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. 14 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 14 [ 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, 2000 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.
----
Dreyfus New York
Tax Exempt Funds
Dreyfus New York Tax Exempt Money Market Fund
Dreyfus New York Tax Exempt Intermediate Bond Fund
Dreyfus New York Tax Exempt Bond Fund, Inc.
Three investment choices for income exempt from federal, New York state and New
York city income taxes
PROSPECTUS October 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
Contents
THE FUNDS
------------------------------------------------------
1 Introduction
2 Goal/Approach
5 Main Risks
7 Past Performance
10 Expenses
13 Management
14 Financial Highlights
YOUR INVESTMENT
--------------------------------------------------------------------
17 Account Policies
21 Distributions and Taxes
22 Services for Fund Investors
24 Instructions for Regular Accounts
FOR MORE INFORMATION
-------------------------------------------------------------------------------
Back Cover
Each fund's investment approach, risks, performance, expenses and related
information
Information for managing your fund account
Where to learn more about these and other Dreyfus funds
The Funds
Dreyfus New York Tax Exempt Money Market Fund
-------------------------------
Ticker Symbol: DNYXX
Dreyfus New York Tax Exempt Intermediate Bond Fund
------------------------------
Ticker Symbol: DRNIX
Dreyfus New York Tax Exempt Bond Fund
-------------------------------
Ticker Symbol: DRNYX
This combined prospectus has been prepared for your convenience so that you can
consider three investment choices in one document. Each fund is a separate
entity with a separate investment portfolio. The operations and results of a
fund are unrelated to those of each other fund.
The funds differ in their average portfolio maturity, which affects their level
of income and degree of share price fluctuation. The Money Market Fund seeks to
maintain a stable $1.00 share price. It offers share price stability for
investors looking to protect principal, but has the lowest income potential of
the three funds. The Bond Funds each offer higher income and return potential,
mainly relative to their average maturities, but their share prices will
fluctuate.
Each fund is non-diversified, which means that a relatively high percentage of
its assets may be invested in a limited number of issuers. Therefore, each
fund's performance may be more vulnerable to changes in the market value of a
single issuer or a group of issuers.
INFORMATION ON EACH FUND'S RECENT PERFORMANCE CAN BE FOUND IN ITS CURRENT
ANNUAL/SEMIANNUAL REPORT (SEE BACK COVER).
What these funds are -- and aren't
These funds are mutual funds: pooled investments that are professionally managed
and give you the opportunity to participate in financial markets. They strive to
reach their stated goals, although as with all mutual funds, they cannot offer
guaranteed results.
An investment in these funds is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in these funds, but you also have the
potential to make money.
Introduction
Dreyfus New York Tax Exempt Funds
GOAL/APPROACH
Dreyfus New York Tax Exempt Money Market Fund
THE MONEY MARKET FUND seeks 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 the maintenance of liquidity. As a money market
fund, the fund is subject to strict federal requirements and must maintain an
average dollar-weighted portfolio maturity of 90 days or less and buy individual
securities that have remaining maturities of 13 months or less.
To pursue this goal, the fund normally invests substantially all of its net
assets in short-term, high quality municipal obligations that provide income
exempt from federal, New York state and New York city income taxes. When the
fund manager believes that acceptable New York municipal obligations are
unavailable for investment, the fund may invest temporarily in municipal
obligations that pay income subject to New York state and New York city income
taxes, but not federal income tax.
Although the fund's objective is to generate income exempt from federal and New
York state and city income taxes, interest from some of its holdings may be
subject to the federal alternative minimum tax. In addition, the fund
temporarily may invest in taxable obligations and/or municipal obligations that
pay income exempt only from federal income tax.
Concepts to understand
MUNICIPAL OBLIGATIONS: debt securities that provide income free from federal
income taxes, and state income taxes if the investor lives in the issuing state.
Municipal bonds are typically of two types:
* GENERAL OBLIGATION BONDS, which are secured by the full faith and credit of
the issuer and its taxing power
* REVENUE BONDS, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway
tolls
<PAGE 2>
Dreyfus New York Tax Exempt Intermediate Bond Fund
THE INTERMEDIATE BOND FUND seeks 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. To pursue this goal, the fund normally invests
substantially all of its assets in municipal bonds that provide income exempt
from federal, New York state and New York city personal income taxes. When the
fund manager believes that acceptable New York municipal obligations are
unavailable for investment, the fund may invest temporarily in municipal
obligations that pay income subject to New York state and New York city income
taxes, but not federal income tax. The fund's dollar-weighted average portfolio
maturity ranges between three and ten years. Although the fund currently intends
to invest only in investment grade municipal bonds, or the unrated equivalent as
determined by Dreyfus, it has the ability to invest up to 20% of its net assets
in bonds of below investment grade credit quality ("high yield" or "junk"
bonds).
Although the fund's objective is to generate income exempt from federal and New
York state and city income taxes, interest from some of its holdings may be
subject to the federal alternative minimum tax. In addition, the fund
temporarily may invest in taxable obligations and/or municipal obligations that
pay income exempt only from federal income tax.
Concepts to understand
INVESTMENT GRADE BONDS: independent rating organizations analyze and evaluate a
bond issuer's credit history and ability to repay debts. Based on their
assessment, they assign letter grades that reflect the issuer's
creditworthiness. AAA or Aaa represents the highest credit rating, AA/Aa the
second highest, and so on down to D, for bonds in default (the inability to make
timely interest or principal payments). Bonds rated BBB or Baa and above are
considered investment grade.
The Funds
<PAGE 3>
GOAL/APPROACH (CONTINUED)
Dreyfus New York Tax Exempt Bond Fund
THE BOND FUND seeks 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. To pursue this goal, the fund normally invests substantially all of
its assets in municipal bonds that provide income exempt from federal, New York
state and New York city income taxes. When the fund manager believes that
acceptable New York municipal obligations are unavailable for investment, the
fund may invest temporarily in municipal obligations that pay income subject to
New York state and New York city income taxes, but not federal income tax.
The dollar-weighted average maturity of the fund's portfolio normally exceeds
ten years, but the fund may invest without regard to maturity. The fund will
invest at least 80% of its assets in investment grade municipal bonds or the
unrated equivalent as determined by Dreyfus. The fund may invest up to 20% of
its assets in high yield municipal bonds.
Although the fund's objective is to generate income exempt from federal and New
York state and city income taxes, interest from some of its holdings may be
subject to the federal alternative minimum tax. In addition, the fund
temporarily may invest in taxable obligations and/or municipal obligations that
pay income exempt only from federal income tax.
Concepts to understand
AVERAGE MATURITY: an average of the stated maturities of the bonds held in the
fund, based on their dollar-weighted proportions in the fund. In general, the
longer a fund's average weighted maturity, the more its share price will
fluctuate in response to changing interest rates.
<PAGE 4>
MAIN RISKS
Dreyfus New York Tax Exempt Money Market Fund
The fund's yield will fluctuate as the short-term securities in its portfolio
mature and the proceeds are reinvested in securities with different interest
rates.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
While the fund has maintained a constant share price since inception and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* New York's economy and revenues underlying its municipal obligations may
decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single stat
* any of the fund's holdings could have its credit rating downgraded or could
default
Concepts to understand
CREDIT RATING: a measure of the issuer's expected ability to make all required
interest and principal payments in a timely manner.
An issuer with the highest credit rating has a very strong degree of certainty
(or safety) with respect to making all payments. An issuer with the
second-highest credit rating still has a strong capacity to make all payments,
although the degree of safety is somewhat less.
Generally, the fund is required to invest at least 95% of its assets in the
securities of issuers with the highest credit rating or the unrated equivalent
as determined by Dreyfus, with the remainder invested in securities with the
second-highest credit rating.
The Funds
<PAGE 5>
MAIN RISKS (CONTINUED)
Dreyfus New York Tax Exempt Intermediate Bond Fund and Dreyfus New York Tax
Exempt Bond Fund
Prices of bonds tend to move inversely with changes in interest rates. While a
rise in rates may allow a fund to invest for higher yields, the most immediate
effect is usually a drop in bond prices, and therefore in a fund's share price
as well. As a result, the value of your investment in a fund could go up and
down, which means that you could lose money.
Other risk factors could have an effect on each fund's performance:
* if an issuer defaults on a bond, or there is a credit downgrade on the
bond, the bond's value, and the fund's share price, could fall
* New York's economy and revenues underlying its municipal bonds may decline
* investing primarily in a single state may make a fund's portfolio
securities more sensitive to risks specific to the state
* high yield bonds are subject to greater credit risk than investment grade
bonds, and tend to be more volatile and less liquid
* if the municipal bond market becomes less liquid, typically when there are
many more sellers than buyers for the securities, the value of such
securities, particularly those purchased at a discounted price, and the
fund's share price, may fall dramatically
Other potential risks
The INTERMEDIATE BOND FUND and BOND FUND may invest in certain derivatives, such
as futures and options, that may cause taxable income, and in inverse floaters.
Derivatives are used primarily to hedge the fund's portfolio or for daily
liquidity. They also may be used to increase returns. However, these practices
may lower returns or increase volatility. Derivatives can be highly sensitive to
changes in their underlying security, interest rate or index. A small
investment in certain derivatives could have a potentially large impact on a
fund's performance.
<PAGE 6>
PAST PERFORMANCE
Dreyfus New York Tax Exempt Money Market Fund
The bar chart and table below show some of the risks of investing in the fund.
The bar chart shows the changes in the fund's performance from year to year. The
table shows the fund's average annual total return over time. Of course, past
performance is no guarantee of future results.
--------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
5.20 3.81 2.31 1.62 2.12 3.24 2.79 3.00 2.75 2.51
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q4 '90 +1.31%
WORST QUARTER: Q1 '93 +0.38%
THE FUND'S YEAR-TO-DATE TOTAL RETURN AS OF 6/30/00 WAS 1.62%.
--------------------------------------------------------
Average annual total return AS OF 12/31/99
1 Year 5 Years 10 Years
--------------------------------------------------------
2.51% 2.86% 2.93%
For the fund's current yield, call toll-free: 1-800-645-6561.
The Funds
<PAGE 7>
PAST PERFORMANCE (CONTINUED)
Dreyfus New York Tax Exempt Intermediate Bond Fund
The bar chart and table below show some of the risks of investing in the fund.
The bar chart shows the changes in the fund's performance from year to year. The
table compares the fund's average annual total return to that of the Lehman
Brothers 10-Year Municipal Bond Index, an unmanaged total return
intermediate-term municipal bond performance benchmark. Of course, past
performance is no guarantee of future results.
--------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
6.07 11.14 9.38 11.52 -5.11 14.03 4.16 8.24 6.05 -2.26
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q1 '95 +5.68%
WORST QUARTER: Q1 '94 -4.45%
THE FUND'S YEAR-TO-DATE TOTAL RETURN AS OF 6/30/00 WAS 3.44%.
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Average annual total return AS OF 12/31/99
1 Year 5 Years 10 Years
-------------------------------------------------------------------------------
FUND -2.26% 5.91% 6.16%
LEHMAN BROTHERS
10-YEAR
MUNICIPAL BOND INDEX* -1.25% 7.12% 7.10%
* UNLIKE THE FUND, THE LEHMAN INDEX IS NOT COMPOSED OF BONDS OF A SINGLE
STATE.
<PAGE 8>
Dreyfus New York Tax Exempt Bond Fund
The bar chart and table below show some of the risks of investing in the fund.
The bar chart shows the changes in the fund's performance from year to year. The
table compares the fund's average annual total return to that of the Lehman
Brothers Municipal Bond Index, an unmanaged total return municipal bond
performance benchmark. Of course, past performance is no guarantee of future
results.
--------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
5.51 12.42 8.85 12.65 -6.95 16.24 2.48 9.13 6.70 -3.81
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: Q1 '95 +6.59%
WORST QUARTER: Q1 '94 -5.52%
THE FUND'S YEAR-TO-DATE TOTAL RETURN AS OF 6/30/00 WAS 4.14%.
--------------------------------------------------------
Average annual total return AS OF 12/31/99
1 Year 5 Years 10 Years
--------------------------------------------------------------------------------
FUND -3.81% 5.94% 6.09%
LEHMAN BROTHERS
MUNICIPAL BOND INDEX* -2.06% 6.91% 6.89%
* UNLIKE THE FUND, THE LEHMAN INDEX IS NOT COMPOSED OF BONDS OF A SINGLE
STATE.
The Funds
<PAGE 9>
EXPENSES
Dreyfus New York Tax Exempt Money Market Fund
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the following table. Annual fund operating expenses are
paid out of fund assets, so their effect is included in the share price. The
fund has no sales charge (load) or Rule 12b-1 distribution fees.
--------------------------------------------------------
Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Shareholder services fee 0.06%
Other expenses 0.10%
-------------------------------------------------------
TOTAL 0.66%
--------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$67 $211 $368 $822
</TABLE>
This example shows what you could pay in expenses over
time. It uses the same hypothetical conditions other
funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in
expenses. The figures shown would be the same whether
you sold your shares at the end of a period or kept
them. Because actual return and expenses will be
different, the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to Dreyfus for managing the fund's portfolio and
assisting in all aspects of the fund's operations.
SHAREHOLDER SERVICES FEE: a fee of up to 0.25% used to reimburse the fund's
distributor for shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the fund for miscellaneous items such as transfer
agency, custody, professional and registration fees.
<PAGE 10>
Dreyfus New York Tax Exempt Intermediate Bond Fund
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the following table. Shareholder transaction fees are
paid from your account. Annual fund operating expenses are paid out of fund
assets, so their effect is included in the share price. The fund has no sales
charge (load).
--------------------------------------------------------
Fee table
SHAREHOLDER TRANSACTION FEES
% OF TRANSACTION AMOUNT
Maximum redemption fee 1.00%
CHARGED ONLY WHEN SELLING SHARES YOU
HAVE OWNED FOR LESS THAN 30 DAYS
--------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.60%
Rule 12b-1 fee 0.25%
Other expenses 0.10%
-------------------------------------------------------
TOTAL 0.95%
--------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$97 $303 $525 $1,166
</TABLE>
This example shows what you could pay in expenses over
time. It uses the same hypothetical conditions other
funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in
expenses. The figures shown would be the same whether
you sold your shares at the end of a period or kept
them. Because actual return and expenses will be
different, the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to Dreyfus for managing the fund's portfolio and
assisting in all aspects of the fund's operations. During the past fiscal year,
Dreyfus waived a portion of its fee so that the effective management fee paid by
the fund was 0.45%, reducing total expenses from 0.95% to 0.80%. This waiver was
voluntary.
RULE 12B-1 FEE: a fee paid to the fund's distributor for distributing fund
shares, servicing shareholder accounts, and advertising and marketing. Because
this fee is paid out of the fund's assets on an ongoing basis, over time it will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
The Funds 11
<PAGE 11>
EXPENSES (CONTINUED)
Dreyfus New York Tax Exempt Bond Fund
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the following table. Shareholder transaction fees are
paid from your account. Annual fund operating expenses are paid out of fund
assets, so their effect is included in the share price. The fund has no sales
charge (load) or Rule 12b-1 distribution fees.
--------------------------------------------------------
Fee table
SHAREHOLDER TRANSACTION FEES
% OF TRANSACTION AMOUNT
Maximum redemption fee 0.10%
CHARGED ONLY WHEN SELLING SHARES YOU
HAVE OWNED FOR LESS THAN 30 DAYS
--------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.60%
Shareholder services fee 0.13%
Other expenses 0.07%
-------------------------------------------------------
TOTAL 0.80%
--------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$82 $255 $444 $990
</TABLE>
This example shows what you could pay in expenses over
time. It uses the same hypothetical conditions other
funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in
expenses. The figures shown would be the same whether
you sold your shares at the end of a period or kept
them. Because actual return and expenses will be
different, the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to Dreyfus for managing the fund's portfolio and
assisting in all aspects of the fund's operations. During the past fiscal year,
Dreyfus waived a portion of its fee so that the effective management fee paid by
the fund was 0.55%, reducing total expenses from 0.80% to 0.75%. This waiver was
voluntary.
SHAREHOLDER SERVICES FEE: a fee of up to 0.25% used to reimburse the fund's
distributor for shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the fund for miscellaneous items such as transfer
agency, custody, professional and registration fees.
<PAGE 12>
MANAGEMENT
The investment adviser for each fund is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages more than
$139 billion in over 160 mutual fund portfolios. For the past fiscal year,
Dreyfus New York Tax Exempt Money Market Fund, Dreyfus New York Tax Exempt
Intermediate Bond Fund and Dreyfus New York Tax Exempt Bond Fund each paid
Dreyfus a management fee at the annual rate of 0.50%, 0.45%, and 0.55%,
respectively, of the fund's average daily net assets. Dreyfus is the primary
mutual fund business of Mellon Financial Corporation, a global financial
services company with approximately $2.8 trillion of assets under management,
administration or custody, including approximately $521 billion under
management. Mellon provides wealth management, global investment services and a
comprehensive array of banking services for individuals, businesses and
institutions. Mellon is headquartered in Pittsburgh, Pennsylvania.
Each fund, Dreyfus and Dreyfus Service Corporation (each fund's distributor)
have adopted a code of ethics that permits its personnel, subject to such code,
to invest in securities, including securities that may be purchased or held by
each fund. The Dreyfus code of ethics restricts the personal securities
transactions of its employees, and requires portfolio managers and other
investment personnel to comply with the code's preclearance and disclosure
procedures. Its primary purpose is to ensure that personal trading by Dreyfus
employees does not disadvantage any Dreyfus-managed fund.
Portfolio managers
Monica S. Wieboldt has been the primary portfolio manager of Dreyfus New York
Tax Exempt Intermediate Bond Fund since May 1987 and has been a portfolio
manager at Dreyfus since 1983.
Samuel J. Weinstock has been the primary portfolio manager of Dreyfus New York
Tax Exempt Bond Fund since May 1997 and has been a portfolio manager at Dreyfus
since 1987.
The Funds 13
<PAGE 13>
FINANCIAL HIGHLIGHTS
The following tables describe each fund's performance for the fiscal periods
indicated. "Total return" shows how much your investment in a fund would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report for each fund, along with each fund's financial
statements, is included in the fund's annual report.
Dreyfus New York Tax Exempt Money Market Fund
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment operations:
Investment income -- net .028 .025 .029 .028 .030
Distributions:
Dividends from investment
income -- net (.028) (.025) (.029) (.028) (.030)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
Total return (%) 2.88 2.54 2.97 2.83 3.05
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses
to average net assets (%) .66 .65 .67 .68 .64
Ratio of net investment income
to average net assets (%) 2.84 2.50 2.93 2.79 3.00
------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 271,439 295,790 281,274 291,529 298,768
<PAGE 14>
Dreyfus New York Tax Exempt Intermediate Bond Fund
YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 18.31 18.62 18.06 17.83 18.05
Investment operations:
Investment income -- net .81 .80 .82 .83 .85
Net realized and unrealized gain
(loss) on investments (.97) (.10) .65 .41 (.22)
Total from investment operations (.16) .70 1.47 1.24 .63
Distributions:
Dividends from investment
income -- net (.81) (.80) (.82) (.83) (.85)
Dividends from net realized gain
on investments (.12) (.21) (.09) (.18) --
Total distributions (.93) (1.01) (.91) (1.01) (.85)
Net asset value, end of period 17.22 18.31 18.62 18.06 17.83
Total investment return (%) (.89) 3.75 8.25 7.12 3.52
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .80 .80 .80 .80 .84
Ratio of net investment income
to average net assets (%) 4.53 4.28 4.44 4.64 4.69
Decrease reflected in above
expense ratios due to
actions by Dreyfus (%) .15 .14 .15 .16 .12
Portfolio turnover rate (%) 36.07 33.08 42.40 45.29 47.48
------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 300,629 366,526 365,481 357,530 365,148
The Funds
<PAGE 15>
FINANCIAL HIGHLIGHTS (CONTINUED)
Dreyfus New York Tax Exempt Bond Fund
YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 15.27 15.47 14.97 14.64 15.19
Investment operations:
Investment income -- net .72 .74 .75 .76 .79
Net realized and unrealized gain
(loss) on investments (1.10) (.06) .63 .41 (.51)
Total from investment operations (.38) .68 1.38 1.17 .28
Distributions:
Dividends from investment
income -- net (.73) (.74) (.74) (.76) (.79)
Dividends from net realized gain
on investments (.13) (.14) (.14) (.08) (.04)
Total distributions (.86) (.88) (.88) (.84) (.83)
Net asset value, end of period 14.03 15.27 15.47 14.97 14.64
Total return (%) (2.44) 4.47 9.36 8.14 1.84
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .75 .75 .73 .74 .71
Ratio of net investment income
to average net assets (%) 5.02 4.77 4.86 5.10 5.24
Decrease reflected in above expense
ratios due to actions by Dreyfus (%) .05 .01 .00* -- --
Portfolio turnover rate (%) 37.67 20.77 35.86 74.46 81.93
------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 1,387,952 1,602,113 1,672,193 1,702,686 1,698,678
* AMOUNT REPRESENTS LESS THAN .01%
</TABLE>
<PAGE 16>
Your Investment
ACCOUNT POLICIES
Buying shares
YOU PAY NO SALES CHARGES to invest in these funds. Your price for fund shares is
the net asset value per share (NAV), which is generally calculated at 12:00 noon
Eastern time for the Money Market Fund, and at the close of trading on the New
York Stock Exchange (usually 4:00 p.m. Eastern time) for the Intermediate Bond
Fund and the Bond Fund, every day the exchange is open. Your order will be
priced at the next NAV calculated after your order is accepted by the fund's
transfer agent or other authorized entity. The Money Market Fund uses the
amortized cost method of valuing its securities. The other funds' investments
are priced at fair value by an independent pricing service approved by the
fund's board. Because the funds seek tax-exempt income, they are not recommended
for purchase in IRAs or other qualified plans.
--------------------------------------------------------
Minimum investments
Initial Additional
--------------------------------------------------------
REGULAR ACCOUNTS $2,500 $100
$500 FOR
TELETRANSFER
INVESTMENTS
DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party
checks cannot be accepted. You may be charged a fee for
any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
Concepts to understand
NET ASSET VALUE (NAV): a mutual fund's share price on a given day. A fund's NAV
is calculated by dividing the value of its net assets by the number of existing
shares.
AMORTIZED COST: a method of valuing a money market fund's portfolio securities,
which does not take into account unrealized gains or losses. As a result,
portfolio securities are valued at their acquisition cost, adjusted over time
based on the discounts or premiums reflected in their purchase price. This
method of valuation is designed to permit a fund to maintain a stable NAV.
<PAGE 17>
ACCOUNT POLICIES (CONTINUED)
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME. Your shares will be sold at the next
NAV calculated after your order is accepted by the fund's transfer agent or
other authorized entity. Any certificates representing fund shares being sold
must be returned with your redemption request. Your order will be processed
promptly and you will generally receive the proceeds within a week.
BEFORE SELLING OR WRITING A CHECK against shares recently purchased by check,
TeleTransfer or Automatic Asset Builder, please note that:
* if you send a written request to sell such shares, the fund may delay
sending the proceeds (or selling the shares in the case of the Money Market
Fund) for up to eight business days following the purchase of those shares
* the fund will not honor redemption checks, or process wire, telephone or
TeleTransfer redemption requests, for up to eight business days following
the purchase of those shares
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $10,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
Written sell orders of $100,000 or more must also be signature guaranteed.
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
<PAGE 18>
IF YOU ARE SELLING OR EXCHANGING SHARES of the Intermediate Bond Fund or Bond
Fund that you have owned for less than 30 days, the fund may deduct a
redemption fee (not charged on shares sold through the Checkwriting Privilege,
Automatic Withdrawal Plan or Dreyfus Auto-Exchange Privilege, or on shares
acquired through dividend reinvestment). The Intermediate Bond Fund charges a 1%
redemption fee and the Bond Fund charges a 0.10% redemption fee.
