General Money Market Funds
General Money Market Fund
General Government Securities Money Market Fund
General Municipal Money Market Fund
General California Municipal Money Market Fund
General Minnesota Municipal Money Market Fund
General New York Municipal Money Market Fund
Investing in high quality short-term securities for current income, safety of
principal and liquidity
PROSPECTUS April 1, 1999
CLASS A SHARES
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
<PAGE>
The Funds
Contents
The Funds
- --------------------------------------------------------------------------------
Introduction 1
General Money Market Fund 2
General Government Securities
Money Market Fund 4
General Municipal
Money Market Fund 6
General California Municipal
Money Market Fund 8
General Minnesota Municipal
Money Market Fund 10
General New York Municipal
Money Market Fund 12
Management 14
Financial Highlights 15
Your Investment
- --------------------------------------------------------------------------------
Account Policies 18
Distributions and Taxes 20
Services for Fund Investors 20
Instructions for Regular Accounts 22
Instructions for IRAs 23
For More Information
- --------------------------------------------------------------------------------
MORE INFORMATION ON EACH FUND CAN BE FOUND IN THE FUND'S CURRENT
ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Introduction
Each fund is a money market mutual fund with a separate investment portfolio.
The operations and results of a fund are unrelated to those of each other fund.
This combined prospectus has been prepared for your convenience so that you can
consider six investment choices in one document.
As a money market fund, each fund is subject to maturity, quality and
diversification requirements designed to help it maintain a stable share price.
Generally, each fund is required to invest at least 95% of its assets in the
securities of issuers with the highest credit rating or the unrated equivalent
as determined by Dreyfus, with the remainder invested in securities with the
second highest credit rating.
An investment in a fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although each fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in a fund.
Concepts to understand
MONEY MARKET FUND: a specific type of fund that seeks to maintain a $1.00 price
per share. Money market funds are subject to strict federal requirements and
must:
* maintain an average dollar-weighted portfolio maturity of 90 days or
less
* buy individual securities that have remaining maturities of 13 months or
less
* invest only in high quality dollar-denominated obligations
CREDIT RATING: a measure of the issuer's expected ability to make all required
interest and principal payments in a timely manner. An issuer with the highest
credit rating has a very strong degree of certainty (or safety) with respect to
making all payments. An issuer with the second highest credit rating has a
strong capacity to make all payments, but the degree of safety is somewhat less
The Funds
<PAGE 1>
General Money Market Fund
-----------------------
Ticker Symbol: GMMXX
GOAL/APPROACH
The fund seeks as high a level of current income as is consistent with the
preservation of capital. To pursue this goal, the fund invests in a diversified
portfolio of high quality, short-term debt securities, including the following:
* securities issued or guaranteed by the U.S. government or its agencies
* certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by domestic or foreign banks or their
subsidiaries or branches
* repurchase agreements
* asset-backed securities
* domestic and dollar-denominated foreign commercial paper, and other
short-term corporate obligations, including those with floating or variable
rates of interest
* dollar-denominated obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions or agencies
Normally, the fund invests at least 25% of its net assets in domestic or
dollar-denominated foreign bank obligations.
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to
drop
* any of the fund's holdings could have its credit rating downgraded or
could default
* the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking industry
* the risks generally associated with dollar-denominated foreign
investments, such as economic and political developments, seizure or
nationalization of deposits, imposition of taxes or other restrictions on the
payment of principal and interest
<PAGE 2>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class A. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
8.84 7.71 5.84 3.39 2.58 3.51 5.44 4.83 4.99 4.93
89 90 91 92 93 94 95 96 97 98
BEST QUARTER: Q2 '89 +2.28%
WORST QUARTER: Q3 '93 +0.63%
The fund's 7-day yield on 12/31/98 was 4.42%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
4.93% 4.74% 5.19%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class A in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.03%
Other expenses 0.04%
- --------------------------------------------------------------------------------
TOTAL 0.77%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$79 $246 $428 $954
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class A shares and providing shareholder account services, and
Dreyfus for paying for such services. Because this fee is paid out of the fund's
assets on an ongoing basis, over time it will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee used to reimburse Dreyfus Service Corporation
for shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the fund for miscellaneous items such as transfer
agency, custody, professional and registration fees.
General Money Market Fund
<PAGE 3>
General Government Securities Money Market Fund
----------------------
Ticker Symbol: GGSXX
GOAL/APPROACH
The fund seeks as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity.
To pursue this goal, the fund invests in securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities, and repurchase agreements
in respect of these securities.
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
A security backed by the U.S. Treasury or the full faith and credit of the
United States is guaranteed only as to the timely payment of interest and
principal when held to maturity. The current market prices for such securities
are not guaranteed and will fluctuate. The fund is subject to the risk that
interest rates could rise sharply, causing the fund's share price to drop.
<PAGE 4>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class A. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
8.61 7.51 5.66 3.47 2.71 3.69 5.36 4.79 4.86 4.83
89 90 91 92 93 94 95 96 97 98
BEST QUARTER: Q2 '89 +2.20%
WORST QUARTER: Q3 '93 +0.66%
The fund's 7-day yield on 12/31/98 was 4.30%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
4.83% 4.70% 5.13%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class A in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.02%
Other expenses 0.05%
- --------------------------------------------------------------------------------
TOTAL 0.77%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$79 $246 $428 $954
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class A shares and providing shareholder account services, and
Dreyfus for paying for such services. Because this fee is paid out of the fund's
assets on an ongoing basis, over time it will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee used to reimburse Dreyfus Service Corporation
for shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the fund for miscellaneous items such as transfer
agency, custody, professional and registration fees.
General Government Securities Money Market Fund
<PAGE 5>
General Municipal Money Market Fund
----------------------
Ticker Symbol: GTMXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal personal income
tax, as is consistent with the preservation of capital and the maintenance of
liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal personal
income tax. When the portfolio manager believes that acceptable municipal
obligations are unavailable for investment, the fund may invest temporarily in
high quality, taxable money market instruments. Municipal obligations are
typically divided into two types:
* GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
* REVENUE BONDS, which are payable from the revenues derived from a
specific revenue source, such as charges for water and sewer service or
highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to
drop
* any of the fund's holdings could have its credit rating downgraded or
could default
Although the fund's objective is to generate income exempt from federal income
tax, interest from some of its holdings may be subject to the federal
alternative minimum tax. In addition, the fund occasionally may invest in
taxable money market instruments.
<PAGE 6>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class A. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
5.91 5.53 4.19 2.62 2.05 2.40 3.42 2.93 3.15 2.98
89 90 91 92 93 94 95 96 97 98
BEST QUARTER: Q2 '89 +1.56%
WORST QUARTER: Q1 '94 +0.46%
The fund's 7-day yield on 12/31/98 was 3.25%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
2.98% 2.97% 3.51%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class A in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price. The fund has no sales charge (load) or Rule 12b-1 distribution fees for
Class A.
- --------------------------------------------------------------------------------
Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Shareholder services fee 0.03%
Other expenses 0.07%
- --------------------------------------------------------------------------------
TOTAL 0.60%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$61 $192 $335 $750
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
SHAREHOLDER SERVICES FEE: a fee used to reimburse Dreyfus Service Corporation
for shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the fund for miscellaneous items such as transfer
agency, custody, professional and registration fees.
General Municipal Money Market Fund
<PAGE 7>
General California Municipal Money Market Fund
----------------------
Ticker Symbol: GCAXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal and California
state personal income taxes, as is consistent with the preservation of capital
and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal and
California state personal income taxes. When the portfolio manager believes that
acceptable California municipal obligations are unavailable for investment, the
fund may invest in securities that may be subject to California state income
tax, but are free from federal income tax. Municipal obligations are typically
divided into two types:
* GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
* REVENUE BONDS, which are payable from the revenues derived from a
specific revenue source, such as charges for water and sewer service or
highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to
drop
* any of the fund's holdings could have its credit rating downgraded or
could default
* California's economy and revenues underlying municipal obligations may
decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal and
California state income taxes, interest from some of its holdings may be subject
to the federal alternative minimum tax. In addition, the fund occasionally may
invest in taxable bonds and/or municipal bonds that are exempt only from federal
personal income tax.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
<PAGE 8>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class A. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
5.81 5.93 4.66 2.90 2.30 2.57 3.22 2.84 2.99 2.73
89 90 91 92 93 94 95 96 97 98
BEST QUARTER: Q4 '89 +1.56%
WORST QUARTER: Q1 '94 +0.51%
The fund's 7-day yield on 12/31/98 was 3.01%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
2.73% 2.87% 3.59%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class A in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price. The fund has no sales charge (load) or Rule 12b-1 distribution fees for
Class A.
- --------------------------------------------------------------------------------
Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Shareholder services fee 0.04%
Other expenses 0.10%
- --------------------------------------------------------------------------------
TOTAL 0.64%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$65 $205 $357 $798
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
SHAREHOLDER SERVICES FEE: a fee used to reimburse Dreyfus Service Corporation
for shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the fund for miscellaneous items such as transfer
agency, custody, professional and registration fees.
General California Municipal Money Market Fund
<PAGE 9>
General Minnesota Municipal
Money Market Fund
------------------
Ticker Symbol: N/A
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal and Minnesota
state personal income taxes, as is consistent with the preservation of capital
and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal and
Minnesota state personal income taxes. When the portfolio manager believes that
acceptable Minnesota municipal obligations are unavailable for investment, the
fund may invest in securities that may be subject to Minnesota state income tax,
but are free from federal income tax. Municipal obligations are typically
divided into two types:
* GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
* REVENUE BONDS, which are payable from the revenues derived from a
specific revenue source, such as charges for water and sewer service or
highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to
drop
* any of the fund's holdings could have its credit rating downgraded or
could default
* Minnesota's economy and revenues underlying municipal obligations may
decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal and
Minnesota state income taxes, interest from some of its holdings may be subject
to the federal alternative minimum tax. In addition, the fund occasionally may
invest in taxable bonds and/or municipal bonds that are exempt only from federal
personal income tax.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
<PAGE 10>
PAST PERFORMANCE
Since this fund has less than one calendar year of performance, past performance
information is not included. For performance information as of the end of the
fund's first fiscal period, please refer to the Statement of Additional
Information (SAI).
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class A in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price. The fund has no sales charge (load) or Rule 12b-1 distribution fees for
Class A.
- --------------------------------------------------------------------------------
Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Shareholder services fee 0.00%
Other expenses 0.91%
- --------------------------------------------------------------------------------
TOTAL 1.41%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years
- --------------------------------------------------------------------------------
$144 $446
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
period ended November 30, 1998, Dreyfus waived its fee and assumed certain other
fund expenses pursuant to an undertaking, reducing total expenses from 1.41% to
0.65%. This undertaking is voluntary and may be terminated at any time.
SHAREHOLDER SERVICES FEE: a fee used to reimburse Dreyfus Service Corporation
for shareholder account service and maintenance.
OTHER EXPENSES: estimated fees to be paid by the fund for miscellaneous items
such as transfer agency, custody, professional and registration fees.
General Minnesota Municipal Money Market Fund
<PAGE 11>
General New York Municipal Money Market Fund
-----------------------
Ticker Symbol: GNMXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal, New York state
and New York city personal income taxes, as is consistent with the preservation
of capital and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal, New York
state and New York city personal income taxes. When the portfolio manager
believes that acceptable New York municipal obligations are unavailable for
investment, the fund may invest in securities that may be subject to New York
state and New York city income taxes, but are free from federal income tax.
Municipal obligations are typically divided into two types:
* GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
* REVENUE BONDS, which are payable from the revenues derived from a
specific revenue source, such as charges for water and sewer service or
highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to
drop
* any of the fund's holdings could have its credit rating downgraded or
could default
* New York's economy and revenues underlying municipal obligations may
decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal, New
York state and New York city income taxes, interest from some of its holdings
may be subject to the federal alternative minimum tax. In addition, the fund
occasionally may invest in taxable bonds and/or municipal bonds that are exempt
only from federal personal income tax.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
<PAGE 12>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class A. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
5.43 5.76 4.28 2.63 1.97 2.46 3.28 2.79 3.00 2.73
89 90 91 92 93 94 95 96 97 98
BEST QUARTER: Q2 '90 +1.45%
WORST QUARTER: Q1 '93 +0.46%
The fund's 7-day yield on 12/31/98 was 2.96%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
2.73% 2.85% 3.43%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class A in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price. The fund has no sales charge (load) or Rule 12b-1 distribution fees for
Class A.
- --------------------------------------------------------------------------------
Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Shareholder services fee 0.10%
Other expenses 0.08%
- --------------------------------------------------------------------------------
TOTAL 0.68%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Expense example
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------------------------------------------------------
$69 $218 $379 $847
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
SHAREHOLDER SERVICES FEE: a fee used to reimburse Dreyfus Service Corporation
for shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the fund for miscellaneous items such as transfer
agency, custody, professional and registration fees.
General New York Municipal Money Market Fund
<PAGE 13>
MANAGEMENT
The investment adviser for each fund is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages one of the
nation's leading mutual fund complexes, with more than $121 billion in more than
160 mutual fund portfolios. Dreyfus is the primary mutual fund business of
Mellon Bank Corporation, a broad-based financial services company with a bank at
its core. With more than $389 billion of assets under management and $1.9
trillion of assets under administration and custody, Mellon provides a full
range of banking, investment and trust products and services to individuals,
businesses and institutions. Its mutual fund companies place Mellon as the
leading bank manager of mutual funds. Mellon is headquartered in Pittsburgh,
Pennsylvania.
Management philosophy
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Concepts to understand
YEAR 2000 ISSUES: these funds could be adversely affected if the computer
systems used by Dreyfus and the funds' other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which these funds invest may be
adversely affected by year 2000-related problems. This could have an impact on
the value of a fund's investments and its share price.
<PAGE 14>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each fund's Class A shares for
the fiscal periods indicated. "Total return" shows how much your investment in
the fund would have increased (or decreased) during each period, assuming you
had reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young LLP, whose report, along with the fund's
financial statements, is included in the annual report.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED TEN MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, YEAR ENDED JANUARY 31,
GENERAL MONEY MARKET FUND 1998 1997(1) 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .049 .041 .047 .053 .037 .025
Distributions: Dividends from investment
income -- net (.049) (.041) (.047) (.053) (.037) (.025)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
Total return (%) 4.98 4.99(2) 4.81 5.42 3.75 2.56
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .77 .88(2) .84 .86 .94 .94
Ratio of net investment income
to average net assets (%) 4.88 4.89(2) 4.71 5.28 3.68 2.53
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- .01 .04 .02
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 835,706 903,313 764,119 654,581 572,116 616,072
(1) THE FUND CHANGED ITS FISCAL YEAR END FROM JANUARY 31 TO NOVEMBER 30.
(2) ANNUALIZED.
YEAR ENDED TEN MONTHS ENDED
GENERAL GOVERNMENT SECURITIES NOVEMBER 30, NOVEMBER 30, YEAR ENDED JANUARY 31,
MONEY MARKET FUND 1998 1997(1) 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .048 .040 .047 .052 .038 .027
Distributions: Dividends from investment
income -- net (.048) (.040) (.047) (.052) (.038) (.027)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
Total return (%) 4.88 4.84(2) 4.75 5.35 3.90 2.69
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .77 .82(2) .82 .84 .83 .81
Ratio of net investment income
to average net assets (%) 4.77 4.78(2) 4.65 5.22 3.82 2.66
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 539,878 510,289 519,861 530,054 513,345 536,884
(1) THE FUND CHANGED ITS FISCAL YEAR END FROM JANUARY 31 TO NOVEMBER 30.
(2) ANNUALIZED.
Financial Highlights
<PAGE 15>
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED NOVEMBER 30,
GENERAL MUNICIPAL MONEY MARKET FUND 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .030 .031 .029 .034 .023
Distributions: Dividends from investment income -- net (.030) (.031) (.029) (.034) (.023)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
Total return (%) 3.02 3.14 2.97 3.41 2.27
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .60 .62 .66 .66 .64
Ratio of net investment income to average net assets (%) 2.98 3.09 2.93 3.35 2.22
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 280,398 273,058 256,862 294,379 294,711
YEAR ENDED FOUR MONTHS ENDED
GENERAL CALIFORNIA NOVEMBER 30, NOVEMBER 30, YEAR ENDED JULY 31,
MUNICIPAL MONEY MARKET FUND 1998 1997(1) 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .027 .010 .029 .029 .031 .023
Distributions: Dividends from investment income -- net (.027) (.010) (.029) (.029) (.031) (.023)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
Total return (%) 2.78 2.96(2) 2.95 2.94 3.14 2.27
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .64 .70(2) .64 .65 .52 .33
Ratio of net investment income to
average net assets (%) 2.74 2.97(2) 2.91 2.91 3.07 2.24
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- -- .11 .28
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 335,726 361,102 327,226 390,155 463,404 699,105
(1) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO NOVEMBER 30.
(2) ANNUALIZED.
</TABLE>
<PAGE 16>
PERIOD ENDED
NOVEMBER 30,
GENERAL MINNESOTA MUNICIPAL MONEY MARKET FUND 1998(1)
- -------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00
Investment operations: Investment income -- net .014
Distributions: Dividends from investment income -- net (.014)
Net asset value, end of period 1.00
Total return (%) 2.81(2)
- -------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .65(2)
Ratio of net investment income to average net assets (%) 2.80(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .76(2)
- -------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 1,014
(1) FROM JUNE 1, 1998 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1998.
(2) ANNUALIZED.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEAR ENDED NOVEMBER 30,
GENERAL NEW YORK MUNICIPAL MONEY MARKET FUND 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .027 .029 .028 .032 .023
Distributions: Dividends from investment income -- net (.027) (.029) (.028) (.032) (.023)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
Total return (%) 2.77 2.98 2.84 3.28 2.34
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .68 .66 .68 .58 .34
Ratio of net investment income to average net assets (%) 2.74 2.94 2.80 3.23 2.33
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- .05 .32
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 405,054 440,750 507,537 636,013 689,918
</TABLE>
Financial Highlights
<PAGE 17>
Your Investment
ACCOUNT POLICIES
Buying shares
GENERAL FUNDS are designed primarily for people who are investing through a
third party such as a bank, broker-dealer or financial adviser. Third parties
with whom you open a fund account may impose policies, limitations and fees
which are different than those described here.
YOUR PRICE FOR FUND SHARES is the fund's net asset value (NAV), which is
generally calculated twice a day, at 5 p.m. and 8 p.m. Eastern time for the
taxable money market funds and 12 noon and 8 p.m. Eastern time for the municipal
money market funds, every day the New York Stock Exchange or the fund's transfer
agent is open. Your order will be priced at the next NAV calculated after your
order is accepted by the fund's transfer agent or other authorized entity. Each
fund's investments are valued based on amortized cost.
IF YOUR PAYMENTS ARE RECEIVED in or converted into Federal Funds by 12 noon, you
will receive the dividend declared that day. If your payments are received in or
converted into Federal Funds after 12 noon, you will begin to accrue dividends
on the following business day. Qualified institutions may telephone orders to
buy shares. If such an order is made by 5 p.m. for the taxable money market
funds or 12 noon for the municipal money market funds, and Federal Funds are
received by 6 p.m. or 4 p.m., respectively, the shares will be purchased at the
NAV determined at 5 p.m. or 12 noon, as the case may be, and will receive the
dividend declared that day. If such an order is made after 5 p.m. for the
taxable money market funds or 12 noon for the municipal money market funds, but
by 8 p.m., and Federal Funds are received by 11 a.m. the next business day, the
shares will be purchased at the NAV determined at 8 p.m. and will begin to
accrue dividends on the next business day. All times are Eastern time.
BECAUSE THE MUNICIPAL MONEY MARKET FUNDS seek tax-exempt income, they are not
recommended for purchase in IRAs or other qualified plans.
- --------------------------------------------------------------------------------
Minimum investments
Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $2,500 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
<PAGE 18>
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME through your financial representative,
or you can contact the fund directly. Your shares will be sold at the next NAV
calculated after your order is accepted by the fund's transfer agent or other
authorized entity. Any certificates representing fund shares being sold must be
returned with your redemption request. Your order will be processed promptly and
you will generally receive the proceeds within a week.
BEFORE SELLING OR WRITING A CHECK for recently purchased shares, please note
that if the fund has not yet collected payment for the shares you are selling,
it may delay sending the proceeds for up to eight business days or until it has
collected payment.
- --------------------------------------------------------------------------------
Limitations on selling shares by phone
Proceeds
sent by Minimum Maximum
- --------------------------------------------------------------------------------
CHECK NO MINIMUM $150,000 PER DAY
WIRE $1,000 $250,000 FOR JOINT ACCOUNTS
EVERY 30 DAYS
TELETRANSFER $500 $250,000 FOR JOINT ACCOUNTS
EVERY 30 DAYS
General policies
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
EACH FUND RESERVES THE RIGHT TO:
* refuse any purchase or exchange request that could adversely affect the
fund or its operations, including those from any individual or group who, in the
fund's view, is likely to engage in excessive trading (usually defined as more
than four exchanges out of the fund within a calendar year)
* refuse any purchase or exchange request in excess of 1% of the fund's
total assets
* change or discontinue its exchange privilege, or temporarily suspend
this privilege during unusual market conditions
* change its minimum investment amounts
* delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or during
unusual market conditions)
Each fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $1,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
Written sell orders of $100,000 or more must also be signature guaranteed.
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
Small account policies
To offset the relatively higher costs of servicing smaller accounts, the
California Municipal Money Market Fund and New York Municipal Money Market Fund
charge regular accounts with balances below $2,000 an annual fee of $12. The fee
will be imposed during the fourth quarter of each calendar year.
The fee will be waived for: any investor whose aggregate Dreyfus mutual fund
investments total at least $25,000; accounts participating in automatic
investment programs and accounts opened through a financial institution.
With respect to any fund, if your account falls below $500, the fund may ask you
to increase your balance. If it is still below $500 after 45 days, the fund may
close your account and send you the proceeds.
Your Investment
<PAGE 19>
DISTRIBUTIONS AND TAXES
EACH FUND USUALLY PAYS ITS SHAREHOLDERS dividends from its net investment income
once a month, and distributes any net realized securities gains once a year.
Your dividends and distributions will be reinvested in the fund unless you
instruct the fund otherwise. There are no fees or sales charges on
reinvestments.
DIVIDENDS AND DISTRIBUTIONS PAID by the taxable money market funds are taxable
to U.S. shareholders as ordinary income (unless your investment is in an IRA or
other tax-advantaged account).
EACH MUNICIPAL MONEY MARKET FUND anticipates that, under normal market
conditions, virtually all of its income dividends will be exempt from federal
and, as to California Municipal Money Market Fund, California, as to Minnesota
Municipal Money Market Fund, Minnesota, and as to New York Municipal Money
Market Fund, New York state and New York city, personal income taxes. However,
any dividends and distributions from taxable investments are taxable as ordinary
income.
The tax status of any distribution is the same regardless of how long you have
been in the fund and whether you reinvest your distributions or take them in
cash.
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
Concepts to understand
DIVIDENDS: income or interest paid by the investments in a fund's portfolio, net
of expenses, passed on to fund shareholders.
DISTRIBUTIONS: income, net of expenses passed on to fund shareholders. These are
calculated on a per-share basis: each share earns the same rate of return, so
the more fund shares you own, the higher your distribution.
SECURITIES GAINS: distributions derived from the profits the fund earns when it
sells securities for a higher price than it paid for them.
SERVICES FOR FUND INVESTORS
THE THIRD PARTY THROUGH WHOM YOU PURCHASED fund shares may impose different
restrictions on these services and privileges offered by the fund, or may not
make them available at all. Consult your financial representative for more
information on the availability of these services and privileges.
Automatic services
BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to certain
restrictions. You can set up most of these services with your application, or by
calling your financial representative or 1-800-645-6561.
- --------------------------------------------------------------------------------
For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.
DREYFUS PAYROLL For making automatic investments
SAVINGS PLAN through a payroll deduction.
DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one Dreyfus fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
DREYFUS AUTO- For making regular exchanges
EXCHANGE PRIVILEGE from one Dreyfus fund into
another.
- --------------------------------------------------------------------------------
For selling shares
DREYFUS AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most Dreyfus funds.
<PAGE 20>
Checkwriting privilege
YOU MAY WRITE REDEMPTION CHECKS against your account in amounts of $500 or more.
These checks are free; however, a fee will be charged if you request a stop
payment or if the transfer agent cannot honor a redemption check due to
insufficient funds or another valid reason. Please do not postdate your checks
or use them to close your account.
Exchange privilege
YOU CAN EXCHANGE $500 OR MORE from one Dreyfus fund into another (no minimum for
retirement accounts). You can request your exchange in writing or by phone. Be
sure to read the current prospectus for any fund into which you are exchanging.
Any new account established through an exchange will have the same privileges as
your original account (as long as they are available). There is currently no fee
for exchanges, although you may be charged a sales load when exchanging into any
fund that has one.
Dreyfus TeleTransfer privilege
TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the Dreyfus TeleTransfer privilege. You can set up TeleTransfer
on your account by providing bank account information and following the
instructions on your application.
The Dreyfus Touch((reg.tm))
FOR 24-HOUR AUTOMATED ACCOUNT ACCESS, use Dreyfus Touch. With a touch-tone
phone, you can easily manage your Dreyfus accounts, obtain information on other
Dreyfus mutual funds and get current stock market quotes.
Account statements
EVERY FUND INVESTOR automatically receives regular account statements. You'll
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
Retirement plans
A variety of retirement plans are offered for the taxable money market funds,
including traditional, Roth and Education IRAs. Here's where you call for
information:
* for traditional, rollover, Roth and Education IRAs,
call 1-800-645-6561
* for SEP-IRAs, Keogh accounts, 401(k) and 403(b) accounts, call
1-800-358-0910
Your Investment
<PAGE 21>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
The Dreyfus Family of Funds
P.O. Box 9387, Providence, RI 02940-9387
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to:
The Dreyfus Family of Funds
P.O. Box 105
Newark, New Jersey 07101-0105
By Telephone
WIRE Have your bank send your investment to The Bank of New York, with
these instructions:
* ABA# 021000018
* fund name and DDA#
* General Money Market Fund
DDA# 8900051957
* General Government Securities
Money Market Fund
DDA# 8900052414
* General Municipal Money Market Fund
DDA# 8900052376
* General California Municipal
Money Market Fund
DDA# 8900052163
* General Minnesota Municipal
Money Market Fund
DDA# 8900337451
* General New York Municipal
Money Market Fund
DDA# 8900052171
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to The Bank of New York, with these
instructions:
* ABA# 021000018
* fund name and DDA#
* General Money Market Fund
DDA# 8900051957
* General Government Securities Money Market Fund
DDA# 8900052414
* General Municipal Money Market Fund
DDA# 8900052376
* General California Municipal Money Market Fund
DDA# 8900052163
* General Minnesota Municipal Money Market Fund
DDA# 8900337451
* General New York Municipal Money Market Fund
DDA# 8900052171
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but insert "1111" before your account number.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate on your application which automatic
service(s) you want. Return your application with your investment.
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials.
TO SELL SHARES
Write a redemption check OR write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 19)
Mail your request to:
The Dreyfus Family of Funds
P.O. Box 9671, Providence, RI 02940-9671
WIRE Call us or your financial representative to request your transaction. Be
sure the fund has your bank account information on file. Proceeds will be wired
to your bank.
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
CHECK Call us or your financial representative to request your transaction. A
check will be sent to the address of record.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
<PAGE 22>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian
P.O. Box 6427, Providence, RI 02940-6427
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail in the slip and the check to:
The Dreyfus Trust Company, Custodian
P.O. Box 6427, Providence, RI 02940-6427
By Telephone
____________
WIRE Have your bank send your investment to The Bank of New York, with these
instructions:
* ABA# 021000018
* fund name and DDA#
* General Money Market Fund
DDA# 8900051957
* General Government Securities Money Market Fund
DDA# 8900052414
* the share class
* your account number
* name of investor
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but insert "1111" before your account number.
Automatically
_____________
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
TO SELL SHARES
Write a redemption check* OR write a letter of instruction that includes:
* your name and signature
* your account number and fund name
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 19).
Mail in your request to:
The Dreyfus Trust Company
P.O. Box 6427, Providence, RI 02940-6427
* A redemption check written for a qualified distribution is not subject to
TEFRA.
____________________
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
Your Investment
<PAGE 23>
NOTES
<PAGE>
NOTES
<PAGE 24>
For More Information
General Money Market Fund
- -----------------------------------
SEC file number: 811-3207
General Government Securities Money Market Fund
- -----------------------------------
SEC file number: 811-3456
General Municipal Money Market Fund
- ----------------------------------
SEC file number: 811-3481
General California Municipal Money Market Fund
- ----------------------------------
SEC file number: 811-4871
General Minnesota Municipal Money Market Fund
- ----------------------------------
SEC file number: 811-3481
General New York Municipal Money Market Fund
- -----------------------------------
SEC file number: 811-4870
More information on each fund is available free upon request, including the
following:
Annual/Semiannual Report
Describes the fund's performance, and lists portfolio holdings.
Statement of Additional Information (SAI)
Provides more details about each fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-645-6561
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 1999, Dreyfus Service Corporation GEN/P0499A
<PAGE>
General Money Market Funds
General Money Market Fund
General Government Securities Money Market Fund
General Municipal Money Market Fund
General California Municipal Money Market Fund
General Minnesota Municipal Money Market Fund
General New York Municipal Money Market Fund
Investing in high quality short-term securities for current income, safety of
principal and liquidity
PROSPECTUS April 1, 1999
CLASS B SHARES
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
<PAGE>
The Funds
Contents
The Funds
- --------------------------------------------------------------------------------
Introduction 1
General Money Market Fund 2
General Government Securities
Money Market Fund 4
General Municipal
Money Market Fund 6
General California Municipal
Money Market Fund 8
General Minnesota Municipal
Money Market Fund 10
General New York Municipal
Money Market Fund 12
Management 14
Financial Highlights 15
Your Investment
- --------------------------------------------------------------------------------
Account Policies 18
Distributions and Taxes 20
Services for Fund Investors 20
Instructions for Regular Accounts 22
Instructions for IRAs 23
For More Information
- --------------------------------------------------------------------------------
MORE INFORMATION ON EACH FUND CAN BE FOUND IN THE FUND'S CURRENT
ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Introduction
Each fund is a money market mutual fund with a separate investment portfolio.
The operations and results of a fund are unrelated to those of each other fund.
This combined prospectus has been prepared for your convenience so that you can
consider six investment choices in one document.
As a money market fund, each fund is subject to maturity, quality and
diversification requirements designed to help it maintain a stable share price.
Generally, each fund is required to invest at least 95% of its assets in the
securities of issuers with the highest credit rating or the unrated equivalent
as determined by Dreyfus, with the remainder invested in securities with the
second highest credit rating.
An investment in a fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although each fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in a fund.
