__________________________________________________________________________
DREYFUS NEW YORK TAX EXEMPT FUNDS
COMBINED PART B
(STATEMENT OF ADDITIONAL INFORMATION)
FOR
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
OCTOBER 1, 1996
AS REVISED NOVEMBER 11, 1996
__________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Combined
Prospectus of Dreyfus New York Tax Exempt Money Market Fund (the "Money
Market Fund"), Dreyfus New York Tax Exempt Intermediate Bond Fund (the
"Intermediate Bond Fund"), and Dreyfus New York Tax Exempt Bond Fund, Inc.
(the "Bond Fund")(collectively, the "Funds"), dated October 1, 1996, as it
may be revised from time to time. To obtain a copy of the Prospectus,
please write to the Funds at 144 Glenn Curtiss Boulevard, Uniondale, New
York 11556-0144, or call the following numbers:
Call Toll Free 1-800-645-6561
In New York City - Call 1-718-895-1206
Outside the U.S. and Canada - Call 516-794-5452
The Dreyfus Corporation (the "Manager") serves as each Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of each Fund's shares.
Each Fund is a separate entity with a separate portfolio. The
operations and investment results of one Fund are unrelated to those of
each other Fund. This combined Statement of Additional Information has
been prepared for your convenience to provide you the opportunity to
consider three investment choices in one document.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . . . . . . . B-2
Management of the Funds. . . . . . . . . . . . . . . . . . . . . . B-14
Management Agreements. . . . . . . . . . . . . . . . . . . . . . . B-18
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . B-20
Service Plan and Shareholder Services Plans. . . . . . . . . . . . B-21
Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . B-23
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . B-25
Determination of Net Asset Value . . . . . . . . . . . . . . . . . B-28
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . B-29
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . B-30
Performance Information. . . . . . . . . . . . . . . . . . . . . . B-31
Information About the Funds. . . . . . . . . . . . . . . . . . . . B-33
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors . . . . . . . . . . . . B-34
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-35
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-47
Financial Statements and Reports of Independent Auditors
Money Market Fund. . . . . . . . . . . . . . . . . . . . B-56
Intermediate Bond Fund . . . . . . . . . . . . . . . . . B-65
Bond Fund. . . . . . . . . . . . . . . . . . . . . . . . B-77
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the sections in the Prospectus entitled "Description of
the Funds" and "Appendix."
Portfolio Securities
The average distribution of investments (at value) in Municipal
Obligations by ratings for the fiscal year ended May 31, 1996, computed on
a monthly basis, for each Fund was as follows:
<TABLE>
<CAPTION>
Fitch Moody's Standard &
Investors Investors Poor's Percentage of Value
Service, L.P. Service, Inc. Ratings Group Money Intermediate
("Fitch") or ("Moody's") or ("S&P") Market Fund Bond Fund Bond Fund
<S> <C> <C> <C> <C> <C>
AAA Aaa AAA 0.8% 26.4% 26.7%
AA Aa AA N/A 13.1% 15.1%
A A A N/A 26.0% 32.9%
BBB Baa BBB N/A 28.4% 19.2%
BB Ba BB N/A - 2.0%
F-1 VMIG1/MIG1,P-1 SP-1,A-1 94.3% 2.6%* 4.0%*
Not Rated Not Rated Not Rated 4.9%** 3.5%*** .1%****
______ ______ ______
100.0% 100.0% 100.0%
====== ====== ======
</TABLE>
______________________________________
* Includes notes rated within the highest grades by Moody's, S&P or
Fitch, which, together with Municipal Obligations rated Baa/BBB, are
taken into account at the time of a purchase to ensure that the
portfolios of the Intermediate Bond Fund and Bond Fund (collectively,
the "Longer Term Funds") meet the 80% minimum quality standard
discussed in the Prospectus.
** Includes securities comprising 4.9% of the Money Market Fund's market
value which, while not rated, have been determined by the Manager to
be of comparable quality to securities rated MIG1.
*** Includes securities comprising 3.5% of the Intermediate Bond Fund's
market value which, while not rated, have been determined by the
Manager to be of comparable quality to securities in the following
rating categories: Aa/AA (.8%) and Baa/BBB (2.7%).
**** Includes securities comprising .1% of the Bond Fund's market value
which, while not rated, have been determined by the Manager to be of
comparable quality to securities rated Baa/BBB.
Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligations may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses
and lending such funds to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or
on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated
housing facilities, sports facilities, convention or trade show
facilities, airport, mass transit, industrial, port or parking facilities,
air or water pollution control facilities and certain local facilities for
water supply, gas, electricity, or sewage or solid waste disposal; the
interest paid on such obligations may be exempt from Federal income tax,
although current tax laws place substantial limitations on the size of
such issues. Such obligations are considered to be Municipal Obligations
if the interest paid thereon qualifies as exempt from Federal income tax
in the opinion of bond counsel to the issuer. There are, of course,
variations in the security of Municipal Obligations, both within a
particular classification and between classifications.
Floating and variable rate demand notes and bonds are tax exempt
obligations normally having stated maturities in excess of one year, but
which permit the holder to demand payment of principal at any time or at
specified intervals. The issuer of such obligations normally has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligation plus accrued interest upon
a specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand obligation is based on a known lending
rate, such as a bank's prime rate, and is adjusted automatically each time
such rate is adjusted. The interest rate on a variable rate demand
obligation is adjusted automatically at specified intervals.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation, and rating of the issue.
The imposition of a Fund's management fee, as well as other operating
expenses, including fees paid under a Service Plan or Shareholder Services
Plan, will have the effect of reducing the yield to investors in that
Fund.
Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
normally associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation.
However, certain lease obligations contain "non-appropriation" clauses
which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated
for such purpose on a yearly basis. Although "non-appropriation" lease
obligations are secured by the leased property, disposition of the
property in the event of foreclosure might prove difficult. The Money
Market Fund will invest only in those lease obligations that (1) are rated
in one of the two highest rating categories for debt obligations by at
least two nationally recognized statistical rating organizations (or one
rating organization if the lease obligation was rated only by one such
organization); or (2) if unrated, are purchased principally from the
issuer or domestic banks or other responsible third parties, in each case
only if the seller shall have entered into an agreement with the Money
Market Fund providing that the seller or other responsible third party
will either remarket or repurchase the lease obligation within a short
period after demand by the Fund. The staff of the Securities and Exchange
Commission currently considers certain lease obligations to be illiquid.
With regard to the Longer Term Funds, determination as to the liquidity of
such securities is made in accordance with guidelines established by each
Fund's Board. Pursuant to such guidelines, each Board has directed the
Manager to monitor carefully each Fund's investment in such securities
with particular regard to (1) the frequency of trades and quotes for the
lease obligation; (2) the number of dealers willing to purchase or sell
the lease obligation and the number of other potential buyers; (3) the
willingness of dealers to undertake to make a market in the lease
obligation; (4) the nature of the marketplace trades including the time
needed to dispose of the lease obligation, the method of soliciting offers
and the mechanics of transfer; and (5) such other factors concerning the
trading market for the lease obligation as the Manager may deem relevant.
In addition, in evaluating the liquidity and credit quality of a lease
obligation that is unrated, each Fund's Board has directed the Manager to
consider (a) whether the lease can be cancelled; (b) what assurance there
is that the assets represented by the lease can be sold; (c) the strength
of the lessee's general credit (e.g., its debt, administrative, economic,
and financial characteristics); (d) the likelihood that the municipality
will discontinue appropriating funding for the leased property because the
property is no longer deemed essential to the operations of the
municipality (e.g., the potential for an "event of nonappropriation"); (e)
the legal recourse in the event of failure to appropriate; and (f) such
other factors concerning credit quality as the Manager may deem relevant.
No Fund will invest more than 15% (10% in the case of the Money Market
Fund) of the value of its net assets in lease obligations that are
illiquid and in other illiquid securities. See each Fund's "Investment
Restriction No. 11" below.
The Money Market Fund will not purchase tender option bonds unless (a)
the demand feature applicable thereto is exercisable by the Fund within 13
months of the date of such purchase upon no more than 30 days' notice and
thereafter is exercisable by the Fund no less frequently than annually
upon no more than 30 days' notice and (b) at the time of such purchase,
the Manager reasonably expects (i) based upon its assessment of current
and historical interest rate trends, that prevailing short-term tax exempt
rates will not exceed the stated interest rate on the underlying Municipal
Obligations at the time of the next tender fee adjustment and (ii) that
the circumstances which might entitle the grantor of a tender option to
terminate the tender option would not occur prior to the time of the next
tender opportunity. At the time of each tender opportunity, the Fund will
exercise the tender option with respect to any tender option bonds unless
the Manager reasonably expects, (x) based upon its assessment of current
and historical interest rate trends, that prevailing short-term tax exempt
rates will not exceed the stated interest rate on the underlying Municipal
Obligations at the time of the next tender fee adjustment, and (y) that
the circumstances which entitle the grantor of a tender option to
terminate the tender option would not occur prior to the time of the next
tender opportunity. The Fund will exercise the tender feature with
respect to tender option bonds, or otherwise dispose of its tender option
bonds, prior to the time the tender option is scheduled to expire pursuant
to the terms of the agreement under which the tender option is granted.
The Money Market Fund otherwise will comply with the provisions of
Rule 2a-7 under the Investment Company Act of 1940, as amended (the "1940
Act"), in connection with the purchase of tender option bonds, including,
without limitation, the requisite determination by the Money Market Fund's
Board that the tender option bonds in question meet the quality standards
described in Rule 2a-7, which, in the case of a tender option bond subject
to a conditional demand feature, would include a determination that the
security has received both the required short-term and long-term quality
rating or is determined to be of comparable quality. In the event of a
default of the Municipal Obligation underlying a tender option bond, or
the termination of the tender option agreement, the Money Market Fund
would look to the maturity date of the underlying security for purposes of
compliance with Rule 2a-7 and, if its remaining maturity was greater than
13 months, the Fund would sell the security as soon as would be
practicable.
Each Fund will purchase tender option bonds only when the Fund is
satisfied that the custodial and tender option arrangements will not
adversely affect the tax exempt status of the underlying Municipal
Obligations and that payment of any tender fees will not have the effect
of creating taxable income for such Fund. Based on the tender option bond
agreement, each Fund expects to be able to value the tender option bond at
par; however, the value of the instrument will be monitored to assure that
it is valued at fair value.
Ratings of Municipal Obligations. If, subsequent to being purchased
by the Money Market Fund, (a) an issue of rated Municipal Obligations
ceases to be rated in the highest rating category by at least two rating
organizations (or one rating organization if the instrument was rated by
only one organization), or the Money Market Fund's Board determines that
it is no longer of comparable quality; or (b) the Manager becomes aware
that any portfolio security not so highly rated or any unrated security
has been given a rating by any rating organization below the rating
organization's second highest rating category, the Money Market Fund's
Board will reassess promptly whether such security presents minimal credit
risk and will cause the Fund to take such action as it determines is in
the best interest of the Fund and its shareholders, provided that the
reassessment required by clause (b) is not required if the portfolio
security is disposed of or matures within five business days of the
Manager becoming aware of the new rating and the Fund's Board is
subsequently notified of the Manager's actions. Subsequent to being
purchased by the Longer Term Funds, an issue of rated Municipal
Obligations may cease to be rated or its rating may be reduced below the
minimum required for purchase by such Funds. Neither event will require
the sale of such Municipal Obligations by a Longer Term Fund, but the
Manager will consider such event in determining whether the Fund should
continue to hold the Municipal Obligations.
To the extent the ratings by Moody's, S&P or Fitch for Municipal
Obligations may change as a result of changes in such organizations or
their rating systems, the Funds will attempt to use comparable ratings as
standards for its investments in accordance with the investment policies
contained in the Prospectus and this Statement of Additional Information.
The ratings of Moody's, S&P and Fitch represent their opinions as to the
quality of the Municipal Obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective
and are not absolute standards of quality. Although these ratings may be
an initial criterion for selection of portfolio investments, the Manager
also will evaluate these securities and the creditworthiness of the
issuers of such securities.
Illiquid Securities. Where a substantial market of qualified
institutional buyers develops for certain restricted securities purchased
by a Fund pursuant to Rule 144A under the Securities Act of 1933, as
amended, the Fund intends to treat such securities as liquid securities in
accordance with procedures approved by the Fund's Board. Because it is
not possible to predict with assurance how the market for restricted
securities pursuant to Rule 144A will develop, each Fund's Board has
directed the Manager to monitor carefully the Fund's investments in such
securities with particular regard to trading activity, availability of
reliable price information and other relevant information. To the extent
that, for a period of time, qualified institutional buyers cease
purchasing restricted securities pursuant to Rule 144A, a Fund's investing
in such securities may have the effect of increasing the level of
illiquidity in its investment portfolio during such period.
Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities are supported by the full faith and credit
of the U.S. Treasury; others by the right of the issuer to borrow from the
Treasury; others by discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality; and others
only by the credit of the agency or instrumentality. These securities
bear fixed, floating or variable rates of interest. While the U.S.
Government provides financial support to such U.S. Government-sponsored
agencies or instrumentalities, no assurance can be given that it will
always do so, since it is not so obligated by law.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified
period of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate. Investments in time deposits generally
are limited to London branches of domestic banks that have total assets in
excess of one billion dollars. Time deposits which may be held by a Fund
will not benefit from insurance from the Bank Insurance Fund or the
Savings Association Insurance Fund administered by the Federal Deposit
Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments
reflect the obligation both of the bank and of the drawer to pay the face
amount of the instrument upon maturity. Other short-term bank obligations
may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.
In a repurchase agreement, the Fund buys, and the seller agrees to
repurchase, a security at a mutually agreed upon time and price (usually
within seven days). The repurchase agreement thereby determines the yield
during the purchaser's holding period, while the seller's obligation to
repurchase is secured by the value of the underlying security. The Fund's
custodian or sub-custodian will have custody of, and will hold in a
segregated account, securities acquired by the Fund under a repurchase
agreement. Repurchase agreements are considered by the staff of the
Securities and Exchange Commission to be loans by the Fund that enters
into them. In an attempt to reduce the risk of incurring a loss on a
repurchase agreement, a Fund will enter into repurchase agreements only
with domestic banks with total assets in excess of $1 billion or primary
government securities dealers reporting to the Federal Reserve Bank of New
York, with respect to securities of the type in which the Fund may invest,
and will require that additional securities be deposited with it if the
value of the securities purchased should decrease below resale price.
Repurchase agreements could involve risks in the event of a default or
insolvency of the other party to the agreement, including possible delays
or restrictions upon the Fund's ability to dispose of the underlying
securities.
Management Policies
Derivatives. (Longer Term Funds only). Each Longer Term Fund may
invest in Derivatives (as defined in the Funds' Combined Prospectus) for a
variety of reasons, including to hedge certain market risks, to provide a
substitute for purchasing or selling particular securities or to increase
potential income gain. Derivatives may provide a cheaper, quicker or more
specifically focused way for the Longer Term Fund to invest than
"traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and
the portfolio as a whole. Derivatives permit the Fund to increase or
decrease the level of risk, or change the character of the risk, to which
its portfolio is exposed in much the same way as the Fund can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives. Exchange-traded Derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
variation margin requirements) operated by the clearing agency in order to
reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated
with Derivatives purchased on an exchange. By contrast, no clearing
agency guarantees over-the-counter Derivatives. Therefore, each party to
an over-the-counter Derivative bears the risk that the counterparty will
default. Accordingly, the Manager will consider the creditworthiness of
counterparties to over-the-counter Derivatives in the same manner as it
would review the credit quality of a security to be purchased by the Fund.
Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only
investor with sufficient understanding of the Derivative to be interested
in bidding for it.
Futures Transactions--In General. (Longer Term Funds only). Each Longer
Term Fund may enter into futures contracts in U.S. domestic markets, such
as the Chicago Board of Trade. Engaging in these transactions involves
risk of loss to the Fund which could adversely affect the value of the
Fund's net assets. Although the Longer Term Funds intend to purchase or
sell futures contracts only if there is an active market for such
contracts, no assurance can be given that a liquid market will exist for
any particular contract at any particular time. Many futures exchanges
and boards of trade limit the amount of fluctuation permitted in futures
contract prices during a single trading day. Once the daily limit has
been reached in a particular contract, no trades may be made that day at a
price beyond that limit or trading may be suspended for specified periods
during the trading day. Futures contract prices could move to the limit
for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and potentially
subjecting the Fund to substantial losses.
Successful use of futures by each Longer Term Fund also is subject to
the Manager's ability to predict correctly movements in the direction of
the relevant market and, to the extent the transaction is entered into for
hedging purposes, to ascertain the appropriate correlation between the
transaction being hedged and the price movements of the futures contract.
For example, if a Fund uses futures to hedge against the possibility of a
decline in the market value of securities held in its portfolio and the
prices of such securities instead increase, such Fund will lose part or
all of the benefit of the increased value of securities which it has
hedged because it will have offsetting losses in its futures positions.
Furthermore, if in such circumstances the Fund has insufficient cash, it
may have to sell securities to meet daily variation margin requirements.
The Fund may have to sell such securities at a time when it may be
disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, the Longer Term Funds may be required to
segregate permissible liquid assets in connection with its commodities
transactions in an amount generally equal to the value of the underlying
commodity. The segregation of such assets will have the effect of
limiting the Funds' ability otherwise to invest those assets.
Specific Futures Transactions. (Longer Term Funds only). The Longer Term
Fund may purchase and sell interest rate futures contracts. An interest
rate future obligates a Fund to purchase or sell an amount of a specific
debt security at a future date at a specific price.
Options--In General. (Longer Term Funds only). The Longer Term Fund may
purchase and write (i.e., sell) call or put options with respect to
specific securities and interest rate futures contracts. A call option
gives the purchaser of the option the right to buy, and obligates the
writer to sell, the underlying security or securities at the exercise
price at any time during the option period, or at a specific date.
Conversely, a put option gives the purchaser of the option the right to
sell, and obligates the writer to buy, the underlying security or
securities at the exercise price at any time during the option period or
at a specific date.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen
events, at times have rendered certain of the clearing facilities
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading
halts or suspensions in one or more options. There can be no assurance
that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it
might not be possible to effect closing transactions in particular
options.
Successful use of options by the Longer Term Funds will be subject to
the Manager's ability to predict correctly movements in interest rates.
To the extent the Manager's predictions are incorrect, the Funds may incur
losses.
Future Developments. (Longer Term Funds only). The Longer Term Funds
may take advantage of opportunities in the area of options and futures
contracts and options on futures contracts and any other Derivatives which
are not presently contemplated for use by the Longer Term Funds or which
are not currently available but which may be developed, to the extent such
opportunities are both consistent with the Fund's investment objective and
legally permissible for the Fund. Before entering into such transactions
or making any such investment, appropriate disclosure will be provided in
the Funds' Combined Prospectus or this Statement of Additional
Information.
Lending Portfolio Securities. (Longer Term Funds only). In
connection with its securities lending transactions, each Longer Term Fund
may return to the borrower or a third party which is unaffiliated with the
Funds, and which is acting as a "placing broker," a part of the interest
earned from the investment of collateral received from securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value
of the securities rises above the level of such collateral; (3) the Fund
must be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any dividends, interest or
other distributions payable on the loaned securities, and any increase in
market value; and (5) the Fund may pay only reasonable custodian fees in
connection with the loan.
Forward Commitments. Municipal Obligations and other securities
purchased on a forward commitment or when-issued basis are subject to
changes in value (generally changing in the same way, i.e., appreciating
when interest rates decline and depreciating when interest rates rise)
based upon the public's perception of the creditworthiness of the issuer
and changes, real or anticipated, in the level of interest rates.
Securities purchased on a when-issued basis may expose the Fund to risks
because they may experience such fluctuations prior to their actual
delivery. Purchasing securities on a when-issued basis can involve the
additional risk that the yield available in the market when the delivery
takes place actually may be higher than that obtained in the transaction
itself. Purchasing securities on a when-issued basis when the Fund is
fully or almost fully invested may result in greater potential fluctuation
in the value of the Fund's net assets and its net asset value per share.
