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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, the Fund paid The Dreyfus Corporation a monthly management fee
at the effective annual rate of .14 of 1% of the value of the Fund's average
daily net assets, pursuant to an agreement by The Dreyfus Corporation then in
effect. For the period from January 18, 1994 (commencement of initial
offering of Class B shares) through July 31, 1994, the effective annual rate
of the management fee was .20 of 1% of the value of the Fund's average daily
net assets.
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
DREYFUS NEW YORK MUNICIPAL CASH MANAGEMENT
CLASS A AND CLASS B SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
NOVEMBER 28, 1994
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus New York Municipal Cash Management (the "Fund"), dated November 28,
1994, as it may be revised from time to time. To obtain a copy of the
Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or, in the case of institutional investors,
call the following numbers:
Outside New York State -- Call Toll Free 1-800-346-3621
In New York State -- Call 1-718-895-1650
Individuals or entities for whom institutions may purchase or redeem
Fund shares may write to the Fund at the above address or call toll free 1-
800-554-4611 to obtain a copy of the Fund's Prospectus.
The Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . . . . B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . B-7
Management Agreement. . . . . . . . . . . . . . . . . . . . B-10
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . B-12
Service Plan (Class B Only) . . . . . . . . . . . . . . . . B-12
Shareholder Services Plan (Class A Only). . . . . . . . . . B-13
Redemption of Fund Shares . . . . . . . . . . . . . . . . . B-14
Determination of Net Asset Value. . . . . . . . . . . . . . B-15
Portfolio Transactions. . . . . . . . . . . . . . . . . . . B-15
Investor Services . . . . . . . . . . . . . . . . . . . . . B-16
Dividends, Distributions and Taxes. . . . . . . . . . . . . B-17
Yield Information . . . . . . . . . . . . . . . . . . . . . B-17
Information About the Fund. . . . . . . . . . . . . . . . . B-18
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . B-19
Appendix A. . . . . . . . . . . . . . . . . . . . . . . . . B-20
Appendix B. . . . . . . . . . . . . . . . . . . . . . . . . B-34
Financial Statements B-38
Report of Independent Auditors. . . . . . . . . . . . . . . B-45
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Description of the Fund."
The average distribution of investments (at value) in
Municipal Obligations by ratings for the fiscal year ended July
31, 1994, computed on a monthly basis, was as follows:
Fitch Moody's Standard
Investors Investors & Poor's
Service, Inc. Service, Inc. Corporation Percentage
("Fitch") or ("Moody's") or ("S&P") of Value
____________ _____________ __________ ------------
F-1+/F-1 VMIG 1/MIG 1, SP-1+/SP-1,
P-1 A-1+/A-1 87.5%
F-2 VMIG 2/MIG 2, SP-2, A-2
P-2 0.2
AAA/AA Aaa/Aa AAA/AA 3.9
Not Rated Not Rated Not Rated 8.4
-----
100.0%
======
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 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. The
issuer of such obligations ordinarily has a corresponding right,
after a given period, to prepay in its discretion the outstanding
principal amount of the obligations 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 the
Fund's management fee, as well as other operating expenses, will
have the effect of reducing the yield to investors.
Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special
risks not ordinarily associated with Municipal Obligations.
Although lease obligations do not constitute general obligations
of the municipality for which the municipality's taxing power is
pledged, a lease obligation ordinarily is backed by the
municipality's covenant to budget for, appropriate and make the
payments due under the lease obligation. However, certain lease
obligations contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is
appropriated for such purpose on a yearly basis. In addition to
the "non-appropriation" risk, these securities represent a
relatively new type of financing that has not yet developed the
depth of marketability associated with more conventional bonds.
Although "non-appropriation" lease obligations are secured by the
leased property, disposition of the property in the event of
foreclosure might prove difficult. The Fund will seek to
minimize these risks by investing only in those lease obligations
that (1) are rated in one of the two highest rating categories
for debt obligations by at least two nationally recognized
statistical rating organizations (or one rating organization if
the lease obligation was rated by only 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
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. Accordingly, not more than 10%
of the value of the Fund's net assets will be invested in lease
obligations that are illiquid and in other illiquid securities.
See "Investment Restriction No. 10" below.
Ratings of Municipal Obligations. If, subsequent to its
purchase by the 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 such organization) or the 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 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.
To the extent that the ratings given by Moody's, S&P or
Fitch may change as a result of changes in such organizations or
their rating systems, the Fund will attempt to use comparable
ratings as standards for its investments in accordance with the
investment policies contained in the Fund's 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 based upon
financial and other available information.
Taxable Investments. Securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities include U.S.
Treasury securities, which differ only in their interest rates,
maturities and times of issuance. Treasury Bills have initial
maturities of one year or less; Treasury Notes have initial
maturities of one to ten years; and Treasury Bonds generally have
initial maturities of greater than ten years. Some obligations
issued or guaranteed by U.S. Government agencies and
instrumentalities, for example, Government National Mortgage
Association pass-through certificates, are supported by the full
faith and credit of the U.S. Treasury; others, such as those of
the Federal Home Loan Banks, by the right of the issuer to borrow
from the U.S. Treasury; others, such as those issued by the
Federal National Mortgage Association, by discretionary authority
of the U.S. Government to purchase certain obligations of the
agency or instrumentality; and others, such as those issued by
the Student Loan Marketing Association, only by the credit of the
agency or instrumentality. These securities bear fixed, floating
or variable rates of interest. Interest may fluctuate based on
generally recognized reference rates or the relationship of
rates. While the U.S. Government provides financial support to
such U.S. Government-sponsored agencies or instrumentalities, no
assurance can be given that it will always do so, since it is not
so obligated by law. The Fund will invest in such securities
only when it is satisfied that the credit risk with respect to
the issuer is minimal.
Commercial paper consists of short-term, unsecured
promissory notes issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates
representing the obligation of a bank to repay funds deposited
with it for a specified period of time.
Time deposits are non-negotiable deposits maintained in a
banking institution for a specified period of time at a stated
interest rate. Investments in time deposits generally are
limited to London branches of domestic banks that have total
assets in excess of one billion dollars. Time deposits which may
be held by the Fund will not benefit from insurance from the Bank
Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the
obligation of a bank to pay a draft drawn on it by a customer.
These instruments reflect the obligation both of the bank and of
the drawer to pay the face amount of the instrument upon
maturity. Other short-term bank obligations may include
uninsured, direct obligations bearing fixed, floating or variable
interest rates.
Repurchase agreements involve the acquisition by the Fund of
an underlying debt instrument, subject to an obligation of the
seller to repurchase, and the Fund to resell, the instrument at a
fixed price usually not more than one week after its purchase.
The Fund's custodian 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. In an attempt to reduce the risk of incurring a
loss on a repurchase agreement, the Fund will enter into
repurchase agreements only with domestic banks with total assets
in excess of one billion dollars or primary government securities
dealers reporting to the Federal Reserve Bank of New York, with
respect to securities of the type in which 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. The Manager will monitor on an ongoing basis the
value of the collateral to assure that it always equals or
exceeds the repurchase price. Certain costs may be incurred by
the Fund in connection with the sale of the securities if the
seller does not repurchase them in accordance with the repurchase
agreement. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the securities, realization on the
securities by the Fund may be delayed or limited. The Fund will
consider on an ongoing basis the creditworthiness of the
institutions with which it enters into repurchase agreements.
Risk Factors - Investing In New York Municipal Obligations.
Each investor 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 and certain of its public bodies and
municipalities, including New York City. Beginning in early
1975, New York State, New York City and other 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 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 caused, in part, the State to overestimate its General Fund
tax receipts in the 1992 fiscal year by $575 million. The 1992
fiscal year was the fourth consecutive year in which the State
incurred a cash-basis operating deficit in the General Fund and
issued deficit notes. 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 A1 to A,
respectively. In addition, S&P and Moody's lowered their ratings
in 1990 on New York State's short-term notes from SP-1+ to SP-1
and from MIG-1 to MIG-2, respectively. In January 1992, Moody's
lowered from A to Baa1 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 Baa1. The rating changes reflect the rating agencies'
concerns about the financial condition of New York State and
City, the heavy debt load of the State and City, and economic
uncertainties in the region. Investors should review Appendix A
which more fully sets forth these and other risk factors.
Investment Restrictions. The Fund has adopted investment
restrictions numbered 1 through 9 as fundamental policies. These
restrictions cannot be changed without approval by the holders of
a majority (as defined in the Investment Company Act of 1940 (the
"Act")) of the Fund's outstanding voting shares. Investment
restriction number 10 is not a fundamental policy and may be
changed by vote of a majority of the Fund's Trustees at any time.
The Fund may not:
1. Purchase securities other than Municipal Obligations
and Taxable Investments as those terms are defined above and in
the Fund's 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 exceed 5% of the value of the Fund's total
assets, the Fund will not make any additional investments.
3. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except to secure borrowings for temporary or emergency
purposes.
4. Sell securities short or purchase securities on margin.
5. Underwrite the securities of other issuers, except that
the Fund may bid separately or as part of a group for the
purchase of Municipal Obligations directly from an issuer for its
own portfolio to take advantage of the lower purchase price
available.
6. Purchase 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.
7. Make loans to others except through the purchase of
qualified debt obligations and the entry into repurchase
agreements referred to above and in the Fund's Prospectus.
8. 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, obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
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. 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.
Notwithstanding Investment Restriction Nos. 1, 3 and 6, the
Fund reserves the right to enter into interest rate futures
contracts, and municipal bond index futures contracts, and any
options that may be offered in respect thereof, subject to the
restrictions then in effect of the Securities and Exchange
Commission and the Commodity Futures Trading Commission and to
the receipt or taking, as the case may be, of appropriate
consents, approvals and other actions from or by those regulatory
bodies. In any event, no such contracts or options will be
entered into until a general description of the terms thereof are
set forth in a subsequent prospectus and statement of additional
information, the Registration Statement with respect to which has
been filed with the Securities and Exchange Commission and has
become effective.
For purposes of Investment Restriction No. 8, 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.
The Fund may make commitments more restrictive than the
restrictions listed above so as to permit the sale of Fund shares
in certain states. Should the Fund determine that a commitment
is no longer in the best interest of the Fund and its
shareholders, the Fund reserves the right to revoke the
commitment by terminating the sale of Fund shares in the state
involved.
MANAGEMENT OF THE FUND
Trustees and officers of the Fund, together with information
as to their principal business occupations during at least the
last five years, are shown below. Each Trustee who is deemed to
be an "interested person" of the Fund, as defined in the Act, is
indicated by an asterisk.
Trustees of the Fund
*DAVID W. BURKE, Trustee. Consultant to the Manager since August
1994. From October 1990 to August 1994, Mr. Burke was Vice
President and Chief Administrative Officer of the Manager.
During the period 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. His address is 200
Park Avenue, New York, New York 10166.