--------------------------------------------------------
Limitations on selling shares by phone
Proceeds
sent by Minimum Maximum
--------------------------------------------------------
CHECK NO MINIMUM $250,000 PER DAY
WIRE $1,000 $500,000 FOR JOINT
ACCOUNTS
EVERY 30 DAYS
TELETRANSFER $500 $500,000 FOR JOINT
ACCOUNTS
EVERY 30 DAYS
Your Investment
<PAGE 19>
ACCOUNT POLICIES (CONTINUED)
General policies
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
EACH FUND (EXCEPT AS NOTED BELOW) RESERVES THE RIGHT TO:
* refuse any purchase or exchange request including, for the Intermediate
Bond Fund and the Bond Fund, those from any individual or group who, in the
fund's view, has or is likely to engage in excessive trading (usually
defined as more than four exchanges out of the fund within a calendar year)
* refuse any purchase or exchange request in excess of 1% of a fund's total
assets (applies mainly to the Intermediate Bond Fund and the Bond Fund
only)
* change or discontinue its exchange privilege or temporarily suspend this
privilege during unusual market conditions
* change its minimum investment amounts
* delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or
during unusual market conditions)
Each fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of a fund's assets).
Small account policies
To offset the relatively higher costs of servicing smaller accounts, the Money
Market Fund and the Intermediate Bond Fund each charge regular accounts with
balances below $2,000 an annual fee of $12. The fee will be imposed during the
fourth quarter of each calendar year.
The fee will be waived for: any investor whose aggregate Dreyfus mutual fund
investments total at least $25,000; IRA accounts; accounts participating in
automatic investment programs; and accounts opened through a financial
institution.
If your account falls below $500, your fund may ask you to increase your
balance. If it is still below $500 after 45 days, the fund may close your
account and send you the proceeds.
<PAGE 20>
DISTRIBUTIONS AND TAXES
EACH FUND USUALLY PAYS ITS SHAREHOLDERS dividends from its net investment income
once a month, and distributes any net capital gains it has realized once a year.
Your dividends and distributions will be reinvested in your fund unless you
instruct the fund otherwise. There are no fees or sales charges on
reinvestments.
EACH FUND ANTICIPATES THAT VIRTUALLY ALL OF ITS INCOME DIVIDENDS will be exempt
from federal, New York state and New York city income taxes. However, any
dividends paid from interest on taxable investments or short-term capital gains
will be taxable as ordinary income. Any distributions of long-term capital gains
will be taxable as such. The tax status of any distribution is the same
regardless of how long you have been in the fund and whether you reinvest your
distributions or take them in cash. In general, distributions are federally
taxable as follows:
--------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
--------------------------------------------------------
INCOME GENERALLY GENERALLY
DIVIDENDS TAX EXEMPT TAX EXEMPT
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE INCOME RATE
LONG-TERM
CAPITAL GAINS 10% 20%
The tax status of your dividends and distributions will be detailed in your
annual tax statement from the fund.
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
Taxes on transactions
Any sale or exchange of fund shares, including through the checkwriting
privilege, may generate a tax liability.
The table at right also can provide a guide for your potential tax liability
when selling or exchanging fund shares. "Short-term capital gains" applies to
fund shares sold or exchanged up to 12 months after buying them. "Long-term
capital gains" applies to shares sold or exchanged after 12 months.
<PAGE 21>
SERVICES FOR FUND INVESTORS
Automatic services
BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to certain
restrictions. You can set up most of these services with your application or by
calling 1-800-645-6561.
--------------------------------------------------------
For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.
DREYFUS PAYROLL For making automatic investments
SAVINGS PLAN through a payroll deduction.
DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one Dreyfus fund into another
(not available for IRAs).
--------------------------------------------------------
For exchanging shares
DREYFUS AUTO- For making regular exchanges
EXCHANGE PRIVILEGE from one Dreyfus fund into
another.
--------------------------------------------------------
For selling shares
DREYFUS AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most Dreyfus funds.
Dreyfus Financial Centers
Through a nationwide network of Dreyfus Financial Centers, Dreyfus offers a full
array of investment services and products. This includes information on mutual
funds, brokerage services, tax-advantaged products and retirement planning.
Experienced financial consultants can help you make informed choices and provide
you with personalized attention in handling account transactions. The Financial
Centers also offer informative seminars and events. To find the Financial Center
nearest you, call 1-800-499-3327.
<PAGE 22>
Checkwriting privilege
YOU MAY WRITE REDEMPTION CHECKS against your account in amounts of $500 or more.
These checks are free; however, a fee will be charged if you request a stop
payment or if the transfer agent cannot honor a redemption check due to
insufficient funds or another valid reason. Please do not postdate your checks
or use them to close your account.
Exchange privilege
YOU CAN EXCHANGE SHARES worth $500 or more from one Dreyfus fund into another.
You can request your exchange in writing or by phone. Be sure to read the
current prospectus for any fund into which you are exchanging before investing.
Any new account established through an exchange will have the same privileges as
your original account (as long as they are available). There is currently no fee
for exchanges, although you may be charged a sales load when exchanging into any
fund that has one.
Dreyfus TeleTransfer privilege
TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the Dreyfus TeleTransfer privilege. You can set up TeleTransfer
on your account by providing bank account information and following the
instructions on your application.
24-hour automated account access
YOU CAN EASILY MANAGE YOUR DREYFUS ACCOUNTS, check your account balances,
transfer money between your Dreyfus funds, get price and yield information and
much more -- when it's convenient for you -- by calling 1-800-645-6561.
Third-party investments
If you invest through a third party (rather than directly with Dreyfus), the
policies and fees may be different than those described here. Banks, brokers,
financial advisers and financial supermarkets may charge transaction fees and
may set different minimum investments or limitations on buying or selling
shares. Consult a representative of your financial institution if in doubt.
Your Investment
<PAGE 23>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
The Dreyfus Family of Funds
P.O. Box 9387, Providence, RI 02940-9387
By Telephone
WIRE Have your bank send your
investment to The Bank of New York, with these instructions:
* ABA# 021000018
* Dreyfus New York Tax Exempt
Money Market Fund DDA# 8900052007
* Dreyfus New York Tax Exempt
Intermediate Bond Fund DDA# 8900052236
* Dreyfus New York Tax Exempt Bond Fund
DDA# 8900052422
* your Social Security or tax ID number
* name(s) of investor(s)
Call us to obtain an account number. Return your application.
Automatically
WITH AN INITIAL INVESTMENT Indicate
on your application which automatic service(s) you want. Return your application
with your investment.
ALL SERVICES Call us to request a form to add any automatic investing service
(see "Services for Fund Investors"). Complete and return the forms along with
any other required materials.
Via the Internet
COMPUTER Visit the Dreyfus Web site http://www.dreyfus.com and follow the
instructions to download an account application.
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: The Dreyfus Family of Funds P.O. Box 105,
Newark, NJ 07101-0105
WIRE Have your bank send your investment to The Bank of New York, with these
instructions:
* ABA# 021000018
* Dreyfus New York Tax Exempt
Money Market Fund DDA# 8900052007
* Dreyfus New York Tax Exempt
Intermediate Bond Fund DDA# 8900052236
* Dreyfus New York Tax Exempt Bond Fund
DDA# 8900052422
* your account number
* name(s) of investor(s)
ELECTRONIC CHECK Same as wire, but insert "1111" before your account number.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
<PAGE 24>
TO SELL SHARES
Write a redemption check OR write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name and share class
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see "Account
Policies -- Selling Shares").
Mail your request to:
The Dreyfus Family of Funds
P.O. Box 9671,
Providence, RI 02940-9671
To reach Dreyfus, call toll free in the U.S.
1-800-645-6561
Outside the U.S. 516-794-5452
Make checks payable to:
THE DREYFUS FAMILY OF FUNDS
You also can deliver requests to any Dreyfus Financial Center. Because
processing time may vary, please ask the representative when your account will
be credited or debited.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers. Wire redemptions from the fund are subject to a
$1,000 minimum.
ELECTRONIC CHECK: for transferring money out of a bank account. Your transaction
is entered electronically, but may take up to eight business days to clear.
Electronic checks usually are available without a fee at all Automated Clearing
House (ACH) banks.
WIRE Be sure the fund has your bank account information on file. Call us to
request your transaction. Proceeds will be wired to your bank.
TELETRANSFER Be sure the fund has your bank account information on file. Call
us to request your transaction. Proceeds will be sent to your bank by electronic
check.
CHECK Call us to request your transaction. A check will be sent to the address
of record.
DREYFUS AUTOMATIC WITHDRAWAL PLAN Call us to request a form to add the plan.
Complete the form, specifying the amount and frequency of withdrawals you would
like.
Be sure to maintain an account balance of $5,000 or more.
Your Investment
<PAGE 25>
For More Information
Dreyfus New York Tax Exempt Money Market Fund
----------------------------
SEC file number: 811-5160
Dreyfus New York Tax Exempt Intermediate Bond Fund
---------------------------
SEC file number: 811-5161
Dreyfus New York Tax Exempt Bond Fund, Inc.
----------------------------
SEC file number: 811-3726
More information on these funds is available free upon
request, including the following:
Annual/Semiannual Report
Describes a fund's performance, lists portfolio holdings
and contains a letter from the fund's manager discussing
recent market conditions, economic trends and fund
strategies that significantly affected the fund's
performance during the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about a fund and its policies. A
current SAI is on file with the Securities and Exchange
Commission (SEC) and is incorporated by reference (is
legally considered part of this prospectus).
To obtain information:
BY TELEPHONE
Call 1-800-645-6561
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request
to [email protected]
ON THE INTERNET Text-only versions of certain fund documents can be viewed
online or downloaded from:
SEC
http://www.sec.gov
DREYFUS
http://www.dreyfus.com
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (for information, call 1-202-942-8090) or, after paying a
duplicating fee, by E-mail request to [email protected], or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102.
(c) 2000 Dreyfus Service Corporation NYTEFP1000
---------------------------------------------------------------------------
DREYFUS NEW YORK TAX EXEMPT FUNDS
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, 2000
---------------------------------------------------------------------------
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, 2000, 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 one of the
following numbers:
Call Toll Free 1-800-645-6561
In New York City - Call 1-718-895-1206
Outside the U.S. - Call 516-794-5452
Each Fund's most recent Annual Report and Semi-Annual Report to
Shareholders are separate documents supplied with this Statement of Additional
Information, and the financial statements, accompanying notes and report of
independent auditors appearing in the Annual Report are incorporated by
reference into this Statement of Additional Information.
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
Description of the Funds........................................B-3
Management of the Funds........................................B-20
Management Arrangements........................................B-23
How to Buy Shares..............................................B-27
Service Plan and Shareholder Services Plans....................B-29
How to Redeem Shares...........................................B-31
Shareholder Services...........................................B-34
Determination of Net Asset Value...............................B-38
Portfolio Transactions.........................................B-39
Dividends, Distributions and Taxes.............................B-40
Performance Information........................................B-42
Information About the Funds....................................B-44
Counsel and Independent Auditors...............................B-46
Appendix A.....................................................B-47
Appendix B.....................................................B-74
DESCRIPTION OF THE FUNDS
Each of the Money Market Fund and the Intermediate Bond Fund is a
Massachusetts business trust that commenced operations on June 9, 1987 and June
12, 1987, respectively. The Bond Fund is a Maryland corporation formed on April
26, 1983. Each Fund is an open-end, management investment company, known as a
mutual fund. The Intermediate Bond Fund and Bond Fund are referred to as the
"Longer Term Funds."
The Dreyfus Corporation (the "Manager") serves as each Fund's investment
adviser.
Dreyfus Service Corporation (the "Distributor") is the distributor of each
Fund's shares.
Certain Portfolio Securities
The following information supplements and should be read in conjunction
with the Funds' Prospectus.
Municipal Obligations. (All Funds) Each Fund will invest primarily in debt
securities of the State of New York, its political subdivisions, authorities and
corporations, and certain other specified securities, the interest from which
is, in the opinion of bond counsel to the issuer, exempt from Federal, 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 a Fund, the Fund will invest temporarily
in other debt securities the interest from which is, in the opinion of bond
counsel to the issuer, exempt from Federal, but not New York State and New York
City, income tax. Each Fund will invest at least 80% of the value of its net
assets (except when maintaining a temporary defensive position) in Municipal
Obligations. Municipal Obligations are debt obligations issued by states,
territories and possessions of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities, or multistate
agencies or authorities, the interest from which, in the opinion of bond counsel
to the issuer, is exempt from Federal income tax. Municipal Obligations
generally include debt obligations issued to obtain funds for various public
purposes as well as certain industrial development bonds issued by or on behalf
of public authorities. Municipal Obligations are classified as general
obligation bonds, revenue bonds and notes. General obligation bonds are secured
by the issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenue derived from
a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source, but not from the
general taxing power. Tax exempt industrial development bonds, in most cases,
are revenue bonds that do not carry the pledge of the credit of the issuing
municipality, but generally are guaranteed by the corporate entity on whose
behalf they are issued. Notes are short-term instruments which are obligations
of the issuing municipalities or agencies and are sold in anticipation of a bond
sale, collection of taxes or receipt of other revenues. Municipal Obligations
include municipal lease/purchase agreements which are similar to installment
purchase contracts for property or equipment issued by municipalities. Municipal
Obligations bear fixed, floating or variable rates of interest. 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.
The yields on Municipal Obligations are dependent on a variety of factors,
including general economic and monetary conditions, money market factors,
conditions in the Municipal Obligations market, size of a particular offering,
maturity of the obligation and rating of the issue.
Certain Tax Exempt Obligations. (All Funds) 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
intervals, 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. 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. (All Funds) 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 the Fund an undivided interest in the Municipal
Obligation in the proportion that the Fund's participation interest bears to the
total principal amount of the Municipal Obligation. These instruments may have
fixed, floating or variable rates of interest 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 Fund's Board has determined meets
prescribed quality standards for banks, or the payment obligation otherwise will
be collateralized by U.S. Government securities. For certain participation
interests, the Fund will have the right to demand payment, on not more than
seven days' notice, for all or any part of the Fund's participation interest in
the Municipal Obligation, plus accrued interest. As to these instruments, 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.
Municipal lease obligations or installment purchase contract obligations
(collectively, "lease obligations") have special risks not ordinarily associated
with Municipal Obligations. Although lease obligations do not constitute general
obligations of the municipality for which the municipality's taxing power is
pledged, a lease obligation ordinarily is backed by the municipality's covenant
to budget for, appropriate and make the payments due under the lease obligation.
However, certain lease obligations contain "non-appropriation" clauses which
provide that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such purpose
on a yearly basis. Although "non-appropriation" lease obligations are secured by
the leased property, disposition of the property in the event of foreclosure
might prove difficult. The 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. Certain lease obligations may be considered 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.
Tender Option Bonds. (All Funds) 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, that has been coupled with the agreement of a third party, such as
a bank, broker-dealer or other financial institution, pursuant to which such
institution grants the security holders the option, at periodic intervals, to
tender their securities to the institution and receive the face value thereof.
As consideration for providing the option, the financial institution receives
periodic fees equal to the difference between the Municipal Obligation's fixed
coupon rate and the rate, as determined by a remarketing or similar agent at or
near the commencement of such period, that would cause the securities, coupled
with the tender option, to trade at par on the date of such determination. Thus,
after payment of this fee, the security holder effectively holds a demand
obligation that bears interest at the prevailing short-term tax exempt rate. The
Manager, on behalf of the Fund, will consider on an ongoing basis the
creditworthiness of the issuer of the underlying Municipal Obligations, of any
custodian and of the third party provider of the tender option. In certain
instances and for certain tender option bonds, the option may be terminable in
the event of a default in payment of principal or interest on the underlying
Municipal Obligations and for other reasons.
The 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, including the fee
payment arrangements, will not adversely affect the tax exempt status of the
underlying Municipal Obligations and that payment of any tender fees will not
have the effect of creating taxable income for such Fund. Based on the tender
option bond agreement, the Fund expects to be able to value the tender option
bond at par; however, the value of the instrument will be monitored to assure
that it is valued at fair value.
Custodial Receipts. (Longer Term Funds only) Each of these Funds may
purchase custodial receipts representing the right to receive certain future
principal and interest payments on Municipal Obligations which underlie the
custodial receipts. A number of different arrangements are possible. In a
typical custodial receipt arrangement, an issuer or a third party owner of
Municipal Obligations deposits such obligations with a custodian in exchange for
two classes of custodial receipts. The two classes have different
characteristics, but, in each case, payments on the two classes are based on
payments received on the underlying Municipal Obligations. One class has the
characteristics of a typical auction rate security, where at specified intervals
its interest rate is adjusted, and ownership changes, based on an auction
mechanism. This class's interest rate generally is expected to be below the
coupon rate of the underlying Municipal Obligations and generally is at a level
comparable to that of a Municipal Obligation of similar quality and having a
maturity equal to the period between interest rate adjustments. The second class
bears interest at a rate that exceeds the interest rate typically borne by a
security of comparable quality and maturity; this rate also is adjusted, but in
this case inversely to changes in the rate of interest of the first class. In no
event will the aggregate interest paid with respect to the two classes exceed
the interest paid by the underlying Municipal Obligations. The value of the
second class and similar securities should be expected to fluctuate more than
the value of a Municipal Obligation of comparable quality and maturity and their
purchase by the Fund should increase the volatility of its net asset value and,
thus, its price per share. These custodial receipts are sold in private
placements. The Fund also may purchase directly from issuers, and not in a
private placement, Municipal Obligations having characteristics similar to
custodial receipts. These securities may be issued as part of a multi-class
offering and the interest rate on certain classes may be subject to a cap or
floor.
Stand-By Commitments. (All Funds) 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 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.
Ratings of Municipal Obligations. (All Funds) Each of the Longer Term
Funds will invest at least 80% of the value of its net assets in Municipal
Obligations which, in the case of bonds, are rated no lower than Baa by Moody's
Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's Ratings Group
("S&P") or Fitch IBCA, Inc. ("Fitch" and, together with Moody's and S&P, the
"Rating Agencies"). 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 the Rating Agencies. Each Longer Term Fund also may invest in
securities which, while not rated, are determined by the Manager to be of
comparable quality to the rated securities in which the Fund may invest; for
purposes of the 80% requirement described in this paragraph, such unrated
securities will be considered to have the rating so determined.
The Money Market Fund may invest only in those Municipal Obligations which
are rated in one of the two highest rating categories for debt obligations by at
least two Rating Agencies (or one Rating Agency if the instrument was rated by
only one Rating Agency) or, if unrated, are of comparable quality as determined
in accordance with procedures established by the Money Market Fund's Board.
The average distribution of investments (at value) in Municipal
Obligations by ratings for the fiscal year ended May 31, 2000, computed on a
monthly basis, for each Fund was as follows:
Percentage of Value
Money Intermediate
Fitch or Moody's Or S&P Market Bond Fund Bond Fund
----- ------- ----------- ------- --------- ---------
Fund
----
AAA Aaa AAA 4.5% 37.8% 37.2%
AA Aa AA N/A 12.7% 12.9%
A A A N/A 29.5% 32.7%
BBB Baa BBB N/A% 14.0% 7.6%
BB Ba BB N/A% - -
F-1 VMIG1/MIG1,P-1 SP-1,A-1 89.2% 1.0%* 1.9%
F-2 VMIG2/MIG2,P-2 SP-2,A-2 - N/A N/A
Not Rated Not Rated Not Rated 6.3%**
5.0%*** 7.7%****
------- --------
100.0% 100.0% 100.0%
====== ====== ======
-----------------------------
* 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 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 6.3% 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 5.0% 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: Aaa/AAA
(.5%) and Baa/BBB (4.5%)
**** Includes securities comprising 7.7% of the Bond Fund's market value which,
while not rated, have been determined by the Manager to be of comparable quality
to securities rates Aaa/AAA (2.0%), Aa/AA (.2%), A(1.1%) and Baa/BBB (4.4%).
If, subsequent to being purchased by the Money Market Fund, (a) an issue
of rated Municipal Obligations ceases to be rated in the highest rating category
by at least two rating organizations (or one rating organization if the
instrument was rated by only one organization), or the Money Market Fund's Board
determines that it is no longer of comparable quality; or (b) the Manager
becomes aware that any portfolio security not so highly rated or any unrated
security has been given a rating by any rating organization below the rating
organization's second highest rating category, the Money Market Fund's Board
will reassess promptly whether such security presents minimal credit risk and
will cause the Fund to take such action as it determines is in the best interest
of the Fund and its shareholders, provided that the reassessment required by
clause (b) is not required if the portfolio security is disposed of or matures
within five business days of the Manager becoming aware of the new rating and
the Fund's Board is subsequently notified of the Manager's actions. Subsequent
to being purchased by the Longer Term Funds, an issue of rated Municipal
Obligations may cease to be rated or its rating may be reduced below the minimum
required for purchase by such Funds. Neither event will require the sale of such
Municipal Obligations by a Longer Term Fund, but the Manager will consider such
event in determining whether the Fund should continue to hold the Municipal
Obligations.
To the extent the ratings by Moody's, S&P or Fitch for Municipal
Obligations may change as a result of changes in such organizations or their
rating systems, the Funds will attempt to use comparable ratings as standards
for its investments in accordance with the investment policies contained in the
Prospectus and this Statement of Additional Information. The ratings of Moody's,
S&P and Fitch represent their opinions as to the quality of the Municipal
Obligations which they undertake to rate. It should be emphasized, however, that
ratings are relative and subjective and are not absolute standards of quality.
Although these ratings may be an initial criterion for selection of portfolio
investments, the Manager also will evaluate these securities and the
creditworthiness of the issuers of such securities.
Taxable Investments. (All Funds) 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 the Rating Agencies; 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 a 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.
Zero Coupon Securities. (Longer Term Funds only) Each of these Funds 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 interests 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. (All Funds) 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. These securities may
include securities that are not readily marketable, such as securities that are
subject to legal or contractual restrictions on resale, and repurchase
agreements providing for settlement in more than seven days after notice. As to
these securities, the Fund is subject to a risk that should the Fund desire to
sell them when a ready buyer is not available at a price the Fund deems
representative of their value, the value of the Fund's net assets could be
adversely affected.
Investment Techniques
The following information supplements and should be read in conjunction
with the Prospectus. A Fund's use of certain of the investment techniques
described below may give rise to taxable income.
Borrowing Money. (All Funds) 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 33-1/3% 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 such borrowings exceed 5% of
a Fund's total assets, the Fund will not make any additional investments.
Lending Portfolio Securities. (Longer Term Funds only) 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. The Fund continues to be entitled to payments in amounts equal to
the interest or other distributions payable on the loaned securities which
affords the Fund an opportunity to earn interest on the amount of the loan and
on the loaned securities' collateral. Loans of portfolio securities may not
exceed 33-1/3% of the value of the Fund's total assets, and the Fund will
receive collateral consisting of cash, U.S. Government securities or irrevocable
letters of credit which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. Such loans are
terminable by the Fund at any time upon specified notice. A Fund might
experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the Fund. In connection
with its securities lending transactions, a Fund may return to the borrower or a
third party which is unaffiliated with the Fund, and which is acting as a
"placing broker," a part of the interest earned from the investment of
collateral received for securities loaned.
Derivatives. (Longer Term Funds only) Each Longer Term Fund may invest in,
or enter into derivatives, such as options and futures, for a variety of
reasons, including to hedge certain market risks, to provide a substitute for
purchasing or selling particular securities or to increase potential income
gain. Derivatives may provide a cheaper, quicker or more specifically focused
way for the Fund to invest than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of risk,
depending upon the characteristics of the particular derivative and the
portfolio as a whole. Derivatives permit a Fund to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed in much the same way as the Fund can increase or decrease the level of
risk, or change the character of the risk, of its portfolio by making
investments in specific securities. However, derivatives may entail investment
exposures that are greater than their cost would suggest, meaning that a small
investment in derivatives could have a large potential impact on the Fund's
performance.
If a Fund invests in derivatives at inopportune times or judges market
conditions incorrectly, such investments may lower the Fund's return or result
in a loss. A 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 be a commodity pool, certain
derivatives subject each of these Funds to the rules of the Commodity Futures
Trading Commission which limit the extent to which the Fund can invest in such
derivatives. Each Longer Term Fund may invest in futures contracts and options
with respect thereto for hedging purposes without limit. However, a Fund may not
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, exceeds 5% of the
liquidation value of the 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.
Derivatives may be purchased on established exchanges or through privately
negotiated transactions referred to as over-the-counter derivatives.