Investment Considerations and Risks
Investing in New York Municipal Obligations. Each investor should
consider carefully the special risks inherent in the investment in New
York Municipal Obligations by each Fund. These risks result from the
financial condition of New York State and certain of its public bodies and
municipalities, including New York City. Beginning in early 1975, New
York State, New York City and other State entities faced serious financial
difficulties which jeopardized the credit standing and impaired the
borrowing abilities of such entities and contributed to high interest
rates on, and lower market prices for, debt obligations issued by them. A
recurrence of such financial difficulties or a failure of certain
financial recovery programs could result in defaults or declines in the
market values of various New York Municipal Obligations in which the Fund
may invest. If there should be a default or other financial crisis
relating to New York State, New York City, a State or City agency, or a
State municipality, the market value and marketability of outstanding New
York Municipal Obligations in the Fund's portfolio and the interest income
to the Fund could be adversely affected. Moreover, the national recession
and the significant slowdown in the New York and regional economies in the
early 1990s added substantial uncertainty to estimates of the State's tax
revenues, which, in part, caused the State to incur cash-basis operating
deficits in the General Fund and issue deficit notes during the fiscal
periods 1989 through 1992. The State's financial operations have
improved, however, during recent fiscal years. For its fiscal periods
1993 through 1996, the State recorded balanced budgets on a cash basis,
with substantial fund balances in the General Fund in fiscal 1992-93 and
1993-94 and smaller fund balances in fiscal 1994-95 and 1995-96. There
can be no assurance that New York will not face substantial potential
budget gaps in future years. In January 1992, Moody's lowered from A to
Baa1 the ratings on certain appropriation-backed debt of New York State
and its agencies. The State's general obligation, state guaranteed and
New York State Local Government Assistance Corporation bonds continue to
be rated A by Moody's. In January 1992, S&P lowered from A to A- the
ratings of New York State general obligation bonds and stated that it
continued to assess the ratings outlook as negative. The ratings of
various agency debt, state moral obligations, contractual obligations,
lease purchase obligations and state guarantees also were lowered. In
February 1991, Moody's lowered its rating on New York City's general
obligation bonds from A to Baa1 and in July 1995, S&P lowered its rating
on such bonds from A- to BBB+. The rating changes reflected the rating
agencies' concerns about the financial condition of New York State and
City, the heavy debt load of the State and City, and economic
uncertainties in the region. Investors should review "Appendix A" which
more fully sets forth these and other risk factors.
Lower Rated Bonds. This section applies only to the Longer Term
Funds. Lower rated bonds as described herein are not eligible investments
for the Money Market Fund. Each Longer Term Fund is permitted to invest
in securities rated Ba by Moody's or BB by S&P or Fitch and as low as the
lowest rating assigned by Moody's, S&P or Fitch. Such bonds, though
higher yielding, are characterized by risk. See "Description of the
Funds--Investment Considerations and Risks--Lower Rated Bonds" in the
Prospectus for a discussion of certain risks and "Appendix B" for a
general description of Moody's, S&P and Fitch ratings of Municipal
Obligations. Although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market value
risk of these bonds. Each Longer Term Fund will rely on the Manager's
judgment, analysis and experience in evaluating the creditworthiness of an
issuer.
Investors should be aware that the market values of many of these
bonds tend to be more sensitive to economic conditions than are higher
rated securities. These bonds generally are considered by Moody's, S&P
and Fitch to be predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the
obligation and generally will involve more credit risk than securities in
the higher rating categories.
Because there is no established retail secondary market for many of
these securities, each Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these bonds does exist, it generally
is not as liquid as the secondary market for higher rated securities. The
lack of a liquid secondary market may have an adverse impact on market
price and yield and a Fund's ability to dispose of particular issues when
necessary to meet its liquidity needs or in response to a specific
economic event such as a deterioration in the creditworthiness of the
issuer. The lack of a liquid secondary market for certain securities also
may make it more difficult for a Fund to obtain accurate market quotations
for purposes of valuing its portfolio and calculating its net asset value.
Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of these
securities. In such cases, judgment may play a greater role in valuation
because less reliable, objective data may be available.
These bonds may be particularly susceptible to economic downturns. It
is likely that any economic recession could severely disrupt the market
for such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn
could adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon and increase the incidence of
default of such securities.
Each Fund may acquire these bonds during an initial offering. Such
securities may involve special risks because they are new issues. Neither
Fund has any arrangements with the Distributor or any other persons
concerning the acquisition of such securities, and the Manager will review
carefully the credit and other characteristics pertinent to such new
issues.
The credit risk factors pertaining to lower rated securities also
apply to lower rated zero coupon bonds, in which each Longer Term Fund may
invest up to 5% of its respective total assets. Zero coupon bonds carry
an additional risk in that, unlike bonds which pay interest throughout the
period to maturity, a Fund will realize no cash until the cash payment
date unless a portion of such securities are sold and, if the issuer
defaults, the Fund may obtain no return at all on its investment. See
"Dividends, Distributions and Taxes."
Investment Restrictions
Money Market Fund. The Money Market Fund has adopted investment
restrictions numbered 1 through 9 as fundamental policies, which cannot be
changed without approval by the holders of a majority (as defined in the
1940 Act) of the Money Market Fund's outstanding voting shares.
Investment restrictions numbered 10 and 11 are not fundamental policies
and may be changed by a vote of a majority of the Money Market Fund's
Board members at any time. The Money Market Fund may not:
1. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the
Prospectus.
2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the
Fund's total assets (including the amount borrowed) based on the
lesser of cost or market, less liabilities (not including the
amount borrowed) at the time the borrowing is made. While
borrowings of the Money Market Fund exceed 5% of the value of
the
Money Market Fund's total assets, it will not make any
additional investments.
3. Sell securities short or purchase securities on margin.
4. Underwrite the securities of other issuers, except that the Money
Market Fund may bid separately or as part of a group for the
purchase of Municipal Obligations directly from an issuer for its
own portfolio to take advantage of the lower purchase price
available.
5. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas
interests, but this shall not prevent the Fund from investing in
Municipal Obligations secured by real estate or interests
therein.
6. Make loans to others except through the purchase of qualified
debt obligations and the entry into repurchase agreements
referred to above and in the Prospectus.
7. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no
such limitation on the purchase of Municipal Obligations and, for
temporary defensive purposes, securities issued by domestic banks
and obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
8. Purchase more than 10% of the voting securities of any issuer or
invest in companies for the purpose of exercising control.
9. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or
acquisition
of assets.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings.
11. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are
illiquid, if, in the aggregate, more than 10% of the value of the
Fund's net assets would be so invested.
Intermediate Bond Fund and Bond Fund. Each Longer Term Fund has
adopted investment restrictions numbered 1 through 7 as fundamental
policies, which cannot be changed, as to a Fund, without approval by the
holders of a majority (as defined in the 1940 Act) of such Fund's
outstanding voting shares. Investment restrictions numbered 8 through 12
are not fundamental policies and may be changed, as to a Longer Term Fund,
by vote of a majority of such Fund's Board members at any time. Neither
Longer Term Fund may:
1. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be
no such limitation on the purchase of Municipal Obligations
and, for temporary defensive purposes, securities issued by
domestic banks and obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities.
2. Borrow money, except to the extent permitted under the 1940
Act (which currently limits borrowing to no more than 33-1/3%
of the value of the Fund's total assets). For purposes of
this investment restriction, the entry into options, forward
contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices shall
not constitute borrowing.
3. Purchase or sell real estate, commodities or commodity
contracts, or oil and gas interests, but this shall not
prevent the Fund from investing in Municipal Obligations
secured by real estate or interests therein, or prevent the
Fund from purchasing and selling options, forward contracts,
futures contracts, including those relating to indices, and
options on futures contracts or indices.
4. Underwrite the securities of other issuers, except that the
Fund may bid separately or as part of a group for the
purchase of Municipal Obligations directly from an issuer for
its own portfolio to take advantage of the lower purchase
price available, and except to the extent the Fund may be
deemed an underwriter under the Securities Act of 1933, as
amended, by virtue of disposing of portfolio securities.
5. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements;
however, the Fund may lend its portfolio securities in an amount
not to exceed 33-1/3% of the value of its total assets. Any
loans of portfolio securities will be made according to
guidelines established by the Securities and Exchange Commission
and the Fund's Board.
6. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act), except to the extent that the activities
permitted in Investment Restrictions numbered 2, 3 and 10 may be
deemed to give rise to a senior security.
7. Sell securities short or purchase securities on margin, but the
Fund may make margin deposits in connection with transactions in
options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or
indices.
8. Purchase securities other than Municipal Obligations and Taxable
Investments and those arising out of transactions in futures and
options or as otherwise provided in the Prospectus.
9. Invest in securities of other investment companies, except to
the extent permitted under the 1940 Act.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings
and to the extent related to the deposit of assets in escrow in
connection with the purchase of securities on a when-issued or
delayed-delivery basis and collateral and initial or variation
margin arrangements with respect to options, futures contracts,
including those related to indices, and options on futures
contracts or indices.
11. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which
are illiquid (which securities could include participation
interests (including municipal lease/purchase agreements) that
are not subject to the demand feature described in the
Prospectus, and floating and variable rate demand obligations as
to which the Fund cannot exercise the demand feature as
described in the Prospectus on less than seven days' notice and
as to which there is no secondary market), if, in the aggregate,
more than 15% of its net assets would be so invested.
12. Invest in companies for the purpose of exercising control.
All Funds - For purposes of Investment Restriction No. 7 with respect
to the Money Market Fund, and Investment Restriction No. 1 with respect to
the Longer Term Funds, industrial development bonds, where the payment of
principal and interest is the ultimate responsibility of companies within
the same industry, are grouped together as an "industry." If a percentage
restriction is adhered to at the time of investment, a later increase or
decrease in percentage resulting from a change in values or assets will
not constitute a violation of such restriction.
Each Fund may make commitments more restrictive than the respective
restrictions listed above so as to permit the sale of such Fund's shares
in certain states. Should any Fund determine that a commitment is no
longer in the best interest of such Fund and its shareholders, it reserves
the right to revoke the commitment by terminating the sale of its shares
in the state involved.
MANAGEMENT OF THE FUNDS
Board members and officers of each Fund, together with information as
to their principal business occupations during at least the last five
years, are shown below. Each Board member who is deemed to be an
"interested person" of the Funds, as defined in the 1940 Act, is indicated
by an asterisk.
Board Members of the Funds
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of various funds in the Dreyfus Family of Funds. He is
also Chairman of the Board of Noel Group, Inc., a venture capital
company; and a director of the Muscular Dystrophy Association,
HealthPlan Services Corporation, Belding Heminway Company, Inc., a
manufacturer and marketer of industrial threads, specialty yarns,
home furnishings and fabrics, Curtis Industries, Inc., a national
distributor of security products, chemicals and automotive and other
hardware, Simmons Outdoor Corporation and Staffing Resources, Inc.
For more than five years prior to January 1995, he was President, a
director and, until August 1994, Chief Operating Officer of the
Manager and Executive Vice President and a director of Dreyfus
Service Corporation, a wholly-owned subsidiary of the Manager and,
until August 24, 1994, each Fund's distributor. From August 1994 to
December 31, 1994, he was a director of Mellon Bank Corporation. He
is 52 years old and his address is 200 Park Avenue, New York, New
York 10166.
*DAVID W. BURKE, Board Member. Chairman of the Broadcasting Board of
Governors, an independent board within the United States Information
Agency, since August 1995. From August 1994 to August 1995, Mr.
Burke was a consultant to the Manager and, from October 1990 to
August 1994, he was Vice President and Chief Administrative Officer
of the Manager. From 1977 to 1990, Mr. Burke was involved in the
management of national television news, as Vice-President and
Executive Vice President of ABC News, and subsequently as President
of CBS News. He is 60 years old and his address is Box 654, Eastham,
Massachusetts 02642.
SAMUEL CHASE, Board Member. Since 1982, President of Samuel Chase &
Company, Ltd., and from 1983 to 1990, Chairman of Chase, Brown &
Blaxall, Inc., economic consulting firms. He is 64 years old and his
address is 10380 Springhill Road, Belgrade, Montana 59714.
GORDON J. DAVIS, Board Member. Since October 1994, Mr. Davis has been a
senior partner with the law firm of LeBoeuf, Lamb, Greene & MacRae.
From 1983 to September 1994, Mr. Davis was a senior partner with the
law firm of Lord Day & Lord, Barrett Smith. From 1978 to 1983, he
was Commissioner of Parks and Recreation for the City of New York.
He is also a director of Consolidated Edison, a utility company, and
Phoenix Home Life Insurance Company and a member of various other
corporate and not-for-profit boards. He is 55 years old and his
address is 241 Central Park West, New York, New York 10023.
JONI EVANS, Board Member. Senior Vice President of the William Morris
Agency since September 1993. From September 1987 to May 1993,
Executive Vice President of Random House, Inc. and, from January 1991
to May 1993, President and Publisher of Turtle Bay Books; from
January 1987 to December 1990, Publisher of Random House--Adult Trade
Division; and from 1985 to 1987, President of Simon & Schuster--Trade
Division. She is 54 years old and her address is 1325 Avenue of the
Americas, 16th Floor, New York, New York 10019.
ARNOLD S. HIATT, Board Member. Chairman of the Stride Rite Foundation.
From 1969 to June 1992, Chairman of the Board, President or Chief
Executive Officer of The Stride Rite Corporation, a multidivisional
footwear manufacturing and retailing company. Mr. Hiatt is also a
Director of the Cabot Corporation. He is 69 years old and his
address is 400 Atlantic Avenue, Boston, Massachusetts 02110.
DAVID J. MAHONEY, Board Member. President of David Mahoney Ventures since
1983. From 1968 to 1983, he was Chairman and Chief Executive Officer
of Norton Simon, Inc., a producer of consumer products and services.
Mr. Mahoney is also a director of Bionaire Inc. and Intercostal
Health Systems, Inc. He is 73 years old and his address is 745 Fifth
Avenue, Suite 700, New York, New York 10151.
BURTON N. WALLACK, Board Member. President and co-owner of Wallack
Management Company, a real estate management company managing real
estate in the New York City area. He is 45 years old and his address
is 18 East 64th Street, Suite 3D, New York, New York 10021.
For so long as the Service Plan of the Intermediate Bond Fund, or the
Shareholder Services Plan of the Money Market Fund or Bond Fund,
respectively, described in the section captioned "Service Plan and
Shareholder Services Plans" remains in effect, the Board members of such
Fund who are not "interested persons" of the Fund, as defined in the 1940
Act, will be selected and nominated by the Board members who are not
"interested persons" of such Fund.
Ordinarily, meetings of shareholders for the purpose of electing
Board members will not be held unless and until such time as less than a
majority of the Board members holding office have been elected by
shareholders, at which time the Board members then in office will call a
shareholders' meeting for the election of Board members. Under the 1940
Act, shareholders of record of not less than two-thirds of the outstanding
shares of the Fund may remove a Board member through a declaration in
writing or by vote cast in person or by proxy at a meeting called for that
purpose. The Board members are required to call a meeting of shareholders
for the purpose of voting upon the question of removal of any such Board
member when requested in writing to do so by the shareholders of record of
not less than 10% of the Fund's outstanding shares.
Each Fund typically pays its Board members an annual retainer and a
per meeting fee and reimburses them for their expenses. The Chairman of
the Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount
of compensation paid to each Board member by each Fund for the fiscal year
ended May 31, 1996, and by all other funds in the Dreyfus Family of Funds
for which such person is a Board member (the number of which is set forth
in parenthesis next to each Board member's total compensation) for the
year ended December 31, 1995, were as follows:
Total Compensation
From Funds and
Name of Board Fund Complex
Member Aggregate Compensation From Fund* Paid to Board Member
______________ __________________________________ ____________________
Money Market Interm Bond Bond
Fund Fund Fund
____________ ___________ ____
Joseph S. DiMartino $3,428 $6,250 $8,750 $448,618 (94)
David W. Burke $2,750 $5,000 $7,000 $253,654 (52)
Samuel Chase $2,750 $5,000 $7,000 $ 54,250 (13)
Gordon J. Davis $2,750 $5,000 $7,000 $ 76,575 (24)
Joni Evans $2,500 $4,500 $6,500 $ 46,750 (13)
Arnold S. Hiatt $2,500 $4,500 $6,500 $ 50,500 (13)
David J. Mahoney $2,250 $4,000 $6,000 $ 47,250 (13)
Burton N. Wallack $2,750 $5,000 $7,000 $ 54,250 (13)
_____________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $1,412, $942 and $3,122 for the Money
Market Fund, Intermediate Bond Fund and Bond Fund, respectively, for
all Board members as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer and a director of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
December 1991 to July 1994, she was President and Chief Compliance
Officer of Funds Distributor, Inc., the ultimate parent of which is
Boston Institutional Group, Inc. Prior to December 1991, she served
as Vice President and Controller, and later as Senior Vice President,
of The Boston Company Advisors, Inc. She is 38 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President
and General Counsel of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
February 1992 to July 1994, he served as Counsel for The Boston
Company Advisors, Inc. From August 1990 to February 1992, he was
employed as an Associate at Ropes & Gray. He is 32 years old.
ELIZABETH BACHMAN, Vice President and Assistant Secretary. Assistant Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. She is 26 year
old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Supervisor of
Treasury Services and Administration of Funds Distributor, Inc. and
an officer of other investment companies advised or administered by
the Manager. From April 1993 to January 1995, Mr. Conroy was a
Senior Fund Accountant for Investors Bank and Trust Company. From
December 1991 to March 1993, Mr. Conroy was employed as a Fund
Accountant at The Boston Company, Inc. He is 27 years old.
RICHARD W. INGRAM, Vice President and Assistant Treasurer. Senior Vice
President and Director of Client Services and Treasury Operations of
Funds Distributor, Inc. and an officer of other investment companies
advised or administered by the Manager. From March 1994 to November
1995, Mr. Ingram was Vice President and Division Manager for First
Data Investor Services Group. From 1989 to 1994, Mr. Ingram was Vice
President, Assistant Treasurer and Tax Director - Mutual Funds of The
Boston Company, Inc. He is 40 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President
and Manager of Treasury Services and Administration of Funds
Distributor, Inc. and an officer of other investment companies
advised or administered by the Manager. From September 1989 to July
1994, Ms. Nelson was an Assistant Vice President and Client Manager
for The Boston Company, Inc. She is 32 years old.
JOSEPH S. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer and Chief Financial Officer of the Distributor
and an officer of other investment companies advised or administered
by the Manager. From July 1988 to August 1994, he was employed by
The Boston Company, Inc. where he held various management positions
in the Corporate Finance and Treasury areas. He is 33 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Each Fund's Board members and officers, as a group, owned less than
1% of such Fund's shares outstanding as of September 4, 1996.
MANAGEMENT AGREEMENTS
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Management of the
Funds."
The Manager provides management services pursuant to separate
Management Agreements (respectively, the "Agreement") with each Fund dated
August 24, 1994. As to each Fund, its Agreement is subject to annual
approval by (i) such Fund's Board, or (ii) vote of a majority (as defined
in the 1940 Act) of such Fund's outstanding voting securities, provided
that in either event the continuance of the Agreement also is approved by
a majority of such Fund's Board members who are not "interested persons"
(as defined in the 1940 Act) of the Fund or of the Manager, by vote cast
in person at a meeting called for the purpose of voting on such approval.
Each Agreement was approved by shareholders on August 2, 1994, and was
last approved by each Fund's Board, including a majority of the Board
members who are not "interested persons" of any party to the Agreement, at
a meeting held on April 17, 1996. As to each Fund, the Agreement is
terminable without penalty, on 60 days' notice, by such Fund's Board or by
vote of the holders of a majority of its shares, or, upon not less than 90
days' notice, by the Manager. Each Agreement will terminate
automatically, as to the relevant Fund, in the event of its assignment (as
defined in the 1940 Act).
The following persons are officers and/or directors of the Manager:
W. Keith Smith, Chairman of the Board; Christopher M. Condron, President,
Chief Executive Officer, Chief Operating Officer and a director; Stephen
E. Canter, Vice Chairman, Chief Investment Officer and a director;
Lawrence S. Kash, Vice Chairman--Distribution and a director; Philip L.
Toia, Vice Chairman--Operations and Administration; William T. Sandalls,
Jr., Senior Vice President and Chief Financial Officer; Elie M. Genadry,
Vice President--Institutional Sales; William F. Glavin, Jr., Vice
President--Corporate Development; Mark N. Jacobs, Vice President, General
Counsel and Secretary; Patrice M. Kozlowski, Vice President--Corporate
Communications; Jeffrey N. Nachman, Vice President--Mutual Fund
Accounting; Andrew S. Wasser, Vice President--Information Services; Mary
Beth Leibig, Vice President--Human Resources; Elvira Oslapas, Assistant
Secretary; and Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman,
Lawrence M. Greene and Julian M. Smerling, directors.
The Manager manages each Fund's portfolio of investments in
accordance with the stated policies of the Fund, subject to the approval
of the Fund's Board. The Manager is responsible for investment decisions
and provides each Fund with portfolio managers who are authorized by its
Board to execute purchases and sales of securities. Each Fund's portfolio
managers are Richard J. Moynihan, Joseph P. Darcy, A. Paul Disdier, Karen
M. Hand, Stephen C. Kris, Jill C. Shaffro, L. Lawrence Troutman, Samuel J.
Weinstock and Monica S. Wieboldt. The Manager also maintains a research
department with a professional staff of portfolio managers and securities
analysts who provide research services for each Fund as well as for other
funds advised by the Manager. All purchases and sales are reported for
the respective Board's review at the Board meeting subsequent to such
transactions.
The Manager maintains office facilities on behalf of each Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to each Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
All expenses incurred in the operation of a Fund are borne by that
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by each Fund include: taxes, interest, brokerage fees and
commissions, if any, fees of Board members who are not officers,
directors, employees or holders of 5% or more of the outstanding voting
securities of the Manager, Securities and Exchange Commission fees, state
Blue Sky qualification fees, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance premiums,
industry association fees, outside auditing and legal expenses, costs of
maintaining the Fund's existence, costs of independent pricing services,
costs attributable to investor services (including, without limitation,
telephone and personnel expenses), costs of shareholders' reports and
meetings, costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and distribution to
existing shareholders, and any extraordinary expenses. Pursuant to the
Service Plan of the Intermediate Bond Fund, such Fund bears expenses for
advertising, marketing and distributing the Fund's shares and servicing
shareholder accounts. Pursuant to separate Shareholder Services Plans,
the Money Market Fund and Bond Fund bear certain allocated expenses for
shareholder servicing. See "Service Plan and Shareholder Services Plans."