ISABEL P. DUNST, Trustee. Partner in the law firm of Hogan &
Hartson since 1990. From 1986 to 1990, Deputy General
Counsel of the United States Department of Health and Human
Services. She is also a Trustee of the Clients Security
Fund of the District of Columbia Bar and a Trustee of Temple
Sinai. Her address is c/o Hogan & Hartson, Columbia Square,
555 Thirteenth Street, N.W., Washington, D.C. 20004-1109.
LYLE E. GRAMLEY, Trustee. Consulting economist since June 1992
and Senior Staff Vice President and Chief Economist of
Mortgage Bankers Association of America from 1985 to May
1992. Since February 1993, a director of CWM Mortgage
Holdings, Inc. From 1980 to 1985, member of the Board of
Governors of the Federal Reserve System. His address is
12901 Three Sisters Road, Potomac, Maryland 20854.
WARREN B. RUDMAN, Trustee. Since January 1993, Partner in the
law firm Paul, Weiss, Rifkind, Wharton & Garrison. From
January 1981 to January 1993, Mr. Rudman served as a United
States Senator from the State of New Hampshire. Also, since
January 1993, Mr. Rudman has served as Vice Chairman of the
Federal Reserve Bank of Boston and as a director of Chubb
Corporation and Raytheon Company. He has served as Vice
Chairman of the President's Foreign Intelligence Advisory
Board since January 1993. Since 1988, Mr. Rudman has served
as a trustee of Boston College and since 1986 as a member of
the Senior Advisory Board of the Institute of Politics of
the Kennedy School of Government at Harvard University. His
address is 1615 L Street, N.W., Suite 1300, Washington D.C.
20036.
Each of the noninterested Trustees is also a trustee of
Dreyfus Cash Management, Dreyfus Government Cash Management,
Dreyfus Municipal Cash Management Plus, Dreyfus Tax Exempt Cash
Management, Dreyfus Treasury Cash Management and Dreyfus Treasury
Prime Cash Management and a director of Dreyfus Cash Management
Plus, Inc.
Mr. Rudman is also a trustee of Dreyfus BASIC U.S. Government
Money Market Fund, Dreyfus California Intermediate Municipal Bond
Fund, Dreyfus Connecticut Intermediate Municipal Bond Fund,
Dreyfus Massachusetts Intermediate Municipal Bond Fund, Dreyfus
New Jersey Intermediate Municipal Bond Fund, Dreyfus Pennsylvania
Intermediate Municipal Bond Fund, Dreyfus Strategic Income and
Dreyfus Strategic Investing, and a director of Dreyfus BASIC
Money Market Fund, Inc. and Dreyfus Strategic Governments Income,
Inc.
For so long as the Fund's plans described in the sections
captioned "Service Plan" and "Shareholder Services Plan" remain
in effect, the Trustees of the Fund who are not "interested
persons" of the Fund, as defined in the Act, will be selected and
nominated by the Trustees who are not "interested persons" of the
Fund.
The Fund does not pay any remuneration to its officers and
Trustees other than fees and expenses to Trustees who are not
officers, directors, employees or holders of 5% or more of the
outstanding voting securities of the Manager, which totalled
$1,918 for the fiscal year ended July 31, 1994 for all such
Trustees as a group.
Each Trustee was elected at a meeting of shareholders held
on August 5, 1994. No further meetings of shareholders will be
held for the purpose of electing Trustees unless and until such
time as less than a majority of the Trustees holding office have
been elected by shareholders, at which time the Trustees then in
office will call a shareholders' meeting for the election of
Trustees. Under the Act, shareholders of record of not less than
two-thirds of the outstanding shares of the Fund may remove a
Trustee through a declaration in writing or by vote cast in
person or by proxy at a meeting called for that purpose. Under
the Fund's Agreement and Declaration of Trust, the Trustees are
required to call a meeting of shareholders for the purpose of
voting upon the question of removal of any such Trustee when
requested in writing to do so by the shareholders of record of
not less than 10% of the Fund's outstanding shares.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief
Operating 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., a wholly-owned subsidiary of The
Boston Company, Inc. Prior to December 1991, she served as
Vice President and Controller, and later as Senior Vice
President, of The Boston Company Advisors, Inc.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice
President - 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, and prior to August 1990, he
was employed as an Associate at Sidley & Austin.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior
Vice President of the Distributor and an officer of other
investment companies advised or administered by the Manager.
From 1988 to August 1994, he was manager of the High
Performance Fabric Division of Springs Industries Inc.
ERIC B. FISCHMAN, Vice President and Assistant Secretary.
Associate General Counsel of the Distributor and an officer
of other investment companies advised or administered by the
Manager. From September 1992 to August 1994, he was an
attorney with the Board of Governors of the Federal Reserve
System.
JOSEPH F. TOWER, III, Assistant Treasurer. 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.
JOHN J. PYBURN, Assistant Treasurer. Vice President of the
Distributor and an officer of other investment companies
advised or administered by Manager. From 1984 to July 1994,
he held the position of Assistant Vice President in the
Mutual Fund Accounting Department of Manager and was an
officer of several investment companies advised or
administered by Manager.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President
of the Distributor and an officer of other investment
companies advised or administered by the Manager. From
March 1992 to July 1994, she was a Compliance Officer for
The Managers Funds, a registered investment company. From
March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts and, prior
thereto, was employed as a Research Assistant for the Bureau
of National Affairs.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President of
the Distributor and an officer of other investment companies
advised or administered by Manager. From January 1992 to
July 1994, he was a Senior Legal product Manager for The
Boston Company Advisors, Inc., and, from January 1990 to
January 1992, he was a mutual fund accountant for The Boston
Company Advisors, Inc. Prior thereto, he was employed as a
licensed realtor at Furcinito Real Estate, Inc.
The address of each officer of the Fund is 200 Park Avenue,
New York, New York 10166.
Trustees and officers of the Fund, as a group, owned less
than 1% of the Fund's shares of beneficial interest outstanding
on September 16, 1994.
The following shareholders are known by the Fund to own of
record 5% or more of the Fund's Class B shares of beneficial
interest outstanding on September 16, 1994:
(1) Republic National Bank of New York, 176 Broadway, Mezzanine
Level, New York, NY 10038, (67.10%) in one account and (22.50%)
in another account; (2) Gunther & Company, Church Street Station,
P.O. Box 395, New York, NY 10008-0395 (9.00%).
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Management of the Fund."
The Manager provides management services pursuant to the
Management Agreement (the "Agreement") dated August 24, 1994,
with the Fund, which is subject to annual approval by (i) the
Fund's Board of Trustees or (ii) vote of a majority (as defined
in the Act) of the outstanding voting securities of the Fund,
provided that in either event the continuance also is approved by
a majority of the Trustees who are not "interested persons" (as
defined in the Act) of the Fund or the Manager, by vote cast in
person at a meeting called for the purpose of voting on such
approval. The Board of Trustees, including a majority of the
Trustees who are not "interested persons" of any party to the
Agreement, approved the Agreement at a meeting held on May 24,
1994. The Fund's shareholders approved the Agreement at a
shareholders meeting held on August 5, 1994. The Agreement is
terminable without penalty, on 60 days' notice, by the Fund's
Board of Trustees or by vote of the holders of a majority of the
Fund's shares, or, on not less than 90 days' notice, by the
Manager. The Agreement will terminate automatically in the event
of its assignment (as defined in the Act).
The following persons are officers and/or directors of the
Manager: Howard Stein, Chairman of the Board and Chief Executive
Officer; Julian M. Smerling, Vice Chairman of the Board of
Directors; Joseph S. DiMartino, President and a director; W.
Keith Smith, Chief Operating Officer and a director; Lawrence S.
Kash, Vice Chairman--Distribution; Daniel C. Maclean III, Vice
President and General Counsel; Diane Coffey, Vice President--
Corporate Communications; Jeffrey N. Nachman, Vice President--
Fund Administration; Mark N. Jacobs, Vice President--Fund Legal
and Compliance; Henry D. Gottmann, Vice President--Retail; Elie
M. Genadry, Vice President--Wholesale; Jay R. DeMartine, Vice
President--Marketing; Paul H. Snyder, Vice President and Chief
Financial Officer; Philip L. Toia, Vice Chairman--Operations and
Administration; Katherine C. Wickham, Vice President--Human
Resources; Maurice Bendrihem, Controller; and Mandell L. Berman,
Frank Cahouet, Alvin S. Friedman, Lawrence M. Greene and David B.
Truman, directors.
The Manager manages the Fund's portfolio of investments in
accordance with the stated policies of the Fund, subject to the
approval of the Fund's Board of Trustees. The Manager is
responsible for investment decisions, and provides the Fund with
portfolio managers who are authorized by the Trustees to execute
purchases and sales of securities. The Fund's portfolio managers
are Joseph P. Darcy, A. Paul Disdier, Karen M. Hand, Stephen C.
Kris, Richard J. Moynihan, Jill C. Shaffro, L. Lawrence Troutman,
Samuel J. Weinstock and Monica S. Wieboldt. The Manager also
maintains a research department with a professional staff of
securities analysts who provide research services for the Fund as
well as for other funds advised by the Manager. All purchases
and sales are reported for the Trustees' review at the meeting
subsequent to such transactions.
The Manager maintains office facilities on behalf of the
Fund, and furnishes statistical and research data, clerical help,
accounting, data processing, bookkeeping and internal auditing
and certain other required services. The Manager also may make
such advertising and promotional expenditures, using its own
resources, as it from time to time deems appropriate.
As compensation for its services, the Fund has agreed to pay
the Manager a monthly fee at the annual rate of .20 of 1% of the
value of the Fund's average daily net assets. All fees and
expenses are accrued daily and deducted before the declaration of
dividends to shareholders. For the period November 4, 1991
(commencement of operations) through July 31, 1992, no management
fee was paid by the Fund pursuant to an undertaking by the
Manager. The fees payable for the fiscal years ended July 31,
1993 and 1994 amounted to $202,107 and $261,339, respectively.
These amounts were reduced pursuant to undertakings by the
Manager, resulting in net management fees paid for such fiscal
years of $21,427 and $192,934, respectively.
Unless the Manager gives the Fund's investors at least 90
days' notice to the contrary, the Manager, 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."
In addition, the Agreement provides that if in any fiscal
year the aggregate expenses of the Fund, 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
the expense limitation of any state having jurisdiction over the
Fund, the Fund may deduct from the payment to be made to the
Manager under the Agreement, or the Manager will bear, such
excess expense to the extent required by state law. 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 is not
subject to reduction as the value of the Fund's net assets
increases.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"How to Buy Fund Shares."
The Distributor. The Distributor serves as the Fund's
distributor pursuant to an agreement 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.
Using Federal Funds. The Shareholder Services Group, Inc.,
the Fund's transfer and dividend disbursing agent (the "Transfer
Agent"), or the 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, bank or other financial institution and his
order to purchase Fund shares is paid for other than in Federal
Funds, the securities dealer, bank or other financial
institution, 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 Fund shares placed
by an investor with a sufficient Federal Funds or cash balance in
his brokerage account with a securities dealer, bank or other
financial institution will become effective on the day that the
order, including Federal Funds, is received by the Transfer
Agent. In some states, banks or other financial institutions
effecting transactions in Fund shares may be required to register
as dealers pursuant to state law.
SERVICE PLAN
(CLASS B ONLY)
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Service Plan."
Rule 12b-1 (the "Rule") adopted by the Securities and
Exchange Commission under the Act provides, among other things,
that an investment company may bear expenses of distributing its
shares only pursuant to a plan adopted in accordance with the
Rule. The Fund's shareholders and Board of Trustees have
approved such a Plan (the "Service Plan") with respect to the
Fund's Class B shares. Pursuant to the Service Plan, the Fund
(i) reimburses the Distributor for distributing the Fund's Class
B shares and (ii) pays the Manager, Dreyfus Service Corporation,
a wholly-owned subsidiary of the Manager, and any affiliate of
either of them (collectively, "Dreyfus") for advertising and
marketing Class B shares and for providing certain services to
the holders of Class B shares. Under the Service Plan, the
Distributor and Dreyfus may make payments to certain financial
institutions, securities dealers and other financial industry
professionals (collectively, "Service Agents") in respect to
these services. The Fund's Board of Trustees believes that there
is a reasonable likelihood that the Service Plan will benefit the
Fund and the holders of Class B shares.