Concepts to understand
MONEY MARKET FUND: a specific type of fund that seeks to maintain a $1.00 price
per share. Money market funds are subject to strict federal requirements and
must:
* maintain an average dollar-weighted portfolio maturity of 90 days or
less
* buy individual securities that have remaining maturities of 13 months or
less
* invest only in high quality dollar-denominated obligations
CREDIT RATING: a measure of the issuer's expected ability to make all required
interest and principal payments in a timely manner. An issuer with the highest
credit rating has a very strong degree of certainty (or safety) with respect to
making all payments. An issuer with the second highest credit rating has a
strong capacity to make all payments, but the degree of safety is somewhat less
The Funds
<PAGE 1>
General Money Market Fund
-----------------------
Ticker Symbol: GMBXX
GOAL/APPROACH
The fund seeks as high a level of current income as is consistent with the
preservation of capital. To pursue this goal, the fund invests in a diversified
portfolio of high quality, short-term debt securities, including the following:
* securities issued or guaranteed by the U.S. government or its agencies
* certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by domestic or foreign banks or their
subsidiaries or branches
* repurchase agreements
* asset-backed securities
* domestic and dollar-denominated foreign commercial paper, and other
short-term corporate obligations, including those with floating or variable
rates of interest
* dollar-denominated obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions or agencies
Normally, the fund invests at least 25% of its net assets in domestic or
dollar-denominated foreign bank obligations.
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to
drop
* any of the fund's holdings could have its credit rating downgraded or
could default
* the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking industry
* the risks generally associated with dollar-denominated foreign
investments, such as economic and political developments, seizure or
nationalization of deposits, imposition of taxes or other restrictions on the
payment of principal and interest
<PAGE 2>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
4.68 4.84 4.73
89 90 91 92 93 94 95 96 97 98
BEST QUARTER: Q4 '97 +1.22%
WORST QUARTER: Q4 '98 +1.09%
The fund's 7-day yield on 12/31/98 was 4.25%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception
1 Year (3/31/95)
- --------------------------------------------------------------------------------
4.73% 4.84%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.11%
- --------------------------------------------------------------------------------
TOTAL 1.06%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$108 $337 $585 $1,294
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.06% to 1.00%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General Money Market Fund
<PAGE 3>
General Government Securities Money Market Fund
----------------------
Ticker Symbol: GSBXX
GOAL/APPROACH
The fund seeks as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity.
To pursue this goal, the fund invests in securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities, and repurchase agreements
in respect of these securities.
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
A security backed by the U.S. Treasury or the full faith and credit of the
United States is guaranteed only as to the timely payment of interest and
principal when held to maturity. The current market prices for such securities
are not guaranteed and will fluctuate. The fund is subject to the risk that
interest rates could rise sharply, causing the fund's share price to drop.
<PAGE 4>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
4.60 4.69 4.61
89 90 91 92 93 94 95 96 97 98
BEST QUARTER: Q4 '97 +1.18%
WORST QUARTER: Q4 '98 +1.06%
The fund's 7-day yield on 12/31/98 was 4.08%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception
1 Year (3/31/95)
- --------------------------------------------------------------------------------
4.61% 4.72%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.07%
- --------------------------------------------------------------------------------
TOTAL 1.02%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$104 $325 $563 $1,248
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.02% to 0.97%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General Government Securities Money Market Fund
<PAGE 5>
General Municipal Money Market Fund
-----------------------
Ticker Symbol: GBMXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal personal income
tax, as is consistent with the preservation of capital and the maintenance of
liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal personal
income tax. When the portfolio manager believes that acceptable municipal
obligations are unavailable for investment, the fund may invest temporarily in
high quality, taxable money market instruments. Municipal obligations are
typically divided into two types:
* GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
* REVENUE BONDS, which are payable from the revenues derived from a
specific revenue source, such as charges for water and sewer service or
highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to
drop
* any of the fund's holdings could have its credit rating downgraded or
could default
Although the fund's objective is to generate income exempt from federal income
tax, interest from some of its holdings may be subject to the federal
alternative minimum tax. In addition, the fund occasionally may invest in
taxable money market instruments.
<PAGE 6>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
2.66 2.86 2.60
89 90 91 92 93 94 95 96 97 98
BEST QUARTER: Q2 '97 +0.76%
WORST QUARTER: Q4 '98 +0.61%
The fund's 7-day yield on 12/31/98 was 2.83%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception
1 Year (3/31/95)
- --------------------------------------------------------------------------------
2.60% 2.77%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.10%
- --------------------------------------------------------------------------------
TOTAL 1.05%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$107 $334 $579 $1,283
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.05% to 0.96%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General Municipal Money Market Fund
<PAGE 7>
General California Municipal Money Market Fund
----------------------
Ticker Symbol: GENXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal and California
state personal income taxes, as is consistent with the preservation of capital
and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal and
California state personal income taxes. When the portfolio manager believes that
acceptable California municipal obligations are unavailable for investment, the
fund may invest in securities that may be subject to California state income
tax, but are free from federal income tax. Municipal obligations are typically
divided into two types:
* GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
* REVENUE BONDS, which are payable from the revenues derived from a
specific revenue source, such as charges for water and sewer service or
highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to
drop
* any of the fund's holdings could have its credit rating downgraded or
could default
* California's economy and revenues underlying municipal obligations may
decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal and
California state income taxes, interest from some of its holdings may be subject
to the federal alternative minimum tax. In addition, the fund occasionally may
invest in taxable bonds and/or municipal bonds that are exempt only from federal
personal income taxes.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
<PAGE 8>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
2.48 2.62 2.34
89 90 91 92 93 94 95 96 97 98
BEST QUARTER: Q2 '97 +0.71%
WORST QUARTER: Q3 '98 +0.53%
The fund's 7-day yield on 12/31/98 was 2.59%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception
1 Year (8/1/95)
- --------------------------------------------------------------------------------
2.34% 2.52%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.12%
- --------------------------------------------------------------------------------
TOTAL 1.07%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$109 $340 $590 $1,306
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.07% to 1.00%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General California Municipal Money Market Fund
<PAGE 9>
General Minnesota Municipal
Money Market Fund
-----------------------
Ticker Symbol: GMNXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal and Minnesota
state personal income taxes, as is consistent with the preservation of capital
and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal and
Minnesota state personal income taxes. When the portfolio manager believes that
acceptable Minnesota municipal obligations are unavailable for investment, the
fund may invest in securities that may be subject to Minnesota state income tax,
but are free from federal income tax. Municipal obligations are typically
divided into two types:
* GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
* REVENUE BONDS, which are payable from the revenues derived from a
specific revenue source, such as charges for water and sewer service or
highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to
drop
* any of the fund's holdings could have its credit rating downgraded or
could default
* Minnesota's economy and revenues underlying municipal obligations may
decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal and
Minnesota state income taxes, interest from some of its holdings may be subject
to the federal alternative minimum tax. In addition, the fund occasionally may
invest in taxable bonds and/or municipal bonds that are exempt only from federal
personal income taxes.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
<PAGE 10>
PAST PERFORMANCE
Since the fund has less than one calendar year of performance, past performance
information is not included. For performance information as of the end of the
fund's first fiscal period, please refer to the Statement of Additional
Information (SAI).
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.72%
- --------------------------------------------------------------------------------
TOTAL 1.67%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years
- --------------------------------------------------------------------------------
$170 $526
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
period ended November 30, 1998, Dreyfus waived its fee and assumed certain other
fund expenses pursuant to an undertaking, reducing total expenses from 1.67% to
0.80%. This undertaking is voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and estimated fees to be paid by the fund for
miscellaneous items such as transfer agency, custody, professional and
registration fees.
General Minnesota Municipal Money Market Fund
<PAGE 11>
General New York Municipal Money Market Fund
----------------------
Ticker Symbol: GNYXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal, New York state
and New York city personal income taxes, as is consistent with the preservation
of capital and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal, New York
state and New York city personal income taxes. When the portfolio manager
believes that acceptable New York municipal obligations are unavailable for
investment, the fund may invest in securities that may be subject to New York
state and New York city income taxes, but are free from federal income tax.
Municipal obligations are typically divided into two types:
* GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
* REVENUE BONDS, which are payable from the revenues derived from a
specific revenue source, such as charges for water and sewer service or
highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to
drop
* any of the fund's holdings could have its credit rating downgraded or
could default
* New York's economy and revenues underlying municipal obligations may
decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal, New
York state and New York city income taxes, interest from some of its holdings
may be subject to the federal alternative minimum tax. In addition, the fund
occasionally may invest in taxable bonds and/or municipal bonds that are exempt
only from federal personal income tax.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
<PAGE 12>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
2.51 2.70 2.42
89 90 91 92 93 94 95 96 97 98
BEST QUARTER: Q2 '97 +0.70%
WORST QUARTER: Q4 '98 +0.55%
The fund's 7-day yield on 12/31/98 was 2.61%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception
1 Year (9/8/95)
- --------------------------------------------------------------------------------
2.42% 2.57%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.11%
- --------------------------------------------------------------------------------
TOTAL 1.06%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$108 $337 $585 $1,294
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.06% to 0.98%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General New York Municipal Money Market Fund
<PAGE 13>
MANAGEMENT
The investment adviser for each fund is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages one of the
nation's leading mutual fund complexes, with more than $121 billion in more than
160 mutual fund portfolios. Dreyfus is the primary mutual fund business of
Mellon Bank Corporation, a broad-based financial services company with a bank at
its core. With more than $389 billion of assets under management and $1.9
trillion of assets under administration and custody, Mellon provides a full
range of banking, investment and trust products and services to individuals,
businesses and institutions. Its mutual fund companies place Mellon as the
leading bank manager of mutual funds. Mellon is headquartered in Pittsburgh,
Pennsylvania.
Management philosophy
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Concepts to understand
YEAR 2000 ISSUES: these funds could be adversely affected if the computer
systems used by Dreyfus and the funds' other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which these funds invest may be
adversely affected by year 2000-related problems. This could have an impact on
the value of a fund's investments and its share price.
<PAGE 14>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each fund's Class B shares for
the fiscal periods indicated. "Total return" shows how much your investment in
the fund would have increased (or decreased) during each period, assuming you
had reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young LLP, whose report, along with the fund's
financial statements, is included in the annual report.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEAR ENDED TEN MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, YEAR ENDED JANUARY 31,
GENERAL MONEY MARKET FUND 1998 1997(1) 1997 1996(2)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .047 .039 .046 .043
Distributions: Dividends from investment income -- net (.047) (.039) (.046) (.043)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 4.78 4.83(3) 4.65 5.18(3)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.00 1.00(3) 1.00 1.00(3)
Ratio of net investment income to average net assets (%) 4.66 4.78(3) 4.56 5.00(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .06 .05(3) .07 .07(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,427,332 1,231,132 369,205 50,446
(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.
YEAR ENDED TEN MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, YEAR ENDED JANUARY 31,
GENERAL GOVERNMENT SECURITIES MONEY MARKET FUND 1998 1997(1) 1997 1996(2)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .046 .038 .045 .042
Distributions: Dividends from investment income -- net (.046) (.038) (.045) (.042)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 4.66 4.69(3) 4.58 5.04(3)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .97 1.00(3) 1.00 1.00(3)
Ratio of net investment income to average net assets (%) 4.55 4.60(3) 4.48 5.01(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .05 .05(3) .08 .10(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 645,984 364,845 90,175 58
(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.
Financial Highlights
<PAGE 15>
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED NOVEMBER 30,
GENERAL MUNICIPAL MONEY MARKET FUND 1998 1997 1996 1995(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .026 .028 .027 .020
Distributions: Dividends from investment income -- net (.026) (.028) (.027) (.020)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.64 2.86 2.70 3.01(2)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .96 .95 .85 1.10(2)
Ratio of net investment income to average net assets (%) 2.59 2.87 2.65 2.83(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .09 .16 .29 .09(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 377,636 263,008 17,491 3,024
(1) FROM MARCH 31, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO NOVEMBER 30, 1995.
(2) ANNUALIZED.
YEAR ENDED FOUR MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, YEAR ENDED JULY 31,
GENERAL CALIFORNIA MUNICIPAL MONEY MARKET FUND 1998 1997(1) 1997 1996(2)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .024 .009 .026 .025
Distributions: Dividends from investment income -- net (.024) (.009) (.026) (.025)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.39 2.57(3) 2.61 2.56
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.00 1.00(3) 1.00 1.00
Ratio of net investment income to average net assets (%) 2.34 2.62(3) 2.52 2.45
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .07 .13(3) .07 .08
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 8,760 2,669 928 5,475
(1) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO NOVEMBER 30.
(2) FROM AUGUST 1, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO JULY 31, 1996.
(3) ANNUALIZED.
</TABLE>
<PAGE 16>
PERIOD ENDED NOVEMBER 30,
GENERAL MINNESOTA MUNICIPAL MONEY MARKET FUND 1998(1)
- --------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00
Investment operations: Investment income -- net .013
Distributions: Dividends from investment
income -- net (.013)
Net asset value, end of period 1.00
Total return (%) 2.67(2)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .80(2)
Ratio of net investment income to average net assets (%) 2.63(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .87(2)
- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 28,160
(1) FROM JUNE 1, 1998 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1998.
(2) ANNUALIZED.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
<S> <C> <C> <C> <C>
GENERAL NEW YORK MUNICIPAL MONEY MARKET FUND 1998 1997 1996 1995(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .024 .027 .025 .006
Distributions: Dividends from investment income -- net (.024) (.027) (.025) (.006)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.47 2.68 2.55 2.82(2)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .98 .95 .95 1.04(2)
Ratio of net investment income to average net assets (%) 2.44 2.64 2.47 3.64(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .08 .08 .16 --
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 46,997 42,169 36,199 --
(1) FROM SEPTEMBER 8, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO NOVEMBER 30, 1995.
(2) ANNUALIZED.
</TABLE>
Financial Highlights
<PAGE 17>
Your Investment
ACCOUNT POLICIES
Buying shares
GENERAL FUNDS are designed primarily for people who are investing through a
third party such as a bank, broker-dealer or financial adviser. Third parties
with whom you open a fund account may impose policies, limitations and fees
which are different than those described here.
YOUR PRICE FOR FUND SHARES is the fund's net asset value (NAV), which is
generally calculated twice a day, at 5 p.m. and 8 p.m. Eastern time for the
taxable money market funds and 12 noon and 8 p.m. Eastern time for the municipal
money market funds, every day the New York Stock Exchange or the fund's transfer
agent is open. Your order will be priced at the next NAV calculated after your
order is accepted by the fund's transfer agent or other authorized entity. Each
fund's investments are valued based on amortized cost.
IF YOUR PAYMENTS ARE RECEIVED in or converted into Federal Funds by 12 noon, you
will receive the dividend declared that day. If your payments are received in or
converted into Federal Funds after 12 noon, you will begin to accrue dividends
on the following business day. Qualified institutions may telephone orders to
buy shares. If such an order is made by 5 p.m. for the taxable money market
funds or 12 noon for the municipal money market funds, and Federal Funds are
received by 6 p.m. or 4 p.m., respectively, the shares will be purchased at the
NAV determined at 5 p.m. or 12 noon, as the case may be, and will receive the
dividend declared that day. If such an order is made after 5 p.m. for the
taxable money market funds or 12 noon for the municipal money market funds, but
by 8 p.m., and Federal Funds are received by 11 a.m. the next business day, the
shares will be purchased at the NAV determined at 8 p.m. and will begin to
accrue dividends on the next business day. All times are Eastern time.
BECAUSE THE MUNICIPAL MONEY MARKET FUNDS seek tax-exempt income, they are not
recommended for purchase in IRAs or other qualified retirement plans.
- --------------------------------------------------------------------------------
Minimum investments
Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $2,500 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
<PAGE 18>
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME through your financial representative,
or you can contact the fund directly. Your shares will be sold at the next NAV
calculated after your order is accepted by the fund's transfer agent or other
authorized entity. Any certificates representing fund shares being sold must be
returned with your redemption request. Your order will be processed promptly and
you will generally receive the proceeds within a week.
BEFORE SELLING OR WRITING A CHECK for recently purchased shares, please note
that if the fund has not yet collected payment for the shares you are selling,
it may delay sending the proceeds for up to eight business days or until it has
collected payment.
- --------------------------------------------------------------------------------
Limitations on selling shares by phone
Proceeds
sent by Minimum Maximum
- --------------------------------------------------------------------------------
CHECK NO MINIMUM $150,000 PER DAY
WIRE $1,000 $250,000 FOR JOINT ACCOUNTS
EVERY 30 DAYS
TELETRANSFER $500 $250,000 FOR JOINT ACCOUNTS
EVERY 30 DAYS
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
* amounts of $1,000 or more on accounts whose address has been changed
within the last 30 days
* requests to send the proceeds to a different payee or address
Written sell orders of $100,000 or more must also be signature guaranteed.
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
General policies
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
EACH FUND RESERVES THE RIGHT TO:
* refuse any purchase or exchange request that could adversely affect the
fund or its operations, including those from any individual or group who, in the
fund's view, is likely to engage in excessive trading (usually defined as more
than four exchanges out of the fund within a calendar year)
* refuse any purchase or exchange request in excess of 1% of the fund's
total assets
* change or discontinue its exchange privilege, or temporarily suspend
this privilege during unusual market conditions
* change its minimum investment amounts
* delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or during
unusual market conditions)
Each fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
Small account policies
To offset the relatively higher costs of servicing smaller accounts, the
California Municipal Money Market Fund and New York Municipal Money Market Fund
charge regular accounts with balances below $2,000 an annual fee of $12. The fee
will be imposed during the fourth quarter of each calendar year.
The fee will be waived for: any investor whose aggregate Dreyfus mutual fund
investments total at least $25,000; accounts participating in automatic
investment programs and accounts opened through a financial institution.
With respect to any fund, if your account falls below $500, the fund may ask you
to increase your balance. If it is still below $500 after 45 days, the fund may
close your account and send you the proceeds.
Your Investment
<PAGE 19>
DISTRIBUTIONS AND TAXES
EACH FUND USUALLY PAYS ITS SHAREHOLDERS dividends from its net investment income
once a month, and distributes any net realized securities gains once a year.
Your dividends and distributions will be reinvested in the fund unless you
instruct the fund otherwise. There are no fees or sales charges on
reinvestments.
DIVIDENDS AND DISTRIBUTIONS PAID by the taxable money market funds are taxable
to U.S. shareholders as ordinary income (unless your investment is in an IRA or
other tax-advantaged account).
EACH MUNICIPAL MONEY MARKET FUND anticipates that, under normal market
conditions, virtually all of its income dividends will be exempt from federal
and, as to California Municipal Money Market Fund, California, as to Minnesota
Municipal Money Market Fund, Minnesota, and as to New York Municipal Money
Market Fund, New York state and New York city, personal income taxes. However,
any dividends and distributions from taxable investments are taxable as ordinary
income.
The tax status of any distribution is the same regardless of how long you have
been in the fund and whether you reinvest your distributions or take them in
cash.
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
Concepts to understand
DIVIDENDS: income or interest paid by the investments in a fund's portfolio, net
of expenses, passed on to fund shareholders.
DISTRIBUTIONS: income, net of expenses passed on to fund shareholders. These are
calculated on a per-share basis: each share earns the same rate of return, so
the more fund shares you own, the higher your distribution.
SECURITIES GAINS: distributions derived from the profits the fund earns when it
sells securities for a higher price than it paid for them.
SERVICES FOR FUND INVESTORS
THE THIRD PARTY THROUGH WHOM YOU PURCHASED fund shares may impose different
restrictions on these services and privileges offered by the fund, or may not
make them available at all. Consult your financial representative for more
information on the availability of these services and privileges.
Automatic services
BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to certain
restrictions. You can set up most of these services with your application, or by
calling your financial representative or 1-800-645-6561.
- --------------------------------------------------------------------------------
For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.
DREYFUS PAYROLL For making automatic investments
SAVINGS PLAN through a payroll deduction.
DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one Dreyfus fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
DREYFUS AUTO- For making regular exchanges
EXCHANGE PRIVILEGE from one Dreyfus fund into
another.
- --------------------------------------------------------------------------------
For selling shares
DREYFUS AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most Dreyfus funds.
<PAGE 20>
Checkwriting privilege
YOU MAY WRITE REDEMPTION CHECKS against your account in amounts of $500 or more.
These checks are free; however, a fee will be charged if you request a stop
payment or if the transfer agent cannot honor a redemption check due to
insufficient funds or another valid reason. Please do not postdate your checks
or use them to close your account.
Exchange privilege
YOU CAN EXCHANGE $500 OR MORE from one Dreyfus fund into another (no minimum for
retirement accounts). You can request your exchange in writing or by phone. Be
sure to read the current prospectus for any fund into which you are exchanging.
Any new account established through an exchange will have the same privileges as
your original account (as long as they are available). There is currently no fee
for exchanges, although you may be charged a sales load when exchanging into any
fund that has one.
Dreyfus TeleTransfer privilege
TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the Dreyfus TeleTransfer privilege. You can set up TeleTransfer
on your account by providing bank account information and following the
instructions on your application.
The Dreyfus Touch((reg.tm))
FOR 24-HOUR AUTOMATED ACCOUNT ACCESS, use Dreyfus Touch. With a touch-tone
phone, you can easily manage your Dreyfus accounts, obtain information on other
Dreyfus mutual funds and get current stock market quotes.
Account statements
EVERY FUND INVESTOR automatically receives regular account statements. You'll
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
Retirement plans
A variety of retirement plans are offered for the taxable money market funds,
including traditional, Roth and Education IRAs. Here's where you call for
information:
* for traditional, rollover, Roth and Education IRAs,
call 1-800-645-6561
* for SEP-IRAs, Keogh accounts, 401(k) and 403(b) accounts, call
1-800-358-0910
Your Investment
<PAGE 21>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
The Dreyfus Family of Funds
P.O. Box 9387, Providence, RI 02940-9387
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to:
The Dreyfus Family of Funds
P.O. Box 105
Newark, New Jersey 07101-0105
By Telephone
WIRE Have your bank send your
investment to The Bank of New York, with these instructions:
* ABA# 021000018
* fund name and DDA#
* General Money Market Fund
DDA# 8900051957
* General Government Securities
Money Market Fund
DDA# 8900052414
* General Municipal Money Market Fund
DDA# 8900052376
* General California Municipal
Money Market Fund
DDA# 8900052163
* General Minnesota Municipal
Money Market Fund
DDA# 8900337451
* General New York Municipal
Money Market Fund
DDA# 8900052171
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to The Bank of New York, with these
instructions:
* ABA# 021000018
* fund name and DDA#
* General Money Market Fund
DDA# 8900051957
* General Government Securities Money Market Fund
DDA# 8900052414
* General Municipal Money Market Fund
DDA# 8900052376
* General California Municipal Money Market Fund
DDA# 8900052163
* General Minnesota Municipal Money Market Fund
DDA# 8900337451
* General New York Municipal Money Market Fund
DDA# 8900052171
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but insert "1111" before your account number.
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate on your application which automatic
service(s) you want. Return your application with your investment.
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials.
TO SELL SHARES
Write a redemption check OR write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 19)
Mail your request to:
The Dreyfus Family of Funds
P.O. Box 9671, Providence, RI 02940-9671
WIRE Call us or your financial representative to request your transaction. Be
sure the fund has your bank account information on file. Proceeds will be wired
to your bank.
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
CHECK Call us or your financial representative to request your transaction. A
check will be sent to the address of record.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
<PAGE 22>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian
P.O. Box 6427, Providence, RI 02940-6427
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail in the slip and the check to:
The Dreyfus Trust Company, Custodian
P.O. Box 6427, Providence, RI 02940-6427
By Telephone
____________
WIRE Have your bank send your investment to The Bank of New York, with these
instructions:
* ABA# 021000018
* fund name and DDA#
* General Money Market Fund
DDA# 8900051957
* General Government Securities Money Market Fund
DDA# 8900052414
* the share class
* your account number
* name of investor
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but insert "1111" before your account number.
Automatically
_____________
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
TO SELL SHARES
Write a redemption check* OR write a letter of instruction that includes:
* your name and signature
* your account number and fund name
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 19).
Mail in your request to:
The Dreyfus Trust Company
P.O. Box 6427, Providence, RI 02940-6427
* A redemption check written for a qualified distribution is not subject to
TEFRA.
_________________
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
Your Investment
<PAGE 23>
NOTES
<PAGE 24>
NOTES
<PAGE 25>
For More Information
General Money Market Fund
- -----------------------------------
SEC file number: 811-3207
General Government Securities Money Market Fund
- -----------------------------------
SEC file number: 811-3456
General Municipal Money Market Fund
- ----------------------------------
SEC file number: 811-3481
General California Municipal Money Market Fund
- ----------------------------------
SEC file number: 811-4871
General Minnesota Municipal Money Market Fund
- ----------------------------------
SEC file number: 811-3481
General New York Municipal Money Market Fund
- -----------------------------------
SEC file number: 811-4870
More information on each fund is available free upon request, including the
following:
Annual/Semiannual Report
Describes the fund's performance, and lists portfolio holdings.
Statement of Additional Information (SAI)
Provides more details about each fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 1999, Dreyfus Service Corporation GEN/P0499B
<PAGE>
<PAGE>
General
Money Market
Funds
GENERAL MONEY MARKET FUND
GENERAL GOVERNMENT SECURITIES
MONEY MARKET FUND
GENERAL MUNICIPAL MONEY MARKET FUND
GENERAL CALIFORNIA MUNICIPAL
MONEY MARKET FUND
GENERAL MINNESOTA MUNICIPAL
MONEY MARKET FUND
GENERAL NEW YORK MUNICIPAL
MONEY MARKET FUND
Investing in high quality, short-term securities
for current income, safety of principal and liquidity
PROSPECTUS April 1, 1999
CLASS B SHARES
Baird/A NORTHWESTERN
MUTUAL COMPANY
SERVICE AGENT
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
CONTENTS
The Funds
- --------------------------------------------------------------------------------
Introduction 1
General Money Market Fund 2
General Government Securities
Money Market Fund 4
General Municipal
Money Market Fund 6
General California Municipal
Money Market Fund 8
General Minnesota Municipal
Money Market Fund 10
General New York Municipal
Money Market Fund 12
Management 14
Financial Highlights 15
Your Investment
- --------------------------------------------------------------------------------
Account Policies 18
Distributions and Taxes 19
For More Information
- --------------------------------------------------------------------------------
More information on each fund can be found in the fund's current
annual/semiannual report. See back cover.
THE FUNDS
INTRODUCTION
Each fund is a money market mutual fund with a separate investment portfolio.
The operations and results of a fund are unrelated to those of each other fund.
This combined prospectus has been prepared for your convenience so that you can
consider six investment choices in one document.
As a money market fund, each fund is subject to maturity, quality and
diversification requirements designed to help it maintain a stable share price.
Generally, each fund is required to invest at least 95% of its assets in the
securities of issuers with the highest credit rating or the unrated equivalent
as determined by Dreyfus, with the remainder invested in securities with the
second highest credit rating.
An investment in a fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although each fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in a fund.
CONCEPTS TO UNDERSTAND
MONEY MARKET FUND: a specific type of fund that seeks to maintain a $1.00 price
per share. Money market funds are subject to strict federal requirements and
must:
* maintain an average dollar-weighted portfolio maturity of 90 days or less
* buy individual securities that have remaining maturities of 13 months or less
* invest only in high quality dollar-denominated obligations
CREDIT RATING: a measure of the issuer's expected ability to make all required
interest and principal payments in a timely manner. An issuer with the highest
credit rating has a very strong degree of certainty (or safety) with respect to
making all payments. An issuer with the second highest credit rating has a
strong capacity to make all payments, but the degree of safety is somewhat less.
The Funds 1
<PAGE>
General Money Market Fund
-----------
Ticker Symbol: GMBXX
GOAL/APPROACH
The fund seeks as high a level of current income as is consistent with the
preservation of capital. To pursue this goal, the fund invests in a diversified
portfolio of high quality, short-term debt securities, including the following:
* securities issued or guaranteed by the U.S. government or its agencies
* certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by domestic or foreign banks or their
subsidiaries or branches
* repurchase agreements
* asset-backed securities
* domestic and dollar-denominated foreign com mercial paper, and other
short-term corporate obligations, including those with floating or variable
rates of interest
* dollar-denominated obligations issued or guaranteed by one or more foreign
governments or any of their political subdivisions or agencies
Normally, the fund invests at least 25% of its net assets in domestic or
dollar-denominated foreign bank obligations.
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* the risks generally associated with concentrating investments in the banking
industry, such as interest rate risk, credit risk and regulatory developments
relating to the banking industry
* the risks generally associated with dollar-denominated foreign investments,
such as economic and political developments, seizure or nationalization of
deposits, imposition of taxes or other restrictions on the payment of
principal and interest
2
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
4.68 4.84 4.73
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q4 '97 +1.22%
Worst Quarter: Q4 '98 +1.09%
The fund's 7-day yield on 12/31/98 was 4.25%. For the fund's current yield, call
toll-free 1-800-645-6561.
- -------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- -------------------------------------------------------------------------------
4.73% 4.84%
What this fund is -- and isn't
- -------------------------------------------------------------------------------
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.11%
- --------------------------------------------------------------------------------
Total 1.06%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$108 $337 $585 $1,294
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
CONCEPTS TO UNDERSTAND
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.06% to 1.00%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General Money Market Fund 3
<PAGE>
General Government Securities
Money Market Fund
-----------
Ticker Symbol: GSBXX
GOAL/APPROACH
The fund seeks as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity.
To pursue this goal, the fund invests in securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities, and repurchase agreements
in respect of these securities.
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
A security backed by the U.S. Treasury or the full faith and credit of the
United States is guaranteed only as to the timely payment of interest and
principal when held to maturity. The current market prices for such securities
are not guaranteed and will fluctuate. The fund is subject to the risk that
interest rates could rise sharply, causing the fund's share price to drop.
4
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
4.60 4.69 4.61
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q4 '97 +1.18%
Worst Quarter: Q4 '98 +1.06%
The fund's 7-day yield on 12/31/98 was 4.08%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- -------------------------------------------------------------------------------
4.61% 4.72%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.07%
- --------------------------------------------------------------------------------
Total 1.02%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$104 $325 $563 $1,248
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
CONCEPTS TO UNDERSTAND
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.02% to 0.97%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General Government Securities Money Market Fund 5
<PAGE>
General Municipal Money Market Fund
-----------
Ticker Symbol: GBMXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal personal income
tax, as is consistent with the preservation of capital and the maintenance of
liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal personal
income tax. When the portfolio manager believes that acceptable municipal
obligations are unavailable for investment, the fund may invest temporarily in
high quality, taxable money market instruments. Municipal obligations are
typically divided into two types:
* general obligation bonds, which are secured by the full faith and credit of
the issuer and its taxing power
* revenue bonds, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
Although the fund's objective is to generate income exempt from federal income
tax, interest from some of its holdings may be subject to the federal
alternative minimum tax. In addition, the fund occasionally may invest in
taxable money market instruments.