As compensation for the Manager's services, the Money Market Fund has
agreed to pay the Manager a monthly management fee at the annual rate of
.50 of 1% of the value of the Fund's average daily net assets. As
compensation for the Manager's services, each Longer Term Fund has agreed
to pay the Manager a monthly management fee at the annual rate of .60 of
1% of the value of its average daily net assets. All fees and expenses
for each Fund are accrued daily and deducted before the declaration of
dividends to investors. Set forth below are the total amounts paid by
each Fund to the Manager for each of the last three fiscal years of the
Funds:
Amount Paid by Amount Paid
Fiscal Year Money Market by Intermediate Amount Paid by
Ended May 31, Fund Bond Fund Bond Fund
1996 $ 1,564,732 $1,750,363* $10,848,601
1995 $ 1,636,701 $2,204,128 $10,933,374
1994 $ 1,769,463 $2,038,931* $12,540,757
* Reflects the reduction in management fees of $444,048 for fiscal
1996 and $303,115 for fiscal 1994, pursuant to undertakings by the
Manager then in effect.
The Manager has agreed that if, in any fiscal year, a Fund's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings
and (with the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including the management fee,
exceed 1 1/2% of the value of such Fund's average net assets for the fiscal
year, the Fund may deduct from the payment to be made to the Manager under
the Agreement, or the Manager will bear, the excess expense. Such
deduction or payment, if any, will be estimated daily, and reconciled and
effected or paid, as the case may be, on a monthly basis.
The aggregate of the fees payable to the Manager by a Fund is not
subject to reduction as the value of such Fund's net assets increase.
PURCHASE OF SHARES
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "How to Buy
Shares."
The Distributor. The Distributor serves as each Fund's distributor
on a best efforts basis pursuant to separate agreements, each of which is
renewable annually. The Distributor also acts as distributor for the
other funds in the Dreyfus Family of Funds and for certain other
investment companies. In some states, certain financial institutions
effecting transactions in a Fund's shares may be required to register as
dealers pursuant to state law.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made at any time. Purchase orders received by 4:00 p.m., New York
time, on any business day that Dreyfus Transfer, Inc., each Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), and the New
York Stock Exchange are open for business will be credited to the
shareholder's particular Fund account on the Transfer Agent's next
business day following such purchase order. Purchase orders made after
4:00 p.m., New York time, on any business day the Transfer Agent and New
York Stock Exchange are open for business, or orders made on Saturday,
Sunday or any Fund holiday (e.g., when the New York Stock Exchange is not
open for business), will be credited to the shareholder's Fund Account on
the second business day following such purchase order. To qualify to use
the Dreyfus TeleTransfer Privilege, the initial payment for purchase of
Fund shares must be drawn on, and redemption proceeds paid to, the same
bank and account as are designated on the Account Application or
Shareholder Services Form on file. If the proceeds of a particular
redemption are to be wired to an account at any other bank, the request
must be in writing and signature-guaranteed. See "Redemption of
Shares--Dreyfus TeleTransfer Privilege."
Using Federal Funds. The following information is applicable only to
shares of the Money Market Fund. The Transfer Agent or the Money Market
Fund may attempt to notify the investor upon receipt of checks drawn on
banks that are not members of the Federal Reserve System as to the
possible delay in conversion into Federal Funds and may attempt to arrange
for a better means of transmitting the money. If the investor is a
customer of a securities dealer ("Selected Dealer") and his order to
purchase Money Market Fund shares is paid for other than in Federal Funds,
the Selected Dealer, acting on behalf of its customer, will complete the
conversion into, or itself advance, Federal Funds generally on the
business day following receipt of the customer order. The order is
effective only when so converted and received by the Transfer Agent. An
order for the purchase of Money Market Fund shares placed by an investor
with sufficient Federal Funds or cash balance in his brokerage account
with a Selected Dealer will become effective on the day that the order,
including Federal Funds, is received by the Transfer Agent.
Reopening an Account. An investor may reopen an account in any of
the Funds with a minimum investment of $100 without filing a new Account
Application during the calendar year the account is closed or during the
following calendar year, provided the information on the old Account
Application is still applicable.
SERVICE PLAN AND SHAREHOLDER SERVICES PLANS
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Service Plan and
Shareholder Services Plans."
The Intermediate Bond Fund has adopted a Service Plan pursuant to
Rule 12b-1 under the 1940 Act and the Money Market Fund and Bond Fund have
adopted separate Shareholder Services Plans.
Service Plan (Intermediate Bond Fund only). Rule l2b-1 (the "Rule")
adopted by the Securities and Exchange Commission under the 1940 Act
provides, among other things, that an investment company may bear expenses
of distributing its shares only pursuant to a plan adopted in accordance
with the Rule. The Intermediate Bond Fund's Board has adopted such a plan
(the "Service Plan"), pursuant to which the Intermediate Bond Fund (a)
reimburses the Distributor for payments to certain financial institutions
(which may include banks), securities dealers and other financial industry
professionals (collectively, "Service Agents") for distributing the
Intermediate Bond Fund's shares and servicing shareholder accounts
("Servicing") and (b) pays the Manager, Dreyfus Service Corporation and
any affiliates of either of them (collectively, "Dreyfus") for advertising
and marketing relating to the Intermediate Bond Fund and for Servicing.
The Intermediate Bond Fund's Board believes that there is a reasonable
likelihood that the Service Plan adopted will benefit the Fund and its
shareholders.
A quarterly report of the amounts expended under the Service Plan,
and the purposes for which such expenditures were incurred, must be made
to the Intermediate Bond Fund's Board for its review. In addition, the
Service Plan provides that it may not be amended to increase materially
the costs which the Fund may bear for distribution pursuant to the Service
Plan without shareholder approval and that other material amendments of
the Service Plan must be approved by the Board, and by the Board members
who are not "interested persons" (as defined in the 1940 Act) of the Fund
or the Manager and have no direct or indirect financial interest in the
operation of the Service Plan or in the related service agreements, by
vote cast in person at a meeting called for the purpose of considering
such amendments. The Service Plan and the related service agreements are
subject to annual approval by such vote of the Board members cast in
person at a meeting called for the purpose of voting on the Service Plan.
The Service Plan was last so approved at a meeting held on April 17, 1996.
The Service Plan is terminable at any time by vote of a majority of the
Intermediate Bond Fund's Board members who are not "interested persons"
and have no direct or indirect financial interest in the operation of the
Service Plan or in any of the related service agreements or by vote of the
holders of a majority of such Fund's shares. Any service agreement is
terminable without penalty, at any time, by such vote of the Board members
or, upon not more than 60 days' written notice to the Service Agent, by
vote of the holders of a majority of Intermediate Bond Fund's shares, or,
upon 15 days' notice, by the Distributor. A service agreement will
terminate automatically in the event of its assignment (as defined in the
1940 Act).
For the fiscal year ended May 31, 1996, the total amount payable by
the Intermediate Bond Fund was $917,999, of which $18,126 was paid to the
Distributor as reimbursement for payments made by the Distributor to
Service Agents for distributing Intermediate Bond Fund shares, $896,212
was paid to Dreyfus for advertising and marketing and for servicing
shareholder accounts, and $3,661 was payable by the Intermediate Bond Fund
for preparing, printing and distributing prospectuses and statements of
additional information and for costs associated with implementing and
operating the Service Plan. The Manager waived $1,064 of the total amount
payable for preparing, printing and distributing prospectuses and
statements of additional information and costs associated with
implementing and operating the Service Plan, resulting in a total amount
paid by the Intermediate Bond Fund, pursuant to the Service Plan of
$916,935.
Shareholder Services Plans. (Money Market Fund and Bond Fund only).
The Money Market Fund and the Bond Fund each have adopted a separate
Shareholder Services Plan, pursuant to which each Fund reimburses Dreyfus
Service Corporation for certain allocated expenses for the provision of
certain services to such Fund's shareholders. The services provided may
include personal services relating to shareholder accounts, such as
answering shareholder inquiries regarding the Fund and providing reports
and other information, and services related to the maintenance of
shareholder accounts.
A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the respective Fund's Board for its review. In addition,
the Shareholder Services Plan provides that material amendments of the
Plan must be approved by the Board, and by the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund and have no
direct or indirect financial interest in the operation of the Shareholder
Services Plan, by vote cast in person at a meeting called for the purpose
of considering such amendments. The Shareholder Services Plan is subject
to annual approval by such vote of the Board members cast in person at a
meeting called for the purpose of voting on the Shareholder Services Plan.
Each Shareholder Services Plan was last so approved on April 17, 1996.
The Shareholder Services Plan is terminable at any time by vote of a
majority of the Board members who are not "interested persons" and who
have no direct or indirect financial interest in the operation of the
Shareholder Services Plan.
For the fiscal year ended May 31, 1996, the Money Market Fund paid
$113,327, and the Bond Fund paid $841,756, pursuant to the Fund's
Shareholder Services Plan.
REDEMPTION OF SHARES
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "How to Redeem
Shares."
Redemption Fee. The Intermediate Bond Fund and the Bond Fund will
deduct a redemption fee equal to 1% and .10%, respectively, of the net
asset value of Fund shares redeemed (including redemptions through the use
of the Fund Exchanges service) less than fifteen days following the
issuance of such shares. The redemption fee will be deducted from the
redemption proceeds and retained by the Fund.
No redemption fee will be charged upon the redemption of shares
through the Fund's Check Redemption Privilege, Automatic Withdrawal Plan
or Dreyfus Auto-Exchange Privilege, or shares redeemed from omnibus
accounts. Furthermore, no redemption fee will be charged upon redemption
of Fund shares acquired through reinvestment of dividends or
distributions, nor will the redemption fee be used to pay fees imposed for
various Fund services or shares. This redemption fee may be waived,
modified or discontinued at any time, or from time to time.
Check Redemption Privilege. An investor may indicate on the Account
Application, Shareholder Services Form or by later written request that
the Fund provide Redemption Checks ("Checks") drawn on the investor's Fund
account. Checks will be sent only to the registered owner(s) of the
account and only to the address of record. The Account Application,
Shareholder Services Form or later written request must be manually signed
by the registered owner(s). Checks may be made payable to the order of
any person in an amount of $500 or more. When a Check is presented to the
Transfer Agent for payment, the Transfer Agent, as the investor's agent,
will cause the Fund to redeem a sufficient number of full or fractional
shares in the investor's account to cover the amount of the Check.
Dividends are earned until the Check clears. After clearance, a copy of
the Check will be returned to the investor. Investors generally will be
subject to the same rules and regulations that apply to checking accounts,
although election of this Privilege creates only a shareholder-transfer
agent relationship with the Transfer Agent.
If the amount of the Check is greater than the value of the shares in
an investor's account, the Check will be returned marked insufficient
funds. Checks should not be used to close an account.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor or the investor's Service Agent, and reasonably believed by the
Transfer Agent to be genuine. Ordinarily, the Money Market Fund will
initiate payment for shares redeemed pursuant to this Privilege on the
same business day if the Transfer Agent receives the redemption request in
proper form prior to Noon on such day; otherwise the Money Market Fund
will initiate payment on the next business day. The Longer Term Funds
ordinarily will initiate payment for shares redeemed pursuant to this
privilege on the next business day after receipt by the Transfer Agent of
a redemption request in proper form. Redemption proceeds ($1,000 minimum)
will be transferred by Federal Reserve wire only to the commercial bank
account specified by the investor on the Account Application or
Shareholder Services Form, or to a correspondent bank if the investor's
bank is not a member of the Federal Reserve System. Fees ordinarily are
imposed by such bank and usually are borne by the investor. Immediate
notification by the correspondent bank to the investor's bank is necessary
to avoid a delay in crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmission:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at
1-800-654-7171, toll free. Investors should advise the operator that the
above transmittal code must be used and should also inform the operator of
the Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Share Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have selected the Dreyfus TeleTransfer Privilege, any request for a
wire redemption will be effected as a Dreyfus TeleTransfer transaction
through the Automated Clearing House ("ACH") system unless more prompt
transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "Purchase of
Shares--Dreyfus TeleTransfer Privilege."
Share Certificates; Signature. Any certificate representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations, as well as from participants in the New
York Stock Exchange Medallion Signature Program, the Securities Transfer
Agents Medallion Program ("STAMP") and the Stock Exchanges Medallion
Program. Guarantees must be signed by an authorized signatory of the
guarantor and "Signature-Guaranteed" must appear with the signature. The
Transfer Agent may request additional documentation from corporations,
executors, administrators, trustees or guardians, and may accept other
suitable verification arrangements from foreign investors, such as
consular verification. For more information concerning signature-
guarantees, please call one of the telephone numbers listed on the cover.
Redemption Commitment. Each Fund has committed itself to pay in cash
all redemption requests by any shareholder of record, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of
the Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such
amount, the Board reserves the right to make payments in whole or in part
in securities (which may include non-marketable securities) or other
assets in case of an emergency or any time a cash distribution would
impair the liquidity of the Fund to the detriment of the existing
shareholders. In such event, the securities would be valued in the same
manner as the Fund's portfolio is valued. If the recipient sold such
securities, brokerage charges might be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the respective markets each Fund ordinarily
utilizes is restricted, or when an emergency exists as determined by the
Securities and Exchange Commission so that disposal of such Fund's
investments or determination of its net asset value is not reasonably
practicable, or (c) for such other periods as the Securities and Exchange
Commission by order may permit to protect the respective Fund's
shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Shareholder
Services."
Fund Exchanges. Shares of other funds purchased by exchange will be
purchased on the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load, and additional shares acquired through reinvestment
of dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged
for shares of other funds sold with a sales load (referred to
herein as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales
load that could have been imposed in connection with the Purchased
Shares (at the time the Purchased Shares were acquired), without
giving effect to any reduced loads, the difference will be
deducted.
To accomplish an exchange under item D above, shareholders must
notify the Transfer Agent of their prior ownership of fund shares and
their account number.
To request an exchange, the investor, or the investor's Service Agent
acting on the investor's behalf, must give exchange instructions to the
Transfer Agent in writing or by telephone. The ability to issue exchange
instructions by telephone is given to all Fund shareholders automatically,
unless the investor checks the applicable "No" box on the Account
Application, indicating that the investor specifically refuses this
Privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions (including
over The Dreyfus TouchRegistration Mark automated telephone system) from any
person representing himself or herself to be the investor, or a representative
of the investor's Service Agent, and reasonably believed by the Transfer
Agent to be genuine. Telephone exchanges may be subject to limitations
as to the amount involved or number of telephone exchanges permitted.
Shares issued in certificate form are not eligible for telephone
exchanges.
To establish a personal retirement plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
For Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with only one participant, the minimum
initial investment is $750. To exchange shares held in corporate plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum
initial investment is $100 if the plan has at least $2,500 invested among
the funds in the Dreyfus Family of Funds. To exchange shares held in
personal retirement plans, the shares exchanged must have a current value
of at least $100.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of a Fund, shares
of another fund in the Dreyfus Family of Funds. This Privilege is
available only for existing accounts. Shares will be exchanged on the
basis of relative net asset value as described above under "Fund
Exchanges." Enrollment in or modification or cancellation of this
Privilege is effective three business days following notification by the
investor. An investor will be notified if his account falls below the
amount designated to be exchanged under this Privilege. An investor's
account will fall to zero unless additional investments are made in excess
of the designated amount prior to the next Auto-Exchange transaction.
Shares held under IRA and other retirement plans are eligible for this
Privilege. Exchanges of IRA shares may be made between IRA accounts and
from regular accounts to IRA accounts, but not from IRA accounts to
regular accounts. With respect to all other retirement accounts,
exchanges may be made only among those accounts.
Fund Exchanges and the Dreyfus Auto-Exchange Privilege are available
to shareholders resident in any state in which shares of the fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. Each Fund reserves the right to
reject any exchange request in whole or in part. The Fund Exchanges
services or the Dreyfus Auto-Exchange Privilege may be modified or
terminated at any time by a Fund upon notice to its shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly
basis. Withdrawal payments are the proceeds from sales of Fund shares,
not the yield on the shares. If withdrawal payments exceed reinvested
dividends and distributions, the investor's shares will be reduced and
eventually may be depleted. Automatic Withdrawal may be terminated at any
time by the investor, the Fund or the Transfer Agent. Shares for which
certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest automatically their dividends or dividends and capital gain
distributions, if any, from a Fund in shares of other eligible funds in
the Dreyfus Family of Funds of which the investor is a shareholder.
Shares of other funds purchased pursuant to the privilege will be
purchased on the basis of relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested without
imposition of a sales load in shares of other funds that are offered
without a sales load.
B. Dividends and distributions paid by a fund which does not charge a
sales load may be invested in shares of other funds sold with a sales
load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a sales load
may be invested in shares of other funds sold with a sales load
(referred to herein as "Offered Shares"), provided that, if the sales
load applicable to the Offered Shares exceeds the maximum sales load
charged by the fund from which dividends or distributions are being
swept, without giving effect to any reduced loads, the difference
will be deducted.
D. Dividends and distributions paid by a fund may be invested in shares
of other funds that impose a contingent deferred sales charge
("CDSC") and the applicable CDSC, if any, will be imposed upon the
redemption of such shares.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "How to Buy
Shares."
Amortized Cost Pricing. The information contained in this section is
applicable only to the Money Market Fund. The valuation of the Money
Market Fund's portfolio securities is based upon their amortized cost,
which does not take into account unrealized capital gains or losses. This
involves valuing an instrument at its cost, and thereafter assuming a
constant amortization to maturity of any discount or premium, regardless
of the impact of fluctuating interest rates on the market value of the
instrument. While this method provides certainty in valuation, it may
result in periods during which value, as determined by amortized cost, is
higher or lower than the price the Fund would receive if it sold the
instrument.
The Money Market Fund's Board has established, as a particular
responsibility within the overall duty of care owed to the Money Market
Fund's investors, procedures reasonably designed to stabilize the Fund's
price per share as computed for the purpose of sales and redemptions at
$1.00. Such procedures include review of the Money Market Fund's
portfolio holdings by the Board, at such intervals as it deems
appropriate, to determine whether the Money Market Fund's net asset value
calculated by using available market quotations or market equivalents
deviates from $1.00 per share based on amortized cost. Market quotations
and market equivalents used in such review are obtained from an
independent pricing service (the "Service") approved by the Board. The
Service values the Money Market Fund's investments based on methods which
include consideration of: yields or prices of municipal bonds of
comparable quality, coupon, maturity and type; indications of values from
dealers; and general market conditions. The Service also may employ
electronic data processing techniques and/or a matrix system to determine
valuations.
The extent of any deviation between the Money Market Fund's net asset
value based upon available market quotations or market equivalents and
$1.00 per share based on amortized cost will be examined by the Board. If
such deviation exceeds 1/2 of 1%, the Board promptly will consider what
action, if any, will be initiated. In the event the Board determines
that a deviation exists which may result in material dilution or other
unfair results to investors or existing shareholders, it has agreed to
take such corrective action as it regards as necessary and appropriate,
including: selling portfolio instruments prior to maturity to realize
capital gains or losses or to shorten average portfolio maturity;
withholding dividends or paying distributions from capital or capital
gains; redeeming shares in kind; or establishing a net asset value per
share by using available market quotations or market equivalents.
Valuation of Portfolio Securities. The information contained in this
section is applicable only to the Longer Term Funds. The investments of
each Longer Term Fund are valued each business day by an independent
pricing service (the "Service") approved by such Fund's Board. When, in
the judgment of the Service, quoted bid prices for investments are readily
available and are representative of the bid side of the market, these
investments are valued at the mean between the quoted bid prices (as
obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the
Service, based on methods which include consideration of: yields or
prices of municipal bonds of comparable quality, coupon, maturity and
type; indications as to values from dealers; and general market
conditions. The Service may employ electronic data processing techniques
and/or a matrix system to determine valuations. The Service's procedures
are reviewed by the Fund's officers under the general supervision of the
relevant Fund's Board. As to each Fund, expenses and fees, including the
management fees (reduced by the expense limitation, if any) and fees
pursuant to the Service Plan or Shareholder Services Plan, as the case may
be, are accrued daily and are taken into account for the purpose of
determining the net asset value of such Fund's shares.
New York Stock Exchange Closings. The holidays (as observed) on
which the New York Stock Exchange is closed currently are: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from and sold to
parties acting as either principal or agent. Newly-issued securities
ordinarily are purchased directly from the issuer or from an underwriter;
other purchases and sales usually are placed with those dealers from which
it appears that the best price or execution will be obtained. Usually no
brokerage commissions, as such, are paid by any Fund for such purchases
and sales, although the price paid usually includes an undisclosed
compensation to the dealer acting as agent. The prices paid to
underwriters of newly-issued securities usually include a concession paid
by the issuer to the underwriter, and purchases of after-market securities
from dealers ordinarily are executed at a price between the bid and asked
price. No brokerage commissions have been paid by any Fund to date.