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 Trustees for their review. In addition, the
Service Plan provides that it may not be amended to increase
materially the costs which holders of Class B shares may bear
pursuant to the Service Plan without the approval of the holders
of Class B shares and that other material amendments of the
Service Plan must be approved by the Board of Trustees, and by
the Trustees who are not "interested persons" (as defined in the
Act) of the Fund and have no direct or indirect financial
interest in the operation of the Service Plan or in any
agreements entered into in connection with the Service Plan, by
vote cast in person at a meeting called for the purpose of
considering such amendments. The Service Plan is subject to
annual approval by such vote of the Trustees cast in person at a
meeting called for the purpose of voting on the Service Plan.
The Service Plan was so approved by the Trustees at a meeting
held on May 24, 1994. The Service Plan may be terminated at any
time by vote of a majority of the Trustees who are not
"interested persons" and have no direct or indirect financial
interest in the operation of the Service Plan or in any
agreements entered into in connection with the Service Plan or by
vote of the holders of a majority of Class B shares. For the
period January 18, 1994 (commencement of the initial offering of
Class B shares) through July 31, 1994, $40,491 was paid with
respect to Class B shares, pursuant to the Service Plan.
SHAREHOLDER SERVICES PLAN
(CLASS A ONLY)
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services Plan."
The Fund has adopted a Shareholder Services Plan (the
"Plan") pursuant to which the Fund has agreed to reimburse the
Dreyfus Service Corporation for certain allocated expenses of
providing personal services and/or maintaining shareholder
accounts with respect to Class A shares only. 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 Plan,
and the purposes for which such expenditures were incurred, must
be made to the Trustees for their review. In addition, the Plan
provides that material amendments of the Plan must be approved by
the Board of Trustees, and by the Trustees who are not
"interested persons" (as defined in the Act) of the Fund or the
Manager and have no direct or indirect financial interest in the
operation of the Plan, by vote cast in person at a meeting called
for the purpose of considering such amendments. The Plan is sub-
ject to annual approval by such vote of the Trustees cast in
person at a meeting called for the purpose of voting on the Plan.
The Plan is terminable at any time by vote of a majority of the
Trustees who are not "interested persons" and have no direct or
indirect financial interest in the operation of the Plan.
For the period from August 1, 1993 through January 17, 1994,
$4,897 was charged to the Fund, with respect to Class A shares,
pursuant to the Shareholder Services Plan. For the period
January 18, 1994 through September 30, 1994, nothing was charged
to the Fund pursuant to an undertaking by the Manager.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"How to Redeem Fund Shares."
Redemption by Wire or Telephone. By using this procedure,
the investor authorizes the Transfer Agent to act on wire or
telephone redemption 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. Ordinarily, the Fund will initiate payment for shares
redeemed pursuant to this procedure on the same business day if
Dreyfus Institutional Services Division receives the redemption
request in proper form prior to 12:00 Noon, New York time, on
such day; otherwise, the Fund will initiate payment on the next
business day. Such payment will be made to a bank that is a
member of the Federal Reserve System.
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.
Redemption Commitment. The 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 of Trustees reserves the right to make payments in whole or
in part in securities or other assets of the Fund in case of an
emergency or at any time a cash distribution would impair the
liquidity of the Fund to the detriment of the existing
shareholders. In such event the securities would be valued in
the same manner as the Fund's portfolio is valued. If the
recipient sold such securities, brokerage charges would be
incurred.
Suspension of Redemptions. The right of redemption may be
suspended or the date of payment postponed (a) during any period
when the New York Stock Exchange is closed (other than a
customary weekend and holiday closing), (b) when trading in the
markets the Fund ordinarily utilizes is restricted, or when an
emergency exists as determined by the Securities and Exchange
Commission so that disposal of the 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 Fund's
shareholders.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"How to Buy Fund Shares."
Amortized Cost Pricing. The valuation of the Fund's
portfolio securities is based upon their amortized cost which
does not take into account unrealized capital gains or losses.
This involves valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates
on the market value of the instrument. While this method pro-
vides 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 Board of Trustees has established, as a particular
responsibility within the overall duty of care owed to the Fund's
investors, procedures reasonably designed to stabilize the Fund's
price per share as computed for purposes of purchases and
redemptions at $1.00. Such procedures include review of the
Fund's portfolio holdings by the Board of Trustees, at such
intervals as it deems appropriate, to determine whether the
Fund's net asset value calculated by using available market
quotations or market equivalents deviates from $1.00 per share
based on amortized cost. Market quotations and market
equivalents used in such review are obtained from an independent
pricing service (the "Service") approved by the Board of
Trustees. The Service values the Fund's investments based on
methods which include consideration of: yields or prices of
municipal obligations of comparable quality, coupon, maturity and
type; indications of values from dealers; and general market
conditions. The Service also may employ electronic data
processing techniques and/or a matrix system to determine
valuations.
The extent of any deviation between the Fund's net asset
value based upon available market quotations or market equiva-
lents and $1.00 per share based on amortized cost will be ex-
amined by the Board of Trustees. If such deviation exceeds 1/2
of 1%, the Board of Trustees will consider what actions, if any,
will be initiated. In the event the Board of Trustees determines
that a deviation exists which may result in material dilution or
other unfair results to investors or existing shareholders, it
has agreed to take such corrective action as it regards as
necessary and appropriate, including: selling portfolio
instruments prior to maturity to realize capital gains or losses
or to shorten average portfolio maturity; withholding dividends
or paying distributions from capital or capital gains; redeeming
shares in kind; or establishing a net asset value per share by
using available market quotations or market equivalents.
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 the 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 the Fund to date.
Transactions are allocated to various dealers by the Fund's
Portfolio managers in their best judgment. The primary
consideration is prompt and effective execution of orders at the
most favorable price. Subject to that primary consideration,
dealers may be selected for research, statistical or other
services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms
and may be selected based upon their sales of Fund shares.
Research services furnished by brokers through which the
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 the 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.
INVESTOR SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Investor Services."
Fund Exchanges. By using the Telephone Exchange Privilege,
the investor authorizes the Distributor to act on exchange
instructions from any person representing himself or herself to
be an authorized representative of the investor and reasonably
believed by the Dreyfus Institutional Services Division to be
genuine. Telephone exchanges may be subject to limitations as to
the amount involved or the number of telephone exchanges
permitted. Shares will be exchanged at the net asset value next
determined after receipt of an exchange request in proper form.
Shares in certificate form are not eligible for telephone
exchange.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange
Privilege permits an investor to purchase, in exchange for 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. This Privilege is available only for
existing accounts. Shares will be exchanged on the basis of
relative net asset value. 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 its account falls below the amount designated to be
exchanged under this Privilege. In this case, 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 issued in certificate form are not
eligible for Auto-Exchange.
Fund Exchanges and Dreyfus Auto-Exchange Privilege are
available to investors 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.
The Fund reserves the right to reject any exchange request
in whole or in part. The availability of Fund expenses and
Dreyfus Auto-Exchange Privilege may be modified or terminated at
any time upon notice to investors.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Dividends, Distributions and Taxes."
Ordinarily, gains and losses realized from portfolio
transactions will be treated as capital gain or loss. However,
all or a portion of any gains 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.
YIELD INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Yield Information."
For the seven-day period ended July 31, 1994, yield and
effective yield for Class A shares were 2.62% and 2.65%,
respectively, and for Class B shares were 2.37% and 2.40%,
respectively. 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 the
shareholder's account, 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 1994 Federal, New York State and New York City
income tax rate of 47.05%, the Fund's tax equivalent yield for
the seven-day period ended July 31, 1994 was 4.95% for Class A
shares and 4.48% for Class B shares. Tax equivalent yield is
computed by dividing that portion of the yield or effective 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 yield noted above represents 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 any other 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, the Fund may use hypothetical tax
equivalent yields or charts in its advertising. These
hypothetical yields or charts will be used for illustrative
purposes only and not as representative of the Fund's past or
future performance.
From time to time, advertising materials for the Fund may
refer to or discuss then-current or past economic conditions,
developments and/or events, including actual or proposed tax
legislation. From time to time, advertising materials for the
Fund may also refer to statistical or other information
concerning trends relating to investment companies, as compiled
by industry associations such as the Investment Company
Institute.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's 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
nonassessable. Fund shares have no preemptive, subscription or
conversion rights and are freely transferable.
The Fund sends annual and semi-annual financial statements
to all its shareholders.
In early 1974, the Manager commenced offering the first
money market fund to be widely offered on a retail basis, Dreyfus
Liquid Assets, Inc. Money market mutual funds have subsequently
grown into a multi-billion dollar industry.
The Fund is a member of the Family of Dreyfus Cash
Management Funds which are designed to meet the needs of an array
of institutional investors. As of November 15, 1994, the total
net assets of the family of Dreyfus Cash Management Funds
amounted to approximately $16.5 billion.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York, New
York 10286, acts as custodian of the Fund's investments. 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. Neither
The Bank of New York nor The Shareholder Services Group, Inc. has
any part in determining the investment policies of the Fund or
which securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New
York 10004-2696, as counsel for the Fund, has rendered its
opinion as to certain legal matters regarding the due
authorization and valid issuance of the shares of beneficial
interest being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York
10019, independent auditors, have been selected as auditors of
the Fund.
APPENDIX A
RISK FACTORS--INVESTING IN NEW YORK MUNICIPAL OBLIGATIONS
The financial condition of New York State (the "State") and certain of
its public bodies (the "Agencies") and municipalities, particularly New York
City (the "City"), could effect the market values and marketability of New
York Municipal Obligations which may be held by the Fund. The following
information constitutes only a brief summary, does not purport to be a
complete description, and is based on information drawn from official
statements relating to securities offerings of the State, the City and the
Municipal Assistance Corporation for the City of New York ("MAC") available
as of the date of this Statement of Additional Information. While the Fund
has not independently verified such information, it has no reason to believe
that such information is not correct in all material respects.
The 1990-91 fiscal year was the third consecutive year in which the
State incurred a cash-basis operating deficit in its General Fund and issued
deficit notes. The slowdown in the New York and regional economy proved to
be greater than anticipated in the 1990-91 fiscal year, contributing to
substantial reductions in actual tax receipts from amounts projected by the
State in the 1990-91 State Financial Plan. Overall, the 1990-91 State
Financial Plan as formulated in May 1990 overestimated actual tax receipts
in the 1990-91 fiscal year by $1.72 billion. Approximately $1.044 billion
of the shortfall was attributable to an overestimate of personal income tax
receipts, $440 million was attributable to an overestimate of sales and use
tax receipts and approximately $124 million was attributable to an
overestimate of business tax receipts. Total General Fund receipts,
including Transfers from Other Funds, were $1.958 billion below the May 1990
projection. During the 1990-91 fiscal year, the State implemented actions
that yielded net spending reductions of $876 million. After implementing
these measures, the State incurred a cash-basis operating deficit in the
General Fund of $1.081 billion, which was financed through the public
issuance of $1.082 billion in tax and revenue anticipation notes in early
1991.
