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PROSPECTUS NOVEMBER 28, 1994
DREYFUS NEW YORK MUNICIPAL CASH MANAGEMENT
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DREYFUS NEW YORK MUNICIPAL CASH MANAGEMENT (THE "FUND") IS AN
OPEN-END, NON-DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN AS A MONEY
MARKET MUTUAL FUND. ITS GOAL IS TO PROVIDE INVESTORS WITH AS HIGH A LEVEL OF
CURRENT INCOME EXEMPT FROM FEDERAL, NEW YORK STATE AND NEW YORK CITY PERSONAL
INCOME TAXES TO THE EXTENT CONSISTENT WITH THE PRESERVATION OF CAPITAL AND
THE MAINTENANCE OF LIQUIDITY.
THE FUND IS DESIGNED FOR INSTITUTIONAL INVESTORS, PARTICULARLY BANKS,
ACTING FOR THEMSELVES OR IN A FIDUCIARY, ADVISORY, AGENCY, CUSTODIAL OR
SIMILAR CAPACITY. FUND SHARES MAY NOT BE PURCHASED DIRECTLY BY INDIVIDUALS,
ALTHOUGH INSTITUTIONS MAY PURCHASE SHARES FOR ACCOUNTS MAINTAINED BY
INDIVIDUALS. SUCH INSTITUTIONS HAVE AGREED TO TRANSMIT COPIES OF THIS
PROSPECTUS TO EACH INDIVIDUAL OR ENTITY FOR WHOSE ACCOUNT THE INSTITUTION
PURCHASES FUND SHARES, TO THE EXTENT REQUIRED BY LAW.
BY THIS PROSPECTUS, THE FUND IS OFFERING CLASS A SHARES AND CLASS B
SHARES. CLASS A SHARES AND CLASS B SHARES ARE IDENTICAL, EXCEPT AS TO THE
SERVICES OFFERED TO AND THE EXPENSES BORNE BY EACH CLASS. CLASS B BEARS
CERTAIN COSTS PURSUANT TO A SERVICE PLAN ADOPTED IN ACCORDANCE WITH RULE 12B-1
UNDER THE INVESTMENT COMPANY ACT OF 1940. INVESTORS CAN INVEST, REINVEST OR
REDEEM SHARES AT ANY TIME WITHOUT CHARGE OR PENALTY IMPOSED BY THE FUND.
THE DREYFUS CORPORATION SERVES AS THE FUND'S INVESTMENT ADVISER.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
AN INVESTOR SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR
FUTURE REFERENCE.
PART B (ALSO KNOWN AS THE STATEMENT OF ADDITIONAL INFORMATION), DATED
NOVEMBER 28, 1994, WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER
DISCUSSION OF CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE
OF INTEREST TO SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION AND IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY,
WRITE TO THE FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK
11556-0144, OR CALL 1-800-554-4611. WHEN TELEPHONING, ASK FOR OPERATOR 666.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. ALL MONEY MARKET MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
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<TABLE>
TABLE OF CONTENTS
PAGE PAGE
<S> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES.......... 3 INVESTOR SERVICES...................... 13
CONDENSED FINANCIAL INFORMATION......... 4 HOW TO REDEEM FUND SHARES............. 13
YIELD INFORMATION......... 4 SERVICE PLAN.......................... 15
DESCRIPTION OF THE FUND... 5 SHAREHOLDER SERVICES PLAN............. 15
MANAGEMENT OF THE FUND.... 10 DIVIDENDS, DISTRIBUTIONS AND TAXES.... 15
HOW TO BUY FUND SHARES.... 11 GENERAL INFORMATION................... 17
</TABLE>
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
<TABLE>
CLASS A CLASS B
SHARES SHARES
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<S> <C> <C>
Management Fees ..................................................... .20% .20%
12b-1 Fees (distribution and servicing) ............................. -- .25%
Total Fund Operating Expenses........................................ .20% .45%
EXAMPLE :
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) redemption at
the end of each time period:
CLASS A CLASS B
SHARES SHARES
--------- ----------
1 Year.................................. $ 2 $ 5
3 Years................................. $ 6 $14
5 Years ................................ $11 $25
10 Years................................ $26 $57
</TABLE>
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THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
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The purpose of the foregoing table is to assist investors in
understanding the various costs and expenses borne by the Fund, and therefore
indirectly by investors, the payment of which will reduce investors' return
on an annual basis. Unless The Dreyfus Corporation gives the Fund's investors
at least 90 days' notice to the contrary, The Dreyfus Corporation, and not
the Fund, will be liable for Fund expenses (exclusive of taxes, brokerage,
interest on borrowings and (with the prior written consent of the necessary
state securities commissions) extraordinary expenses) other than the
following expenses, which will be borne by the Fund: (i) the management fee
payable by the Fund monthly at the annual rate of .20 of 1% of the Fund's
average daily net assets and (ii) as to Class B shares only, payments made
pursuant to the Fund's Service Plan at the annual rate of .25 of 1% of the
value of the average daily net assets of Class B. Institutions and certain
Service Agents (as defined below) effecting transactions in Fund shares for
the accounts of their clients may charge their clients direct fees in
connection with such transactions; such fees are not reflected in the
foregoing table. See "Management of the Fund," "How to Buy Fund Shares,"
"Service Plan" and "Shareholder Services Plan."
Page 3
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst &
Young LLP, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and related
notes are included in the Statement of Additional Information, available upon
request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share
of beneficial interest outstanding, total investment return, ratios to
average net assets and other supplemental data for each year indicated. This
information has been derived from information provided in the Fund's
financial statements.
<TABLE>
CLASS A SHARES CLASS B SHARES
----------------------------- --------------
YEAR ENDED JULY 31, YEAR ENDED
1992(1) 1993 1994 JULY 31, 1994(2)
<S> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of year.............................. $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- -------
INVESTMENT OPERATIONS;
Investment income--net ......................................... .0222 .0225 .0221 .0107
Net realized and unrealized gain (loss) on investments.......... -- -- -- --
------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS................................ .0222 .0225 .0221 .0107
DISTRIBUTIONS:
Dividends from investment income-net............................ (.0222) (.0225) (.0221) (.0107)
------- ------- ------- -------
Net asset value, end of year.................................... $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ========
TOTAL INVESTMENT RETURN 3.02%(3) 2.27% 2.23% 2.02%(3)
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......................... .20%(3) .20% .20% .45%(3)
Ratio of net investment income to average net assets ........... 2.71%(3) 2.20% 2.18% 2.12%(3)
Decrease reflected in above expense ratio due to
undertaking by The Dreyfus Corporation.......................... .37%(3) .18% .06% --
Net Assets, end of year (000's omitted)......................... $76,830 $116,527 $82,755 $53,324
(1)From November 4, 1991 (commencement of operations) to July 31, 1992.