6
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
2.66 2.86 2.60
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q2 '97 +0.76%
Worst Quarter: Q4 '98 +0.61%
The fund's 7-day yield on 12/31/98 was 2.83%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- -------------------------------------------------------------------------------
2.60% 2.77%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.10%
- --------------------------------------------------------------------------------
Total 1.05%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$107 $334 $579 $1,283
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
CONCEPTS TO UNDERSTAND
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.05% to 0.96%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General Municipal Money Market Fund 7
<PAGE>
General California Municipal
Money Market Fund
-----------
Ticker Symbol: GENXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal and California
state personal income taxes, as is consistent with the preservation of capital
and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal and
California state personal income taxes. When the portfolio manager believes that
acceptable California municipal obligations are unavailable for investment, the
fund may invest in securities that may be subject to California state income
tax, but are free from federal income tax. Municipal obligations are typically
divided into two types:
* GENERAL OBLIGATION BONDS, which are secured by the full faith and credit of
the issuer and its taxing power
* REVENUE BONDS, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* California's economy and revenues underlying municipal obligations may decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal and
California state income taxes, interest from some of its holdings may be subject
to the federal alternative minimum tax. In addition, the fund occasionally may
invest in taxable bonds and/or municipal bonds that are exempt only from federal
personal income taxes.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
8
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- -------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
2.48 2.62 2.34
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q2 '97 +0.71%
Worst Quarter: Q3 '98 +0.53%
The fund's 7-day yield on 12/31/98 was 2.59%. For the fund's current yield, call
toll-free 1-800-645-6561.
- -------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (8/1/95)
- -------------------------------------------------------------------------------
2.34% 2.52%
What this fund is -- and isn't
- -------------------------------------------------------------------------------
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- -------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.12%
- -------------------------------------------------------------------------------
Total 1.07%
- -------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
$109 $340 $590 $1,306
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
- -------------------------------------------------------------------------------
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.07% to 1.00%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General California Municipal Money Market Fund 9
<PAGE>
General Minnesota Municipal
Money Market Fund
---------------------------
Ticker Symbol: GMNXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal and Minnesota
state personal income taxes, as is consistent with the preservation of capital
and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal and
Minnesota state personal income taxes. When the portfolio manager believes
that acceptable Minnesota municipal obligations are unavailable for investment,
the fund may invest in securities that may be subject to Minnesota state income
tax, but are free from federal income tax. Municipal obligations are typically
divided into two types:
* general obligation bonds, which are secured by the full faith and credit of
the issuer and its taxing power
* revenue bonds, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* Minnesota's economy and revenues underlying municipal obligations may decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal and
Minnesota state income taxes, interest from some of its holdings may be subject
to the federal alternative minimum tax. In addition, the fund occasionally may
invest in taxable bonds and/or municipal bonds that are exempt only from federal
personal income taxes.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
10
<PAGE>
PAST PERFORMANCE
Since the fund has less than one calendar year of performance, past performance
information is not included. For performance information as of the end of the
fund's first fiscal period, please refer to the Statement of Additional
Information (SAI).
What this fund is -- and isn't
- -------------------------------------------------------------------------------
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- -------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.72%
- -------------------------------------------------------------------------------
Total 1.67%
- -------------------------------------------------------------------------------
Expense example
1 Year 3 Years
- -------------------------------------------------------------------------------
$170 $526
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
- -------------------------------------------------------------------------------
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
period ended November 30, 1998, Dreyfus waived its fee and assumed certain other
fund expenses pursuant to an undertaking, reducing total expenses from 1.67% to
0.80%. This undertaking is voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting
services provided by third parties and estimated fees to be paid by the fund for
miscellaneous items such as transfer agency, custody, professional and
registration fees.
General Minnesota Municipal Money Market Fund 11
<PAGE>
General New York Municipal
Money Market Fund
---------------------
Ticker Symbol: GNYXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal, New York state
and New York city personal income taxes, as is consistent with the preservation
of capital and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal, New York
state and New York city personal income taxes. When the portfolio manager
believes that acceptable New York municipal obligations are unavailable for
investment, the fund may invest in securities that may be subject to New York
state and New York city income taxes, but are free from federal income tax.
Municipal obligations are typically divided into two types:
* general obligation bonds, which are secured by the full faith and credit of
the issuer and its taxing power
* revenue bonds, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* New York's economy and revenues underlying municipal obligations may decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal, New
York state and New York city income taxes, interest from some of its holdings
may be subject to the federal alternative minimum tax. In addition, the fund
occasionally may invest in taxable bonds and/or municipal bonds that are exempt
only from federal personal income tax.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
12
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- -------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
2.51 2.70 2.42
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q2 '97 +0.70%
Worst Quarter: Q4 '98 +0.55%
The fund's 7-day yield on 12/31/98 was 2.61%. For the fund's current yield, call
toll-free 1-800-645-6561.
- -------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (9/8/95)
- -------------------------------------------------------------------------------
2.42% 2.57%
What this fund is-- and isn't
- -------------------------------------------------------------------------------
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- -------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.11%
- -------------------------------------------------------------------------------
Total 1.06%
- -------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
$108 $337 $585 $1,294
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
- -------------------------------------------------------------------------------
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.06% to 0.98%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General New York Municipal Money Market Fund 13
<PAGE>
MANAGEMENT
The investment adviser for each fund is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages one of the
nation's leading mutual fund complexes, with more than $121 billion in more than
160 mutual fund portfolios. Dreyfus is the primary mutual fund business of
Mellon Bank Corporation, a broad-based financial services company with a bank at
its core. With more than $389 billion of assets under management and $1.9
trillion of assets under administration and custody, Mellon provides a full
range of banking, investment and trust products and services to individuals,
businesses and institutions. Its mutual fund companies place Mellon as the
leading bank manager of mutual funds. Mellon is headquartered in Pittsburgh,
Pennsylvania.
MANAGEMENT PHILOSOPHY
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Concepts to understand
- ------------------------------------------------------------------------------
YEAR 2000 ISSUES: these funds could be adversely affected if the computer
systems used by Dreyfus and the funds' other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which these funds invest may be
adversely affected by year 2000-related problems. This could have an impact on
the value of a fund's investments and its share price.
14
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each fund's Class B shares for
the fiscal periods indicated. "Total return" shows how much your investment in
the fund would have increased (or decreased) during each period, assuming you
had reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young LLP, whose report, along with the fund's
financial statements, is included in the annual report.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Year Ended Ten Months Ended
November 30, November 30, Year Ended January 31,
General Money Market Fund 1998 1997(1) 1997 1996(2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .047 .039 .046 .043
Distributions: Dividends from investment income--net (.047) (.039) (.046) (.043)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 4.78 4.83(3) 4.65 5.18(3)
- ----------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.00 1.00(3) 1.00 1.00(3)
Ratio of net investment income to average net assets (%) 4.66 4.78(3) 4.56 5.00(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .06 .05(3) .07 .07(3)
- ----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,427,332 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.
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Year Ended Ten Months Ended
November 30, November 30 Year Ended January 31,
General Government Securities Money Market Fund 1998 1997(1) 1997 1996(2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .046 .038 .045 .042
Distributions: Dividends from investment income--net (.046) (.038) (.045) (.042)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 4.66 4.69(3) 4.58 5.04(3)
- ----------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .97 1.00(3) 1.00 1.00(3)
Ratio of net investment income to average net assets (%) 4.55 4.60(3) 4.48 5.01(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .05 .05(3) .08 .10(3)
- ----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 645,984 364,845 90,175 58
- ----------------------------------------------------------------------------------------------------------------
<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.
</TABLE>
Financial Highlights 15
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Year Ended November 30,
General Municipal Money Market Fund 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .026 .028 .027 .020
Distributions: Dividends from investment income--net (.026) (.028) (.027) (.020)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.64 2.86 2.70 3.01(2)
- ----------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .96 .95 .85 1.10(2)
Ratio of net investment income to average net assets (%) 2.59 2.87 2.65 2.8(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .09 .16 .29 .09(2)
- ----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 377,636 263,008 17,491 3,024
- ----------------------------------------------------------------------------------------------------------------
<FN>
1 From March 31, 1995 (commencement of initial offering) to November 30, 1995.
2 Annualized.
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Year Ended Four Months Ended
November 30, November 30, Year Ended July 31,
General California Municipal Money Market Fund 1998 1997(1) 1997 1996(2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .024 .009 .026 .025
Distributions: Dividends from investment income--net (.024) (.009) (.026) (.025)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.39 2.57(3) 2.61 2.56
- ----------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.00 1.00(3) 1.00 1.00
Ratio of net investment income to average net assets (%) 2.34 2.62(3) 2.52 2.45
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .07 .13(3) .07 .08
- ----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 8,760 2,669 928 5,475
- ----------------------------------------------------------------------------------------------------------------
<FN>
1 The fund changed its fiscal year end from July 31 to November 30.
2 From August 1, 1995 (commencement of initial offering) to July 31, 1996.
3 Annualized.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Period Ended November 30,
General Minnesota Municipal Money Market Fund 1998(1)
- --------------------------------------------------------------------------------------------------------------
<S> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00
Investment operations: Investment income-- net .013
Distributions: Dividends from investment income-- net (.013)
Net asset value, end of period 1.00
Total return (%) 2.67(2)
- --------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .80(2)
Ratio of net investment income to average net assets (%) 2.63(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .87(2)
- --------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 28,160
- --------------------------------------------------------------------------------------------------------------
<FN>
1 From June 1, 1998 (commencement of operations) to November 30, 1998.
2 Annualized.
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
General New York Municipal Money Market Fund 1998 1997 1996 1995(1)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .024 .027 .025 .006
Distributions: Dividends from investment income-- net (.024) (.027) (.025) (.006)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.47 2.68 2.55 2.82(2)
- -------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .98 .95 .95 1.04(2)
Ratio of net investment income to average net assets (%) 2.44 2.64 2.47 3.64(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .08 .08 .16 --
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 46,997 42,169 36,199 --
- -------------------------------------------------------------------------------------------------------------------------
<FN>
1 From September 8, 1995 (commencement of initial offering) to November 30, 1995.
2 Annualized.
</TABLE>
Financial Highlights 17
<PAGE>
Your Investment
ACCOUNT POLICIES
BUYING SHARES
GENERAL FUNDS are designed primarily for people who are investing through a
third party such as a bank, broker-dealer or financial adviser. Third parties
with whom you open a fund account may impose policies and charge transaction
fees and may set minimum investment limitations on buying or selling shares.
Consult a representative of your financial institution for more information.
YOUR PRICE FOR FUND SHARES is the fund's net asset value (NAV), which is
generally calculated twice a day, at 5 p.m. and 8 p.m. Eastern time for the
taxable money market funds and 12 noon and 8 p.m. Eastern time for the municipal
money market funds, every day the New York Stock Exchange or the fund's transfer
agent is open. Your order will be priced at the next NAV calculated after your
order is accepted by the fund's transfer agent or other authorized entity. Each
fund's investments are valued based on amortized cost.
IF YOUR PAYMENTS ARE RECEIVED in or converted into Federal Funds by 12 noon, you
will receive the dividend declared that day. If your payments are received in or
converted into Federal Funds after 12 noon, you will begin to accrue dividends
on the following business day. Qualified institutions may telephone orders to
buy shares. If such an order is made by 5 p.m. for the taxable money market
funds or 12 noon for the municipal money market funds, and Federal Funds are
received by 6 p.m. or 4 p.m., respectively, the shares will be purchased at the
NAV determined at 5 p.m. or 12 noon, as the case may be, and will receive the
dividend declared that day. If such an order is made after 5 p.m. for the
taxable money market funds or 12 noon for the municipal money market funds, but
by 8 p.m., and Federal Funds are received by 11 a.m. the next business day, the
shares will be purchased at the NAV determined at 8 p.m. and will begin to
accrue dividends on the next business day. All times are Eastern time.
BECAUSE THE MUNICIPAL MONEY MARKET FUNDS seek tax-exempt income, they are not
recommended for purchase in IRAs or other qualified retirement plans.
Retirement plans
- -------------------------------------------------------------------------------
A variety of retirement plans are offered for the taxable money market funds,
including traditional, rollover, Roth and Education IRAs. In addition, SEP-IRAs,
Keogh accounts, 401(k) and 403(b) accounts are also available. Please call your
financial representative for information.
18
<PAGE>
SELLING SHARES
YOU MAY SELL (REDEEM) SHARES AT ANY TIME THROUGH your financial representative.
Your shares will be sold at the next NAV calculated after your order is accepted
by the fund's transfer agent or other authorized entity.
BEFORE SELLING OR WRITING A CHECK for recently purchased shares, please note
that if the fund has not yet collected payment for the shares you are selling,
it may delay sending the proceeds for up to eight business days or until it has
collected payment.
GENERAL POLICIES
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify that the order is from a representative of your
financial institution.
EACH FUND RESERVES THE RIGHT TO:
* refuse any purchase or exchange request that could adversely affect the
fund or its operations, including those from any individual or group who, in
the fund's view, is likely to engage in excessive trading (usually defined as
more than four exchanges out of the fund within a calendar year)
* refuse any purchase or exchange request in excess of 1% of the fund's total
assets
* change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions
* delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or during
unusual market conditions)
Each fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
DISTRIBUTIONS AND TAXES
EACH FUND USUALLY PAYS ITS SHAREHOLDERS dividends from its net investment income
once a month, and distributes any net realized securities gains once a year.
Your dividends and distributions will be reinvested in the fund unless you
instruct the fund otherwise. There are no fees or sales charges on reinvestments
or withdrawals.
DIVIDENDS AND DISTRIBUTIONS PAID by the taxable money market funds are taxable
to U.S. shareholders as ordinary income (unless your investment is in an IRA or
other tax-advantaged account).
EACH MUNICIPAL MONEY MARKET FUND anticipates that, under normal market
conditions, virtually all of its income dividends will be exempt from federal
and, as to California Municipal Money Market Fund, California, as to Minnesota
Municipal Money Market Fund, Minnesota, and as to New York Municipal Money
Market Fund, New York state and New York city, personal income taxes. However,
any dividends and distributions from taxable investments are taxable as ordinary
income.
The tax status of any distribution is the same regardless of how long you have
been in the fund and whether you reinvest your distributions or take them in
cash.
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
Concepts to understand
- ------------------------------------------------------------------------------
DIVIDENDS: income or interest paid by the investments in a fund's portfolio, net
of expenses, passed on to fund shareholders.
DISTRIBUTIONS: income, net of expenses passed on to fund shareholders. These are
calculated on a per-share basis: each share earns the same rate of return, so
the more fund shares you own, the higher your distribution.
SECURITIES GAINS: distributions derived from the profits the fund earns when it
sells securities for a higher price than it paid for them.
Your Investment 19
<PAGE>
NOTES
20
<PAGE>
NOTES
21
<PAGE>
For More Informaation
GENERAL MONEY MARKET FUND
- --------------------------
SEC FILE NUMBER: 811-3207
GENERAL GOVERNMENT SECURITIES
MONEY MARKET FUND
- --------------------------
SEC FILE NUMBER: 811-3456
GENERAL MUNICIPAL MONEY MARKET FUND
- --------------------------
SEC FILE NUMBER: 811-3481
GENERAL CALIFORNIA MUNICIPAL
MONEY MARKET FUND
- --------------------------
SEC FILE NUMBER: 811-4871
GENERAL MINNESOTA MUNICIPAL
MONEY MARKET FUND
- --------------------------
SEC FILE NUMBER: 811-3481
GENERAL NEW YORK MUNICIPAL
MONEY MARKET FUND
- --------------------------
SEC FILE NUMBER: 811-4870
To obtain information:
- -------------------------------------------------------------------------------
BY TELEPHONE
Call your Baird Representative or 1-800-RW-BAIRD.
BY MAIL Write to:
Robert W. Baird & Co. Incorporated
Attn: Client Services
777 East Wisconsin Avenue
Milwaukee, WI 53202
http://www.rwbaird.com
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
More information on each fund is available free upon request, including the
following:
ANNUAL/SEMIANNUAL REPORT
Describes the fund's performance, and lists portfolio holdings.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Provides more details about each fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
(C) 1999, Dreyfus Service Corporation GEN/P0499B-RWB
<PAGE>
General
Money Market
Funds
GENERAL MONEY MARKET FUND
GENERAL GOVERNMENT SECURITIES
MONEY MARKET FUND
GENERAL MUNICIPAL MONEY MARKET FUND
GENERAL CALIFORNIA MUNICIPAL
MONEY MARKET FUND
GENERAL MINNESOTA MUNICIPAL
MONEY MARKET FUND
GENERAL NEW YORK MUNICIPAL
MONEY MARKET FUND
Investing in high quality short-term securities
for current income, safety of principal and liquidity
PROSPECTUS April 1, 1999
CLASS B SHARES
George K. Baum & Company
Service Agent
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
Contents
The Funds
- ---------------------------------------------
Introduction 1
General Money Market Fund 2
General Government Securities
Money Market Fund 4
General Municipal
Money Market Fund 6
General California Municipal
Money Market Fund 8
General Minnesota Municipal
Money Market Fund 10
General New York Municipal
Money Market Fund 12
Management 14
Financial Highlights 15
Your Investment
- ---------------------------------------------
Account Policies 18
Distributions and Taxes 19
For More Information
- ---------------------------------------------
More information on each fund can be found in the fund's current
annual/semiannual report. See back cover.
The Funds
Introduction
Each fund is a money market mutual fund with a separate investment portfolio.
The operations and results of a fund are unrelated to those of each other
fund. This combined prospectus has been prepared for your convenience so that
you can consider six investment choices in one document.
As a money market fund, each fund is subject to maturity, quality and
diversification requirements designed to help it maintain a stable share
price.
Generally, each fund is required to invest at least 95% of its assets in the
securities of issuers with the highest credit rating or the unrated equivalent
as determined by Dreyfus, with the remainder invested in securities with the
second highest credit rating.
An investment in a fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although each fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in a fund.
Concepts to understand
MONEY MARKET FUND: a specific type of fund that seeks to maintain a $1.00
price per share. Money market funds are subject to strict federal requirements
and must:
* maintain an average dollar-weighted portfolio maturity
of 90 days or less
* buy individual securities that have remaining maturities
of 13 months or less
* invest only in high quality dollar-denominated obligations
CREDIT RATING: a measure of the issuer's expected ability to make all required
interest and principal payments in a timely manner. An issuer with the highest
credit rating has a very strong degree of certainty (or safety) with respect
to making all payments. An issuer with the second highest credit rating has a
strong capacity to make all payments, but the degree of safety is somewhat
less.
<PAGE>
General Money Market Fund
--------------------
Ticker Symbol: GMBXX
GOAL/APPROACH
The fund seeks as high a level of current income as is consistent with the
preservation of capital. To pursue this goal, the fund invests in a
diversified portfolio of high quality, short-term debt securities, including
the following:
* securities issued or guaranteed by the U.S. government or its
agencies
* certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by domestic or foreign banks or their
subsidiaries or branches
* repurchase agreements
* asset-backed securities
* domestic and dollar-denominated foreign com mercial paper, and other
short-term corporate obligations, including those with floating or variable
rates of interest
* dollar-denominated obligations issued or guaranteed by one or
more foreign governments or any of their political subdivisions or agencies
Normally, the fund invests at least 25% of its net assets in domestic or
dollar-denominated foreign bank obligations.
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio
mature and the proceeds are reinvested in securities with different interest
rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or
could default
* the risks generally associated with concentrating investments in the banking
industry, such as interest rate risk, credit risk and regulatory developments
relating to the banking industry
* the risks generally associated with dollar-denominated foreign investments,
such as economic and political developments, seizure or nationalization of
deposits, imposition of taxes or other restrictions on the payment of
principal and interest
2
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- -----------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
4.68 4.84 4.73
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q4 '97 +1.22%
Worst Quarter: Q4 '98 +1.09%
The fund's 7-day yield on 12/31/98 was 4.25%. For the fund's current yield,
call toll-free 1-800-645-6561.
- ------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- ------------------------------------------------------------------------------
4.73% 4.84%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives
to reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- ------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.11%
- ------------------------------------------------------------------------------
Total 1.06%
- ------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
$108 $337 $585 $1,294
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example
is for comparison only.
Concepts to understand
- ------------------------------------------------------------------------------
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the
fiscal year ended November 30, 1998, Dreyfus assumed certain fund expenses
pursuant to an undertaking, reducing total expenses from 1.06% to 1.00%. This
undertaking is voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment
and may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items
such as transfer agency, custody, professional and registration fees.
General Money Market Fund 3
<PAGE>
General Government Securities
Money Market Fund
--------------------
Ticker Symbol: GSBXX
GOAL/APPROACH
The fund seeks as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity.
To pursue this goal, the fund invests in securities issued or guaranteed by
the U.S. government or its agencies or instrumentalities, and repurchase
agreements in respect of these securities.
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio
mature and the proceeds are reinvested in securities with different interest
rates.
A security backed by the U.S. Treasury or the full faith and credit of the
United States is guaranteed only as to the timely payment of interest and
principal when held to maturity. The current market prices for such securities
are not guaranteed and will fluctuate. The fund is subject to the risk that
interest rates could rise sharply, causing the fund's share price to drop.
4
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- -----------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
4.60 4.69 4.61
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q4 '97 +1.18%
Worst Quarter: Q4 '98 +1.06%
The fund's 7-day yield on 12/31/98 was 4.08%. For the fund's current yield,
call toll-free 1-800-645-6561.
- ------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- ------------------------------------------------------------------------------
4.61% 4.72%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives
to reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- ------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.07%
- ------------------------------------------------------------------------------
Total 1.02%
- ------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
$104 $325 $563 $1,248
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example
is for comparison only.
Concepts to understand
- ------------------------------------------------------------------------------
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the
fiscal year ended November 30, 1998, Dreyfus assumed certain fund expenses
pursuant to an undertaking, reducing total expenses from 1.02% to 0.97%. This
undertaking is voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment
and may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items
such as transfer agency, custody, professional and registration fees.
General Government Securities Money Market Fund 5
<PAGE>
General Municipal Money Market Fund
--------------------
Ticker Symbol: GBMXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal personal income
tax, as is consistent with the preservation of capital and the maintenance of
liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal personal
income tax. When the portfolio manager believes that acceptable municipal
obligations are unavailable for investment, the fund may invest temporarily in
high quality, taxable money market instruments. Municipal obligations are
typically divided into two types:
* GENERAL OBLIGATION BONDS, which are secured by the full faith and credit of
the issuer and its taxing power
* REVENUE BONDS, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio
mature and the proceeds are reinvested in securities with different interest
rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
Although the fund's objective is to generate income exempt from federal income
tax, interest from some of its holdings may be subject to the federal
alternative minimum tax. In addition, the fund occasionally may invest in
taxable money market instruments.
6
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- -----------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
2.66 2.86 2.60
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q2 '97 +0.76%
Worst Quarter: Q4 '98 +0.61%
The fund's 7-day yield on 12/31/98 was 2.83%. For the fund's current yield,
call toll-free 1-800-645-6561.
- ------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- ------------------------------------------------------------------------------
2.60% 2.77%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives
to reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- ------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.10%
- ------------------------------------------------------------------------------
Total 1.05%
- ------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
$107 $334 $579 $1,283
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example
is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the
fiscal year ended November 30, 1998, Dreyfus assumed certain fund expenses
pursuant to an undertaking, reducing total expenses from 1.05% to 0.96%. This
undertaking is voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment
and may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items
such as transfer agency, custody, professional and registration fees.
General Municipal Money Market Fund 7
<PAGE>
General California Municipal
Money Market Fund
--------------------
Ticker Symbol: GENXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal and California
state personal income taxes, as is consistent with the preservation of capital
and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal and
California state personal income taxes. When the portfolio manager believes
that acceptable California municipal obligations are unavailable for
investment, the fund may invest in securities that may be subject to
California state income tax, but are free from federal income tax. Municipal
obligations are typically divided into two types:
* GENERAL OBLIGATION BONDS, which are secured by the full faith and credit of
the issuer and its taxing power
* REVENUE BONDS, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio
mature and the proceeds are reinvested in securities with different interest
rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* California's economy and revenues underlying municipal obligations may decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal and
California state income taxes, interest from some of its holdings may be
subject to the federal alternative minimum tax. In addition, the fund
occasionally may invest in taxable bonds and/or municipal bonds that are
exempt only from federal personal income taxes.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore,
its performance may be more vulnerable to changes in the market value of a
single issuer or a group of issuers.
8
<PAGE>
Past Performance
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- -----------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
2.48 2.62 2.34
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q2 '97 +0.71%
Worst Quarter: Q3 '98 +0.53%
The fund's 7-day yield on 12/31/98 was 2.59%. For the fund's current yield,
call toll-free 1-800-645-6561.
- ------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- ------------------------------------------------------------------------------
2.34% 2.52%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives
to reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.12%
- ------------------------------------------------------------------------------
Total 1.07%
- ------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
$109 $340 $590 $1,306
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example
is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the
fiscal year ended November 30, 1998, Dreyfus assumed certain fund expenses
pursuant to an undertaking, reducing total expenses from 1.07% to 1.00%. This
undertaking is voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment
and may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items
such as transfer agency, custody, professional and registration fees.
General California Municipal Money Market Fund 9
<PAGE>
General Minnesota Municipal
Money Market Fund
-------------------------
Ticker Symbol: GMNXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal and Minnesota
state personal income taxes, as is consistent with the preservation of capital
and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets
in municipal obligations, the interest from which is exempt from federal and
Minnesota state personal income taxes. When the portfolio manager believes
that acceptable Minnesota municipal obligations are unavailable for investment,
the fund may invest in securities that may be subject to Minnesota state income
tax, but are free from federal income tax. Municipal obligations are typically
divided into two types:
* GENERAL OBLIGATION BONDS, which are secured by the full faith and credit of
the issuer and its taxing power
* REVENUE BONDS, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio
mature and the proceeds are reinvested in securities with different interest
rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* Minnesota's economy and revenues underlying municipal obligations may decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal and
Minnesota state income taxes, interest from some of its holdings may be
subject to the federal alternative minimum tax. In addition, the fund
occasionally may invest in taxable bonds and/or municipal bonds that are
exempt only from federal personal income taxes.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore,
its performance may be more vulnerable to changes in the market value of a
single issuer or a group of issuers.
10
<PAGE>
PAST PERFORMANCE
Since the fund has less than one calendar year of performance, past
performance information is not included. For performance information as of the
end of the fund's first fiscal period, please refer to the Statement of
Additional Information (SAI).
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives
to reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.72%
- ------------------------------------------------------------------------------
Total 1.67%
- ------------------------------------------------------------------------------
Expense example
1 Year 3 Years
- ----------------------------------
$170 $526
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example
is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the
fiscal period ended November 30, 1998, Dreyfus waived its fee and assumed
certain other fund expenses pursuant to an undertaking, reducing total
expenses from 1.67% to 0.80%. This undertaking is voluntary and may be
terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment
and may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for
shareholder account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and estimated fees to be paid by the fund for
miscellaneous items such as transfer agency, custody, professional and
registration fees.
General Minnesota Municipal Money Market 11
<PAGE>
General New York Municipal
Money Market Fund
--------------------
Ticker Symbol: GNYXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal, New York state
and New York city personal income taxes, as is consistent with the
preservation of capital and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal, New
York state and New York city personal income taxes. When the portfolio manager
believes that acceptable New York municipal obligations are unavailable for
investment, the fund may invest in securities that may be subject to New York
state and New York city income taxes, but are free from federal income tax.
Municipal obligations are typically divided into two types:
* GENERAL OBLIGATION BONDS, which are secured by the full faith and credit of
the issuer and its taxing power
* REVENUE BONDS, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio
mature and the proceeds are reinvested in securities with different interest
rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* New York's economy and revenues underlying municipal obligations may
decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal, New
York state and New York city income taxes, interest from some of its holdings
may be subject to the federal alternative minimum tax. In addition, the fund
occasionally may invest in taxable bonds and/or municipal bonds that are
exempt only from federal personal income tax.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore,
its performance may be more vulnerable to changes in the market value of a
single issuer or a group of issuers.
12
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- -----------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
2.51 2.70 2.42
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q2 '97 +0.70%
Worst Quarter: Q4 '98 +0.55%
The fund's 7-day yield on 12/31/98 was 2.61%. For the fund's current yield,
call toll-free 1-800-645-6561.
- ------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (9/8/95)
- -----------------------------------------------------------------------------
2.42% 2.57%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives
to reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.11%
- ------------------------------------------------------------------------------
Total 1.06%
- ------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
$108 $337 $585 $1,294
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example
is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the
fiscal year ended November 30, 1998, Dreyfus assumed certain fund expenses
pursuant to an undertaking, reducing total expenses from 1.06% to 0.98%. This
undertaking is voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment
and may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items
such as transfer agency, custody, professional and registration fees.
General New York Municipal Money Market Fund 13
<PAGE>
MANAGEMENT
The investment adviser for each fund is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages one of the
nation's leading mutual fund complexes, with more than $121 billion in more
than 160 mutual fund portfolios. Dreyfus is the primary mutual fund business
of Mellon Bank Corporation, a broad-based financial services company with a
bank at its core. With more than $389 billion of assets under management and
$1.9 trillion of assets under administration and custody, Mellon provides a
full range of banking, investment and trust products and services to
individuals, businesses and institutions. Its mutual fund companies place
Mellon as the leading bank manager of mutual funds. Mellon is headquartered in
Pittsburgh, Pennsylvania.
MANAGEMENT PHILOSOPHY
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Concepts to understand
YEAR 2000 ISSUES: these funds could be adversely affected if the computer
systems used by Dreyfus and the funds' other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which these funds invest may be
adversely affected by year 2000-related problems. This could have an impact
on the value of a fund's investments and its share price.
14
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each fund's Class B shares
for the fiscal periods indicated. "Total return" shows how much your
investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been independently audited by Ernst & Young LLP, whose report,
along with the fund's financial statements, is included in the annual
report.