In 1990, S&P and Moody's lowered their ratings of the State's general
obligation debt from AA- to A and A-1 to A, respectively. In addition, S&P
and Moody's lowered their ratings in 1990 on New York's short-term notes
from SP-1+ to SP-1 and from MIG-1 to MIG-2, respectively. The State's A-1+
rated commercial paper and variously rated moral obligation, lease purchase,
guarantee and contractual obligation debt at that time remained on S&P
CreditWatch with negative implications. In February 1991, Moody's lowered
its rating on the City's general obligation bonds from A to Baa1. In April
1991, S&P downgraded New York City's municipal notes from SP-1 to SP-2. The
rating changes reflect the rating agencies' concerns about the financial
condition of New York State and City, the heavy debt load of the State and
City, and economic uncertainties in the region.
(1) The State, Agencies and Other Municipalities. During the mid-
1970s, some of the Agencies and municipalities (in particular, the City)
faced extraordinary financial difficulties, which affected the State's own
financial condition. These events, including a default on short-term notes
issued by the New York State Urban Development Corporation ("UDC") in
February 1975, which default was cured shortly thereafter, and a
continuation of the financial difficulties of the City, created substantial
investor resistance to securities issued by the State and by some of its
municipalities and Agencies. For a time, in late 1975 and early 1976, these
difficulties resulted in a virtual closing of public credit markets for
State and many State related securities.
In response to the financial problems confronting it, the State
developed and implemented programs for its 1977 fiscal year that included
the adoption of a balanced budget on a cash basis (a deficit of $92 million
that actually resulted was financed by issuing notes that were paid during
the first quarter of the State's 1978 fiscal year). In addition,
legislation was enacted limiting the occurrence of additional so-called
"moral obligation" and certain other Agency debt, which legislation does
not, however, apply to MAC debt.
State Financial Results. The 1978 fiscal year saw an improvement in
the financial condition of the State, its Agencies and municipalities
generally, although certain municipalities (including the City) and certain
Agencies continued to face financial difficulties. The State adopted and
adhered to a balanced budget, with receipts and disbursements on a cash
basis of approximately $11.18 billion. For its 1979, 1980, 1981 and 1982
fiscal years, the State achieved balanced budgets with receipts and
disbursements on a cash basis of $11.9 billion, $13.2 billion, $15.2 billion
and $16.781 billion, respectively. During the 1982 fiscal year, the State
had full access to the public credit markets for its borrowing needs.
The State completed its fiscal years ended March 31, 1983, 1984, 1985
and 1986 with combined governmental funds operating deficits of $826
million, $3.399 billion, $3.425 billion and $3.124 billion, respectively,
determined in accordance with generally accepted accounting principles
("GAAP").
During the fiscal years ended March 31, 1987, 1988, 1989 and 1990, the
State experienced significant unanticipated variations in the result of the
State Financial Plan, particularly with respect to revenue projections,
which it believes resulted principally from changes in taxpayer behavior
caused by the Federal Tax Reform Act of 1986 (the "Tax Reform Act"). The
Tax Reform Act substantially altered definitions of income and deductions in
the computation of taxable income and substantially lowered tax rates used
in the computation of Federal taxes. In 1987, the State enacted legislation
that conformed State law to most of those definitional changes and also
lowered tax rates. Those changes "broadened" the income tax base through
such devices as full inclusion of capital gains, restrictions on certain
losses and adjustments to income. Those changes in the Federal tax law are
expected to continue to influence taxpayer behavior during the next several
years. For State personal income taxes, the net effect of those changes is
to make estimates and forecasts of adjusted gross income less reliable than
they had been in the past and to add substantial uncertainty to estimates of
State tax liability based on such estimates and forecasts. In large part
because of these uncertainties, the State's Financial Plan overestimated
General Fund tax receipts in the 1988-89 and 1989-90 fiscal years by $1.9
billion and $1.6 billion, respectively.
During its 1988-89, 1989-90 and 1990-91 fiscal years, the State
incurred cash basis operating deficits in the General Fund of $529 million,
$775 million and $1.081 billion, respectively, prior to the issuance of
short-term tax and revenue anticipation notes owing to lower-than-projected
receipts, which it believes to have been principally the result of a
significant slowdown in the New York and regional economy and changes in
taxpayer behavior caused by the Tax Reform Act.
In its 1988-89 fiscal year, the State experienced a significant drop in
receipts as compared to projections contained in the State Financial Plan
formulated in April 1988. General Fund tax receipts were approximately $1.9
billion lower than projected in April 1988. After reflecting more than $1
billion in additional receipts and transfers resulting from deficit-reducing
actions during the course of the fiscal year, total General Fund receipts in
fiscal 1988-89 were $797 million below the original estimates.
General Fund tax receipts for 1989-90 were $1.615 billion lower than
amounts projected in April 1989. After more than $350 million in deficit
reduction measures taken during the fiscal year, consisting of additional
non-tax receipts and transfers described below, and increases in certain
other non-tax receipts, total General Fund receipts were $1.159 billion
below the April 1989 projections. The State also effected net spending
reductions of $384 million, which together with the deficit reduction
measures resulted in a cash basis operating deficit in the General Fund of
$775 million, which was financed through the issuance of tax and revenue
anticipation notes. To offset a portion of these shortfalls, the State took
several nonrecurring actions to increase receipts in its 1989-90 fiscal
year. These actions included the transfer of excess balances from several
State funds, including $230 million from the State Insurance Fund, $86
million from the Industry Fee Transfer Account of the Hazardous Waste
Remedial Fund and $34 million from the Court Facilities Incentive Aid Fund.
The advent of a recession in the national and regional economies during
1990-91, and other factors as described below, caused major downward
revisions to estimates of receipts in 1990-91. Total General Fund receipts
and transfers from other funds in the 1990-91 fiscal year were $28.6
billion, a decline of $1.9 billion from projections made in the initial
1990-91 financial plan formulated May 23, 1990, immediately after adoption
of the 1990-91 budget. General Fund tax receipts were $27.4 billion, down
$1.7 billion from projections made in May 1990. The State implemented a
deficit-reduction plan in December 1990, which had the effect of reducing
the General Fund cash-basis operating deficit to $1.081 billion. The State
met the deficit through two issuances of tax and revenue anticipation notes:
a public sale of $905 million on February 28, 1991 and a sale of $176.5
million to the State's Short-Term Investment Pool on March 29, 1991.
Personal income tax receipts totalled $14.516 billion, a decline of
$1.044 billion from the $15.560 billion projected in the 1990-91 State
Financial Plan formulated in May 1990, primarily as a result of the
recession.
User taxes and fees were down $509 million, as adjusted, from May 1990
projections to $7.702 billion.
Specific causes of the $509 million drop include lower growth in wage
income and nominal spending on consumer durables. Business taxes fell $124
million from the May 1990 projection to $4.017 billion. The major cause was
a drop of $114 million in collections from banks reflecting the continued
poor financial results of the banking industry. Other taxes totalled $1.199
billion, a reduction of $43 million from the May 1990 projections. Real
estate-based taxes were down $151 million to $410 million, primarily due to
a sharp drop in real estate transactions caused by the recession. Estate
and gift tax revenues were up $108 million to $789 million, resulting from a
larger number of settlements of extra-large estates.
Receipts and transfers from other funds to the General Fund increased
from $27.731 billion in its 1988-89 fiscal year to $28.914 billion in its
1989-90 fiscal year. During its 1990-91 fiscal year, however, General Fund
receipts and transfers fell to $28.592 billion. Similarly, disbursements
and transfers to other funds increased from $28.244 billion during the
State's 1988-89 fiscal year to $29.229 billion in its 1989-90 fiscal year,
but fell to $28.898 billion in its 1990-91 fiscal year.
Borrowings by the State in the public credit markets during the 1988-89
and 1989-90 fiscal years totalled $3.6 billion and $5.8 billion,
respectively. Of these amounts $2.6 billion and $3.9 billion, respectively,
were annual seasonal borrowings. In 1990-91, State borrowings in the public
credit markets in 1990-91 totalled $6.0 billion, including annual seasonal
borrowings of $4.1 billion. In addition, $905 million in tax and revenue
anticipation notes maturing on December 30, 1991 were issued in February
1991 and a $176.5 million tax and revenue anticipation note, which matures
January 17, 1992 was issued to the State's Short-Term Investment Pool on
March 29, 1991. This note is callable at any time by the State. In
addition, the State issued $758.5 million of bonds and notes, exclusive of
bonds issued to redeem bond anticipation notes, during 1990-91 to finance
capital projects. Based on preliminary analyses made in June 1991, the
Comptroller believes that the operating deficit in the GAAP-basis General
Fund for the 1990-91 fiscal year could be approximately $500 million to $800
million, after reflecting payments of $598 million to the Education
Accumulation Revolving Account and approximately $360 million in tax refunds
on tax returns for the 1990 year and after reflecting the $800 million
benefit to General Fund operating results resulting from the February 1991
sale of bonds. In the 1989-90 fiscal year the State had an audited GAAP
General Fund operating deficit of $673 million.
The 1991-92 State Financial Plan was formulated on June 10, 1991 only
after substantial disagreement between the Governor and the legislative
leaders over spending levels, revenue-raising measures and estimates of the
impact of legislative actions. In formulating the 1991-92 State Financial
Plan, the Governor stated that to ensure that the State's budget is
balanced, he had vetoed spending which the Legislature added to his proposed
Executive Budget without providing the necessary revenues.
The 1991-92 State Financial Plan is based on an economic projection
that the State will perform more poorly that the nation as a whole.
Although it projects that the national economy will begin to recover in the
third quarter of calendar 1991, the Division of the Budget expects that the
State's economy will take longer to recover, with modest growth resuming in
the second quarter of calendar 1992, after the close of the State's 1991-92
fiscal year. Many uncertainties exist in forecasts of both the national and
State economies, including consumer attitudes toward spending, Federal
financial and monetary policies, and the state of the world economy, which
could have an adverse effect on the State.
The volatility of employment and income since 1987 in the finance,
insurance and real estate sector of the New York City economy and related
effects on other sectors has increased the uncertainty involved in
estimating personal income and business tax receipts and has contributed to
errors in estimates of revenue from the sales tax and the real estate-based
taxes. The 1991-92 State Financial Plan assumes, among other things, a
further slowdown of the New York and regional economy, and its projection of
receipts is based in part upon that assumption. There can, however, be no
assurance that the State and regional economy will not experience weaker-
than-predicted results in the 1991-92 fiscal year with corresponding
material and adverse effects on the State's projections of receipts.
The principal operating fund of the State is the General Fund. It
receives all State income that is not required by law to be deposited in
another fund and, for 1991-92, includes approximately 92% of total State tax
receipts and many other revenues. After including transfers from Other
Funds, the 1991-92 General Fund shows a $38 million positive balance on a
cash basis with projected receipts of $30.557 billion, an increase of $1.965
billion (6.9%) over total receipts (excluding the amount received from
temporary borrowing) in the 1990-91 fiscal year. The receipts amounts are
before the impoundment of receipts for repayment of the 1991 Deficit Notes
of $1.081 billion in 1991-92 and exclude proceeds of $1.081 billion in 1991
deficit tax and revenue anticipation notes of 1990-91. After including
Transfers to Other Funds, total General Fund disbursements in the 1991-92
fiscal year are projected to be $29.394 billion, an increase of $496 million
(1.7%) over the total amount disbursed and transferred in the 1990-91 fiscal
year.