Exchange-traded derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such derivatives. This guarantee usually
is supported by a daily variation margin system operated by the clearing agency
in order to reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated with
derivatives purchased on an exchange. By contrast, no clearing agency guarantees
over-the-counter derivatives. Therefore, each party to an over-the-counter
derivative bears the risk that the counterparty will default. Accordingly, the
Manager will consider the creditworthiness of counterparties to over-the-counter
derivatives in the same manner as it would review the credit quality of a
security to be purchased by the Fund. Over-the-counter derivatives are less
liquid than exchange-traded derivatives since the other party to the transaction
may be the only investor with sufficient understanding of the derivative to be
interested in bidding for it.
Futures Transactions--In General. (Longer Term Funds only) Each of these Funds
may enter into futures contracts in U.S. domestic markets. 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 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 of these Funds 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 securities 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 Fund may be required to segregate permissible liquid
assets to cover its obligations relating to its transactions in derivatives. To
maintain this required cover, the Fund may have to sell portfolio securities at
disadvantageous prices or times since it may not be possible to liquidate a
derivative position at a reasonable price. In addition, the segregation of such
assets will have the effect of limiting the Fund's ability otherwise to invest
those assets.
Specific Futures Transactions. Each Longer Term Fund may purchase and sell
interest rate futures contracts. An interest rate future obligates the 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) Each of these Funds may invest up
to 5% of its assets, represented by the premium paid, in the purchase of call
and put options. The 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. 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.
A covered call option written by the Fund is a call option with respect to
which the Fund owns the underlying security or otherwise covers the transaction
by segregating permissible liquid assets. A put option written by the Fund is
covered when, among other things, the Fund segregates permissible liquid assets
having a value equal to or greater than the exercise price of the option to
fulfill the obligation undertaken. The principal reason for writing covered call
and put options is to realize, through the receipt of premiums, a greater return
than would be realized on the underlying securities alone. The Fund receives a
premium from writing covered call or put options which it retains whether or not
the option is exercised.
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. If, as a
covered call option writer, the Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.
Successful use of options by these 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) Each Longer Term Fund 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 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' Prospectus or this Statement of
Additional Information.
Forward Commitments. (All Funds) Each Fund may purchase or sell Municipal
Obligations and other securities on a forward commitment, when-issued or delayed
delivery 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. The Fund will segregate permissible liquid assets at
least equal at all times to the amount of the Fund's purchase commitments.
Municipal Obligations and other securities purchased on a forward
commitment or when-issued basis are subject to changes in value (generally
changing in the same way, i.e., appreciating when interest rates decline and
depreciating when interest rates rise) based upon the public's perception of the
creditworthiness of the issuer and changes, real or anticipated, in the level of
interest rates. Securities purchased on a forward commitment or when-issued
basis may expose the Fund to risks because they may experience such fluctuations
prior to their actual delivery. Purchasing securities on a when-issued basis can
involve the additional risk that the yield available in the market when the
delivery takes place actually may be higher than that obtained in the
transaction itself. Purchasing securities on a forward commitment or when-issued
basis when the Fund is fully or almost fully invested may result in greater
potential fluctuation in the value of the Fund's net assets and its net asset
value per share.
Investment Considerations and Risks
General. (All Funds) 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 Municipal Obligations. (All Funds) 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 a fund that does 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 Manager will consider, on an ongoing basis, a number of factors
including the likelihood that the issuing municipality will discontinue
appropriating funding for the leased property.
Certain provisions in the Internal Revenue Code of 1986, as amended (the
"Code"), relating to the issuance of Municipal Obligations may reduce the volume
of Municipal Obligations qualifying for Federal tax exemption. One effect of
these provisions could be to increase the cost of the Municipal Obligations
available for purchase by the Fund and thus reduce available yield. Shareholders
should consult their tax advisers concerning the effect of these provisions on
an investment in 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 Fund
shareholders, the Fund would reevaluate its investment objective and policies
and submit possible changes in the Fund's structure to shareholders for their
consideration. If legislation were enacted that would treat a type of Municipal
Obligation as taxable, the Funds would treat such security as a permissible
Taxable Investment within the applicable limits set forth herein.
Investing in New York Municipal Obligations. (All Funds) Since each Fund
is concentrated in securities issued by New York or entities within New York, an
investment in a Fund may involve greater risk than investments in certain other
types of funds. You should consider carefully the special risks inherent in the
Funds' investment in New York Municipal Obligations. You should review the
information in "Appendix A" which provides a brief summary of special investment
considerations and risk factors relating to investing in New York Municipal
Obligations.
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 may invest up to 20% of the value of its net
assets in higher yielding (and, therefore, higher risk) debt securities rated
below investment grade by the Rating Agencies (commonly known as junk bonds).
They may be subject to certain risks with respect to the issuing entity and to
greater market fluctuations than certain lower yielding, higher rated Municipal
Obligations. See "Appendix B" for a general description of the Rating Agencies'
ratings of Municipal Obligations. Although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the market
value risk of these bonds. Each Fund will rely on the Manager's judgment,
analysis and experience in evaluating the creditworthiness of an issuer.
You should be aware that the market values of many of these bonds tend to
be more sensitive to economic conditions than are higher rated securities. These
bonds generally are considered by the Rating Agencies to be, on balance,
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation and generally will
involve more credit risk than securities in the higher rating categories.
Because there is no established retail secondary market for many of these
securities, 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. An
economic recession could adversely affect the ability of the issuers of lower
rated bonds to repay principal and pay interest thereon which would increase the
incidence of default of such securities. It is likely that any economic
recession also would disrupt severely the market for such securities and may
have an adverse impact on the value of such securities.
Each of these Funds 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 any person concerning the acquisition of such
securities, and the Manager will review carefully the credit and other
characteristics pertinent to such new issues.
The credit risk factors pertaining to lower rated securities also apply to
lower rated zero coupon bonds and pay-in-kind bonds. Zero coupon bonds and
pay-in-kind 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
"Zero Coupon Securities" below and "Dividends, Distributions and Taxes."
Zero Coupon Securities. (Longer Term Funds) Each of these Funds 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, the Fund may be required to distribute such
income accrued with respect to these securities and may have to dispose of
portfolio securities under disadvantageous circumstances in order to generate
cash to satisfy these distribution requirements.
Simultaneous Investments. (All Funds) Investment decisions for each Fund
are made independently from those of other investment companies advised by the
Manager. If, however, such other investment companies desire to invest in, or
dispose of, the same securities as a Fund, available investments or
opportunities for sales will be allocated equitably to each investment company.
In some cases, this procedure may adversely affect the size of the position
obtained for or disposed of by the Fund or the price paid or received by the
Fund.
Investment Restrictions
Money Market Fund. The Fund's investment objective is a fundamental
policy, which cannot be changed without approval by the holders of a majority
(as defined in the 1940 Act) of the Fund's outstanding voting shares. In
addition, the Fund has adopted investment restrictions numbered 1 through 9 as
fundamental policies. Investment restrictions numbered 10 and 11 are not
fundamental policies and may be changed by vote of a majority of the Fund's
Board members at any time. The 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's investment
objective is a fundamental policy, which cannot be changed without approval by
the holders of a majority (as defined in the 1940 Act) of the Fund's outstanding
voting shares. In addition, each of these Funds has adopted investment
restrictions numbered 1 through 7 as fundamental policies. Investment
restrictions numbered 8 through 12 are not fundamental policies and may be
changed, as to a Fund, by vote of a majority of such Fund's Board members at any
time. Neither of these Funds 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.
MANAGEMENT OF THE FUNDS
Each Fund's Board is responsible for the management and supervision of the
Fund. The Board approves all significant agreements between the Fund and those
companies that furnish services to the Fund. These companies are as follows:
The Dreyfus Corporation..............Investment Adviser
Dreyfus Service Corporation..........Distributor
Dreyfus Transfer, Inc................Transfer Agent
The Bank of New York.................Custodian
Board members and officers of each Fund, together with information as to
their principal business occupations during at least the last five years, are
shown below.
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 also is a
director of The Muscular Dystrophy Association, HealthPlan Services
Corporation, a provider of marketing, administrative and risk management
services to health and other benefit programs, Carlyle Industries, Inc.
(formerly, Belding Heminway Company, Inc.), a button packager and
distributor, Century Business Services, Inc., a provider of various
outsourcing functions for small and medium size companies, and
QuickCAT.com, Inc., a private company engaged in the development of high
speed movement, routing, storage, and encryption of data across all modes
of data transport. For more than five years prior to January 1995, he was
President, a director and, until August 1994, Chief Operating Officer of
the Manager and Executive Vice President and a director of the
Distributor. From August 1994 to December 31, 1994, he was a director of
Mellon Financial Corporation. He is 56 years old and his address is 200
Park Avenue, New York, New York 10166.
DAVID W. BURKE, Board Member. Board member of various funds in the Dreyfus
Family of Funds. Chairman of the Broadcasting Board of Governors, an
independent board within the United States Information Agency, from August
1994 to November 1998. From August 1994 to December 1994, 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 64 years old and his address
is Box 654, Eastham, Massachusetts 02642.
SAMUEL CHASE, Board Member. Retired. From 1982 to 1996, Mr. Chase was
------------
President of Samuel Chase & Company, Ltd., an economic consulting
firm. He is 68 years old and his address is 10380 Springhill Road,
Belgrade, Montana 59714.
GORDON J. DAVIS, Board Member. Since October 1994, 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 59 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 58 years old
and her address is 1325 Avenue of the Americas, 33rd 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 73 years old and his
address is 400 Atlantic Avenue, Boston, Massachusetts 02110.
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 49 years old and his address is 18 East 64th Street,
Suite 3D, New York, New York 10021.
Each Fund has a standing nominating committee comprised of its Board
members who are not "interested persons" of the Fund, as defined in the 1940
Act. The function of the nominating committee is to select and nominate all
candidates who are not "interested persons" of the Fund for election to the
Fund's Board.
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, 2000,
and by all funds in the Dreyfus Family of Funds for which such person was a
Board member (the number of which is set forth in parenthesis next to each Board
member's total compensation)* for the year ended December 31, 1999, was as
follows:
Total
Compensation
From Funds
and Fund
Name of Board Complex
Member Paid to
Aggregate Compensation From Fund** Board Member
---------------- ---------------------------------- ------------
Money Interm.Bond Bond Fund
Market Fund Fund
Joseph S. $3,438 $6,250 $8,750 $642,177(189)
DiMartino
David W. Burke $2,750 $5,000 $7,000 $228,500(62)
Samuel Chase $2,500 $4,500 $6,500 $53,500 (12)
Gordon J. Davis $2,750 $5,000 $7,000 $89,625 (29)
Joni Evans $2,750 $5,000 $7,000 $42,250 (12)
Arnold S. Hiatt $2,500 $4,500 $6,500 $45,000 (12)
Burton N. Wallack $2,750 $5,000 $7,000 $49,750 (12)
---------------------
* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Funds, for which the Board
member serves.
** Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $986, $1,430 and $4,722 for the Money Market Fund,
Intermediate Bond Fund and Bond Fund, respectively, for all Board members
as a group.
Officers of the Funds
STEPHEN E. CANTER, President. President, Chief Operating Officer, Chief
---------
Investment Officer and a director of the Manager, and an officer of
other investment companies advised or administered by the Manager.
Mr. Canter also is a Director or Executive Committee Member of
other investment management subsidiaries of Mellon Financial
Corporation, each of which is an affiliate of the Manager. He is
54 years old.
MARK N. JACOBS, Vice President. Vice President, Secretary and General
--------------
Counsel of the Manager, and an officer of other investment
companies advised or administered by the Manager. He is 53 years
old.
JOSEPH CONNOLLY, Vice President and Treasurer. Director - Mutual Fund Accounting
of the Manager, and an officer of other investment companies advised or
administered by the Manager. He is 42 years old.
JOHN B. HAMMALIAN, Secretary. Associate General Counsel of the Manager,
---------
and an officer of other investment companies advised or
administered by the Manager. He is 37 years old.
STEVEN F. NEWMAN, Assistant Secretary. Associate General Counsel and
-------------------
Assistant Secretary of the Manager, and an officer of other
investment companies advised or administered by the Manager. He is
50 years old.
MICHAEL A. ROSENBERG, Assistant Secretary. Associate General Counsel of
-------------------
the Manager, and an officer of other investment companies advised
or administered by the Manager. He is 40 years old.
MICHAEL CONDON, Assistant Treasurer (Money Market Fund only). Senior Treasury
Manager of the Manager, and an officer of other investment companies
advised and administered by the Manager. He is 38 years old.
GREGORY S. GRUBER, Assistant Treasurer (Longer Term Funds only). Senior
--------------------------------------------
Accounting Manager - Municipal Bond Funds of the Manager, and an
officer of other investment companies advised and administered by
the Manager. He is 40 years old.
The address of each officer of the Fund is 200 Park Avenue, New York, New
York 10166.
Each Fund's Board members and officers, as a group, owned less than 1% of
such Fund's shares outstanding as of August 31, 2000.
The following shareholder is known by the Intermediate Bond Fund to own of
record 5% or more of the Intermediate Bond Fund's shares of beneficial interest
outstanding on August 31, 2000: Charles Schwab & Co Inc, Reinvest Account, 101
Montgomery Street, San Francisco, CA 94104-4122, 9.96%.
MANAGEMENT ARRANGEMENTS
Investment Adviser. The Manager is a wholly-owned subsidiary of Mellon
Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation
("Mellon"). Mellon is a global multibank financial 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 largest bank holding companies in the United States
based on total assets.
The Manager provides management services pursuant to separate Management
Agreements (respectively, the "Agreement") between each Fund and the Manager. As
to each Fund, the Agreement is subject to annual approval by (i) the Fund's
Board, or (ii) vote of a majority (as defined in the 1940 Act) of the 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.
As to each Fund, the Agreement is terminable without penalty, on 60 days'
notice, by the Fund's Board or by vote of the holders of a majority of 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: Christopher M. Condron, Chairman of the Board and Chief
Executive Officer; Stephen E. Canter, President, Chief Operating Officer,
Chief Investment Officer and a director; Thomas F. Eggers, Vice
Chairman--Institutional and a director; Lawrence S. Kash, Vice Chairman;
J. David Officer, Vice Chairman and a director; Ronald P. O'Hanley III,
Vice Chairman; William T. Sandalls, Jr., Executive Vice President;
Stephen R. Byers, Senior Vice President; Patrice M. Kozlowski, Senior
Vice President--Corporate Communications; Mark N. Jacobs, Vice President,
General Counsel and Secretary; Diane P. Durnin, Vice President--Product
Development; Mary Beth Leibig, Vice President--Human Resources; Ray Van
Cott, Vice President--Information Systems; Theodore A. Schachar, Vice
President--Tax; Wendy Strutt, Vice President; William H. Maresca,
Controller; James Bitetto, Assistant Secretary; Steven F. Newman,
Assistant Secretary; and Mandell L. Berman, Burton C. Borgelt, Steven G.
Elliot, Martin G. McGuinn, Richard W. Sabo and Richard F. Syron,
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 J. Gaylor, Joseph Irace,
Colleen Meehan, W. Michael Petty, Scott Sprauer, Samuel J. Weinstock and Monica
S. Wieboldt. The Manager also maintains a research department with a
professional staff of portfolio managers and securities analysts who provide
research services for each Fund and for other funds advised by the Manager.
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."
The Manager's Code of Ethics subjects its employees' personal securities
transactions to various restrictions to ensure that such trading does not
disadvantage any fund advised by the Manager. In that regard, portfolio managers
and other investment personnel of the Manager must preclear and report their
personal securities transactions and holdings, which are reviewed for compliance
with the Code of Ethics and are also subject to the oversight of Mellon's
Investment Ethics Committee. Portfolio managers and other investment personnel
of the Manager who comply with the preclearance and disclosure procedures of the
Code of Ethics and the requirements of the Committee may be permitted to
purchase, sell or hold securities which also may be or are held in fund(s) they
manage or for which they otherwise provide investment advice.
The Manager maintains office facilities on behalf of each Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager may pay the Distributor for shareholder
services from the Manager's own assets, including past profits but not including
the management fee paid by the Fund. The Distributor may use part or all of such
payments to pay Service Agents (as defined below) in respect of these services.
The Manager also may make such advertising and promotional expenditures, using
its own resources, as it from time to time deems appropriate.
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 0.50%
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 0.60% 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. For the last three
fiscal years of the
Funds, the management fees payable by each Fund, the amounts waived by the
Manager and the net fee paid by the Fund were as follows:
<TABLE>
Management Fee Payable Reduction Fee Net Fee Paid
Name of Fund 1998 1999 2000 1998 1999 2000 1998 1999 2000
------------ ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market Fund $1,470,427 $1,476,899 $1,429,828 N/A N/A N/A $1,470,427 $1,476,899 $1,429,828
Intermediate Bond Fund $2,175,985 $2,232,576 $1,972,728 $547,047 $538,882 $508,999 $1,628,938 $1,693,694 $1,463,729
Bond Fund $10,080,981 $9,906,017 $8,808,820 $78,731 $90,536 $724,769 $10,002,250 $9,815,481 $8,084,051
</TABLE>
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 the Fund's net assets increase.
Distributor. The Distributor, a wholly-owned subsidiary of Manager located
at 200 Park Avenue, New York, New York 10166, serves as each Fund's distributor
on a best efforts basis pursuant to an agreement with the Fund which is
renewable annually.
Transfer and Dividend Disbursing Agent and Custodian. Dreyfus Transfer,
Inc. (the "Transfer Agent"), a wholly-owned subsidiary of the Manager, P.O. Box
9671, Providence, Rhode Island 02940-9671, is each Fund's transfer and dividend
disbursing agent. Under a separate 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 Fund during the
month, and is reimbursed for certain out-of-pocket expenses.
The Bank of New York (the "Custodian"), 100 Church Street, New York, New
York 10286, is each Fund's custodian. The Custodian has no part in determining
the investment policies of the Funds or which securities are to be purchased or
sold by the Funds. Under a separate custody agreement with each Fund, the
Custodian holds the Fund's securities and keeps all necessary accounts and
records. For its custody services, the Custodian receives a monthly fee based on
the market value of the Fund's assets held in custody and receives certain
securities transactions charges.
HOW TO BUY SHARES
General. 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 in each Fund is $2,500, or $1,000 if you
are a client of a Service Agent which maintains an omnibus account in the Fund
and has made an aggregate minimum initial purchase for its customers of $2,500.
Subsequent investments must be at least $100. The initial investment must be
accompanied by the Account Application. For full-time or part-time employees of
the Manager or any of its affiliates or subsidiaries, directors of the Manager,
Board members of a fund advised by the Manager, including members of a Fund's
Board, or the spouse or minor child of any of the foregoing, the minimum initial
investment is $1,000. For full-time or part-time employees of the Manager or any
of its affiliates or subsidiaries who elect to have a portion of their pay
directly deposited into their Fund accounts, the minimum initial investment is
$50. Each Fund reserves the right to vary the initial and subsequent investment
minimum requirements at any time.
Fund shares also are offered without regard to the minimum initial
investment requirements through Dreyfus-Automatic Asset Builder(R), Dreyfus
Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan pursuant to
the Dreyfus Step Program described under "Shareholder Services." These services
enable you to make regularly scheduled investments and may provide you with a
convenient way to invest for long-term financial goals. You should be aware,
however, that periodic investment plans do not guarantee a profit and will not
protect an investor against loss in a declining market.
Management understands that some Service Agents may impose certain
conditions on their clients which are different from those described in the
Funds' Prospectus and this Statement of Additional Information, and, to the
extent permitted by applicable regulatory authority, may charge their clients
direct fees. You should consult your Service Agent in this regard.
Shares 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 or
other entity authorized to receive orders on behalf of the Fund. 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."
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 the 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 each Longer Term Fund are sold on a continuous basis at the net
asset value per share next determined after an order in proper form is received
by the Transfer Agent or other entity authorized to receive orders on behalf of
the Fund. Each Longer Term Fund's net asset value per share is determined as of
the close of trading on the floor of the New York Stock Exchange (currently 4:00
p.m., New York time) on each day the New York Stock Exchange is open for
business. For purposes of computing net asset value per share 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 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 the Fund's Board and are valued at fair value as determined
by the pricing service. The pricing service's procedures are reviewed under the
general supervision of the Fund's Board. For further information regarding the
methods employed in valuing each Longer Term Fund's investments, see
"Determination of Net Asset Value."
Using Federal Funds. The following information is applicable only to
shares of the Money Market Fund. The Transfer Agent or the Fund may attempt to
notify you 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 you
are a customer of a Selected Dealer and your order to purchase Fund shares is
paid for other than in Federal Funds, the Selected Dealer, acting on your
behalf, will complete the conversion into, or itself advance, Federal Funds
generally on the business day following receipt of your order. The order is
effective only when so converted and received by the Transfer Agent. An order
for the purchase of Fund shares placed by you with sufficient Federal Funds or
cash balance in your brokerage account with a Selected Dealer will become
effective on the day that the order, including Federal Funds, is received by the
Transfer Agent.
Dreyfus TeleTransfer Privilege. (All Funds) You may purchase shares by
telephone if you have checked the appropriate box and supplied the necessary
information on the Account Application or have filed a Shareholder Services Form
with the Transfer Agent. The proceeds will be transferred between the bank
account designated in one of these documents and your Fund account. Only a bank
account maintained in a domestic financial institution which is an Automated
Clearing House ("ACH") member may be so designated.
Dreyfus TeleTransfer purchase orders may be made at any time. Purchase
orders received by 4:00 p.m., New York time, on any day the Transfer Agent and
the New York Stock Exchange are open for business will be credited to the
shareholder's Fund account on the next bank business day following such purchase
order. Purchase orders made after 4:00 p.m., New York time, on any day the
Transfer Agent and the New York Stock Exchange are open for business or orders
made on Saturday, Sunday or any Fund holiday (e.g., when the New York Stock
Exchange is not open for business) will be credited to the shareholder's Fund
account the second bank business day following such purchase order. To qualify
to use the Dreyfus TeleTransfer Privilege, the initial payment for purchase of
Fund shares must be drawn on, and redemption proceeds paid to, the same bank and
account as are designated on the Account Application or Shareholder Services
Form on file. If the proceeds of a particular redemption are to be wired to an
account at any other bank, the request must be in writing and
signature-guaranteed. See "How to Redeem Shares--Dreyfus TeleTransfer
Privilege."
Reopening an Account. You may reopen an account with a minimum investment
of $100 without filing a new Account Application during the calendar year the
account is closed or during the following calendar year, provided the
information on the old Account Application is still applicable.
SERVICE PLAN 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 Fund's
Board has adopted such a plan (the "Service Plan"), pursuant to which the Fund
pays the Distributor for distributing the Fund's shares, advertising and
marketing relating to the Fund and servicing shareholder accounts ("Servicing"),
at an aggregate annual rate of 0.25% of the value of the Fund's average daily
net assets. The Fund's Board believes that there is a reasonable likelihood that
the Service Plan adopted will benefit the Fund and its shareholders. The
Distributor may pay one or more Service Agents a fee in respect of Fund shares
owned by shareholders with whom the Service Agent has a Servicing relationship
or for whom the Service Agent is the dealer or holder of record. The Distributor
determines the amount, if any, to be paid to Service Agents under the Service
Plan and the basis on which such payments are made. The fees payable under the
Service Plan are payable without regard to actual expenses incurred.
The 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 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 Fund the greater of $100,000 or .005 of 1% of
the value of its average daily net assets for such fiscal year.
A quarterly report of the amounts expended under the Service Plan, and the
purposes for which such expenditures were incurred, must be made to the Fund's
Board for its review. In addition, the Service Plan provides that it may not be
amended to increase materially the costs which the Fund may bear for
distribution pursuant to the Service Plan without shareholder approval and that
other material amendments of the Service Plan must be approved by the Board, and
by the Board members who are not "interested persons" (as defined in the 1940
Act) of the Fund or the Manager and have no direct or indirect financial
interest in the operation of the Service Plan or in the related service
agreements, by vote cast in person at a meeting called for the purpose of
considering such amendments. The Service Plan and the related service agreements
are subject to annual approval by such vote of the Board members cast in person
at a meeting called for the purpose of voting on the Service Plan.
The Service Plan is terminable at any time by vote of a majority of the 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 15 days' notice by either party to such
service agreement. A service agreement will terminate automatically in the event
of its assignment (as defined in the 1940 Act).