<TABLE>
<CAPTION>
Year Ended Ten Months Ended
November 30, November 30, Year Ended January 31,
General Money Market Fund 1998 1997(1) 1997 1996(2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .047 .039 .046 .043
Distributions: Dividends from investment income-- net (.047) (.039) (.046) (.043)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 4.78 4.83(3) 4.65 5.18(3)
- -----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.00 1.00(3) 1.00 1.00(3)
Ratio of net investment income to average net assets (%) 4.66 4.78(3) 4.56 5.00(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .06 .05(3) .07 .07(3)
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,427,332 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>
<TABLE>
<CAPTION>
Year Ended Ten Months Ended
November 30, November 30, Year Ended January 31,
General Government Securities Money Market Fund 1998 1997(1) 1997 1996(2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .046 .038 .045 .042
Distributions: Dividends from investment income-- net (.046) (.038) (.045) (.042)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 4.66 4.69(3) 4.58 5.04(3)
- -----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .97 1.00(3) 1.00 1.00(3)
Ratio of net investment income to average net assets (%) 4.55 4.60(3) 4.48 5.01(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .05 .05(3) .08 .10(3)
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 645,984 364,845 90,175 58
- -----------------------------------------------------------------------------------------------------------------------------
<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>
Financial Highlights 15
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Year Ended November 30,
General Municipal Money Market Fund 1998 1997 1996 1995(1)
- -----------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .026 .028 .027 .020
Distributions: Dividends from investment income-- net (.026) (.028) (.027) (.020)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.64 2.86 2.70 3.01(2)
- -----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .96 .95 .85 1.10(2)
Ratio of net investment income to average net assets (%) 2.59 2.87 2.65 2.83(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .09 .16 .29 .09(2)
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 377,636 263,008 17,491 3,024
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
1 From March 31, 1995 (commencement of initial offering) to November 30, 1995.
2 Annualized.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Year Ended Four Months Ended
November 30, November 30, Year Ended July 31,
General California Municipal Money Market Fund 1998 1997(1) 1997 1996(2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .024 .009 .026 .025
Distributions: Dividends from investment income-- net (.024) (.009) (.026) (.025)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.39 2.57(3) 2.61 2.56
- -----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.00 1.00(3) 1.00 1.00
Ratio of net investment income to average net assets (%) 2.34 2.62(3) 2.52 2.45
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .07 .13(3) .07 .08
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 8,760 2,669 928 5,475
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
1 The fund changed its fiscal year end from July 31 to November 30.
2 From August 1, 1995 (commencement of initial offering) to July 31, 1996.
3 Annualized.
</FN>
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Period Ended November 30,
General Minnesota Municipal Money Market Fund 1998(1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00
Investment operations: Investment income-- net .013
Distributions: Dividends from investment income-- net (.013)
Net asset value, end of period 1.00
Total return (%) 2.67(2)
- -----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .80(2)
Ratio of net investment income to average net assets (%) 2.63(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .87(2)
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 28,160
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
1 From June 1, 1998 (commencement of operations) to November 30, 1998.
2 Annualized.
</FN>
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
General New York Municipal Money Market Fund 1998 1997 1996 1995(1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .024 .027 .025 .006
Distributions: Dividends from investment income-- net (.024) (.027) (.025) (.006)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.47 2.68 2.55 2.82(2)
- -----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .98 .95 .95 1.04(2)
Ratio of net investment income to average net assets (%) 2.44 2.64 2.47 3.64(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .08 .08 .16 --
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 46,997 42,169 36,199 --
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
1 From September 8, 1995 (commencement of initial offering) to November 30, 1995.
2 Annualized.
</FN>
</TABLE>
Financial Highlights 17
<PAGE>
ACCOUNT POLICIES
BUYING SHARES
GENERAL FUNDS are designed primarily for people who are investing through a
third party such as a bank, broker-dealer or financial adviser. Third parties
with whom you open a fund account may impose policies and charge transaction
fees and may set minimum investment limitations on buying or selling shares.
Consult a representative of your financial institution for more information.
YOUR PRICE FOR FUND SHARES is the fund's net asset value (NAV), which is
generally calculated twice a day, at 5 p.m. and 8 p.m. Eastern time for the
taxable money market funds and 12 noon and 8 p.m. Eastern time for the municipal
money market funds, every day the New York Stock Exchange or the fund's transfer
agent is open. Your order will be priced at the next NAV calculated after your
order is accepted by the fund's transfer agent or other authorized entity. Each
fund's investments are valued based on amortized cost.
IF YOUR PAYMENTS ARE RECEIVED in or converted into Federal Funds by 12 noon,
you will receive the dividend declared that day. If your payments are
received in or converted into Federal Funds after 12 noon, you will begin
to accrue dividends on the following business day. Qualified institutions may
telephone orders to buy shares. If such an order is made by 5 p.m. for the
taxable money market funds or 12 noon for the municipal money market funds,
and Federal Funds are received by 6 p.m. or 4 p.m., respectively, the shares
will be purchased at the NAV determined at 5 p.m. or 12 noon, as the case may
be, and will receive the dividend declared that day. If such an order is made
after 5 p.m. for the taxable money market funds or 12 noon for the municipal
money market funds, but by 8 p.m., and Federal Funds are received by 11 a.m.
the next business day, the shares will be purchased at the NAV determined at
8 p.m. and will begin to accrue dividends on the next business day. All times
are Eastern time.
BECAUSE THE MUNICIPAL MONEY MARKET FUNDS seek tax-exempt income, they are not
recommended for purchase in IRAs or other qualified retirement plans
Retirement plans
A variety of retirement plans are offered for the taxable money market funds,
including traditional, rollover, Roth and Education IRAs. In addition,
SEP-IRAs, Keogh accounts, 401(k) and 403(b) accounts are also available. Please
call your financial representative for information.
18
<PAGE>
SELLING SHARES
YOU MAY SELL (REDEEM) SHARES AT ANY TIME through your financial representative.
Your shares will be sold at the next NAV calculated after your order is accepted
by the fund's transfer agent or other authorized entity.
BEFORE SELLING OR WRITING A CHECK for recently purchased shares, please note
that if the fund has not yet collected payment for the shares you are selling,
it may delay sending the proceeds for up to eight business days or until it
has collected payment.
GENERAL POLICIES
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify that the order is from a representative of your
financial institution.
EACH FUND RESERVES THE RIGHT TO:
* refuse any purchase or exchange request that could adversely affect the fund
or its operations, including those from any individual or group who, in the
fund's view, is likely to engage in excessive trading (usually defined as more
than four exchanges out of the fund within a calendar year)
* refuse any purchase or exchange request in excess of 1% of the fund's total
assets
* change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions
* delay sending out redemption proceeds for up to seven days (generally applies
only in cases of very large redemptions, excessive trading or during unusual
market conditions)
Each fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
DISTRIBUTIONS AND TAXES
EACH FUND USUALLY PAYS ITS SHAREHOLDERS dividends from its net investment income
once a month, and distributes any net realized securities gains once a year.
Your dividends and distributions will be reinvested in the fund unless you
instruct the fund otherwise. There are no fees or sales charges on reinvestments
or withdrawals.
DIVIDENDS AND DISTRIBUTIONS PAID by the taxable money market
funds are taxable to U.S. shareholders as ordinary income (unless your
investment is in an IRA or other tax-advantaged account).
EACH MUNICIPAL MONEY MARKET FUND anticipates that, under normal market
conditions, virtually all of its income dividends will be exempt from
federal and, as to California Municipal Money Market Fund, California,
as to Minnesota Municipal Money Market Fund, Minnesota, and as to New
York Municipal Money Market Fund, New York state and New York city,
personal income taxes. However, any dividends and distributions
from taxable investments are taxable as ordinary income.
The tax status of any distribution is the same regardless of how long
you have been in the fund and whether you reinvest your distributions
or take them in cash.
Because everyone's tax situation is unique, always consult your tax
professional about federal, state and local tax consequences.
Concepts to understand
DIVIDENDS: income or interest paid by the investments in a fund's portfolio,
net of expenses, passed on to fund shareholders.
DISTRIBUTIONS: income, net of expenses passed on to fund shareholders. These
are calculated on a per-share basis: each share earns the same rate of return,
so the more fund shares you own, the higher your distribution.
SECURITIES GAINS: distributions derived from the profits the fund earns when
it sells securities for a higher price than it paid for them.
Your Investment 19
<PAGE>
NOTES
20
<PAGE>
NOTES
21
<PAGE>
For More Information
GENERAL MONEY MARKET FUND
- -------------------------
SEC FILE NUMBER: 811-3207
GENERAL GOVERNMENT SECURITIES
MONEY MARKET FUND
- -------------------------
SEC FILE NUMBER: 811-3456
GENERAL MUNICIPAL MONEY MARKET FUND
- -------------------------
SEC FILE NUMBER: 811-3481
GENERAL CALIFORNIA MUNICIPAL
MONEY MARKET FUND
- -------------------------
SEC FILE NUMBER: 811-4871
GENERAL MINNESOTA MUNICIPAL
MONEY MARKET FUND
- -------------------------
SEC FILE NUMBER: 811-3481
GENERAL NEW YORK MUNICIPAL
MONEY MARKET FUND
- -------------------------
SEC FILE NUMBER: 811-4870
More information on each fund is available free upon request, including the
following:
ANNUAL/SEMIANNUAL REPORT
Describes the fund's performance, and lists portfolio holdings.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Provides more details about each fund and its policies. A current SAI is on
file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE
Call your George K. Baum & Company investment executive or 1-800-821-7195
BY MAIL Write to:
George K. Baum & Company
120 West 12th Street, Suite 800
Kansas City, MO 64105
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from:
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(C) 1999, Dreyfus Service Corporation GEN/P0499B-GKB
<PAGE>
General
Money Market
Funds
GENERAL MONEY MARKET FUND
GENERAL GOVERNMENT SECURITIES
MONEY MARKET FUND
GENERAL MUNICIPAL MONEY MARKET FUND
GENERAL CALIFORNIA MUNICIPAL
MONEY MARKET FUND
GENERAL MINNESOTA MUNICIPAL
MONEY MARKET FUND
GENERAL NEW YORK MUNICIPAL
MONEY MARKET FUND
Investing in high quality, short-term securities
for current income, safety of principal and liquidity
PROSPECTUS April 1, 1999
CLASS B SHARES
First Albany
Corporation
The General Money Market Funds are managed by The Dreyfus Corporation.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
Contents
The Funds
- -----------------------------------------------
Introduction 1
General Money Market Fund 2
General Government Securities
Money Market Fund 4
General Municipal
Money Market Fund 6
General California Municipal
Money Market Fund 8
General Minnesota Municipal
Money Market Fund 10
General New York Municipal
Money Market Fund 12
Management 14
Financial Highlights 15
Your Investment
- -----------------------------------------------
Account Policies 18
Distributions and Taxes 19
For More Information
- -----------------------------------------------
More information on each fund can be found in the fund's current
annual/semiannual report. See back cover.
The Funds
INTRODUCTION
Each fund is a money market mutual fund with a separate investment portfolio.
The operations and results of a fund are unrelated to those of each other fund.
This combined prospectus has been prepared for your convenience so that you can
consider six investment choices in one document.
As a money market fund, each fund is subject to maturity, quality and
diversification requirements designed to help it maintain a stable share price.
Generally, each fund is required to invest at least 95% of its assets in the
securities of issuers with the highest credit rating or the unrated equivalent
as determined by Dreyfus, with the remainder invested in securities with the
second highest credit rating.
An investment in a fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although each fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in a fund.
Concepts to understand
MONEY MARKET FUND: a specific type of fund that seeks to maintain a $1.00 price
per share. Money market funds are subject to strict federal requirements and
must:
* maintain an average dollar-weighted portfolio maturity of 90 days or less
* buy individual securities that have remaining maturities of 13 months or less
* invest only in high quality dollar-denominated obligations
CREDIT RATING: a measure of the issuer's expected ability to make all required
interest and principal payments in a timely manner. An issuer with the highest
credit rating has a very strong degree of certainty (or safety) with respect to
making all payments. An issuer with the second highest credit rating has a
strong capacity to make all payments, but the degree of safety is somewhat less.
The Funds 1
<PAGE>
General Money Market Fund
-----------
Ticker Symbol: GMBXX
GOAL/APPROACH
The fund seeks as high a level of current income as is consistent with the
preservation of capital. To pursue this goal, the fund invests in a diversified
portfolio of high quality, short-term debt securities, including the following:
* securities issued or guaranteed by the U.S. government or its agencies
* certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by domestic or foreign banks or their
subsidiaries or branches
* repurchase agreements
* asset-backed securities
* domestic and dollar-denominated foreign com mercial paper, and other
short-term corporate obligations, including those with floating or variable
rates of interest
* dollar-denominated obligations issued or guaranteed by one or more foreign
governments or any of their political subdivisions or agencies
Normally, the fund invests at least 25% of its net assets in domestic or
dollar-denominated foreign bank obligations.
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking industry
* the risks generally associated with dollar-denominated foreign investments,
such as economic and political developments, seizure or nationalization of
deposits, imposition of taxes or other restrictions on the payment of
principal and interest
2
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
4.68 4.84 4.73
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q4 '97 +1.22%
Worst Quarter: Q4 '98 +1.09%
The fund's 7-day yield on 12/31/98 was 4.25%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- --------------------------------------------------------------------------------
4.73% 4.84%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.11%
- --------------------------------------------------------------------------------
Total 1.06%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$108 $337 $585 $1,294
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.06% to 1.00%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items
such as transfer agency, custody, professional and registration fees.
3
<PAGE>
General Government Securities
Money Market Fund
-----------
Ticker Symbol: GSBXX
GOAL/APPROACH
The fund seeks as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity.
To pursue this goal, the fund invests in securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities, and repurchase agreements
in respect of these securities.
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
A security backed by the U.S. Treasury or the full faith and credit of the
United States is guaranteed only as to the timely payment of interest and
principal when held to maturity. The current market prices for such
securities are not guaranteed and will fluctuate. The fund is subject to the
risk that interest rates could rise sharply, causing the fund's share price to
drop.
4
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
4.60 4.69 4.61
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q4 '97 +1.18%
Worst Quarter: Q4 '98 +1.06%
The fund's 7-day yield on 12/31/98 was 4.08%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- --------------------------------------------------------------------------------
4.61% 4.72%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.07%
- --------------------------------------------------------------------------------
Total 1.02%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$104 $325 $563 $1,248
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.02% to 0.97%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items
such as transfer agency, custody, professional and registration fees.
General Government Securities Money Market Fund 5
<PAGE>
General Municipal Money Market Fund
-----------
Ticker Symbol: GBMXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal personal income
tax, as is consistent with the preservation of capital and the maintenance of
liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal personal
income tax. When the portfolio manager believes that acceptable municipal
obligations are unavailable for investment, the fund may invest temporarily in
high quality, taxable money market instruments. Municipal obligations are
typically divided into two types:
* general obligation bonds, which are secured by the full faith and credit of
the issuer and its taxing power
* revenue bonds, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
Although the fund's objective is to generate income exempt from federal income
tax, interest from some of its holdings may be subject to the federal
alternative minimum tax. In addition, the fund occasionally may invest in
taxable money market instruments.
6
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
2.66 2.86 2.60
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q2 '97 +0.76%
Worst Quarter: Q4 '98 +0.61%
The fund's 7-day yield on 12/31/98 was 2.83%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- --------------------------------------------------------------------------------
2.60% 2.77%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.10%
- --------------------------------------------------------------------------------
Total 1.05%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$107 $334 $579 $1,283
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.05% to 0.96%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items
such as transfer agency, custody, professional and registration fees.
General Municipal Money Market Fund 7
<PAGE>
General California Municipal
Money Market Fund
-----------
Ticker Symbol: GENXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal and California
state personal income taxes, as is consistent with the preservation of capital
and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal and
California state personal income taxes. When the portfolio manager believes
that acceptable California municipal obligations are unavailable for
investment, the fund may invest in securities that may be subject to California
state income tax, but are free from federal income tax. Municipal obligations
are typically divided into two types:
* general obligation bonds, which are secured by the full faith and credit of
the issuer and its taxing power
* revenue bonds, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* California's economy and revenues underlying municipal obligations may decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal and
California state income taxes, interest from some of its holdings may be subject
to the federal alternative minimum tax. In addition, the fund occasionally may
invest in taxable bonds and/or municipal bonds that are exempt only from federal
personal income taxes.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
8
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
2.48 2.62 2.34
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q2 '97 +0.71%
Worst Quarter: Q3 '98 +0.53%
The fund's 7-day yield on 12/31/98 was 2.59%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (8/1/95)
- --------------------------------------------------------------------------------
2.34% 2.52%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.12%
- --------------------------------------------------------------------------------
Total 1.07%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$109 $340 $590 $1,306
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.07% to 1.00%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items
such as transfer agency, custody, professional and registration fees.
General California Municipal Money Market Fund 9
<PAGE>
General Minnesota Municipal
Money Market Fund
-----------------
Ticker Symbol: GMNXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal and Minnesota
state personal income taxes, as is consistent with the preservation of capital
and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal and
Minnesota state personal income taxes. When the portfolio manager believes that
acceptable Minnesota municipal obligations are unavailable for investment, the
fund may invest in securities that may be subject to Minnesota state income
tax, but are free from federal income tax. Municipal obligations are typically
divided into two types:
* general obligation bonds, which are secured by the full faith and credit of
the issuer and its taxing power
* revenue bonds, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* Minnesota's economy and revenues underlying municipal obligations may decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal and
Minnesota state income taxes, interest from some of its holdings may be subject
to the federal alternative minimum tax. In addition, the fund occasionally may
invest in taxable bonds and/or municipal bonds that are exempt only from federal
personal income taxes.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
10
<PAGE>
PAST PERFORMANCE
Since the fund has less than one calendar year of performance, past performance
information is not included. For performance information as of the end of the
fund's first fiscal period, please refer to the Statement of Additional
Information (SAI).
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.72%
- --------------------------------------------------------------------------------
Total 1.67%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years
- --------------------------------------------------------------------------------
$170 $526
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
period ended November 30, 1998, Dreyfus waived its fee and assumed certain other
fund expenses pursuant to an undertaking, reducing total expenses from 1.67% to
0.80%. This undertaking is voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting
services provided by third parties and estimated fees to be paid by the fund for
miscellaneous items such as transfer agency, custody, professional and
registration fees.
General Minnesota Municipal Money Market Fund 11
<PAGE>
General New York Municipal
Money Market Fund
-----------
Ticker Symbol: GNYXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal, New York state
and New York city personal income taxes, as is consistent with the preservation
of capital and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal, New York
state and New York city personal income taxes. When the portfolio manager
believes that acceptable New York municipal obligations are unavailable for
investment, the fund may invest in securities that may be subject to New York
state and New York city income taxes, but are free from federal income tax.
Municipal obligations are typically divided into two types:
* general obligation bonds, which are secured by the full faith and credit of
the issuer and its taxing power
* revenue bonds, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* New York's economy and revenues underlying municipal obligations may decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal, New
York state and New York city income taxes, interest from some of its holdings
may be subject to the federal alternative minimum tax. In addition, the fund
occasionally may invest in taxable bonds and/or municipal bonds that are exempt
only from federal personal income tax.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
12
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
2.51 2.70 2.42
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q2 '97 +0.70%
Worst Quarter: Q4 '98 +0.55%
The fund's 7-day yield on 12/31/98 was 2.61%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (9/8/95)
- --------------------------------------------------------------------------------
2.42% 2.57%
What this fund is-- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.11%
- --------------------------------------------------------------------------------
Total 1.06%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$108 $337 $585 $1,294
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.06% to 0.98%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items
such as transfer agency, custody, professional and registration fees.
General New York Municipal Money Market Fund 13
<PAGE>
MANAGEMENT
The investment adviser for each fund is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages one of the
nation's leading mutual fund complexes, with more than $121 billion in more than
160 mutual fund portfolios. Dreyfus is the primary mutual fund business of
Mellon Bank Corporation, a broad-based financial services company with a bank at
its core. With more than $389 billion of assets under management and $1.9
trillion of assets under administration and custody, Mellon provides a full
range of banking, investment and trust products and services to individuals,
businesses and institutions. Its mutual fund companies place Mellon as the
leading bank manager of mutual funds. Mellon is headquartered in Pittsburgh,
Pennsylvania.
MANAGEMENT PHILOSOPHY
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Concepts to understand
YEAR 2000 ISSUES: these funds could be adversely affected if the computer
systems used by Dreyfus and the funds' other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which these funds invest may be
adversely affected by year 2000-related problems. This could have an impact on
the value of a fund's investments and its share price.
14
<PAGE>
Financial Highlights
The following tables describe the performance of each fund's Class B shares for
the fiscal periods indicated. "Total return" shows how much your investment in
the fund would have increased (or decreased) during each period, assuming you
had reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young LLP, whose report, along with the fund's
financial statements, is included in the annual report.
<TABLE>
<CAPTION>
Year Ended Ten Months Ended
November 30, November 30, Year Ended January 31,
General Money Market Fund 1998 1997 (1) 1997 1996 (2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .047 .039 .046 .043
Distributions: Dividends from investment
income-- net (.047) (.039) (.046) (.043)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 4.78 4.83(3) 4.65 5.18(3)
- -------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.00 1.00(3) 1.00 1.00(3)
Ratio of net investment income to average net assets (%) 4.66 4.78(3) 4.56 5.00(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .06 .05(3) .07 .07(3)
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,427,332 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>
<TABLE>
<CAPTION>
Year Ended Ten Months Ended
November 30, November 30, Year Ended January 31,
General Government Securities Money Market Fund 1998 1997(1) 1997 1996(2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .046 .038 .045 .042
Distributions: Dividends from investment
income-- net (.046) (.038) (.045) (.042)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 4.66 4.69(3) 4.58 5.04(3)
- -------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .97 1.00(3) 1.00 1.00(3)
Ratio of net investment income to average net assets (%) 4.55 4.60(3) 4.48 5.01(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .05 .05(3) .08 .10(3)
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 645,984 364,845 90,175 58
- -------------------------------------------------------------------------------------------------------------------
<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>
Financial Highlights 15
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Year Ended November 30,
General Municipal Money Market Fund 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .026 .028 .027 .020
Distributions: Dividends from investment income-- net (.026) (.028) (.027) (.020)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.64 2.86 2.70 3.01(2)
- ----------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .96 .95 .85 1.10(2)
Ratio of net investment income to average net assets (%) 2.59 2.87 2.65 2.83(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .09 .16 .29 .09(2)
- ----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 377,636 263,008 17,491 3,024
- ----------------------------------------------------------------------------------------------------------------
<FN>
1 From March 31, 1995 (commencement of initial offering) to November 30, 1995.
2 Annualized.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Year Ended Four Months Ended
November 30, November 30, Year Ended July 31,
General California Municipal Money Market Fund 1998 1997(1) 1997 1996(2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .024 .009 .026 .025
Distributions: Dividends from investment
income-- net (.024) (.009) (.026) (.025)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.39 2.57(3) 2.61 2.56
- -------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.00 1.00(3) 1.00 1.00
Ratio of net investment income to average net assets (%) 2.34 2.62(3) 2.52 2.45
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .07 .13(3) .07 .08
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 8,760 2,669 928 5,475
- -------------------------------------------------------------------------------------------------------------------
<FN>
1 The fund changed its fiscal year end from July 31 to November 30.
2 From August 1, 1995 (commencement of initial offering) to July 31, 1996.
3 Annualized.
</FN>
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Period Ended November 30,
General Minnesota Municipal Money Market Fund 1998(1)
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00
Investment operations: Investment income-- net .013
Distributions: Dividends from investment income-- net (.013)
Net asset value, end of period 1.00
Total return (%) 2.67(2)
- -------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .80(2)
Ratio of net investment income to average net assets (%) 2.63(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .87(2)
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 28,160
- -------------------------------------------------------------------------------------------------------------------
<FN>
1 From June 1, 1998 (commencement of operations) to November 30, 1998.
2 Annualized.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Year Ended November 30,
General New York Municipal Money Market Fund 1998 1997 1996 1995(1)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .024 .027 .025 .006
Distributions: Dividends from investment income-- net (.024) (.027) (.025) (.006)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.47 2.68 2.55 2.82(2)
- -------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .98 .95 .95 1.04(2)
Ratio of net investment income to average net assets (%) 2.44 2.64 2.47 3.64(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .08 .08 .16 --
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 46,997 42,169 36,199 --
- -------------------------------------------------------------------------------------------------------------------
<FN>
1 From September 8, 1995 (commencement of initial offering) to November 30,
1995.
2 Annualized.
- -------------------------------------------------------------------------------------------------------------------
</FN>
</TABLE>
Financial Highlights 17
<PAGE>
Your Investment
ACCOUNT POLICIES
BUYING SHARES
GENERAL FUNDS are designed primarily for people who are investing through a
third party such as a bank, broker-dealer or financial adviser. Third parties
with whom you open a fund account may impose policies and charge transaction
fees and may set minimum investment limitations on buying or selling shares.
Consult a representative of your financial institution for more information.
YOUR PRICE FOR FUND SHARES is the fund's net asset value (NAV), which is
generally calculated twice a day, at 5 p.m. and 8 p.m. Eastern time for the
taxable money market funds and 12 noon and 8 p.m. Eastern time for the municipal
money market funds, every day the New York Stock Exchange or the fund's transfer
agent is open. Your order will be priced at the next NAV calculated after your
order is accepted by the fund's transfer agent or other authorized entity. Each
fund's investments are valued based on amortized cost.
IF YOUR PAYMENTS ARE RECEIVED in or converted into Federal Funds by 12 noon,
you will receive the dividend declared that day. If your payments are received
in or converted into Federal Funds after 12 noon, you will begin to accrue
dividends on the following business day. Qualified institutions may telephone
orders to buy shares. If such an order is made by 5 p.m. for the taxable money
market funds or 12 noon for the municipal money market funds, and Federal Funds
are received by 6 p.m. or 4 p.m., respectively, the shares will be purchased at
the NAV determined at 5 p.m. or 12 noon, as the case may be, and will receive
the dividend declared that day. If such an order is made after 5 p.m. for the
taxable money market funds or 12 noon for the municipal money market funds, but
by 8 p.m., and Federal Funds are received by 11 a.m. the next business day, the
shares will be purchased at the NAV determined at 8 p.m. and will begin to
accrue dividends on the next business day. All times are Eastern time.
BECAUSE THE MUNICIPAL MONEY MARKET FUNDS seek tax-exempt income, they are not
recommended for purchase in IRAs or other qualified retirement plans.
Retirement plans
A variety of retirement plans are offered for the taxable money market funds,
including traditional, rollover, Roth and Education IRAs. In addition,
SEP-IRAs, Keogh accounts, 401(k) and 403(b) accounts are also available. Please
call your financial representative for information.
18
<PAGE>
SELLING SHARES
YOU MAY SELL (REDEEM) SHARES AT ANY TIME through your financial representative.
Your shares will be sold at the next NAV calculated after your order is accepted
by the fund's transfer agent or other authorized entity.
BEFORE SELLING OR WRITING A CHECK for recently purchased shares, please note
that if the fund has not yet collected payment for the shares you are selling,
it may delay sending the proceeds for up to eight business days or until it has
collected payment.
GENERAL POLICIES
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify that the order is from a representative of your
financial institution.
EACH FUND RESERVES THE RIGHT TO:
* refuse any purchase or exchange request that could adversely affect the fund
or its operations, including those from any individual or group who, in the
fund's view, is likely to engage in excessive trading (usually defined as more
than four exchanges out of the fund within a calendar year)
* refuse any purchase or exchange request in excess of 1% of the fund's total
assets
* change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions
* delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or during
unusual market conditions)
Each fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
DISTRIBUTIONS AND TAXES
EACH FUND USUALLY PAYS ITS SHAREHOLDERS dividends from its net investment income
once a month, and distributes any net realized securities gains once a year.
Your dividends and distributions will be reinvested in the fund unless you
instruct the fund otherwise. There are no fees or sales charges on reinvestments
or withdrawals.
DIVIDENDS AND DISTRIBUTIONS PAID by the taxable money market funds are taxable
to U.S. shareholders as ordinary income (unless your investment is in an IRA or
other tax-advantaged account).
EACH MUNICIPAL MONEY MARKET FUND anticipates that, under normal market
conditions, virtually all of its income dividends will be exempt from federal
and, as to California Municipal Money Market Fund, California, as to Minnesota
Municipal Money Market Fund, Minnesota, and as to New York Municipal Money
Market Fund, New York state and New York city, personal income taxes. However,
any dividends and distributions from taxable investments are taxable as
ordinary income.
The tax status of any distribution is the same regardless of how long you have
been in the fund and whether you reinvest your distributions or take them in
cash.
Because everyone's tax situation is unique, always consult your tax
professional about federal, state and local tax consequences.
Concepts to understand
DIVIDENDS: income or interest paid by the investments in a fund's portfolio,
net of expenses, passed on to fund shareholders.
DISTRIBUTIONS: income, net of expenses passed on to fund shareholders. These
are calculated on a per-share basis: each share earns the same rate of return,
so the more fund shares you own, the higher your distribution.
SECURITIES GAINS: distributions derived from the profits the fund earns when it
sells securities for a higher price than it paid for them.
Your Investment 19
<PAGE>
NOTES
20
<PAGE>
NOTES
21
<PAGE>
For More Information
General Money Market Fund
- --------------------
SEC file number: 811-3207
General Government Securities
Money Market Fund
- --------------------
SEC file number: 811-3456
General Municipal Money Market Fund
- --------------------
SEC file number: 811-3481
General California Municipal
Money Market Fund
- --------------------
SEC file number: 811-4871
General Minnesota Municipal
Money Market Fund
- --------------------
SEC file number: 811-3481
General New York Municipal
Money Market Fund
- --------------------
SEC file number: 811-4870
More information on each fund is available free upon request, including the
following:
ANNUAL/SEMIANNUAL REPORT
Describes the fund's performance, and lists portfolio holdings.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Provides more details about each fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE
Call your First Albany Financial Consultant
or 1-800-462-6242
BY MAIL Write to:
First Albany Corporation
30 South Pearl Street
P.O. Box 52
Albany, NY 12201-0052
http://[email protected]
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(C) 1999, Dreyfus Service Corporation GEN/P0499B-FA
<PAGE>
General
Money Market
Funds
GENERAL MONEY MARKET FUND
GENERAL GOVERNMENT SECURITIES
MONEY MARKET FUND
GENERAL MUNICIPAL MONEY MARKET FUND
Investing in high quality, short-term securities
for current income, safety of principal and liquidity
PROSPECTUS April 1, 1999
CLASS B SHARES
John G. Kinnard & Co.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
CONTENTS
The Funds
- --------------------------------------------------------------------------------
Introduction 1
General Money Market Fund 2
General Government Securities
Money Market Fund 4
General Municipal
Money Market Fund 6
Management 8
Financial Highlights 9
Your Investment
- --------------------------------------------------------------------------------
Account Policies 11
Distributions and Taxes 12
For More Information
- --------------------------------------------------------------------------------
More information on each fund can be found in the fund's current
annual/semiannual report. See back cover.
THE FUNDS
INTRODUCTION
Each fund is a money market mutual fund with a separate investment portfolio.
The operations and results of a fund are unrelated to those of each other fund.
This combined prospectus has been prepared for your convenience so that you can
consider three investment choices in one document.
As a money market fund, each fund is subject to maturity, quality and
diversification requirements designed to help it maintain a stable share price.
Generally, each fund is required to invest at least 95% of its assets in the
securities of issuers with the highest credit rating or the unrated equivalent
as determined by Dreyfus, with the remainder invested in securities with the
second highest credit rating.
An investment in a fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although each fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in a fund.
Concepts to understand
MONEY MARKET FUND: a specific type of fund that seeks to maintain a $1.00 price
per share. Money market funds are subject to strict federal requirements and
must:
* maintain an average dollar-weighted portfolio maturity of 90 days or less
* buy individual securities that have remaining maturities of 13 months or less
* invest only in high quality dollar-denominated obligations
CREDIT RATING: a measure of the issuer's expected ability to make all required
interest and principal payments in a timely manner. An issuer with the highest
credit rating has a very strong degree of certainty (or safety) with respect to
making all payments. An issuer with the second highest credit rating has a
strong capacity to make all payments, but the degree of safety is somewhat less.