Taxes, which account for 98% of total available General Fund receipts
before the impoundment of $1.081 billion to redeem the 1991 deficit tax and
revenue anticipation notes, are projected to total $27.433 billion, up
$1.315 billion (5%) from the amount collected during the 1990-91 fiscal
year. Of the increase in total taxes, approximately $687 million represents
higher personal income tax receipts, $42 million represents higher user
taxes and fees receipts, and $656 million represents greater receipts from
business taxes, while collections from other taxes are projected to decline
$70 million.
The Special Revenue Funds, representing approximately 35% of 1991-92
State Financial Plan receipts, account for State receipts from specific
sources that are legally restricted in use to specified purposes and include
all moneys received from the Federal government. Total receipts in Special
Revenue Funds are projected at $17.885 billion, an increase of 17.1% from
fiscal year 1990-91. Total receipts consist of Federal grants ($13.232
billion), miscellaneous receipts ($3.909 billion) and dedicated taxes ($744
million).
Federal grants account for 74% of receipts in Special Revenue Funds
with approximately 86% of the Federal funds received by the State coming
through the Department of Health and Human Services Fund. Another 10% of
these Federal funds are used in a variety of program areas, including aid to
students, home energy assistance, food and nutrition and preservation of the
environment. Miscellaneous receipts account for 22% of receipts in Special
Revenue Funds and consist of fees and other charges, the proceeds of which
are dedicated to the support of specific programs. This category also
includes the proceeds of the State's lottery, which account for 23% of total
miscellaneous receipts. Tax revenues account for 4% of receipts in Special
Revenue Funds and are dedicated to the support of transit programs,
including the MTA. Disbursements from Special Revenue Funds are projected
to be $19.016 billion, an increase of $1.888 billion (11%) from fiscal year
1990-91. Grants to local governments disbursed from this fund type are
projected at $14.023 billion for the 1991-92 fiscal year.
The Capital Projects Funds are used to finance the acquisition and
construction of major capital facilities and to aid local government units
and Agencies in financing capital constructions. Capital Projects Funds are
estimated to account for 5.3% of total receipts and 7.3% of total
disbursements in the 1991-92 State Financial Plan.
Total receipts in Capital Projects Funds are projected at $2.745
billion, representing an increase of $970 million (55%) from fiscal 1990-91
receipts. Federal grants for capital projects, largely highway-related, are
projected to account for 34% of the total receipts in Capital Projects Funds
in the State's 1991-92 fiscal year. The preponderance of Federal grants
(70%) received in Capital Projects Funds represent Federal support for
highway programs, with the balance supporting various environmental,
recreation and public protection programs. Total disbursements for capital
projects are projected to be $3.778 billion, an increase of $647 million
(21%) from fiscal 1990-91. Of total disbursements from Capital Projects
Funds, approximately 50% is for various transportation purposes, including
highways and mass transportation facilities; 7% is for programs of the
Department of Correctional Services and other public protection activities;
18% is for environmental and recreational programs; 5% is for educational
programs; 11% is for health and mental hygiene facilities; and 7% is for
housing and economic development programs. The balance is for the
maintenance of State office facilities and various other capital programs.
The Debt Service Funds serve to fulfill State debt service on long-term
general obligation State debt and other State lease/purchase and contractual
obligation financing commitments. Total receipts in Debt Service Funds are
projected to reach $2.099 billion, representing a decrease of $743 million
(26%) from fiscal 1990-91 receipts. The decrease is mainly attributable to
the reclassification of SUNY tuition from debt service funds receipts to
special revenue funds receipts. Total disbursements from Debt Service Funds
for debt service, lease-purchase and contractual-obligation financing
commitments are projected to be $1.532 billion or $512 million more than in
fiscal 1990-91. Disbursements from Debt Service Funds include $1.198
billion in debt service payments on full faith and credit debt and lease-
purchase and contractual-obligation financing commitments largely supported
by the General Fund.
The State anticipates that its borrowings for capital purposes will
consist of approximately $766 million in general obligation bonds and $140
million in new commercial paper issuances for new capital projects. In
addition, it is anticipated that the State will issue $70 million of its
bonds for the purpose of redeeming outstanding commercial paper bond
anticipation notes. The State also anticipates the issuance of
approximately $25 million in bonds for the purpose of redeeming outstanding
bond anticipation notes. The projections of the State regarding its
borrowings for the 1991-92 fiscal year may change if actual receipts fall
short of State projections or if other circumstances require. The
Legislature has authorized the issuance of up to $105 million in
certificates of participation for equipment purchases and real property
purposes during the State's 1991-92 fiscal year.
The Governor presented a summary financial plan prepared on a GAAP
basis together with the Executive Budget for the 1991-92 fiscal year. That
plan included an operating surplus on a GAAP basis for the General Fund.
The Governor also is required to prepare a summary financial plan for the
four governmental funds on a GAAP basis for the 1991-92 fiscal year as soon
as practicable after the formulation of the 1991-92 State Financial Plan.
Based upon the cash-basis 1991-92 State Financial Plan, the Division of the
Budget expects that the 1991-92 State Financial Plan will show a surplus on
a GAAP basis.
State Agencies. The fiscal stability of the State is related, at least
in part, to the fiscal stability of its localities and various of its
Agencies. Various Agencies have issued bonds secured, in part, by
non-binding statutory provisions for State appropriations to maintain
various debt service reserve funds established for such bonds (commonly
referred to as "moral obligation" provisions).
At September 30, 1990, there were 17 Agencies that had outstanding debt
of $100 million or more. The aggregate outstanding debt, including
refunding bonds, of these 17 Agencies, was $52.1 billion as of September 30,
1990, of which approximately $10.2 billion was moral obligation debt and
approximately $10.7 billion was financed under lease purchase or contractual
obligation financing arrangements. Debt service on the outstanding Agency
obligations normally is paid out of revenues generated by the Agencies'
projects or programs, but in recent years the State has provided special
financial assistance, in some cases on a recurring basis, to certain
Agencies for operating and other expenses and for debt service pursuant to
moral obligation indebtedness provisions or otherwise. Additional
assistance is expected to continue to be required in future years.
Several Agencies have experienced financial difficulties in the past.
Certain Agencies continue to experience financial difficulties requiring
financial assistance from the State. Failure of the State to appropriate
necessary amounts or to take other action to permit certain Agencies to meet
their obligations could result in a default by one or more of such Agencies.
If a default were to occur, it would likely have a significant effect on the
marketability of obligations of the State and the Agencies. These Agencies
are discussed below.
The New York State Housing Finance Agency ("HFA") provides financing
for multifamily housing, State University construction, hospital and nursing
home development and other programs. In general, HFA depends upon
mortgagors in the housing programs it finances to generate sufficient funds
from rental income, subsidies and other payments to meet their respective
mortgage repayment obligations to HFA, which provide the principal source of
funds for the payment of debt service on HFA bonds, as well as to meet
operating and maintenance costs of the projects financed. From January 1,
1976 through March 31, 1987, the State was called upon to appropriate a
total of $162.8 million to make up deficiencies in the debt service reserve
funds of HFA pursuant to moral obligation provisions. The State has not
been called upon to make such payments since the 1986-87 fiscal year and no
payments are anticipated during the 1992 fiscal year.
UDC has experienced, and expects to continue to experience, financial
difficulties with the housing programs it had undertaken prior to 1975,
because a substantial number of these housing program mortgagors are unable
to make full payments on their mortgage loans. Through a subsidiary, UDC is
currently attempting to increase its rate of collection by accelerating its
program of foreclosures and by entering into settlement agreements. UDC has
been, and will remain, dependent upon the State for appropriations to meet
its operating expenses. The State also has appropriated money to assist in
the curing of a default by UDC on notes which did not contain the State's
moral obligation provision.
The Metropolitan Transportation Authority (the "MTA") oversees New York
City's subway and bus lines by its affiliates, the New York City Transit
Authority and the Manhattan and Bronx Surface Transit Operating Authority
(collectively, the "TA"). Through MTA's subsidiaries, the Long Island Rail
Road Company, the Metro-North Commuter Railroad Company and the Metropolitan
Suburban Bus Authority, the MTA operates certain commuter rail and bus lines
in the New York metropolitan area. In addition, the Staten Island Rapid
Transit Authority, an MTA subsidiary, operates a rapid transit line on
Staten Island. Through its affiliated agency, the Triborough Bridge and
Tunnel Authority (the "TBTA"), the MTA operates certain toll bridges and
tunnels. Because fare revenues are not sufficient to finance the mass
transit portion of these operations, the MTA has depended and will continue
to depend for operating support upon a system of State, local government and
TBTA support and, to the extent available, Federal operating assistance,
including loans, grants and operating subsidies.
For its fiscal year ended December 31, 1990, the MTA's unaudited
results show operating budgets balanced on a cash basis, reflecting
substantial assistance from the State and a 15 cent fare increase that
became effective on January 1, 1990. Over the past several years the State
has enacted several taxes--including a surcharge on the profits of banks,
insurance corporations and general business corporations doing business in
the 12-county region (the "Metropolitan Transportation Region") served by
the MTA and a special .25% regional sales and use tax--that provide
additional revenues for mass transit purposes, including assistance to the
MTA.
For 1991, the MTA's 1990-92 financial plan projected a balanced budget
for the commuter railroads, but a budget gap for the TA of approximately $70
million, which it proposed be closed by governmental assistance, revenue
enhancements, expense decreases and, to the extent these are insufficient to
close the gap, by a fare increase to take effect by mid-year 1991.
On June 17, 1991, TA officials announced that the TA's projected gap
for its 1991 fiscal year could reach up to $223 million, primarily as a
result of continued declines in ridership, further deterioration in revenues
from real estate taxes and proposed decreases in State and City aid to the
TA. The TA proposes to close the projected 1991 fiscal year gap by
expenditure reductions (some of which may require legislation), refundings
of outstanding bonds and implementation of a new capital reimbursement
procedure for the TA, among other things. TA officials project that the
1991 gap would be closed if those actions are successfully implemented.
For 1992, the MTA's financial plan projects a $375 million budget gap
for the TA, before giving effect to the recurring value of any actions taken
to close the 1991 budget gap but after giving effect to certain assumptions,
such as a 1991-92 labor settlement with net wage increases of 1.5% annually.
MTA officials have recently stated, however, that the TA's gap for 1992 has
grown to more that $500 million. For 1992, the plan also projects a $116
million budget gap for the commuter railroads. Should any of the
assumptions used in arriving at its projections prove incorrect, the MTA
could incur greater deficits and, therefore, would be required to seek
additional State assistance, increase fares, or take other actions.
The Office of the State Deputy Comptroller for New York City (the
"OSDC"), within the officer of the State Comptroller, released a report on
January 23, 1991, reviewing the MTA Financial Plan as it relates to the TA.
The report found that shortcomings in the gap closing program are likely to
result in the imposition of a fare increase. It also noted that further
deterioration in the regional economy may cause additional shortfalls.
A subway fire on December 28, 1990, which caused fatalities and many
injuries, may give rise to substantial claims for damages against both the
TA and the City.
Because the MTA has a calendar fiscal year, factors affecting the MTA's
1990 fiscal year could affect the 1990-91 State Financial Plan.