Transactions are allocated to various dealers by the portfolio
managers of a Fund in their best judgment. The primary consideration is
prompt and effective execution of orders at the most favorable price.
Subject to that primary consideration, dealers may be selected for
research, statistical or other services to enable the Manager to
supplement its own research and analysis with the views and information of
other securities firms.
Research services furnished by brokers through which a Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising each Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses
of its research department.
The amount of transactions during the last fiscal year in newly
issued debt instruments in fixed price public offerings directed to an
underwriter in consideration of, among other things, research services
provided was $5,870,118 for the Intermediate Bond Fund and $36,120,245 for
the Bond Fund.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Dividends,
Distributions and Taxes."
All Funds. Ordinarily, gains and losses realized from portfolio
transactions will be treated as capital gain or loss. However, all or
portion of any gain realized from the sale or other disposition of certain
market discount bonds will be treated as ordinary income under Section
1276 of the Internal Revenue Code of 1986, as amended (the "Code").
Longer Term Funds Only. The Code provides that if a shareholder has
not held his Fund shares for more than six months (or such shorter period
as the Internal Revenue Service may prescribe by regulation) and has
received an exempt-interest dividend with respect to such shares, any loss
incurred on the sale of such shares will be disallowed to the extent of
the exempt-interest dividend received. In addition, any dividend or
distribution paid shortly after an investor's purchase may have the effect
of reducing the net asset value of his shares below the cost of his
investment. Such a distribution would be a return on investment in an
economic sense although taxable as stated under "Dividends, Distributions
and Taxes" in the Prospectus.
In addition, all or a portion of the gain realized from engaging in
"conversion transactions" may be treated as ordinary income under Section
1258 of the Code. "Conversion transactions" are defined to include
certain forward, futures, option and "straddle" transactions, transactions
marketed or sold to produce capital gains, or transactions described in
Treasury regulations to be issued in the future.
Under Section 1256 of the Code, gain or loss realized by the Fund
from certain financial futures and options transactions will be treated as
60% long-term capital gain or loss and 40% short-term capital gain or
loss. Gain or loss will arise upon exercise or lapse of such futures and
options as well as from closing transactions. In addition, any such
futures or options remaining unexercised at the end of the Fund's taxable
year will be treated as sold for their then fair market value, resulting
in additional gain or loss to the Fund characterized in the manner
described above.
Offsetting positions held by the Fund involving certain financial
futures contracts or options transactions may be considered, for tax
purposes, to constitute "straddles." "Straddles" are defined to include
"offsetting positions" in actively traded personal property. The tax
treatment of "straddles" is governed by Sections 1092 and 1258 of the
Code, which, in certain circumstances, overrides or modifies the
provisions of Section 1256 of the Code. As such, all or a portion of any
short or long-term capital gain from certain "straddle" and/or conversion
transactions may be recharacterized to ordinary income.
If the Fund were treated as entering into "straddles" by reason of
its engaging in financial futures contracts or options transactions, such
"straddles" would be characterized as "mixed straddles" if the futures or
options comprising a part of such "straddles" were governed by
Section 1256 of the Code. The Fund may make one or more elections with
respect to "mixed straddles." If no election is made, to the extent the
straddle rules apply to positions established by the Fund, losses realized
by the Fund will be deferred to the extent of unrealized gain in any
offsetting positions. Moreover, as a result of the straddle and the
conversion transaction rules, short-term capital loss on straddle
positions may be recharacterized as long-term capital loss, and long-term
capital gain may be recharacterized as short-term capital gain or ordinary
income.
Investment by the Longer Term Funds in securities issued at a
discount or providing for deferred interest or for payment of interest in
the form of additional obligations could, under special tax rules, affect
the amount, timing and character of distributions to shareholders. For
example, a Fund could be required to take into account annually a portion
of the discount (or deemed discount) at which such securities were issued
and to distribute such portion in order to maintain its qualification as a
regulated investment company. In that case, the Fund may have to dispose
of securities which it might otherwise have continued to hold in order to
generate cash to satisfy these distribution requirements.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Performance
Information."
Money Market Fund. For the seven-day period ended May 31, 1996, the
Money Market Fund's yield was 2.93% and its effective yield was 2.97%.
The Money Market Fund's yield is computed in accordance with a
standardized method which involves determining the net change in the value
of a hypothetical pre-existing Fund account having a balance of one share
at the beginning of a seven calendar day period for which yield is to be
quoted, dividing the net change by the value of the account at the
beginning of the period to obtain the base period return, and annualizing
the results (i.e., multiplying the base period return by 365/7). The net
change in the value of the account reflects the value of additional shares
purchased with dividends declared on the original share and any such
additional shares and fees that may be charged to shareholder accounts, in
proportion to the length of the base period and the Fund's average account
size, but does not include realized gains and losses or unrealized
appreciation and depreciation. Effective yield is computed by adding 1 to
the base period return (calculated as described above), raising that sum
to a power equal to 365 divided by 7, and subtracting 1 from the result.
Based upon a combined 1996 Federal, New York State and New York City
personal income tax rate of 46.60%, the Money Market Fund's tax equivalent
yield for the seven-day period ended May 31, 1996 was 5.49%.
Longer Term Funds. The Intermediate Bond Fund's yield for the 30-day
period ended May 31, 1996 was 4.66%. This yield reflects the waiver of the
management fee and the absorption of expenses by the Manager, without
which the Intermediate Bond Fund's yield for the 30 day period ended May
31, 1996 would have been 4.50%. The Bond Fund's yield for the 30-day
period ended May 31, 1996 was 5.06%. Current yield for a Longer Term Fund
is computed pursuant to a formula which operates as follows: the amount
of a Fund's expenses accrued for a 30-day period is subtracted from the
amount of the dividends and interest earned (computed in accordance with
regulatory requirements) by it during the period. That result is then
divided by the product of: (a) the average daily number of shares
outstanding during the period that were entitled to receive dividends and
distributions, and (b) the net asset value per share on the last day of
the period less any undistributed earned income per share reasonably
expected to be declared as a dividend shortly thereafter. The quotient is
then added to 1, and that sum is raised to the 6th power, after which 1 is
subtracted. The current yield is then arrived at by multiplying the
result by 2.
Based upon a combined 1996 Federal, New York State and New York City
personal income tax rate of 46.60%, the Intermediate Bond Fund's tax
equivalent yield for the 30-day period ended May 31, 1996 was 8.73%, and
the Bond Fund's tax equivalent yield for such period was 9.48%. The
Intermediate Bond Fund's tax equivalent yield for the 30-day period ended
May 31, 1996 reflects the waiver of the management fee and absorption of
expenses by the Manager, without which the Intermediate Bond Fund's tax
equivalent yield for such period would have been 8.43%.
The Intermediate Bond Fund's average annual total return for the one-
and five-year periods ended May 31, 1996 and for the period from June 12,
1987 (commencement of operations) through May 31, 1996 was 3.52%, 6.87%
and 7.06%, respectively. The Bond Fund's average annual total return for
the one-, five- and ten-year periods ended May 31, 1996 was 1.84%, 6.64%
and 6.94%, respectively. Average annual total return is calculated by
determining the ending redeemable value of an investment purchased with a
hypothetical $1,000 payment made at the beginning of the period (assuming
the reinvestment of dividends and distributions), dividing by the amount
of the initial investment, taking the "n"th root of the quotient (where
"n" is the number of years in the period) and subtracting 1 from the
result.
The Intermediate Bond Fund's total return for the period June 12,
1987 (commencement of operations) to May 31, 1996 was 84.45%. The Bond
Fund's total return for the period July 26, 1983 (commencement of
operations) to May 31, 1996 was 187.31%. Total return is calculated by
subtracting the amount of the Fund's net asset value per share at the
beginning of a stated period from the net asset value per share at the end
of the period (after giving effect to the reinvestment of dividends and
distributions during the period), and dividing the result by the net asset
value per share at the beginning of the period.
All Funds. Tax equivalent yield is computed by dividing that portion
of the current yield (calculated as described above) which is tax exempt
by 1 minus a stated tax rate and adding the quotient to that portion, if
any, of the yield of the Fund that is not tax exempt. The tax equivalent
yields noted above represent the application of the highest Federal, New
York State and New York City marginal personal income tax rates presently
in effect. For Federal income tax purposes, a 39.6% tax rate has been
used. For New York State and New York City personal income tax purposes,
tax rates of 7.875% and 4.46%, respectively, have been used. The tax
equivalent figure, however, does not reflect the potential effect of local
(including, but not limited to, county, district or city) taxes, including
applicable surcharges. In addition, there may be pending legislation
which could affect such stated tax rates or yield. Each investor should
consult its tax adviser, and consider its own factual circumstances and
applicable tax laws, in order to ascertain the relevant tax equivalent
yield.
Yields will fluctuate and are not necessarily representative of
future results. Each investor should remember that yield is a function of
the type and quality of the instruments in the portfolio, portfolio
maturity and operating expenses. An investor's principal in the Fund is
not guaranteed. See "Determination of Net Asset Value" for a discussion
of the manner in which the Fund's price per share is determined.
From time to time, each Fund may use hypothetical tax equivalent
yields or charts in their advertising. These hypothetical yields or
charts will be used for illustrative purposes only and are not indicative
of the Fund's past or future performance.
From time to time, advertising materials for a Fund also may refer to
or discuss then-current or past economic conditions, developments, and/or
events, actual or proposed tax legislation, or to statistical or other
information concerning trends relating to investment companies, as
compiled by industry associations such as the Investment Company
Institute. From time to time, advertising materials for the Longer Term
Funds also may refer to Morningstar ratings and related analyses
supporting such ratings.
INFORMATION ABOUT THE FUNDS
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Each Fund share is of one class and has equal rights as
to dividends and in liquidation. Shares have no preemptive, subscription
or conversion rights and are freely transferable.
Each Fund sends annual and semi-annual financial statements to all
its respective shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN,
COUNSEL AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager,
P.O. Box 9671, Providence, Rhode Island 02940-9671, is each Fund's
transfer and dividend disbursing agent. Under a transfer agency agreement
with each Fund, the Transfer Agent arranges for the maintenance of
shareholder account records for the Fund, the handling of certain
communications between shareholders and the Fund and the payment of
dividends and distributions payable by the Fund. For these services, the
Transfer Agent receives a monthly fee computed on the basis of the number
of shareholder accounts it maintains for the Funds during the month, and
is reimbursed for certain out-of-pocket expenses. For the period December
1, 1995 (effective date of transfer agency agreement) through May 31,
1996, the Money Market Fund, Intermediate Bond Fund and Bond Fund paid the
Transfer Agent $60,309, $74,223 and $279,504, respectively.
The Bank of New York, 90 Washington Street, New York, New York 10286,
acts as custodian of each Fund's investments.
Neither Dreyfus Transfer, Inc. nor The Bank of New York has any part
in determining the investment policies of any Fund or which securities are
to be purchased or sold by a Fund.
Stroock & Stroock & Lavan, Seven Hanover Square, New York, New York
10004-2696, as counsel for each Fund, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance
of the shares being sold pursuant to the Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of each Fund.
APPENDIX A
INVESTING IN NEW YORK MUNICIPAL OBLIGATIONS
The financial condition of New York State (the "State") and certain
of its public bodies (the "Agencies") and municipalities, particularly New
York City (the "City"), could affect the market values and marketability
of New York Municipal Obligations which may be held by the Fund. The
following information constitutes only a brief summary, does not purport
to be a complete description, and is based on information drawn from
official statements relating to securities offerings of the State, the
City and the Municipal Assistance Corporation for the City of New York
("MAC") available as of the date of this Statement of Additional
Information. While the Fund has not independently verified such
information, it has no reason to believe that such information is not
correct in all material respects.
A national recession commenced in mid-1990. The downturn continued
through the remainder of the 1990-91 fiscal year, and was followed by a
period of weak economic growth during the remainder of the 1991 calendar
year. For the calendar year 1992, the national economy continued to
recover, although at a rate below all post-war recoveries. The recession
was more severe in the State than in other parts of the nation, owing to a
significant retrenchment in the financial services industry, cutbacks in
defense spending, and an overbuilt real estate market. The State economy
remained in recession until 1993, when employment growth resumed. Since
early 1993, the State has gained approximately 100,000 jobs. The State's
economy expanded modestly during 1995. Although industries that export
goods and services abroad are expected to benefit from the lower dollar,
growth will be slowed by government cutbacks at all levels. On an average
annual basis, employment growth in 1995 was estimated to be about the same
as 1994. Both personal income and wages were estimated to have recorded
moderate gains in 1995. Employment growth is expected to slow
significantly in 1996 as the pace of national economic growth slackens,
entire industries experience consolidations, and governmental employment
continues to shrink. Personal income is estimated to increase by
approximately 5.0% in 1996.
The State's budget for the 1996-97 fiscal year was enacted by the
Legislature on July 13, 1996, more than three months after the start of
the fiscal year. Prior to adoption of the budget, the Legislature enacted
appropriations for disbursements considered to be necessary for State
operations and other purposes, including all necessary appropriations for
debt service. The State Financial Plan for the 1996-97 fiscal year was
formulated on July 25, 1996 and is based on the State's budget as enacted
by the Legislature and signed into law by the Governor, as well as actual
results for the first quarter of the 1996-97 fiscal year.
After adjustments for comparability between fiscal years, the adopted
1996-97 budget projects a year-over-year increase in General Fund
disbursements of 0.2%. Adjusted State Funds (excluding federal grants)
disbursements are projected to increase by 1.6% from the prior fiscal
year. All Governmental Funds projected disbursements increase by 4.1%
over the prior fiscal year, after adjustments for comparability.
The 1996-97 State Financial Plan is projected to be balanced on a
cash basis. As compared to the Governor's proposed budget as revised on
March 20, 1996, the State's adopted budget for 1996-97 increases General
Fund spending by $842 million, primarily from increases for education,
special education and higher education ($563 million). The balance
represents funding increases to a variety of other programs, including
community projects and increased assistance to fiscally distressed cities.
Resources used to fund these additional expenditures include $540 million
in increased revenues projected for 1996-97 based on higher-than-projected
tax collections during the first half of calendar 1996, $110 million in
projected receipts from a new State tax amnesty program, and other
resources including certain non-recurring resources. The total amount of
non-recurring resources included in the 1996-97 State budget is projected
to be $1.3 billion, or 3.9% of total General Fund receipts.
The State Financial Plan was based upon forecasts of national and
State economic activity. Economic forecasts have frequently failed to
predict accurately the timing and magnitude of changes in the national and
the State economies. Many uncertainties exist in forecasts of both the
national and State economies, including consumer attitudes toward
spending, Federal financial and monetary policies, the availability of
credit and the condition of the world economy, which could have an adverse
effect on the State. There can be no assurance that the State economy
will not experience worse-than-predicted results, with corresponding
material and adverse effects on the State's projections of receipts and
disbursements.
There can be no assurance that the State will not face substantial
potential budget gaps in future years resulting from a significant
disparity between tax revenues projected from a lower recurring receipts
base and the spending required to maintain State programs at current
levels. To address any potential budgetary imbalance, the State may need
to take significant actions to align recurring receipts and disbursements
in future fiscal years.
On June 6, 1990, Moody's changed its ratings on all the State's
outstanding general obligation bonds from A1 to A. On March 26, 1990 and
January 13, 1992, S&P changed its ratings on all of the State's
outstanding general obligation bonds from AA- to A and from A to A-,
respectively. In February 1991, Moody's lowered its rating on the City's
general obligation bonds from A to Baa1 and in July 1995, S&P lowered its
rating on such bonds from A- to BBB+. Ratings reflect only the respective
views of such organizations, and their concerns about the financial
condition of New York State and City, the debt load of the State and City
and any economic uncertainties about the region. There is no assurance
that a particular rating will continue for any given period of time or
that any such rating will not be revised downward or withdrawn entirely
if, in the judgment of the agency originally establishing the rating,
circumstances so warrant.
(1) The State, Agencies and Other Municipalities. During the
mid-1970s, some of the Agencies and municipalities (in particular, the City)
faced extraordinary financial difficulties, which affected the State's own
financial condition. These events, including a default on short-term
notes issued by the New York State Urban Development Corporation ("UDC")
in February 1975, which default was cured shortly thereafter, and a
continuation of the financial difficulties of the City, created
substantial investor resistance to securities issued by the State and by
some of its municipalities and Agencies. For a time, in late 1975 and
early 1976, these difficulties resulted in a virtual closing of public
credit markets for State and many State related securities.
In response to the financial problems confronting it, the State
developed and implemented programs for its 1977 fiscal year that included
the adoption of a balanced budget on a cash basis (a deficit of $92
million that actually resulted was financed by issuing notes that were
paid during the first quarter of the State's 1978 fiscal year). In
addition, legislation was enacted limiting the occurrence of additional
so-called "moral obligation" and certain other Agency debt, which
legislation does not, however, apply to MAC debt.
GAAP-Basis Results--1995-96 Fiscal Year. The State completed its 1995-96
fiscal year with a combined Governmental Funds operating surplus of $432
million, which included an operating surplus in the General Fund of $380
million, in the Capital Projects Funds of $276 million and in the Debt
Service Funds of $185 million. There was an operating deficit of $409
million in the Special Revenue Funds. The State's Combined Balance Sheet
as of March 31, 1996 showed an accumulated deficit in its combined
Governmental Funds of $1.23 billion, reflecting liabilities of $14.59
billion and assets of $13.35 billion. This accumulated Governmental Funds
deficit includes a $2.93 billion accumulated deficit in the General Fund
and an accumulated deficit of $712 million in the Capital Projects Fund
type as partially offset by accumulated surpluses of $468 million and
$1.94 billion in the Special Revenue and Debt Service fund types,
respectively.
GAAP-Basis Results--1994-95 Fiscal Year. The State's Combined Balance
Sheet as of March 31, 1995 showed an accumulated deficit in its combined
governmental funds of $1.666 billion reflecting liabilities of $14.778
billion and assets of $13.112 billion. This accumulated governmental
funds deficit includes a $3.308 billion accumulated deficit in the General
Fund, as well as accumulated surpluses in the special Revenue and Debt
Service fund types of $877 million and $1.753 billion, respectively, and a
$988 million accumulated deficit in the Capital Projects fund type.
The State completed its 1994-95 fiscal year with a combined
Governmental Funds operating deficit of $1.791 billion, which included
operating deficits in the General Fund of $1.426 billion, in the Capital
Projects Funds of $366 million, and in the Debt Service Funds of $38
million. There was an operating surplus in the Special Revenue Funds of
$39 million.
GAAP-Basis Results--1993-94 Fiscal Year. The State reported a General
Fund operating surplus of $914 million for the 1993-94 fiscal year, as
compared to an operating surplus of $2.065 billion for the prior fiscal
year. The 1993-94 fiscal year surplus reflects several major factors,
including the cash basis surplus recorded in 1993-94, the use of $671
million of the 1992-93 surplus to fund operating expenses in 1993-94, net
proceeds of $575 million in bonds issued by the New York Local Government
Assistance Corporation ("LGAC") and the accumulation of a $265 million
balance in the Contingency Reserve Fund ("CRF"). Revenues increased $543
million (1.7%) over prior fiscal year revenues with the largest increase
occurring in personal income taxes. Expenditures increased $1.659 billion
(5.6%) over the prior fiscal year, with the largest increase occurring in
State aid for social services programs.
The Special Revenue fund and Debt Service fund ended 1993-94 with
operating surpluses of $149 million and $23 million, respectively. The
Capital Projects fund ended with an operating deficit of $35 million.
GAAP-Basis Results--1992-93 Fiscal Year. The State completed its 1992-93
fiscal year with a GAAP-basis operating surplus of $2.065 billion in the
General Fund and an accumulated deficit of $2.551 billion. The Combined
Statement of Revenues, Expenditures and Changes in Fund Balances reported
total revenues of $31.085 billion, total expenditures of $29.337 billion,
and net other financing sources and uses of $317 million. The surplus
primarily reflects the 1992-93 cash-basis surplus and the net proceeds of
$881 million in bonds issued by LGAC.
The Special Revenue, Debt Service and Capital Projects fund types
ended the 1992-93 fiscal year with GAAP-basis operating surpluses of $131
million, $381 million, and $57 million, respectively.
State Financial Plan--Cash-Basis Results--General Fund. The General
Fund is the principal operating fund of the State and is used to account
for all financial transactions, except those required to be accounted for
in another fund. It is the State's largest fund and receives almost all
State taxes and other resources not dedicated to particular purposes.
General Fund moneys are also transferred to other funds, primarily to
support certain capital projects and debt service payments in other fund
types.
In the State's 1996-97 fiscal year, the General Fund is expected to
account for approximately 47% of total Governmental Funds disbursements
and 71% of total State Funds disbursements. The General Fund is projected
to be balanced on a cash basis for the 1996-97 fiscal year. Total
receipts and transfers from other funds are projected to be $33.17
billion, an increase of $365 million from the prior fiscal year. Total
General Fund disbursements and transfers to other funds are projected to
be $33.12 billion, an increase of $444 million from the total in the prior
fiscal year.