The Funds 1
<PAGE>
General Money Market Fund
-----------
Ticker Symbol: GMBXX
GOAL/APPROACH
The fund seeks as high a level of current income as is consistent with the
preservation of capital. To pursue this goal, the fund invests in a diversified
portfolio of high quality, short-term debt securities, including the following:
* securities issued or guaranteed by the U.S. government or its agencies
* certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by domestic or foreign banks or their
subsidiaries or branches
* repurchase agreements
* asset-backed securities
* domestic and dollar-denominated foreign com mercial paper, and other
short-term corporate obligations, including those with floating or variable
rates of interest
* dollar-denominated obligations issued or guaranteed by one or more foreign
governments or any of their political subdivisions or agencies
Normally, the fund invests at least 25% of its net assets in domestic or
dollar-denominated foreign bank obligations.
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* the risks generally associated with concentrating investments in the banking
industry, such as interest rate risk, credit risk and regulatory developments
relating to the banking industry
* the risks generally associated with dollar-denominated foreign investments,
such as economic and political developments, seizure or nationalization of
deposits, imposition of taxes or other restrictions on the payment of
principal and interest
2
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
4.68 4.84 4.73
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q4 '97 +1.22%
Worst Quarter: Q4 '98 +1.09%
The fund's 7-day yield on 12/31/98 was 4.25%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- --------------------------------------------------------------------------------
4.73% 4.84%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.11%
- --------------------------------------------------------------------------------
Total 1.06%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$108 $337 $585 $1,294
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
CONCEPTS TO UNDERSTAND
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.06% to 1.00%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General Money Market Fund 3
<PAGE>
General Government Securities
Money Market Fund
-----------
Ticker Symbol: GSBXX
GOAL/APPROACH
The fund seeks as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity.
To pursue this goal, the fund invests in securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities, and repurchase agreements
in respect of these securities.
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
A security backed by the U.S. Treasury or the full faith and credit of the
United States is guaranteed only as to the timely payment of interest and
principal when held to maturity. The current market prices for such securities
are not guaranteed and will fluctuate. The fund is subject to the risk that
interest rates could rise sharply, causing the fund's share price to drop.
4
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
4.60 4.69 4.61
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q4 '97 +1.18%
Worst Quarter: Q4 '98 +1.06%
The fund's 7-day yield on 12/31/98 was 4.08%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- --------------------------------------------------------------------------------
4.61% 4.72%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.07%
- --------------------------------------------------------------------------------
Total 1.02%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$104 $325 $563 $1,248
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
CONCEPTS TO UNDERSTAND
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.02% to 0.97%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General Government Securities Money Market Fund 5
<PAGE>
General Municipal Money Market Fund
-----------
Ticker Symbol: GBMXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal personal income
tax, as is consistent with the preservation of capital and the maintenance of
liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal personal
income tax. When the portfolio manager believes that acceptable municipal
obligations are unavailable for investment, the fund may invest temporarily in
high quality, taxable money market instruments. Municipal obligations are
typically divided into two types:
* general obligation bonds, which are secured by the full faith and credit of
the issuer and its taxing power
* revenue bonds, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
Although the fund's objective is to generate income exempt from federal income
tax, interest from some of its holdings may be subject to the alternative
minimum tax. In addition, the fund occasionally may invest in taxable money
market instruments.
6
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
2.66 2.86 2.60
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q2 '97 +0.76%
Worst Quarter: Q4 '98 +0.61%
The fund's 7-day yield on 12/31/98 was 2.83%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- --------------------------------------------------------------------------------
2.60% 2.77%
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- --------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.10%
- --------------------------------------------------------------------------------
Total 1.05%
- --------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$107 $334 $579 $1,283
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
CONCEPTS TO UNDERSTAND
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.05% to 0.96%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General Municipal Money Market Fund 7
<PAGE>
MANAGEMENT
The investment adviser for each fund is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages one of the
nation's leading mutual fund complexes, with more than $121 billion in more than
160 mutual fund portfolios. Dreyfus is the primary mutual fund business of
Mellon Bank Corporation, a broad-based financial services company with a bank at
its core. With more than $389 billion of assets under management and $1.9
trillion of assets under administration and custody, Mellon provides a full
range of banking, investment and trust products and services to individuals,
businesses and institutions. Its mutual fund companies place Mellon as the
leading bank manager of mutual funds. Mellon is headquartered in Pittsburgh,
Pennsylvania.
MANAGEMENT PHILOSOPHY
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
CONCEPTS TO UNDERSTAND
YEAR 2000 ISSUES: these funds could be adversely affected if the computer
systems used by Dreyfus and the funds' other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which these funds invest may be
adversely affected by year 2000-related problems. This could have an impact on
the value of a fund's investments and its share price.
8
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each fund's Class B shares for
the fiscal periods indicated. "Total return" shows how much your investment in
the fund would have increased (or decreased) during each period, assuming you
had reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young LLP, whose report, along with the fund's
financial statements, is included in the annual report.
<TABLE>
<CAPTION>
Year Ended Ten Months Ended
November 30, November 30, Year Ended January 31,
General Money Market Fund 1998 1997 (1) 1997 1996 (2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .047 .039 .046 .043
Distributions: Dividends from investment
income--net (.047) (.039) (.046) (.043)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 4.78 4.83 (3) 4.65 5.18 (3)
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.00 1.00 (3) 1.00 1.00 (3)
Ratio of net investment income to average net assets (%) 4.66 4.78 (3) 4.56 5.00 (3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .06 .05 (3) .07 .07 (3)
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,427,332 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>
<TABLE>
<CAPTION>
Year Ended Ten Months Ended
November 30, November 30, Year Ended January 31,
General Government Securities Money Market Fund 1998 1997 (1) 1997 1996 (2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .046 .038 .045 .042
Distributions: Dividends from investment
income--net (.046) (.038) (.045) (.042)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 4.66 4.69 (3) 4.58 5.04 (3)
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .97 1.00 (3) 1.00 1.00 (3)
Ratio of net investment income to average net assets (%) 4.55 4.60 (3) 4.48 5.01 (3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .05 .05 (3) .08 .10 (3)
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 645,984 364,845 90,175 58
- ----------------------------------------------------------------------------------------------------------------------------------
<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>
Financial Highlights 9
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Year Ended November 30,
General Municipal Money Market Fund 1998 1997 1996 1995 (1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .026 .028 .027 .020
Distributions: Dividends from investment income-- net (.026) (.028) (.027) (.020)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.64 2.86 2.70 3.01 (2)
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .96 .95 .85 1.10 (2)
Ratio of net investment income to average net assets (%) 2.59 2.87 2.65 2.83 (2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .09 .16 .29 .09 (2)
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 377,636 263,008 17,491 3,024
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
1 From March 31, 1995 (commencement of initial offering) to November 30, 1995.
2 Annualized.
</FN>
</TABLE>
10
<PAGE>
YOUR INVESTMENT
ACCOUNT POLICIES
BUYING SHARES
GENERAL FUNDS are designed primarily for people who are investing through a
third party such as a bank, broker-dealer or financial adviser. Third parties
with whom you open a fund account may impose policies and charge transaction
fees and may set minimum investment limitations on buying or selling shares.
Consult a representative of your financial institution for more information.
YOUR PRICE FOR FUND SHARES is the fund's net asset value (NAV), which is
generally calculated twice a day, at 5 p.m. and 8 p.m. Eastern time for the
taxable money market funds and 12 noon and 8 p.m. Eastern time for the municipal
money market fund, every day the New York Stock Exchange or the fund's transfer
agent is open. Your order will be priced at the next NAV calculated after your
order is accepted by the fund's transfer agent or other authorized entity. Each
fund's investments are valued based on amortized cost.
IF YOUR PAYMENTS ARE RECEIVED in or converted into Federal Funds by 12 noon, you
will receive the dividend declared that day. If your payments are received
in or converted into Federal Funds after 12 noon, you will begin to accrue
dividends on the following business day. Qualified institutions may telephone
orders to buy shares. If such an order is made by 5 p.m. for the taxable money
market funds or 12 noon for the municipal money market fund, and Federal Funds
are received by 6 p.m. or 4 p.m., respectively, the shares will be purchased at
the NAV determined at 5 p.m. or 12 noon, as the case may be, and will receive
the dividend declared that day. If such an order is made after 5 p.m. for the
taxable money market funds or 12 noon for the municipal money market fund, but
by 8 p.m., and Federal Funds are received by 11 a.m. the next business day, the
shares will be purchased at the NAV determined at 8 p.m. and will begin to
accrue dividends on the next business day. All times are Eastern time.
BECAUSE THE MUNICIPAL MONEY MARKET FUND seeks tax-exempt income, it is not
recommended for purchase in IRAs or other qualified retirement plans.
RETIREMENT PLANS
A variety of retirement plans are offered for the taxable money market funds,
including traditional, rollover, Roth and Education IRAs. In addition, SEP-IRAs,
Keogh accounts, 401(k) and 403(b) accounts are also available. Please call your
financial representative for information.
Your Investment 11
<PAGE>
ACCOUNTS POLICIES (continued)
SELLING SHARES
YOU MAY SELL (REDEEM) SHARES AT ANY TIME through your financial representative.
Your shares will be sold at the next NAV calculated after your order is accepted
by the fund's transfer agent or other authorized entity.
BEFORE SELLING OR WRITING A CHECK for recently purchased shares, please note
that if the fund has not yet collected payment for the shares you are selling,
it may delay sending the proceeds for up to eight business days or until it has
collected payment.
GENERAL POLICIES
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify that the order is from a representative of your
financial institution.
Each fund reserves the right to:
* refuse any purchase or exchange request that could adversely affect the fund
or its operations, including those from any individual or group who, in the
fund's view, is likely to engage in excessive trading (usually defined as more
than four exchanges out of the fund within a calendar year)
* refuse any purchase or exchange request in excess of 1% of the fund's total
assets
* change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions
* delay sending out redemption proceeds for up to seven days (generally applies
only in cases of very large redemptions, excessive trading or during unusual
market conditions)
Each fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
DISTRIBUTIONS AND TAXES
EACH FUND USUALLY PAYS ITS SHAREHOLDERS dividends from its net investment income
once a month, and distributes any net realized securities gains once a year.
Your dividends and distributions will be reinvested in the fund unless you
instruct the fund otherwise. There are no fees or sales charges on reinvestments
or withdrawals.
DIVIDENDS AND DISTRIBUTIONS PAID by the taxable money market funds are taxable
to U.S. shareholders as ordinary income (unless your investment is in an IRA or
other tax-advantaged account).
THE MUNICIPAL MONEY MARKET FUND anticipates that, under normal market
conditions, virtually all of its income dividends will be exempt from federal
income taxes. However, any dividends and distributions from taxable investments
are taxable as ordinary income.
The tax status of any distribution is the same regardless of how long you have
been in the fund and whether you reinvest your distributions or take them in
cash.
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences. *12
CONCEPTS TO UNDERSTAND
DIVIDENDS: income or interest paid by the investments in a fund's portfolio, net
of expenses, passed on to fund shareholders.
DISTRIBUTIONS: income, net of expenses passed on to fund shareholders. These are
calculated on a per-share basis: each share earns the same rate of return, so
the more fund shares you own, the higher your distribution.
SECURITIES GAINS: distributions derived from the profits the fund earns when it
sells securities for a higher price than it paid for them.
12
<PAGE>
NOTES
13
<PAGE>
FOR MORE INFORMATION
GENERAL MONEY MARKET FUND
- --------------------------
SEC FILE NUMBER: 811-3207
GENERAL GOVERNMENT SECURITIES
MONEY MARKET FUND
- -----------------------------
SEC FILE NUMBER: 811-3456
GENERAL MUNICIPAL MONEY MARKET FUND
- -----------------------------------
SEC FILE NUMBER: 811-3481
More information on each fund is available free upon request, including the
following:
ANNUAL/SEMIANNUAL REPORT
Describes the fund's performance, and lists portfolio holdings.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Provides more details about each fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE
Call your John G. Kinnard Investment Executive or
1-800-444-7884 or 612-370-2559
BY MAIL Write to:
John G. Kinnard & Co. Incorporated
920 Second Avenue South
Minneapolis, MN 55402
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(C) 1999, Dreyfus Service Corporation GMM/P0499B-JGK
<PAGE>
General
Money Market
Funds
GENERAL MONEY MARKET FUND
GENERAL GOVERNMENT SECURITIES
MONEY MARKET FUND
GENERAL MUNICIPAL MONEY MARKET FUND
GENERAL CALIFORNIA MUNICIPAL
MONEY MARKET FUND
GENERAL MINNESOTA MUNICIPAL
MONEY MARKET FUND
GENERAL NEW YORK MUNICIPAL
MONEY MARKET FUND
Investing in high quality, short-term securities
for current income, safety of principal and liquidity
PROSPECTUS April 1, 1999
CLASS B SHARES
Stifel, Nicolaus
& Company, Incorporated
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
Contents
The Funds
- ------------------------------------------------
Introduction 1
General Money Market Fund 2
General Government Securities
Money Market Fund 4
General Municipal
Money Market Fund 6
General California Municipal
Money Market Fund 8
General Minnesota Municipal
Money Market Fund 10
General New York Municipal
Money Market Fund 12
Management 14
Financial Highlights 15
Your Investment
- ------------------------------------------------
Account Policies 18
Distributions and Taxes 19
For More Information
- ------------------------------------------------
More information on each fund can be found in the
fund's current annual/semiannual report.
See back cover.
THE FUNDS
INTRODUCTION
Each fund is a money market mutual fund with a separate investment portfolio.
The operations and results of a fund are unrelated to those of each other fund.
This combined prospectus has been prepared for your convenience so that you can
consider six investment choices in one document.
As a money market fund, each fund is subject to maturity, quality and
diversification requirements designed to help it maintain a stable share price.
Generally, each fund is required to invest at least 95% of its assets in the
securities of issuers with the highest credit rating or the unrated equivalent
as determined by Dreyfus, with the remainder invested in securities with the
second highest credit rating.
An investment in a fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although each fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in a fund.
Concepts to understand
- -------------------------------------------------------------------------------
MONEY MARKET FUND: a specific type of fund that seeks to maintain a $1.00 price
per share. Money market funds are subject to strict federal requirements and
must:
* maintain an average dollar-weighted portfolio maturity of 90 days or less
* buy individual securities that have remaining maturities of 13 months or less
* invest only in high quality dollar-denominated obligations
CREDIT RATING: a measure of the issuer's expected ability to make all required
interest and principal payments in a timely manner. An issuer with the highest
credit rating has a very strong degree of certainty (or safety) with respect to
making all payments. An issuer with the second highest credit rating has a
strong capacity to make all payments, but the degree of safety is somewhat less.
The Funds 1
<PAGE>
General Money Market Fund
---------------------
Ticker Symbol: GMBXX
GOAL/APPROACH
The fund seeks as high a level of current income as is consistent with the
preservation of capital. To pursue this goal, the fund invests in a diversified
portfolio of high quality, short-term debt securities, including the following:
* securities issued or guaranteed by the U.S. government or its agencies
* certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by domestic or foreign banks or their
subsidiaries or branches
* repurchase agreements
* asset-backed securities
* domestic and dollar-denominated foreign com mercial paper, and other
short-term corporate obligations, including those with floating or variable
rates of interest
* dollar-denominated obligations issued or guar anteed by one or more foreign
governments or any of their political subdivisions or agencies
Normally, the fund invests at least 25% of its net assets in domestic or
dollar-denominated foreign bank obligations.
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking industry
* the risks generally associated with dollar-denominated foreign investments,
such as economic and political developments, seizure or nationalization of
deposits, imposition of taxes or other restrictions on the payment of
principal and interest
2
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- ------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
4.68 4.84 4.73
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q4 '97 +1.22%
Worst Quarter: Q4 '98 +1.09%
The fund's 7-day yield on 12/31/98 was 4.25%. For the fund's current yield, call
toll-free 1-800-645-6561.
- ------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- ------------------------------------------------------------------------------
4.73% 4.84%
What this fund is -- and isn't
- ------------------------------------------------------------------------------
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- ------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.11%
- ------------------------------------------------------------------------------
Total 1.06%
- ------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
$108 $337 $585 $1,294
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
- ------------------------------------------------------------------------------
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.06% to 1.00%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for
sub-accounting services provided by third parties and fees paid by the fund for
miscellaneous items such as transfer agency, custody, professional and
registration fees.
General Government Securities 3
<PAGE>
General Government Securities
Money Market Fund
---------------------
Ticker Symbol: GSBXX
GOAL/APPROACH
The fund seeks as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity.
To pursue this goal, the fund invests in securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities, and repurchase agreements
in respect of these securities.
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
A security backed by the U.S. Treasury or the full faith and credit of the
United States is guaranteed only as to the timely payment of interest and
principal when held to maturity. The current market prices for such securities
are not guaranteed and will fluctuate. The fund is subject to the risk that
interest rates could rise sharply, causing the fund's share price to drop.
4
<PAGE>
Past Performance
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- ------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
4.60 4.69 4.61
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q4 '97 +1.18%
Worst Quarter: Q4 '98 +1.06%
The fund's 7-day yield on 12/31/98 was 4.08%. For the fund's current yield, call
toll-free 1-800-645-6561.
- ------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- ------------------------------------------------------------------------------
4.61% 4.72%
What this fund is -- and isn't
- ------------------------------------------------------------------------------
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- ------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.07%
- ------------------------------------------------------------------------------
Total 1.02%
- ------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
$104 $325 $563 $1,248
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
- ------------------------------------------------------------------------------
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, including total expenses from 1.02% to 0.97%. This undertaking
is voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General Government Securities Money Market Fund 5
<PAGE>
General Municipal Money Market Fund
----------------------
Ticker Symbol: GBMXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal personal income
tax, as is consistent with the preservation of capital and the maintenance of
liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal personal
income tax. When the portfolio manager believes that acceptable municipal
obligations are unavailable for investment, the fund may invest temporarily in
high quality, taxable money market instruments. Municipal obligations are
typically divided into two types:
* general obligation bonds, which are secured by the full faith and credit of
the issuer and its taxing power
* revenue bonds, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded
or could default
Although the fund's objective is to generate income exempt from federal income
tax, interest from some of its holdings may be subject to the federal
alternative minimum tax. In addition, the fund occasionally may invest in
taxable money market instruments.
6
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- ------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
2.66 2.86 2.60
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q2 '97 +0.76%
Worst Quarter: Q4 '98 +0.61%
The fund's 7-day yield on 12/31/98 was 2.83%. For the fund's current yield, call
toll-free 1-800-645-6561.
- ------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (3/31/95)
- ------------------------------------------------------------------------------
2.60% 2.77%
What this fund is -- and isn't
- ------------------------------------------------------------------------------
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- ------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.10%
- ------------------------------------------------------------------------------
Total 1.05%
- ------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
$107 $334 $579 $1,283
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
- ------------------------------------------------------------------------------
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.05% to 0.96%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items
such as transfer agency, custody, professional and registration fees.
General Municipal Money Market Fund 7
<PAGE>
General California Municipal
Money Market Fund
---------------------
Ticker Symbol: GENXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal and California
state personal income taxes, as is consistent with the preservation of capital
and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal and
California state personal income taxes. When the portfolio manager believes that
acceptable California municipal obligations are unavailable for investment, the
fund may invest in securities that may be subject to California state income
tax, but are free from federal income tax. Municipal obligations are typically
divided into two types:
* general obligation bonds, which are secured by the full faith and credit of
the issuer and its taxing power
* revenue bonds, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* California's economy and revenues underlying municipal obligations may decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal and
California state income taxes, interest from some of its holdings may be subject
to the federal alternative minimum tax. In addition, the fund occasionally may
invest in taxable bonds and/or municipal bonds that are exempt only from federal
personal income taxes.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
8
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- ------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
2.48 2.62 2.34
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q2 '97 +0.71%
Worst Quarter: Q3 '98 +0.53%
The fund's 7-day yield on 12/31/98 was 2.59%. For the fund's current yield, call
toll-free 1-800-645-6561.
- ------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (8/1/95)
- ------------------------------------------------------------------------------
2.34% 2.52%
What this fund is -- and isn't
- ------------------------------------------------------------------------------
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- ------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.12%
- ------------------------------------------------------------------------------
Total 1.07%
- ------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
$109 $340 $590 $1,306
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
- ------------------------------------------------------------------------------
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.07% to 1.00%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General California Municipal Money Market Fund 9
<PAGE>
General Minnesota Municipal
Money Market Fund
---------------------------
Ticker Symbol: GMNXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal and Minnesota
state personal income taxes, as is consistent with the preservation of capital
and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal and
Minnesota state personal income taxes. When the portfolio manager believes that
acceptable Minnesota municipal obligations are unavailable for investment, the
fund may invest in securities that may be subject to Minnesota state income tax,
but are free from federal income tax. Municipal obligations are typically
divided into two types:
* general obligation bonds, which are secured by the full faith and credit of
the issuer and its taxing power
* revenue bonds, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* Minnesota's economy and revenues underlying municipal obligations may decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal and
Minnesota state income taxes, interest from some of its holdings may be subject
to the federal alternative minimum tax. In addition, the fund occasionally may
invest in taxable bonds and/or municipal bonds that are exempt only from federal
personal income taxes.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
10
<PAGE>
PAST PERFORMANCE
Since the fund has less than one calendar year of performance, past performance
information is not included. For performance information as of the end of the
fund's first fiscal period, please refer to the Statement of Additional
Information (SAI).
What this fund is -- and isn't
- ------------------------------------------------------------------------------
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- ------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.72%
- ------------------------------------------------------------------------------
Total 1.67%
- ------------------------------------------------------------------------------
Expense example
1 Year 3 Years
- ------------------------------------------------------------------------------
$170 $526
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
- ------------------------------------------------------------------------------
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
period ended November 30, 1998, Dreyfus waived its fee and assumed certain other
fund expenses pursuant to an undertaking, reducing total expenses from 1.67% to
0.80%. This undertaking is voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and estimated fees to be paid by the fund for
miscellaneous items such as transfer agency, custody, professional and
registration fees.
General Minnesota Municipal Money Market Fund 11
<PAGE>
General New York Municipal
Money Market Fund
---------------------
Ticker Symbol: GNYXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal, New York state
and New York city personal income taxes, as is consistent with the preservation
of capital and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal, New York
state and New York city personal income taxes. When the portfolio manager
believes that acceptable New York municipal obligations are unavailable for
investment, the fund may invest in securities that may be subject to New York
state and New York city income taxes, but are free from federal income tax.
Municipal obligations are typically divided into two types:
* general obligation bonds, which are secured by the full faith and credit of
the issuer and its taxing power
* revenue bonds, which are payable from the revenues derived from a specific
revenue source, such as charges for water and sewer service or highway tolls
MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
* interest rates could rise sharply, causing the fund's share price to drop
* any of the fund's holdings could have its credit rating downgraded or could
default
* New York's economy and revenues underlying municipal obligations may decline
* the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal, New
York state and New York city income taxes, interest from some of its holdings
may be subject to the federal alternative minimum tax. In addition, the fund
occasionally may invest in taxable bonds and/or municipal bonds that are exempt
only from federal personal income tax.
The fund is non-diversified, which means that a relatively high percentage of
the fund's assets may be invested in a limited number of issuers. Therefore, its
performance may be more vulnerable to changes in the market value of a single
issuer or a group of issuers.
12
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second table averages the fund's performance over time.
Both tables assume reinvestment of dividends and distributions. As with all
mutual funds, the past is not a prediction of the future.
- ------------------------------------------------------------------------------
Year-by-year total return as of 12/31 each year (%)
2.51 2.70 2.42
89 90 91 92 93 94 95 96 97 98
Best Quarter: Q2 '97 +0.70%
Worst Quarter: Q4 '98 +0.55%
The fund's 7-day yield on 12/31/98 was 2.61%. For the fund's current yield, call
toll-free 1-800-645-6561.
- ------------------------------------------------------------------------------
Average annual total return as of 12/31/98
Inception
1 Year (9/8/95)
- ------------------------------------------------------------------------------
2.42% 2.57%
What this fund is-- and isn't
- ------------------------------------------------------------------------------
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described for Class B in the table below. Annual fund operating
expenses are paid out of fund assets, so their effect is included in the share
price.
- ------------------------------------------------------------------------------
Fee table
Annual fund operating expenses
% of average daily net assets
Management fees 0.50%
Rule 12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.11%
- ------------------------------------------------------------------------------
Total 1.06%
- ------------------------------------------------------------------------------
Expense example
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
$108 $337 $585 $1,294
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
- ------------------------------------------------------------------------------
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations. For the fiscal
year ended November 30, 1998, Dreyfus assumed certain fund expenses pursuant to
an undertaking, reducing total expenses from 1.06% to 0.98%. This undertaking is
voluntary and may be terminated at any time.
RULE 12B-1 FEE: a fee of up to 0.20% to reimburse the fund's distributor for
distributing Class B shares. Because this fee is paid out of the fund's assets
on an ongoing basis, over time it will increase the cost of your investment and
may cost you more than paying other types of sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General New York Municipal Money Market Fund 13
<PAGE>
MANAGEMENT
The investment adviser for each fund is The Dreyfus Corporation, 200 Park
Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages one of the
nation's leading mutual fund complexes, with more than $121 billion in more than
160 mutual fund portfolios. Dreyfus is the primary mutual fund business of
Mellon Bank Corporation, a broad-based financial services company with a bank at
its core. With more than $389 billion of assets under management and $1.9
trillion of assets under administration and custody, Mellon provides a full
range of banking, investment and trust products and services to individuals,
businesses and institutions. Its mutual fund companies place Mellon as the
leading bank manager of mutual funds. Mellon is headquartered in Pittsburgh,
Pennsylvania.
Management philosophy
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Concepts to understand
- ------------------------------------------------------------------------------
YEAR 2000 ISSUES: these funds could be adversely affected if the computer
systems used by Dreyfus and the funds' other service providers do not properly
process and calculate date-related information from and after January 1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which these funds invest may be
adversely affected by year 2000-related problems. This could have an impact on
the value of a fund's investments and its share price.
14
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each fund's Class B shares for
the fiscal periods indicated. "Total return" shows how much your investment in
the fund would have increased (or decreased) during each period, assuming you
had reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young LLP, whose report, along with the fund's
financial statements, is included in the annual report.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Year Ended Ten Months Ended
November 30, November 30, Year Ended January 31,
General Money Market Fund 1998 1997(1) 1997 1996(2)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .047 .039 .046 .043
Distributions: Dividends from investment income--net (.047) (.039) (.046) (.043)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 4.78 4.83(3) 4.65 5.18(3)
- ---------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.00 1.00(3) 1.00 1.00(3)
Ratio of net investment income to average net assets (%) 4.66 4.78(3) 4.56 5.00(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .06 .05(3) .07 .07(3)
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,427,332 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.
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Year Ended Ten Months Ended
November 30, November 30, Year Ended January 31,
General Government Securities Money Market Fund 1998 1997(1) 1997 1996(2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .046 .038 .045 .042
Distributions: Dividends from investment income--net (.046) (.038) (.045) (.042)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 4.66 4.69(3) 4.58 5.04(3)
- -------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .97 1.00(3) 1.00 1.00(3)
Ratio of net investment income to average net assets (%) 4.55 4.60(3) 4.48 5.01(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .05 .05(3) .08 .10
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 645,984 364,845 90,175 58
- -------------------------------------------------------------------------------------------------------------------
<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.
</TABLE>
Financial Highlights 15
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
General Municipal Money Market Fund 1998 1997 1996 1995(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .026 .028 .027 .020
Distributions: Dividends from investment income--net (.026) (.028) (.027) (.020)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.64 2.86 2.70 3.01(2)
- ---------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .96 .95 .85 1.10(2)
Ratio of net investment income to average net assets (%) 2.59 2.87 2.65 2.83(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .09 .16 .29 .09(2)
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 377,636 263,008 17,491 3,024
- ---------------------------------------------------------------------------------------------------------------------
<FN>
1 From March 31, 1995 (commencement of initial offering) to November 30, 1995.
2 Annualized.
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Year Ended Four Months Ended
November 30, November 30, Year Ended July 31,
General California Municipal Money Market Fund 1998 1997(1) 1997 1996(2)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .024 .009 .026 .025
Distributions: Dividends from investment income--net (.024) (.009) (.026) (.025)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.39 2.57(3) 2.61 2.56
- ---------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) 1.00 1.00(3) 1.00 1.00
Ratio of net investment income to average net assets (%) 2.34 2.62(3) 2.52 2.45
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .07 .13(3) .07 .08
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 8,760 2,669 928 5,475
- ---------------------------------------------------------------------------------------------------------------------
<FN>
1 The fund changed its fiscal year end from July 31 to November 30.
2 From August 1, 1995 (commencement of initial offering) to July 31, 1996.
3 Annualized.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Period Ended November 30,
General Minnesota Municipal Money Market Fund 1998(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00
Investment operations: Investment income-- net .013
Distributions: Dividends from investment income-- net (.013)
Net asset value, end of period 1.00
Total return (%) 2.67(2)
- ---------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .80(2)
Ratio of net investment income to average net assets (% 2.63(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .87(2)
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 28,160
- ---------------------------------------------------------------------------------------------------------------------
<FN>
1 From June 1, 1998 (commencement of operations) to November 30, 1998.
2 Annualized.
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
General New York Municipal Money Market Fund 1998 1997 1996 1995(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per-Share Data ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income-- net .024 .027 .025 .006
Distributions: Dividends from investment income-- net (.024) (.027) (.025) (.006)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.47 2.68 2.55 2.82(2)
- ---------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Ratio of expenses to average net assets (%) .98 .95 .95 1.04(2)
Ratio of net investment income to average net assets (%) 2.44 2.64 2.47 3.64(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .08 .08 .16 --
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 46,997 42,169 36,199 --
- ---------------------------------------------------------------------------------------------------------------------
<FN>
1 From September 8, 1995 (commencement of initial offering) to November 30, 1995.
2 Annualized.
</TABLE>
Financial Highlights 17
<PAGE>
Your Investment
ACCOUNT POLICIES
BUYING SHARES
GENERAL FUNDS are designed primarily for people who are investing through a
third party such as a bank, broker-dealer or financial adviser. Third parties
with whom you open a fund account may impose policies and charge transaction
fees and may set minimum investment limitations on buying or selling shares.
Consult a representative of your financial institution for more information.
YOUR PRICE FOR FUND SHARES is the fund's net asset value (NAV), which is
generally calculated twice a day, at 5 p.m. and 8 p.m. Eastern time for the
taxable money market funds and 12 noon and 8 p.m. Eastern time for the municipal
money market funds, every day the New York Stock Exchange or the fund's transfer
agent is open. Your order will be priced at the next NAV calculated after your
order is accepted by the fund's transfer agent or other authorized entity. Each
fund's investments are valued based on amortized cost.