In 1981, the State Legislature authorized procedures for the adoption,
approval and amendment of a five-year plan for the capital program designed
to upgrade the performance of the MTA's transportation systems and to
supplement, replace and rehabilitate facilities and equipment, and also
granted certain additional bonding authorization therefor.
As required by the legislation, MTA submitted, and has received
approval by the MTA Capital Program Review Board ("CPRB") of a 1987-91
Capital Program, as amended by CPRB in March 1991, totalling $8.486 billion.
The TA portion of the MTA 1987-91 Capital Program totals $6.531 billion,
which includes as a funding source $355 million related to the proposed sale
of the New York Coliseum. However, lawsuits challenging the sale are
pending. If the Coliseum site is not developed as planned, the TA and the
commuter railroads may have to defer certain capital projects or seek other
funding sources.
In March 1991, the MTA issued a draft 1992-96 Capital Program proposal
with projected total spending of $11.5 billion of which the TA portion is
$8.3 billion. Currently, the MTA has identified $6 billion in potential
funding sources, leaving a funding gap of $5.5 billion. The MTA expects to
submit its formal proposal to the CPRB in October 1991. If the MTA capital
program is delayed because of funding shortfalls or other factors, ridership
and fare revenues may decline. A loss of fare revenues, among other things,
could impair the MTA's ability to meet its operating expenses without
additional State assistance.
The cities, towns, villages and school districts of the State are
political subdivisions of the State with the powers granted by the State
Constitution and statutes. As the sovereign, the State retains broad powers
and responsibilities with respect to the government, finances and welfare of
these political subdivisions, especially in education and social services.
In recent years the State has been called upon to provide added financial
assistance to certain localities.
Other Localities. Certain localities in addition to the City could
have financial problems leading to requests for additional State assistance
during the State's 1991-92 fiscal year and thereafter. The 1992-92 State
Financial Plan includes a significant reduction in State aid to localities
in such programs as revenue sharing and aid to education from projected
base-line growth in such programs. It is expected that such reductions will
result in the need for localities to reduce their spending or increase their
revenues. The potential impact on the State of such actions by localities
is not included in the projections of the State receipts and disbursements
in the State's 1991-92 fiscal year.
The counties and other localities on Long Island could be affected by
problems relating to the Long Island Lighting Company ("LILCO"), the
investor-owned utility which supplies gas service and substantially all
electric service in Nassau and Suffolk counties and a small portion of
Queens County in the City. LILCO faces serious cash-flow and other
financial difficulties attributable to, among other things, construction
problems on this 809-megawatt Shoreham Nuclear Power Facility ("Shoreham"),
the cash-flow problems for carrying debt service on that facility, certain
litigation and certain problems in obtaining a Federal operating license for
Shoreham.
In February 1989, the Governor and LILCO reached an agreement pursuant
to which LILCO would sell Shoreham to the New York Power Authority for $1
(which would then decommission Shoreham) in return for a schedule of rate
increases which have since been approved by the State Public Service
Commission (the "PSC"). The agreement has been approved by the New York
Power Authority, the Long Island Power Authority (which had been established
in 1986 by the State with the power to acquire LILCO) and LILCO's
shareholders, although various actions have been initiated to challenge its
implementation. The agreement and PSC approved rate increases have enabled
LILCO to reenter the public credit markets. It is difficult to predict the
ultimate fiscal and economic impact on the State or on local governments on
Long Island of any litigation to which LILCO is or may become a party, or of
any bankruptcy by or takeover of LILCO.
Municipalities and school districts have engaged in substantial
short-term and long-term borrowings. In 1989, the total indebtedness of all
localities in the State was approximately $23.4 billion, of which $11.4
billion was debt of the City (excluding $7.5 billion in MAC debt). A small
portion (approximately $56.6 million) of this indebtedness represents
borrowing to finance budgetary deficits and was issued pursuant to enabling
State legislation. State law requires the Comptroller to review and make
recommendations concerning the budgets of those local government units other
than the City authorized by State law to finance deficits during the period
that such deficit financing is outstanding. Fifteen localities had
outstanding indebtedness for deficit financing at the close of their fiscal
year ending 1989.
Certain proposed Federal expenditure reductions would reduce, or in
some cases eliminate, Federal funding of some local programs and accordingly
might impose substantial increased expenditure requirements on affected
localities. If the State, the City or any of the Agencies were to suffer
serious financial difficulties jeopardizing their respective access to the
public credit markets, the marketability of notes and bonds issued by
localities within the State could be adversely affected. Localities also
face anticipated and potential problems resulting from certain pending
litigation, judicial decisions and long-range economic trends. The
longer-range problems of declining city population, increasing expenditures
and other economic trends could adversely affect localities and require
increasing State assistance in the future.
Because of significant fiscal difficulties experienced from time to
time by the City of Yonkers, a Financial Control Board was created by the
State in 1984 to oversee Yonkers' fiscal affairs. Future actions taken by
the Governor or the State Legislature to assist Yonkers in this crisis could
result in the allocation of State resources in amounts that cannot yet be
determined.
Certain litigation pending against the State or its officers or
employees could have a substantial or long-term adverse effect on State
finances. Among the more significant of these litigations are those that
involve: (i) the validity and fairness of agreements and treaties by which
various Indian tribes transferred title to the State of approximately six
million acres of land in central New York; (ii) certain aspects of the
State's Medicaid rates and regulations, including reimbursements to
providers of mandatory and optional Medicaid services; (iii) the care and
housing provided for individuals released from State mental health
facilities; (iv) contamination in the Love Canal area of Niagara Falls; (v)
the use by the State of certain casualty insurance reserve funds; (vi)
educational accommodations for learning-disabled students at a State
University; (vii) alleged employment discrimination by the State and its
agencies; (viii) a challenge to the State's practice of reimbursing certain
Office of Mental Hygiene patient-care expenses with clients' Social Security
benefits; (ix) the treatment provided at several State mental hygiene
facilities; (x) a challenge to the methods by which the State reimburses
localities for the administrative costs of food stamp programs; (xi)
challenges to the methods by which the State computes its aid to localities
and to school districts; (xii) a challenge to the State's possession of
certain funds taken pursuant to the State's Abandoned Property law; (xiii)
alleged responsibility of State officials to assist in remedying racial
segregation in the City of Yonkers; (xiv) an action, in which the State is a
third party defendant, for injunctive or other appropriate relief,
concerning liability for the maintenance of stone groins constructed along
certain areas of Long Island's shoreline; (xv) actions challenging the
constitutionality of legislation enacted during the 1990 legislative session
which changed the actuarial funding methods for determining contributions to
State employee retirement systems; (xvi) actions challenging legislation
enacted in 1990 which requires the withholding of certain amounts of pay
from State employees until their separation from State employment; (xvii) a
challenge to the adequacy of care available for persons who abuse drugs; and
(xviii) an action against State and City officials alleging that the present
level of shelter allowance for public assistance recipients is inadequate
under statutory standards to maintain proper housing.
Final adverse decisions in such cases could require extraordinary
appropriations or expenditure reductions or both, and might have a material,
adverse effect upon the financial condition of the State and various of its
Agencies and municipal subdivisions.
(2) New York City. In the mid-1970s, the City had large accumulated
past deficits and until recently was not able to generate sufficient tax and
other ongoing revenues to cover expenses in each fiscal year. However, the
City's operating results for the fiscal year ending June 30, 1990 were
balanced in accordance with GAAP, the ninth consecutive year in which the
City achieved balanced operating results in accordance with GAAP. The
City's ability to maintain balanced operating results in future years is
subject to numerous contingencies and future developments.
The City's economy, whose rate of growth slowed substantially over the
past three years, is currently in recession. During the 1990 and 1991
fiscal years, as a result of the slowing economy, the City has experienced
significant shortfalls in almost all of its major tax sources and increases
in social services costs, and has been required to take actions to close
substantial budget gaps in order to maintain balanced budgets in accordance
with the Financial Plan. Since the stock market crash, the City's tax
revenues have been below expected levels, and the revised local employment
data available since January 1989 have confirmed that the City's economy has
been severely affected by the stock market crash, and that the impact of
layoffs in the finance, insurance and real estate sector is greater than had
been believed earlier.
In 1975, the City became unable to market its securities and entered a
period of extraordinary financial difficulties. In response to this crisis,
the State also enacted the New York State Financial Emergency Act for the
City of New York (the "Emergency Act") which, among other things, created
the Financial Control Board (the "Control Board") to oversee the City's
financial affairs and facilitate its return to the public credit markets.
The State also established the OSDC to assist the Control Board in
exercising its powers and responsibilities. On June 30, 1986, the Control
Board's powers of approval over the City Financial Plan were suspended
pursuant to the Emergency Act. However, the Control Board, MAC and OSDC
continue to exercise various monitoring functions relating to the City's
financial condition. The City prepares and operates under a four-year
financial plan which is submitted annually to the Control Board for review
and which the City periodically updates.
The City's independently audited operating results for each of its
fiscal years from 1981 through 1990 show a General Fund surplus reported in
accordance with GAAP, after taking into account actions in each of those
years which in effect prepaid certain City costs, averaging $450 million per
year, in the next fiscal year. The City has eliminated the cumulative
deficit in its net General Fund position. In addition, the City's financial
statements for the 1990 fiscal year received an unqualified opinion from the
City's independent auditors, the eighth consecutive year the City has
received such an opinion.
The City released its audited operating results for the 1990 fiscal
year on October 31, 1990, reporting revenues of $25.937 billion and
expenditures of $25.932 billion, on a GAAP basis, as of June 30, 1990. The
GAAP surplus was achieved despite a significant decline in revenues, chiefly
non-property tax collections, during the fiscal year resulting from a
downturn in local economic growth. The City compensated for these revenue
shortages by implementing certain expenditure reduction measures.
On July 11, 1990, the City submitted to the Control Board a four-year
financial plan for its 1991 through 1994 fiscal years. The 1991-1994
Financial Plan projected a balanced budget in fiscal year 1991, based on
revenues of $27.922 billion, and budget gaps of $970 million in fiscal year
1992, $811 million in fiscal year 1993 and $872 million in fiscal year 1994,
which were projected to be eliminated through a combination of City, State
and Federal actions.
On October 1, 1990, the City reached a labor agreement with the United
Federation of Teachers (the "UFT") providing for a one-year increase in
wages and salaries of 5.5% and other benefits.
On December 20, 1990, the Bureau of Labor Statistics, in its annual
year-end report on regional employment, reported expected losses in the City
of 47,000 private-sector jobs in 1990, or a net loss of 35,700 jobs after
factoring in the increase in government employment.
On January 3, 1991, the City's Director of the Budget stated that he
estimated the budget gap for the City's 1991 fiscal year at $500 million.
On May 17, 1991, the City submitted to the Control Board its most
recent modification to the Financial Plan for the 1991 fiscal year. The
1991 modification projects a balanced budget, based on revenues of $27.973
billion, and assumes the implementation of a variety of actions required to
be taken prior to June 30, 1991 that would provide increases in revenues and
reductions in expenditures totaling $265 million to maintain this budget
balance.
On June 4, 1991, OSDC issued a report on the 1991 modification. The
report projects further declines in tax revenues over the remainder of the
fiscal year that would offset the Financial Plan's remaining $40 million
general reserve. The report noted that just a slight percentage variance in
non-property tax collections from the amounts forecast over the remainder of
the 1991 fiscal year could translate into a large revenue surplus or
shortfall, and that each of the last three fiscal years has ended with
revenue shortfalls. The report further notes that the City was able to
absorb these shortfalls and maintain budget balance because spending did not
reach planned levels. However, the City has already counted on this lower
spending for fiscal year 1991, thus leaving the City without its customary
year-end financial cushion. The report also identified other actions the
City could take to maintain balance in the 1991 fiscal year, but noted that
such actions could exacerbate the already formidable budget problems
projected for the 1992 fiscal year.