(2)From January 18, 1994 (commencement of initial offering) to July 31, 1994.
(3)Annualized.
</TABLE>
YIELD INFORMATION
From time to time, the Fund advertises its yield and effective yield.
Both yield figures are based on historical earnings and are not intended to
indicate future performance. It can be expected that these yields will
fluctuate substantially. The yield of the Fund refers to the income generated
by an investment in the Fund over a seven-day period (which period will be
stated in the advertisement). This income is then annualized. That is, the
amount of income generated by the investment during that week is assumed to
be generated each week over a 52-week period and is shown as a percentage of
the investment. The effective yield is calculated similarly, but, when
annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment. The Fund's
yield and effective yield may reflect absorbed expenses pursuant to any
undertaking that may be in effect. See "Management of the Fund." Both yield
figures also take into account any applicable distribution and service fees.
As a result, at any given time, the performance of Class B should be expected
to be lower than that of Class A. See "Service Plan."
Tax equivalent yield is calculated by determining the pre-tax yield
which, after being taxed at a stated rate (in the case of the Fund, typically
the combined highest Federal, New York State and New York City personal
income tax rates), would be equivalent to a stated yield or effective yield
calculated as described above.
Page 4
Yield information is useful in reviewing the Fund's performance, but
because yields will fluctuate, under certain conditions such information may
not provide a basis for comparison with domestic bank deposits, other
investments which pay a fixed yield for a stated period of time, or other
investment companies which may use different methods of computing yield.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., Bank Rate Monitortrademark, IBC/Donoghue's Money
Fund Report, Morningstar, Inc. and other industry publications.
DESCRIPTION OF THE FUND
GENERAL -- By this Prospectus, two classes of shares of the Fund are being
offered -- Class A shares and Class B shares (each such class being referred
to as a "Class"). The Classes are identical, except that Class B shares are
subject to an annual distribution and service fee at the rate of .25% of the
value of the average daily net assets of Class B. The fee is payable for
advertising, marketing and distributing the Fund's Class B shares and for
ongoing personal services relating to Class B shareholder accounts and
services related to the maintenance of such shareholder accounts pursuant to
a Service Plan adopted in accordance with Rule 12b-1 under the Investment
Company Act of 1940. See "Service Plan." The distribution and service fee
paid by Class B will cause Class B to have a higher expense ratio and to pay
lower dividends than Class A.
WHEN USED IN THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL
INFORMATION, THE TERMS "INVESTOR" AND "SHAREHOLDER" REFER TO THE INSTITUTION
PURCHASING FUND SHARES AND DO NOT REFER TO ANY INDIVIDUAL OR ENTITY FOR WHOSE
ACCOUNT THE INSTITUTION MAY PURCHASE FUND SHARES. Such institutions have
agreed to transmit copies of this Prospectus and all relevant Fund materials,
including proxy materials, to each individual or entity for whose account the
institution purchases Fund shares, to the extent required by law.
INVESTMENT OBJECTIVE -- The Fund's goal is to provide investors with as high
a level of current income exempt from Federal, New York State and New York
City income taxes to the extent consistent with the preservation of capital
and the maintenance of liquidity. To accomplish this goal, the Fund invests
primarily in debt securities of the State of New York, its political
subdivisions, authorities and corporations, the interest from which is, in
the opinion of bond counsel to the issuer, exempt from Federal, New York
State and New York City income taxes (collectively, "New York Municipal
Obligations"). To the extent acceptable New York Municipal Obligations are at
any time unavailable for investment by the Fund, the Fund will invest, for
temporary defensive purposes, primarily in other debt securities the interest
from which is, in the opinion of bond counsel to the issuer, exempt from
Federal, but not New York State or New York City, income tax. The Fund's
investment objective cannot be changed without approval by the holders of a
majority (as defined in the Investment Company Act of 1940) of the Fund's
outstanding voting shares. There can be no assurance that the Fund's
investment objective will be achieved. Securities in which the Fund invests
may not earn as high a level of current income as long-term or lower quality
securities which generally have less liquidity, greater market risk and more
fluctuation in market value.
MUNICIPAL OBLIGATIONS -- Debt securities the interest from which is, in the
opinion of bond counsel to the issuer, exempt from Federal income tax
("Municipal Obligations") generally include debt obligations issued to obtain
funds for various public purposes as well as certain industrial development
bonds issued by or on behalf of public authorities. Municipal Obligations are
classified as general obligation bonds, revenue bonds and notes. General
obligation bonds are secured by the issuer's pledge of its faith, credit and
taxing power for the payment of principal and interest . Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Tax exempt
Page 5
industrial development bonds, in most cases, are revenue bonds that do not
carry the pledge of the credit of the issuing municipality, but generally are
guaranteed by the corporate entity on whose behalf they are issued. Notes are
short-term instruments which are obligations of the issuing municipalities or
agencies and are sold in anticipation of a bond sale, collection of taxes or
receipt of other revenues. Municipal Obligations include municipal
lease/purchase agreements which are similar to installment purchase contracts
for property or equipment issued by municipalities. Municipal Obligations
bear fixed, floating or variable rates of interest.
MANAGEMENT POLICIES _ It is a fundamental policy of the Fund that it will
invest at least 80% of the value of its net assets (except when maintaining a
temporary defensive position) in Municipal Obligations. Under normal
circumstances, at least 65% of the value of the Fund's net assets will be
invested in New York Municipal Obligations and the remainder may be invested
in securities which are not New York Municipal Obligations and therefore may
be subject to New York State and New York City income taxes. See "Risk
Factors_Investing in New York Municipal Obligations" below, and "Dividends,
Distributions and Taxes."