New York State's financial operations have improved during recent
fiscal years. During the period 1989-90 through 1991-92, the State
incurred General Fund operating deficits that were closed with receipts
from the issuance of tax and revenue anticipation notes ("TRANs"). First,
the national recession, and then the lingering economic slowdown in the
New York and regional economy, resulted in repeated shortfalls in receipts
and three budget deficits. During its last four fiscal years, however,
the State recorded balanced budgets on a cash basis, with positive fund
balances as described below.
The State ended its 1995-96 fiscal year on March 31, 1996 with a
General Fund cash surplus. The Division of the Budget reported that
revenues exceeded projections by $270 million, while spending for social
service programs was lower than forecast by $120 million and all other
spending was lower by $55 million. From the resulting benefit of $445
million, a $65 million voluntary deposit was made into the Tax
Stabilization Reserve Fund ("TSRF"), and $380 million was used to reduce
1996-97 Financial Plan liabilities by accelerating 1996-97 payments,
deferring 1995-96 revenues, and making a deposit to the tax refund reserve
account.
The General Fund closing fund balance was $287 million, an increase
of $129 million from 1994-95 levels. The $129 million change in fund
balance is attributable to the $65 million voluntary deposit to the TSRF,
a $15 million required deposit to the TSRF, a $40 million deposit to the
Contingency Reserve Fund ("CRF"), and a $9 million deposit to the Revenue
Accumulation Fund. The closing fund balance includes $237 million on
deposit in the TSRF, to be used in the event of any future General Fund
deficit as provided under the State Constitution and State Finance Law.
In addition, $41 million is on deposit in the CRF. The CRF was
established in State fiscal year 1993-94 to assist the State in financing
the costs of extraordinary litigation. The remaining $9 million reflects
amounts on deposit in the Revenue Accumulation Fund. This fund was
created to hold certain tax receipts temporarily before their deposit to
other accounts. In addition, $678 million was on deposit in the tax
refund reserve account, of which $521 million was necessary to complete
the restructuring of the State's cash flow under the New York Local
Government Assistance Corporation ("LGAC") program.
General Fund receipts totaled $32.81 billion, a decrease of 1.1% from
1994-95 levels. This decrease reflects the impact of tax reductions
enacted and effective in both 1994 and 1995. General Fund disbursements
totaled $32.68 billion for the 1995-96 fiscal year, a decrease of 2.2%
from 1994-95 levels.
The State ended its 1994-95 fiscal year with the General Fund in
balance. The $241 million decline in the fund balance reflects the
planned use of $264 million from the CRF, partially offset by the required
deposit of $23 million to the TSRF. In addition, $278 million was on
deposit in the tax refund reserve account, $250 million of which was
deposited to continue the process of restructuring the State's cash flow
as part of the LGAC program. The closing fund balance of $158 million
reflects $157 million in the TSRF and $1 million in the CRF.
General Fund receipts totaled $33.16 billion, an increase of 2.9%
from 1993-94 levels. General Fund disbursements totaled $33.40 billion
for the 1994-95 fiscal year, an increase of 4.7% from the previous fiscal
year. The increase in disbursements was primarily the result of one-time
litigation costs for the State, funded by the use of the CRF, offset by
$188 million in spending reductions initiated in January 1995 to avert a
potential gap in the 1994-95 State Financial Plan. These actions included
savings from a hiring freeze, halting the development of certain services,
and the suspension of non-essential capital projects.
The State ended its 1993-94 fiscal year with a General Fund cash
surplus, primarily the result of an improving national economy, State
employment growth, tax collections that exceeded earlier projections and
disbursements that were below expectations. A deposit of $268 million was
made to the CRF, with a withdrawal during the year of $3 million, and a
deposit of $67 million was made to the TSRF. These three transactions
resulted in the change in fund balance of $332 million. In addition, a
deposit of $1.14 billion was made to the tax refund reserve account, of
which $1.03 billion was available for budgetary purposes in the 1994-95
fiscal year. The remaining $114 million was redeposited in the tax refund
reserve account at the end of the State's 1994-95 fiscal year to continue
the process of restructuring the State's cash flow as part of the LGAC
program. The General Fund closing balance was $399 million, of which $265
million was on deposit in the CRF and $134 million in the TSRF. The CRF
was initially funded with a transfer of $100 million attributable to a
positive margin recorded in the 1992-93 fiscal year.
General Fund receipts totaled $32.23 billion, an increase of 2.6%
from 1992-93 levels. General Fund disbursements totaled $31.90 billion
for the 1993-94 fiscal year, 3.5% higher than the previous fiscal year.
Receipts were higher in part due to improved tax collections from renewed
State economic growth, although the State continued to lag behind the
national economic recovery. Disbursements were higher due in part to
increased local assistance costs for school aid and social services,
accelerated payment of certain Medicaid expenses, and the cost of an
additional payroll for State employees.
Cash-Basis Results--Other Governmental Funds. Activity in the three other
governmental funds has remained relatively stable over the last three
fiscal years, with Federally-funded programs comprising approximately two-
thirds of these funds. The most significant change in the structure of
these funds has been the redirection, beginning in the 1993-94 fiscal
year, of a portion of transportation-related revenues from the General
Fund to two new dedicated funds in the Special Revenue and Capital
Projects Fund types. These revenues are used to support the capital
programs of the Department of Transportation and the Metropolitan
Transportation Authority ("MTA").
The Special Revenue Funds account for State receipts from specific
sources that are legally restricted in use to specified purposes and
include all moneys received from the Federal government. Revenues in
Special Revenue Funds in the State's 1995-96 fiscal year increased $1.45
billion over the prior fiscal year as a result of increases in federal
grants and lottery revenues. Disbursements from Special Revenue Funds in
the State's 1995-96 fiscal year increased $1.21 billion over the prior
fiscal year as a result of increased costs for social services programs
and an increase in the distribution of lottery proceeds to school
districts.
The Capital Projects Funds are used to finance the acquisition and
construction of major capital facilities and to aid local government units
and Agencies in financing capital constructions. Revenues in the Capital
Projects Funds in the State's 1995-96 fiscal year increased $260 million
primarily because a larger share of the petroleum business tax was shifted
from the General Fund to the Dedicated Highway and Bridge Trust Fund and
by an increase in federal grant revenues. Expenditures increased $194
million because of increased expenditures for education and health and
environmental projects.
The Debt Service Funds serve to fulfill State debt service on long-
term general obligation State debt and other State lease/purchase and
contractual obligation financing commitments. Revenues in the Debt
Service Funds in the State's 1995-96 fiscal year increased $10 million
because of increases in both dedicated taxes and mental hygiene patient
fees. Expenditures increased $201 million.
State Borrowing Plan. The State anticipates that its capital
programs will be financed, in part, through borrowings by the State and
public authorities in the 1996-97 fiscal year. The State expects to issue
$411 million in general obligation bonds (including $153.6 million for
purposes of redeeming outstanding BANs) and $154 million in general
obligation commercial paper. The Legislature has also authorized the
issuance of up to $101 million in COPs during the State's 1996-97 fiscal
year for equipment purchases. The projection of the State regarding its
borrowings for the 1996-97 fiscal year may change if circumstances
require.
State Agencies. The fiscal stability of the State is related, at
least in part, to the fiscal stability of its localities and various of
its Agencies. Various Agencies have issued bonds secured, in part, by
non-binding statutory provisions for State appropriations to maintain
various debt service reserve funds established for such bonds (commonly
referred to as "moral obligation" provisions).
At September 30, 1995, there were 17 Agencies that had outstanding
debt of $100 million or more. The aggregate outstanding debt, including
refunding bonds, of these 17 Agencies was $73.45 billion as of September
30, 1995. As of March 31, 1995, aggregate Agency debt outstanding as
State-supported debt was $27.9 billion and as State-related was $36.1
billion. Debt service on the outstanding Agency obligations normally is
paid out of revenues generated by the Agencies' projects or programs, but
in recent years the State has provided special financial assistance, in
some cases on a recurring basis, to certain Agencies for operating and
other expenses and for debt service pursuant to moral obligation
indebtedness provisions or otherwise. Additional assistance is expected
to continue to be required in future years.
Several Agencies have experienced financial difficulties in the past.
Certain Agencies continue to experience financial difficulties requiring
financial assistance from the State. Failure of the State to appropriate
necessary amounts or to take other action to permit certain Agencies to
meet their obligations could result in a default by one or more of such
Agencies. If a default were to occur, it would likely have a significant
effect on the marketability of obligations of the State and the Agencies.
These Agencies are discussed below.
The New York State Housing Finance Agency ("HFA") provides financing
for multifamily housing, State University construction, hospital and
nursing home development, and other programs. In general, HFA depends
upon mortgagors in the housing programs it finances to generate sufficient
funds from rental income, subsidies and other payments to meet their
respective mortgage repayment obligations to HFA, which provide the
principal source of funds for the payment of debt service on HFA bonds, as
well as to meet operating and maintenance costs of the projects financed.
From January 1, 1976 through March 31, 1987, the State was called upon to
appropriate a total of $162.8 million to make up deficiencies in the debt
service reserve funds of HFA pursuant to moral obligation provisions. The
State has not been called upon to make such payments since the 1986-87
fiscal year.
UDC has experienced, and expects to continue to experience, financial
difficulties with the housing programs it had undertaken prior to 1975,
because a substantial number of these housing program mortgagors are
unable to make full payments on their mortgage loans. Through a
subsidiary, UDC is currently attempting to increase its rate of collection
by accelerating its program of foreclosures and by entering into
settlement agreements. UDC has been, and will remain, dependent upon the
State for appropriations to meet its operating expenses. The State also
has appropriated money to assist in the curing of a default by UDC on
notes which did not contain the State's moral obligation provision.
The MTA oversees New York City's subway and bus lines by its
affiliates, the New York City Transit Authority and the Manhattan and
Bronx Surface Transit Operating Authority (collectively, the "TA").
Through MTA's subsidiaries, the Long Island Rail Road Company, the
Metro-North Commuter Railroad Company and the Metropolitan Suburban Bus
Authority, the MTA operates certain commuter rail and bus lines in the New
York metropolitan area. In addition, the Staten Island Rapid Transit
Authority, an MTA subsidiary, operates a rapid transit line on Staten
Island. Through its affiliated agency, the Triborough Bridge and Tunnel
Authority (the "TBTA"), the MTA operates certain toll bridges and tunnels.
Because fare revenues are not sufficient to finance the mass transit
portion of these operations, the MTA has depended and will continue to
depend for operating support upon a system of State, local government and
TBTA support and, to the extent available, Federal operating assistance,
including loans, grants and subsidies. If current revenue projections are
not realized and/or operating expenses exceed current projections, the TA
or commuter railroads may be required to seek additional State assistance,
raise fares or take other actions.
Over the past several years the State has enacted several
taxes--including a surcharge on the profits of banks, insurance
corporations and general business corporations doing business in the
12-county region (the "Metropolitan Transportation Region") served by the
MTA and a special .25% regional sales and use tax--that provide additional
revenues for mass transit purposes, including assistance to the MTA. In
addition, since 1987, State law has required that the proceeds of .25%
mortgage recording tax paid on certain mortgages in the Metropolitan
Transportation Region be deposited in a special MTA fund for operating or
capital expenses. Further, in 1993, the State dedicated a portion of
certain additional State petroleum business tax receipts to fund operating
or capital assistance to the MTA. For the 1996-97 State fiscal year,
total State assistance to the MTA is estimated at approximately $1.09
billion.
In 1981, the State Legislature authorized procedures for the
adoption, approval and amendment of a five-year plan for the capital
program designed to upgrade the performance of the MTA's transportation
systems and to supplement, replace and rehabilitate facilities and
equipment, and also granted certain additional bonding authorization
therefor.
State legislation accompanying the 1996-97 adopted State budget
authorized the MTA, TBTA and TA to issue an aggregate of $6.5 billion in
bonds to finance a portion of a new $11.98 billion MTA capital plan for
the 1995 through 1999 calendar years (the "1995-99 Capital Program"), and
authorized the MTA to submit the 1995-99 Capital Program to the Capital
Program Review Board for approval. This plan will supersede the
overlapping portion of the MTA's 1992-96 Capital Program. This is the
fourth capital plan since the Legislature authorized procedures for the
adoption, approval and amendment of MTA capital programs and is designed
to upgrade the performance of the MTA's transportation systems by
investing in new rolling stock, maintaining replacement schedules for
existing assets and bringing the MTA system into a state of good repair.
The 1995-99 Capital Program assumes the issuance of an estimated $5.1
billion in bonds under this $6.5 billion aggregate bonding authority. The
remainder of the plan is projected to be financed through assistance from
the State, the federal government, and the City of New York, and from
various other revenues generated from actions taken by the MTA.
There can be no assurance that such governmental actions will be
taken, that sources currently identified will not be decreased or
eliminated, or that the 1995-1999 Capital Program will not be delayed or
reduced. If the MTA capital program is delayed or reduced because of
funding shortfalls or other factors, ridership and fare revenues may
decline, which could, among other things, impair the MTA's ability to meet
its operating expenses without additional State assistance.
The cities, towns, villages and school districts of the State are
political subdivisions of the State with the powers granted by the State
Constitution and statutes. As the sovereign, the State retains broad
powers and responsibilities with respect to the government, finances and
welfare of these political subdivisions, especially in education and
social services. In recent years the State has been called upon to
provide added financial assistance to certain localities.
Other Localities. Certain localities in addition to the City could
have financial problems leading to requests for additional State
assistance during the last several State fiscal years. The potential
impact on the State of such actions by localities is not included in the
projections of the State receipts and disbursements in the State's 1996-97
fiscal year.
Fiscal difficulties experienced by the City of Yonkers resulted in
the re-establishment of the Financial Control Board for the City of
Yonkers by the State in 1984. That Board is charged with oversight of the
fiscal affairs of Yonkers. Future actions taken by the State to assist
Yonkers could result in increased State expenditures for extraordinary
local assistance.
Beginning in 1990, the City of Troy experienced a series of budgetary
deficits that resulted in the establishment of a Supervisory Board for the
City of Troy in 1994. The Supervisory Board's powers were increased in
1995, when Troy MAC was created to help Troy avoid default on certain
obligations. The legislation creating Troy MAC prohibits the City of Troy
from seeking federal bankruptcy protection while Troy MAC bonds are
outstanding.
Seventeen municipalities received extraordinary assistance during the
1996 legislative session through $50 million in special appropriations
targeted for distressed cities.
Municipalities and school districts have engaged in substantial
short-term and long-term borrowings. In 1994, the total indebtedness of
all localities in the State, other than the City, was approximately $17.7
billion. A small portion (approximately $82.9 million) of this
indebtedness represented borrowing to finance budgetary deficits and was
issued pursuant to enabling State legislation. State law requires the
Comptroller to review and make recommendations concerning the budgets of
those local government units other than the City authorized by State law
to issue debt to finance deficits during the period that such deficit
financing is outstanding. Seventeen localities had outstanding
indebtedness for deficit financing at the close of their fiscal year
ending in 1994.
From time to time, Federal expenditure reductions could reduce, or in
some cases eliminate, Federal funding of some local programs and
accordingly might impose substantial increased expenditure requirements on
affected localities to increase local revenues to sustain those
expenditures. If the State, the City or any of the Agencies were to
suffer serious financial difficulties jeopardizing their respective access
to the public credit markets, the marketability of notes and bonds issued
by localities within the State could be adversely affected. Localities
also face anticipated and potential problems resulting from certain
pending litigation, judicial decisions and long-range economic trends.
The longer-range, potential problems of declining city population,
increasing expenditures and other economic trends could adversely affect
localities and require increasing State assistance in the future.
Certain litigation pending against the State or its officers or
employees could have a substantial or long-term adverse effect on State
finances. Among the more significant of these litigations are those that
involve: (i) the validity and fairness of agreements and treaties by
which various Indian tribes transferred title to the State of
approximately six million acres of land in central New York; (ii) certain
aspects of the State's Medicaid rates and regulations, including
reimbursements to providers of mandatory and optional Medicaid services;
(iii) contamination in the Love Canal area of Niagara Falls; (iv) a
challenge to the State's practice of reimbursing certain Office of Mental
Health patient-care expenses with clients' Social Security benefits; (v) a
challenge to the methods by which the State reimburses localities for the
administrative costs of food stamp programs; (vi) a challenge to the
State's possession of certain funds taken pursuant to the State's
Abandoned Property law; (vii) alleged responsibility of State officials to
assist in remedying racial segregation in the City of Yonkers; (viii) an
action, in which the State is a third party defendant, for injunctive or
other appropriate relief, concerning liability for the maintenance of
stone groins constructed along certain areas of Long Island's shoreline;
(ix) actions challenging the constitutionality of legislation enacted
during the 1990 legislative session which changed the actuarial funding
methods for determining contributions to State employee retirement
systems; (x) an action against State and City officials alleging that the
present level of shelter allowance for public assistance recipients is
inadequate under statutory standards to maintain proper housing; (xi) an
action challenging legislation enacted in 1990 which had the effect of
deferring certain employer contributions to the State Teachers' Retirement
System and reducing State aid to school districts by a like amount; (xii)
a challenge to the constitutionality of financing programs of the Thruway
Authority authorized by Chapters 166 and 410 of the Laws of 1991
(described below in this Part); (xiii) a challenge to the
constitutionality of financing programs of the Metropolitan Transportation
Authority and the Thruway Authority authorized by Chapter 56 of the Laws
of 1993 (described below in this Part); (xiv) challenges to the delay by
the State Department of Social Services in making two one-week Medicaid
payments to the service providers; (xv) challenges by commercial insurers,
employee welfare benefit plans, and health maintenance organizations to
provisions of Section 2807-c of the Public Health Law which impose 13%,
11% and 9% surcharges on inpatient hospital bills and a bad debt and
charity care allowance on all hospital bills paid by such entities; (xvi)
challenges to the promulgation of the State's proposed procedure to
determine the eligibility for and nature of home care services for
Medicaid recipients; (xvii) a challenge to State implementation of a
program which reduces Medicaid benefits to certain home-relief recipients;
and (xviii) challenges to the rationality and retroactive application of
State regulations recelebrating nursing home Medicaid rates.
(2) New York City. In the mid-1970s, the City had large
accumulated past deficits and until recently was not able to generate
sufficient tax and other ongoing revenues to cover expenses in each fiscal
year. However, the City has achieved balanced operating results for each of
its fiscal years since 1981 as reported in accordance with the then-applicable
GAAP standards. The City's ability to maintain balanced operating results
in future years is subject to numerous contingencies and future
developments.
The City's economy, whose rate of growth slowed substantially over
the past three years, is currently in recession. During the 1990 and 1991
fiscal years, as a result of the slowing economy, the City has experienced
significant shortfalls in almost all of its major tax sources and
increases in social services costs, and has been required to take actions
to close substantial budget gaps in order to maintain balanced budgets in
accordance with the Financial Plan.
In 1975, the City became unable to market its securities and entered
a period of extraordinary financial difficulties. In response to this
crisis, the State created MAC to provide financing assistance to the City
and also enacted the New York State Financial Emergency Act for the City
of New York (the "Emergency Act") which, among other things, created the
Financial Control Board (the "Control Board") to oversee the City's
financial affairs and facilitate its return to the public credit markets.
The State also established the Office of the State Deputy Comptroller
("OSDC") to assist the Control Board in exercising its powers and
responsibilities. On June 30, 1986, the Control Board's powers of
approval over the City Financial Plan were suspended pursuant to the
Emergency Act. However, the Control Board, MAC and OSDC continue to
exercise various monitoring functions relating to the City's financial
condition. The City prepares and operates under a four-year financial
plan which is submitted annually to the Control Board for review and which
the City periodically updates.
The City's independently audited operating results for each of its
fiscal years from 1981 through 1995 show a General Fund surplus reported
in accordance with GAAP. The City has eliminated the cumulative deficit
in its net General Fund position.
According to a recent OSDC economic report, the City's economy was
slow to recover from the recession and is expected to experience a weak
employment situation, and moderate wage and income growth, during the
1995-96 period. Also, Financial Plan reports of OSDC, the Control Board,
and the City Comptroller have variously indicated that many of the City's
balanced budgets have been accomplished, in part, through the use of non-
recurring resource, tax and fee increases, personnel reductions and
additional State assistance; that the City has not yet brought its long-
term expenditures in line with recurring revenues; that the City's
proposed gap-closing programs, if implemented, would narrow future budget
gaps; that these programs tend to rely heavily on actions outside the
direct control of the City; and that the City is therefore likely to
continue to face futures projected budget gaps requiring the City to
reduce expenditures and/or increase revenues. According to the most
recent staff reports of OSDC, the Control Board and the City Comptroller
during the four-year period covered by the current Financial Plan, the
City is relying on obtaining substantial resources from initiatives
needing approval and cooperation of its municipal labor unions, Covered
Organizations, and City Council, as well as the State and Federal
governments, among others, and there can be no assurance that such
approval can be obtained.
The City requires certain amounts of financing for seasonal and
capital spending purposes. The City has issued $1.75 billion of notes for
seasonal financing purposes during the 1994 fiscal year. The City's
capital financing program projects long-term financing requirements of
approximately $17 billion for the City's fiscal years 1995 through 1998
for the construction and rehabilitation of the City's infrastructure and
other fixed assets. The major capital requirement include expenditures
for the City's water supply system, and waste disposal systems, roads,
bridges, mass transit, schools and housing. In addition, the City and the
Municipal Water Finance Authority issued about $1.8 billion in refunding
bonds in the 1994 fiscal year.
