General
Money Market
Fund, Inc.
Semi-Annual
Report
May 31, 1998
<PAGE>
General Money Market Fund, Inc.
- -------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to report the performance for General Money Market Fund for
the six-month period ended May 31, 1998, as shown in the following table:
Annualized
Annualized Yield Effective Yield*
---------------- ---------------
Class A Shares.................. 4.95% 5.07%
Class B Shares.................. 4.77% 4.87%
The Economy
Although real Gross Domestic Product (GDP) sustained a growth trend
approaching 4% into the first quarter, recent evidence suggests a shift to
somewhat slower economic growth in coming months. Aggregate profit margins
already have begun to narrow in some sectors. The conflicting pressures of a
softening economy dampened by the Asian financial crisis and a tightening labor
market have kept the Federal Reserve Board (the "Fed") in neutral, although a
bias towards higher rates was reinstated at the March 1998 meeting of the
Federal Open Market Committee (the policy-making arm of the Fed). Market
interest rates have likewise stayed within a narrow range in recent months.
While manufacturing has turned appreciably sluggish since year end, this was
overshadowed in the first quarter by a strong rebound in domestic demand. The
industrial sector has been slowed by the strong dollar and by weak exports.
However, with Asian economies still in turmoil, competition from Asian-made
imports has emerged slowly. The first quarter rebound in domestic demand was
fueled primarily by strong housing market conditions and rising real household
incomes.
Rising real wages that have been such a boon to consumers in recent months
may take a toll on corporate profit margins. The first sign of profit pressure
was seen last year as the dollar strengthened. This year, profit margins have
eroded further due to weak exports and falling prices in some sectors.
Accelerating wage growth alongside limited pricing power may also prove a
harbinger of profit margin erosion. Hence, a shift to slower economic growth
that coexists with rising wage pressures creates a further risk to overall
profit growth.
The above pressures have kept Fed policy unchanged until now. However, it
appears that policymakers are more concerned about wage growth than about
economic strains, as evidenced by a recent shift towards a tightening bias.
Although long-term bond yields were below year-ago levels at the end of May,
substantially lower yields have proven difficult to attain in the absence of
lower short-term rates. This too could restrain the economic growth rate.
The Market Environment
For the past six months, expectations for short-term interest rates have
fluctuated between the need for an increase in the Federal Funds rate in order
to cool off an overheating economy, and for an ease in order to offset the
Asian-crisis-triggered slowdown. Money markets are currently in a narrow band
and likely to remain there until a clear trend develops.
As the economy continues into its seventh year of expansion, the short-term
money markets are also on the lookout for signs that the economic cycle is
coming to an end. With unemployment at historic lows, the market is on alert for
a labor shortage-inspired pickup in inflation. To date, there has been no
evidence of such an occurrence.
Another development that gives many market participants concern is the
increasing talk of an "asset bubble." The short-term market is apprehensive that
Federal Reserve chairman Alan Greenspan, concerned over the effects of the
dramatic rise in stock prices, will raise short-term rates in an attempt to head
off the speculative excesses that might derail the economy.
With economic releases providing an often contradictory picture of the
economy, the financial markets are especially sensitive to comments from Federal
Reserve members. Recent speeches suggest that the Fed is concerned about the
<PAGE>
possibility of re-emerging inflationary pressures, yet is prepared to wait until
a more definitive picture develops before altering monetary policy.
Portfolio Focus
In this market environment, we continue to maintain an average maturity for
the Fund which is somewhat longer than the industry average. We feel that this
strategy has been beneficial to the Fund, and we currently intend to maintain
that posture as long as we believe it corresponds with market conditions. Of
course, we will look to adapt our approach should new factors in the market
cause us to believe that such action is desirable.
Sincerely,
/s/ Patricia A. Larkin
Patricia A. Larkin
Senior Portfolio Manager
June 18, 1998
New York, N.Y.
* Annualized effective yield takes into account the effect of compounding and
is based upon dividends declared daily and reinvested monthly.
<PAGE>
General Money Market Fund, Inc.
- -------------------------------------------------------------------------------
Statement of Investments May 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Negotiable Bank Certificates of Deposit--30.4% Amount Value
- ------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Abbey National Treasury Services PLC (Yankee)
5.70%-5.72%, 1/27/99-2/25/99................................................ $ 105,000,000 $ 105,000,000
ABN-AMRO Bank N.V. (Yankee)
5.83%, 6/19/98.............................................................. 25,000,000 25,000,300
Bankers Trust Co.