Under the Plan, for the fiscal year ended May 31, 2000, the Fund paid a
total amount of $824,723, of which (a) $52,933 was paid to Premier Mutual Fund
Services, Inc., the Fund's distributor until March 21, 2000, for payments made
to Service Agents for distributing Fund shares and Servicing, (b) $769,037 was
paid to the Distributor and the Manager for advertising and marketing Fund
shares and Servicing, and (c) $2,753 was paid for printing the Fund's
prospectuses and statement of additional information, as well as implementing
and operating the Service Plan.
Shareholder Services Plans. (Money Market Fund and Bond Fund only) Each of
these Funds has adopted a separate Shareholder Services Plan, pursuant to which
the Fund reimburses the Distributor an amount not to exceed an annual rate of
0.25% of the value of the Fund's average daily net assets 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. 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, 2000, the Money Market Fund paid
$184,758, and the Bond Fund paid $1,947,382, pursuant to the Fund's Shareholder
Services Plan.
HOW TO REDEEM SHARES
General. The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. However, if you have purchased Fund shares by check, by Dreyfus
TeleTransfer Privilege or through Dreyfus-Automatic Asset Builder(R) and
subsequently submit a written redemption request to the Transfer Agent, the Fund
may delay sending the redemption proceeds (or delay the redemption of such
shares in the case of the Money Market Fund) for up to eight business days after
the purchase of such shares. In addition, the Fund will not honor Checks under
the Checkwriting Privilege, and will reject requests to redeem shares by wire or
telephone or pursuant to the Dreyfus TeleTransfer Privilege, for a period of up
to eight business days after receipt by the Transfer Agent of the purchase
check, the Dreyfus TeleTransfer purchase or the Dreyfus-Automatic Asset
Builder(R) 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. Fund shares may not be redeemed until the Transfer Agent has
received your Account Application.
Redemption Fee. (Longer Term Funds only) The Intermediate Bond Fund and
Bond Fund will deduct a redemption fee equal to 1% and 0.10%, respectively, of
the net asset value of Fund shares redeemed (including redemptions through the
use of the Fund Exchanges service) less than 30 days following the issuance of
such shares. The redemption fee will be deducted from the redemption proceeds
and retained by the Fund. For the fiscal year ended May 31, 2000, the Bond Fund
retained $4,739 and the Intermediate Bond Fund retained $742 in redemption fees.
No redemption fee will be charged on the redemption or exchange of shares
(1) through the Fund's Checkwriting Privilege, Automatic Withdrawal Plan or
Dreyfus Auto-Exchange Privilege, (2) through accounts that are reflected on the
records of the Transfer Agent as omnibus accounts approved by the Distributor,
(3) through accounts established by Service Agents approved by the Distributor
that utilize the National Securities Clearing Corporation's networking system,
or (4) acquired through the reinvestment of dividends or distributions. The
redemption fee may be waived, modified or terminated at any time, or from time
to time.
Checkwriting Privilege. (All Funds) Each Fund provides redemption checks
("Checks") automatically upon opening an account, unless you specifically refuse
the Checkwriting Privilege by checking the applicable "No" box on the Account
Application. The Checkwriting Privilege may be established for an existing
account by a separate signed Shareholder Services Form. Checks will be sent only
to the registered owner(s) of the account and only to the address of record. The
Account Application or Shareholder Services Form must be manually signed by the
registered owner(s). Checks are drawn on your Fund account and may be made
payable to the order of any person in an 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 an account in a
Longer Term Fund. When a Check is presented to the Transfer Agent for payment,
the Transfer Agent, as your agent, will cause the Fund to redeem a sufficient
number of 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 you. You 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.
You should date your Checks with the current date when you write them.
Please do not postdate your Checks. If you do, the Transfer Agent will honor,
upon presentment, even if presented before the date of the check, all postdated
Checks which are dated within six months of presentment for payment, if they are
otherwise in good order.
The Transfer Agent will impose a fee for stopping payment of a Check upon
your request or if the Transfer Agent cannot honor a Check due to insufficient
funds or other valid reason. If the amount of the Check is greater than the
value of the shares in your account, the Check will be returned marked
insufficient funds. Checks should not be used to close an account. 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
redemptions. Any Check written on a Longer Term Fund account which has become
subject to backup withholding on redemptions will not be honored by the Transfer
Agent.
Wire Redemption Privilege. (All Funds) By using this Privilege, you
authorize the Transfer Agent to act on wire, telephone or letter redemption
instructions from any person representing himself or herself to be you or a
representative of your 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 you on the Account Application or the
Shareholder Services Form, or to a correspondent bank if your bank is not a
member of the Federal Reserve System. Fees ordinarily are imposed by such bank
and borne by the investor. Immediate notification by the correspondent bank to
your bank is necessary to avoid a delay in crediting the funds to your bank
account.
If you have access to telegraphic equipment, you may wire redemption
requests to the Transfer Agent by employing the following transmittal code which
may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
If you do not have direct access to telegraphic equipment, you may have
the wire transmitted by contacting a TRT Cables operator at 1-800-654-7171, toll
free. You should advise the operator that the above transmittal code must be
used and should also inform the operator of the Transfer Agent's answer back
sign.
To change the commercial bank or account designated to receive redemption
proceeds, a written request must be sent to the Transfer Agent. This request
must be signed by each shareholder, with each signature guaranteed as described
below under "Share Certificates; Signatures."
Dreyfus TeleTransfer Privilege. (All Funds) You may request by telephone
that redemption proceeds be transferred between your Fund account and your bank
account. Only a bank account maintained in a domestic financial institution
which is an ACH member may be designated. Redemption proceeds will be on deposit
in your account at an ACH member bank ordinarily two business days after receipt
of the redemption request. Holders of jointly registered Fund or bank accounts
may redeem through the Dreyfus TeleTransfer Privilege for transfer to their bank
account not more than $500,000 within any 30-day period. You should be aware
that if you have selected the Dreyfus TeleTransfer Privilege, any request for a
wire redemption will be effected as a Dreyfus TeleTransfer transaction through
the ACH system unless more prompt transmittal specifically is requested. See
"How to Buy Shares--Dreyfus TeleTransfer Privilege."
Redemption Through a Selected Dealer. (Intermediate Bond Fund only) 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.
Share Certificates; Signatures. (All Funds) Any certificates representing
Fund shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including each
holder of a joint account, and each signature must be guaranteed. Signatures on
endorsed certificates submitted for redemption also must be guaranteed. The
Transfer Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from domestic
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program ("STAMP"), and the
Stock Exchanges Medallion Program. Guarantees must be signed by an authorized
signatory of the guarantor, and "Signature-Guaranteed" must appear with the
signature. The Transfer Agent may request additional documentation from
corporations, executors, administrators, trustees or guardians, and may accept
other suitable verification arrangements from foreign investors, such as
consular verification. For more information with respect to
signature-guarantees, please call one of the telephone numbers listed on the
cover.
Redemption Commitment. (All Funds) 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,
each Fund's Board reserves the right to make payments in whole or in part in
securities or other assets of the Fund in case of an emergency or any time a
cash distribution would impair the liquidity of the Fund to the detriment of the
existing shareholders. In such event, the securities would be valued in the same
manner as the Fund's portfolio is valued. If the recipient sells such
securities, brokerage charges might be incurred.
Suspension of Redemptions. (All Funds) The right of redemption may be
suspended or the date of payment postponed (a) during any period when the New
York Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of a 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 a
Fund's shareholders.
SHAREHOLDER SERVICES
Fund Exchanges. (All Funds) You may purchase, in exchange for shares of a
Fund, shares of certain other funds managed or administered by the Manager or
Founders Asset Management LLC ("Founders"), an affiliate of the Manager, to the
extent such shares are offered for sale in your state of residence. The
Intermediate Bond Fund and Bond Fund will deduct a redemption fee equal to 1%
and 0.10%, respectively, of the net asset value of Fund shares exchanged where
the exchange is made less than 30 days after the issuance of such shares. Shares
of other funds purchased by exchange will be purchased on the basis of relative
net asset value per share as follows:
A. Exchanges for shares of funds offered without a sales load
will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged for
shares of other funds sold with a sales load, and the applicable
sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged without
a sales load for shares of other funds sold without a sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load, and additional shares acquired through
reinvestment of dividends or distributions of any such funds
(collectively referred to herein as "Purchased Shares") may be
exchanged for shares of other funds sold with a sales load
(referred to herein as "Offered Shares"), but if the sales
load applicable to the Offered Shares exceeds the maximum
sales load that could have been imposed in connection with the
Purchased Shares (at the time the Purchased Shares were
acquired), without giving effect to any reduced loads, the
difference will be deducted.
To accomplish an exchange under item D above, you must notify the Transfer
Agent of your prior ownership of fund shares and your account number.
To request an exchange, you, or your Service Agent acting on your behalf,
must give exchange instructions to the Transfer Agent in writing or by
telephone. The ability to issue exchange instructions by telephone is given to
all Fund shareholders automatically, unless you check the applicable "No" box on
the Account Application, indicating that you specifically refuse this Privilege.
By using the Telephone Exchange Privilege, you authorize the Transfer Agent to
act on telephonic instructions (including over The Dreyfus Touch(R) automated
telephone system) from any person representing himself or herself to be you, or
a representative of your Service Agent, and reasonably believed by the Transfer
Agent to be genuine. Telephone exchanges may be subject to limitations as to the
amount involved or number of telephone exchanges permitted. Shares issued in
certificate form are not eligible for telephone exchanges. 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
shareholders a nominal administrative fee in accordance with rules promulgated
by the Securities and Exchange Commission.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made.
Dreyfus Auto-Exchange Privilege. (All Funds) Dreyfus Auto-Exchange
Privilege permits you to purchase, in exchange for shares of a Fund, shares of
another fund in the Dreyfus Family of Funds or a fund advised by Founders of
which you are a shareholder. This Privilege is available only for existing
accounts. Shares will be exchanged on the basis of relative net asset value as
described above under "Fund Exchanges." Enrollment in or modification or
cancellation of this Privilege is effective three business days following
notification by you. You will be notified if your account falls below the amount
designated to be exchanged under this Privilege. In this case, your account will
fall to zero unless additional investments are made in excess of the designated
amount prior to the next Auto-Exchange transaction. Shares held under IRA and
other retirement plans are eligible for this Privilege. Exchanges of IRA shares
may be made between IRA accounts 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 service or the Dreyfus
Auto-Exchange Privilege may be modified or terminated at any time by a Fund upon
notice to its shareholders.
Dreyfus-Automatic Asset Builder(R). (All Funds) Dreyfus-Automatic Asset
Builder permits you to purchase Fund shares (minimum of $100 and maximum of
$150,000 per transaction) at regular intervals selected by you. Fund shares are
purchased by transferring funds from the bank account designated by you.
Dreyfus Government Direct Deposit Privilege. (All Funds) Dreyfus
Government Direct Deposit Privilege enables you to purchase Fund shares (minimum
of $100 and maximum of $50,000 per transaction) by having Federal salary, Social
Security, or certain veterans', military or other payments from the U.S.
Government automatically deposited into your Fund account. You may deposit as
much of such payments as you elect.
Dreyfus Payroll Savings Plan. (All Funds) Dreyfus Payroll Savings Plan
permits you to purchase Fund shares (minimum of $100 per transaction)
automatically on a regular basis. Depending upon your employer's direct deposit
program, you may have part or all of your paycheck transferred to your existing
Dreyfus account electronically through the ACH system at each pay period. To
establish a Dreyfus Payroll Savings Plan account, you must file an authorization
form with your employer's payroll department. It is the sole responsibility of
your employer to arrange for transactions under the Dreyfus Payroll Savings
Plan.
Dreyfus Step Program. (All Funds) Dreyfus Step Program enables you to
purchase Fund shares without regard to the Fund's minimum initial investment
requirements through Dreyfus-Automatic Asset Builder(R), Dreyfus Government
Direct Deposit Privilege or Dreyfus Payroll Savings Plan. To establish a Dreyfus
Step Program account, you must supply the necessary information on the Account
Application and file the required authorization form(s) with the Transfer Agent.
For more information concerning this Program, or to request the necessary
authorization form(s), please call toll free 1-800-782-6620. You may terminate
your participation in this Program at any time by discontinuing your
participation in Dreyfus-Automatic Asset Builder, Dreyfus Government Direct
Deposit Privilege or Dreyfus Payroll Savings Plan, as the case may be, as
provided under the terms of such Privilege(s). Each Fund may modify or terminate
this Program at any time.
Dreyfus Dividend Options. (All Funds) Dreyfus Dividend Sweep allows you to
invest automatically your dividends or dividends and capital gain distributions,
if any, from a Fund in shares of another fund in the Dreyfus Family of Funds or
a fund advised by Founders of which you are a shareholder. Shares of other funds
purchased pursuant to this privilege will be purchased on the basis of relative
net asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested
without imposition of a sales load in shares of other funds
offered without a sales load.
B. Dividends and distributions paid by a fund which does not charge a
sales load may be invested in shares of other funds sold with a sales
load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund that charges a sales load
may be invested in shares of other funds sold with a sales load
(referred to herein as "Offered Shares"), but if the sales load
applicable to the Offered Shares exceeds the maximum sales load
charged by the fund from which dividends or distributions are being
swept (without giving effect to any reduced loads), the difference
will be deducted
D. Dividends and distributions paid by a fund may be invested in shares
of other funds that impose a contingent deferred sales charge
("CDSC") and the applicable CDSC, if any, will be imposed upon
redemption of such shares.
Dreyfus Dividend ACH permits you to transfer electronically dividends or
dividends and capital gain distributions, if any, from a Fund to a designated
bank account. Only an account maintained at a domestic financial institution
which is an ACH member may be so designated. Banks may charge a fee for this
service.
Automatic Withdrawal Plan. (All Funds) The Automatic Withdrawal Plan
permits you to request withdrawal of a specified dollar amount (minimum of $50)
on either a monthly or quarterly basis if you have a $5,000 minimum account.
Withdrawal payments are the proceeds from sales of Fund shares, not the yield on
the shares. If withdrawal payments exceed reinvested dividends and
distributions, your shares will be reduced and eventually may be depleted.
Automatic Withdrawal may be terminated at any time by you, the Fund or the
Transfer Agent. Shares for which certificates have been issued may not be
redeemed through the Automatic Withdrawal Plan.
DETERMINATION OF NET ASSET VALUE
Amortized Cost Pricing. The information contained in this section is
applicable only to the Money Market Fund. The valuation of the 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 Fund's Board has established, as a particular responsibility within
the overall duty of care owed to the Fund's investors, procedures reasonably
designed to stabilize the Fund's price per share as computed for the purpose of
purchases and redemptions at $1.00. Such procedures include review of the Fund's
portfolio holdings by the Board, at such intervals as it deems appropriate, to
determine whether the 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 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 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
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, Martin Luther King Jr. 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 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. 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 and may be selected based
upon their sales of shares of a Fund or other funds advised by the Manager or
its affiliates.
Research services furnished by brokers through which a Fund effects
securities transactions may be used by the Manager in advising other funds it
advises and, conversely, research services furnished to the Manager by brokers
in connection with other funds the Manager advises may be used by the Manager in
advising each Fund. Although it is not possible to place a dollar value on these
services, it is the opinion of the Manager that the receipt and study of such
services should not reduce the overall expenses of its research department.
DIVIDENDS, DISTRIBUTIONS AND TAXES
All Funds. Management believes that each Fund has qualified for the fiscal
year ended May 31, 2000 as a "regulated investment company" under the Code. Each
Fund intends to continue to so qualify if such qualification is in the best
interests of its shareholders. As a regulated investment company, the Fund will
pay no Federal income tax on net investment income and net realized capital
gains to the extent that such income and gains are distibuted to shareholders in
accordance with applicable provisions of the Code. To qualify as a regulated
investment company, the Fund must distribute at least 90% of its net income
(consisting of net investment income from tax exempt obligations and net
short-term capital gains) to its shareholders, and must meet certain asset
diversification and other requirements. If the Fund did not qualify as a
regulated investment company, it would be treated for tax purposes as an
ordinary corporation subject to Federal income tax. The term "regulated
investment company" does not imply the supervision of management or investment
practices or policies by any government agency.
Each Fund ordinarily declares dividends from its net investment income on
each day the New York Stock Exchange is open for business. Earnings for
Saturdays, Sundays and holidays are declared as dividends on the preceding
business day for the Money Market Fund and on the next business day for the
Longer Term Funds. 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 automatically are reinvested in additional
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.
If you elect to receive dividends and distributions in cash, and your
dividend or distribution check is returned to the Fund as undeliverable or
remains uncashed for six months, the Fund reserves the right to reinvest such
dividends or distributions and all future dividends and distributions payable to
you in additional Fund shares at net asset value. No interest will accrue on
amounts represented by uncashed distribution or redemption checks.
If, at the close of each quarter of its taxable year, at least 50% of the
value of a Fund's total assets consists of Federal tax exempt obligations, then
the Fund may designate and pay Federal exempt-interest dividends from interest
earned on all such tax exempt obligations. Such exempt-interest dividends may be
excluded by shareholders of the Fund from their gross income for Federal income
tax purposes. Dividends derived from Taxable Investments, together with
distributions from any net realized short-term securities gains, generally are
taxable as ordinary income for Federal income tax purposes whether or not
reinvested. Distributions from net realized long-term securities gains generally
are taxable as long-term capital gains to a shareholder who is a citizen or
resident of the United States, whether or not reinvested and regardless of the
length of time the shareholder has held his or her shares.
Longer Term Funds Only. 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. In addition, all or a
portion of the gain realized from engaging in "conversion transactions"
(generally including certain transactions designed to convert ordinary income
into capital gain) may be treated as ordinary income.
Gain or loss, if any, realized by the Fund from certain financial futures
and options transactions ("Section 1256 contracts") 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 Section 1256 contracts as well as from
closing transactions. In addition, any Section 1256 contracts 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 as described above.
Offsetting positions held by the Fund involving certain futures or forward
contracts or options transactions with respect to actively traded personal
property may be considered, for tax purposes, to constitute "straddles." To the
extent the straddle rules apply to positions established by the Fund, losses
realized by the Fund may be deferred to the extent of unrealized gain in the
offsetting position. In addition, short-term capital loss on straddle positions
may be recharacterized as long-term capital loss, and long-term capital gains on
straddle positions may be treated as short-term capital gains or ordinary
income. Certain of the straddle positions held by a Fund may constitute "mixed
straddles." The Fund may make one or more elections with respect to the
treatment of "mixed straddles," resulting in different tax consequences. In
certain circumstances, the provisions governing the tax treatment of straddles
override or modify certain of the provisions discussed above.
If a Fund either (1) holds an appreciated financial position with respect
to stock, certain debt obligations, or partnership interests ("appreciated
financial position") and then enters into a short sale, futures, forward, or
offsetting notional principal contract (collectively, a "Contract") respecting
the same or substantially identical property or (2) holds an appreciated
financial position that is a Contract and then acquires property that is the
same as, or substantially identical to, the underlying property, the Fund
generally will be taxed as if the appreciated financial position were sold at
its fair market value on the date the Fund enters into the financial position or
acquires the property, respectively.
Investment by the Funds in securities issued or acquired 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 by causing the Fund to recognize
income prior to the receipt of cash payments. For example, a Fund could be
required to take into account annually a portion of the discount (or deemed
discount) at which the 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
Money Market Fund. For the seven-day period ended May 31, 2000, the Fund's
yield was 3.54% and its effective yield was 3.60%. The 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 2000 Federal, New York State and New York City
personal income tax rate of 46.02%, the Fund's tax equivalent yield for the
seven-day period ended May 31, 2000 was 6.56%.
Longer Term Funds. The Intermediate Bond Fund's and Bond Fund's yields for
the 30-day period ended May 31, 2000 were 4.77% and 4.93%, respectively. These
yields reflect the waiver of a portion of the management fee and/or absorption
of certain expense by the Manager, without which the Intermediate Bond Fund's
and Bond Fund's 30-day yields for the period ended May 31, 2000 would have been
4.59% and 4.89%, respectively. 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 2000 Federal, New York State and New York City
personal income tax rate of 46.02%, the Intermediate Bond Fund's tax equivalent
yield for the 30-day period ended May 31, 2000 was 8.84%, and the Bond Fund's
tax equivalent yield for such period was 9.13%. Without the above-referenced
absorption by the Manager, the Intermediate Bond Fund's tax equivalent yield for
the 30-day period ended May 31, 2000 would have been 8.50% and the Bond Fund's
tax equivalent yield for the 30-day period ended May 31, 2000 would have been
9.06%.
The Intermediate Bond Fund's average annual total return for the one, five
and ten year periods ended May 31, 2000 was -0.89%, 4.30% and 6.14%,
respectively. The Bond Fund's average annual total return for the one, five and
ten year periods ended May 31, 2000 was -2.44%, 4.18% and 6.13%, respectively.
Had a portion of each Fund's management fee not been waived, the Fund's return
would have been lower. 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, 2000 was 119.93%. The Bond Fund's total
return for the period July 26, 1983 (commencement of operations) to May 31, 2000
was 245.26%. Had a portion of each Fund's management fee not been waived, the
Fund's return would have been lower. 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. You should remember that yield is a function of the type and quality of
the instruments in the portfolio, portfolio maturity and operating expenses.
Your principal in the Fund is not guaranteed. See "Determination of Net Asset
Value" for a discussion of the manner in which the Money Market 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.
Comparative performance information may be used from time to time in
advertising or marketing shares of the Funds, including data from CDA Investment
Technologies, Inc., Lipper Analytical Services, Inc., Bank Rate Monitor(TM),
IBC's Money Fund Report(TM), Moody's Bond Survey Bond Index, Lehman Brothers
Municipal Bond Indexes, Morningstar, Inc. and other industry publications.
INFORMATION ABOUT THE FUNDS
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.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for a Fund to hold annual meetings of shareholders. As a result, Fund
shareholders may not consider each year the election of Board members or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Fund to hold a special meeting
of shareholders for purposes of removing a Board member from office. Fund
shareholders may remove a Board member by the affirmative vote of a majority, in
the case of the Bond Fund, or two-thirds, in the case of the Money Market Fund
and Intermediate Bond Fund, of the Fund's outstanding voting shares. In
addition, the Board will call a meeting of shareholders for the purpose of
electing Board members if, at any time, less than a majority of the Board
members then holding office have been elected by shareholders.
The Money Market Fund and Intermediate Bond Fund are organized as
unincorporated business trusts under the laws of the Commonwealth of
Massachusetts. Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Money Market
Fund and Intermediate Bond Funds of which they are shareholders. However, each
Fund's Agreement and Declaration of Trust ("Trust Agreement") disclaims
shareholder liability for acts or obligations of the Fund and requires that
notice of such disclaimer be given in each agreement, obligation or instruments
entered into or executed by the Fund or a Trustee. The Trust Agreement provides
for indemnification from the Fund's property for all losses and expenses of any
shareholder held personally liable for the obligations of the Fund. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund itself would be unable
to meet its obligations, a possibility which management believes is remote. Upon
payment of any liability incurred by 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.
The following information applies to the Intermediate Bond Fund and Bond
Fund only. Each Fund is intended to be a long-term investment vehicle and is not
designed to provide investors with a means of speculating on short-term market
movements. A pattern of frequent purchases and exchanges can be disruptive to
efficient portfolio management and, consequently, can be detrimental to the
Fund's performance and its shareholders. Accordingly, if the Fund's management
determines that an investor is following a market-timing strategy or is
otherwise engaging in excessive trading, the Fund, with or without prior notice,
may temporarily or permanently terminate the availability of Fund Exchanges, or
reject in whole or part any purchase or exchange request, with respect to such
investor's account. Such investors also may be barred from purchasing other
funds in the Dreyfus Family of Funds. Generally, an investor who makes more than
four exchanges out of the Fund during any calendar year or who makes exchanges
that appear to coincide with a market-timing strategy may be deemed to be
engaged in excessive trading. Accounts under common ownership or control will be
considered as one account for purposes of determining a pattern of excessive
trading. In addition, the Fund may refuse or restrict purchase or exchange
requests by any person or group if, in the judgment of the Fund's management,
the Fund would be unable to invest the money effectively in accordance with its
investment objective and policies or could otherwise be adversely affected or if
the Fund receives or anticipates receiving simultaneous orders that may
significantly affect the Fund (e.g., amounts equal to 1% or more of the Fund's
total assets). If an exchange request is refused, the Fund will take no other
action with respect to the shares until it receives further instructions from
the investor. The Fund may delay forwarding redemption proceeds for up to seven
days if the investor redeeming shares is engaged in excessive trading or if the
amount of the redemption request otherwise would be disruptive to efficient
portfolio management or would adversely affect the Fund. Each Fund's policy on
excessive trading applies to investors who invest in the Fund directly or
through financial intermediaries, but does not apply to the Dreyfus
Auto-Exchange Privilege, to any automatic investment or withdrawal privilege
described herein, or to participants in employer-sponsored retirement plans.