State Economic Trends. The State historically has been one of the
wealthiest states in the nation. For decades, however, the State has
grown more slowly than the nation as a whole, gradually eroding its
relative economic position. Statewide, urban centers have experienced
significant changes involving migration of the more affluent to the
suburbs and an influx of generally less affluent residents. Regionally,
the older Northeast cities have suffered because of the relative success
that the South and the West have had in attracting people and business.
The City has also had to face greater competition as other major cities
have developed financial and business capabilities which make them less
dependent on the specialized services traditionally available almost
exclusively in the City.
During the 1982-83 recession, overall economic activity in the State
declined less than that of the nation as a whole. However, in the
calendar years 1984 through 1991, the State's rate of economic expansion
was somewhat slower than that of the nation. In the 1990-91 recession,
the economy of the State, and that of the rest of the Northeast, was more
heavily damaged than that of the nation as a whole and has been slower to
recover. The total employment growth rate in the State has been below the
national average since 1984. The unemployment rate in the State dipped
below the national rate in the second half of 1981 and remained lower
until 1991; since then, it has been higher. According to data published
by the U.S. Bureau of Economic Analysis, during the past ten years, total
personal income in the State rose slightly faster than the national
average only from 1986 through 1988.
APPENDIX B
Description of S&P, Moody's & Fitch ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable, and will
include: (1) likelihood of default-capacity and willingness of the
obligor as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation; (2) nature and provisions of
the obligation; and (3) protection afforded by, and relative position of,
the obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small
degree.
A
Principal and interest payments on bonds in this category are
regarded as safe. This rating describes the third strongest capacity for
payment of debt service. It differs from the two higher ratings because:
General Obligation Bonds -- There is some weakness in the local
economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse
circumstances, any one such weakness might impair the ability of the
issuer to meet debt obligations at some future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management
performance appears adequate.
BBB
Of the investment grade, this is the lowest.
General Obligation Bonds -- Under certain adverse conditions, several
of the above factors could contribute to a lesser capacity for payment of
debt service. The difference between "A" and "BBB" rating is that the
latter shows more than one fundamental weakness, or one very substantial
fundamental weakness, whereas the former shows only one deficiency among
the factors considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the
pledged revenues could show substantial variations, with the revenue flow
possibly being subject to erosion over time. Basic security provisions
are no more than adequate. Management performance could be stronger.
BB, B, CCC, CC, C
Debt rated BB, B, CCC, CC or C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal. BB indicates the least degree of speculation and C the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB
Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payment.
B
Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Debt rated CCC has a current identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic
conditions to meet timely payments of interest and repayment of principal.
In the event of adverse business, financial or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
Plus (+) or minus (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus designation to show relative standing
within the major ratings categories.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus sign (+)
designation.
SP-2
The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.
SP-3
The issuers of these municipal notes exhibit speculative capacity to
pay principal and interest.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no
more than 365 days. Issues assigned an A rating are regarded as having
the greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.
A-1
This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign
(+) designation.
A-2
Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for
issues designated A-1.
A-3
Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the
higher designations.
Moody's
Municipal Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment some
time in the future.
Baa
Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate, and therefore not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
Ca
Bonds which are rated Ca present obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category
and in categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower
end of a rating category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings
recognize the differences between short-term credit risk and long-term
risk. Factors affecting the liquidity of the borrower and short-term
cyclical elements are critical in short-term ratings, while other factors
of major importance in bond risk, long-term secular trends for example,
may be less important over the short run.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand
feature is not rated, as NR. Short-term ratings on issues with demand
features are differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon periodic demand rather than fixed maturity
dates and payment relying on external liquidity. Additionally, investors
should be alert to the fact that the source of payment may be limited to
the external liquidity with no or limited legal recourse to the issuer in
the event the demand is not met.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when
Moody's assigns a MIG or VMIG rating, all categories define an investment
grade situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/VMIG 3
This designation denotes favorable quality. All security elements
are accounted for but there is lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and
market access for refinancing is likely to be less well established.
MIG 4/VMIG 4
This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and, although
not distinctly or predominantly speculative, there is specific risk.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins
in earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets
and assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations.
This ordinarily will be evidenced by many of the characteristics cited
above but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external conditions.
Ample alternate liquidity is maintained.
Issuers (or related supporting institutions) rated Prime-3 (P-3) have
an acceptable capacity for repayment of short-term promissory obligations.
The effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and the requirements
for relatively high financial leverage. Adequate alternate liquidity is
maintained.
Fitch
Municipal Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse changes
in economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual or imminent default of
interest and/or principal payments. Such bonds are extremely speculative
and should be valued on the basis of their ultimate recovery value in
liquidation or reorganization of the obligor. DDD represents the highest
potential for recovery on these bonds and D represents the lowest
potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to
indicate the relative position of a credit within the rating category.
Plus and minus signs, however, are not used in the AAA category covering
12-36 months or the DDD, DD or D categories.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations
in a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not
as great as the F-1+ and F-1 categories.
<TABLE>
<CAPTION>
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
STATEMENT OF INVESTMENTS MAY 31, 1996
PRINCIPAL
TAX EXEMPT INVESTMENTS-100.0% AMOUNT VALUE
_______ _______
<S> <C> <C>
NEW YORK-98.3%
Broome County Industrial Development Agency, IDR, Refunding, VRDN
(Bing Realty Co. Project) 3.65% (LOC; Meridian Bank Corp.) (a,b)........ $ 1,350,000 $ 1,350,000
Buffalo, RAN 4.20%, 7/16/96 (LOC; Landesbank Hessen) (b).................... 10,000,000 10,009,649
Erie County, RAN 4.25%, Series A, 4/17/97 (LOC; Union Bank of Switzerland) (b) 11,000,000 11,060,439
Metropolitan Transportation Authority, Commuter Facilities Revenue, VRDN
3.50% (LOC: Bank of Tokyo-Mitsubishi, Industrial Bank of Japan,
National Westminster Bank and Sumitomo Bank) (a,b)...................... 34,300,000 34,300,000
Monroe County Industrial Development Agency, Revenue, VRDN (Enbi Corp.)
3.40% (LOC; ABN-Amro Bank) (a,b)........................................ 4,700,000 4,700,000
New York City, VRDN:
3.65%, Series B (Insured; MBIA and SBPA; Westdeutsche Landesbank) (a)... 8,400,000 8,400,000
3.70%, Subseries A-7 (LOC; Morgan Guaranty Trust Co.) (a,b)............. 4,200,000 4,200,000
3.75%, Subseries A-4 (LOC; Chemical Bank) (a,b)......................... 2,500,000 2,500,000
3.80%, Subseries A-4 (LOC; Industrial Bank of Japan) (a,b).............. 7,700,000 7,700,000
3.85%, Subseries E-2 (LOC; Industrial Bank of Japan) (a,b).............. 4,100,000 4,100,000
3.85%, Subseries E-5 (LOC; Sumitomo Bank) (a,b)......................... 6,000,000 6,000,000
Trust Cultural Resource Revenue, Refunding (American Museum of Natural History)
3.35%, Series A (Insured; MBIA and BPA; Credit Suisse) (a)............ 6,000,000 6,000,000
New York City Housing Development Corporation, Mortgage Revenue, VRDN:
(Multi-Family York Avenue Development Project) 3.65% (LOC; Midland Bank) (a,b) 7,000,000 7,000,000
(Park Gate Tower) 3.40% (LOC; Citibank) (a,b)........................... 610,000 610,000
(Residential East 17th Street) 3.70%, Series A (LOC; Chemical Bank) (a,b) 2,800,000 2,800,000
New York City Industrial Development Agency, VRDN:
Civil Facility Revenue (Mercy College Project)
3.50% (LOC; The Bank of New York) (a,b)............................... 1,900,000 1,900,000
IDR:
(Japan Airlines Co. Limited Project) 3.75% (LOC; Morgan Guaranty Trust Co.) (a,b) 9,300,000 9,300,000
(La Guardia Association Project) 3.70% (LOC; Banque Indosuez) (a,b)... 13,700,000 13,700,000
(Stroheam & Roman Project) 3.65% (LOC; Westdeutsche Landesbank) (a,b). 5,700,000 5,700,000
New York City Municipal Water Finance Authority, Water & Sewer Systems
Revenue,
VRDN 3.80%, Series A (Liquidity Facility; FGIC) (a)..................... 1,800,000 1,800,000
New York State, CP 3.75%, Series R, 8/7/96 (LOC; Westdeutsche Landesbank) (b) 7,400,000 7,400,000
New York State Energy, Research and Development Authority, PCR, VRDN:
(Central Hudson Gas and Electric)
3.55%, Series A (LOC; Union Bank of Switzerland) (a,b)................ 2,600,000 2,600,000
(New York State Electric and Gas)
3.55%, Series D (LOC; Union Bank of Switzerland) (a,b)................ 2,000,000 2,000,000
New York State Housing Finance Agency, MFHR, VRDN
3.60%, Series A (a)..................................................... 3,100,000 3,100,000
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
NEW YORK (CONTINUED)
New York State Local Government Assistance Corporation, VRDN:
3.45%, Series B (LOC: Credit Suisse and Swiss Bank Corp.) (a,b)......... $ 28,600,000 $ 28,600,000
3.40%, Series A (LOC: Credit Suisse and Swiss Bank Corp.) (a,b)......... 5,200,000 5,200,000
New York State Medical Care Facilities Finance Agency, Revenue, VRDN:
(Childrens Hospital Buffalo) 3.50%, Series A (LOC; Barclays Bank) (a,b). 4,200,000 4,200,000
(Pooled Equipment Loan Program) 3.55% (LOC; Chemical Bank) (a,b)........ 8,000,000 8,000,000
Patchogue-Medford Union Free School District, TAN 4.375%, 6/27/96........... 8,500,000 8,502,979
Rochester County, BAN 3.75%, Series I, 3/11/97.............................. 10,000,000 10,037,474
Sachem Central School District, TAN 4.125%, 6/27/96......................... 15,000,000 15,004,053
Suffolk County, TAN:
4%, Series I, 8/15/96 (LOC: Canadian Imperial Bank of Commerce,
National Westminster Bank and Westdeutsche Landesbank) (b)............ 12,000,000 12,016,920
4.50%, Series II, 9/12/96 (LOC: Canadian Imperial Bank of Commerce,
National Westminster Bank and Westdeutsche Landesbank) (b)............ 15,000,000 15,026,399
Triborough Bridge and Tunnel Authority, Special Obligation, VRDN
3.40% (Insured; FGIC) (a)............................................... 14,500,000 14,500,000
Westchester County, TAN 3.75%, 12/11/96..................................... 9,000,000 9,030,185
U.S. RELATED-1.7%
Commonwealth of Puerto Rico Government Development Bank, CP
3.55%, 7/16/96.......................................................... 5,000,000 5,000,000
______
TOTAL INVESTMENTS
(cost $293,348,098)..................................................... $293,348,098
=======
</TABLE>
<TABLE>
<CAPTION>
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
BAN Bond Anticipation Notes MFHR Multi-Family Housing Revenue
BPA Bond Purchase Agreement PCR Pollution Control Revenue
CP Commercial Paper RAN Revenue Anticipation Notes
FGIC Financial Guaranty Insurance Company SBPA Standby Bond Purchase Agreement
IDR Industrial Development Revenue TAN Tax Anticipation Notes
LOC Letter of Credit VRDN Variable Rate Demand Notes
MBIA Municipal Bond Investors Assurance
Insurance Corporation
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- ------- ------------------ ------------------
<S> <C> <C> <C>
F1+/F1 VMIG1/MIG1, P1 (d) SP1+/SP1, A1+/A1 (d) 96.6%
Not Rated (e) Not Rated (e) Not Rated (e) 3.4
____
100.0%
====
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(b) Secured by letters of credit. At May 31, 1996, 71.0% of the Fund's
net assets are backed by letters of credit issued by domestic banks and
foreign banks.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
(d) P1 and A1 are the highest ratings assigned tax-exempt commercial
paper by Moody's and Standard & Poor's, respectively.
(e) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Fund's Board of Trustees to be of
comparable quality to those rated securities in which the Fund may
invest.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value-Note 1(a)........................... $293,348,098
Cash.................................................................... 2,995,199
Interest receivable..................................................... 2,645,870
Prepaid expenses........................................................ 9,841
___________
298,999,008
LIABILITIES:
Due to The Dreyfus Corporation and subsidiaries......................... $ 158,464
Accrued expenses and other liabilities.................................. 72,910 231,374
___________ ____________
NET ASSETS ................................................................ $298,767,634
=======
REPRESENTED BY:
Paid-in capital......................................................... $298,823,123
Accumulated net realized (loss) on investments.......................... (55,489)
____________
NET ASSETS at value applicable to 298,823,123 shares outstanding (unlimited
number of $.001 par value shares of Beneficial Interest authorized)..... $298,767,634
=======
NET ASSET VALUE, offering and redemption price per share
($298,767,634 / 298,823,123 shares)..................................... $1.00
=======
STATEMENT OF OPERATIONS YEAR ENDED MAY 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 11,407,878
EXPENSES:
Management fee-Note 2(a).............................................. $1,564,732
Shareholder servicing costs-Note 2(b)................................. 311,097
Professional fees..................................................... 46,502
Custodian fees........................................................ 32,480
Trustees' fees and expenses-Note 2(c)................................. 22,088
Prospectus and shareholders' report................................... 12,686
Registration fees..................................................... 5,667
Miscellaneous......................................................... 13,123
_____
TOTAL EXPENSES.................................................... 2,008,375
______
INVESTMENT INCOME-NET....................................................... 9,399,503
NET REALIZED (LOSS) ON INVESTMENTS-Note 1(b)................................ (3,214)
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 9,396,289
=======
See notes to financial statements.
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED MAY 31,
---------------------------------
1995 1996
-------- -------
OPERATIONS:
Investment income-net................................................... $ 8,884,535 $ 9,399,503
Net realized (loss) on investments...................................... (26,195) (3,214)
_______ ______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 8,858,340 9,396,289
_______ ______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................... (8,884,535) (9,399,503)
_______ ______
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold........................................... 333,556,193 326,637,302
Dividends reinvested.................................................... 8,431,092 8,835,535
Cost of shares redeemed................................................. (368,085,583) (354,541,767)
_______ ______
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS........ (26,098,298) (19,068,930)
_______ ______
TOTAL (DECREASE) IN NET ASSETS.................................... (26,124,493) (19,072,144)
NET ASSETS:
Beginning of year....................................................... 343,964,271 317,839,778
_______ ______
End of year............................................................. $ 317,839,778 $ 298,767,634
======= ======
</TABLE>
See notes to financial statements.
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 5 of the Fund's Prospectus dated October 1, 1996.
See notes to financial statements.
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus New York Tax Exempt Money Market Fund (the "Fund") is registered
under the Investment Company Act of 1940 ("Act") as a non-diversified
open-end management investment company. The Fund's investment objective is to
provide investors with as high a level of current income exempt from Federal,
New York State and New York City income taxes as is consistent with the
preservation of capital and the maintenence of liquidity. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A. Premier Mutual Fund Services,
Inc. (the "Distributor") acts as the distributor of the Fund's shares, which
are sold to the public without a sales charge.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00; the Fund has adopted certain investment, portfolio valuation
and dividend and distribution policies to enable it to do so. There is no
assurance, however, that the Fund will be able to maintain a stable net asset
value of $1.00.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost, which
has been determined by the Fund's Board of Trustees to represent the fair
value of the Fund's investments.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Interest income, adjusted
for amortization of premiums and original issue discounts on investments, is
earned from settlement date and recognized on the accrual basis. Realized
gain and loss from securities transactions are recorded on the identified
cost basis.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations
held by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Fund may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $52,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to May 31, 1996. The
carryover does not include net realized securities losses from November 1,
1995 through May 31, 1996, which are treated, for Federal income tax purposes
as arising in fiscal 1997. If not applied, $15,000 expires in fiscal 1998,
$1,000 expires in fiscal 1999, $2,000 expires in fiscal 2002, $27,000 expires
in fiscal 2003 and $7,000 expires in fiscal 2004.
At May 31, 1996, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .50 of 1% of the value
of the Fund's average daily net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed 1 1/2% of the average value of the Fund's net
assets for any full fiscal year. There was no expense reimbursement for the
year ended May 31, 1996.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, an
amount not to exceed an annual rate of .25 of 1% of the value of the Fund's
average daily net assets for certain allocated expenses of providing personal
services and/or maintaining shareholder accounts. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
During the year ended May 31, 1996, the Fund was charged an aggregate of
$113,327 pursuant to the Shareholder Services Plan.
Effective December 1, 1995, the Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a transfer agency agreement
for providing personnel and facilities to perform transfer agency services
for the Fund. Such compensation amounted to $60,309 for the period from
December 1, 1995 through May 31, 1996.
(C) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS NEW YORK TAX EXEMPT MONEY MARKET FUND
We have audited the accompanying statement of assets and liabilities of
Dreyfus New York Tax Exempt Money Market Fund, including the statement of
investments, as of May 31, 1996, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of May 31, 1996 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus New York Tax Exempt Money Market Fund at May 31, 1996,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with generally
accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
June 27, 1996
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Fund hereby designates all the
dividends paid from investment income-net during the fiscal year ended May
31, 1996 as "exempt-interest dividends" (not subject to regular Federal and,
for individuals who are New York residents, New York State and New York City
personal income taxes).
[Dreyfus lion "d" logo]
DREYFUS NEW YORK TAX EXEMPT
MONEY MARKET FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 273AR965
[Dreyfus logo]
New York
Tax Exempt
Money Market Fund
Annual Report
May 31, 1996
<TABLE>
<CAPTION>
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
_______ _______
<S> <C> <C>
NEW YORK-90.8%
Albany Parking Authority, Parking Revenue, Refunding:
6.50%, 11/1/2004........................................................ $ 1,000,000 $ 1,067,980
6.70%, 11/1/2006........................................................ 1,000,000 1,067,430
Board Cooperative Educational Services, COP
(Greenport Vocational Facility Project) 7.50%, 10/1/1996................ 100,000 101,209
Buffalo Municipal Water Finance Authority, Water System Revenue
5.50%, 7/1/2005 (Insured; FSA).......................................... 1,200,000 1,229,676
City University of New York, COP, Refunding (John Jay College)
5%, 8/15/2002........................................................... 9,345,000 9,091,844
Development Authority of the North Country,
Solid Waste Management System Revenue:
6.40%, 7/1/2000 (Prerefunded 7/1/1999) (a)............................ 605,000 647,816
6.40%, 7/1/2000....................................................... 510,000 521,694
Franklin Solid Waste Management Authority, Solid Waste System Revenue
6%, 6/1/2005 (Prerefunded 6/1/2003) (a)................................. 1,515,000 1,588,902
Metropolitan Transportation Authority:
Service Contract Transit Facilities
7.25%, 7/1/1998....................................................... 2,550,000 2,687,317
Transit Facilities Revenue, Refunding:
5.10%, 7/1/2004 (Insured; AMBAC)...................................... 1,255,000 1,259,480
5.30%, 7/1/2006 (Insured; AMBAC)...................................... 3,500,000 3,534,965
Municipal Assistance Corp. for the City of New York, Refunding:
6%, 7/1/2005............................................................ 9,000,000 9,559,080
6%, 7/1/2006............................................................ 7,000,000 7,415,030
Nassau County, Refunding (Combined Sewer Districts)
5.30%, 7/1/2006 (Insured; MBIA)......................................... 4,860,000 4,908,551
New York City:
5.75%, 2/15/2008........................................................ 10,500,000 10,025,715
Refunding:
4.75%, 8/15/1998...................................................... 5,000,000 5,018,350
5.75%, 8/1/2002 (Insured; MBIA)....................................... 4,200,000 4,395,678
6.25%, 8/1/2009....................................................... 3,225,000 3,183,462
New York City Industrial Development Agency, Revenue:
Civic Facility
(YMCA of Greater New York Project) 7.25%, 8/1/1999.................... 1,800,000 1,892,880
Industrial Development:
8%, Series I, 11/16/1998 (LOC; Algemene Bank Nederland) (b)........... 605,000 610,046
8%, Series J, 11/16/1998 (LOC; Algemene Bank Nederland) (b)........... 1,175,000 1,184,799
Special Facility
(Terminal One Group Association, L.P. Project) 5.60%, 1/1/2003........ 4,000,000 3,973,320
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
NEW YORK (CONTINUED)
New York City Municipal Water Finance Authority, Water and Sewer System Revenue:
5.55%, 6/15/2001........................................................ $ 1,500,000 $ 1,544,385
6.60%, 6/15/2002........................................................ 1,495,000 1,613,389
6.60%, 6/15/2002 (Prerefunded 6/15/2001) (a)............................ 1,505,000 1,638,403
5.375%, 6/15/2007 (Insured; AMBAC)...................................... 7,895,000 7,888,289
New York State:
6.75%, 11/15/2000....................................................... 2,000,000 2,163,460
Refunding:
5.50%, 8/15/2006...................................................... 4,300,000 4,354,911
5.40%, 10/1/2008...................................................... 3,680,000 3,638,306
New York State Dormitory Authority, Revenue:
City University:
5.20%, 7/1/2005....................................................... 5,690,000 5,501,092
5.25%, 7/1/2006....................................................... 3,000,000 2,875,200
5.25%, 7/1/2006 (Insured; FGIC)....................................... 3,000,000 2,991,720
5.75%, 7/1/2009....................................................... 8,085,000 7,842,612
Refunding 6.25%, 7/1/2003............................................. 4,225,000 4,388,507
Columbia University 5.50%, 7/1/2005..................................... 3,045,000 3,142,592
Court Facilities Lease 5.50%, 5/15/2010................................. 4,000,000 3,744,400
Department of Health:
6%, 7/1/2005.......................................................... 2,500,000 2,556,025
6%, 7/1/2006.......................................................... 2,350,000 2,388,963
Refunding 5.50%, 7/1/2005............................................. 1,000,000 988,010
Highland Community Development Corp.