6.00%, 12/10/98............................................................. 50,000,000 50,002,514
Berliner Handels-und Frankforter Bank (Yankee)
5.69%, 7/13/98 (a).......................................................... 50,000,000 49,999,165
Credit Agricole Indosuez S.A. (Yankee)
5.62%, 5/26/99 (a).......................................................... 40,000,000 39,970,241
Creditanstalt-Bankverein (Yankee)
5.61%-5.77%, 4/16/99-5/26/99 (a)............................................ 75,000,000 74,960,732
Credit Suisse First Boston (Yankee)
5.61%, 4/14/99 (a).......................................................... 50,000,000 50,000,000
Deutsche Bank AG (Yankee)
5.61%-5.70%, 2/26/99-3/22/99................................................ 50,000,000 49,982,291
International Nederlanden Bank (London)
6.06%, 6/5/98............................................................... 43,000,000 43,000,148
Lloyds Bank PLC (London)
5.93%, 10/27/98............................................................. 25,000,000 25,001,939
Societe Generale (Yankee)
5.78%-5.93%, 7/16/98-5/5/99................................................. 95,000,000 94,992,861
SwedBank (Yankee)
5.70-5.79%, 7/28/98-3/26/99................................................. 110,000,000 109,984,353
Swiss Bank Corp. (Yankee)
5.74%, 3/5/99............................................................... 40,000,000 39,986,911
-------------
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $757,881,455)......................................................... $ 757,881,455
=============
Commercial Paper--31.5%
- -------------------------------------------------------------------------------
Associates Corp. of North America
5.63%, 6/1/98............................................................... $ 35,000,000 $ 35,000,000
Bear Stearns Companies Inc.
5.67%-5.76%, 10/2/98-11/2/98................................................ 70,000,000 68,585,589
Berliner Handels-und Frankforter Bank
5.61%, 7/20/98.............................................................. 50,000,000 49,623,653
BTAB Holdings Funding Corp.
5.73%, 12/24/98............................................................. 50,000,000 48,426,389
Donaldson Lufkin & Jenrette Inc.
5.63%-5.68%, 6/10/98-7/6/98................................................. 39,000,000 38,868,805
</TABLE>
<PAGE>
General Money Market Fund, Inc.
- -------------------------------------------------------------------------------
Statement of Investments (continued) May 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Commercial Paper (continued) Amount Value
- ------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Fina Oil & Chemical Co.
5.60%, 7/14/98.............................................................. $ 4,600,000 $ 4,569,671
FINOVA Capital Corp.
5.70%-5.74%, 11/13/98-2/25/99............................................... 105,000,000 101,281,924
General Electric Capital Corp.
5.60%-5.85%, 6/9/98-9/4/98.................................................. 90,000,000 89,681,937
Hertz Corp.
5.58%-5.61%, 7/10/98-8/20/98................................................ 120,000,000 118,818,022
Lehman Brothers Holdings Inc.
5.66%-5.78%, 2/1/99-2/8/99 (a).............................................. 35,000,000 34,245,944
Merrill Lynch & Co. Inc.
5.52%, 7/28/98.............................................................. 25,000,000 24,787,833
Salomon Smith Barney Holdings Inc.
5.52%, 8/3/98............................................................... 20,000,000 19,812,050
Sanwa Business Credit Corp.
5.63%, 7/20/98.............................................................. 50,000,000 49,622,292
Spintab AB
5.56%-5.65%, 6/8/98-8/4/98.................................................. 104,250,000 103,692,462
-------------
TOTAL COMMERCIAL PAPER
(cost $787,016,571)......................................................... $ 787,016,571
=============
Bank Notes--8.2%
- ------------------------------------------------------------------------------
BankBoston N.A.
5.71%, 12/10/98 (a)......................................................... $ 20,000,000 $ 20,000,000
Bayerische Landesbank Girozentrale
5.76%, 8/14/98.............................................................. 25,000,000 25,012,460
Huntington National Bank
5.75%, 6/23/98.............................................................. 20,000,000 19,999,984
PNC Bank N.A.
5.60%-5.62%, 4/28/99-5/21/99 (a)............................................ 120,000,000 119,942,622
Societe Generale
5.63%, 2/23/99 (a).......................................................... 20,000,000 19,994,294
-------------
TOTAL BANK NOTES
(cost $204,949,360)......................................................... $ 204,949,360
=============
Corporate Notes--22.0%
- -------------------------------------------------------------------------------
BankBoston
5.66%, 1/11/99 (a).......................................................... $ 10,000,000 $ 9,997,642
Bankers Trust Co.