During times of drastic economic or market conditions, the Intermediate
Bond Fund and Bond Fund may suspend Fund Exchanges temporarily without notice
and treat exchange requests based on their separate components -- redemption
orders with a simultaneous request to purchase the other fund's shares. In such
a case, the redemption request would be processed at the Fund's next determined
net asset value but the purchase order would be effective only at the net asset
value next determined after the fund being purchased receives the proceeds of
the redemption, which may result in the purchase being delayed.
Each Fund sends annual and semi-annual financial statements to all its
respective shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, 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 independent auditors of each Fund.
APPENDIX A
RISK FACTORS--INVESTING IN NEW YORK MUNICIPAL OBLIGATIONS
The following information is a summary of special factors affecting
investments in New York Municipal Obligations. It does not purport to be a
complete description and is based on information drawn from the Official
Statement issued by the State of New York (the "State") for its public bond
issue on August 24, 1999. While the Fund has not independently verified this
information, it has no reason to believe that such information is not correct in
all material respects.
The State's fiscal year begins on April 1st and ends on March 31st. On
March 31, 1999, the State adopted the debt service portion of the State budget
for the 1999-2000 fiscal year; four months later, on August 4, 1999, it enacted
the remainder of the budget. The Governor approved the budget as passed by the
Legislature. Prior to passing the budget in its entirety for the 1999-2000
fiscal year, the State enacted appropriations that permitted the State to
continue its operations.
Following enactment of the 1999-2000 budget, the State prepared a
Financial Plan for the 1999-2000 fiscal year (the "1999-2000 Financial Plan")
that sets forth projected receipts and disbursements based on the actions taken
by the Legislature. For fiscal year 1999-2000, General Fund disbursements,
including transfers to support capital projects, debt service and other funds,
are estimated at $37.36 billion, an increase of $868 million or 2.38 % over
1998-99. Projected spending under the 1999-2000 enacted budget is $215 million
above the Governor's Executive Budget recommendations. The increase in General
Fund spending is comprised of $1.1 billion in legislative additions to the
Executive Budget (primarily in education), offset by various actions, including
reestimates of required spending based on year-to-date results and the
identification of certain other resources that offset spending, such as $250
million from commencing the process of privatizing the Medical Malpractice
Insurance Association (MMIA), $250 million from the retention of the Debt
Reduction Reserve Fund within the General Fund and about $100 million in excess
fund balances. The MMIA was established in 1983 to provide excess liability
insurance to doctors and medical providers. Legislation enacted with the
1999-2000 budget initiates the process of MMIA privatization and transfers
excess fund balances to the State.
The 1999-2000 enacted budget provides for $831 million in new funding for
public schools, the largest year-to-year increase in State history. The budget
also enacts several new tax cuts valued at $375 million when fully phased in by
2003-04. None of the $1.82 billion cash surplus from 1998-99 is assumed to
support spending in 1999-2000, but instead is reserved to help offset the costs
of previously enacted tax cuts that take effect after 1999-2000.
The 1999-2000 Financial Plan projects a closing balance of $2.85 billion
in the General Fund. The balance is comprised of the $1.82 billion surplus from
1998-99 that has been set aside to finance already-enacted tax cuts, $473
million in the Tax Stabilization Reserve Fund (TSRF), $250 million in the Debt
Reduction Reserve Fund (DRRF), $107 million in the Contingency Reserve Fund
(CRF), and $200 million in the Community Projects Fund (CPF), which finances
legislative initiatives. The State expects to close fiscal year 1999-2000 with
cash balances in these funds at their highest levels ever.
Many complex political, social and economic forces influence the State's
economy and finances, which in turn may affect the State Financial Plan. These
forces may affect the State unpredictably from fiscal year to fiscal year and
are influenced by governments, institutions, and organizations that are not
subject to the State's control. The State Financial Plan also is based upon
forecasts of national and State economic activity. Economic forecasts frequently
have failed to predict accurately the timing and magnitude of changes in the
national and State economies. The Division of Budget (DOB) believes that its
projections of receipts and disbursements relating to the current State
Financial Plan, and the assumptions on which they are based, are reasonable.
Actual results, however, could differ materially and adversely from the
projections set forth below, and those projections may be changed materially and
adversely from time to time. See the section entitled "Special Considerations"
below for a discussion of risks and uncertainties faced by the State.
1999-2000 State Financial Plan
Four governmental fund types comprise the State Financial Plan: the
General Fund, the Special Revenue Funds, the Capital Projects Funds, and the
Debt Service Funds. The State's fund structure adheres to the accounting
standards of the Governmental Accounting Standards Board.
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. In the
State's 1999-2000 fiscal year, the General Fund (exclusive of transfers) is
expected to account for approximately 47.1 % of All Governmental Funds
disbursements and 69.3 % of total State Funds disbursements. General Fund moneys
also are transferred to other funds, primarily to support certain capital
projects and debt service payments in other fund types.
Total receipts and transfers from other funds are projected to be $39.31
billion in 1999-2000, an increase of $2.57 billion over 1998-99. Total General
Fund disbursements and transfers to other funds are projected to be $37.36
billion, an increase of $868 million over 1998-99.
Projected General Fund Receipts
Total General Fund receipts and transfers in 1999-2000 are projected to be
$39.31 billion, an increase of $2.57 billion from the $36.74 billion recorded in
1998-99. This total includes $35.93 billion in tax receipts, $1.36 billion in
miscellaneous receipts, and $2.02 billion in transfers from other funds. The
transfer of the $1.82 billion surplus recorded in 1998-99 to the 1999-2000
fiscal period has the effect of exaggerating the growth in State receipts from
year to year by depressing reported 1998-99 figures and inflating 1999-2000
projections.
The Personal Income Tax is imposed on the income of individuals, estates
and trusts and is based, with certain modifications, on federal definitions of
income and deductions. Net General Fund personal income tax collections are
projected to reach $22.95 billion in 1999-2000, well over half of all General
Fund receipts and nearly $2.87 billion above the reported 1998-99 collection
total. Much of this growth is associated with the $1.82 billion net impact of
the transfer of the surplus from 1998-99 to the current year as partially offset
by the diversion of an additional $661 million in income tax receipts to the
School Tax Relief (STAR) fund. The STAR program was created in 1997 as a
State-funded local property tax relief program funded through the use of
personal income tax receipts. Adjusted for these transactions, the growth in net
income tax receipts is roughly $1.8 billion, an increase of almost 9 %.
This growth is largely a function of two factors: (i) the 8 % growth in
income tax liability projected for 1999; and (ii) the impact of the 1998 tax
year settlement recorded early in the 1999-2000 fiscal year.
The most significant statutory change made this year provides for an
increase, phased-in over two years, in the earned income tax credit from 20% to
25% of the federal credit.
User taxes and fees are comprised of three-quarters of the State's 4%
sales and use tax, cigarette, alcoholic beverage, container, and auto rental
taxes, and a portion of the motor fuel excise levies. This category also
includes receipts from the motor vehicle registration fees and alcoholic
beverage license fees. Dedicated transportation funds outside of the General
Fund receive a portion of motor fuel tax and motor vehicle registration fees and
all of the highway use taxes.
Receipts from user taxes and fees are projected to total $7.35 billion, an
increase of $105 million from reported collections in the prior year. The sales
tax component of this category accounts for virtually all of the 1999-2000
growth. Growth in base sales tax yield, after adjusting for tax law and other
changes, is projected at 5.6%. Modest increases in motor fuel and auto rental
tax receipts over 1998-99 levels are also expected. However, receipts from other
user taxes and fees are estimated to decline by $177 million.
The yield of other excise taxes in this category, particularly the
cigarette and alcoholic beverage taxes, show long-term declining trends. General
Fund declines in 1999-2000 motor vehicle fee receipts, in contrast, reflect
statutory fee reductions and an increased amount of collections earmarked to the
Dedicated Highway and Bridge Trust Fund.
Significant statutory changes made in this category during the 1999-2000
legislative session include: delaying until March 1, 2000 the implementation of
the exemption from State sales tax of clothing and footwear priced under $110;
providing week-long sales tax exemptions in September 1999 and January 2000 for
clothing and footwear priced under $500; enactment of a variety of small sales
tax exemptions including certain equipment used in providing telecommunications
service for sale, property and services used in theatrical productions, computer
hardware used to design Internet web sites, and building materials used in
farming; a reduction in the beer tax rate; and an expanded exemption from the
alcoholic beverage tax for small brewers.
Business taxes include franchise taxes based generally on net income of
general business, bank and insurance corporations, as well as
gross-receipts-based taxes on utilities and gallonage-based petroleum business
taxes. Beginning in 1994, a 15% surcharge on these levies began to be phased out
and, for most taxpayers, there is no surcharge liability for taxable periods
ending in 1997 and thereafter.
Total business tax collections in 1999-2000 are now projected to be $4.63
billion, $230 million below results for the prior fiscal year. The
year-over-year decline in projected receipts in this category is largely
attributable to statutory changes. These include the first year of a scheduled
corporation franchise tax rate reduction, the alternative minimum tax rate
reduction, the fixed dollar minimum rate reduction, and the expansion of the
investment tax credit to financial service companies. Ongoing tax reductions
include the second year of the "Power for Jobs" utility tax credit program, the
gross receipts tax rate reduction, and scheduled additional diversion of General
Fund petroleum business and utility tax receipts to dedicated transportation
funds.
Legislation enacted this year affecting receipts in this category
includes: a phased reduction in the net income tax rate applicable to bank and
insurance companies from 9% to 7.5%; reforms to the corporation franchise
subsidiary capital tax; a further reduction in the alternative minimum tax rate
from 3% to 2.5%; doubling the economic development zone and zone equivalent area
wage tax credits; and providing further reforms to the apportionment of income
for the airline industry.
Other taxes include the estate and gift tax, the real property gains tax
and pari-mutuel taxes. Taxes in this category are now projected to total $1
billion, $137 million below last year's amount. The primary factors accounting
for most of the expected decline include: an adverse tax tribunal decision
resulting in significant refunds of the now repealed real property gains tax;
pari-mutuel tax reductions enacted with the 1999-2000 budget; and the effects of
the already enacted reductions in the estate and gift taxes.
Significant legislation passed with the 1999-2000 enacted budget affecting
these sources include both the extension of and an increase in certain temporary
tax reductions at the State's race tracks and conformity with new federal estate
tax provisions.
Miscellaneous receipts include investment income, abandoned property
receipts, medical provider assessments, minor federal grants, receipts from
public authorities, and certain other license and fee revenues. Miscellaneous
receipts are expected to total $1.36 billion, down $142 million from the prior
year amount. This reflects the loss of non-recurring receipts received in
1998-99 and the growing effects of the phase-out of the medical provider
assessments.
Transfers from other funds to the General Fund consist primarily of tax
revenues in excess of debt service requirements, including the 1% sales tax used
to support payments to Local Government Assistance Corporation (LGAC).
Transfers from other funds are expected to total $2.02 billion, or $99
million more than total receipts from this category during 1998-99. Total
transfers of sales taxes in excess of LGAC debt service requirements are
expected to increase by approximately $93 million, while transfers from all
other funds are expected to increase by $6 million.
Projected General Fund Disbursements
General Fund disbursements, including transfers to support capital
projects, debt service and other funds, are estimated at $37.36 billion in
1999-2000, an increase of $868 million or 2.38% over 1998-99.
Following the pattern of the last two fiscal years, education programs
receive the largest share of new funding contained in the 1999-2000 Financial
Plan. School aid is expected to grow by $831 million or 8.58% over 1998-99
levels (on a State fiscal year basis). Outside of education, the largest growth
in spending is for State Operations ($207 million, including $100 million
reserved for possible collective bargaining costs); Debt Service ($183 million);
and mental hygiene programs, including funding for a cost of living increase for
care providers ($114 million). These increases were offset, in part, by spending
reductions or actions in health and social welfare ($280 million), and in
general State charges ($222 million).
Grants to Local Governments is the largest category of General Fund
disbursements and includes financial assistance to local governments and
not-for-profit corporations, as well as entitlement benefits to individuals. The
largest areas of spending in this category are for aid to elementary and
secondary schools (41%) and for the State's share of Medicaid payments to
providers (22%). Grants to Local Governments are projected at $25.60 billion in
1999-2000, an increase of $910 million or 3.68% over 1998-99.
Under the 1999-2000 enacted budget, General Fund spending on school aid is
projected at $10.52 billion on a State fiscal year basis, an increase of $831
million from the prior year. The budget provides additional funding for
operating aid, building aid, and several other targeted aid programs. It also
funds the balance of aid payable for the 1998-99 school year that is due
primarily in the first quarter of the 1999-2000 fiscal year. For all other
educational programs, disbursements are projected to grow by $78 million to
$2.99 billion.
Spending for Medicaid in 1999-2000 is projected to total $5.54 billion,
essentially unchanged from 1998-99, due in part to the use of $145 million in
other available funds that lowers disbursements in this area. Disbursements for
all other health and social welfare programs are projected to total $2.70
billion, a decrease of $252 million. Lower welfare spending, driven by State and
federal reforms and a robust economy, accounts for most of the decline.
The remaining disbursements primarily support community-based mental
hygiene programs, local transportation programs, and revenue sharing payments to
local governments. Revenue sharing and other general purpose aid to local
governments is projected at $825 million.
State operations pays for the costs of operating the Executive,
Legislative, and Judicial branches of government, including the prison system,
mental hygiene institutions, and the State University system (SUNY). Personal
Service costs account for approximately 73% of spending in this category.
Spending in State operations is projected to increase by $207 million or
3.1% over the prior year. The growth reflects $100 million in projected spending
for new collective bargaining agreements that the State expects to be ratified
in the current year. Funding for this expense will come from the Collective
Bargaining Reserve. The annualized costs of current collective bargaining
agreements, growth in the Legislative and Judiciary budgets, and staffing costs
for the State's Year 2000 compliance programs also contribute to the
year-to-year growth in spending. The State's overall workforce is expected to
remain stable at around 191,300 employees.
General State charges account for the costs of providing fringe benefits
to State employees and retirees of the Executive, Legislature, and Judiciary.
These payments, many of which are mandated by statute and collective bargaining
agreements, include employer contributions for pensions, social security, health
insurance, workers' compensation, and unemployment insurance. General State
charges also cover State payments-in-lieu-of-taxes to local governments for
certain State-owned lands, and the costs of defending lawsuits against the State
and its public officers.
Disbursements in this category are estimated at $2.04 billion, a decrease
of $222 million from the prior year. The change primarily reflects projected
growth of $27 million in a variety of programs offset by the use of proceeds
from the privatization of the MMIA, which is expected to offset certain General
Fund fringe benefit costs over the next two fiscal years by approximately $250
million annually.
This category accounts for debt service on short-term obligations of the
State, i.e., the interest costs of the State's commercial paper program. The
commercial paper program is expected to have an average of approximately $185
million outstanding during 1999-2000. The majority of the State's debt service
is for long-term bonds, and is shown in the Financial Plan as a transfer to the
General Debt Service Fund.
Transfers to other funds from the General Fund are made primarily to
finance certain portions of State capital projects spending and debt service on
long-term bonds where these costs are not funded from other sources.
Long-term debt service transfers are projected at $2.27 billion in
1999-2000, an increase of $183 million from 1998-99. The increase reflects debt
service costs from prior-year bond sales (net of refunding savings), and certain
sales planned to occur during the 1999-2000 fiscal year.
Transfers for capital projects provide General Fund support for projects
that are not financed with bond proceeds, dedicated taxes, other revenues, or
federal grants. Transfers in this category are projected to total $168 million
in 1999-2000. The decline of $78 million from the prior year is due primarily to
the delay of the receipt of payment of certain reimbursements in 1998-99.
Receipts of $50 million transferred to DRRF in 1998-99 will be used in the
Capital Projects Fund in 1999-2000 to provide pay-as-you-go funding for five
capital programs that were previously funded with bond proceeds. The 1999-2000
enacted budget also reserves $250 million in new resources for DRRF.
All other transfers (excluding DRRF), which reflect the remaining
transfers from the General Fund to other funds, are estimated to total $385
million in 1999-2000, a decline of $84 million from 1998-99, primarily because
of certain non-recurring transfers that occurred last year.
Non-recurring Resources
The DOB estimates that the 1999-2000 State Financial Plan contains actions
that provide non-recurring resources or savings totaling approximately $500
million, or 1.3% of General Fund resources, the largest of which is the first
phase of the privatization of MMIA. To the greatest extent possible, one-time
resources are expected to be utilized to finance one-time costs, including Year
2000 compliance costs and certain capital spending.
Outyear Projections of Receipts and Disbursements
State law requires the Governor to propose a balanced budget each year.
Preliminary analysis by DOB indicates that the State will have a 2000-01 budget
gap of approximately $1.9 billion, or about $300 million above the 1999-2000
Executive Budget estimate (after adjusting for the projected costs of collective
bargaining). This estimate includes an assumption for the projected costs of new
collective bargaining agreements, $500 million in assumed operating
efficiencies, as well as the planned application of approximately $615 million
of the $1.82 billion tax reduction reserve. In recent years, the State has
closed projected budget gaps which DOB estimates at $5.0 billion (1995-96), $3.9
billion (1996-97), $2.3 billion (1997-98), and less than $1 billion (1998-99).
DOB will formally update its projections of receipts and disbursements for
future years as part of the Governor's 2000-01 Executive Budget submission. The
revised expectations for these years will reflect the cumulative impact of tax
reductions and spending commitments enacted over the last several years as well
as new 2000-01 Executive Budget recommendations.
The State and the United University Professionals (UUP) union have reached
a tentative agreement on a new four-year labor contract. The State is continuing
negotiations with other unions representing State employees, the largest of
which is the Civil Service Employees Association (CSEA). CSEA previously failed
to ratify a tentative agreement on a new four-year contract earlier in 1999. The
1999-2000 Financial Plan has reserved $100 million for possible collective
bargaining agreements, and reserves are contained in the preliminary outyear
projection for 2000-01 to cover the recurring costs of any new agreements. To
the extent these reserves are inadequate to finance such agreements, the costs
of new labor contracts could increase the size of future budget gaps.
Sustained growth in the State's economy could contribute to closing
projected budget gaps over the next several years, both in terms of
higher-than-projected tax receipts and in lower-than-expected entitlement
spending. The State assumes that the 2000-01 Financial Plan will achieve $500
million in savings from initiatives by State agencies to deliver services more
efficiently, workforce management efforts, maximization of federal and
non-General Fund spending offsets, and other actions necessary to help bring
projected disbursements and receipts into balance. The projections do not assume
any gap-closing benefit from the potential settlement of State claims against
the tobacco industry.
Other Governmental Funds
In addition to the General Fund, the State Financial Plan includes Special
Revenue Funds, Capital Projects Funds and Debt Service Funds which are discussed
below. Amounts below do not include other sources and uses of funds transferred
to or from other fund types.
Special Revenue Funds
Total disbursements for programs supported by Special Revenue Funds are
projected at $30.94 billion, an increase of $1.29 billion or 4.35% over the
prior year. Special Revenue Funds include federal grants and State special
revenue funds.
Federal grants are projected to comprise 72% of all Special Revenue Funds
spending in 1999-2000, comparable to prior years. Disbursements from federal
funds are estimated at $22.17 billion, an increase of $741 million or 3.46%.
Medicaid is the largest program within federal funds, accounting for 56% of
total spending in this category. In 1999-2000, Medicaid spending is projected at
$14.32 billion, an increase of $711 million over 1998-99. The remaining growth
in federal funds is primarily for the Child Health Plus program, which is
estimated at $117 million in 1999-2000. This growth is offset by decreased
spending in certain social services programs resulting from more recent spending
reestimates.
State special revenue spending is projected to be $8.77 billion, an
increase of $550 million or 6.69% from the last fiscal year. The spending growth
is primarily due to $661 million for the next phase of the STAR program and $250
million in additional general State charges funded by proceeds from the MMIA
transaction, offset by a decrease of $185 million in projected educational
spending as a result of lower projected Lottery proceeds and a decline of $112
million in transportation disbursements. The remainder reflects the net impact
of spending reestimates.
Capital Projects Funds
Spending from Capital Projects Funds in 1999-2000 is projected at $4.18
billion, an increase of $114 million or 2.80% from last fiscal year.
Transportation, environmental, education and mental hygiene programs are the
major sources of year-to-year spending growth in this category.
Debt Service Funds
Spending from Debt Service Funds are estimated at $3.64 billion in
1999-2000, up $370 million or 11.31% from 1998-99. Transportation purposes,
including debt service on bonds issued for State and local highway and bridge
programs financed through the New York State Thruway Authority and supported by
the Dedicated Highway and Bridge Trust Fund, account for $124 million of the
year-to-year growth. Debt service for educational purposes, including State and
City University programs financed through the Dormitory Authority, will increase
by $80 million. The remaining growth is for a variety of programs in mental
health and corrections, and for general obligation financings.
Special Considerations
General
Many complex political, social and economic forces influence the State's
economy and finances, which may in turn affect the State's Financial Plan. These
forces may affect the State unpredictably from fiscal year to fiscal year and
are influenced by governments, institutions, and events that are not subject to
the State's control. The Financial Plan also is necessarily 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 State economies.
The State Financial Plan is based upon forecasts of national and State
economic activity developed through both internal analysis and review of
national and State economic forecasts prepared by commercial forecasting
services and other public and private forecasters. Economic forecasts have
frequently failed to predict accurately the timing and magnitude of changes in
the national and State economies. Many uncertainties exist in forecasts of both
the national and State economies, including consumer attitudes toward spending,
the extent of corporate and governmental restructuring, the condition of the
financial sector, federal, fiscal and monetary policies, the level of interest
rates, 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 results in the current fiscal year that are worse than predicted,
with corresponding material and adverse effects on the State's projections of
receipts and disbursements.
Projections of total State receipts in the Financial Plan are based on the
State tax structure in effect during the fiscal year and on assumptions relating
to basic economic factors and their historical relationships to State tax
receipts. In preparing projections of State receipts, economic forecasts
relating to personal income, wages, consumption, profits and employment have
been particularly important. The projection of receipts from most tax or revenue
sources is generally made by estimating the change in yield of such tax or
revenue source caused by economic and other factors, rather than by estimating
the total yield of such tax or revenue source from its estimated tax base. The
forecasting methodology, however, ensures that State fiscal year collection
estimates for taxes that are based on a computation of annual liability, such as
the business and personal income taxes, are consistent with estimates of total
liability under such taxes.
Projections of total State disbursements are based on assumptions relating
to economic and demographic factors, potential collective bargaining agreements,
levels of disbursements for various services provided by local governments
(where the cost is partially reimbursed by the State), and the results of
various administrative and statutory mechanisms in controlling disbursements for
State operations. Factors that may affect the level of disbursements in the
fiscal year include uncertainties relating to the economy of the nation and the
State, the policies of the federal government, collective bargaining
negotiations and changes in the demand for and use of State services.
An additional risk to the State Financial Plan arises from the potential
impact of certain litigation and of federal disallowances now pending against
the State, which could adversely affect the State's projections of receipts and
disbursements. The State Financial Plan assumes no significant litigation or
federal disallowance or other federal actions that could affect State finances,
but has significant reserves in the event of such an action.
Additional risks to the Financial Plan arise out of potential actions at
the federal level. Potential changes to federal tax law currently under
discussion as part of the federal government's efforts to enact a multi-year tax
reduction package could alter the federal definitions of income on which certain
State taxes rely. Certain proposals, if enacted, could have a significant impact
on State revenues in the future.
The Personal Responsibility and Work Opportunity Reconciliation Act of
1996 created a new Temporary Assistance to Needy Families program (TANF)
partially funded with a fixed federal block grant to states. This law also
imposes (with certain exceptions) a five-year durational limit on TANF
recipients, requires that virtually all recipients be engaged in work or
community service activities within two years of receiving benefits, and limits
assistance provided to certain immigrants and other classes of individuals.