The Fund seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, the Fund uses the amortized cost method
of valuing its securities pursuant to Rule 2a-7 under the Investment Company
Act of 1940, certain requirements of which are summarized as follows. In
accordance with Rule 2a-7, the Fund will maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only instruments having
remaining maturities of 13 months or less and invest only in U.S. dollar
denominated securities determined in accordance with procedures established
by the Board of Trustees to present minimal credit risks and which are rated
in one of the two highest rating categories for debt obligations by at least
two nationally recognized statistical rating organizations (or one rating
organization if the instrument was rated only by one such organization) or,
if unrated, are of comparable quality as determined in accordance with
procedures established by the Board of Trustees. Moreover, the Fund will
purchase commercial paper, or other instruments having only commercial paper
ratings, only if the security is rated in the highest rating category by at
least one nationally recognized statistical rating organization or, if
unrated, of comparable quality as determined in accordance with such
procedures. The nationally recognized statistical rating organizations
currently rating instruments of the type the Fund may purchase are Moody's
Investors Services, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P")
and Fitch Investors Service, Inc. ("Fitch") and their rating criteria are
described in Appendix B to the Fund's Statement of Additional Information. For
further information regarding the amortized cost method of valuing securities,
see "Determination of Net Asset Value" in the Fund's Statement of Additional
Information. There can be no assurance that the Fund will be able to maintain
a stable net asset value of $1.00 per share.
The Fund may invest more than 25% of the value of its total assets in
Municipal Obligations which are related in such a way that an economic,
business or political development or change affecting one such security also
would affect the other securities; for example, securities the interest upon
which is paid from revenues of similar types of projects. As a result, the
Fund may be subject to greater risk as compared to a fund that does not
follow this practice.
From time to time, the Fund may invest more than 25% of the value of
its total assets in industrial development bonds which, although issued by
industrial development authorities, may be backed only by the assets and
revenues of the non-governmental users. Interest on Municipal Obligations
(including certain industrial development bonds) which are specified private
activity bonds, as defined in the Internal Revenue Code of 1986, as amended
(the "Code"), issued after August 7, 1986, while exempt from Federal income
tax, is a preference item for the purpose of the alternative minimum tax.
Where a regulated investment company receives such interest, a proportionate
share of any exempt-interest dividend paid by the investment company may be
treated as such a preference item to shareholders. The
Page 6
Fund may invest without limitation in such Municipal Obligations if The
Dreyfus Corporation determines that their purchase is consistent with the
Fund's investment objective.
The Fund may purchase floating and variable rate demand notes and
bonds, which are tax exempt obligations ordinarily having stated maturities
in excess of 13 months, but which permit the holder to demand payment of
principal at any time, or at specified intervals not exceeding 13 months, in
each case upon not more than 30 days' notice. Variable rate demand notes
include master demand notes which are obligations that permit the Fund to
invest fluctuating amounts, which may change daily without penalty, pursuant
to direct arrangements between the Fund, as lender, and the borrower. The
interest rates on these obligations fluctuate from time to time. Frequently,
such obligations are secured by letters of credit or other credit support
arrangements provided by banks. Use of letters of credit or other credit
support arrangements will not adversely affect the tax exempt status of these
obligations. Because these obligations are direct lending arrangements
between the lender and borrower, it is not contemplated that such instruments
generally will be traded, and there generally is no secondary market for
these obligations, although they are redeemable at face value. Accordingly,
where these obligations are not secured by letters of credit or other credit
support arrangements, the Fund's right to redeem is dependent on the ability
of the borrower to pay principal and interest on demand. Each obligation
purchased by the Fund will meet the quality criteria established for the
purchase of Municipal Obligations. The Dreyfus Corporation, on behalf of the
Fund, will consider on an ongoing basis the creditworthiness of the issuers
of the floating and variable rate demand obligations in the Fund's portfolio.
The Fund will not invest more than 10% of the value of its net assets in
floating or variable rate demand obligations as to which it cannot exercise
the demand feature on not more than seven days' notice if there is no
secondary market available for these obligations, and in other securities
that are illiquid.
The Fund may purchase from financial institutions participation
interests in Municipal Obligations (such as industrial development bonds and
municipal lease/purchase agreements). A participation interest gives the Fund
an undivided interest in the Municipal Obligation in the proportion that the
Fund's participation interest bears to the total principal amount of the
Municipal Obligation. These instruments may have fixed, floating or variable
rates of interest, with remaining maturities of 13 months or less. If the
participation interest is unrated, or has been given a rating below that
which otherwise is permissible for purchase by the Fund, the participation
interest will be backed by an irrevocable letter of credit or guarantee of a
bank that the Board of Trustees has determined meets the prescribed quality
standards for banks set forth below, or the payment obligation otherwise will
be collateralized by U.S. Government securities. For certain participation
interests, the Fund will have the right to demand payment, on not more than
seven days' notice, for all or any part of the Fund's participation interest
in the Municipal Obligation, plus accrued interest. As to these instruments,
the Fund intends to exercise its right to demand payment only upon a default
under the terms of the Municipal Obligation, as needed to provide liquidity
to meet redemptions, or to maintain or improve the quality of its investment
portfolio. The Fund will not invest more than 10% of the value of its net
assets in participation interests that do not have this demand feature, and
in other securities that are illiquid.
The Fund may acquire "stand-by commitments" with respect to Municipal
Obligations held in its portfolio. Under a standby commitment, the Fund
obligates a broker, dealer or bank to repurchase at the Fund's option
specified securities at a specified price and, in this respect, stand-by
commitments are comparable to put options. The exercise of a stand-by
commitment, therefore, is subject to the ability of the seller to make
payment on demand. The Fund will acquire stand-by commitments solely to
facilitate portfolio liquidity and does not intend to exercise its rights
thereunder for trading purposes. The Fund may pay for stand-by commitments if
such action is deemed necessary, thus increasing to a degree the cost of the
underlying Municipal Obligation and similarly decreasing such security's
yield to investors. Gains realized in connection with stand-by commitments
will be taxable.