5.62%, 4/9/99 (a)........................................................... 65,000,000 64,978,537
</TABLE>
<PAGE>
General Money Market Fund, Inc.
- -------------------------------------------------------------------------------
Statement of Investments (continued) May 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Corporate Notes (continued) Amount Value
- ------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
CTN Trust Series 1
5.64%, 9/2/98 (a,b,c)....................................................... $ 50,000,000 $ 50,044,246
Heller Financial Inc.
5.70%-5.80%, 11/6/98-4/13/99 (a)............................................ 75,000,000 75,000,000
Key Bank N.A. Cleveland
5.61%, 4/16/99 (a).......................................................... 45,000,000 44,976,796
Lehman Brothers Holdings Inc.
5.67%-5.80%, 1/13/99-3/5/99 (a)............................................. 66,000,000 66,010,132
Merrill Lynch & Co. Inc.
5.67%, 9/9/98-10/30/98 (a).................................................. 50,000,000 50,000,000
NationsBank N.A.
5.61%, 4/27/99 (a).......................................................... 50,000,000 49,986,890
Old Kent Trust & Trust Co.
5.68%, 10/14/98 (a)......................................................... 75,000,000 74,986,407
Paine Webber Group Inc.
5.70%-5.79%, 6/15/98-4/22/99 (a)............................................ 42,200,000 42,200,290
Salomon Smith Barney Holdings Inc.
5.85%, 7/20/98 (a).......................................................... 20,000,000 20,000,000
-------------
TOTAL CORPORATE NOTES
(cost $548,180,940)......................................................... $ 548,180,940
=============
Promissory Notes--4.7%
- -------------------------------------------------------------------------------
Goldman Sachs Group L.P.
5.68%-5.92%, 6/12/98-10/30/98 (b,c)
(cost $117,000,000)......................................................... $ 117,000,000 $ 117,000,000
=============
U.S. Government Agencies--2.4%
- -------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. Floating Rate Notes
5.75%, 6/30/98 (a).......................................................... $ 10,700,000 $ 10,700,968
Federal National Mortgage Association, Floating Rate Notes
5.58%, 12/1/99 (a).......................................................... 50,000,000 50,000,000
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $60,700,968).......................................................... $ 60,700,968
=============
</TABLE>
<PAGE>
General Money Market Fund, Inc.
- -------------------------------------------------------------------------------
Statement of Investments (continued) May 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Time Deposits--.2% Amount Value
- ------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Berliner Handels-und Frankforter Bank AG (Cayman)
5.69%, 6/1/98
(cost $6,143,000)........................................................... $ 6,143,000 $ 6,143,000
==============
TOTAL INVESTMENTS
(cost $2,481,872,294)............................................ 99.4% $2,481,872,294
====== ==============
CASH AND RECEIVABLES (NET).......................................... .6% $ 14,992,729
====== ==============
NET ASSETS.......................................................... 100.0% $2,496,865,023
====== ==============
<FN>
Notes to Statement of Investments:
- ------------------------------------------------------------------------------
(a) Variable interest rate subject to periodic change.
(b) These notes were acquired for investment, not with intent to distribute
or sell.
(c) Securities restricted as to public resale. These securities were acquired
from 9/16/97 to 5/4/98 at a cost of par value. At May 31, 1998, the
aggregate value of these securities is $117 million representing
approximately 4.7% of net assets and are valued at amortized cost.
See notes to financial statements.
</TABLE>
<PAGE>
General Money Market Fund, Inc.
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities May 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Cost Value
--------------- ---------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $2,481,872,294 $2,481,872,294
Cash............................................. 10,685,638
Interest receivable.............................. 24,745,108
Prepaid expenses................................. 168,260
--------------
2,517,471,300
--------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 1,074,885
Due to Distributor............................... 259,393
Payable for investment securities purchased...... 19,178,056
Accrued expenses................................. 93,943
--------------
20,606,277
--------------
NET ASSETS............................................................... $2,496,865,023
==============
REPRESENTED BY: Paid-in capital.................................. $2,496,993,287
Accumulated net realized gain (loss) on investments (128,264)
--------------
NET ASSETS............................................................... $2,496,865,023
==============
</TABLE>
NET ASSET VALUE PER SHARE
-------------------------
<TABLE>
<CAPTION>
Class A Class B
-------------- ----------------
<S> <C> <C>
Net Assets............................................................... $889,030,245 $1,607,834,778
Shares Outstanding....................................................... 889,097,436 1,607,895,851
NET ASSET VALUE PER SHARE................................................ $1.00 $1.00
===== ======
</TABLE>
See notes to financial statements.