IF YOUR PAYMENTS ARE RECEIVED in or converted into Federal Funds by 12 noon, you
will receive the dividend declared that day. If your payments are received in or
converted into Federal Funds after 12 noon, you will begin to accrue dividends
on the following business day. Qualified institutions may telephone orders to
buy shares. If such an order is made by 5 p.m. for the taxable money market
funds or 12 noon for the municipal money market funds, and Federal Funds are
received by 6 p.m. or 4 p.m., respectively, the shares will be purchased at the
NAV determined at 5 p.m. or 12 noon, as the case may be, and will receive the
dividend declared that day. If such an order is made after 5 p.m. for the
taxable money market funds or 12 noon for the municipal money market funds, but
by 8 p.m., and Federal Funds are received by 11 a.m. the next business day, the
shares will be purchased at the NAV determined at 8 p.m. and will begin to
accrue dividends on the next business day. All times are Eastern time.
BECAUSE THE MUNICIPAL MONEY MARKET FUNDS seek tax-exempt income, they are not
recommended for purchase in IRAs or other qualified retirement plans.
Retirement plans
- ------------------------------------------------------------------------------
A variety of retirement plans are offered for the taxable money market funds,
including traditional, rollover, Roth and Education IRAs. In addition, SEP-IRAs,
Keogh accounts, 401(k) and 403(b) accounts are also available. Please call your
financial representative for information.
18
<PAGE>
SELLING SHARES
YOU MAY SELL (REDEEM) SHARES AT ANY TIME through your financial representative.
Your shares will be sold at the next NAV calculated after your order is accepted
by the fund's transfer agent or other authorized entity.
BEFORE SELLING OR WRITING A CHECK for recently purchased shares, please note
that if the fund has not yet collected payment for the shares you are selling,
it may delay sending the proceeds for up to eight business days or until it has
collected payment.
GENERAL POLICIES
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify that the order is from a representative of your
financial institution.
EACH FUND RESERVES THE RIGHT TO:
* refuse any purchase or exchange request that could adversely affect the
fund or its operations, including those from any individual or group who, in
the fund's view, is likely to engage in excessive trading (usually defined as
more than four exchanges out of the fund within a calendar year)
* refuse any purchase or exchange request in excess of 1% of the fund's total
assets
* change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions
* delay sending out redemption proceeds for up to seven days (generally applies
only in cases of very large redemptions, excessive trading or during unusual
market conditions)
Each fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
DISTRIBUTIONS AND TAXES
EACH FUND USUALLY PAYS ITS SHAREHOLDERS dividends from its net investment income
once a month, and distributes any net realized securities gains once a year.
Your dividends and distributions will be reinvested in the fund unless you
instruct the fund otherwise. There are no fees or sales charges on reinvestments
or withdrawals.
DIVIDENDS AND DISTRIBUTIONS PAID by the taxable money market funds are taxable
to U.S. shareholders as ordinary income (unless your investment is in an IRA or
other tax-advantaged account).
EACH MUNICIPAL MONEY MARKET FUND anticipates that, under normal market
conditions, virtually all of its income dividends will be exempt from federal
and, as to California Municipal Money Market Fund, California, as to Minnesota
Municipal Money Market Fund, Minnesota, and as to New York Municipal Money
Market Fund, New York state and New York city, personal income taxes. However,
any dividends and distributions from taxable investments are taxable as ordinary
income.
The tax status of any distribution is the same regardless of how long you have
been in the fund and whether you reinvest your distributions or take them in
cash.
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
Concepts to understand
- -------------------------------------------------------------------------------
DIVIDENDS: income or interest paid by the investments in a fund's portfolio, net
of expenses, passed on to fund shareholders.
DISTRIBUTIONS: income, net of expenses passed on to fund shareholders. These are
calculated on a per-share basis: each share earns the same rate of return, so
the more fund shares you own, the higher your distribution.
SECURITIES GAINS: distributions derived from the profits the fund earns when it
sells securities for a higher price than it paid for them.
Your Investment 19
<PAGE>
NOTES
20
<PAGE>
NOTES
21
<PAGE>
For More Information
GENERAL MONEY MARKET FUND
- --------------------------
SEC FILE NUMBER: 811-3207
GENERAL GOVERNMENT SECURITIES
MONEY MARKET FUND
- --------------------------
SEC FILE NUMBER: 811-3456
GENERAL MUNICIPAL MONEY MARKET FUND
- --------------------------
SEC FILE NUMBER: 811-3481
GENERAL CALIFORNIA MUNICIPAL
MONEY MARKET FUND
- --------------------------
SEC FILE NUMBER: 811-4871
GENERAL MINNESOTA MUNICIPAL
MONEY MARKET FUND
- --------------------------
SEC FILE NUMBER: 811-3481
GENERAL NEW YORK MUNICIPAL
MONEY MARKET FUND
- --------------------------
SEC FILE NUMBER: 811-4870
To obtain information:
- ------------------------------------------------------------------------------
BY TELEPHONE
Call your Stifel, Nicolaus & Company Investment Executive or 1-800-679-5446
BY MAIL Write to:
Stifel, Nicolaus & Company, Incorporated
501 North Broadway
St. Louis, MO 63102
http://www.stifel.com
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
More information on each fund is available free upon request, including the
following:
ANNUAL/SEMIANNUAL REPORT
Describes the fund's performance, and lists portfolio holdings.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Provides more details about each fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
(C) 1999 Dreyfus Service Corporation GEN/P0499B-SN
GENERAL GOVERNMENT SECURITIES MONEY MARKET FUND, INC.
GENERAL MONEY MARKET FUND, INC.
GENERAL CALIFORNIA MUNICIPAL MONEY MARKET FUND
GENERAL MINNESOTA MUNICIPAL MONEY MARKET FUND
GENERAL MUNICIPAL MONEY MARKET FUND
GENERAL NEW YORK MUNICIPAL MONEY MARKET FUND
STATEMENT OF ADDITIONAL INFORMATION
APRIL 1, 1999
CLASS A AND CLASS B SHARES
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current combined
Prospectus for Class A or Class B shares of General Government Securities
Money Market Fund, Inc. (the "Government Money Fund"), General Money Market
Fund, Inc. (the "Money Fund"), General California Municipal Money Market
Fund (the "California Municipal Fund"), General Minnesota Municipal Money
Market Fund (the "Minnesota Municipal Fund"), General Municipal Money Market
Fund (the "National Municipal Fund") and General New York Municipal Money
Market Fund (the "New York Municipal Fund") (each, a "Fund" and
collectively, the "Funds"), dated April 1, 1999, as it may be revised from
time to time. To obtain a copy of the Prospectus for Class A or Class B
shares of a Fund, please write to a Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1396
Outside the U.S. -- Call 516-794-5452
The most recent Annual and Semi-Annual Report to Shareholders of each
Fund are separate documents supplied with this Statement of Additional
Information, and the financial statements, accompanying notes and reports of
independent auditors appearing in the Annual Report are incorporated by
reference into this Statement of Additional Information. When requesting a
copy of this Statement of Additional Information, you will receive the
report(s) for the Fund(s) in which you are a shareholder.
Each Fund is a separate investment portfolio with operations and
results that are unrelated to those of each other Fund. The Minnesota
Municipal Fund and the National Municipal Fund are separate series of
General Municipal Money Market Funds, Inc. (the "Company"). This combined
Statement of Additional Information has been provided for your convenience
to provide you with the opportunity to consider six investment choices in
one document.
TABLE OF CONTENTS
Page
DESCRIPTION OF THE FUNDS 3
MANAGEMENT OF THE FUNDS 23
MANAGEMENT ARRANGEMENTS 29
HOW TO BUY SHARES 33
SERVICE PLAN AND DISTRIBUTION PLAN 36
SHAREHOLDER SERVICES PLANS 38
HOW TO REDEEM SHARES 39
SHAREHOLDER SERVICES 42
DETERMINATION OF NET ASSET VALUE 46
DIVIDENDS, DISTRIBUTIONS AND TAXES 47
YIELD INFORMATION 49
PORTFOLIO TRANSACTIONS 52
INFORMATION ABOUT THE FUNDS 53
COUNSEL AND INDEPENDENT AUDITORS 54
APPENDIX A 55
APPENDIX B 58
APPENDIX C 62
APPENDIX D 81
APPENDIX E 87
APPENDIX F 114
DESCRIPTION OF THE FUNDS
Each of the Government Money Fund, the Company and the Money Fund is a
Maryland corporation formed on April 8, 1982, April 8, 1982 and May 15,
1981, respectively.
Each of the California Municipal Fund and the New York Municipal Fund
is a Massachusetts business trust that commenced operations on March 10,
1987 and December 2, 1986, respectively.
Each Fund is an open-end management investment company, known as a
money market mutual fund. Each of the Government Money Fund, the Money Fund
and the National Municipal Fund is a diversified fund, which means that,
with respect to 75% of its total assets, the Fund will not invest more than
5% of its assets in the securities of any single issuer. Each of the other
Funds is a non-diversified fund, which 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, as amended (the "1940
Act").
The Dreyfus Corporation (the "Manager") serves as each Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of each Fund's shares.
Certain Portfolio Securities
The following information supplements and should be read in conjunction
with the Funds' Prospectus.
U.S. Government Securities. (Government Money Fund and Money Fund)
Each of these Funds may invest in securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities, which include U.S.
Treasury securities that differ in their interest rates, maturities and
times of issuance. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities are supported by the full faith and credit of
the U.S. Treasury; others by the right of the issuer to borrow from the
Treasury; others by discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality; and others
only by the credit of the agency or instrumentality. These securities bear
fixed, floating or variable rates of interest. Interest may fluctuate based
on generally recognized reference rates or the relationship of rates. While
the U.S. Government currently 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.
Repurchase Agreements. (Government Money Fund and Money Fund) Each of
these Funds may enter into repurchase agreements. In a repurchase
agreement, the Fund buys, and the seller agrees to repurchase, a security at
a mutually agreed upon time and price (usually within seven days). The
repurchase agreement thereby determines the yield during the purchaser's
holding period, while the seller's obligation to repurchase is secured by
the value of the underlying security. The Fund's custodian or sub-custodian
will have custody of, and will hold in a segregated account, securities
acquired by the Fund under a repurchase agreement. Repurchase agreements
are considered by the staff of the Securities and Exchange Commission to be
loans by the Fund entering into them. Repurchase agreements could involve
risks in the event of a default or insolvency of the other party to the
agreement, including possible delays or restrictions upon the Fund's ability
to dispose of the underlying securities. 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 $1 billion, or primary government securities dealers reporting to the
Federal Reserve Bank of New York, with respect to securities of the type in
which the Fund may invest, and will require that additional securities be
deposited with it if the value of the securities purchased should decrease
below the resale price.
Bank Obligations. (Money Fund) The Money Fund may purchase
certificates of deposit, time deposits, bankers' acceptances and other short-
term obligations issued by domestic banks, foreign subsidiaries or foreign
branches of domestic banks, domestic and foreign branches of foreign banks,
domestic savings and loan associations and other banking institutions.
Certificates of deposit ("CDs") are negotiable certificates evidencing
the obligation of a bank to repay funds deposited with it for a specified
period of time.
Time deposits ("TDs") are non-negotiable deposits maintained in a
banking institution for a specified period of time (in no event longer than
seven days) at a stated interest rate.
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 the drawer to pay the face
amount of the instrument upon maturity. The other short-term obligations
may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.
As a result of Federal and state laws and regulations, domestic banks
whose CDs may be purchased by the Fund are, among other things, generally
required to maintain specified levels of reserves, and are subject to other
supervision and regulation designed to promote financial soundness.
Domestic commercial banks organized under Federal law are supervised and
examined by the Comptroller of the Currency and are required to be members
of the Federal Reserve System and to have their deposits insured by the
Federal Deposit Insurance Corporation (the "FDIC"). Domestic banks
organized under state law are supervised and examined by state banking
authorities but are members of the Federal Reserve System only if they elect
to join. In addition, state banks whose CDs may be purchased by the Money
Fund are insured by the Bank Insurance Fund administered by the FDIC
(although such insurance may not be of material benefit to the Fund,
depending upon the principal amount of the CDs of each bank held by the
Fund) and are subject to Federal examination and to a substantial body of
Federal law and regulation. However, not all of such laws and regulations
apply to the foreign branches of domestic banks.
Obligations of foreign branches of domestic banks, foreign subsidiaries
of domestic banks and domestic and foreign branches of foreign banks may be
general obligations of the parent banks in addition to the issuing branch,
or may be limited by the terms of a specific obligation and governmental
regulation. Such obligations are subject to different risks than are those
of domestic banks. These risks include foreign economic and political
developments, foreign governmental restrictions that may adversely affect
payment of principal and interest on the obligations, foreign exchange
controls and foreign withholding and other taxes on interest income. These
foreign branches and subsidiaries are not necessarily subject to the same or
similar regulatory requirements as apply to domestic banks, such as
mandatory reserve requirements, loan limitations, and accounting, auditing
and financial recordkeeping requirements. In addition, less information may
be publicly available about a foreign branch of a domestic bank or about a
foreign bank than about a domestic bank.
Obligations of United States branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation or by Federal and state
regulation as well as governmental action in the country in which the
foreign bank has its head office. A domestic branch of a foreign bank with
assets in excess of $1 billion may be subject to reserve requirements
imposed by the Federal Reserve System or by the state in which the branch is
located if the branch is licensed in that state.
In addition, Federal branches licensed by the Comptroller of the
Currency and branches licensed by certain states ("State Branches") may be
required to: (1) pledge to the regulator, by depositing assets with a
designated bank within the state, a certain percentage of their assets as
fixed from time to time by the appropriate regulatory authority; and (2)
maintain assets within the state in an amount equal to a specified
percentage of the aggregate amount of liabilities of the foreign bank
payable at or through all of its agencies or branches within the state. The
deposits of Federal or State Branches generally must be insured by the FDIC
if such branches take deposits of less than $100,000.
In view of the foregoing factors associated with the purchase of CDs
and TDs issued by foreign branches of domestic banks, by foreign
subsidiaries of domestic banks, by foreign branches of foreign banks or by
domestic branches of foreign banks, the Manager carefully evaluates such
investments on a case-by-case basis.
The Fund may purchase CDs issued by banks, savings and loan
associations and similar thrift institutions with less than $1 billion in
assets, the deposits of which are insured by the FDIC, provided the Fund
purchases any such CD in a principal amount of no more than $100,000, which
amount would be fully insured by the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the FDIC. Interest payments on
such a CD are not insured by the FDIC. The Fund will not own more than one
such CD per such issuer.
Commercial Paper. (Money Fund) The Money Fund may purchase commercial
paper consisting of short-term, unsecured promissory notes issued to finance
short-term credit needs. The commercial paper purchased by the Fund will
consist only of direct obligations issued by domestic and foreign entities.
The other corporate obligations in which the Fund may invest consist of high
quality, U.S. dollar denominated short-term bonds and notes (including
variable amount master demand notes) issued by domestic and foreign
corporations, including banks.
Floating and Variable Rate Obligations. (Money Fund) The Money Fund
may purchase floating and variable rate demand notes and bonds, which are
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, at
varying rates of interest, pursuant to direct arrangements between the Fund,
as lender, and the borrower. These obligations permit daily changes in the
amounts borrowed. Because these obligations are direct lending arrangements
between the lender and borrower, it is not contemplated that such
instruments generally will be traded, and there generally is no established
secondary market for these obligations, although they are redeemable at face
value, plus accrued interest. Accordingly, where these obligations are not
secured by letters of credit or other credit support arrangements, the
Fund's right to redeem is dependent on the ability of the borrower to pay
principal and interest on demand.
Participation Interests. (Money Fund) The Money Fund may purchase
from financial institutions participation interests in securities in which
the Fund may invest. A participation interest gives the Fund an undivided
interest in the security in the proportion that the Fund's participation
interest bears to the total principal amount of the security. 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 is permissible for
purchase by the Fund, the participation interest will be backed by an
irrevocable letter of credit or guarantee of a bank, or the payment
obligation otherwise will be collateralized by U.S. Government securities,
or, in the case of unrated participation interests, the Manager must have
determined that the instrument is of comparable quality to those instruments
in which the Fund may invest.
Asset-Backed Securities. (Money Fund) The Money Fund may purchase
asset-backed securities, which are securities issued by special purpose
entities whose primary assets consist of a pool of mortgages, loans,
receivables or other assets. Payment of principal and interest may depend
largely on the cash flows generated by the assets backing the securities
and, in certain cases, supported by letters of credit, surety bonds or other
forms of credit or liquidity enhancements. The value of these asset-backed
securities also may be affected by the creditworthiness of the servicing
agent for the pool of assets, the originator of the loans or receivables or
the financial institution providing the credit support.
Municipal Obligations. (California Municipal Fund, Minnesota Municipal
Fund, National Municipal Fund and New York Municipal Fund (collectively, the
"Municipal Funds")) Each Municipal Fund will invest at least 80% of the
value of its net assets (except when maintaining a temporary defensive
position) in Municipal Obligations. Municipal Obligations are debt
obligations issued by states, territories and possessions of the United
States and the District of Columbia and their political subdivisions,
agencies and instrumentalities, or multistate agencies of authorities, the
interest from which, in the opinion of bond counsel to the issuer, is exempt
from Federal income tax. Municipal Obligations generally include debt
obligations issued to obtain funds for various public purposes as well as
certain industrial development bonds issued by or on behalf of public
authorities. Municipal Obligations are classified as general obligation
bonds, revenue bonds and notes. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenue derived
from a particular facility or class of facilities or, in some cases, from
the proceeds of a special excise or other specific revenue source, but not
from the general taxing power. Tax exempt industrial development bonds, in
most cases, are revenue bonds that do not carry the pledge of the credit of
the issuing municipality, but generally are guaranteed by the corporate
entity on whose behalf they are issued. Notes are short-term instruments
which are obligations of the issuing municipalities or agencies and are sold
in anticipation of a bond sale, collection of taxes or receipt of other
revenues. Municipal Obligations include municipal lease/purchase agreements
which are similar to installment purchase contracts for property or
equipment issued by municipalities. Municipal Obligations bear fixed,
floating or variable rates of interest. Certain Municipal Obligations are
subject to redemption at a date earlier than their stated maturity pursuant
to call options, which may be separated from the related Municipal
Obligation and purchased and sold separately.
With respect to the National Municipal Fund, for the purpose of
diversification under the 1940 Act, the identification of the issuer of
Municipal Obligations depends on the terms and conditions of the security.
When the assets and revenues of an agency, authority, instrumentality or
other political subdivision are separate from those of the government
creating the subdivision and the security is backed only by the assets and
revenues of the subdivision, such subdivision would be deemed to be the sole
issuer. Similarly, in the case of an industrial development bond, if that
bond is backed only by the assets and revenues of the non-governmental user,
then such non-governmental user would be deemed to be the sole issuer. If,
however, in either case, the creating government or some other entity
guarantees a security, such a guaranty would be considered a separate
security and will be treated as an issue of such government or other entity.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation and rating of the issue.
Certain Tax Exempt Obligations. (Municipal Funds) Each Municipal 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, at varying rates of interest, pursuant to direct
arrangements between the Fund, as lender, and the borrower. These
obligations permit daily changes in the amount borrowed. Because these
obligations are direct lending arrangements between the lender and borrower,
it is not contemplated that such instruments generally will be traded, and
there generally is no established secondary market for these obligations,
although they are redeemable at face value, plus accrued interest.
Accordingly, where these obligations are not secured by letters of credit or
other credit support arrangements, the Fund's right to redeem is dependent
on the ability of the borrower to pay principal and interest on demand.
Each obligation purchased by the Fund will meet the quality criteria
established for the purchase of Municipal Obligations.
Tax Exempt Participation Interests. (Municipal Funds) Each Municipal 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, it will be backed by an
irrevocable letter of credit or guarantee of a bank that the Fund's Board
has determined meets prescribed quality standards for banks, or the payment
obligation otherwise will be collateralized by U.S. Government securities.
For certain participation interests, the Fund will have the right to demand
payment, on not more than seven days' notice, for all or any part of the
Fund's participation interest in the Municipal Obligation, plus accrued
interest. As to these instruments, 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.
Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such
purpose on a yearly basis. Although "non-appropriation" lease obligations
are secured by the leased property, disposition of the property in the event
of foreclosure might prove difficult. The 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 only by one such
organization) or (2) if unrated, are purchased principally from the issuer
or domestic banks or other responsible third parties, in each case only if
the seller shall have entered into an agreement with the 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 a Fund's net assets will be invested in lease
obligations that are illiquid and in other illiquid securities.
Tender Option Bonds. (Municipal Funds) Each Municipal Fund may purchase
tender option bonds. A tender option bond is a Municipal Obligation
(generally held pursuant to a custodial arrangement) having a relatively
long maturity and bearing interest at a fixed rate substantially higher than
prevailing short-term tax exempt rates, that has been coupled with the
agreement of a third party, such as a bank, broker-dealer or other financial
institution, pursuant to which such institution grants the security holders
the option, at periodic intervals, to tender their securities to the
institution and receive the face value thereof. As consideration for
providing the option, the financial institution receives periodic fees equal
to the difference between the Municipal Obligation's fixed coupon rate and
the rate, as determined by a remarketing or similar agent at or near the
commencement of such period, that would cause the securities, coupled with
the tender option, to trade at par on the date of such determination. Thus,
after payment of this fee, the security holder effectively holds a demand
obligation that bears interest at the prevailing short-term tax exempt rate.
The Manager, on behalf of the Fund, will consider on an ongoing basis the
creditworthiness of the issuer of the underlying Municipal Obligation, of
any custodian and of the third party provider of the tender option. In
certain instances and for certain tender option bonds, the option may be
terminable in the event of a default in payment of principal or interest on
the underlying Municipal Obligation and for other reasons.
The Fund will not purchase tender option bonds unless (a) the demand
feature applicable thereto is exercisable by the Fund within 13 months of
the date of such purchase upon no more than 30 days' notice and thereafter
is exercisable by the Fund no less frequently than annually
upon no more than 30 days' notice and (b) at the time of such purchase, the
Manager reasonably expects (i) based upon its assessment of current and
historical interest rate trends, that prevailing short-term tax exempt rates
will not exceed the stated interest rate on the underlying Municipal
Obligations at the time of the next tender fee adjustment and (ii) that the
circumstances which might entitle the grantor of a tender option to
terminate the tender option would not occur prior to the time of the next
tender opportunity. At the time of each tender opportunity, the Fund will
exercise the tender option with respect to any tender option bonds unless
the Manager reasonably expects, (x) based upon its assessment of current and
historical interest rate trends, that prevailing short-term tax exempt rates
will not exceed the stated interest rate on the underlying Municipal
Obligations at the time of the next tender fee adjustment, and (y) that the
circumstances which might entitle the grantor of a tender option to
terminate the tender option would not occur prior to the time of the next
tender opportunity. The Fund will exercise the tender feature with respect
to tender option bonds, or otherwise dispose of its tender option bonds,
prior to the time the tender option is scheduled to expire pursuant to the
terms of the agreement under which the tender option is granted. The Fund
otherwise will comply with the provisions of Rule 2a-7 in connection with
the purchase of tender option bonds, including, without limitation, the
requisite determination by the Fund's Board that the tender option bonds in
question meet the quality standards described in Rule 2a-7, which, in the
case of a tender option bond subject to a conditional demand feature, would
include a determination that the security has received both the required
short-term and long-term quality rating or is determined to be of comparable
quality. In the event of a default of the Municipal Obligation underlying a
tender option bond, or the termination of the tender option agreement, the
Fund would look to the maturity date of the underlying security for purposes
of compliance with Rule 2a-7 and, if its remaining maturity was greater than
13 months, the Fund would sell the security as soon as would be practicable.
The Fund will purchase tender option bonds only when it is satisfied that
the custodial and tender option arrangements, including the fee payment
arrangements, will not adversely affect the tax exempt status of the
underlying Municipal Obligations and that payment of any tender fees will
not have the effect of creating taxable income for the Fund. Based on the
tender option bond agreement, the Fund expects to be able to value the
tender option bond at par; however, the value of the instrument will be
monitored to assure that it is valued at fair value.
Stand-By Commitments. (Municipal Funds) Each Municipal Fund may acquire
"stand-by commitments" with respect to Municipal Obligations held in its
portfolio. Under a stand-by commitment, the Fund obligates a broker, dealer
or bank to repurchase, at the Fund's option, specified securities at a
specified price and, in this respect, stand-by commitments are comparable to
put options. The exercise of a stand-by commitment, therefore, is subject
to the ability of the seller to make payment on demand. The Fund will
acquire stand-by commitments solely to facilitate its 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.
Ratings of Municipal Obligations. (Municipal Funds) Each Municipal Fund
may invest only in those Municipal Obligations which are rated in one of the
two highest rating categories for debt obligations by at least two rating
organizations (or one rating organization if the instrument was rated by
only one such organization) or, if unrated, are of comparable quality as
determined in accordance with procedures established by the Fund's Board.
The average distribution of investments (at value) in Municipal
Obligations (including notes) by ratings as of the fiscal year ended
November 30, 1998, computed on a monthly basis, was as follows:
<TABLE>
<CAPTION>
Percentage of Value
Moody's Investors Standard & Poor's California Minnesota National New York
Fitch IBCA, Inc. Service, Inc. Ratings Group Municipal Municipal Municipal Municipal
("Fitch") ("Moody's") ("S&P") Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
F1+/F1 VMIG1/MIG,P1 SP1+/SP1,A1+/A1 92.7% 80.0% 93.5% 95.1%
F2+/F2 VMIG/MIG2,P2 SP2+/SP2 1.6%
AAA/AA Aaa/Aa AAA/AA 2.2% 20.0% 1.5% .4%
Not Rated Not Rated Not Rated 3.5%* - %* 5.0%* 4.5%*
100.0% 100.0% 100.0% 100.0%
</TABLE>
___________________________
* Included in the Not Rated category are securities which, while not rated,
have been determined by the Manager to be of comparable quality to
securities in the VMIG1/MIG1 or SP-1+/SP-1 rating categories.
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 for
Municipal Obligations may change as a result of changes in such
organizations or their rating systems, each Fund will attempt to use
comparable ratings as standards for its investments in accordance with its
stated investment policies contained in the Funds' Prospectus and this
Statement of Additional Information. The ratings of Moody's, S&P and Fitch
represent their opinions as to the quality of the Municipal Obligations
which they undertake to rate. It should be emphasized, however, that
ratings are relative and subjective and are not absolute standards of
quality. Although these ratings may be an initial criterion for selection
of portfolio investments, the Manager also will evaluate these securities
and the creditworthiness of the issuers of such securities.
Taxable Investments. (Municipal Funds) From time to time, on a
temporary basis other than for temporary defensive purposes (but not to
exceed 20% of the value of the Fund's net assets) or for temporary defensive
purposes, each Municipal 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-2 by Moody's, A-2
by S&P or F-2 by Fitch; certificates of deposit of U.S. domestic banks,
including foreign branches of domestic banks, with assets of one billion
dollars or more; time deposits; bankers' acceptances and other short-term
bank obligations; and repurchase agreements in respect of any of the
foregoing. Dividends paid by the Fund that are attributable to income
earned by the Fund from Taxable Investments will be taxable to investors.
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 California Municipal Fund,
the Minnesota Municipal Fund or the New York Municipal Fund has adopted a
temporary defensive position, including when acceptable California,
Minnesota or New York Municipal Obligations, respectively, are unavailable
for investment by the relevant Fund, in excess of 35% of the Fund's net
assets may be invested in securities that are not exempt from California,
Minnesota or New York State and New York City income taxes, respectively.
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.
Illiquid Securities. (All Funds) Each Fund may invest up to 10% of
the value of its net assets in securities as to which a liquid trading
market does not exist, provided such investments are consistent with the
Fund's investment objective. These securities may include securities that
are not readily marketable, such as securities that are subject to legal or
contractual restrictions on resale, and repurchase agreements providing for
settlement in more than seven days after notice. As to these securities,
the Fund is subject to a risk that should the Fund desire to sell them when
a ready buyer is not available at a price the Fund deems representative of
their value, the value of the Fund's net assets could be adversely affected.
Investment Techniques
In addition to the principal investment strategies discussed in the
Funds' Prospectus, the Funds also may engage in the investment techniques
described below.
Borrowing Money. (All Funds) Each Fund may borrow money from banks
for temporary or emergency (not leveraging) purposes in an amount up to 15%
(33 1/3 % in the case of Minnesota Municipal Money Market Fund) of the value
of its total assets (including the amount borrowed) valued at the lesser of
cost or market, less liabilities (not including the amount borrowed) at the
time the borrowing is made. While borrowings exceed 5% of the value of a
Fund's total assets, the Fund will not make any additional investments.
Forward Commitments. (Municipal Funds) Each Municipal Fund may
purchase Municipal Obligations and other securities on a forward commitment
or when-issued basis, which means that delivery and payment take place a
number of days after the date of the commitment to purchase. The payment
obligation and the interest rate receivable on a forward commitment or when-
issued security are fixed when the Fund enters into the commitment, but the
Fund does not make payment until it receives delivery from the counterparty.
The Fund will commit to purchase such securities only with the intention of
actually acquiring the securities, but the Fund may sell these securities
before the settlement date if it is deemed advisable. The Fund will
segregate permissible liquid assets at least equal at all times to the
amount of the purchase commitment.
Municipal Obligations and other securities purchased on a forward
commitment or when-issued basis are subject to changes in value (generally
changing in the same way, i.e., appreciating when interest rates decline and
depreciating when interest rates rise) based upon the public's perception of
the creditworthiness of the issuer and changes, real or anticipated, in the
level of interest rates. Securities purchased on a forward commitment or
when-issued basis may expose a Fund to risks because they may experience
such fluctuations prior to their actual delivery. Purchasing securities on
a when-issued basis can involve the additional risk that the yield available
in the market when the delivery takes place actually may be higher than that
obtained in the transaction itself. Purchasing securities on a forward
commitment or when-issued basis when a Fund is fully or almost fully
invested may result in greater potential fluctuation in the value of the
Fund's net assets and its net asset value per share.
Investment Considerations and Risks
Bank Securities. (Money Fund) To the extent the Money Fund's
investments are concentrated in the banking industry, the Fund will have
correspondingly greater exposure to the risk factors which are
characteristic of such investments. Sustained increases in interest rates
can adversely affect the availability or liquidity and cost of capital funds
for a bank's lending activities, and a deterioration in general economic
conditions could increase the exposure to credit losses. In addition, the
value of and the investment return on the Fund's shares could be affected by
economic or regulatory developments in or related to the banking industry,
which industry also is subject to the effects of competition within the
banking industry as well as with other types of financial institutions. The
Fund, however, will seek to minimize its exposure to such risks by investing
only in debt securities which are determined to be of high quality.
Foreign Securities. (Money Fund) Since the Money Fund's portfolio may
contain securities issued by foreign governments, or any of their political
subdivisions, agencies or instrumentalities, and by foreign subsidiaries and
foreign branches of domestic banks, domestic and foreign branches of foreign
banks, and commercial paper issued by foreign issuers, the Fund may be
subject to additional investment risks with respect to those securities that
are different in some respects from those incurred by a fund which invests
only in debt obligations of U.S. domestic issuers, although such obligations
may be higher yielding when compared to the securities of U.S. domestic
issuers. Such risks include possible future political and economic
developments, seizure or nationalization of foreign deposits, imposition of
foreign withholding taxes on interest income payable on the securities,
establishment of exchange controls or adoption of other foreign governmental
restrictions which might adversely affect the payment of principal and
interest on these securities.