5.50%, 7/1/2001 (LOC; Marine Midland Bank) (b)........................ 3,500,000 3,512,110
State University Educational Facilities:
6.10%, 5/15/2005...................................................... 2,630,000 2,715,922
6.10%, 5/15/2008...................................................... 2,000,000 2,025,520
7.70%, 5/15/2012 (Prerefunded 5/15/2000) (a).......................... 3,850,000 4,335,523
New York State Energy Research and Development Authority,
State Service Contract Revenue (Western New York Nuclear Service Center Project):
5.25%, 4/1/2003....................................................... 5,345,000 5,438,163
5.375%, 4/1/2004...................................................... 1,500,000 1,531,590
5.40%, 4/1/2005....................................................... 2,000,000 2,032,840
New York State Environmental Facilities Corp.:
PCR
(State Water Revolving Fund):
3.90%, 2/15/2000.................................................. 10,000,000 9,696,200
7.30%, 6/15/2001.................................................. 4,000,000 4,423,680
6.30%, 6/15/2002.................................................. 3,000,000 3,221,250
6.20%, 3/15/2004.................................................. 1,700,000 1,829,557
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
NEW YORK (CONTINUED)
New York State Environmental Facilities Corp. (continued):
PCR (continued)
(State Water Revolving Fund) (continued):
6.30%, 3/15/2005.................................................. $ 1,800,000 $ 1,940,310
6.60%, 6/15/2005.................................................. 3,120,000 3,369,350
7.20%, 6/15/2006.................................................. 3,000,000 3,308,220
(New York Municipal Water Finance Authority Project)
6.35%, 6/15/2006................................................ 2,000,000 2,164,540
Special Obligation:
(Riverbank State Park) 7.10%, 4/1/2002................................ 1,130,000 1,209,190
(State Park Infrastructure) 5.75%, 3/15/2008.......................... 2,475,000 2,459,086
New York State Housing Finance Agency:
Revenue
(Refunding- Health Facilities - New York City):
7.90%, 11/1/1999 (Prerefunded 11/1/1996) (a)...................... 245,000 249,332
7.90%, 11/1/1999.................................................. 1,770,000 1,924,061
6.375%, 11/1/2003................................................. 3,000,000 3,088,050
6%, 11/1/2006..................................................... 12,450,000 12,278,937
(Urban Rent) 5.90%, 11/1/2003........................................... 4,330,000 4,369,446
New York State Local Government Assistance Corp.:
6.70%, 4/1/2000......................................................... 2,490,000 2,659,021
6.75%, 4/1/2002......................................................... 2,500,000 2,739,950
5.70%, 4/1/2008......................................................... 3,000,000 3,027,750
New York State Medical Care Facilities Finance Agency, Revenue:
Hospital and Nursing Home 5.875%, 2/15/2008 (Insured; FHA).............. 2,215,000 2,244,880
Mental Health Services 5.25%, 2/15/2008 (Insured; FGIC)................. 6,160,000 6,009,696
(Mortgage Project) 5.40%, 8/15/2005 (Insured; FHA)...................... 2,115,000 2,137,588
New York State Mortgage Agency, Revenue, (Homeowner Mortgage)
6.15%, 10/1/2001........................................................ 1,225,000 1,270,019
New York State Power Authority,
General Purpose Revenue:
6.50%, 1/1/2004....................................................... 2,735,000 2,939,414
Refunding 5%, 1/1/2007................................................ 5,000,000 4,818,650
New York State Project Finance Agency 5%, 11/1/2007 (Insured; FHA).......... 2,650,000 2,553,858
New York State Thruway Authority:
(Emergency Highway Reconditioning and Preservation)
6%, 1/1/2002.......................................................... 2,000,000 2,110,720
General Revenue 5.70%, 1/1/2008 (Insured; FGIC)......................... 3,000,000 3,054,480
Local Highway and Bridge 5.75%, 4/1/2008................................ 3,200,000 3,140,576
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
NEW YORK (CONTINUED)
New York State Thruway Authority (continued):
Service Contract Revenue (Local Highway and Bridge):
5.40%, 4/1/2003....................................................... $ 6,195,000 $ 6,174,247
5.50%, 4/1/2004....................................................... 1,130,000 1,124,938
5.125%, 4/1/2007 (Insured; MBIA)...................................... 4,295,000 4,200,811
5.90%, 4/1/2007....................................................... 7,000,000 7,027,160
New York State Urban Development Corp.:
Project Revenue (Cornell Center for Theory and Simulation Science and
Engineering Grant) 5.90%, 1/1/2007.................................... 2,735,000 2,670,810
Refunding, Project (Onondaga County Convention):
6.25%, 1/1/2007....................................................... 1,725,000 1,758,310
6.25%, 1/1/2008....................................................... 1,830,000 1,853,955
6.25%, 1/1/2009....................................................... 1,950,000 1,965,854
6.25%, 1/1/2010....................................................... 2,065,000 2,066,549
Revenue (Correctional Capital Facilities)
6%, 1/1/2005.......................................................... 5,165,000 5,240,719
(State Facilities) Refunding 5.50%, 4/1/2007............................ 3,000,000 2,904,690
Oneida-Herkimer Solid Waste Management Authority, Solid Waste System Revenue
6.60%, 4/1/2004......................................................... 1,150,000 1,193,953
Onondaga County Industrial Development Agency, PCR, Refunding
(Anheuser-Busch Co. Inc. Project) 6.625%, 8/1/2006...................... 4,000,000 4,302,280
Port Authority of New York and New Jersey
(Consolidated Bonds 73rd Series) 6.75%, 10/15/2006...................... 2,000,000 2,150,460
Rensselaer Industrial Development Agency, IDR (Albany International Corp.)
7.55%, 6/1/2007 (LOC; Norstar Bank) (b)................................. 2,000,000 2,243,240
Suffolk County Industrial Development Agency, IDR (Metavac Inc. Facilities)
7.25%, 12/1/1999 (LOC; Bank of Tokyo) (b)............................... 1,310,000 1,349,313
Suffolk County Water Authority, Waterworks Revenue Refunding:
5.10%, 6/1/2003 (Insured; MBIA)......................................... 3,545,000 3,575,097
5.10%, 6/1/2004 (Insured; MBIA)......................................... 4,500,000 4,513,185
Syracuse:
COP
(Syracuse Hancock International Airport):
6.50%, 1/1/2004................................................... 1,045,000 1,124,148
6.60%, 1/1/2005................................................... 1,105,000 1,191,477
6.70%, 1/1/2007................................................... 1,210,000 1,282,443
Public Improvement:
5.70%, 6/15/2004...................................................... 1,850,000 1,934,194
5.70%, 6/15/2005...................................................... 1,830,000 1,901,022
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
NEW YORK (CONTINUED)
Syracuse Industrial Development Agency, Pilot Revenue, Refunding
5.125%, 10/15/2002 (LOC; ABN AMRO Bank) (b)............................. $ 3,000,000 $ 2,945,520
Ulster County Resource Recovery Agency, Solid Waste System Revenue 5.90%, 3/1/2007 1,235,000 1,203,359
Westchester County Industrial Development Agency, RRR, Refunding
(Resco Company Project) 5.50%, 7/1/2006................................. 2,850,000 2,881,720
U.S. RELATED-9.2%
Guam 5.625%, 9/1/2002....................................................... 5,000,000 4,959,350
Puerto Rico Aqueduct and Sewer Authority, Revenue, Refunding
5.20%, 7/1/2008......................................................... 10,000,000 9,496,700
Puerto Rico Highway and Transportation Authority, Highway Revenue
6.25%, 7/1/2007 (Insured; MBIA)......................................... 3,500,000 3,789,555
Puerto Rico Public Buildings Authority,
Revenue Guaranteed Government Facilities
6.25%, 7/1/2008 (Insured; AMBAC)........................................ 3,730,000 4,048,244
Virgin Islands, Subordinated Special Tax
(Insurance Claims Fund Program, GO Matching Fund) 5.65%, 10/1/2003...... 5,075,000 5,169,040
Virgin Islands Port Authority, Airport Revenue (Cyril E. King Airport Project)
7.875%, 10/1/1997....................................................... 1,020,000 1,059,811
Virgin Islands Public Finance Authority, Revenue, Refunding
Matching Fund Loan Notes 6.80%, 10/1/2000............................... 1,500,000 1,557,750
Virgin Islands Water and Power Authority, Electric System Revenue
6.90%, 7/1/1996......................................................... 2,595,000 2,601,384
__________
TOTAL INVESTMENTS
(cost $349,638,914)..................................................... $353,516,255
=============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation IDR Industrial Development Revenue
COP Certificate of Participation LOC Letter of Credit
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
FHA Federal Housing Administration Insurance Corporation
FSA Financial Security Assurance PCR Pollution Control Revenue
GO General Obligation RRR Resources Recovery Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------- ------- ----------------- --------------------
<S> <C> <S> <C>
AAA Aaa AAA 27.6%
AA Aa AA 15.8
A A A 23.3
BBB Baa BBB 28.9
F1 MIG1/P1 SP1/A1 1.0
Not Rated (d) Not Rated (d) Not Rated (d) 3.4
_______
100.0%
========
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collateralized by U.S. government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) Secured by letter of credit.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
(d) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Fund may invest.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $349,638,914)-see statement..................................... $353,516,255
Receivable for investment securities sold............................... 7,216,579
Interest receivable..................................................... 6,399,174
Prepaid expenses........................................................ 7,500
__________
367,139,508
LIABILITIES:
Due to The Dreyfus Corporation and subsidiaries......................... $ 221,430
Due to Distributor...................................................... 7,890
Due to Custodian........................................................ 1,653,857
Accrued expenses........................................................ 108,725 1,991,902
___________ __________
NET ASSETS.................................................................. $365,147,606
=============
REPRESENTED BY:
Paid-in capital......................................................... $359,137,765
Accumulated undistributed net realized gain on investments.............. 2,132,500
Accumulated net unrealized appreciation on investments-Note 3........... 3,877,341
_________
NET ASSETS at value applicable to 20,476,885 shares outstanding
(unlimited number of $.001 par value shares of Beneficial
Interest authorized).................................................... $365,147,606
=============
NET ASSET VALUE, offering and redemption price per share
($365,147,606 / 20,476,885 shares)...................................... $17.83
======
STATEMENT OF OPERATIONS YEAR ENDED MAY 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $20,236,447
EXPENSES:
Management fee-Note 2(a).............................................. $ 2,194,411
Shareholder servicing costs-Note 2(b)................................. 1,131,730
Professional fees..................................................... 46,954
Trustees' fees and expenses-Note 2(c)................................. 41,865
Custodian fees........................................................ 40,334
Prospectus and shareholders' reports-Note 2(b)........................ 27,523
Registration fees..................................................... 4,967
Miscellaneous......................................................... 38,486
___________
TOTAL EXPENSES.................................................. 3,526,270
Less-reduction in management fee and reimbursement of
prospectus costs due to undertaking-Note 2(a,b)................... 445,112
___________
NET EXPENSES.................................................... 3,081,158
__________
INVESTMENT INCOME-NET........................................... 17,155,289
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 3,319,729
Net unrealized (depreciation) on investments............................ (7,887,728)
___________
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (4,567,999)
__________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 12,587,290
=============
See notes to financial statements.
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED MAY 31,
----------------------------------------
1995 1996
-------- --------
OPERATIONS:
Investment income-net................................................... $ 18,034,151 $ 17,155,289
Net realized gain (loss) on investments................................. (316,185) 3,319,729
Net unrealized appreciation (depreciation) on investments for the year.. 5,287,113 (7,887,728)
_____________ _____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 23,005,079 12,587,290
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................... (18,034,151) (17,155,289)
_____________ _____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................... 102,716,892 77,525,221
Dividends reinvested.................................................... 14,835,969 14,196,245
Cost of shares redeemed................................................. (155,468,249) (81,204,467)
_____________ _____________
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (37,915,388) 10,516,999
_____________ _____________
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... (32,944,460) 5,949,000
NET ASSETS:
Beginning of year....................................................... 392,143,066 359,198,606
_____________ _____________
End of year............................................................. $ 359,198,606 $ 365,147,606
============== ==============
SHARES SHARES
_____________ _____________
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 5,899,261 4,275,135
Shares issued for dividends reinvested.................................. 851,555 783,299
Shares redeemed......................................................... (8,998,947) (4,479,706)
_____________ _____________
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... (2,248,131) 578,728
============== ==============
</TABLE>
See notes to financial statements.
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 5 of the Prospectus dated October 1, 1996.
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus New York Tax Exempt Intermediate Bond Fund (the "Fund") is
registered under the Investment Company Act of 1940 ("Act") as a
non-diversified open-end management investment company. The Fund's investment
objective is to provide investors with as high a level of current income
exempt from Federal, New York State and New York City income taxes as is
consistent with the preservation of capital. The Dreyfus Corporation
("Manager") serves as the Fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A. Premier Mutual Fund Services, Inc. (the
"Distributor") acts as the distributor of the Fund's shares, which are sold
to the public without a sales load.
(A) PORTFOLIO VALUATION: The Fund's investments are valued each business
day by an independent pricing service ("Service") approved by the Board of
Trustees. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of municipal securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations
held by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the value
of the Fund's average daily net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Fund's aggregate expenses, exclusive of taxes, brokerage, interest on
borrowings and extraordinary expenses, exceed 1 1/2% of the average value of
the Fund's net assets for any full fiscal year. The Manager has undertaken
from September 1, 1995 through June 30, 1996 to reduce the Management fee
paid by, or reimburse such excess expenses of the Fund, to the extent that
the Fund's aggregate annual expenses (exclusive of certain expenses as
described above) exceed an annual rate of .80 of 1% of the value of the
Fund's average daily net assets. The reduction in management fee, pursuant to
the undertaking, amounted to $444,048 for the year ended May 31, 1996.
(B) Under the Service Plan (the "Plan") adopted pursuant to rule 12b-1
under the Act, the Fund (a) reimburses the Distributor for payments to
certain Service Agents (a securities dealer, financial institution or other
industry professional) for distributing the Fund's shares and servicing
shareholder accounts ("Servicing") and (b) pays the Manager, Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager, or any affiliate
(collectively "Dreyfus") for advertising and marketing relating to the Fund
and for Servicing, at an annual rate of .25 of 1% of the value of the Fund's
average daily net assets. Both the Distributor and Dreyfus may pay Service
Agents (a securities dealer, financial institution or other industry
professional) a fee in respect of the Fund's shares owned by shareholders
with whom the Service Agent has a servicing relationship or for whom the
Service Agent is the dealer or holder of record. Both the Distributor and
Dreyfus determine the amounts to be paid to Service Agents to which it will
make payments and the basis on which such payments are made. The Plan also
separately provides for the Fund to bear the costs of preparing, printing and
distributing certain of the Fund's prospectuses and statements of additional
information and costs associated with implementing and operating the Plan,
not to exceed the greater of $100,000 or .005 of 1% of the Fund's average
daily net assets for any full fiscal year. During the year ended May 31,
1996, $917,999 was charged to the Fund pursuant to the Plan of which $1,064
was waived by the Manager.
Effective December 1, 1995, the Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a transfer agency agreement
for providing personnel and facilities to perform transfer agency services
for the Fund. Such compensation amounted to $74,223 for the period from
December 1, 1995, through May 31, 1996.
(C) Each trustee who is not an "affiliated person" as defined in the Act,
receives from the Fund an annual fee of $2,500 and an attendance fee of $500
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended May 31, 1996 amounted
to $185,330,247 and $169,302,041, respectively.
At May 31, 1996, accumulated net unrealized appreciation on investments
was $3,877,341, consisting of $7,259,367 gross unrealized appreciation and
$3,382,026 gross unrealized depreciation.
At May 31, 1996, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS NEW YORK TAX EXEMPT INTERMEDIATE BOND FUND
We have audited the accompanying statement of assets and liabilities of
Dreyfus New York Tax Exempt Intermediate Bond Fund, including the statement
of investments, as of May 31, 1996, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of
the two years in the period then ended, and financial highlights for each of
the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of May 31, 1996 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus New York Tax Exempt Intermediate Bond Fund at May 31,
1996, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst & Young LLP signature logo]
New York, New York
July 2, 1996
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR ENDED FIVE YEARS ENDED TEN YEARS ENDED
MAY 31, 1996 MAY 31, 1996 MAY 31, 1996
________ _________ _________
<S> <C> <C>
1.84% 6.64% 6.94%
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Dreyfus New York Tax
Exempt Bond Fund, Inc. on 5/31/86 to a $10,000 investment made in the Lehman
Brothers Municipal Bond Index on that date. All dividends and capital gain
distributions are reinvested.
The Fund invests primarily in New York municipal securities and its
performance shown in the line graph takes into account fees and expenses.
Unlike the Fund, the Lehman Brothers Municipal Bond Index is an unmanaged
total return performance benchmark for the long-term, investment-grade,
geographically unrestricted tax exempt bond market, calculated by using
municipal bonds selected to be representative of the municipal market
overall. The Index does not take into account charges, fees and other
expenses. Also, unlike the Fund which principally limits investments to New
York municipal obligations, the Index is not State specific. These factors
can contribute to the Index potentially outperforming the Fund. Further
information relating to Fund performance, including expense reimbursements,
if applicable, is contained in the Financial Highlights section of the
Prospectus and elsewhere in this report.
<TABLE>
<CAPTION>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-99.5% AMOUNT VALUE
________ ________
<S> <C> <C>
NEW YORK-93.5%
Alleghany County Industrial Development Agency, Solid Waste Disposal Facility
Revenue
(Atlantic Richfield Co. Facility) 6.625%, 9/1/2016...................... $ 5,600,000 $ 5,770,520
Cohoes Industrial Development Agency, IDR (Norlite Corp. Project)
6.75%, 5/1/2009 (LOC; Dresdner Bank)(a)................................. 5,000,000 5,203,900
Essex County Industrial Development Agency, SWDR (International Paper Co.