<PAGE>
General Money Market Fund, Inc.
- -------------------------------------------------------------------------------
Statement of Operations Six Months Ended May 31, 1998 (Unaudited)
INVESTMENT INCOME
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INCOME Interest Income............................ $64,671,172
EXPENSES: Management fee--Note 2(a)................... $ 5,612,802
Distribution fees--Note 2(b)................ 2,245,121
Shareholder servicing costs--Note 2(c)...... 2,057,741
Registration fees.......................... 341,388
Custodian fees............................. 76,566
Prospectus and shareholders' reports....... 35,038
Professional fees.......................... 33,299
Directors' fees and expenses--Note 2(d)..... 20,252
Miscellaneous.............................. 16,755
------------
Total Expenses........................... 10,438,962
Less--reduction in shareholder servicing costs
due to undertaking--Note 2(c)............. (125,244)
------------
Net Expenses............................. 10,313,718
-----------
INVESTMENT INCOME--NET.................................................... 54,357,454
NET REALIZED GAIN (LOSS) ON INVESTMENTS--Note 1(b)........................ (23,162)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $54,334,292
</TABLE>
See notes to financial statements.
<PAGE>
General Money Market Fund, Inc.
- -------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
May 31, 1998 Ten Months Ended Year Ended
(Unaudited) November 30, 1997* January 31, 1997
---------------- ------------------ ----------------
<S> <C> <C> <C>
OPERATIONS:
Investment income--net............................... $ 54,357,454 $ 68,525,556 $ 49,280,474
Net realized gain (loss) on investments............. (23,162) (78,341) (8,067)
--------------- --------------- ---------------
Net Increase (Decrease) in Net Assets Resulting
from Operations............................ 54,334,292 68,447,215 49,272,407
--------------- --------------- ---------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A Shares................................... (21,634,202) (32,426,980) (34,241,653)
Class B Shares................................... (32,723,252) (36,098,576) (15,038,821)
--------------- --------------- ---------------
Total Dividends............................... (54,357,454) (68,525,556) (49,280,474)
--------------- --------------- ---------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold:
Class A Shares................................... 2,924,760,910 5,481,588,637 6,572,669,153
Class B Shares................................... 2,807,753,217 3,353,368,498 1,019,289,506
Dividends reinvested:
Class A Shares................................... 21,324,861 31,506,536 32,898,001
Class B Shares................................... 31,821,288 35,189,462 14,154,018
Cost of shares redeemed:
Class A Shares................................... (2,960,359,274) (5,373,865,859) (6,496,025,709)
Class B Shares................................... (2,462,857,947) (2,526,588,101) (714,679,626)
--------------- --------------- ---------------
Increase (Decrease) in Net Assets from
Capital Stock Transactions................. 362,443,055 1,001,199,173 428,305,343
--------------- --------------- ---------------
Total Increase (Decrease) in Net Assets. 362,419,893 1,001,120,832 428,297,276
NET ASSETS:
Beginning of Period................................. 2,134,445,130 1,133,324,298 705,027,022
--------------- --------------- --------------
End of Period....................................... $2,496,865,023 $2,134,445,130 $1,133,324,298
=============== =============== ===============
</TABLE>
- ------------------------------
* The Fund changed its fiscal year end from January 31 to November 30.
See notes to financial statements.
<PAGE>
General Money Market Fund, Inc.
- -------------------------------------------------------------------------------
Financial Highlights
Contained below is per share operating performance data for a share of Common
Stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period indicated. This information has been
derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Class A Shares
-----------------------------------------------------------------------------
Six Months Ended
May 31, 1998 Ten Months Ended Year Ended January 31,
------------------------------------
PER SHARE DATA: (Unaudited) November 30, 1997(1) 1997 1996 1995 1994
---------------- ------------------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----
Investment Operations:
Investment income--net............... .025 .041 .047 .053 .037 .025
----- ----- ----- ----- ----- -----
Distributions:
Dividends from investment income--net (.025) (.041) (.047) (.053) (.037) (.025)
----- ----- ----- ----- ----- -----
Net asset value, end of period...... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
TOTAL INVESTMENT RETURN................ 5.01%(2) 4.99%(2) 4.81% 5.42% 3.75% 2.56%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .80%(2) .88%(2) .84% .86% .94% .94%
Ratio of net investment income
to average net assets............ 4.96%(2) 4.89%(2) 4.71% 5.28% 3.68% 2.53%
Decrease reflected in above expense ratios
due to undertakings by the Manager -- -- -- .01% .04% .02%
Net Assets, end of period (000's Omitted) $889,030 $903,313 $764,119 $654,581 $572,116 $616,072
<FN>
- --------------------
(1) The Fund changed its fiscal year end from January 31 to November 30.