Investing in Municipal Obligations. (Municipal Funds) Each Municipal
Fund may invest more than 25% of the value of its total assets in Municipal
Obligations which are related in such a way that an economic, business or
political development or change affecting one such security also would
affect the other securities; for example, securities the interest upon which
is paid from revenues of similar types of projects. As a result, each of
these Funds may be subject to greater risk as compared to a fund that does
not follow this practice.
Certain municipal lease/purchase obligations in which the Municipal
Funds may invest may contain "non-appropriation" clauses which provide that
the municipality has no obligation to make lease payments in future years
unless money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease/purchase obligations are secured by the leased
property, disposition of the leased property in the event of foreclosure
might prove difficult. In evaluating the credit quality of a municipal
lease/purchase obligation that is unrated, the Manager will consider, on an
ongoing basis, a number of factors including the likelihood that the issuing
municipality will discontinue appropriating funding for the leased property.
Certain provisions in the Internal Revenue Code of 1986, as amended
(the "Code"), relating to the issuance of Municipal Obligations may reduce
the volume of Municipal Obligations qualifying for Federal tax exemption.
One effect of these provisions could be to increase the cost of the
Municipal Obligations available for purchase by the Fund and thus reduce
available yield. Shareholders should consult their tax advisers concerning
the effect of these provisions on an investment in 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.
Investing in California Municipal Obligations. (California Municipal
Fund) Since the California Municipal Fund is concentrated in securities
issued by California or entities within California, an investment in the
Fund may involve greater risk than investments in certain other types of
money market funds. You should consider carefully the special risks
inherent in the Fund's investment in California Municipal Obligations.
These risks result from certain amendments to the California Constitution
and other statues that limit the taxing and spending authority of California
governmental entities, as well as from the general financial condition of
the State of California. A severe recession from 1990 through fiscal 1994
reduced revenues and increased expenditures for social welfare programs,
resulting in a period of budget imbalance. During this period, expenditures
exceeded revenues in four out of six years, and the State accumulated and
sustained a budget deficit in its budget reserve, the Special Fund for
Economic Uncertainties, approaching $2.8 billion at its peak at June 30,
1993. By the 1993-94 fiscal year, the accumulated budget deficit was so
large that it was impractical to budget to retire it in one year, so a two-
year program was implemented, using the issuance of revenue anticipation
warrants to carry a portion of the deficit over the end of the fiscal year.
When the economy failed to recover sufficiently, a second two-year plan was
implemented in 1994-95, again using cross-fiscal year revenue anticipation
warrants to partly finance the deficit into the 1995-96 fiscal year. As a
consequence of the accumulated budget deficits, the State's cash resources
available to pay its ongoing obligations were significantly reduced causing
the State to rely increasingly on external debt markets to meet its cash
needs. The last and largest of these borrowings was 4.0 billion of revenue
anticipation warrants which were issued in July 1994 and matured on April
25, 1996. Future budget problems or a deterioration in California's general
financial condition may have the effect of impairing the ability of the
issuers of California Municipal Obligations to pay interest on, or repay the
principal of, such California Municipal Obligations. You should review
"Appendix C" which sets forth additional information relating to investing
in California Municipal Obligations.
Investing in Minnesota Municipal Obligations. (Minnesota Municipal
Fund) Since the Minnesota Municipal Fund is concentrated in securities
issued by Minnesota or entities within Minnesota, an investment in the Fund
may involve greater risk than investments in certain other types of money
market funds. You should consider carefully the special risks inherent in
the Fund's investment in Minnesota Municipal Obligations. These risks
result from the financial condition of the State of Minnesota and its
municipalities. The structure of Minnesota's economy parallels the
structure of the United States' economy as a whole when viewed at a highly
aggregated level of detail. Diversity and a significant natural resource
base are two important characteristics of the State's economy. However, the
State of Minnesota experienced financial difficulties in the early 1980s
because of a downturn in the State's economy resulting from the national
recession. More recently, real growth has been equal to or greater than
national growth. There can be no assurance that the financial problems
referred to or similar future problems will not affect the market value
or marketability of the Minnesota Municipal Obligations or the ability of
the issuer thereof to pay interest or principal thereon. You should review
"Appendix D" which sets forth additional information relating to investing
in Minnesota Municipal Obligations.
Investing in New York Municipal Obligations. (New York Municipal Fund)
Since the New York Municipal Fund is concentrated in securities issued by
New York or entities within New York, an investment in the Fund may involve
greater risk than investments in certain other types of money market funds.
You 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 New York State entities faced serious financial
difficulties which jeopardized the credit standing and impaired the
borrowing abilities of such entities and contributed to high interest rates
on, and lower market prices for, debt obligations issued by them. A
recurrence of such financial difficulties or a failure of certain financial
recovery programs could result in defaults or declines in the market values
of various New York Municipal Obligations in which the Fund may invest. If
there should be a default or other financial crisis relating to New York
State, New York City, a State or City agency, or a State municipality, the
market value and marketability of outstanding New York Municipal Obligations
in the Fund's portfolio and the interest income to the Fund could be
adversely affected. Moreover, the national recession and the significant
slowdown in the New York and regional economies in the early 1990's added
substantial uncertainty to estimates of the State's tax revenues, which, in
part, caused the State to incur cash-basis operating deficits in the General
Fund and issue deficit notes during the fiscal periods 1989 through 1992.
New York State's financial operations have improved, however, during recent
fiscal years. For its fiscal years 1993 through 1998, the State recorded
balanced budgets on a cash basis, with positive fund balances in the General
Fund. New York State ended its 1997-1998 fiscal year on March 31, 1998 in
balance on a cash basis, with a cash surplus in the General Fund of
approximately $2.04 billion. There can be no assurance that New York State
will not face substantial potential budget gaps in future years. You should
review "Appendix E" which sets forth additional information relating to
investing in New York Municipal Obligations.
Simultaneous Investments. (All Funds) Investment decisions for each
Fund are made independently from those of other investment companies advised
by the Manager. If, however, such other investment companies desire to
invest in, or dispose of, the same securities as a Fund, available
investments or opportunities for sales will be allocated equitably to each
investment company. In some cases, this procedure may adversely affect the
size of the position obtained for or disposed of by the Fund or the price
paid or received by the Fund.
Investment Restrictions
Government Money Fund. The Government Money Fund's investment
objective is a fundamental policy, which cannot be changed without approval
by the holders of a majority (as defined in the 1940 Act) of the Fund's
outstanding voting shares. In addition, the Government Money Fund has
adopted investment restrictions numbered 1 through 10 as fundamental
policies. Investment restrictions numbered 11 and 12 are not fundamental
policies and may be changed by vote of a majority of the Fund's Board
members at any time. The Government Money Fund may not:
1. Purchase common stocks, preferred stocks, warrants or other equity
securities, or purchase corporate bonds or debentures, state bonds,
municipal bonds or industrial revenue bonds.
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. Sell securities short or purchase securities on margin.
4. Write or purchase put or call options.
5. Underwrite the securities of other issuers.
6. Purchase or sell real estate, real estate investment trust
securities, commodities, or oil and gas interests.
7. Make loans to others (except through the purchase of debt
obligations referred to in the Fund's Prospectus and this Statement of
Additional Information).
8. Invest in companies for the purpose of exercising control.
9. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets.
10. Invest more than 25% of its assets in the securities of issuers in
any industry, provided that there shall be no limitation on investments in
obligations issued or guaranteed as to principal and interest by the U.S.
Government.
11. Pledge, mortgage, hypothecate or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings.
12. 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.
* * * * *
Money Fund. The Money Fund's investment objective is a fundamental
policy, which cannot be changed without approval by the holders of a
majority (as defined in the 1940 Act) of the Fund's outstanding voting
shares. In addition, the Money Fund has adopted investment restrictions
numbered 1 through 12 as fundamental policies. Investment restriction
number 13 is not a fundamental policy and may be changed by vote of a
majority of the Fund's Board members at any time. The Money Fund may not:
1. Purchase common stocks, preferred stocks, warrants or other equity
securities, or purchase corporate bonds or debentures, state bonds,
municipal bonds or industrial revenue bonds (except through the purchase of
debt obligations referred to in the Fund's Prospectus and this Statement of
Additional Information).
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 its assets, except in an amount up to 15% of the value of
its total assets but only to secure borrowings for temporary or emergency
purposes.
4. Sell securities short.
5. Write or purchase put or call options.
6. Underwrite the securities of other issuers.
7. Purchase or sell real estate investment trust securities,
commodities, or oil and gas interests.
8. Make loans to others (except through the purchase of debt
obligations referred to in the Fund's Prospectus and this Statement of
Additional Information).
9. Invest more than 15% of its assets in the obligations of any one
bank, or invest more than 5% of its assets in the commercial paper of any
one issuer. Notwithstanding the foregoing, to the extent required by the
rules of the Securities and Exchange Commission, the Fund will not invest
more than 5% of its assets in the obligations of any one bank.
10. Invest less than 25% of its assets in securities issued by banks
or invest more than 25% of its assets in the securities of issuers in any
other industry, provided that there shall be no limitation on the purchase
of obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
11. Invest in companies for the purpose of exercising control.
12. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets.
13. 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.
* * * * *
California Municipal Fund. The California Municipal Fund's investment
objective is a fundamental policy, which cannot be changed without approval
by the holders of a majority (as defined in the 1940 Act) of the Fund's
outstanding voting shares. In addition, the California Municipal Fund has
adopted investment restrictions numbered 1 through 9 as fundamental
policies. Investment restrictions numbered 10 and 11 are not fundamental
policies and may be changed by vote of a majority of the Fund's Board
members at any time. The California Municipal Fund may not:
1. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the Prospectus.
2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the Fund's total
assets (including the amount borrowed) based on the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the value of the Fund's
total assets, the Fund will not make any additional investments.
3. Sell securities short or purchase securities on margin.
4. Underwrite the securities of other issuers, except that the Fund
may bid separately or as part of a group for the purchase of Municipal
Obligations directly from an issuer for its own portfolio to take advantage
of the lower purchase price available.
5. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
but this shall not prevent the Fund from investing in Municipal Obligations
secured by real estate or interests therein.
6. Make loans to others except through the purchase of qualified debt
obligations and the entry into repurchase agreements referred to above and
in the Fund's Prospectus.
7. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no such
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, securities issued by domestic banks and obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
8. Invest in companies for the purpose of exercising control.
9. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings.
11. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid if,
in the aggregate, more than 10% of the value of the Fund's net assets would
be so invested.
* * * * *
Minnesota Municipal Fund. The Minnesota Municipal Fund's investment
objective is a fundamental policy, which cannot be changed without approval
by the holders of a majority (as defined in the 1940 Act) of the Fund's
outstanding voting shares. In addition, the Minnesota Municipal Fund has
adopted investment restrictions numbered 1 through 7 as fundamental
policies. Investment restrictions numbered 8 through 13 are not fundamental
policies and may be changed by vote of a majority of the Fund's Board
members at any time. The Minnesota Municipal Fund may not:
1. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Fund's total assets).
2. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, the Fund may
lend its portfolio securities in an amount not to exceed 33-1/3% of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Fund's Board.
3. Underwrite the securities of other issuers, except to the extent
the Fund may bid separately or as part of a group for the purchase of
Municipal Obligations directly from an issuer for its own portfolio to take
advantage of the lower purchase price available, and except to the extent
the Fund may be deemed an underwriter under the Securities Act of 1933, as
amended, by virtue of disposing of portfolio securities.
4. Purchase or sell real estate, commodities or commodity contracts,
or oil and gas interests, but this shall not prevent the Fund from investing
in Municipal Obligations secured by real estate or interests therein.
5. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act).
6. Purchase securities on margin.
7. Invest more than 25% of its assets in the securities of issuers in
any single industry; provided that there shall be no limitation on the
purchase of Municipal Obligations and, for temporary defensive purposes,
securities issued by banks and obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
8. Sell securities short.
9. Invest in companies for the purpose of exercising control.
10. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act.
11. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings.
12. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the Fund's Prospectus.
13. Enter into repurchase agreements provided 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.
* * * * *
National Municipal Fund. The National Municipal Fund's investment
objective is a fundamental policy, which cannot be changed without approval
by the holders of a majority (as defined in the 1940 Act) of the Fund's
outstanding voting shares. In addition, the National
Municipal Fund has adopted investment restrictions numbered 1 through 11 as
fundamental policies. Investment restriction number 12 is not a fundamental
policy and may be changed by vote of a majority of the Fund's Board members
at any time. The National Municipal Fund may not:
1. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the Prospectus.
2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the Fund's total
assets (including the amount borrowed) based on the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings 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. Invest more than 25% of its assets in the securities of issuers in
any single industry; provided that there shall be no limitation on the
purchase of Municipal Obligations and, for defensive purposes, securities
issued by banks and obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities.
8. Invest more than 15% of its assets in the obligations of any one
bank, or invest more than 5% of its assets in the obligations of any other
issuer, except that up to 25% of the value of the Fund's total assets may be
invested, and securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities may be purchased, without regard to any such
limitations. Notwithstanding the foregoing, to the extent required by the
rules of the Securities and Exchange Commission, the Fund will not invest
more than 5% of its assets in the obligations of any one bank, except that
up to 25% of the value of the Fund's total assets may be invested without
regard to such limitation.
9. Make loans to others except through the purchase of qualified debt
obligations and the entry into repurchase agreements referred to above and
in the Prospectus.
10. Purchase more than 10% of the voting securities of any issuer or
invest in companies for the purpose of exercising control.
11. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets
and except for the purchase, to the extent permitted by Section 12 of the
1940 Act, of shares of registered unit investment trusts whose assets
consist substantially of Municipal Obligations.
12. 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.
* * * * *
New York Municipal Fund. The New York Municipal Fund's investment
objective is a fundamental policy, which cannot be changed without approval
by the holders of a majority (as defined in the 1940 Act) of the Fund's
outstanding voting shares. In addition, the New York Municipal Fund has
adopted investment restrictions numbered 1 through 9 as fundamental
policies. Investment restrictions numbered 10 and 11 are not fundamental
policies and may be changed by vote of a majority of the Fund's Board
members at any time. The New York Municipal Fund may not:
1. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the Prospectus.
2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the Fund's total
assets (including the amount borrowed) based on the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the value of the Fund's
total assets, the Fund will not make any additional investments.
3. Sell securities short or purchase securities on margin.
4. Underwrite the securities of other issuers, except that the Fund
may bid separately or as part of a group for the purchase of Municipal
Obligations directly from an issuer for its own portfolio to take advantage
of the lower purchase price available.
5. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
but this shall not prevent the Fund from investing in Municipal Obligations
secured by real estate or interests therein.
6. Make loans to others, except through the purchase of qualified
debt obligations and the entry into repurchase agreements referred to above
and in the Fund's Prospectus.
7. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no such
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, securities issued by domestic banks and obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
8. Invest in companies for the purpose of exercising control.
9. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings.
11. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if,
in the aggregate, more than 10% of the value of the Fund's net assets would
be so invested.
* * * * *
Municipal Funds. For purposes of Investment Restriction No. 7 for each
Municipal Fund, 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.
All Funds. If a percentage restriction is adhered to at the time of
investment, a later increase or decrease in percentage resulting from a
change in values or assets will not constitute a violation of such
restriction.
MANAGEMENT OF THE FUNDS
Each Fund's Board is responsible for the management and supervision of
the Fund. The Board approves all significant agreements between the Fund
and those companies that furnish services to the Fund. These companies are
as follows:
The Dreyfus Corporation Investment Adviser
Premier Mutual Fund Services, Inc. Distributor
Dreyfus Transfer, Inc. Transfer Agent
The Bank of New York Custodian
Board members and officers of each Fund, together with information as
to their principal business occupations during at least the last five years,
are shown below.
Board Members of the Funds
JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of
the Board of various funds in the Dreyfus Family of Funds. He also is
a director of The Noel Group, Inc., a venture capital company (for
which, from February 1995 until November 1997, he was Chairman of the
Board), The Muscular Dystrophy Association, HealthPlan Services
Corporation, a provider of marketing, administrative and risk
management services to health and other benefit programs, Carlyle
Industries, Inc. (formerly, Belding Heminway Company, Inc.), a button
packager and distributor, Career Blazers, Inc. (formerly, Staffing
Resources, Inc.), a temporary placement agency, and Century Business
Services, Inc., a provider of various outsourcing functions for small
and medium sized companies. For more than five years prior to January
1995, he was President, a director and, until August 1994, Chief
Operating Officer of the Manager and Executive Vice President and a
director of Dreyfus Service Corporation, a wholly-owned subsidiary of
the Manager and, until August 24, 1994, the Funds' distributor. From
August 1994 until December 31, 1994, he was a director of Mellon Bank
Corporation. He is 55 years old and his address is 200 Park Avenue, New
York, New York 10166.
CLIFFORD L. ALEXANDER, JR., Board Member. President of Alexander &
Associates, Inc., a management consulting firm. From 1977 to 1981, Mr.
Alexander served as Secretary of the Army and Chairman of the Board of
the Panama Canal Company, and from 1975 to 1977, he was a member of the
Washington, D.C. law firm of Verner, Liipfert, Bernhard, McPherson and
Alexander. He is a director of American Home Products Corporation, IMS
Health, a service provider of marketing information and information
technology, The Dun & Bradstreet Corporation, MCI WorldCom and Mutual
of America Life Insurance Company. He is 65 years old and his address
is 400 C Street, N.E., Washington, D.C. 20002.
PEGGY C. DAVIS, Board Member. Shad Professor of Law, New York
University School of Law. Professor Davis has been a member of
the New York University law faculty since 1983. Prior to that
time, she served for three years as a judge in the courts of New
York State; was engaged for eight years in the practice of law,
working in both corporate and non-profit sectors; and served for
two years as a criminal justice administrator in the government of
the City of New York. She writes and teaches in the fields of
evidence, constitutional theory, family law, social sciences and
the law, legal process and professional methodology and training.
She is 56 years old and her address is c/o New York University
School of Law, 40 Washington Square South, New York, New York
10012.
ERNEST KAFKA, Board Member. A physician engaged in private practice
specializing in the psychoanalysis of adults and adolescents. Since
1981, he has served as an Instructor at the New York Psychoanalytic
Institute and, prior thereto, held other teaching positions. He is
Associate Clinical Professor of Psychiatry at Cornell Medical School.
For more than the past five years, Dr. Kafka has held numerous
administrative positions and has published many articles on subjects in
the field of psychoanalysis. He is 66 years old and his address is 23
East 92nd Street, New York, New York 10128.
SAUL B. KLAMAN, Board Member. Chairman and Chief Executive Officer of SBK
Associates, which provides research and consulting services to
financial institutions. Dr. Klaman was President of the National
Association of Mutual Savings Banks until November 1983, President of
the National Council of Savings Institutions until June 1985, Vice
Chairman of Golembe Associates and BEI Golembe, Inc. until 1989 and
Chairman Emeritus of BEI Golembe, Inc. until November 1992. He also
served as an Economist to the Board of Governors of the Federal Reserve
System and on several Presidential Commissions, and has held numerous
consulting and advisory positions in the fields of economics and
housing finance. He is 79 years old and his address is 431-B Dedham
Street, The Gables, Newton Center, Massachusetts 02459.
NATHAN LEVENTHAL, Board Member. President of Lincoln Center for the
Performing Arts, Inc. Mr. Leventhal was Deputy Mayor for Operations of
New York City from September 1979 until March 1984 and Commissioner of
the Department of Housing Preservation and Development of New York City
from February 1978 to September 1979. Mr. Leventhal was an associate
and then a member of the New York law firm of Poletti Freidin Prashker
Feldman and Gartner from 1974 to 1978. He was Commissioner of Rent and
Housing Maintenance for New York City from 1972 to 1973. Mr. Leventhal
served as Chairman of Citizens Union, an organization which strives to
reform and modernize city and state government from June 1994 until
June 1997. He is 56 years old and his address is 70 Lincoln Center
Plaza, New York, New York 10023-6583.
For so long as a Fund's plan described in the sections captioned
"Service Plan and Distribution Plan" and "Shareholder Services Plans"
remains in effect, the Board members of the Fund who are not "interested
persons" of the Fund, as defined in the 1940 Act, will be selected and
nominated by the Board members who are not "interested persons" of the Fund.
Each Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by each Fund for the fiscal year
ended November 30, 1998, and by all funds in the Dreyfus Family of Funds for
which such person was a Board member (the number of which is set forth in
parenthesis next to each Board member's total compensation)* during the year
ended December 31, 1998 is as follows:
Total Compensation
Aggregate From Funds and
Compensation Fund Complex Paid
Name of Board Member and Fund From the Fund** To Board Member
JOSEPH S. DiMARTINO $619,660 (187)
Government Money Fund $6,875
Money Fund $6,875
California Municipal Fund $5,000
National/Minnesota Municipal Fund*** $6,875
New York Municipal Fund $5,000
CLIFFORD L. ALEXANDER, JR. $80,918 (38)
Government Money Fund $5,500
Money Fund $5,500
California Municipal Fund $4,000
National/Minnesota Municipal Fund*** $5,500
New York Municipal Fund $4,000
PEGGY C. DAVIS $64,000 (29)
Government Money Fund $5,500
Money Fund $5,500
California Municipal Fund $4,000
National/Minnesota Municipal Fund*** $5,500
New York Municipal Fund $4,000
ERNEST KAFKA $57,500 (29)
Government Money Fund $5,000
Money Fund $5,000
California Municipal Fund $3,750
National/Minnesota Municipal Fund*** $5,000
New York Municipal Fund $3,750
SAUL B. KLAMAN $64,000 (29)
Government Money Fund $5,500
Money Fund $5,500
California Municipal Fund $4,000
National/Minnesota Municipal Fund*** $5,500
New York Municipal Fund $4,000
NATHAN LEVENTHAL $64,000 (29)
Government Money Fund $5,500
Money Fund $5,500
California Municipal Fund $4,000
National/Minnesota Municipal Fund*** $5,500
New York Municipal Fund $4,000
_____________________________________
* Represents the number of separate portfolios comprising the investment
companies in the Fund complex, including the Fund, for which the Board
members serves.
** Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $1348 for the Government Money Fund, $3177
for the Money Fund, $1095 for the California Municipal Fund, $1584 for
the National/Minnesota Municipal Fund and $935 for the New York
Municipal Fund, for all Board members as a group.
*** The National Municipal Fund and the Minnesota Municipal Fund are
separate series of the Company.
Officers of the Funds
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer, Chief Compliance Officer and a director of the Distributor and
Funds Distributor, Inc., the ultimate parent of which is Boston
Institutional Group, Inc., and an officer of other investment companies
advised or administered by the Manager. She is 41 years old.
MARGARET W. CHAMBERS, Vice President and Secretary. Senior Vice President
and General Counsel of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
August 1996 to March 1998, she was Vice President and Assistant General
Counsel for Loomis, Sayles & Company, L.P. From January 1986 to July
1996, she was an associate with the law firm of Ropes & Gray. She is
39 years old.
STEPHANIE D. PIERCE, Vice President, Assistant Secretary and Assistant
Treasurer. Vice President and Client Development Manager of Funds
Distributor, Inc., and an officer of other investment companies advised
or administered by the Manager. From April 1997 to March 1998, she was
employed as a Relationship Manager with Citibank, N.A. From August
1995 to April 1997, she was an Assistant Vice President with Hudson
Valley Bank, and from September 1990 to August 1995, she was Second
Vice President with Chase Manhattan Bank. She is 30 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President of
the Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
September 1989 to July 1994, she was an Assistant Vice President and
Client Manager for The Boston Company, Inc. She is 34 years old.
GEORGE A. RIO, Vice President and Assistant Treasurer. Executive Vice
President and Client Service Director of Funds Distributor, Inc., and
an officer of other investment companies advised or administered by the
Manager. From June 1995 to March 1998, he was Senior Vice President
and Senior Key Account Manager for Putnam Mutual Funds. From May 1994
to June 1995, he was Director of Business Development for First Data
Corporation. From September 1983 to May 1994, he was Senior Vice
President and Manager of Client Services and Director of Internal Audit
at The Boston Company, Inc. He is 44 years old.
JOSEPH F. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer, Chief Financial Officer and a director of the
Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From July
1988 to August 1994, he was employed by The Boston Company, Inc. where
he held various management positions in the Corporate Finance and
Treasury areas. He is 37 years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
April 1993 to January 1995, he was a Senior Fund Accountant for
Investors Bank & Trust Company. He is 30 years old.
CHRISTOPHER J. KELLEY, Vice President and Assistant Secretary. Vice
President and Senior Associate General Counsel of Funds Distributor,
Inc., and an officer of other investment companies advised or
administered by the Manager. From April 1994 to July 1996, he was
Assistant Counsel at Forum Financial Group. From October 1992 to March
1994, he was employed by Putnam Investments in legal and compliance
capacities. He is 34 years old.
KATHLEEN K. MORRISEY, Vice President and Assistant Secretary. Manager of
Treasury Services Administration of Funds Distributor, Inc., and an
officer of other investment companies advised or administered by the
Manager. From July 1994 to November 1995, she was a Fund Accountant
for Investors Bank & Trust Company. She is 26 years old.
ELBA VASQUEZ, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
March 1990 to May 1996, she was employed by U.S. Trust Company of New
York where she held various sales and marketing positions. She is 37
years old.
The address of each officer of the Funds is 200 Park Avenue, New York,
New York 10166.
Each Fund's Board members and officers, as a group, owned less than 1%
of the Fund's shares outstanding on January 4, 1999.
Set forth in "Appendix F" to this Statement of Additional Information
are the shareholders known by each Fund (as indicated) to own of record 5%
or more of such Fund's Class A or Class B shares outstanding on January 4,
1999. A shareholder who beneficially owns, directly or indirectly, more
than 25% of the Fund's voting securities may be deemed a "control person"
(as defined in the 1940 Act) of the Fund.
MANAGEMENT ARRANGEMENTS
Investment Adviser. The Manager is a wholly-owned subsidiary of Mellon
Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank Corporation
("Mellon"). 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.
The Manager provides management services pursuant to separate
Management Agreements (respectively, the "Agreement") dated August 24, 1994
with respect to each Fund. As to each Fund, the Agreement is subject to
annual approval by (i) the Fund's Board or (ii) vote of a majority (as
defined in the 1940 Act) of the Fund's outstanding voting securities,
provided that in either event the continuance also is approved by a majority
of the Fund's Board members who are not "interested persons" (as defined in
the 1940 Act) of the Fund or the Manager, by vote cast in person at a
meeting called for the purpose of voting on such approval. Each Agreement,
other than for the Minnesota Municipal Fund, was approved by shareholders on
August 3, 1994 and was last approved by the Fund's Board, including a
majority of the Board members who are not "interested persons" of any party
to the Agreement, at a meeting held on September 16, 1998. With respect to
the Minnesota Municipal Fund, the Agreement was approved by the Fund's
initial shareholder on April 8, 1998 and by the Fund's Board, including a
majority of the Board members who are not "interested persons" of any party
to the Agreement, at a meeting held on April 8, 1998. As to each Fund, the
Agreement is terminable without penalty, on 60 days' notice, by the Fund's
Board or by vote of the holders of a majority of the Fund's shares or, upon
not less than 90 days' notice, by the Manager. Each Agreement will
terminate automatically, as to the relevant Fund, in the event of its
assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of the Manager:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
Stephen E. Canter, President, Chief Operating Officer, Chief Investment
Officer and a director; Thomas F. Eggers, Vice Chairman-Institutional and a
director; Lawrence S. Kash, Vice Chairman and a director; Ronald P. O'Hanley
III, Vice Chairman; J. David Officer, Vice Chairman and a director; William
T. Sandalls, Jr., Executive Vice President; Mark N. Jacobs, Vice President,
General Counsel and Secretary; Diane P. Durnin, Vice President-Product
Development; Patrice M. Kozlowski, Vice President-Corporate Communications;
Mary Beth Leibig, Vice President-Human Resources; Andrew S. Wasser, Vice
President-Information Systems; Theodore A. Schachar, Vice President; Wendy
Strutt, Vice President; Richard Terres, Vice President; William H. Maresca,
Controller; James Bitetto, Assistant Secretary; Steven F. Newman, Assistant
Secretary; and Mandell L. Berman, Burton C. Borgelt, Steven G. Elliott,
Martin C. McGuinn, Richard W. Sabo and Richard F. Syron, directors.
The Manager manages each Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board. The Manager is responsible for investment decisions and provides
each Fund with portfolio managers who are authorized by the Board to execute
purchases and sales of securities. The portfolio managers of the Government
Money Fund and the Money Fund are Bernard W. Kiernan, Patricia A. Larkin and
Thomas Riordan. The portfolio managers of the Municipal Funds are Joseph P.
Darcy, A. Paul Disdier, Douglas J. Gaylor, Karen M. Hand, Stephen C. Kris,
Richard J. Moynihan, W. Michael Petty, Jill C. Shaffro, Samuel J. Weinstock
and Monica S. Wieboldt. The Manager also maintains a research department
with a professional staff of portfolio managers and securities analysts who
provide research services for each Fund and for other funds advised by the
Manager.
The Manager maintains office facilities on behalf of each Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Funds. The Manager may pay the Distributor for shareholder
services from the Manager's own assets, including past profits but not
including the management fee paid by the Funds. The Distributor may use
part or all of such payments to pay Service Agents (as defined below) in
respect of these services. The Manager also may make such advertising and
promotional expenditures using its own resources, as it from time to time
deems appropriate.
All expenses incurred in the operation of a Fund are borne by such
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by each Fund include: taxes, interest, brokerage fees and
commissions, if any, fees of Board members who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, Securities and Exchange Commission fees, state Blue Sky
qualification fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of maintaining the Fund's existence,
investor services (including, without limitation, telephone and personnel
expenses), costs of shareholder reports and meetings, costs of preparing and
printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders, and any
extraordinary expenses. Each Fund bears certain expenses in accordance with
separate written plans and also bears certain costs associated with
implementing and operating such plans. See "Service Plan and Distribution
Plan" and "Shareholder Services Plans."
As compensation for the Manager's services under the Agreement, each
Fund has agreed to pay the Manager a monthly management fee at the annual
rate of .50% of the value of such Fund's average daily net assets. All fees
and expenses are accrued daily and deducted before declaration of dividends
to investors. Set forth below are the total amounts paid by each Fund to
the Manager for each Fund's last three fiscal years, including for the
Government Money Fund, the Money Fund and the California Municipal Fund,
which changed their fiscal year end to November 30, the relevant period
ended November 30, 1998:
<TABLE>
<CAPTION>
Fiscal Year Ten-Month Period
Ended Ended Fiscal Year Ended January 31,
November 30,1998 November 30, 1997 1997 1996
<S> <C> <C> <C> <C>
Government Money $5,124,528 $3,330,297 $3,002,777 $2,622,700
Fund
Money Fund $13,222,636 $7,091,891 $5,285,812 $3,172,667
California Municipal $1,794,867 $ 620,429 $1,836,034 $2,195,288
Fund
Fiscal Year Ended November 30,
1998 1997 1996
Minnesota Municipal $65,816* N/A N/A
Fund
National Municipal $3,038,316 $2,127,041 $1,566,276
Fund
New York Municipal $2,369,250 $2,599,539 $2,945,172
Fund
</TABLE>
____________________
* For the period from June 1, 1998 (commencement of operations) to
November 30, 1998.