Projects)
5.80%, 12/1/2019........................................................ 5,500,000 5,267,625
Metropolitan Transportation Authority:
Commuter Facilities, Service Contract 6%, 7/1/2016 (Insured; FGIC)...... 9,000,000 8,942,400
Transit Facilities Revenue 5.50%, 7/1/2022 (Insured; FGIC).............. 24,000,000 22,441,440
Transit Facilities, Service Contract:
7.125%, 7/1/2009...................................................... 5,000,000 5,431,300
5.75%, 7/1/2015....................................................... 10,000,000 9,304,600
7.50%, 7/1/2019 (Prerefunded 7/1/2000)(b)............................. 7,700,000 8,607,522
Municipal Assistance Corporation for City of New York, Refunding 5.50%, 7/1/2001 19,765,000 20,422,186
Nassau County Industrial Development Agency, IDR
(Hofstra University Project) 8.25%, 7/1/2003 (Prerefunded 7/1/1998)(b).. 3,000,000 3,240,090
New York City:
7.50%, 2/1/2003......................................................... 3,500,000 3,833,900
6.375%, 8/1/2004........................................................ 16,000,000 16,558,560
7.50%, 2/1/2006......................................................... 4,000,000 4,388,720
5.75%, 2/1/2007......................................................... 22,305,000 21,511,165
5.75%, 8/15/2008........................................................ 5,000,000 4,749,350
6.25%, 8/1/2009......................................................... 10,500,000 10,364,760
7.50%, 3/15/2010........................................................ 2,340,000 2,515,172
6.25%, 8/1/2010......................................................... 10,000,000 9,878,800
7%, 10/1/2010........................................................... 3,955,000 4,151,484
3.65%, 8/1/2011......................................................... 18,775,000 16,702,991
6.25%, 8/1/2011 (Insured; FSA) (Prerefunded 8/1/2002)(b)................ 3,950,000 4,295,388
5.75%, 8/15/2011........................................................ 8,870,000 8,289,281
6.85%, 10/1/2013........................................................ 5,000,000 5,103,850
5.875%, 3/15/2018....................................................... 6,130,000 5,622,803
5.75%, 2/1/2020......................................................... 6,525,000 5,861,146
7.50%, 8/1/2021......................................................... 5,000,000 5,486,200
Refunding:
7.50%, 3/15/2010 (Prerefunded 3/15/2000)(b)........................... 7,660,000 8,490,650
6.375%, 8/15/2012..................................................... 18,000,000 17,881,200
New York City Industrial Development Agency, Special Facility Revenue
(Terminal One Group Assoc., L.P. Project) 6.125%, 1/1/2024.............. 41,575,000 40,282,849
New York City Municipal Water Finance Authority, Water and Sewer Systems
Revenue:
7%, 6/15/2015 (Prerefunded 6/15/2001)(b)................................ 5,655,000 6,251,715
5.50%, 6/15/2019........................................................ 5,090,000 4,676,335
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
NEW YORK (CONTINUED)
New York City Municipal Water Finance Authority,
Water and Sewer Systems Revenue (continued):
5.50%, 6/15/2020...................................................... $ 29,835,000 $27,328,561
6.20%, 6/15/2021 (Insured; AMBAC)..................................... 9,700,000 9,863,930
State of New York:
5.875%, 3/15/2014....................................................... 3,000,000 3,002,070
5.75%, 6/15/2026 (Insured; MBIA)........................................ 25,000,000 24,050,000
5.875%, 6/15/2026....................................................... 8,750,000 8,439,287
COP Commissioner Office of Mental Health 8.30%, 9/1/2012................ 4,000,000 4,236,000
Environmental Quality 5%, 1/15/2014..................................... 7,670,000 6,869,099
Refunding:
5.625%, 8/15/2009..................................................... 15,000,000 15,023,250
5.70%, 8/15/2011...................................................... 4,500,000 4,488,255
6.125%, 11/15/2011.................................................... 3,130,000 3,217,107
5.80%, 10/1/2013...................................................... 4,715,000 4,703,825
5.625%, 10/1/2020..................................................... 5,175,000 4,924,633
New York State Dormitory Authority, Revenues:
(City University Systems):
6.375%, 7/1/2008...................................................... 7,070,000 7,171,879
7%, 7/1/2009.......................................................... 8,500,000 9,218,165
5.60%, 7/1/2010....................................................... 12,000,000 11,348,880
7.50%, 7/1/2010 (Insured; FGIC)....................................... 5,000,000 5,930,250
5.75%, 7/1/2013....................................................... 4,100,000 3,888,440
5.625%, 7/1/2016...................................................... 11,120,000 10,312,466
5.75%, 7/1/2018....................................................... 36,410,000 34,181,344
5%, 7/1/2020.......................................................... 50,500,000 41,579,175
(Columbia University) 5.75% 7/1/2009.................................... 10,000,000 10,348,600
(Cornell University) 7.375%, 7/1/2030................................... 11,785,000 12,964,796
Department of Health:
5.75%, 7/1/2017....................................................... 17,010,000 15,785,450
5.50%, 7/1/2025....................................................... 35,080,000 30,871,803
Refunding 5.50%, 7/1/2014............................................. 10,000,000 9,058,100
Lease Court Facilities 5.70%, 5/15/2022................................. 5,000,000 4,550,750
Mental Health Services Facility Improvement 5.375%, 2/15/2026........... 17,550,000 15,221,993
(New York Medical College) 6.875%, 7/1/2021 (Insured; AGIC)............. 19,310,000 20,601,067
(State University) 7.60%, 7/1/2018 (Prerefunded 7/1/1998)(b)............ 3,000,000 3,259,650
Educational Facilities:
7.25%, 5/15/2008 (Prerefunded 5/15/2000)(b)....................... 11,590,000 12,840,329
5.875%, 5/15/2011................................................. 20,000,000 19,324,400
7.50%, 5/15/2011.................................................. 3,750,000 4,270,050
5.50%, 5/15/2013.................................................. 16,035,000 14,780,101
6.375%, 5/15/2014................................................. 7,110,000 7,072,175
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
NEW YORK (CONTINUED)
New York State Dormitory Authority, Revenues (continued):
(State University) (continued):
Educational Facilities (continued):
7.375%, 5/15/2014 (Prerefunded 5/15/2000)(b)...................... $ 10,155,000 $11,317,240
5.25%, 5/15/2015.................................................. 12,500,000 11,103,375
7%, 5/15/2018 (Prerefunded 5/15/2000)(b).......................... 16,060,000 17,649,138
7.25%, 5/15/2018 (Prerefunded 5/15/2002)(b)....................... 16,065,000 18,311,208
6%, 5/15/2022..................................................... 5,025,000 4,750,736
Refunding 7.375%, 5/15/2014....................................... 12,945,000 14,148,367
(Upstate Community College) 5.70%, 7/1/2021............................. 12,290,000 11,200,492
New York State Energy Research and Development Authority:
Electric Facilities Revenue:
(Consolidated Edison Co. Project) 7.375%, 7/1/2024.................... 7,000,000 7,377,580
(Long Island Lighting Co. Project):
7.15%, 9/1/2019................................................... 12,230,000 12,087,521
7.15%, 12/1/2020.................................................. 14,650,000 14,478,302
7.15%, 2/1/2022................................................... 5,000,000 4,940,250
Facilities Revenue (Consolidated Edison Co. Project):
6.375%, 12/1/2027..................................................... 9,465,000 9,466,704
7.125%, 12/1/2029..................................................... 13,000,000 14,365,910
Gas Facilities Revenue (Brooklyn Union Gas Co. Project)
5.50%, 1/1/2021 (Insured; MBIA)....................................... 16,000,000 15,045,920
SWDR (New York State Electric and Gas Co. Project) 5.70%, 12/1/2028..... 17,320,000 16,380,390
New York State Environmental Facilities Corp.:
SWDR (Occidental Petroleum Corp. Project)
6.10%, 11/1/2030 (Guaranteed; Occidental Petroleum Corp.)............. 5,000,000 4,771,450
State Water Pollution Control Revolving Fund Revenue
(New York City Municipal Water Finance Authority Project):
6.875%, 6/15/2010................................................. 21,340,000 23,278,312
7.25%, 6/15/2010.................................................. 16,065,000 17,913,760
7%, 6/15/2012..................................................... 21,660,000 23,601,819
New York State Housing Finance Agency, Revenue:
Health Facilities Refunding:
5.875%, 5/1/2004...................................................... 6,500,000 6,457,035
6%, 5/1/2008.......................................................... 10,000,000 9,693,600
Insured Multi-Family Mortgage 7%, 8/15/2022............................. 4,495,000 4,711,210
Multi-Family Housing Second Mortgage 6.95%, 8/15/2024 (Insured; FHA).... 2,940,000 3,058,717
Service Contract Obligation:
6.375%, 9/15/2015..................................................... 5,000,000 4,977,450
5.50%, 9/15/2022...................................................... 4,000,000 3,514,600
Refunding 5.375%, 9/15/2011........................................... 13,520,000 12,088,773
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
NEW YORK (CONTINUED)
New York State Local Government Assistance Corp.:
7%, 4/1/2005............................................................ $ 4,300,000 $ 4,727,678
5.50%, 4/1/2021......................................................... 10,000,000 9,230,700
5.50%, 4/1/2023......................................................... 7,000,000 6,443,850
6%, 4/1/2024............................................................ 10,000,000 9,767,700
Refunding 5%, 4/1/2021.................................................. 22,140,000 19,030,880
New York State Medical Care Facilities Finance Agency, Revenue:
FHA Insured Mortgage:
(Montefiore Medical Center) 5.75%, 2/15/2015 (Insured; AMBAC)......... 8,750,000 8,519,525
(New York Hospital) 6.50%, 8/15/2029 (Insured; AMBAC)................. 12,000,000 12,533,160
(Saint Lukes Hospital) 7.45%, 2/15/2029 (Prerefunded 2/15/2000)(b).... 10,000,000 11,122,700
Hospital and Nursing Home FHA Insured Mortgage:
6.45%, 2/15/2009...................................................... 6,325,000 6,657,379
6.85%, 2/15/2012...................................................... 6,000,000 6,338,640
6.125%, 2/15/2015..................................................... 13,270,000 13,268,540
7.45%, 8/15/2031...................................................... 4,250,000 4,612,823
(Presbyterian Hospital) Refunding 5.375%, 2/15/2025 (Insured; MBIA)... 8,315,000 7,580,370
Insured Long Term Health Care 6.45%, 11/1/2010 (Insured; FSA)........... 11,660,000 12,257,342
Mental Health Services:
5.375%, 8/15/2013 (Insured; FGIC)..................................... 10,000,000 9,436,400
5.80%, 8/15/2022 (Insured; AMBAC)..................................... 14,515,000 14,085,791
5.25%, 8/15/2023 (Insured; FGIC)...................................... 18,575,000 16,636,513
Refunding, Custodial Receipts:
5.375%, 2/15/2014 (Insured; FSA).................................. 16,000,000 15,024,800
5.25%, 2/15/2019 (Insured; FSA) (Prerefunded 2/15/2004)(b)........ 17,015,000 15,452,002
5.25%, 2/15/2019 (Insured; FGIC).................................. 39,060,000 35,516,867
Mental Health Services Facilities Improvement
6%, 2/15/2025 (Insured; MBIA)......................................... 8,710,000 8,574,298
New York State Mortgage Agency, Homeowner Mortgage Revenue:
5.50%, 4/1/2019......................................................... 5,000,000 4,777,550
6.60%, 10/1/2019........................................................ 10,685,000 11,034,186
6.45%, 10/1/2020........................................................ 17,315,000 17,669,958
6.625%, 4/1/2025........................................................ 7,135,000 7,313,589
6.20%, 10/1/2026........................................................ 28,100,000 27,793,991
New York State Power Authority, Revenue and General Purpose
6.625%, 1/1/2012........................................................ 5,690,000 6,119,197
New York State Thruway Authority:
Highway and Bridge Trust Fund 5.50%, 4/1/2015 (Insured; MBIA)........... 10,550,000 10,101,942
Service Contract Revenue (Local Highway and Bridge):
7.25%, 1/1/2010 (Prerefunded 1/1/2001)(b)............................. 13,000,000 14,496,430
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
NEW YORK (CONTINUED)
New York State Thruway Authority (continued):
Service Contract Revenue (Local Highway and Bridge) (continued):
6%, 4/1/2010.......................................................... $ 5,980,000 $5,775,245
5.75%, 4/1/2013 (Insured; MBIA)....................................... 11,185,000 11,142,273
6.25%, 4/1/2014....................................................... 11,645,000 11,405,113
New York State Urban Development Corp., Revenue Refunding:
(Correctional Capital Facilities):
5.50%, 1/1/2016....................................................... 33,885,000 30,488,029
5.50%, 1/1/2018....................................................... 5,000,000 4,463,700
5.375%, 1/1/2025...................................................... 11,635,000 10,058,341
5.50%, 1/1/2025 (Insured; MBIA)....................................... 5,000,000 4,676,100
(Correctional Facilities) 5.50%, 1/1/2016............................... 7,900,000 7,108,025
(State Facilities) 5.70%, 4/1/2020...................................... 28,600,000 26,544,232
Onondaga County Industrial Development Agency, IDR (Weyerhaeuser Project)
9%, 10/1/2007........................................................... 1,000,000 1,248,050
Port Authority of New York and New Jersey:
(Consolidated Bond 93rd Series) 6.125%, 6/1/2094........................ 14,500,000 14,655,730
(Consolidated Bond 99th Series) 5.90%, 11/1/2012 (Insured; FGIC)........ 6,840,000 6,892,736
(Consolidated Bond 99th Series) 6%, 11/1/2013 (Insured; FGIC)........... 5,810,000 5,881,579
(Consolidated Bond 104th Series) 5.20%, 7/15/2017 (Insured; AMBAC)...... 8,025,000 7,373,771
(Consolidated Bond 105th Series) 5.50%, 9/1/2013 (Insured; MBIA)........ 7,500,000 7,204,725
Triborough Bridge and Tunnel Authority:
Capital Appreciation General Purpose 5%, 1/1/2015....................... 11,000,000 9,828,170
Revenues:
7.375%, 1/1/2016 (Prerefunded 1/1/2000)(b)............................ 8,280,000 9,130,439
General Purpose:
5%, 1/1/2014...................................................... 5,000,000 4,524,100
6.50%, 1/1/2015 (Prerefunded 1/1/1999)(b)......................... 8,525,000 9,055,426
Special Obligation Refunding 7.10%, 1/1/2010............................ 9,000,000 9,756,270
U.S. RELATED-6.0%
Commonwealth of Puerto Rico, Public Improvement:
5.85%, 7/1/2011......................................................... 5,480,000 5,417,583
7.75%, 7/1/2017 (Prerefunded 7/1/1999)(b)............................... 4,850,000 5,373,364
Puerto Rico Aqueduct and Sewer Authority, Revenue:
10.25%, 7/1/2009........................................................ 13,750,000 18,619,425
7.875%, 7/1/2017 (Prerefunded 7/1/1998)(b).............................. 4,340,000 4,742,578
5%, 7/1/2019............................................................ 4,000,000 3,460,880
Puerto Rico Electric Power Authority, Refunding:
6.10%, 7/1/2003......................................................... 5,000,000 5,275,650
8.375%, 7/1/2007 (Prerefunded 7/1/1997)(b).............................. 4,950,000 5,289,026
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________ ________
U.S. RELATED (CONTINUED)
Puerto Rico Electric Power Authority, Refunding (continued):
Power Revenue:
6%, 7/1/2015.......................................................... $ 5,000,000 $ 4,929,900
5.50%, 7/1/2016....................................................... 8,250,000 7,712,513
Puerto Rico Highway and Transportation Authority, Highway Revenue
6.25%, 7/1/2004 (Insured; MBIA)......................................... 10,000,000 10,888,200
5.50%, 7/1/2013 (Insured; MBIA)......................................... 9,625,000 9,493,523
Refunding 5.50%, 7/1/2015 (Insured; MBIA)............................... 8,000,000 7,819,440
Puerto Rico Public Building Authority, Refunding:
Government Facilities Revenue
6.25%, 7/1/2009 (Guaranteed; Commonwealth of Puerto Rico) (Insured; AMBAC) 3,090,000 3,341,526
Public Education and Health Facilities
5.75%, 7/1/2015 (Guaranteed; Commonwealth of Puerto Rico)............. 7,520,000 7,188,443
_______
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $1,642,985,228)................................................... $1,661,832,547
=======
SHORT-TERM MUNICIPAL INVESTMENTS-.5%
NEW YORK-.4%
New York City, VRDN:
3.70%, (LOC; State Street Bank and Trust)(a,c).......................... 300,000 $ 300,000
3.65%, 8/15/2022 (Insured; MBIA)(c)..................................... 6,600,000 6,600,000
U.S. RELATED-.1%
Commonwealth of Puerto Rico 3.28% (Insured; AMBAC)(d)....................... 1,500,000 1,500,000
_______
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $8,400,000)....................................................... $ 8,400,000
=======
TOTAL INVESTMENTS-100.0%
(cost $1,651,385,228)................................................... $1,670,232,547
=======
</TABLE>
<TABLE>
<CAPTION>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AGIC Asset Guaranty Insurance Company IDR Industrial Development Revenue
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FHA Federal Housing Administration SWDR Solid Waste Disposal Revenue
FSA Financial Security Assurance VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH(E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- ------- ------- ----------------- -------------------
<S> <C> <S> <C>
AAA Aaa AAA 31.1%
AA Aa AA 14.4
A A A 32.9
BBB Baa BBB 19.3
BB Ba BB 1.9
F1 MIG1 SP1 .4
-----
100.0%
====
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(b) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(c) Security payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(d) Inverse floater security - the interest rate is subject to change
periodically.
(e) Fitch currently provides creditworthiness information for a limited
number of investments.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $1,651,385,228)-see statement................................... $1,670,232,547
Cash.................................................................... 1,540,027
Interest receivable..................................................... 31,618,334
Receivable for investment securities sold............................... 11,972,943
Receivable for subscriptions to Common Stock............................ 64,200
Prepaid expenses........................................................ 31,265
_______
1,715,459,316
LIABILITIES:
Due to The Dreyfus Corporation and subsidiaries......................... $ 922,841
Payable for investment securities purchased............................. 15,673,107
Payable for Common Stock redeemed....................................... 64,186
Accrued expenses........................................................ 120,794 16,780,928
_____ _______
NET ASSETS.................................................................. $1,698,678,388
=======
REPRESENTED BY:
Paid-in capital......................................................... $1,670,878,382
Accumulated undistributed net realized gain on investments.............. 8,952,687
Accumulated net unrealized appreciation on investments-Note 3........... 18,847,319
_______
NET ASSETS at value applicable to 116,035,307 shares outstanding
(300 million shares of $.01 par value Common Stock authorized).......... $1,698,678,388
=======
NET ASSET VALUE, offering and redemption price per share
($1,698,678,388 / 116,035,307 shares)................................... $14.64
=======
See notes to financial statements.
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED MAY 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $107,496,409
EXPENSES:
Management fee-Note 2(a).............................................. $ 10,848,601
Shareholder servicing costs-Note 2(b)................................. 1,673,191
Custodian fees........................................................ 117,975
Directors' fees and expenses-Note 2(c)................................ 58,989
Professional fees..................................................... 46,878
Prospectus and shareholders' reports.................................. 45,277
Registration fees..................................................... 17,423
______
TOTAL EXPENSES.................................................. 12,808,334
______
INVESTMENT INCOME-NET........................................... 94,688,075
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain on investments-Note 3.............................. $ 18,576,683
Net unrealized (depreciation) on investments............................ (72,041,092)
______
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (53,464,409)
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 41,223,666
=======
See notes to financial statements.
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED MAY 31,
---------------------------------------
1995 1996
----------- ---------
OPERATIONS:
Investment income-net................................................... $ 103,879,086 $ 94,688,075
Net realized gain (loss) on investments................................. (1,930,409) 18,576,683
Net unrealized appreciation (depreciation) on investments for the year.. 29,915,882 (72,041,092)
________ ________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 131,864,559 41,223,666
________ ________
DIVIDENDS TO SHAREHOLDERS:
From investment income-net.............................................. (103,879,086) (94,688,075)
From net realized gain on investments................................... (10,590,662) (5,306,076)
In excess of net realized gain on investments........................... (1,996,709) __
________ ________
TOTAL DIVIDENDS....................................................... (116,466,457) (99,994,151)
________ ________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 1,842,837,132 2,435,800,035
Dividends reinvested.................................................... 84,285,040 70,937,968
Cost of shares redeemed................................................. (2,004,556,426) (2,628,486,012)
________ ________
(DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS.............. (77,434,254) (121,748,009)
________ ________
TOTAL (DECREASE) IN NET ASSETS.................................... (62,036,152) (180,518,494)
NET ASSETS:
Beginning of year....................................................... 1,941,233,034 1,879,196,882
________ ________
End of year............................................................. $ 1,879,196,882 $ 1,698,678,388
========= =========
SHARES SHARES
________ _______
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 126,069,512 161,812,682
Shares issued for dividends reinvested.................................. 5,780,551 4,695,987
Share redeemed.......................................................... (137,056,900) (174,178,872)
________ ________
NET (DECREASE) IN SHARES OUTSTANDING.................................. (5,206,837) (7,670,203)
========= =========
</TABLE>
See notes to financial statements.
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
FINANCIAL HIGHLIGHTS
Reference is made to page 5 of the Fund's Prospectus
dated October 1, 1996.
See notes to financial statements.
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus New York Tax Exempt Bond Fund, Inc. the ("Fund") is registered
under the Investment Company Act of 1940 ("Act") as a non-diversified,
open-end management investment company. The Fund's investment objective is to
provide investors with as high a level of current income exempt from Federal,
New York State and New York City income taxes as is consistent with the
preservation of capital. The Dreyfus Corporation ("Manager") serves as the
Fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank,
N.A. Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares, which are sold to the public without a
sales charge.
(A) PORTFOLIO VALUATION: The Fund's investments are valued each business
day by an independent pricing service ("Service") approved by the Board of
Directors. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of municipal securities of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Fund follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations
held by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the value
of the Fund's average daily net assets and is
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
payable monthly. The Agreement provides for an expense reimbursement from the
Manager should the Fund's aggregate expenses, exclusive of taxes, interest on
borrowings, brokerage commissions and extraordinary expenses, exceed 1 1/2% of
the value of the Fund's average net assets for any full fiscal year. There
was no expense reimbursement for the year ended May 31, 1996.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, an
amount not to exceed an annual rate of .25 of 1% of the value of the Fund's
average daily net assets for certain allocated expenses of providing personal
services and/or maintaining shareholder accounts. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
During the year ended May 31, 1996, the Fund was charged an aggregate of
$841,756 pursuant to the Shareholder Services Plan.
Effective December 1, 1995, the Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a transfer agency agreement
for providing personnel and facilities to perform transfer agency services
for the Fund. Such compensation amounted to $279,504 for the period from
December 1, 1995 through May 31, 1996.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $4,500 and an attendance fee of $500
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended May 31, 1996 amounted
to $1,394,471,941 and $1,418,186,891, respectively.
At May 31, 1996, accumulated net unrealized appreciation on investments
was $18,847,319, consisting of $49,843,910 gross unrealized appreciation and
$30,996,591 gross unrealized depreciation.
At May 31, 1996, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus New York Tax Exempt Bond Fund, Inc., including the statement of
investments, as of May 31, 1996, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of May 31, 1996 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus New York Tax Exempt Bond Fund, Inc. at May 31, 1996, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with generally
accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
July 3, 1996