(2) Annualized.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
General Money Market Fund, Inc.
- -------------------------------------------------------------------------------
Financial Highlights (continued)
Contained below is per share operating performance data for a share of Common
Stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period indicated. This information has been
derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Class B Shares
--------------------------------------------------------------
Six Months Ended Year Ended January 31,
May 31, 1998 Ten Months Ended ----------------------
PER SHARE DATA: (Unaudited) November 30, 1997(1) 1997 1996(2)
---------------- ------------------- ------ ------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.. $1.00 $1.00 $1.00 $1.00
----- ----- ----- -----
Investment Operations:
Investment income--net................ .024 .039 .046 .043
----- ----- ----- -----
Distributions:
Dividends from investment income--net. (.024) (.039) (.046) (.043)
----- ----- ----- -----
Net asset value, end of period....... $1.00 $1.00 $1.00 $1.00
===== ===== ===== =====
TOTAL INVESTMENT RETURN................. 4.81%(3) 4.83%(3) 4.65% 5.18%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.00%(3) 1.00%(3) 1.00% 1.00%(3)
Ratio of net investment income
to average net assets............. 4.77%(3) 4.78%(3) 4.56% 5.00%(3)
Decrease reflected in above expense ratios
due to undertakings by the Manager .05%(3) .05%(3) .07% .07%(3)
Net Assets, end of period (000's Omitted) $1,607,835 $1,231,132 $369,205 $50,446
<FN>
- ------------------
(1) The Fund changed its fiscal year end from January 31 to November 30.
(2) From March 31, 1995 (commencement of initial offering) to January 31, 1996.
(3) Annualized.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
General Money Market Fund, Inc.
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
General Money Market Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a diversified open-end management
investment company. The Fund's investment objective is to provide investors with
as high a level of current income as is consistent with the preservation of
capital. The Dreyfus Corporation ("Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of
the Fund's shares, which are sold to the public without a sales load. The Fund
is authorized to issue 25 billion shares of $.01 par value Common Stock. The
Fund currently offers two classes of shares: Class A (15 billion shares
authorized) and Class B (10 billion shares authorized). Class A shares and Class
B shares are identical except for the services offered to and the expenses borne
by each class and certain voting rights. Class A shares are subject to a Service
Plan adopted pursuant to Rule 12b-1 under the Act, Class B shares are subject to
a Distribution Plan adopted pursuant to Rule 12b-1 under the Act and, in
addition, Class B shares are charged directly for sub-accounting services
provided by Service Agents (a securities dealer financial institution or other
industry professional) at an annual rate of .05% of the value of the average
daily net assets of Class B shares.
It is the Fund's policy to maintain a continuous net asset value per share of
$1.00; the Fund has adopted certain investment, portfolio valuation and dividend
and distribution policies to enable it to do so. There is no assurance, however,
that the Fund will be able to maintain a stable net asset value per share of
$1.00.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments are valued at amortized cost, which has
been determined by the Fund's Board of Directors 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. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Interest income is
recognized on the accrual basis. Cost of investments represents amortized cost.
Under the terms of the custodian agreement, the Fund received net earnings
credits of $6,703 during the period ended May 31, 1998 based on available cash
balances left on deposit. Income earned under this arrangement is included in
interest income.
The Fund may enter into repurchase agreements with financial institutions,
deemed to be creditworthy by the Fund's Manager, subject to the seller's
agreement to repurchase and the Fund's agreement to resell such securities at a
mutually agreed upon price. Securities purchased subject to repurchase
agreements are deposited with the Fund's custodian and, pursuant to the terms of
the repurchase agreements, must have an aggregate market value greater than or
equal to the repurchase price plus accrued interest at all times. If the value
of the underlying securities falls below the value of the repurchase price plus
accrued interest, the Fund will require the seller to deposit additional
collateral by the next business day. If the request for additional collateral is
not met, or the seller defaults on its repurchase obligation, the Fund maintains
the right to sell the underlying securities at market value and may claim any
resulting loss against the seller.
(c) Dividends to shareholders: It is the policy of the Fund to declare
dividends from investment income-net on each business day; 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.