Page 7
From time to time, on a temporary basis other than for temporary
defensive purposes (but not to exceed 20% of the value of the Fund's net
assets) or for temporary defensive purposes, the Fund may invest in taxable
short-term investments ("Taxable Investments") consisting of: notes of
issuers having, at the time of purchase, a quality rating within the two
highest grades of Moody's, S&P or Fitch; obligations of the U.S. Government,
its agencies or instrumentalities; commercial paper rated not lower than P-l
by Moody's, A-l by S&P or F-l by Fitch; certificates of deposit of U.S.
domestic banks, including foreign branches of domestic banks, with assets of
one billion dollars or more; time deposits; bankers' acceptances and other
short-term bank obligations; and repurchase agreements in respect of any of
the foregoing. Dividends paid by the Fund that are attributable to income
earned by the Fund from Taxable Investments will be taxable to investors. See
"Dividends, Distributions and Taxes." Except for temporary defensive
purposes, at no time will more than 20% of the value of the Fund's net assets
be invested in Taxable Investments. If the Fund purchases Taxable
Investments, it will value them using the amortized cost method and comply
with the provisions of Rule 2a-7 relating to purchases of taxable
instruments. When the Fund has adopted a temporary defensive position,
including when acceptable New York Municipal Obligations are unavailable for
investment by the Fund, in excess of 35% of the Fund's net assets may be
invested in securities that are not exempt from New York State and New York
City income taxes. Under normal market conditions, the Fund anticipates that
not more than 5% of the value of its total assets will be invested in any one
category of Taxable Investments. Taxable Investments are more fully described
in the Statement of Additional Information, to which reference hereby is
made.
CERTAIN FUNDAMENTAL POLICIES -- The Fund may (i) borrow money from banks, but
only 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)
valued at the lesser of cost or market, less liabilities (not including the
amount borrowed) at the time the borrowing is made. While borrowings exceed
5% of the Fund's total assets, the Fund will not make any additional
investments; (ii) pledge, hypothecate, mortgage or otherwise encumber its
assets, but only to secure borrowings for temporary or emergency purposes;
and (iii) invest up to 25% of its total assets in the securities of issuers
in any industry, provided that there is no such limitation on investments in
Municipal Obligations and, for temporary defensive purposes, obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. This paragraph describes fundamental policies that cannot
be changed without approval by the holders of a majority (as defined in the
Investment Company Act of 1940) of the Fund's outstanding voting shares. See
"Investment Objective and Management Policies_Investment Restrictions" in the
Statement of Additional Information.
ADDITIONAL NON-FUNDAMENTAL POLICY -- The Fund may invest up to 10% of its net
assets in repurchase agreements providing for settlements in more than seven
days after notice and in other illiquid securities (which securities could
include participation interests (including municipal lease/purchase
agreements) that are not subject to the demand feature described above and
floating and variable rate demand obligations as to which the Fund cannot
exercise the related demand feature described above and as to which there is
no secondary market). See "Investment Objective and Management
Policies_Investment Restrictions" in the Statement of Additional Information.
RISK FACTORS
INVESTING IN NEW YORK MUNICIPAL OBLIGATIONS -- Investors should consider
carefully the special risks inherent in the Fund's investment in New York
Municipal Obligations. These risks result from the financial condition of New
York State, certain of its public bodies and municipalities, and New York
City. Beginning in early 1975, New York State, New York City and other State
entities faced serious financial difficulties which jeopardized the credit
standing and impaired the borrowing abilities of such entities and
contributed to high interest rates on, and lower market prices for, debt
obligations issued by
Page 8
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 significant slowdown in
the New York and regional economies in the early 1990's added substantial
uncertainty to estimates of the State's tax revenues, which, in part, caused
the State to overestimate its General Fund tax receipts for the 1992 fiscal
year by $575 million. The 1992 fiscal year was the fourth consecutive year in
which the State incurred a cash-basis operating deficit in the General Fund
and issued deficit notes. The State's 1993 fiscal year, however, was
characterized by national and regional economies that performed better than
projected. After reflecting a 1993 year-end deposit to the refund reserve
account of $671 million, reported 1993 General Fund receipts were $45
million higher than originally projected in April 1992. If not for that
year-end transaction, General Fund receipts would have been $716 million
higher than originally projected. There can be no assurance that New York
will not face substantial potential budget gaps in future years. In 1990,
S&P and Moody's lowered their ratings of the State's general obligation debt
from AA- to A and from Al to A, respectively. In addition, S&P and Moody's
lowered their ratings in 1990 on New York's short-term notes from SP-l+ to
SP-l and from MIG-l to MIG-2, respectively. In January l992, Moody's lowered
from A to Baa1 its ratings of certain appropriation-backed debt of New York
State and its agencies and S&P lowered from A to A- its ratings of New York
State general obligation bonds. S&P also lowered its ratings of various
agency debt, State moral obligations, contractual obligations, lease purchase
obligations and State guarantees. In February 1991, Moody's lowered its
rating of New York City's general obligation bonds from A to Baal. The rating
changes reflect the rating agencies' concerns about the financial condition
of New York State and City, the heavy debt load of the State and City, and
economic uncertainties in the region. Investors should obtain and review a
copy of the Statement of Additional Information which more fully sets forth
these and other risk factors.
INVESTMENT CONSIDERATIONS--Even though interest-bearing securities are
investments which promise a stable stream of income, the prices of such
securities are inversely affected by changes in interest rates and,
therefore, are subject to the risk of market price fluctuations. The values
of fixed-income securities also may be affected by changes in the credit
rating or financial condition of the issuing entities.
New issues of Municipal Obligations usually are offered on a
when-issued basis, which means that delivery and payment for such Municipal
Obligations ordinarily take place within 45 days after the date of the
commitment to purchase. The payment obligation and the interest rate that
will be received on the Municipal Obligations are fixed at the time the Fund
enters into the commitment. The Fund will make commitments to purchase such
Municipal Obligations only with the intention of actually acquiring the securi
ties, but the Fund may sell these securities before the settlement date if it
is deemed advisable, although any gain realized on such sale would be
taxable. The Fund will not accrue income in respect of a when-issued security
prior to its stated delivery date. No additional when-issued commitments will
be made if more than 20% of the value of the Fund's net assets would be so
committed.
Municipal Obligations purchased on a when-issued basis and the
securities held in the Fund's portfolio are subject to changes in value (both
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. Municipal Obligations purchased
on a when-issued basis may expose the Fund to risk because they may experience
such fluctuations prior to their actual delivery. Purchasing Municipal
Obligations 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. A segregated account of
the Fund
Page 9
consisting of cash, cash equivalents or U.S. Government securities
or other high quality liquid debt securities at least equal at all times to
the amount of the when-issued commitments will be established and maintained
at the Fund's custodian bank. Purchasing Municipal Obligations 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.
Certain provisions in the Code relating to the issuance of Municipal
Obligations may reduce the volume of Municipal Obligations qualifying for
Federal tax exemption. One effect of these provisions could be to increase
the cost of the Municipal Obligations available for purchase by the Fund and
thus reduce available yield. Shareholders should consult their tax advisers
concerning the effect of these provisions on an investment in the Fund.