States are required to meet work activity participation targets for their TANF
caseload and conform with certain other federal standards or face potential
sanctions in the form of a reduced federal block grant and increased State/local
funding requirements. Any future reduction could have an adverse impact on the
State's Financial Plan. However, the State has been able to demonstrate
compliance with TANF work requirements to date and does not now expect to be
subject to associated federal fiscal penalties.
The Division of the Budget believes that its projections of receipts and
disbursements relating to the current State Financial Plan, and the assumptions
on which they are based, are reasonable. Actual results, however, could differ
materially and adversely from projections. In the past, the State has taken
management actions to address potential Financial Plan shortfalls, and may take
similar actions should adverse variances occur in its projections for the
current fiscal year.
Despite recent budgetary surpluses recorded by the State, actions
affecting the level of receipts and disbursements, the relative strength of the
State and regional economy, and actions by the federal government could impact
projected budget gaps for the State. These gaps would result from a disparity
between recurring revenues and the costs of increasing the level of support for
State programs. For example, the fiscal effects of tax reductions adopted in the
last several fiscal years are projected to grow more substantially in the
forecast period, continuing to restrain receipts levels and placing pressure on
future spending levels. To address a potential imbalance in any given fiscal
year, the State would be required to take actions to increase receipts and/or
reduce disbursements as it enacts the budget for that year, and, under the State
Constitution, the Governor is required to propose a balanced budget each year.
There can be no assurance, however, that the Legislature will enact the
Governor's proposals or that the State's actions will be sufficient to preserve
budgetary balance in a given fiscal year or to align recurring receipts and
disbursements in future fiscal years.
To help guard against these risks, the State has projected reserves of
$2.4 billion in 1999-2000.
Cash-Basis Results for Prior Fiscal Years
General Fund 1996-97 through 1998-99
New York State's financial operations have improved during recent fiscal
years. During its last seven fiscal years, the State has recorded balanced
budgets on a cash basis, with positive year-end fund balances.
A description of cash-basis results in the General Fund for the prior
three fiscal years is presented below.
1998-99 Fiscal Year
The State ended its 1998-99 fiscal year on March 31, 1999 in balance on a
cash basis, with a General Fund cash surplus as reported by the DOB of $1.82
billion. The cash surplus was derived primarily from higher-than-projected tax
collections as a result of continued economic growth, particularly in the
financial markets and the securities industries.
The State reported a General Fund closing cash balance of $892 million, an
increase of $254 million from the prior fiscal year. The balance is held in
three accounts within the General Fund: the Tax Stabilization Reserve Fund
(TSRF), the Contingency Reserve Fund (CRF) and the Community Projects Fund
(CPF). The TSRF closing balance was $473 million, following an additional
deposit of $73 million in 1998-99. The CRF closing balance was $107 million,
following a deposit of $39 million in 1998-99. The CPF, which finances
legislative initiatives, closed the fiscal year with a balance of $312 million.
The closing fund balance excludes $2.31 billion that the State deposited
into the tax refund reserve account at the close of 1998-99 to pay for tax
refunds in 1999-2000 of which $521 million was made available as a result of the
Local Government Assistance Corporation (LGAC) financing program and was
required to be on deposit as of March 31, 1999. The tax refund reserve account
transaction has the effect of decreasing reported personal income tax receipts
in 1998-99, while increasing reported receipts in 1999-2000.
General Fund receipts and transfers from other funds (net of tax refund
reserve account activity) for the 1998-99 fiscal year totaled $36.74 billion, an
increase of 6.34% from 1997-98 levels. General Fund disbursements and transfers
to other funds totaled $36.49 billion for the 1998-99 fiscal year, an increase
of 6.23% from 1997-98 levels.
1997-98 Fiscal Year
The State ended its 1997-98 fiscal year in balance on a cash basis, with a
General Fund cash surplus as reported by DOB of approximately $2.04 billion. The
cash surplus was derived primarily from higher-than-anticipated receipts and
lower spending on welfare, Medicaid, and other entitlement programs.
The General Fund had a closing balance of $638 million, an increase of
$205 million from the prior fiscal year. The TSRF closing balance was $400
million, following a required deposit of $15 million (repaying a transfer made
in 1991-92) and an additional deposit of $68 million made from the 1997-98
surplus. The CRF closing balance was $68 million, following a $27 million
deposit from the surplus. The CPF closed the fiscal year with a balance of $170
million. The General Fund closing balance did not include $2.39 billion in the
tax refund reserve account, of which $521 million was made available as a result
of the LGAC financing program and was required to be on deposit on March 31,
1998.
General Fund receipts and transfers from other funds (net of tax refund
reserve account activity) for the 1997-98 fiscal year totaled $34.55 billion, an
annual increase of 4.57% over 1996-97. General Fund disbursements and transfers
to other funds were $34.35 billion, an annual increase of 4.41%.
1996-97 Fiscal Year
The State ended its 1996-97 fiscal year on March 31, 1997 in balance on a
cash basis, with a General Fund cash surplus as reported by DOB of approximately
$1.42 billion. The cash surplus was derived primarily from higher-than-expected
receipts and lower-than-expected spending for social services programs.
The General Fund closing balance was $433 million, an increase of $146
million from the 1995-96 fiscal year. The balance included $317 million in the
TSRF, after a required deposit of $15 million (repaying a transfer made in
1991-92) and an additional deposit of $65 million in 1996-97. In addition, $41
million remained on deposit in the CRF. The remaining $75 million reflected
amounts then on deposit in the CPF. The General Fund closing balance did not
include $1.86 billion in the tax refund reserve account, of which $521 million
was made available as a result of the LGAC financing program and was required to
be on deposit as of March 31, 1997.
General Fund receipts and transfers from other funds (net of tax refund
reserve account activity) for the 1996-97 fiscal year totaled $33.04 billion, an
increase of 0.7% from the previous fiscal year. General Fund disbursements and
transfers to other funds totaled $32.90 billion for the 1996-97 fiscal year, an
increase of 0.7% from the 1995-96 fiscal year.
Other Governmental Funds (1996-97 through 1998-99)
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 of a portion of
transportation-related revenues from the General Fund to two 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, the
Metropolitan Transportation Authority (MTA) and other transit entities.
In the Special Revenue Funds, disbursements increased from $26.02 billion
to $29.65 billion over the last three years, primarily as a result of increased
costs for the federal share of Medicaid and the initial costs of the STAR
program. Other activity reflected dedication of taxes for mass transportation
purposes, new lottery games, and new fees for criminal justice programs.
Disbursements in the Capital Projects Funds increased over the three-year
period from $3.54 billion to $4.06 billion, primarily for education,
environment, public protection and transportation programs. The composition of
this fund type's receipts also has changed as dedicated taxes, federal grants
and reimbursements from public authority bonds increased, while general
obligation bond proceeds declined.
Activity in the Debt Service Funds reflected increased use of bonds during
the three-year period for improvements to the State's capital facilities and the
ongoing costs of the LGAC fiscal reform program. The increases were moderated by
the refunding savings achieved by the State over the last several years using
strict present value savings criteria. Disbursements in this fund type increased
from $2.53 billion to $3.27 billion over the three-year period.
The State Financial Plan is based upon a June 1999 projection by DOB of
national and State economic activity. The information in this section summarizes
the national and State economic situation and outlook upon which projections of
receipts and certain disbursements were made for the 1999-2000 Financial Plan.
The national economy has maintained a robust rate of growth during the
past six quarters as the expansion, which is well into its ninth year,
continues. The national expansion, if it continues through February 2000, will
be the longest on record. Since early 1992, approximately 19 million jobs have
been added nationally. Output growth has averaged 3.2% over this period,
essentially the same as the 3.3% average annual growth during the post-World War
II period. The State economy also has continued to expand, with over 600,000
jobs added since late 1992. Employment growth has been slower than in the nation
during this period, although the State's relative performance has improved in
the last two years. Growth in average wages in New York has generally
outperformed the nation, while growth in personal income per capita has kept
pace with the nation.
DOB expects that national economic growth will be quite robust throughout
calendar year 1999. Growth in real Gross Domestic Product for 1999 is projected
to be 4.0%, with a decline in net exports overwhelmed by continued strong
consumer spending. The projected overall growth rate of the national economy for
calendar year 1999 is nearly identical to the consensus forecast of a widely
followed survey of national economic forecasters. Inflation, as measured by the
Consumer Price Index, is projected to be about 2.1%, a modest increase despite
strong economic growth. Personal income and wages are projected to increase by
5.1% and 6.3% respectively.
The forecast of the State's economy shows continued expansion during the
1999 calendar year, with employment growth gradually slowing as the year
progresses. The financial and business service sectors are expected to continue
to do well, while employment in the manufacturing sector is expected to post a
modest decline. On an average annual basis, the employment growth rate in the
State is expected to be somewhat lower than in 1998 and the unemployment rate is
expected to drop further to 5.1%. Personal income is expected to record moderate
gains in 1999. Wage growth in 1999 is expected to be slower than in the previous
year as the recent robust growth in bonus payments moderates.
The forecast for continued growth, and any resultant impact on the State's
1999-2000 Financial Plan, contains some uncertainties. Stronger-than-expected
gains in employment and wages or in stock market prices could lead to
unanticipated strong growth in consumer spending. Inventory investment due to
Y2K may be significantly stronger than expected towards the end of this year
possibly followed by significant weakness early next year. Also, improvements in
foreign economies may be weaker than expected and therefore, may have
unanticipated effects on the domestic economy. The inflation rate may differ
significantly from expectations due to the conflicting impacts of a tight labor
market and improved productivity growth as well as to the future direction and
magnitude of fluctuations of oil prices. In addition, the State economic
forecast could over- or underestimate the level of future bonus payments,
financial sector profits or inflation growth, resulting in unexpected economic
impacts. Similarly, the State forecast could fail to correctly estimate the
amount of employment change in the banking, financial and other business service
sectors as well as the direction of employment change that is likely to
accompany telecommunications and energy deregulation.
The New York Economy
New York is the third most populous state in the nation and has a
relatively high level of personal wealth. The State's economy is diverse, with a
comparatively large share of the nation's finance, insurance, transportation,
communications and services employment, and a very small share of the nation's
farming and mining activity. The State's location and its excellent air
transport facilities and natural harbors have made it an important link in
international commerce. Travel and tourism constitute an important part of the
economy. Like the rest of the nation, New York has a declining proportion of its
workforce engaged in manufacturing, and an increasing proportion engaged in
service industries.
Services: The services sector, which includes entertainment, personal
services, such as health care and auto repairs, and business-related services,
such as information processing, law and accounting, is the State's leading
economic sector. The services sector accounts for more than three of every 10
nonagricultural jobs in New York and has a noticeably higher proportion of total
jobs than does the rest of the nation.
Manufacturing: Manufacturing employment continues to decline in importance
in New York, as in most other states, and New York's economy is less reliant on
this sector than is the nation. The principal manufacturing industries in recent
years produced printing and publishing materials, instruments and related
products, machinery, apparel and finished fabric products, electronic and other
electric equipment, food and related products, chemicals and allied products,
and fabricated metal products.
Trade: Wholesale and retail trade is the second largest sector in terms of
nonagricultural jobs in New York but is considerably smaller when measured by
income share. Trade consists of wholesale businesses and retail businesses, such
as department stores and eating and drinking establishments.
Finance, Insurance and Real Estate: New York City is the nation's leading
center of banking and finance and, as a result, this is a far more important
sector in the State than in the nation as a whole. Although this sector accounts
for under one-tenth of all nonagricultural jobs in the State, it contributes
about one-fifth of all nonfarm labor and proprietors' income.
Agriculture: Farming is an important part of the economy of large regions
of the State, although it constitutes a very minor part of total State output.
Principal agricultural products of the State include milk and dairy products,
greenhouse and nursery products, apples and other fruits, and fresh vegetables.
New York ranks among the nation's leaders in the production of these
commodities.
Government: Federal, State and local government together are the third
largest sector in terms of nonagricultural jobs, with the bulk of the employment
accounted for by local governments. Public education is the source of nearly
one-half of total State and local government employment.
Economic and Demographic Trends
In the calendar years 1987 through 1998, the State's rate of economic
growth was somewhat slower than that of the nation. In particular, during the
1990-91 recession and post-recession period, 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 1987. 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 US Bureau of Economic Analysis, personal income in the State
has risen more slowly since 1988 than personal income for the nation as a whole,
although preliminary data suggests that, in 1998, the State personal income rose
more rapidly. Total State nonagricultural employment has declined as a share of
national nonagricultural employment.
State per capita personal income has historically been significantly
higher than the national average, although the ratio has varied substantially.
Because New York City is a regional employment center for a multi-state region,
State personal income measured on a residence basis understates the relative
importance of the State to the national economy and the size of the base to
which State taxation applies.
Public Authorities
The fiscal stability of the State is related in part to the fiscal
stability of its public authorities. For the purposes of this summary, public
authorities refer to public benefit corporations, created pursuant to State law,
other than local authorities. Public authorities are not subject to the
constitutional restrictions on the incurrence of debt that apply to the State
itself and may issue bonds and notes within the amounts and restrictions set
forth in legislative authorization. The State's access to the public credit
markets could be impaired and the market price of its outstanding debt may be
materially and adversely affected if any of its public authorities were to
default on their respective obligations. As of December 31, 1998, there were 17
public authorities that had outstanding debt of $100 million or more, and the
aggregate outstanding debt, including refunding bonds, of these State public
authorities was $94 billion, only a portion of which constitutes State-supported
or State-related debt.
The State has numerous public authorities with various responsibilities,
including those which finance, construct and/or operate revenue-producing public
facilities. Public authorities generally pay their operating expenses and debt
service costs from revenues generated by the projects they finance or operate,
such as tolls charged for the use of highways, bridges or tunnels, charges for
public power, electric and gas utility services, rentals charged for housing
units, and charges for occupancy at medical care facilities. In addition, State
legislation authorizes several financing techniques for public authorities.
Also, there are statutory arrangements providing for State local assistance
payments otherwise payable to localities to be made under certain circumstances
to public authorities. Although the State has no obligation to provide
additional assistance to localities whose local assistance payments have been
paid to public authorities under these arrangements, the affected localities may
seek additional State assistance if local assistance payments are diverted. Some
authorities also receive moneys from State appropriations to pay for the
operating costs of certain of their programs. As described below, the MTA
receives the bulk of this money in order to provide transit and commuter
services.
Beginning in 1998, the Long Island Power Authority (LIPA) assumed
responsibility for the provision of electric utility services previously
provided by Long Island Lighting Company for Nassau, Suffolk and a portion of
Queen Counties, as part of an estimated $7 billion financing plan. As of the
date of this AIS, LIPA has issued over $5 billion in bonds secured solely by
ratepayer charges. LIPA's debt is not considered either State-supported or
State-related debt.
Metropolitan Transportation Authority
The MTA oversees the operation of subway and bus lines in New York City by
its affiliates, the New York City Transit Authority and the Manhattan and Bronx
Surface Transit Operating Authority (collectively, the TA). The MTA operates
certain commuter rail and bus services in the New York metropolitan area through
the MTA's subsidiaries, the Long Island Rail Road Company, the Metro-North
Commuter Railroad Company, and the Metropolitan Suburban Bus Authority. In
addition, the Staten Island Rapid Transit Operating Authority, an MTA
subsidiary, operates a rapid transit line on Staten Island. Through its
affiliated agency, the Triborough Bridge and Tunnel Authority (TBTA), the MTA
operates certain intrastate toll bridges and tunnels. Because fare revenues are
not sufficient to finance the mass transit portion of these operations, the MTA
has depended on, and will continue to depend on, operating support from the
State, local governments and TBTA, 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.
Since 1980, 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 Metropolitan Transportation Region served by the
MTA and a special one-quarter of 1% regional sales and use tax--that provide
revenues for mass transit purposes, including assistance to the MTA. Since 1987,
State law also has required that the proceeds of a one-quarter of 1% mortgage
recording tax paid on certain mortgages in the Metropolitan Transportation
Region be deposited in a special MTA fund for operating or capital expenses. In
1993, the State dedicated a portion of certain additional State petroleum
business tax receipts to fund operating or capital assistance to the MTA. The
1999-2000 enacted budget provides State assistance to the MTA totaling
approximately $1.4 billion, an increase of $55 million over the 1998-99 fiscal
year.
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 the $12.17 billion MTA capital plan for the 1995 through 1999
calendar years (the 1995-99 Capital Program). In July 1997, the Capital Program
Review Board (CPRB) approved the 1995-99 Capital Program and subsequently
amended it in August 1997 and in March 1999. The MTA plan now totals $12.55
billion. The 1995-99 Capital Program was 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 assumed the issuance of an
estimated $5.2 billion in bonds under this $6.5 billion aggregate bonding
authority. The remainder of the plan was projected to be financed with
assistance from the federal government, the State, the City of New York, and
from various other revenues generated from actions taken by the MTA.
There can be no assurance that the MTA's capital plan for 2000 through
2004 will be adequate to finance the MTA's capital needs over the plan period,
or that funding sources identified in the approved plan will not be reduced or
eliminated.
There can be no assurance that all the necessary governmental actions for
future capital programs will be taken, that funding sources currently identified
will not be decreased or eliminated, or that the 2000-04 Capital Program or
parts thereof will not be delayed or reduced. Should funding levels fall below
current projections, the MTA would have to revise its 2000-04 Capital Program
accordingly. If the 2000-04 Capital Program is delayed or reduced, ridership and
fare revenues may decline, which could, among other things, impair the MTA's
ability to meet its operating expenses without additional assistance.
The City of New York
The fiscal health of the State also may be affected by the fiscal health
of New York City, which continues to receive significant financial assistance
from the State. State aid contributes to the City's ability to balance its
budget and meet its cash requirements. The State also may be affected by the
ability of the City and certain entities issuing debt for the benefit of the
City to market their securities successfully in the public credit markets.
Fiscal Oversight
In response to the City's fiscal crisis in 1975, the State took action to
assist the City in returning to fiscal stability. Among those actions, the State
established the Municipal Assistance Corporation for the City of New York (NYC
MAC) to provide financing assistance to the City; the New York State Financial
Control Board (the Control Board) to oversee the City's financial affairs; and
the Office of the State Deputy Comptroller for the City of New York (OSDC) to
assist the Control Board in exercising its powers and responsibilities. A
"control period" existed from 1975 to 1986, during which the City was subject to
certain statutorily-prescribed fiscal controls. The Control Board terminated the
control period 1986 when certain statutory conditions were met. State law
requires the Control Board to reimpose a control period upon the occurrence, or
"substantial likelihood and imminence" of the occurrence, of certain events,
including (but not limited to) a City operating budget deficit of more than $100
million or impaired access to the public credit markets.
Currently, the City and its Covered Organizations (i.e., those
organizations which receive or may receive moneys from the City directly,
indirectly or contingently) operate under the City's Financial Plan. The City's
Financial Plan summarizes its capital, revenue and expense projections and
outlines proposed gap-closing programs for years with projected budget gaps. The
City's projections set forth in its Financial Plan are based on various
assumptions and contingencies, some of which are uncertain and may not
materialize. Unforeseen developments and changes in major assumptions could
significantly affect the City's ability to balance its budget as required by
State law and to meet its annual cash flow and financing requirements.
To successfully implement its Financial Plan, the City and certain
entities issuing debt for the benefit of the City must market their securities
successfully. The City issues securities to finance, refinance and rehabilitate
infrastructure and other capital needs, as well as for seasonal financing needs.
In City fiscal year 1997-98, the State constitutional debt limit would have
prevented the City from entering into new capital contracts. Therefore, in 1997,
the State created the New York City Transitional Finance Authority (TFA) in
order to finance a portion of the City's capital program. Despite this
additional financing mechanism, the City currently projects that, if no further
action is taken, it will reach its debt limit in City's current fiscal year
1999-2000. To continue its capital plan without interruption, the City is
proposing an amendment to the State Constitution to change the methodology used
to calculate the debt limit. Since an amendment to the Constitution to raise the
debt limit could not take effect until City fiscal year 2001-02 at the earliest,
the City has decided to securitize a portion of its share of the proceeds from
the settlement with the nation's tobacco companies. However, a number of
potential developments may affect both the availability and level of funding
that the City will receive from the tobacco settlement. City officials have
indicated that, should their efforts to securitize a portion of City tobacco
settlement proceeds fail or not be accomplished in a timely manner, the City
will request that the State increase the borrowing authority of the TFA.
Monitoring Agencies
The staffs of the Control Board, OSDC and the City Comptroller issue
periodic reports on the City's Financial Plans. The reports analyze the City's
forecasts of revenues and expenditures, cash flow, and debt service
requirements, as well as evaluate compliance by the City and its Covered
Organizations with its Financial Plan. According to staff reports, while
economic growth in New York City has been slower than in other regions of the
country, a surge in Wall Street profitability resulted in increased tax revenues
and produced a substantial surplus for the City in City fiscal year 1997-98.
Recent staff reports also indicate that the City projects a surplus for City
fiscal year 1998-99. Although several sectors of the City's economy have
expanded over the last several years, especially tourism and business and
professional services, City tax revenues remain heavily dependent on the
continued profitability of the securities industries and the performance of the
national economy. In addition, the size of recent tax reductions has increased
to over $2 billion in City fiscal year 1999-2000 through the expiration of a
personal income tax surcharge, the repeal of the non-resident earnings tax and
the elimination of the sales tax on clothing items costing less than $110. Staff
reports have indicated that recent City budgets have been balanced in part
through the use of nonrecurring resources and that the City's Financial Plan
relies in part on actions outside its direct control. These reports also have
indicated that the City has not yet brought its long-term expenditure growth in
line with recurring revenue growth and that the City is likely to continue to
face substantial gaps between forecast revenues and expenditures in future years
that must be closed with reduced expenditures and/or increased revenues. In
addition to these monitoring agencies, the Independent Budget Office (IBO) has
been established pursuant to the City Charter to provide analysis to elected
officials and the public on relevant fiscal and budgetary issues affecting the
City.
Other Localities
Certain localities outside New York City have experienced financial
problems and have requested and received additional State assistance during the
last several State fiscal years. The potential impact on the State of any future
requests by localities for additional oversight or financial assistance is not
included in the projections of the State's receipts and disbursements for the
State's 1999-2000 fiscal year.
The State has provided extraordinary financial assistance to select
municipalities, primarily cities, since the 1996-97 fiscal year. Funding has
essentially been continued or increased in each subsequent fiscal year. Such
funding in 1999-2000 totals $113.9 million. In 1997-98, the State increased
General Purpose State Aid for local governments by $27 million to $550 million,
and has continued funding at this new level since that date.
While the distribution of General Purpose State Aid for local governments
was originally based on a statutory formula, in recent years both the total
amount appropriated and the shares appropriated to specific localities have been
determined by the Legislature. A State commission established to study the
distribution and amounts of general purpose local government aid failed to agree
on any recommendations for a new formula.
Counties, cities, towns, villages and school districts have engaged in
substantial short-term and long-term borrowings. In 1997, the total indebtedness
of all localities in the State, other than New York City, was approximately
$21.0 billion. A small portion (approximately $80 million) of that 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 New York City) authorized by State law to issue debt to finance
deficits during the period that such deficit financing is outstanding.
Twenty-two localities had outstanding indebtedness for deficit financing at the
close of their fiscal year ending in 1997.
Like the State, local governments must respond to changing political,
economic and financial influences over which they have little or no control.
Such changes may adversely affect the financial condition of certain local
governments. For example, the federal government may reduce (or in some cases
eliminate) federal funding of some local programs which, in turn, may require
local governments to fund these expenditures from their own resources. It is
also possible that the State, New York City, or any of their respective public
authorities may suffer serious financial difficulties that could jeopardize
local access to the public credit markets, which may adversely affect the
marketability of notes and bonds issued by localities within the State.
Localities also may face unanticipated problems resulting from certain pending
litigation, judicial decisions and long-range economic trends. Other large-scale
potential problems, such as declining urban populations, increasing
expenditures, and the loss of skilled manufacturing jobs, also may adversely
affect localities and necessitate State assistance.
Litigation
General
The legal proceedings listed below involve State finances and programs and
miscellaneous civil rights, real property, contract and other tort claims in
which the State is a defendant and the potential monetary claims against the
State are substantial, generally in excess of $100 million. These proceedings
could adversely affect the financial condition of the State in the 1999-2000
fiscal year or thereafter.