<PAGE>
General Money Market Fund, Inc.
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(d) Federal income taxes: It is the policy of the Fund to continue to qualify
as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $105,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to November 30, 1997. If not
applied, $12,000 of the carryover expires in fiscal 2001, $15,000 expires in
fiscal 2004 and $78,000 expires in fiscal 2005.
At May 31, 1998, 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 .50 of 1% of the value of the
Fund's average daily net assets and is payable monthly. The Agreement provides
that if in any full fiscal year the aggregate expenses of the Fund, exclusive of
taxes, brokerage, interest on borrowings and extraordinary expenses, exceed
1 1/2% of the value of the Fund's average net assets, the Fund may deduct from
payments to be made to the Manager, or the Manager will bear such excess
expense. During the period ended May 31, 1998, There was no expense
reimbursement pursuant to the Agreement.
(b) Under the Service Plan with respect to Class A shares (the "Plan"),
adopted pursuant to Rule 12b-1 under the Act, Class A shares directly bear the
cost of preparing, printing and distributing prospectuses and statements of
additional information and implementing and operating the Plan. In addition,
Class A shares reimburse (a) the Distributor for payments made for distributing
Class A shares and servicing shareholder accounts ("Servicing") and (b) the
Manager, Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
and their affiliate (collectively, "Dreyfus") for payments made for Servicing,
at an aggregate annual rate of up to .20 of 1% of the value of the average daily
net assets of Class A. Both the Distributor and Dreyfus may pay Service Agents a
fee in respect of Class A shares owned by shareholders with whom the Service
Agent has a Servicing relationship or for whom the Service Agent is the dealer
or holder of record. The schedule of such fees and the basis upon which such
fees will be paid shall be determined from time to time by the Fund's Board of
Directors. If a holder of Class A shares ceases to be a client of a Service
Agent, but continues to hold Class A shares, Dreyfus will be permitted to act as
a Service Agent in respect of such Fund shareholders and receive payments under
the Service Plan for Servicing. The fees payable for Servicing are payable
without regard to actual expenses incurred. During the period ended May 31,
1998, Class A shares were charged $872,935 pursuant to the Plan.
Under the Distribution Plan with respect to Class B shares ("Class B
Distribution Plan"), adopted pursuant to Rule 12b-1 under the Act, Class B
shares directly bear the costs of preparing, printing and distributing
prospectuses and statements of additional information and of implementing and
operating the Class B Distribution Plan. In addition, Class B shares reimburse
the Distributor for payments made to third parties for distributing their shares
at an aggregate annual rate of up to .20% of 1% of the value of the average
daily net assets of Class B. During the period ended May 31, 1998, Class B
shares were charged $1,372,186 pursuant to the Class B Distribution Plan.
(c) Under the Fund's Shareholder Services Plan with respect to Class A
("Class A Shareholder Services Plan"), Class A shares 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 Class A for certain allocated
expenses of providing personal services and/or maintaining
<PAGE>
General Money Market Fund, Inc.
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding Class A shares and providing reports and other information, and
services related to the maintenance of shareholder accounts. During the period
ended May 31, 1998, Class A shares were charged $137,740 pursuant to the Class
A Shareholder Services Plan.
Under the Fund's Shareholder Services Plan with respect to Class B ("Class B
Shareholder Services Plan"), Class B shares pay the Distributor for the
provision of certain services to the holders of Class B shares a fee at an
annual rate of .25 of 1% of the value of the average daily net assets of Class
B. The services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding Class B shares and
providing reports and other information, and services related to the maintenance
of shareholder accounts. The Distributor may make payments to Service Agents in
respect of these services. The Distributor determines the amounts to be paid to
Service Agents.
The Manager has undertaken through May 31, 1998, that if the aggregate
expenses of Class B shares (exclusive of taxes, brokerage, interest on
borrowings and extraordinary expenses) exceed 1% of the value of the average
daily net assets of Class B, the Manager will reimburse the expenses of the Fund
under the Class B Shareholder Services Plan to the extent of any excess expense
and up to the full fee payable under the Class B Shareholder Services Plan.
During the period ended May 31, 1998, Class B shares were charged $715,232
pursuant to the Class B Shareholder Services Plan, of which $125,244 was
reimbursed by the Manager.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the
Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the fund. During the period
ended May 31, 1998, the Fund was charged $92,385 pursuant to the transfer agency
agreement.
(d) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $2,500 and an attendance fee of $500 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
<PAGE>
General Money Market Fund, Inc.
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York.
90 Washington Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 196/696SAR985