Proposals that may restrict or eliminate the income tax exemption for
interest on Municipal Obligations may be introduced in the future. If any
such proposal were enacted that would reduce the availability of Municipal
Obligations for investment by the Fund so as to adversely affect Fund
shareholders, the Fund would reevaluate its investment objective and policies
and submit possible changes in the Fund's structure to shareholders for their
consideration. If legislation were enacted that would treat a type of
Municipal Obligation as taxable, the Fund would treat such security as a
permissible Taxable Investment within the applicable limits set forth herein.
The Fund's classification as a "non-diversified" investment company
means that the proportion of the Fund's assets that may be invested in the
securities of a single issuer is not limited by the Investment Company Act of
1940. A "diversified" investment company is required by the Investment
Company Act of 1940 generally to invest, with respect to 75% of its total
assets, not more than 5% of such assets in the securities of a single issuer.
However, the Fund intends to conduct its operations so as to qualify as a
"regulated investment company" for purposes of the Code, which requires that,
at the end of each quarter of the taxable year, (i) at least 50% of the
market value of the Fund's total assets be invested in cash, U.S. Government
securities, the securities of other regulated investment companies and other
securities, with such other securities of any one issuer limited for the
purposes of this calculation to an amount not greater than 5% of the value of
the Fund's total assets, and (ii) not more than 25% of the value of its total
assets be invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies). Since a relatively high percentage of the Fund's assets may be inv
ested in the obligations of a limited number of issuers, the Fund's portfolio
securities may be more susceptible to any single economic, political or
regulatory occurrence than the portfolio securities of a diversified
investment company.
Investment decisions for the Fund are made independently from those
of other investment companies advised by The Dreyfus Corporation. However, if
such other investment companies are prepared to invest in, or desire to
dispose of, Municipal Obligations or Taxable Investments at the same time as
the Fund, available investments or opportunities for sales will be allocated
equitably to each investment company. In some cases, this procedure may
adversely affect the size of the position obtained for or disposed of by the
Fund or the price paid or received by the Fund.
MANAGEMENT OF THE FUND
The Dreyfus Corporation, located at 200 Park Avenue, New York, New
York 10166, was formed in 1947 and serves as the Fund's investment adviser.
The Dreyfus Corporation is a wholly-owned subsidiary of Mellon Bank N.A.,
which is a wholly-owned subsidiary of Mellon Bank Corporation ("Mellon"). As
of October 31, 1994, The Dreyfus Corporation managed or administered
approximately $73 billion in assets for more than 1.9 million investor
accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the Fund,
subject to the overall authority of the Fund's Board of Trustees in
accordance with Massachusetts law.
Page 10
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCOCredit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, Mellon managed more than $130 billion in assets as of July
31, 1994, including approximately $6 billion in mutual fund assets. As of
June 30, 1994, various subsidiaries of Mellon provided non-investment
services, such as custodial or administration services, for approximately
$747 billion in assets including approximately $73 billion in mutual fund
assets.
Under the terms of the Management Agreement, the Fund has agreed to
pay The Dreyfus Corporation a monthly fee at the annual rate of .20 of 1% of
the value of the Fund's average daily net assets. For the fiscal year ended
July 31, 1994, as to the Fund's Class A shares, a monthly management fee
at the effective annual rate of .14 of 1% of the value of the average
daily net assets of Class A shares was paid to The Dreyfus Corporation,
pursuant to an undertaking by The Dreyfus Corporation then in
effect.
Unless The Dreyfus Corporation gives the Fund's investors at least 90
days' notice to the contrary, The Dreyfus Corporation, and not the Fund, will
be liable for Fund expenses (exclusive of taxes, brokerage, interest on
borrowings and (with the prior written consent of the necessary state
securities commissions) extraordinary expenses) other than the following
expenses, which will be borne by the Fund: (i)the management fee payable by
the Fund monthly at the annual rate of .20 of 1% of the Fund's average daily
net assets and (ii) as to Class B shares only, payments made pursuant to the
Fund's Service Plan at the annual rate of .25 of 1% of the value of the
average daily net assets of Class B. See "Service Plan." The Fund will not
reimburse The Dreyfus Corporation in respect of any amounts the Fund may
deduct or The Dreyfus Corporation may bear.
The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"), located at One Exchange Place, Boston, Massachusetts 02109.
The Distributor is a wholly-owned subsidiary of Institutional Administration
Services, Inc., a provider of mutual fund administration services, the parent
company of which is Boston Institutional Group, Inc.
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671, is the
Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent"). The
Bank of New York, 110 Washington Street, New York, New York 10286, is the
Fund's Custodian.
HOW TO BUY FUND SHARES
The Fund is designed for institutional investors, particularly banks,
acting for themselves or in a fiduciary, advisory, agency, custodial or
similar capacity. Fund shares may not be purchased directly by individuals,
although institutions may purchase shares for accounts maintained by
individuals. Generally, each investor will be required to open a single
master account with the Fund for all purposes. In certain cases, the Fund may
request investors to maintain separate master accounts for shares held by the
investor (i) for its own account, for the account of other institutions and
for accounts for which the institution acts as a fiduciary, and (ii) for
accounts for which the investor acts in some other capacity. An institution
may arrange with the Transfer Agent for sub-accounting services and will be
charged directly for the cost of such services.
The minimum initial investment is $10,000,000, unless: (a) the
investor has invested at least $10,000,000 in the aggregate among the Fund,
Dreyfus Cash Management, Dreyfus Cash Management
Page 11
Plus, Inc., Dreyfus Government Cash Management, Dreyfus Municipal Cash
Management Plus, Dreyfus Tax Exempt Cash Management, Dreyfus Treasury Cash
Management and Dreyfus Treasury Prime Cash Management; or (b) the investor
has, in the opinion of management of Dreyfus Institutional Services Division,
a division of Dreyfus Service Corporation, adequate intent and availability of
funds to reach a future level of investment of $10,000,000 among the funds
identified above. There is no minimum for subsequent purchases. The initial
investment must be accompanied by the Fund's Account Application. Management
understands that some financial institutions, securities dealers and other
industry professionals (collectively, "Service Agents") and other institutions
may charge their clients fees in connection with purchases for the accounts of
their clients. These fees would be in addition to any amounts which might be
received under the Service Plan. Service Agents may receive different levels
of compensation for selling different classes of shares. Each Service Agent
has agreed to transmit to its clients a schedule of such fees. Share
certificates are issued only upon the investor's written request. No
certificates are issued for fractional shares. It is not recommended that the
Fund be used as a vehicle for Keogh, IRA or other qualified retirement plans.