On June 19, 1991, the staff of the Control Board issued its report on
the City's May 17 modification to the Financial Plan. The report stated
that the City has a remaining gap in fiscal year 1991 of about $47 million.
Noting that only two weeks remained in the fiscal year, the report stated
that some options available to the City to close the remaining gap still
await implementation and that uncertainties continued to exist that could
enlarge the gap further. The report further noted that certain actions
taken by the City to close its 1991 budget gap were short-term and non-
recurrent and concluded that such actions only make future imbalance worse
and balance harder to achieve.
The City submitted to the Control Board a new Financial Plan for its
fiscal years 1992 through 1995 on May 15, 1991. The 1992-95 Financial Plan
is based on the Mayor's Executive Budget released on May 10, 1991, which
sets forth a program to eliminate a potential budget gap of $3.5 billion in
the 1992 fiscal year. After implementation of this program, which includes
service reductions of almost $1.5 billion, tax increases of almost $1
billion, productivity initiatives of $500 million and other City and State
actions of $500 million, the 1992-95 Financial Plan projects a balanced
budget in the 1992 fiscal year, based on revenues of $28.718 billion. The
Executive Budget is subject to approval by the City Counsel, and certain
revenue-raising initiatives contained in the Executive Budget are subject to
approval by the State Legislature. The City has announced that the 1991-92
State Financial Plan contains approximately $328 million less in aid from
the State than the City had anticipated. The 1992-95 Financial Plan
projects remaining budget gaps of $883 million in fiscal year 1993, $1.370
billion in fiscal year 1994 and $1.166 billion in fiscal year 1995, which
are proposed to be eliminated through a combination of City and State
actions.
On June 6, 1991, the City Counsel issued a report on the Mayor's
proposed 1992 budget. The City Council stated it would approve no more than
$170 million of the Mayor's proposed $646 million increase in real property
taxes; opposed $400 million of the Mayor's proposed service reductions while
proposing $276 million in alternative expenditure reductions; called for
$350 million in labor-cost savings; and called for non-recurring revenue
increases of $225 million from financing actions, including MAC debt
refinancings. On June 15, 1991, the Mayor and the City Counsel announced
that they would seek approval from the State Legislature of a $335 million
increase in the City personal income tax.
On June 17, 1991, OSDC issued a report on the 1992-95 Financial Plan.
The report noted that as a consequence of increases in the City's workforce,
questionable budget-relief devices that aggravated the City's financial
problems in the long term, a severe recession, and new labor contracts
slated to cost more than $1 billion over fiscal years 1991 and 1992, the
City is confronting its worst fiscal crisis since 1975. The report found
that the budget gap for the 1992 fiscal year could be $325 million higher
than projected in the 1992-95 Financial Plan, primarily because of higher
costs for personal services and debt service. In addition, the report
indicated that attainment of a number of the gap-closing actions planned for
the 1992 fiscal year, such as $250 million in additional assistance from the
State and $200 million in savings from the Board of Education, is highly
uncertain. The report also noted that the City Council's opposition to over
$800 million of the tax increases and service reductions proposed in the
1992-95 Financial Plan and the Mayor's rejection of many of the City
Council's alternative proposals could result in a delayed budget adoption
for the 1992 fiscal year beyond the start of such year. The report warned
that such an event could possibly lead to a lowering of the City's credit
rating and a reimposition of a control period by the Control Board. The
staff of the Control Board also is reviewing the 1992-95 Financial Plan and
is expected to issue a report on its review results.
Estimates of the City's revenues and expenditures are based on numerous
assumptions and subject to many uncertainties. If expected Federal or State
aid is not forthcoming, if unforeseen developments in the economy
significantly reduce revenues derived from economically sensitive taxes or
necessitate increased expenditures for public assistance, or if other
uncertainties materialize that reduce expected revenues or increase
projected expenditures, then, to avoid operating deficits, the City may be
required to implement additional actions, including increases in taxes and
reductions in essential City services, that could weaken the City's economy
and tax base. The City also might seek additional assistance from the
State.
The City requires certain amounts of financing for seasonal and capital
spending purposes. Since 1982, the City has satisfied all of its seasonal
financing needs with sales of short-term notes in the public credit markets.
In its 1991 fiscal year, the City has issued $3.65 billion of notes to meet
its seasonal financing needs.
The City's capital financing program projects long-term financing
requirements of approximately $18.4 billion for the City's fiscal years 1991
through 1994, primarily for the construction and rehabilitation of the
City's infrastructure and other fixed assets. The major capital
requirements include capital expenditures for the City's water supply
system, sewage and waste disposal systems, roads, bridges, mass transit,
schools and housing. The City's program assumes the successful sale of its
general obligation bonds and increasing market access in each year for water
and sewer revenue bonds to be issued by a public authority. On October 9,
1990, S&P placed the City's outstanding general obligation bonds on
"CreditWatch" with negative implications.
(3) State Economic Trends. Over the long-term, the State and the City
also face serious potential economic problems. The City accounts for
approximately 40% of the State's population and personal income, and the
City's financial health affects the State in numerous ways. The State has
long been one of the wealthiest states in the nation. For decades, however,
the State economy has grown more slowly than that of the nation as a whole,
resulting in the gradual erosion of its relative economic affluence. The
causes of this relative decline are varied and complex, in many cases
involving national and international developments beyond the State's
control. In recent years, the State's economic position has improved in a
manner consistent with that of the Northeast as a whole.
Part of the reason for the long-term relative decline in the State's
economy has been attributed to the combined State and local tax burden,
which is among the highest in the United States. The existence of this tax
burden limits the State's ability to impose higher taxes in the event of
future financial difficulties. Recently, the State has been relatively
successful in bringing the rate of growth in the public sector in the State
into line with the slower expansion in the private economy.
The burdens of State and local taxation, in combination with many other
causes of regional economic dislocation, may have contributed to the
decision of businesses and individuals to relocate outside, or not locate
within, the State. In 1987, the State enacted a major personal income tax
reduction and reform program and also reduced the tax rate on corporation
income. In addition, the State has provided various tax incentives to
encourage business relocation and expansion. While no sustained reversal of
the erosion of the State's economic position relative to the nation as a
whole has been projected, the actions to date, in combination with other
causes of regional economic change, have slowed these trends.
APPENDIX B
Description of S&P, Moody's and 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 small degree.
The AA rating may be modified by the addition of a plus or a minus sign,
which is used to show relative standing within the category.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics are given a plus (+) designation.
Commercial Paper Ratings
The rating A is the highest rating and is assigned by S&P to issues
that 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. Paper rated A-1 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.
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. Bonds in the Aa category which Moody's
believes possess the strongest investment attributes are designated by the
symbol Aa1.
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 rated Prime-2 (P-2) have a
strong ability for repayment of senior short-term debt obligations.
Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings recognize
the difference between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower and short-term cyclical elements are
critical in short-term ratings, while other factors of major importance in
bond risk, long-term secular trends for example, may be less important over
the short run.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand feature
is not rated, as NR. Short-term ratings on issues with demand features are
differentiated by the use of the VMIG symbol to reflect such characteristics
as payment upon periodic demand rather than fixed maturity dates and payment
relying on external liquidity. Additionally, investors should be alert to
the fact that the source of payment may be limited to the external liquidity
with no or limited legal recourse to the issuer in the event the demand is
not met.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when Moody's
assigns a MIG or VMIG rating, all categories define an investment grade
situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
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+. Plus (+) and minus (-) signs are used with the rating
symbol AA to indicate the relative position of a credit within the rating
category.
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 MUNICIPAL CASH MANAGEMENT
STATEMENT OF INVESTMENTS JULY 31, 1994
PRINCIPAL
TAX EXEMPT INVESTMENTS-100.0% AMOUNT VALUE
------------- ------------
<S> <C> <C>
Town of Islip Industrial Development Agency, IDR, VRDN:
(Brentwood Distribution Project) 3.125% (LOC; Bankers Trust) (a,b)...... $ 1,750,000 $ 1,750,000
(Radiation Dynamics Project) 3.40%, Series A (LOC; Sumitomo Bank) (a,b). 100,000 100,000
Monroe County Industrial Development Agency, Revenue, VRDN (Enbi Corp.)