As of August 24, 1999, except as described below, no current litigation
involves the State's authority, as a matter of law, to contract indebtedness,
issue its obligations, or pay such indebtedness when due, or affects the State's
power or ability, as a matter of law, to impose or collect significant amounts
of taxes and revenues.
The State is party to other claims and litigation which its legal counsel
has advised are not probable of adverse court decisions or are not deemed
adverse and material. Although the amounts of potential losses resulting from
this litigation, if any, are not presently determinable, it is the State's
opinion that its ultimate liability in these cases is not expected to have a
material and adverse effect on the State's financial position in the 1999-2000
fiscal year or thereafter.
The General Purpose Financial Statements for the 1998-99 fiscal year
report estimated probable awarded and anticipated unfavorable judgments of $895
million, of which $132 million is expected to be paid during the 1999-2000
fiscal year.
Adverse developments in the proceedings described below, other proceedings
for which there are unanticipated, unfavorable and material judgments, or the
initiation of new proceedings could affect the ability of the State to maintain
a balanced 1999-2000 Financial Plan. The State believes that the 1999-2000
Financial Plan includes sufficient reserves to offset the costs associated with
the payment of judgments that may be required during the 1999-2000 fiscal year.
These reserves include (but are not limited to) amounts appropriated for court
of claims payments and projected fund balances in the General Fund. In addition,
any amounts ultimately required to be paid by the State may be subject to
settlement or may be paid over a multi-year period. There can be no assurance,
however, that adverse decisions in legal proceedings against the State would not
exceed the amount of all potential 1999-2000 Financial Plan resources available
for the payment of judgments, and could therefore affect the ability of the
State to maintain a balanced 1999-2000 Financial Plan.
Tax Law
In New York Association of Convenience Stores, et al. v. Urbach, et al.,
petitioners, New York Association of Convenience Stores, National Association of
Convenience Stores, M.W.S. Enterprises, Inc. and Sugarcreek Stores, Inc. are
seeking to compel respondents, the Commissioner of Taxation and Finance and the
Department of Taxation and Finance, to enforce sales and excise taxes imposed,
pursuant to Tax Law Articles 12-A, 20 and 28, on tobacco products and motor fuel
sold to non-Indian consumers on Indian reservations. In orders dated August 13,
1996 and August 24, 1996, the Supreme Court, Albany County, ordered, inter alia,
that there be equal implementation and enforcement of said taxes for sales to
non-Indian consumers on and off Indian reservations, and further ordered that,
if respondents failed to comply within 120 days, no tobacco products or motor
fuel could be introduced onto Indian reservations other than for Indian
consumption or, alternately, the collection and enforcement of such taxes would
be suspended statewide. Respondents appealed to the Appellate Division, Third
Department, and invoked CPLR 5519(a)(1), which provides that the taking of the
appeal stayed all proceedings to enforce the orders pending the appeal.
Petitioners' motion to vacate the stay was denied. In a decision entered May 8,
1997, the Third Department modified the orders by deleting the portion thereof
that provided for the statewide suspension of the enforcement and collection of
the sales and excise taxes on motor fuel and tobacco products. The Third
Department held, inter alia, that petitioners had not sought such relief in
their petition and that it was an error for the Supreme Court to have awarded
such undemanded relief without adequate notice of its intent to do so. On May
22, 1997, respondents appealed to the Court of Appeals on other grounds, and
again invoked the statutory stay. On October 23, 1997, the Court of Appeals
granted petitioners' motion for leave to cross appeal from the portion of the
Third Department's decision that deleted the statewide suspension of the
enforcement and collection of the sales and excise taxes on motor fuel and
tobacco. On July 9, 1998, the New York Court of Appeals reversed the order of
the Appellate Division, Third Department, and remanded the matter to the Supreme
Court, Albany County, for further proceedings. The Court held that the
petitioners had standing to assert an equal protection claim, but that their
claim did not implicate racial discrimination. The Court remanded the case to
Supreme Court, Albany County, for resolution of the question of whether there
was a rational basis for the Tax Department's policy of non-enforcement of the
sales and excise taxes on reservation sales of cigarettes and motor fuel to
non-Indians. In a footnote, the Court stated that, in view of its disposition of
the case, petitioners' cross-appeal regarding the statewide suspension of the
taxes is "academic." By decision and judgment dated July 9, 1999, the Supreme
Court, Albany County, granted judgment dismissing the petition. The time in
which to appeal the July 9, 1999 decision and judgment has not yet expired.
Line Item Veto
In an action commenced in June 1998 by the Speaker of the Assembly of the
State of New York against the Governor of the State of New York (Silver v.
Pataki, Supreme Court, New York County), the Speaker challenges the Governor's
application of his constitutional line item veto authority to certain portions
of budget bills adopted by the State Legislature contained in Chapters 56, 57
and 58 of the Laws of 1998. On July 10, 1998, the State filed a motion to
dismiss this action. By order entered January 7, 1999, the Court denied the
State's motion to dismiss. On January 27, 1999, the State appealed that order.
On April 27, 1999, the Appellate Division, First Department, held that the
State's automatic stay of litigation pending the resolution of the appeal would
be vacated unless the State perfected its appeal for the Court's September 1999
appellate term. The State perfected its appeal on July 12, 1999.
Medicaid
Several cases challenge provisions of Chapter 81 of the Laws of
1995 which alter the nursing home Medicaid reimbursement methodology on
and after April 1, 1995. Included are New York State Health Facilities
Association, et al. v. DeBuono, et al., St. Luke's Nursing Center, et al.
v. DeBuono, et al., New York Association of Homes and Services for the
Aging v. DeBuono et al. (three cases), Healthcare Association of New York
State v. DeBuono and Bayberry Nursing Home et al. v. Pataki, et al.
Plaintiffs allege that the changes in methodology have been adopted in
violation of procedural and substantive requirements of State and federal
law.
In a consolidated action commenced in 1992, Medicaid recipients and home
health care providers and organizations challenge promulgation by the State
Department of Social Services (DSS) in June 1992 of a home assessment resource
review instrument (HARRI), which is to be used by DSS to determine eligibility
for and the nature of home care services for Medicaid recipients, and challenge
the policy of DSS of limiting reimbursable hours of service until a patient is
assessed using the HARRI (Dowd, et al. v. Bane, Supreme Court, New York County).
In a related case, Rodriguez v. DeBuono, on April 19, 1999, the United States
District Court for the Southern District of New York enjoined the State's use of
task based assessment, which is similar to the HARRI, unless the State assesses
safety monitoring as a separate task based assessment, on the grounds that its
use without such additional assessment violated federal Medicaid law and the
Americans with Disabilities Act. The State appealed from the April 19, 1999
order and on July 12, 1999 argued the appeal before the Second Circuit.
In several cases, plaintiffs seek retroactive claims for
reimbursement for services provided to Medicaid recipients who were also
eligible for Medicare during the period January 1, 1987 to June 2, 1992.
Included are Matter of New York State Radiological Society v. Wing, Appel
v. Wing, E.F.S. Medical Supplies v. Dowling, Kellogg v. Wing, Lifshitz v.
Wing, New York State Podiatric Medical Association v. Wing and New York
State Psychiatric Association v. Wing. These cases were commenced after
the State's reimbursement methodology was held invalid in New York City
Health and Hospital Corp. v. Perales. The State contends that these
claims are time-barred. In a judgment dated September 5, 1996, the
Supreme Court, Albany County, dismissed Matter of New York State
Radiological Society v. Wing as time-barred. By order dated November 26,
1997, the Appellate Division, Third Department, affirmed that judgment.
By decision dated June 9, 1998, the Court of Appeals denied leave to
appeal. In a decision entered December 15, 1998, the Appellate Division,
First Department, dismissed the remaining cases in accordance with the
result in Matter of New York State Radiological Society v. Wing. By
decision dated July 8, 1999, the Court of Appeals denied leave to appeal.
Several cases, including Port Jefferson Health Care Facility, et al. v.
Wing (Supreme Court, Suffolk County), challenge the constitutionality of Public
Health Law ss.2807-d, which imposes a tax on the gross receipts hospitals and
residential health care facilities receive from all patient care services.
Plaintiffs allege that the tax assessments were not uniformly applied, in
violation of federal regulations. In a decision dated June 30, 1997, the Court
held that the 1.2% and 3.8% assessments on gross receipts imposed pursuant to
Public Health Law ss.ss. 2807-d(2)(b)(ii) and 2807-d(2)(b)(iii), respectively,
are unconstitutional. An order entered August 27, 1997 enforced the terms of the
decision. The State appealed that order. By decision and order dated August 31,
1998, the Appellate Division, Second Department, affirmed that order. On
September 30, 1998, the State moved for re-argument or, in the alternative, for
a certified question for the Court of Appeals to review. By order dated January
7, 1999, the motion was denied. A final order was entered in Supreme Court on
January 26, 1999. On February 23, 1999, the State appealed that order to the
Court of Appeals. The case is scheduled to be argued on October 20, 1999.
In Dental Society, et al. v. Pataki, et al. (United States District Court,
Northern District of New York, commenced February 2, 1999), plaintiffs challenge
the State's reimbursement rates for dental care provided under the State's
dental Medicaid program. Plaintiffs claim that the State's Medicaid fee schedule
violates Title XIX of the Social Security Act (42 U.S.C. ss. 1396a et seq.) and
the federal and State Constitutions. On June 25, 1999, the State filed its
answer.
Shelter Allowance
In an action commenced in March 1987 against State and New York City
officials (Jiggetts, et al. v. Bane, et al., Supreme Court, New York County),
plaintiffs allege that the shelter allowance granted to recipients of public
assistance is not adequate for proper housing. In a decision dated April 16,
1997, the Court held that the shelter allowance promulgated by the Legislature
and enforced through the State Department of Social Services regulations is not
reasonably related to the cost of rental housing in New York City and results in
homelessness to families in New York City. A judgment was entered on July 25,
1997, directing, inter alia, that the State (i) submit a proposed schedule of
shelter allowances (for the Aid to Dependent Children program and any successor
program) that bears a reasonable relation to the cost of housing in New York
City; and (ii) compel the New York City Department of Social Services to pay
plaintiffs a monthly shelter allowance in the full amount of their contract
rents, provided they continue to meet the eligibility requirements for public
assistance, until such time as a lawful shelter allowance is implemented, and
provide interim relief to other eligible recipients of Aid to Dependent Children
under the interim relief system established in this case. The State appealed to
the Appellate Division, First Department from each and every provision of this
judgment except that portion directing the continued provision of interim
relief. By decision and order dated May 6, 1999, the Appellate Division, First
Department, affirmed the July 25, 1997 judgment. By order dated July 8, 1999,
the Appellate Division denied the State's motion for leave to appeal to the
Court of Appeals from the May 6, 1999 decision and order. The State's motion for
leave to appeal to the Court of Appeals is pending in that court.
Real Property Claims
On March 4, 1985 in Oneida Indian Nation of New York, et al. v. County of
Oneida, the United States Supreme Court affirmed a judgment of the United States
Court of Appeals for the Second Circuit holding that the Oneida Indians have a
common-law right of action against Madison and Oneida Counties for wrongful
possession of 872 acres of land illegally sold to the State in 1795. At the same
time, however, the Court reversed the Second Circuit by holding that a
third-party claim by the counties against the State for indemnification was not
properly before the federal courts. The case was remanded to the District Court
for an assessment of damages, which action is still pending. The counties may
still seek indemnification in the State courts.
In 1998, the United States filed a complaint in intervention in Oneida
Indian Nation of New York. In December 1998, both the United States and the
tribal plaintiffs moved for leave to amend their complaints to assert claims for
250,000 acres, to add the State as a defendant, and to certify a class made up
of all individuals who currently purport to hold title within said 250,000 acre
area. These motions were argued March 29, 1999 and are still awaiting
determination. The District Court has not yet rendered a decision. By order
dated February 24, 1999, the District Court appointed a federal settlement
master. A conference scheduled by the District Court for May 26, 1999 to address
the administration of this case has been adjourned indefinitely.
Several other actions involving Indian claims to land in upstate New York
are also pending. Included are Cayuga Indian Nation of New York v. Cuomo, et
al., and Canadian St. Regis Band of Mohawk Indians, et al. v. State of New York,
et al., both in the United States District Court for the Northern District of
New York. The Supreme Court's holding in Oneida Indian Nation of New York may
impair or eliminate certain of the State's defenses to these actions, but may
enhance others. In the Cayuga Indian Nation of New York case, by order dated
March 29, 1999, the United States District Court for the Northern District of
New York appointed a federal settlement master. In June 1999, the federal
government moved to have the State held jointly and severally liable for any
damages owed to the plaintiffs. This motion was argued before the District Court
on July 8, 1999. The damages phase of the trial of this case is scheduled to
begin on December 1, 1999. In the Canadian St. Regis Band of Mohawk Indians
case, the United States District Court for the Northern District of New York has
directed the parties to rebrief outstanding motions to dismiss brought by the
defendants. The State filed its brief on July 1, 1999. The motions are scheduled
for argument on September 21, 1999.
Civil Rights Claims
In an action commenced in 1980 (United States, et al. v. Yonkers Board of
Education, et al.), the United States District Court for the Southern District
of New York found, in 1985, that Yonkers and its public schools were
intentionally segregated. In 1986, the District Court ordered Yonkers to develop
and comply with a remedial educational improvement plan (EIP I). On January 19,
1989, the District Court granted motions by Yonkers and the NAACP to add the
State Education Department, the Yonkers Board of Education, and the State Urban
Development Corporation as defendants, based on allegations that they had
participated in the perpetuation of the segregated school system. On August 30,
1993, the District Court found that vestiges of a dual school system continued
to exist in Yonkers. On March 27, 1995, the District Court made factual findings
regarding the role of the State and the other State defendants (the State) in
connection with the creation and maintenance of the dual school system, but
found no legal basis for imposing liability. On September 3, 1996, the United
States Court of Appeals for the Second Circuit, based on the District Court's
factual findings, held the State defendants liable under 42 USC ss.1983 and the
Equal Educational Opportunity Act, 20 USC ss.ss.1701, et seq., for the unlawful
dual school system, because the State, inter alia, had taken no action to force
the school district to desegregate despite its actual or constructive knowledge
of de jure segregation. By order dated October 8, 1997, the District Court held
that vestiges of the prior segregated school system continued to exist and that,
based on the State's conduct in creating and maintaining that system, the State
is liable for eliminating segregation and its vestiges in Yonkers and must fund
a remedy to accomplish that goal. Yonkers presented a proposed educational
improvement plan (EIP II) to eradicate these vestiges of segregation. The
October 8, 1997 order of the District Court ordered that EIP II be implemented
and directed that, within 10 days of the entry of the order, the State make
available to Yonkers $450,000 to support planning activities to prepare the EIP
II budget for 1998-99 and the accompanying capital facilities plan. A final
judgment to implement EIP II was entered on October 14, 1997. On November 7,
1997, the State appealed that judgment to the Second Circuit. The appeal is
pending. Additionally, the Court adopted a requirement that the State pay to
Yonkers approximately $9.85 million as its pro rata share of the funding of EIP
I for the 1996-97 school year. The requirement for State funding of EIP I was
reduced to an order on December 2, 1997 and reduced to a judgment on February
10, 1998. The State appealed that order to the Second Circuit on December 31,
1997 and amended the notice of appeal after entry of the judgment. By decision
dated June 22, 1999, as discussed below, the Second Circuit affirmed the
District Court's order requiring the State to pay one-half of the cost of EIP I
for the 1996-97 school year and remanded the case to the District Court for
further proceedings consistent with its decision.
On June 15, 1998, the District Court issued an opinion setting forth the
formula for the allocation of the costs of EIP I and EIP II between the State
and the City for the school years 1997-98 through 2005-06. That opinion was
reduced to an order on July 27, 1998. The order directed the State to pay $37.5
million by August 1, 1998 for estimated EIP costs for the 1997-98 school year.
The State made this payment, as directed. On August 24, 1998, the State appealed
that order to the Second Circuit. The city of Yonkers and the Yonkers Board of
Education cross appealed to the Second Circuit from that order. By stipulation
of the parties approved by the Second Circuit on November 19, 1998, the appeals
from the July 27, 1998 order were withdrawn without prejudice to reinstatement
upon determination of the State's appeal of the October 14, 1997 judgment
discussed above.
On April 15, 1999, the District Court issued two additional orders. The
first order directed the State to pay to Yonkers an additional $11.3 million by
May 1, 1999, as the State's remaining share of EIP costs for the 1997-98 school
year. The second order directed the State to pay to Yonkers $69.1 million as its
share of the estimated EIP costs for the 1998-99 school year. The State made
both payments on April 30, 1999.
In a decision dated June 22, 1999, the Second Circuit found no basis for
the District Court's findings that vestiges of a dual system continued to exist
in Yonkers and reversed the order directing the implementation of EIP II. The
Second Circuit also affirmed the District Court's order requiring the State to
pay one-half of the cost of EIP I for the 1996-97 school year and remanded the
case to the District Court for further proceedings consistent with its decision.
On July 2, 1999 the NAACP filed a petition for rehearing of the June 22, 1999
decision before the Second Circuit, en banc. The State has joined in the City of
Yonker's motion to stay further implementation of EIP II pending the decision on
the petition for rehearing. By order dated August 5, 1999, the Second Circuit
granted the motion staying further implementation of EIP II pending appeal.
On July 27, 1999, the City of Yonkers moved in the District Court to
modify the July 27, 1998 order to require the State to make payments for EIP
expenses each month from July 1999 through April 2000 of $9.22 million per month
instead of paying $92.2 million by May 1, 2000. By memorandum and order dated
July 29, 1999, the District Court denied this motion.
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 rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa
Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group they comprise what generally are known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
A
Bonds rated A possess many favorable investment attributes and are to be
considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa
Bonds rated Baa are considered as medium-grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba
Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate, and therefore not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B
Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa
Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca
Bonds rated Ca present obligations which are speculative in a high degree.
Such issues are often in default or have other marked shortcomings.
C
Bonds rated C are the lowest rated class of bonds, and issues so rated can
be regarded as having extremely poor prospects of ever attaining any real
investment standing.
For bond issues in the health care, higher education and other
not-for-profit sectors, Moody's provides numerical modifiers 1, 2 and 3 to the
generic rating categories Aa through B; the modifier 1 indicates that the issue
ranks in the higher end of the generic rating category; the modifier 2 indicates
that the issue is in the mid-range of the generic rating category; and the
modifier 3 indicates that the issue is in the low end of the generic rating
category. For all other municipal bonds, Moody's provides either a generic
rating or a rating with the numerical modifier 1 for the rating categories Aa
through B, with the latter indicating that the issue ranks in the higher end of
the 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.
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
PART C. OTHER INFORMATION
-------------------------
Item 23. Exhibits.
------- -----------------------------------------------------
(a) Registrant's Agreement and Declaration of Trust is incorporated by
reference to Exhibit (1)(a) of Post-Effective Amendment No. 10 to the
Registration Statement on Form N-1A, filed on September 27, 1996.
Articles of Amendment are incorporated by reference to Exhibit (1)(b)
of Post-Effective Amendment No. 10 to the Registration Statement on
Form N-1A, filed on September 27, 1996.
(b) Registrant's Amended By-Laws.
(d) Management Agreement is incorporated by reference to Exhibit (5) of
Post-Effective Amendment No. 9 to the Registration Statement on Form
N-1A, filed on August 31, 1995.
(e) Registrant's Distribution Agreement and Forms of Service Agreements.
(f) Registrant's Amended and Restated Custody Agreement with The Bank of
New York is incorporated by reference to Exhibit (8)(a) of
Post-Effective Amendment No. 10 to the Registration Statement on Form
N-1A, filed on September 27, 1996. Registrant's Forms of
Sub-Custodian Agreements are incorporated by reference to Exhibit
(8)(b) of Post-Effective Amendment No. 10 to the Registration
Statement on Form N-1A, filed on September 27, 1996.
(i) Registrant's Opinion of Counsel of Stroock & Stroock & Lavan is
incorporated by reference to Exhibit (10) of Post-Effective
Amendment No. 10 to the Registration Statement on Form N-1A, filed
on September 27, 1996.
(j) Consent of Ernst & Young LLP, Independent Auditors.
(m) Service Plan.
(p) Code of Ethics.
Other Exhibits
(a) Power of Attorney.
(b) Certificate of Secretary.
Item 24. Persons Controlled by or under Common Control with Registrants
------- --------------------------------------------------------------
Not Applicable.
Item 25. Indemnification
Reference is made Article EIGHTH of the Agreement and Declaration of
Trust, as amended, incorporated by reference to Exhibit (1) of
Post-Effective Amendment No. 10 to the Registration Statement on Form
N-1A, filed on September 27, 1996. The application of these provisions is
limited by Article 10 of the By-Laws of the Fund incorporated by
reference to Exhibit (2) of Post-Effective Amendment No. 8 to the
Registration Statement on Form N-1A, filed 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.
Reference is also made to the Distribution Agreement as amended.
Item 26. 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 26. Business and Other Connections of Investment Adviser (continued)
----------------------------------------------------------------------------
Officers and Directors of Investment Adviser
<TABLE>
Name and Position
With Dreyfus Other Businesses Position Held Dates
------------ ---------------- ------------- -----
<S> <C> <C> <C>
Christopher M. Condron Franklin Portfolio Director 1/97 - Present
Chairman of the Board Associates,
and LLC*
Chief Executive
Officer
TBCAM Holdings, Inc.* Director 10/97 - Present
President 10/97 - 6/98
Chairman 10/97 - 6/98
The Boston Company Director 1/98 - Present
Asset Management, LLC* Chairman 1/98 - 6/98
President 1/98 - 6/98
The Boston Company President 9/95 - 1/98
Asset Management, Inc.* Chairman 4/95 - 1/98
Director 4/95 - 1/98
Franklin Portfolio Director 1/97 - Present
Holdings, Inc.*
Certus Asset Advisors Director 6/95 - Present
Corp.**
Mellon Capital Management Director 5/95 - Present
Corporation***
Mellon Bond Associates, Executive Committee 1/98 - Present
LLP+ Member
Mellon Bond Associates+ Trustee 5/95 - 1/98
Mellon Equity Associates, Executive 1/98 - Present
LLP+ Committee
Member
Mellon Equity Associates+ Trustee 5/95 - 1/98
Boston Safe Advisors, Director 5/95 - Present
Inc.* President 5/95 - Present
Mellon Bank, N.A. + Director 1/99 - Present
Chief Operating 3/98 - Present
Officer 3/98 - Present
President 11/94 - 3/98
Vice Chairman
Mellon Financial Chief Operating 1/99 - Present
Corporation+ Officer 1/99 - Present
President 1/98 - Present
Director 11/94 - 1/99
Vice Chairman
Founders Asset Chairman 12/97 - Present
Management, Director 12/97 - Present
LLC****
The Boston Company, Inc.* Vice Chairman 1/94 - Present
Director 5/93 - Present
Laurel Capital Advisors, Executive Committee 1/98 - 8/98
LLP+ Member
Christopher M. Condron Laurel Capital Advisors+ Trustee 10/93 - 1/98
Chairman and Chief
Executive Officer Boston Safe Deposit and Director 5/93 - Present
(Continued) Trust
Company*
The Boston Company President 6/89 - 1/97
Financial Director 6/89 - 1/97
Strategies, Inc. *
Mandell L. Berman Self-Employed Real Estate 11/74 - Present
Director 29100 Northwestern Highway Consultant,
Suite 370 Residential
Southfield, MI 48034 Builder and
Private Investor
Burton C. Borgelt DeVlieg Bullard, Inc. Director 1/93 - Present
Director 1 Gorham Island
Westport, CT 06880
Mellon Financial Director 6/91 - Present
Corporation+
Mellon Bank, N.A. + Director 6/91 - Present
Dentsply International, Director 2/81 - Present
Inc.