The Fund reserves the right to reject any purchase order.
Fund shares may be purchased by wire, by telephone or through
compatible computer facilities. All payments should be made in U.S. dollars
and, to avoid fees and delays, should be drawn only on U.S. banks. For
instructions concerning purchases and to determine whether their computer
facilities are compatible with the Fund's, investors should call one of the
telephone numbers listed under "General Information" in this Prospectus.
Fund shares are sold on a continuous basis at the net asset value per
share next determined after an order in proper form and Federal Funds (monies
of member banks in the Federal Reserve System which are held on deposit at a
Federal Reserve Bank) are received by the Custodian. If an investor does not
remit Federal Funds, its payment must be converted into Federal Funds. This
usually occurs within one business day of receipt of a bank wire and within
two business days of receipt of a check drawn on a member bank of the Federal
Reserve System. Checks drawn on banks which are not members of the Federal
Reserve System may take considerably longer to convert into Federal Funds.
Prior to receipt of Federal Funds, the investor's money will not be invested.
The Fund's net asset value per share is determined as of 12:00 Noon,
New York time, on each day that the New York Stock Exchange is open for
business. Net asset value per share of each class is computed by dividing the
value of the Fund's net assets represented by such class (i.e., the value of
its assets less liabilities) by the total number of shares of such class
outstanding. See "Determination of Net Asset Value" in the Fund's Statement
of Additional Information.
Except in the case of telephone orders, investors whose payments are
received in or converted into Federal Funds by 12:00 Noon, New York time, by
the Custodian will receive the dividend declared that day. Investors whose
payments are received in or converted into Federal Funds after 12:00 Noon,
New York time, by the Custodian will begin to accrue dividends on the
following business day.
Investors may telephone orders for purchase of the Fund's shares.
These orders will become effective at the price determined at 12:00 Noon, New
York time, and the shares purchased will receive the dividend on Fund shares
declared on that day if the telephone order is placed by 12:00 Noon, New York
time, and Federal Funds are received by 4:00 p.m., New York time, on that
day.
Federal regulations require that an investor provide a certified
Taxpayer Identification Number ("TIN") upon opening or reopening an account.
See "Dividends, Distributions and Taxes" and the Fund's Account Application
for further information concerning this requirement. Failure to furnish a
certified TIN to the Fund could subject an investor to a $50 penalty imposed
by the Internal Revenue Service (the "IRS").
Page 12
INVESTOR SERVICES
FUND EXCHANGES -- An investor may purchase, in exchange for Class A or Class
B shares of the Fund, shares of Dreyfus Cash Management, Dreyfus Cash
Management Plus, Inc., Dreyfus Government Cash Management, Dreyfus Municipal
Cash Management Plus, Dreyfus Tax Exempt Cash Management, Dreyfus Treasury
Cash Management and Dreyfus Treasury Prime Cash Management, which have
different investment objectives that may be of interest to investors. Upon an
exchange into a new account, the following shareholder services and privileges
, as applicable and where available, will be automatically carried over to
the fund into which the exchange is being made: Telephone Exchange Privilege,
Redemption by Wire or Telephone, Redemption Through Compatible Computer
Facilities and the dividend/capital gain distribution option selected by the
investor.
To request an exchange, exchange instructions must be given in
writing or by telephone directed to the address or numbers listed under
"General Information" in this Prospectus. See "How to Redeem Fund
Shares_Procedures." Before any exchange, the investor must obtain and should
review a copy of the current prospectus of the fund into which the exchange
is being made. Prospectuses and further information about Fund exchanges may
be obtained also by calling one of the telephone numbers listed under "General
Information." Shares will be exchanged at the net asset value next
determined after receipt of an exchange request in proper form. The exchange
of shares of one fund for shares of another fund is treated for Federal
income tax purposes as a sale of the shares given in exchange by the investor
and, therefore, an exchanging investor may realize a taxable gain or loss. No
fees currently are charged investors directly in connection with exchanges,
although the Fund reserves the right, upon not less than 60 days' written
notice, to charge investors a nominal fee in accordance with rules
promulgated by the Securities and Exchange Commission. The Fund reserves the
right to reject any exchange request in whole or in part. The availability of
Fund exchanges may be modified or terminated at any time upon notice to
investors.
DREYFUS AUTO-EXCHANGE PRIVILEGE -- Dreyfus Auto-Exchange Privilege enables an
investor to invest regularly (on a semi-monthly, monthly, quarterly or annual
basis), in exchange for Class A or Class B shares of the Fund, in shares of
Dreyfus Cash Management, Dreyfus Cash Management Plus, Inc., Dreyfus
Government Cash Management, Dreyfus Municipal Cash Management Plus, Dreyfus
Tax Exempt Cash Management, Dreyfus Treasury Cash Management or Dreyfus
Treasury Prime Cash Management, if the investor is currently an investor in
one of these funds. The amount an investor designates, which can be expressed
either in terms of a specific dollar or share amount, will be exchanged
automatically on the first and/or fifteenth of the month according to the
schedule that the investor has selected. Shares will be exchanged at the
then-current net asset value. The right to exercise this Privilege may be
modified or cancelled by the Fund or the Transfer Agent. An investor may
modify or cancel the exercise of this Privilege at any time by writing to The
Dreyfus Institutional Services Division, EAB Plaza, 144 Glenn Curtiss
Boulevard, 8th Floor, Uniondale, New York 11556-0144. The Fund may charge a
service fee for the use of this Privilege. No such fee currently is
contemplated. The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the investor and, therefore, an exchanging investor may realize a
taxable gain or loss. For more information concerning this Privilege and the
funds eligible to participate in this Privilege, or to obtain a Dreyfus
Auto-Exchange Authorization Form, please call in New York State
1-718-895-1650; outside New York State call toll free 1-800-346-3621.
HOW TO REDEEM FUND SHARES
GENERAL -- Investors may request redemption of shares at any time and the
shares will be redeemed at the next determined net asset value.
The Fund imposes no charges when shares are redeemed directly through
the Distributor. Service Agents or other institutions may charge their
clients a nominal fee for effecting redemptions of Fund
Page 13
shares. Any share certificates representing Fund shares being redeemed must
be submitted with the redemption request. The value of the shares redeemed
may be more or less than their original cost, depending upon the Fund's
then-current net asset value.