2.65% (LOC; ABN-Amro Bank) (a,b)........................................ 100,000 100,000
Nassau County Industrial Development Agency, IDR, VRDN
(Manhassett Association Project) 3.275% (LOC; Bankers Trust) (a,b)...... 2,000,000 2,000,000
City of New York:
VRDN:
2.80%, Series A-9 (LOC; Industrial Bank of Japan) (a,b)............... 5,200,000 5,200,000
3.20%, Series E (LOC; Fuji Bank) (a,b)................................ 2,100,000 2,100,000
Trust Cultural Resource Revenue:
(American Museum of Natural History) 2.60%, Series A
(Insured; MBIA and SBPA; Credit Suisse) (a)..................... 3,000,000 3,000,000
(Soloman R. Guggenheim) 2.75%, Series B (LOC; Swiss Bank Corp.) (a,b) 2,900,000 2,900,000
New York City Housing Development Corp., MFMR, VRDN
(York Avenue Development Project) 2.85% (LOC; Chemical Bank) (a,b)...... 5,000,000 5,000,000
New York City Industrial Development Agency, VRDN:
Civil Facility Revenue:
(Childrens Oncology Society-Ronald McDonald House)
2.70% (LOC; Barclays Bank) (a,b).................................. 100,000 100,000
(National Audubon Society) 2.75% (LOC; Swiss Bank Corp.) (a,b)........ 5,300,000 5,300,000
IDR (Nobart-New York Ink Project) 3.25% (LOC; Dai-Ichi Kangyo Bank) (a,b) 3,100,000 3,100,000
New York City Municipal Water Finance Authority, Water and Sewer Systems
Revenue,
VRDN:
2.75%, Series C (Insured; FGIC) (a)................................... 24,000,000 24,000,000
2.75%, Series G (Insured; FGIC) (a)................................... 6,000,000 6,000,000
New York City Transportation Authority, Special Obigation Revenue, RAN
4%, Series A, 12/15/94.................................................. 5,000,000 5,018,239
New York State, GO Notes 4.90%, 3/1/95...................................... 3,060,000 3,090,364
New York State Energy, Research and Development Authority, PCR:
Bonds:
(LILCO Project) 3%, Series A, 3/1/95 (LOC; Deutsche Bank) (b)......... 7,000,000 7,000,000
(New York State Electric and Gas Corp.) 3.25%, 3/15/95 (LOC; JP Morgan) (b) 3,000,000 3,000,000
(Rochester Gas and Electric Corp.) 2.75%, 11/15/94 (LOC; Credit Suisse) (b) 5,000,000 5,000,000
VRDN:
(Central Hudson Gas and Electric Project) 2.75%, Series A (LOC; Bankers
Trust) (a,b)................................................................ 3,000,000 3,000,000
(Niagara Mohawk Power Corp.) 2.70%, Series B (LOC; Toronto Dominion) (a,b) 4,800,000 4,800,000
New York State Environment Facilities Corp., RRR, VRDN (Equity Huntington
Project)
2.85% (LOC; Union Bank of Switzerland) (a,b)............................ 6,600,000 6,600,000
New York State Local Government Assistance Corp., VRDN 2.80%, Series 93A
(LOC: Credit Suisse, Swiss Bank Corp. and Union Bank of Switzerland) (a,b) 6,000,000 6,000,000
New York State Mortgage Agency, Revenue 3.30%, Series 40-C, 12/1/94
(Collateralized; U.S. Treasury Bills and GIC; Morgan Guaranty Trust Co.) 2,500,000 2,500,000
DREYFUS NEW YORK MUNICIPAL CASH MANAGEMENT
STATEMENT OF INVESTMENTS (CONTINUED) JULY 31, 1994
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- ------------
New York State Thruway Authority, General Revenue, VRDN 2.60% (Insured; FGIC) (a) $ 2,700,000 $ 2,700,000
Onondaga County Industrial Development Agency, IDR, VRDN
(Edgecomb Metals Co. Project) 2.75% (LOC; Banque Nationale de Paris) (a,b) 1,100,000 1,100,000
Orange County Industrial Development Agency, IDR, VRDN
(Minolta Advance Technology Project) 3.40% (LOC; Sanwa Bank) (a,b)...... 2,100,000 2,100,000
Port Authority of New York and New Jersey, Special Obilgation Revenue, VRDN
(Third Installment) 2.85%, Series 3 (LOC; Deutsche Bank) (a,b).......... 5,000,000 5,000,000
South Huntington Union Free School District, TAN 4.25%, 6/30/95............. 4,000,000 4,012,275
Suffolk County, TAN 3%, Series II, 9/15/94 (LOC; Chemical Bank) (b)........ 4,000,000 4,000,719
Triborough Bridge and Tunnel Authority, Special Obligation, VRDN
2.75% (Insured; FGIC) (a)............................................... 5,000,000 5,000,000
Westchester County, TAN 2.75%, 12/15/94..................................... 7,000,000 7,002,515
------------
TOTAL INVESTMENTS (cost $137,574,112)....................................... $137,574,112
============
</TABLE>
<TABLE>
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
FGIC Financial Guaranty Insurance Corporation PCR Pollution Control Revenue
GIC Guaranty Investment Contract RAN Revenue Anticipation Notes
GO General Obligation RRR Resources Recovery Revenue
IDR Industrial Development Revenue SBPA Standby Bond Purchase Agreeement
LOC Letter of Credit TAN Tax Anticipation Notes
MBIA Municipal Bond Insurance Association VRDN Variable Rate Demand Notes
MFMR Multi-Family Mortgage Revenue
</TABLE>
<TABLE>
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) 91.4%
AAA/AA (e) Aaa/Aa (e) AAA/AA (e) 3.5
Not Rated (f) Not Rated (f) Not Rated (f) 5.1
------
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 July 31, 1994, 55.3% of the Fund's
net assets are backed by letters of credit issued by domestic banks,
foreign banks and brokerage firms.
(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) Notes which are not F, MIG or SP rated are represented by bond
ratings of the issuers.
(f) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Fund's Board of Trustees to be of
comparable quality to those rated securities in which the Fund may
invest.
See notes to financial statements.
<TABLE>
DREYFUS NEW YORK MUNICIPAL CASH MANAGEMENT
STATEMENT OF ASSETS AND LIABILITIES JULY 31, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value-Note 1(a)........................... $137,574,112
Interest receivable..................................................... 717,240
Prepaid expenses........................................................ 4,232
------------
138,295,584
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 34,198
Due to Custodian........................................................ 2,182,287 2,216,485
------------ ------------
NET ASSETS ................................................................ $136,079,099
============
REPRESENTED BY:
Paid-in capital......................................................... $136,083,761
Accumulated net realized (loss) on investments.......................... (4,662)
------------
NET ASSETS at value......................................................... $136,079,099
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 82,757,834
============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 53,325,927
============
NET ASSET VALUE per share:
Class A Shares
($82,754,837 / 82,757,834 shares)..................................... $1.00
=====
Class B Shares
($53,324,262 / 53,325,927 shares)..................................... $1.00
=====
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS NEW YORK MUNICIPAL CASH MANAGEMENT
STATEMENT OF OPERATIONS YEAR ENDED JULY 31, 1994
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $3,137,252
EXPENSES:
Management fee-Note 2(a).............................................. $261,339
Distribution fees (Class B shares)-Note 2(b).......................... 40,491
Shareholder servicing costs-Note 2(c)................................. 27,394
Legal fees............................................................ 13,838
Prospectus and shareholders' reports.................................. 8,177
Custodian fees........................................................ 5,676
Registration fees..................................................... 2,553
Trustees' fees and expenses-Note 2(d)................................. 1,918
Auditing fees......................................................... 1,565
Miscellaneous......................................................... 7,284
----------
370,235
Less-reduction in management fee due
to undertaking-Note 2(a).......................................... 68,405
----------
TOTAL EXPENSES........................................................ 301,830
------------
INVESTMENT INCOME-NET....................................................... 2,835,422
NET REALIZED (LOSS) ON INVESTMENTS-Note 1(b)................................ (3,972)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $2,831,450
============
See notes to financial statements.
</TABLE>
<TABLE>
DREYFUS NEW YORK MUNICIPAL CASH MANAGEMENT
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JULY 31,
---------------------------
1993 1994
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 2,225,395 $ 2,835,422
Net realized (loss) on investments...................................... (135) (3,972)
Net unrealized (depreciation) on investments
for the year.......................................................... (236) ---
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 2,225,024 2,831,450
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net:
Class A Shares........................................................ (2,225,395) (2,492,078)
Class B Shares........................................................ --- (343,344)
------------ ------------
TOTAL DIVIDENDS................................................... (2,225,395) (2,835,422)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold:
Class A shares........................................................ 448,998,173 491,336,951
Class B shares........................................................ --- 92,810,600
Dividends reinvested:
Class A shares........................................................ 188,530 212,107
Class B shares........................................................ --- 77,110
Cost of shares redeemed:
Class A shares........................................................ (409,489,394) (525,319,271)
Class B shares........................................................ --- (39,561,783)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...... 39,697,309 19,555,714
------------ ------------
TOTAL INCREASE IN NET ASSETS.................................... 39,696,938 19,551,742
NET ASSETS:
Beginning of year....................................................... 76,830,419 116,527,357
------------ ------------
End of year............................................................. $116,527,357 $136,079,099
============ ============
See notes to financial statements.
</TABLE>
DREYFUS NEW YORK MUNICIPAL CASH MANAGEMENT
FINANCIAL HIGHLIGHTS
Reference is made to page 2 of the Fund's Prospectus dated November 28,
1994.
See notes to financial statements.
DREYFUS NEW YORK MUNICIPAL CASH MANAGEMENT
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a non-diversified open-end management investment company. Dreyfus Service
Corporation acted as the distributor of the Fund's shares until August 24,
1994, which are sold to the public without a sales load. Dreyfus Service
Corporation is a wholly-owned subsidiary of The Dreyfus Corporation ("
Manager"). Effective August 24, 1994, the Manager became a direct subsidiary
of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services Inc. ("Premier") was
engaged as the Fund's distributor. Premier, located at One Exchange Place,
Boston, Massachusetts 02109, 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.
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.
On July 14, 1993, the Fund's Board of Trustees approved an amendment to
the Fund's Agreement and Declaration of Trust to provide for the issuance of
additional classes of shares of the Fund. The amendment was approved by Fund
shareholders on January 13, 1994. Effective January 18, 1994, existing Fund
shares were classified as class A shares and unlimited number of Class B
shares were authorized. The Fund began offering both Class A and Class B
shares on January 18, 1994. Class B shares are subject to a Service Plan
adopted pursuant to Rule 12b-1 under the Act. Other differences between the
two Classes include the services offered to and the expenses borne by each
Class and certain voting rights.
(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 discount 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 taxes.
DREYFUS NEW YORK MUNICIPAL CASH MANAGEMENT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund has an unused capital loss carryover of $690 available for
Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to July 31, 1994. The carryover does not
include net realized securities losses from November 1, 1993 through July 31,
1994 which are treated, for Federal income tax purposes, as arising in fiscal
1995. If not applied, $555 of the carryover expires in fiscal 2001 and $135
expires in fiscal 2002.
At July 31, 1994, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .20 of 1% of the average
daily value of the Fund's net assets and is payable monthly.
The Agreement provides for an expense reimbursement from the Manager
should the Fund's aggregate expenses, exclusive of taxes, brokerage, interest
on borrowings and extraordinary expenses, exceed the expense limitation of
any state having jurisdiction over the Fund for any full fiscal year. The
most stringent state expense limitation applicable to the Fund presently
requires reimbursement of expenses in any full fiscal year that such expenses
(excluding certain expenses as described above) exceed 2 1/2% of the first
$30 million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of the Fund's net assets in accordance with
California "blue sky" regulations. However, the Manager has undertaken to
reduce the management fee paid by, or bear such excess expenses of the Fund,
to the extent that the Fund's aggregate expenses (excluding certain expenses
as described above) exceed an annual rate of .20 of 1% of the average daily
value of the Fund's net assets. The reduction in management fee, pursuant to
the undertaking, amounted to $68,405 from August 1, 1993 through January 17,
1994.
Effective January 18, 1994, the Manager and not the Fund, is liable for
those expenses of the Fund (excluding certain expenses as described above)
other than management fee, and with respect to the Fund's Class B shares,
Rule 12b-1 Service Plan expenses.
The Manager may modify the existing undertaking provided that the Fund's
shareholders are given 90 days prior notice.
(B) Under the Service Plan ("Class B Service Plan") adopted pursuant to
Rule 12b-1 under the Act, effective January 18, 1994, the Fund pays Dreyfus
Service Corporation, at an annual rate of .25 of 1% of the value of the
Fund's Class B shares average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing Class B shares and
for providing certain services to holders of Class B shares. Dreyfus Service
Corporation will make payments to one or more Service Agents (financial
institutions, securities dealers, or other industry professional) based on
the value of the Fund's Class B shares owned by clients of the Service Agent.
From January 18, 1994 through July 31, 1994, $40,491 was charged to the Fund,
pursuant to the Class B Service Plan.
DREYFUS NEW YORK MUNICIPAL CASH MANAGEMENT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) Pursuant to the Fund's Shareholder Services Plan, ("Class A
Shareholder Services Plan"), the Fund reimburses Dreyfus Service Corporation
an amount not to exceed an annual rate of .25 of 1% of the value of the Fund's
average daily net assets for servicing 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 period from August 1, 1993 through January 17, 1994, the
Fund was charged an aggregate of $4,897 pursuant to the Class A Shareholder
Services Plan.
(D) Certain officers and trustees of the Fund are "affiliated persons,"
as defined in the Act, of the Manager and/or Dreyfus Service Corporation.
Each trustee who is not an "affiliated person" receives an annual fee of
$1,000 and an attendance fee of $250 per meeting.
DREYFUS NEW YORK MUNICIPAL CASH MANAGEMENT
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS NEW YORK MUNICIPAL CASH MANAGEMENT
We have audited the accompanying statement of assets and liabilities of
Dreyfus New York Municipal Cash Management, including the statement of
investments, as of July 31, 1994, 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 July 31, 1994 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 Municipal Cash Management at July 31, 1994, 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
September 8, 1994