570 West College Avenue
York, PA
Quill Corporation Director 3/93 - Present
Lincolnshire, IL
Stephen E. Canter Dreyfus Investment Chairman of the 1/97 - Present
President, Chief Advisors, Inc.++ Board 5/95 - Present
Operating Director 5/95 - Present
Officer, Chief President
Investment
Officer, and Director
Newton Management Limited Director 2/99 - Present
London, England
Mellon Bond Associates, Executive 1/99 - Present
LLP+ Committee
Member
Mellon Equity Associates, Executive Committee 1/99 - Present
LLP+ Member
Franklin Portfolio Director 2/99 - Present
Associates,
LLC*
Franklin Portfolio Director 2/99 - Present
Holdings, Inc.*
The Boston Company Asset Director 2/99 - Present
Management, LLC*
TBCAM Holdings, Inc.* Director 2/99 - Present
Mellon Capital Management Director 1/99 - Present
Corporation***
Stephen E. Canter Founders Asset Management, Member, Board of 12/97 - Present
President, Chief LLC**** Managers
Operating Acting Chief 7/98 - 12/98
Officer, Chief Executive
Investment Officer
Officer, and Director
(Continued)
The Dreyfus Trust Director 6/95 - Present
Company+++ Chairman 1/99 - Present
President 1/99 - Present
Chief Executive 1/99 - Present
Officer
Thomas F. Eggers Dreyfus Service Chief Executive 3/00 - Present
Vice Chairman - Corporation++ Officer
Institutional and Chairman of
And Director the 4/96 - 3/00
Board 9/96 - Present
Executive Vice
President
Director
Founders Asset Management, Member, Board of 2/99 - Present
LLC**** Managers
Dreyfus Investment Director 1/00 - Present
Advisors, Inc.
Dreyfus Service Director 3/99 - Present
Organization,
Inc.++
Dreyfus Insurance Agency Director 3/99 - Present
of
Massachusetts, Inc. +++
Dreyfus Brokerage Director 11/97 - 6/98
Services, Inc.
401 North Maple Avenue
Beverly Hills, CA.
Steven G. Elliott Mellon Financial Senior Vice 1/99 - Present
Director Corporation+ Chairman 1/90 - Present
Chief Financial 6/92 - 1/99
Officer 1/90 - 5/98
Vice Chairman
Treasurer
Mellon Bank, N.A.+ Senior Vice 3/98 - Present
Chairman 6/92 - 3/98
Vice Chairman 1/90 - Present
Chief Financial
Officer
Mellon EFT Services Director 10/98 - Present
Corporation
Mellon Bank Center, 8th
Floor
1735 Market Street
Philadelphia, PA 19103
Mellon Financial Services Director 1/96 - Present
Corporation #1 Vice President 1/96 - Present
Mellon Bank Center, 8th
Floor
1735 Market Street
Philadelphia, PA 19103
Boston Group Holdings, Vice President 5/93 - Present
Inc.*
APT Holdings Corporation Treasurer 12/87 - Present
Pike Creek Operations
Center
4500 New Linden Hill Road
Wilmington, DE 19808
Steven G. Elliott Allomon Corporation Director 12/87 - Present
Director (Continued) Two Mellon Bank Center
Pittsburgh, PA 15259
Collection Services Controller 10/90 - 2/99
Corporation Director 9/88 - 2/99
500 Grant Street Vice President 9/88 - 2/99
Pittsburgh, PA 15258 Treasurer 9/88 - 2/99
Mellon Financial Company+ Principal Exec. 1/88 - Present
Officer 8/87 - Present
Chief Executive 8/87 - Present
Officer 8/87 - Present
Director
President
Mellon Overseas Director 4/88 - Present
Investments
Corporation+
Mellon Financial Services Treasurer 12/87 - Present
Corporation # 5+
Mellon Financial Markets, Director 1/99 - Present
Inc.+
Mellon Financial Services Director 1/99 - Present
Corporation #17
Fort Lee, NJ
Mellon Mortgage Company Director 1/99 - Present
Houston, TX
Mellon Ventures, Inc. + Director 1/99 - Present
Lawrence S. Kash Dreyfus Investment Director 4/97 - 12/99
Vice Chairman Advisors, Inc.++
Dreyfus Brokerage Chairman 11/97 - 2/99
Services, Inc. Chief Executive 11/97 - 2/98
401 North Maple Ave. Officer
Beverly Hills, CA
Dreyfus Service Director 1/95 - 2/99
Corporation++ President 9/96 - 3/99
Dreyfus Precious Metals, Director 3/96 - 12/98
Inc.+++ President 10/96 - 12/98
Dreyfus Service Director 12/94 - 3/99
Organization, Inc.++ President 1/97 - 3/99
Seven Six Seven Agency, Director 1/97 - 4/99
Inc. ++
Dreyfus Insurance Agency Chairman 5/97 - 3/99
of President 5/97 - 3/99
Massachusetts, Inc.++++ Director 5/97 - 3/99
The Dreyfus Trust Chairman 1/97 - 1/99
Company+++ President 2/97 - 1/99
Chief Executive 2/97 - 1/99
Officer 12/94 - Present
Director
Lawrence S. Kash The Dreyfus Consumer Chairman 5/97 - 6/99
Vice Chairman Credit President 5/97 - 6/99
(Continued) Corporation++ Director 12/94 - 6/99
Founders Asset Management, Member, Board of 12/97 - 12/99
LLC**** Managers
The Boston Company Chairman 12/95 - 1/99
Advisors, Chief Executive 12/95 - 1/99
Inc. Officer 12/95 - 1/99
Wilmington, DE President
The Boston Company, Inc.* Director 5/93 - 1/99
President 5/93 - 1/99
Mellon Bank, N.A.+ Executive Vice 6/92 - Present
President
Laurel Capital Advisors, Chairman 1/98 - 8/98
LLP+ Executive Committee 1/98 - 8/98
Member
Chief Executive 1/98 - 8/98
Officer 1/98 - 8/98
President
Laurel Capital Advisors, Trustee 12/91 - 1/98
Inc. + Chairman 9/93 - 1/98
President and CEO 12/91 - 1/98
Boston Group Holdings, Director 5/93 - Present
Inc.* President 5/93 - Present
Boston Safe Deposit & Director 6/93 - 1/99
Trust Co.+ Executive Vice 6/93 - 4/98
President
Martin G. McGuinn Mellon Financial Chairman 1/99 - Present
Director Corporation+ Chief Executive 1/99 - Present
Officer 1/98 - Present
Director 1/90 - 1/99
Vice Chairman
Mellon Bank, N. A. + Chairman 3/98 - Present
Chief Executive 3/98 - Present
Officer 1/98 - Present
Director 1/90 - 3/98
Vice Chairman
Mellon Leasing Vice Chairman 12/96 - Present
Corporation+
Mellon Bank (DE) National Director 4/89 - 12/98
Association
Wilmington, DE
Mellon Bank (MD) National Director 1/96 - 4/98
Association
Rockville, Maryland
J. David Officer Dreyfus Service President 3/00 - Present
Vice Chairman Corporation++ Executive Vice 5/98 - 3/00
And Director President 3/99 - Present
Director
Dreyfus Service Director 3/99 - Present
Organization,
Inc.++
Dreyfus Insurance Agency Director 5/98 - Present
of
Massachusetts, Inc.+++++
Dreyfus Brokerage Chairman 3/99 - Present
Services, Inc.
401 North Maple Avenue
Beverly Hills, CA
Seven Six Seven Agency, Director 10/98 - Present
Inc.++
Mellon Residential Director 4/97 - Present
Funding Corp.+
Mellon Trust of Florida, Director 8/97 - Present
N.A.
2875 Northeast 191st
Street
North Miami Beach, FL
33180
Mellon Bank, NA+ Executive Vice 7/96 - Present
President
The Boston Company, Inc.* Vice Chairman 1/97 - Present
Director 7/96 - Present
Mellon Preferred Capital Director 11/96 - 1/99
Corporation*
RECO, Inc.* President 11/96 - Present
Director 11/96 - Present
The Boston Company President 8/96 - 6/99
Financial Director 8/96 - 6/99
Services, Inc.*
Boston Safe Deposit and Director 7/96 - Present
Trust President 7/96 - 1/99
Company*
Mellon Trust of New York Director 6/96 - Present
1301 Avenue of the
Americas
New York, NY 10019
Mellon Trust of California Director 6/96 - Present
400 South Hope Street
Suite 400
Los Angeles, CA 90071
Mellon United National Director 3/98 - Present
Bank
1399 SW 1st Ave., Suite
400
Miami, Florida
Boston Group Holdings, Director 12/97 - Present
Inc.*
Dreyfus Financial Director 9/96 - Present
Services Corp. +
J. David Officer Dreyfus Investment Director 4/96 - Present
Vice Chairman and Services
Director (Continued) Corporation+
Richard W. Sabo Founders Asset Management President 12/98 - Present
Director LLC**** Chief Executive 12/98 - Present
Officer
Prudential Securities Senior Vice 07/91 - 11/98
New York, NY President 07/91 - 11/98
Regional Director
Richard F. Syron Thermo Electron President 6/99 - Present
Director 81 Wyman Street Chief Executive 6/99 - Present
Waltham, MA 02454-9046 Officer
American Stock Exchange Chairman 4/94 - 6/99
86 Trinity Place Chief Executive 4/94 - 6/99
New York, NY 10006 Officer
Ronald P. O'Hanley Franklin Portfolio Director 3/97 - Present
Vice Chairman Holdings, Inc.*
Franklin Portfolio Director 3/97 - Present
Associates,
LLC*
Boston Safe Deposit and Executive Committee 1/99 - Present
Trust Member
Company* Director 1/99 - Present
The Boston Company, Inc.* Executive Committee 1/99 - Present
Member 1/99 - Present
Director
Buck Consultants, Inc.++ Director 7/97 - Present
Newton Asset Management Executive 10/98 - Present
LTD Committee
(UK) Member 10/98 - Present
London, England Director
Mellon Asset Management Non-Resident 11/98 - Present
(Japan) Co., LTD Director
Tokyo, Japan
TBCAM Holdings, Inc.* Director 10/97 - Present
The Boston Company Asset Director 1/98 - Present
Management, LLC*
Boston Safe Advisors, Chairman 6/97 - Present
Inc.* Director 2/97 - Present
Pareto Partners Partner 5/97 - Present
271 Regent Street Representative
London, England W1R 8PP
Mellon Capital Management Director 2/97 -Present
Corporation***
Certus Asset Advisors Director 2/97 - Present
Corp.**
Ronald P. O'Hanley Mellon Bond Associates; Trustee 1/98 - Present
Vice Chairman LLP+ Chairman 1/98 - Present
(Continued)
Mellon Equity Associates; Trustee 1/98 - Present
LLP+ Chairman 1/98 - Present
Mellon-France Corporation+ Director 3/97 - Present
Laurel Capital Advisors+ Trustee 3/97 - Present
Stephen R. Byers Dreyfus Service Senior Vice 3/00 - Present
Director of Corporation++ President 5/97 - 11/99
Investments and Gruntal & Co., LLC Executive Vice 5/97 - 11/99
Senior Vice President New York, NY President 5/97 - 11/99
Partner
Executive Committee 5/97 -
11/99 Member Board of
Directors 5/97 - 11/99 Member
5/97 - 6/99 Treasurer Chief
Financial Officer
Mark N. Jacobs Dreyfus Investment Director 4/97 - Present
General Counsel, Advisors, Inc.++ Secretary 10/77 - 7/98
Vice President, and
Secretary The Dreyfus Trust Director 3/96 - Present
Company+++
The TruePenny President 10/98 - Present
Corporation++ Director 3/96 - Present
Dreyfus Service Director 3/97 - 3/99
Organization, Inc.++
William H. Maresca The Dreyfus Trust Chief Financial 3/99 - Present
Controller Company+++ Officer 9/98 - Present
Treasurer 3/97 - Present
Director
Dreyfus Service Chief Financial 12/98 - Present
Corporation++ Officer
Dreyfus Consumer Credit Treasurer 10/98 - Present
Corp. ++
Dreyfus Investment Treasurer 10/98 - Present
Advisors, Inc. ++
Dreyfus-Lincoln, Inc. Vice President 10/98 - Present
4500 New Linden Hill Road
Wilmington, DE 19808
The TruePenny Vice President 10/98 - Present
Corporation++
Dreyfus Precious Metals, Treasurer 10/98 - 12/98
Inc. +++
The Trotwood Corporation++ Vice President 10/98 - Present
Trotwood Hunters Vice President 10/98 - Present
Corporation++
Trotwood Hunters Site A Vice President 10/98 - Present
Corp. ++
William H. Maresca Dreyfus Transfer, Inc. Chief Financial 5/98 - Present
Controller One American Express Officer
(Continued) Plaza,
Providence, RI 02903
Dreyfus Service Treasurer 3/99 - Present
Organization, Inc.++ Assistant 3/93 - 3/99
Treasurer
Dreyfus Insurance Agency Assistant Treasurer 5/98 - Present
of
Massachusetts, Inc.++++
William T. Sandalls, Dreyfus Transfer, Inc. Chairman 2/97 - Present
Jr. One American Express
Executive Vice Plaza,
President Providence, RI 02903
Dreyfus Service Director 1/96 - Present
Corporation++ Executive Vice 2/97 - Present
President 2/97 - 12/98
Chief Financial
Officer
Dreyfus Investment Director 1/96 - Present
Advisors, Inc.++ Treasurer 1/96 - 10/98
Dreyfus-Lincoln, Inc. Director 12/96 - Present
4500 New Linden Hill Road President 1/97 - Present
Wilmington, DE 19808
Seven Six Seven Agency, Director 1/96 - 10/98
Inc.++ Treasurer 10/96 - 10/98
The Dreyfus Consumer Director 1/96 - Present
Credit Corp.++ Vice President 1/96 - Present
Treasurer 1/97 - 10/98
The Dreyfus Trust Company Director 1/96 - Present
+++
Dreyfus Service Treasurer 10/96 - 3/99
Organization,
Inc.++
Dreyfus Insurance Agency Director 5/97 - 3/99
of Treasurer 5/97 - 3/99
Massachusetts, Inc.++++ Executive Vice 5/97 - 3/99
President
Diane P. Durnin Dreyfus Service Senior Vice 5/95 - 3/99
Vice President - Corporation++ President -
Product Marketing and
Development Advertising
Division
Patrice M. Kozlowski None
Senior Vice President
- Corporate
Communications
Mary Beth Leibig None
Vice President -
Human Resources
Theodore A. Schachar Dreyfus Service Vice President -Tax 10/96 - Present
Vice President - Tax Corporation++
The Dreyfus Consumer Chairman 6/99 - Present
Credit President 6/99 - Present
Corporation ++
Theodore A. Schachar Dreyfus Investment Vice President - 10/96 - Present
Vice President - Tax Advisors, Tax
(Continued) Inc.++
Dreyfus Precious Metals, Vice President - 10/96 - 12/98
Inc. +++ Tax
Dreyfus Service Vice President - 10/96 - Present
Organization, Tax
Inc.++
Wendy Strutt None
Vice President
Raymond J. Van Cott Mellon Financial Vice President 7/98 - Present
Vice-President - Corporation+
Information Systems
Computer Sciences Vice President 1/96 - 7/98
Corporation
El Segundo, CA
James Bitetto The TruePenny Secretary 9/98 - Present
Assistant Secretary Corporation++
Dreyfus Service Assistant Secretary 8/98 - Present
Corporation++
Dreyfus Investment Assistant Secretary 7/98 - Present
Advisors, Inc.++
Dreyfus Service Assistant Secretary 7/98 - Present
Organization, Inc.++
Steven F. Newman Dreyfus Transfer, Inc. Vice President 2/97 - Present
Assistant Secretary One American Express Plaza Director 2/97 - Present
Providence, RI 02903 Secretary 2/97 - Present
Dreyfus Service Secretary 7/98 - Present
Organization, Inc.++ Assistant Secretary 5/98 - 7/98
</TABLE>
* The address of the business so indicated is One Boston Place, Boston,
Massachusetts, 02108.
** The address of the business so indicated is One Bush Street, Suite 450,
San Francisco, California 94104.
*** The address of the business so indicated is 595 Market Street, Suite 3000,
San Francisco, California 94105.
**** The address of the business so indicated is 2930 East Third Avenue,
Denver, Colorado 80206.
+ The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
++ The address of the business so indicated is 200 Park Avenue, New York, New
York 10166.
+++ The address of the business so indicated is 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144.
++++ The address of the business so indicated is 53 State Street, Boston,
Massachusetts 02109.
Item 27. Principal Underwriters
-------- ----------------------
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or exclusive
distributor:
1) Dreyfus A Bonds Plus, Inc.
2) Dreyfus Appreciation Fund, Inc.
3) Dreyfus Balanced Fund, Inc.
4) Dreyfus BASIC GNMA Fund
5) Dreyfus BASIC Money Market Fund, Inc.
6) Dreyfus BASIC Municipal Fund, Inc.
7) Dreyfus BASIC U.S. Government Money Market Fund
8) Dreyfus California Intermediate Municipal Bond Fund
9) Dreyfus California Tax Exempt Bond Fund, Inc.
10) Dreyfus California Tax Exempt Money Market Fund
11) Dreyfus Cash Management
12) Dreyfus Cash Management Plus, Inc.
13) Dreyfus Connecticut Intermediate Municipal Bond Fund
14) Dreyfus Connecticut Municipal Money Market Fund, Inc.
15) Dreyfus Florida Intermediate Municipal Bond Fund
16) Dreyfus Florida Municipal Money Market Fund
17) Dreyfus Founders Funds, Inc.
18) The Dreyfus Fund Incorporated
19) Dreyfus Global Bond Fund, Inc.
20) Dreyfus Global Growth Fund
21) Dreyfus GNMA Fund, Inc.
22) Dreyfus Government Cash Management Funds
23) Dreyfus Growth and Income Fund, Inc.
24) Dreyfus Growth and Value Funds, Inc.
25) Dreyfus Growth Opportunity Fund, Inc.
26) Dreyfus Debt and Equity Funds
27) Dreyfus Index Funds, Inc.
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Preferred Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Funds, Inc.
34) Dreyfus Investment Grade Bond Funds, Inc.
35) Dreyfus Investment Portfolios
36) The Dreyfus/Laurel Funds, Inc.
37) The Dreyfus/Laurel Funds Trust
38) The Dreyfus/Laurel Tax-Free Municipal Funds
39) Dreyfus LifeTime Portfolios, Inc.
40) Dreyfus Liquid Assets, Inc.
41) Dreyfus Massachusetts Intermediate Municipal Bond Fund
42) Dreyfus Massachusetts Municipal Money Market Fund
43) Dreyfus Massachusetts Tax Exempt Bond Fund
44) Dreyfus MidCap Index Fund
45) Dreyfus Money Market Instruments, Inc.
46) Dreyfus Municipal Bond Fund, Inc.
47) Dreyfus Municipal Cash Management Plus
48) Dreyfus Municipal Money Market Fund, Inc.
49) Dreyfus New Jersey Intermediate Municipal Bond Fund
50) Dreyfus New Jersey Municipal Bond Fund, Inc.
51) Dreyfus New Jersey Municipal Money Market Fund, Inc.
52) Dreyfus New Leaders Fund, Inc.
53) Dreyfus New York Municipal Cash Management
54) Dreyfus New York Tax Exempt Bond Fund, Inc.
55) Dreyfus New York Tax Exempt Money Market Fund
56) Dreyfus U.S. Treasury Intermediate Term Fund
57) Dreyfus U.S. Treasury Long Term Fund
58) Dreyfus 100% U.S. Treasury Money Market Fund
59) Dreyfus U.S. Treasury Short Term Fund
60) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
61) Dreyfus Pennsylvania Municipal Money Market Fund
62) Dreyfus Premier California Municipal Bond Fund
63) Dreyfus Premier Equity Funds, Inc.
64) Dreyfus Premier International Funds, Inc.
65) Dreyfus Premier GNMA Fund
66) Dreyfus Premier Opportunity Funds
67) Dreyfus Premier Worldwide Growth Fund, Inc.
68) Dreyfus Premier Municipal Bond Fund
69) Dreyfus Premier New York Municipal Bond Fund
70) Dreyfus Premier State Municipal Bond Fund
71) Dreyfus Premier Value Equity Funds
72) Dreyfus Short-Intermediate Government Fund
73) Dreyfus Short-Intermediate Municipal Bond Fund
74) The Dreyfus Socially Responsible Growth Fund, Inc.
75) Dreyfus Stock Index Fund
76) Dreyfus Tax Exempt Cash Management
77) The Dreyfus Premier Third Century Fund, Inc.
78) Dreyfus Treasury Cash Management
79) Dreyfus Treasury Prime Cash Management
80) Dreyfus Variable Investment Fund
81) Dreyfus Worldwide Dollar Money Market Fund, Inc.
82) General California Municipal Bond Fund, Inc.
83) General California Municipal Money Market Fund
84) General Government Securities Money Market Funds, Inc.
85) General Money Market Fund, Inc.
86) General Municipal Bond Fund, Inc.
87) General Municipal Money Market Funds, Inc.
88) General New York Municipal Bond Fund, Inc.
89) General New York Municipal Money Market Fund
(b)
<TABLE>
Positions and
Name and principal Offices with
Business address Positions and offices with the Distributor Registrant
---------------- ------------------------------------------ ----------
<S> <C> <C>
Thomas F. Eggers * Chief Executive Officer and Chairman of the None
Board
J. David Officer * President and Director None
Stephen Burke * Executive Vice President None
Charles Cardona * Executive Vice President None
Anthony DeVivio ** Executive Vice President None
David K. Mossman ** Executive Vice President None
Jeffrey N. Nachman *** Executive Vice President and Chief Operations None
Officer
William T. Sandalls, Jr. * Executive Vice President and Director None
Wilson Santos ** Executive Vice President and Director of None
Client Services
William H. Maresca * Chief Financial Officer None
Ken Bradle ** Senior Vice President None
Stephen R. Byers * Senior Vice President None
Frank J. Coates * Senior Vice President None
Joseph Connolly * Senior Vice President Vice President
and Treasurer
William Glenn * Senior Vice President None
Michael Millard ** Senior Vice President None
Mary Jean Mulligan ** Senior Vice President None
Bradley Skapyak * Senior Vice President None
Jane Knight * Chief Legal Officer and Secretary None
Stephen Storen * Chief Compliance Officer None
Jeffrey Cannizzaro * Vice President - Compliance None
Maria Georgopoulos * Vice President - Facilities Management None
William Germenis Vice President - Compliance None
Walter T. Harris * Vice President None
Janice Hayles * Vice President None
Hal Marshall * Vice President - Compliance None
Paul Molloy * Vice President None
Theodore A. Schachar * Vice President - Tax None
James Windels * Vice President None
James Bitetto * Assistant Secretary None
</TABLE>
* Principal business address is 200 Park Avenue, New York, NY 10166.
** Principal business address is 144 Glenn Curtiss Blvd., Uniondale, NY
11556-0144.
*** Principal business address is 401 North Maple Avenue, Beverly Hills,
CA 90210.
Item 28. 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
100 Church Street
New York, NY 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 29. Management Services
------- -------------------
Not Applicable
Item 30. Undertakings
------- ------------
None
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 28th day of September, 2000.
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
BY: /s/ *
------------------------------------------
, 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/Stephen E. Canter* Vice Presidentand Assistant 09/28/00
______________________________ Treasurer (Principal Accounting
Stephen E. Canter* Officer)
/s/ Joseph Connolly* President and Treasurer 09/28/00
______________________________ Principal Executive, Financial
Joseph Connolly and Accounting Officer)
/s/Joseph S. DiMartino* Chairman of the Board 09/28/00
------------------------------
Joseph S. DiMartino
/s/David W. Burke* Board member 09/28/00
------------------------------
David W. Burke
/s/Samuel Chase* Board member 09/28/00
-----------------------------
Samuel Chase
/s/Gordon J. Davis* Board member 09/28/00
-----------------------------
Gordon J. Davis
/s/Joni Evans* Board member 09/28/00
-----------------------------
Joni Evans
/s/Arnold S. Hiatt* Board member 09/28/00
-----------------------------
Arnold S. Hiatt
/s/Burton N. Wallack* Board member 09/28/00
-----------------------------
Burton N. Wallack
*BY: /s/John B. Hammalian*
----------------------
John B. Hammalian,
Attorney-in-Fact
Exhibit No.
23. (b) Amended By-Laws
(e) Distribution Agreement and
Forms of Service Agreements
(j) Consent of Independent Auditors
(m) Rule 12b-1 Plan
(p) Code of Ethics
OTHER EXHIBITS
(a) Powers of Attorney
(b) Certificate of Secretary