If a request for redemption is received in proper form by the
Distributor by 12:00 Noon, New York time, the proceeds of the redemption, if
transfer by wire is requested, ordinarily will be transmitted in Federal
Funds on the same day and the shares will not receive the dividend declared
on that day. If the request is received later that day by the Distributor,
the shares will receive the dividend on the Fund's shares declared on that
day and the proceeds of redemption, if wire transfer is requested, ordinarily
will be transmitted in Federal Funds on the next business day.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission.
PROCEDURES -- Investors may redeem Fund shares by wire or telephone, or
through compatible computer facilities as described below.
An investor may redeem Fund shares by telephone if the investor has
checked the appropriate box on the Fund's Account Application or has filed a
Shareholder Services Form with the Transfer Agent. If an investor selects a
telephone redemption privilege or telephone exchange privilege (which is
automatically granted unless it is affirmatively refused), the investor
authorizes the Transfer Agent to act on telephone instructions from any
person representing himself or herself to be an authorized representative of
the investor, and reasonably believed by the Transfer Agent to be genuine.
The Fund will require the Transfer Agent to employ procedures, such as requiri
ng a form of personal identification, to confirm that instructions are
genuine and, if they do not follow such procedures, the Fund or the Transfer
Agent may be liable for any losses due to unauthorized or fraudulent
instructions. The Fund or the Transfer Agent will not be liable for following
telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, investors may
experience difficulty in contacting the Transfer Agent or the Distributor by
telephone to request a redemption or exchange of Fund shares. In such cases,
investors should consider using the other redemption procedures described
herein.
REDEMPTION BY WIRE OR TELEPHONE -- Investors may redeem Fund shares by wire
or telephone. The redemption proceeds will be paid by wire transfer.
Investors can redeem shares by telephone by calling one of the telephone
numbers listed under "General Information" in this Prospectus. The Fund
reserves the right to refuse any request made by wire or telephone and may
limit the amount involved or the number of telephone redemptions. This
procedure may be modified or terminated at any time by the Transfer Agent or
the Fund. The Fund's Statement of Additional Information sets forth
instructions for redeeming shares by wire. Shares for which certificates have
been issued may not be redeemed by wire or telephone.
REDEMPTION THROUGH COMPATIBLE COMPUTER FACILITIES -- The Fund makes available
to institutions the ability to redeem shares through compatible computer
facilities. Investors desiring to redeem shares in this manner should call
one of the telephone numbers listed under "General Information" in this
Prospectus to determine whether their computer facilities are compatible and
to receive instructions for redeeming shares in this manner.
Page 14
SERVICE PLAN
(Class B Only)
Class B shares are subject to a Service Plan adopted pursuant to Rule
12b-1 under the Investment Company Act of 1940. Under the Service Plan, the
Fund (a) reimburses the Distributor for distributing the Fund's Class B
shares and (b) pays The Dreyfus Corporation, Dreyfus Service Corporation, a
wholly-owned subsidiary of The Dreyfus Corporation, and any affiliate of
either of them (collectively, "Dreyfus") for advertising and marketing
relating to the Fund's Class B shares and for providing certain services
relating to Class B 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("Servicing"), at
an aggregate annual rate of .25 of 1% of the value of the average daily net
assets of Class B. Each of the Distributor and Dreyfus may pay one or more
Service Agents a fee in respect of the Fund's Class B shares owned by
shareholders with whom the Service Agent has a Servicing relationship or for
whom the Service Agent is the dealer or holder of record. Each of the
Distributor and Dreyfus determines the amounts, if any, to be paid to Service
Agents under the Service Plan and the basis on which such payments are made.
The fee payable for Servicing is intended to be a "service fee" as defined in
Article III, Section 26 of the NASD Rules of Fair Practice. The fees payable
under the Service Plan are payable without regard to actual expenses
incurred.
SHAREHOLDER SERVICES PLAN
(Class A Only)
Class A shares are subject to a Shareholder Services Plan pursuant to
which the Fund has agreed to reimburse Dreyfus Service Corporation an amount
not to exceed an annual rate of .25 of 1% of the value of the average daily
net assets of the Class A shares for certain allocated expenses of providing
personal services to, and/or maintaining accounts of, Class A 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. Pursuant to an agreement by The Dreyfus
Corporation described under "Management of the Fund," The Dreyfus
Corporation, and not the Fund, currently reimburses Dreyfus Service
Corporation for any such allocated expenses.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from its net investment income
on each day the New York Stock Exchange or the Transfer Agent is open for
business. Fund shares begin earning income dividends on the day the purchase
order is effective. The Fund's earnings for Saturdays, Sundays and holidays
are declared as dividends on the next business day. Dividends usually are
paid on the last calendar day of each month, and are automatically reinvested
in additional Fund shares at net asset value or, at the investor's option,
paid in cash. If an investor redeems all shares in its account at any time
during the month, all dividends to which the investor is entitled will be
paid along with the proceeds of the redemption. Distributions from net
realized securities gains, if any, generally are declared and paid once a
year, but the Fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Code, in all events in a manner
consistent with the provisions of the Investment Company Act of 1940. The
Fund will not make distributions from net realized securities gains unless
capital loss carryovers, if any, have been utilized or have expired.
Investors may choose whether to receive distributions in cash or to reinvest
in additional Fund shares at net asset value. All expenses are accrued daily
and deducted before declaration of dividends to investors. Dividends paid by
each Class will be calculated at the same time and in the same manner and
will be of the same amount, except that the expenses attributable solely to
Class A or Class B will be borne exclusively by such Class. Class B
Page 15
shares will receive lower per share dividends than Class A shares because of
the higher expenses borne by Class B. See "Annual Fund Operating Expenses."
Except for dividends from Taxable Investments, the Fund anticipates
that substantially all dividends paid by the Fund will not be subject to
Federal, New York State and New York City personal income taxes. To the
extent that investors are obligated to pay state or local taxes outside of
New York State and New York City, dividends earned by an investment in the
Fund may represent taxable income. Dividends derived from Taxable
Investments, together with distributions from any net realized short-term
securities gains and all or a portion of any gain realized from the sale or
other disposition of certain market discount bonds, are taxable as ordinary
income whether received in cash or reinvested in Fund shares, if the
beneficial holder of Fund shares is a citizen or resident of the United
States. No dividend paid by the Fund will qualify for the dividends received
deduction allowable to certain U.S. corporations. Distributions from net
realized long-term securities gains of the Fund generally are taxable as
long-term capital gains for Federal income tax purposes if the beneficial
holder of Fund shares is a citizen or resident of the United States,
regardless of how long shareholders have held their Fund shares and whether
such distributions are received in cash or reinvested in Fund shares. The
Code provides that the net capital gain of an individual generally will not
be subject to Federal income tax at a rate in excess of 28%. Under the Code,
interest on indebtedness incurred or continued to purchase or carry Fund
shares which is deemed to relate to exempt-interest dividends is not
deductible.
Although all or a substantial portion of the dividends paid by the
Fund may be excluded by the beneficial holders of Fund shares from their
gross income for Federal income tax purposes, the Fund may purchase specified
private activity bonds, the interest from which may be (i) a preference item
for purposes of the alternative minimum tax, (ii) a component of the
"adjusted current earnings" preference item for purposes of the corporate
alternative minimum tax as well as a component in computing the corporate
environmental tax or (iii) a factor in determining the extent to which the
Social Security benefits of a beneficial holder of Fund shares are taxable.
If the Fund purchases such securities, the portion of the Fund's dividends
related thereto will not necessarily be tax exempt to a beneficial holder of
Fund shares who is subject to the alternative minimum tax and/or tax on
Social Security benefits and may cause a beneficial holder of Fund shares to
be subject to such taxes.
Notice as to the tax status of an investor's dividends and
distributions will be mailed to such investor annually. Each investor also
will receive periodic summaries of its account which will include information
as to dividends and distributions from securities gains, if any, paid during
the year. These statements set forth the dollar amount of income exempt from
Federal tax and the dollar amount, if any, subject to Federal tax. These
dollar amounts will vary depending on the size and length of time of the
investor's investment in the Fund. If the Fund pays dividends derived from
taxable income, it intends to designate as taxable the same percentage of the
day's dividend as the actual taxable income earned on that day bears to total
income earned on that day. Thus, the percentage of the dividend designated as
taxable, if any, may vary from day to day.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of taxable dividends and
distributions from net realized securities gains paid to a shareholder if
such shareholder fails to certify either that the TIN furnished in connection
with opening an account is correct or that such shareholder has not received
notice from the IRS of being subject to backup withholding as a result of a
failure to properly report taxable dividend or interest income on a Federal
income tax return. Furthermore, the IRS may notify the Fund to institute
backup withholding if the IRS determines a shareholder's TIN is incorrect or
if a shareholder has failed to properly report taxable dividend and interest
income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax
Page 16
imposed on the record owner of the account, and may be claimed as a credit on
the record owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified for the
fiscal year ended July 31, 1994 as a "regulated investment company" under the
Code. The Fund intends to continue to so qualify if such qualification is in
the best interests of its shareholders. Such qualification relieves the Fund
of any liability for Federal income tax to the extent its earnings are
distributed in accordance with applicable provisions of the Code. The Fund is
subject to a non-deductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable investment income and capital gains.
Each investor should consult its tax adviser regarding specific
questions as to Federal, state or local taxes.
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust under the
laws of the Commonwealth of Massachusetts pursuant to an Agreement and
Declaration of Trust (the "Trust Agreement") dated September 12, 1990, and
commenced operations on November 4, 1991. The Fund is authorized to issue an
unlimited number of shares of beneficial interest, par value $.001 per share.
The Fund's shares are classified into two classes. Each share has one vote
and shareholders will vote in the aggregate and not by class except as to any
matter which affects only one class or as otherwise required by law. Holders
of Class B shares only, however, will be entitled to vote on matters
submitted to shareholders pertaining to the Service Plan. Investors have
agreed to vote Fund shares for which they are the record owners according to
voting instructions received from the beneficial holder of such shares.
Under Massachusetts law, shareholders could, under certain
circumstances, be held liable for the obligations of the Fund. However, the
Trust Agreement disclaims shareholder liability for acts or obligations of
the Fund and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Fund or a
Trustee. The Trust Agreement provides for indemnification from the Fund's
property for all losses and expenses of any shareholder held liable for the
obligations of the Fund. Thus, the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its
obligations, a possibility which management believes is remote. Upon payment
of any liability incurred by the Fund, the shareholder paying such liability
will be entitled to reimbursement from the general assets of the Fund. The
Trustees intend to conduct the operations of the Fund in such a way so as to a
void, as far as possible, ultimate liability of the shareholders for
liabilities of the Fund. As described under "Management of the Fund" in the
Statement of Additional Information, the Fund ordinarily will not hold
shareholder meetings; however, shareholders under certain circumstances may
have the right to call a meeting of shareholders for the purpose of voting to
remove Trustees.
The Transfer Agent maintains a record of each investor's ownership
and sends confirmations and statements of account.
Investor inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or, in the case of
institutional investors, by calling in New York State 1-718-895-1650; outside
New York State call toll free 1-800-346-3621.
The Glass-Steagall Act and other applicable laws prohibit Federally
chartered or supervised banks from engaging in certain aspects of the
business of issuing, underwriting, selling and/or distributing securities.
Accordingly, banks will perform only administrative and shareholder servicing
functions. While the matter is not free from doubt, the Fund's Board of
Trustees believes that such laws should not preclude a bank from acting on
behalf of clients as contemplated by this Prospectus. However, judicial or
administrative decisions or interpretations of such laws, as well as changes
in either Federal or state statutes or regulations relating to the
permissible activities of banks and their subsidiaries or affili-
Page 17
ates, could prevent a bank from continuing to perform all or part of the
activities contemplated by this Prospectus. If a bank were prohibited from
so acting, its shareholder clients would be permitted to remain Fund
shareholders and alternative means for continuing the servicing of such
shareholders would be sought. In such event, changes in the operation of the
Fund might occur and shareholders serviced by such bank might no longer be
able to avail themselves of any automatic investment or other services then
being provided by the bank. The Fund does not expect that shareholders would
suffer any adverse financial consequences as a result of any of these
occurrences.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and in the
Fund's official sales literature in connection with the offer of the Fund's
shares, and, if given or made, such other information or representations must
not be relied upon as having been authorized by the Fund. This Prospectus
does not constitute an offer in any State in which, or to any person to whom,
such offering may not lawfully be made.
Page 18
PROSPECTUS
(LION PICTURE)
DREYFUS
NEW YORK
MUNICIPAL
CASH MANAGEMENT
(copyright logo) Dreyfus Service Corporation, 1994