As to each Fund, the Manager has agreed that if in any fiscal year the
aggregate expenses of the Fund, exclusive of taxes, brokerage, interest and
(with the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including the management fee,
exceed 1-1/2% of the average market value of the net assets of such Fund for
that fiscal year, the Fund may deduct from the payment to be made to the
Manager under the Agreement, or the Manager will bear, such excess expense.
Such deduction or payment, if any, will be estimated daily and reconciled
and effected or paid, as the case may be, on a monthly basis. As to each
Fund, no such deduction or payment was required for the most recent fiscal
year end.
As to each Fund, the aggregate of the fees payable to the Manager is
not subject to reduction as the value of the Fund's net assets increases.
Distributor. The Distributor located at 60 State Street, Boston,
Massachusetts 02109, serves as each Fund's distributor on a best efforts
basis pursuant to an agreement which is renewable annually.
The Distributor may pay dealers a fee of up to .50% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where
(i) the employers or affiliated employers maintaining such plans or programs
have a minimum of 250 employees eligible for participation in such plans or
programs, or (ii) such plan's or program's aggregate investment in the
Dreyfus Family of Funds or certain other products made available by the
Distributor to such plans or programs exceeds $1,000,000 ("Eligible Benefit
Plans"). Shares of funds in the Dreyfus Family of Funds then held by
Eligible Benefit Plans will be aggregated to determine the fee payable. The
Distributor reserves the right to cease paying these fees at any time. The
Distributor will pay such fees from its own funds, other than amounts
received from the Fund, including past profits or any other source available
to it.
Transfer and Dividend Disbursing Agent and Custodian. Dreyfus
Transfer, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of the
Manager, P.O. Box 9671, Providence, Rhode Island 02940-9671, is each Fund's
transfer and dividend disbursing agent. Under a separate transfer agency
agreement with each Fund, the Transfer Agent arranges for the maintenance of
shareholder account records for the Fund, the handling of certain
communications between shareholders and the Fund and the payment of
dividends and distributions payable by the Fund. For these services, the
Transfer Agent receives a monthly fee from each Fund computed on the basis
of the number of shareholder accounts it maintains for such Fund during the
month, and is reimbursed for certain out-of-pocket expenses.
The Bank of New York (the "Custodian"), 90 Washington Street, New York,
New York 10286, is each Fund's custodian. The Custodian has no part in
determining the investment policies of the Fund or which securities are to
be purchased or sold by the Fund. Under a separate custody agreement with
each Fund, the Custodian holds the Fund's securities and keeps all necessary
accounts and records. For its custody services, the Custodian receives a
monthly fee from each Fund based on the market value of the Fund's assets
held in custody and receives certain securities transactions charges.
HOW TO BUY SHARES
Each Fund's shares may be purchased only by clients of certain
financial institutions (which may include banks), securities dealers
("Selected Dealers"), and other industry professionals such as investment
advisers, accountants and estate planning firms (collectively, "Service
Agents") that have entered into service agreements with the Distributor.
For shareholders who purchase Fund shares from the Distributor, the
Distributor will act as Service Agent. Stock certificates are issued only
upon your written request. No certificates are issued for fractional
shares. Each Fund reserves the right to reject any purchase order.
The minimum initial investment in each Fund is $2,500, or $1,000 if you
are a client of a Service Agent which maintains an omnibus account in the
relevant Fund and has made an aggregate minimum initial purchase in the Fund
for its customers of $2,500. Subsequent investments must be at least $100.
For the Government Money Fund and the Money Fund, however, the minimum
initial investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs
(including regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs,
IRAs set up under a Simplified Employee Pension Plan ("SEP-IRAs") and
rollover IRAs) and 403(b)(7) Plans with only one participant and $500 for
Dreyfus-sponsored Education IRAs, with no minimum for subsequent purchases.
It is not recommended that the Municipal Funds be used as a vehicle for
Keogh, IRA or other qualified plans. The initial investment must be
accompanied by the Account Application. For full-time or part-time
employees of the Manager or any of its affiliates or subsidiaries, directors
of the Manager, Board members of a Fund advised by the Manager, including
members of each Fund's Board, or the spouse or minor child of any of the
foregoing, the minimum initial investment is $1,000. For full-time or part-
time employees of the Manager or any of its affiliates or subsidiaries who
elect to have a portion of their pay directly deposited into their Fund
accounts, the minimum initial investment is $50. The Government Money Fund
and the Money Fund reserve the right to offer Fund shares without regard to
minimum purchase requirements to employees participating in certain
qualified and non-qualified employee benefit plans or other programs where
contributions or account information can be transmitted in a manner and form
acceptable to such Fund. Each Fund reserves the right to vary further the
initial and subsequent investment minimum requirements at any time.
Fund shares also may be purchased through Dreyfus-Automatic Asset
Builderr, the Government Direct Deposit Privilege or the Payroll Savings
Plan described under "Shareholder Services." These services enable you to
make regularly scheduled investments and may provide you with a convenient
way to invest for long-term financial goals. You should be aware, however,
that periodic investment plans do not guarantee a profit and will not
protect you against loss in a declining market.
Service Agents may receive different levels of compensation for selling
different Classes of shares. Management understands that some Service
Agents may impose certain conditions on their clients which are different
from those described in the Funds' Prospectus and this Statement of
Additional Information, and, to the extent permitted by applicable
regulatory authority, may charge their clients direct fees. You should
consult your Service Agent in this regard.
Shares are sold on a continuous basis at the net asset value per share
next determined after an order in proper form and Federal Funds (monies of
member banks within the Federal Reserve System which are held on deposit at
a Federal Reserve Bank) are received by the Transfer Agent or other entity
authorized to receive orders on behalf of the Fund in written or telegraphic
form. If you do not remit Federal Funds, your payment must be converted
into Federal Funds. This usually occurs within one business day of receipt
of a bank wire 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, your money
will not be invested. 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."
Government Money Fund and Money Fund--Each of these Funds determines its net
asset value per share twice each day the New York Stock Exchange or the
Transfer Agent is open for business: as of 5:00 p.m., New York time, and as
of 8:00 p.m., New York time.
If your payments are received in or converted into Federal Funds by
12:00 Noon, New York time, by the Transfer Agent on a business day, you will
receive the dividend declared that day. If your payments are received in or
converted into Federal Funds after 12:00 Noon, New York time, by the
Transfer Agent, you will begin to accrue dividends on the following business
day.
Qualified institutions may telephone orders for purchase of Fund shares
of each of these Funds. A telephone order placed with the Distributor or
its designee in New York will become effective at the price determined at
5:00 p.m., New York time, and the shares purchased will receive the dividend
on Fund shares declared on that day, if such order is placed with the
Distributor or its designee in New York by 5:00 p.m., New York time, and
Federal Funds are received by 6:00 p.m., New York time, on that day. A
telephone order placed with the Distributor or its designee in New York
after 5:00 p.m., New York time, but by 8:00 p.m., New York time, on a given
day will become effective at the price determined at 8:00 p.m., New York
time, on that day, and the shares purchased will begin to accrue dividends
on the next business day, if Federal Funds are received by 11:00 a.m., New
York time, on the next business day.
Municipal Funds--Each Municipal Fund determines its net asset value per
share twice each day the New York Stock Exchange or the Transfer Agent is
open for business: as of 12:00 Noon, New York time, and as of 8:00 p.m., New
York time.
If your payments are received in or converted into Federal Funds by
12:00 Noon, New York time, on a business day, you will receive the dividend
declared that day. If your payments are received in or converted into
Federal Funds after 12:00 Noon, New York time, you will begin to accrue
dividends on the following business day.
Qualified institutions may telephone orders for purchase of shares of
each of these Funds. A telephone order placed with the Distributor or its
designee in New York will become effective at the price determined at 12:00
Noon, New York time, on a given day, and the shares purchased will receive
the dividend on Fund shares declared on that day, if the telephone order is
placed with the Distributor or its designee by 12:00 Noon, New York time,
and Federal Funds are received at 4:00 p.m., New York time, on that day. A
telephone order placed with the Distributor or its designee in New York
after 12:00 Noon, New York time, but by 8:00 p.m., New York time, on a given
day will become effective at the price determined at 8:00 p.m., New York
time, on that day, and the shares purchased will begin to accrue dividends
on the next business day, if Federal Funds are received by 11:00 a.m., New
York time, on the next business day.
Using Federal Funds. The Transfer Agent or the Fund may attempt to
notify you upon receipt of checks drawn on banks that are not members of the
Federal Reserve System as to the possible delay in conversion into Federal
Funds and may attempt to arrange for a better means of transmitting the
money. If you are a customer of a Selected Dealer and your order to
purchase Fund shares is paid for other than in Federal Funds, the Selected
Dealer, acting on your behalf, will complete the conversion into, or itself
advance, Federal Funds, generally on the business day following receipt of
your order. The order is effective only when so converted and received by
the Transfer Agent. If you have sufficient Federal Funds or a cash balance
in your brokerage account with a Selected Dealer, your order to purchase
Fund shares will become effective on the day that the order, including
Federal Funds, is received by the Transfer Agent.
Dreyfus TeleTransfer Privilege. (California Municipal Fund, Minnesota
Municipal Fund and New York Municipal Fund only) You may purchase shares by
telephone if you have checked the appropriate box and supplied the necessary
information on the Account Application or have filed a Shareholder Services
Form with the Transfer Agent. The proceeds will be transferred between the
bank account designated in one of these documents and your Fund account.
Only a bank account maintained in a domestic financial institution which is
an Automated Clearing House ("ACH") member may be so designated.
Dreyfus TeleTransfer purchase orders may be made at any time. Purchase
orders received by 4:00 p.m., New York time, on any day that the Transfer
Agent and the New York Stock Exchange are open for business will be credited
to the shareholder's Fund account on the next bank business day following
such purchase order. Purchase orders made after 4:00 p.m., New York time,
on any day the Transfer Agent and the New York Stock Exchange are open for
business, or orders made on Saturday, Sunday or any Fund holiday (e.g., when
the New York Stock Exchange is not open for business), will be credited to
the shareholder's Fund account on the second bank business day following such
purchase order. To qualify to use the Dreyfus TeleTransfer Privilege, the
initial payment for purchase of Fund shares must be drawn on, and redemption
proceeds paid to, the same bank and account as are designated on the Account
Application or Shareholder Services Form on file. If the proceeds of a
particular redemption are to be wired to an account at any other bank, the
request must be in writing and signature-guaranteed. See "How to Redeem
Shares--Dreyfus TeleTransfer Privilege."
Reopening an Account. You may reopen an account with a minimum
investment of $100 without filing a new Account Application during the
calendar year the account is closed or during the following calendar year,
provided the information on the old Account Application is still applicable.
SERVICE PLAN AND DISTRIBUTION PLAN
Class A shares of each of the Government Money Fund and the Money Fund
are subject to a Service Plan and Class B shares of each Fund are subject to
a Distribution Plan.
Rule 12b-1 (the "Rule") adopted by the Securities and Exchange
Commission under the 1940 Act provides, among other things, that an
investment company may bear expenses of distributing its shares only
pursuant to a plan adopted in accordance with the Rule. The Board of each
of the Government Money Fund and the Money Fund has adopted separate plans
with respect to Class A and Class B of such Funds and the Board of each of
the Municipal Funds has adopted a plan with respect to Class B of such Funds
(each, a "Plan"). Under each Plan, the respective Fund bears directly the
costs of preparing, printing and distributing prospectuses and statements of
additional information and of implementing and operating the Plan. Under
each Plan adopted with respect to Class A of the Government Money Fund and
Money Fund (the "Service Plan"), the Fund reimburses (a) the Distributor for
payments made for distributing Class A shares and servicing shareholder
accounts ("Servicing") and (b) the Manager, Dreyfus Service Corporation and
any affiliate of either of them (collectively, "Dreyfus") for payments made
for Servicing, at an aggregate annual rate of up to .20% of the value of the
Fund's average daily net assets attributable to Class A. Under each Service
Plan, each of the Distributor and Dreyfus may pay one or more Service Agents
a fee in respect of Class A shares of the Fund 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. Under each Fund's Plan adopted
with respect to Class B (the "Distribution Plan"), the Fund reimburses the
Distributor for payments made to third parties for distributing (within the
meaning of the Rule) Class B shares, at an aggregate annual rate of up to
.20% of the value of the Fund's average daily net assets attributable to
Class B. Each Fund's Board believes that there is a reasonable likelihood
that each Plan will benefit the Fund and holders of the relevant Class of
shares.
A quarterly report of the amounts expended under each Plan, and the
purposes for which such expenditures were incurred, must be made to the
Fund's Board for its review. In addition, each Plan provides that it may
not be amended to increase materially the costs which the Fund may bear for
distribution pursuant to the Plan without shareholder approval of the
affected Class and that other material amendments of the Plan must be
approved by the Board, and by the Fund's Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund or the Manager
and have no direct or indirect financial interest in the operation of the
Plan or in any related agreements entered into in connection with such Plan,
by vote cast in person at a meeting called for the purpose of considering
such amendments. Each Plan is subject to annual approval by such vote of
the Board members cast in person at a meeting called for the purpose of
voting on the Plan. The Plan was last so approved on September 16, 1998
with respect to each Fund, except the Minnesota Municipal Fund, which so
approved the Plan on April 8, 1998. Each Plan is terminable at any time by
vote of a majority of the Fund's Board members who are not "interested
persons" and have no direct or indirect financial interest in the operation
of the Plan or in any of the related agreements or by vote of a majority of
the relevant Class of shares.
Set forth below are the total amounts paid by each of the Government
Money Fund and the Money Fund pursuant to its Service Plan with respect to
Class A (i) to the Distributor ("Distributor Payments") as reimbursement for
distributing Class A shares and Servicing, (ii) to Dreyfus for payments made
for Servicing ("Dreyfus Payments"), and (iii) for costs of preparing,
printing and distributing prospectuses and statement of additional
information and of implementing and operating the Service Plan ("Printing
and Implementation") for the Fund's fiscal year ended November 30, 1998:
Total Amount
Paid Pursuant to Dreyfus Printing and
Name of Fund Service Plan Distributor Payments Payments Implementation
Government
Money Fund
- Class A $1,468,487 $410,171 $1,058,316 $ -0-
Money Fund
- Class A $3,215,190 $1,490,345 $1,724,845 $12,690
Set forth below are the total amounts paid by each Fund to the
Distributor pursuant to its Distribution Plan with respect to Class B for
the Fund's fiscal year ended November 30, 1998:
Total Amount Paid
Name of Fund Pursuant to Distribution Plan
Government
Money Fund
- Class B $991,495
Money Fund
- Class B $3,564,210
California
Municipal Fund
- Class B $14,052
Minnesota
Municipal Fund
- Class B $25,313*
National
Municipal Fund
- Class B $646,579
New York
Municipal Fund
- Class B $93,487
________________
* For the period June 1, 1998 (commencement of operations) to November
30, 1998.
SHAREHOLDER SERVICES PLANS
Each Fund has adopted a Shareholder Services Plan with respect to Class
A pursuant to which the Fund reimburses Dreyfus Service Corporation an
amount not to exceed an annual rate of .25% of the value of the Fund's
average daily net assets attributable to Class A for certain allocated
expenses of providing certain services to the holders of Class A shares.
Each Fund also has adopted a Shareholder Services Plan with respect to Class
B pursuant to which the Fund pays the Distributor for the provision of
certain services to the holders of Class B shares a fee at the annual rate
of .25% of the value of the Fund's average daily net assets attributable to
Class B. Under each Shareholder Services Plan, 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. As to each Fund, under the Shareholders Services Plan for Class
B, the Distributor may make payments to Service Agents in respect of their
services.
A quarterly report of the amounts expended under each Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Fund's Board for its review. In addition, each
Shareholder Services Plan provides that material amendments to the
Shareholder Services Plan must be approved by the Fund's Board, and by the
Board members who are not "interested persons" (as defined in the 1940 Act)
of the Fund and have no direct or indirect financial interest in the operation
of the Shareholder Services Plan, by vote cast in person at a meeting called
for the purpose of considering such amendments. Each Shareholder Services Plan
is subject to annual approval by such vote of its Board members cast in person
at a meeting called for the purpose of voting on the Shareholder Services Plan.
Each Shareholder Services Plan was last so approved on September 16, 1998
with respect to each Fund, except the Minnesota Municipal Fund, which so
approved each Shareholder Services Plan on April 8, 1998. Each Shareholder
Services Plan is terminable at any time by vote of a majority of the Board
members who are not "interested persons" and have no direct or indirect
financial interest in the operation of the Shareholder Services Plan.
Set forth below are the total amounts payable by each Fund pursuant to
its separate Shareholder Services Plans for Class A and Class B, the amounts
reimbursed to the Fund by the Manager pursuant to undertakings in effect, if
any, and the net amount paid by the Fund for the Fund's fiscal year ended
November 30, 1998:
Total Amount
Name of Fund Payable Pursuant to Amount Reimbursed Net Amount Paid
and Class Shareholder Services Plan Pursuant to Undertaking by Fund
Government
Money Fund
- - Class A $86,597 $ -0- $86,597
- - Class B $1,400,646 $269,700 $1,130,946
Money Fund
- - Class A $240,310 $ -0- $240,310
- - Class B $4,455,262 $1,046,213 $3,409,049
California
Municipal Fund
- - Class A $141,357 $ -0- $141,357
- - Class B $21,077 $4,897 $16,180
National
Municipal Fund
- - Class A $84,018 $ -0- $84,018
- - Class B $969,868 $282,750 $687,118
Minnesota
Municipal Fund
- - Class A $ -0- * $ -0- * $ -0- *
- - Class B $37,969 * $37,969 * $ -0- *
New York
Municipal Fund
-Class A $412,841 $ -0- $412,841
-Class B $140,231 $38,784 $101,447
_________
* For the period June 1, 1998 (commencement of operations) to November
30, 1998.
HOW TO REDEEM SHARES
Check Redemption Privilege. Each Fund provides Redemption Checks
("Checks") automatically upon opening an account, unless you specifically
refuse the Check Redemption Privilege by checking the applicable "No" box on
the Account Application. The Check Redemption Privilege may be established
for an existing account by a separate signed Shareholder Services Form.
Checks will be sent only to the registered owner(s) of the account and only
to the address of record. The Account Application or Shareholder Services
Form must be manually signed by the registered owner(s). Checks are drawn
on your Fund account and may be made payable to the order of any person in
an amount of $500 or more. When a Check is presented to the Transfer Agent
for payment, the Transfer Agent, as your agent, will cause the Fund to
redeem a sufficient number of shares in your account to cover the amount of
the Check. Dividends are earned until the Check clears. After clearance, a
copy of the Check will be returned to you. You generally will be subject to
the same rules and regulations that apply to checking accounts, although the
election of this Privilege creates only a shareholder-transfer agent
relationship with the Transfer Agent.
You should date your Checks with the current date when you write them.
Please do not postdate your Checks. If you do, the Transfer Agent will
honor, upon presentment, even if presented before the date of the check, all
postdated Checks which are dated within six months of presentment for
payment, if they are otherwise in good order. If you hold shares in a
Dreyfus-sponsored IRA account, you may be permitted to make withdrawals from
your IRA account using checks furnished to you by The Dreyfus Trust Company.
Checks are free, but the Transfer Agent will impose a fee for stopping
payment of a Check upon your request or if the Transfer Agent cannot honor a
Check due to insufficient funds or other valid reason. If the amount of
the Check is greater than the value of the shares in your account, the Check
will be returned marked insufficient funds. Checks should not be used to
close an account.
Wire Redemption Privilege. By using this Privilege, you authorize the
Transfer Agent to act on wire, telephone or letter redemption instructions
from any person representing himself or herself to be you or a
representative of your Service Agent, and reasonably believed by the
Transfer Agent to be genuine. Ordinarily, each Fund will initiate payment
for shares redeemed pursuant to this Privilege on the same business day if
the Transfer Agent receives a redemption request in proper form prior to
5:00 p.m., New York time, on such day; otherwise the Fund will initiate
payment on the next business day. Redemption proceeds ($1,000 minimum) will
be transferred by Federal Reserve wire only to the commercial bank account
specified by you on the Account Application or the Shareholder Services
Form, or to a correspondent bank if your bank is not a member of the Federal
Reserve System. Fees ordinarily are imposed by such bank and borne by the
investor. Immediate notification by the correspondent bank to your bank is
necessary to avoid a delay in crediting the funds to your bank account.
If you have access to telegraphic equipment, you may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
If you do not have direct access to telegraphic equipment, you may have
the wire transmitted by contacting a TRT Cables operator at 1-800-654-7171,
toll free. You should advise the operator that the above transmittal code
must be used and should also inform the operator of the Transfer Agent's
answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Dreyfus TeleTransfer Privilege. (California Municipal Fund, Minnesota
Municipal Fund and New York Municipal Fund only) You may request by
telephone that redemption proceeds be transferred between your Fund account
and your bank account. Only a bank account maintained in a domestic
financial institution which is an ACH member may be designated. Redemption
proceeds will be on deposit in your account at an ACH member bank ordinarily
two days after receipt of the redemption request. Holders of jointly
registered Fund or bank accounts may redeem through the Dreyfus TeleTransfer
Privilege Privilege for transfer to their bank account not more than
$250,000 within any 30-day period. You should be aware that if you have
selected the Dreyfus TeleTransfer Privilege privilege, any request for a
wire redemption will be effected as a Dreyfus TeleTransfer Privilege
transaction through the ACH system unless more prompt transmittal
specifically is requested. See "How to Buy Shares-- Dreyfus TeleTransfer
Privilege Privilege."
Redemption Through a Selected Dealer. If you are a customer of a
Selected Dealer, you may make redemption requests to your Selected Dealer.
If the Selected Dealer transmits the redemption request so that it is
received by the Transfer Agent or its designee by 12:00 Noon, New York time,
with respect to the Municipal Funds, or 5:00 p.m., New York time, with
respect to the Government Money Fund and Money Fund on a business day, the
proceeds of the redemption ordinarily will be transmitted in Federal Funds
on the same day and the shares will not receive the dividend declared on
that day. If a redemption request is received after such time, but by 8:00
p.m., New York time, the redemption request will be effective on that day,
the shares will receive the dividend declared on that day and the proceeds
of redemption ordinarily will be transmitted in Federal Funds on the next
business day. If a redemption request is received after 8:00 p.m., New York
time, the redemption request will be effective on the next business day. It
is the responsibility of the Selected Dealer to transmit a request so that
it is received in a timely manner. The proceeds of the redemption are
credited to your account with the Selected Dealer.
Stock Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each holder of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the guarantor, and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
Redemption Commitment. Each Fund has committed itself to pay in cash
all redemption requests by any shareholder of record, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of the
Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission and is a fundamental policy of the Fund which may not be changed
without shareholder approval. In the case of requests for redemption in
excess of such amount, each Fund's Board reserves the right to make payments
in whole or in part in securities or other assets of the Fund in case of an
emergency or any time a cash distribution would impair the liquidity of the
Fund to the detriment of the existing shareholders. In such event, the
securities would be valued in the same manner as the Fund's portfolio is
valued. If the recipient sells such securities, brokerage charges might be
incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets a Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the Securities and Exchange
Commission so that disposal of a Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other periods
as the Securities and Exchange Commission by order may permit to protect a
Fund's shareholders.
SHAREHOLDER SERVICES
Fund Exchanges. Clients of certain Service Agents may purchase, in
exchange for shares of a Fund, shares of certain other funds managed or
administered by the Manager, to the extent such shares are offered for sale
in such client's state of residence. Shares of other funds purchased by
exchange will be purchased on the basis of relative net asset value per
share as follows:
A. Exchanges for shares of funds that are offered without a
sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales load, and
the applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
for shares of other funds sold without a sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load, and additional shares acquired through reinvestment of
dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), but if the sales load applicable to the
Offered Shares exceeds the maximum sales load that could have been
imposed in connection with the Purchased Shares (at the time the
Purchased Shares were acquired), without giving effect to any
reduced loads, the difference will be deducted.
To accomplish an exchange under item D above, you or your Service Agent
acting on your behalf must notify the Transfer Agent of your prior ownership
of fund shares and your account number.
To request an exchange, you or your Service Agent acting on your behalf
must give exchange instructions to the Transfer Agent in writing or by
telephone. The ability to issue exchange instructions by telephone is given
to shareholders of each Fund automatically, unless you check the applicable
"No" box on the Account Application, indicating that you specifically refuse
this Privilege. By using the Telephone Exchange Privilege, you authorize
the Transfer Agent to act on telephonic instructions (including over The
Dreyfus Touchr automated telephone system) from any person representing
himself or herself to be you or a representative of your Service Agent, and
reasonably believed by the Transfer Agent to be genuine. Telephone
exchanges may be subject to limitations as to the amount involved or the
number of telephone exchanges permitted. Shares issued in certificate form
are not eligible for telephone exchange. No fees currently are charged
shareholders directly in connection with exchanges, although each Fund
reserve the right, upon not less than 60 days' written notice, to charge
shareholders a nominal administrative fee in accordance with rules
promulgated by the Securities and Exchange Commission.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege
permits you to purchase, in exchange for shares of a Fund, shares of certain
other funds in the Dreyfus Family of Funds of which you are a shareholder.
This Privilege is available only for existing accounts. Shares will be
exchanged on the basis of relative net asset value as described above under
"Fund Exchanges." Enrollment in or modification or cancellation of this
Privilege is effective three business days following notification by you.
You will be notified if your account falls below the amount designated to be
exchanged under this Privilege. In this case, your account will fall to
zero unless additional investments are made in excess of the designated
amount prior to the next Auto-Exchange transaction. Shares held under IRA
and other retirement plans are eligible for this Privilege. Exchanges of
IRA shares may be made between IRA accounts and from regular accounts to IRA
accounts, but not from IRA accounts to regular accounts. With respect to
all other retirement accounts, exchanges may be made only among those
accounts.
Fund Exchanges and the Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired legally may be sold. Shares may be exchanged only between accounts
having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. Each Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges service or the
Auto-Exchange Privilege may be modified or terminated at any time upon
notice to shareholders.
Dreyfus-Automatic Asset Builderr. Dreyfus-Automatic Asset Builder
permits you to purchase Fund shares (minimum of $100 and maximum of $150,000
per transaction) at regular intervals selected by you. Fund shares are
purchased by transferring funds from the bank account designated by you.
Dreyfus Government Direct Deposit Privilege. Dreyfus Government Direct
Deposit Privilege enables you to purchase Fund shares (minimum of $100 and
maximum of $50,000 per transaction) by having Federal salary, Social
Security, or certain veterans', military or other payments from the Federal
Government automatically deposited into your Fund account. You may deposit
as much of such payments as you elect.
Dreyfus Payroll Savings Plan. Dreyfus Payroll Savings Plan permits you
to purchase Fund shares (minimum of $100 per transaction) automatically on a
regular basis. Depending upon your employer's direct deposit program, you
may have part or all of your paycheck transferred to your existing Dreyfus
account electronically through the ACH system at each pay period. To
establish a Payroll Savings Plan account, you must file an authorization
form with your employer's payroll department. It is the sole responsibility
of your employer, not the Distributor, the Manager, the Fund, the Transfer
Agent or any other person, to arrange for transactions under the Dreyfus
Payroll Savings Plan.
Dreyfus Dividend Options. Dreyfus Dividend Sweep allows you to invest
automatically your dividends or dividends and capital gain distributions, if
any, paid by a Fund in shares of another fund in the Dreyfus Family of Funds
of which you are a shareholder. Shares of other funds purchased pursuant to
this privilege will be purchased on the basis of relative net asset value
per share as follows:
A. Dividends and distributions paid by a fund may be
invested without imposition of a sales load in shares of
other funds offered without a sales load.
B. Dividends and distributions paid by a fund which
does not charge a sales load may be invested in shares
of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Dividends and distributions paid by a fund that
charges a sales load may be invested in shares of other
funds sold with a sales load (referred to herein as
"Offered Shares"), but if the sales load applicable to
the Offered Shares exceeds the maximum sales load
charged by the fund from which dividends or
distributions are being swept, (without giving effect to
any reduced loads), the difference will be deducted.
D. Dividends and distributions paid by a fund may be
invested in shares of other funds that impose a
contingent deferred sales charge ("CDSC") and the
applicable CDSC, if any, will be imposed upon redemption
of such shares.
Dreyfus Dividend ACH permits you to transfer electronically dividends
or dividends and capital gain distributions, if any, from each Fund to a
designated bank account. Only an account maintained at a domestic financial
institution which is an ACH member may be so designated. Banks may charge a
fee for this service.
Quarterly Distribution Plan. The Quarterly Distribution Plan permits
you to receive quarterly payments from a Fund consisting of proceeds from
the redemption of shares purchased for your account through the automatic
reinvestment of dividends declared on your account during the preceding
calendar quarter.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits you
to request withdrawal of a specified dollar amount (minimum of $50) on
either a monthly or quarterly basis if you have a $5,000 minimum account.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends and
distributions, your shares will be reduced and eventually may be depleted.
Automatic Withdrawal may be terminated at any time by you, the Fund or the
Transfer Agent. Shares for which certificates have been issued may not be
redeemed through the Automatic Withdrawal Plan.
Corporate Pension/Profit-Sharing and Personal Retirement Plans.
(Government Money Fund and Money Fund) Each of the Government Money Fund and
the Money Fund makes available to corporations a variety of prototype
pension and profit-sharing plans, including a 401(k) Salary Reduction Plan.
In addition, these Funds make available Keogh Plans, IRAs (including regular
IRAs, spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs, rollover
IRAs and Education IRAs) and 403(b)(7) Plans. Plan support services also
are available.
If you wish to purchase Fund shares in conjunction with a Keogh Plan, a
403(b)(7) Plan or an IRA, including a SEP-IRA, you may request from the
Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs
may charge a fee, payment of which could require the liquidation of shares.
All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity which acts as custodian. Such purchases will be
effective when payments received by the Transfer Agent are converted into
Federal Funds. Purchases for these plans may not be made in advance of
receipt of funds.
The minimum initial investment for corporate plans, salary reduction
plans, 403(b)(7) Plans and SEP-IRAs, with more than one participant, is
$2,500, with no minimum for subsequent purchases. The minimum initial
investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs (including
regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs and
rollover IRAs) and 403(b)(7) Plans with only one participant and $500 for
Education IRAs, with no minimum for subsequent purchases.
You should read the prototype retirement plans and the applicable form
of custodial agreement for further details as to eligibility, service fees
and tax implications, and should consult a tax adviser.
DETERMINATION OF NET ASSET VALUE
Amortized Cost Pricing. The valuation of each Fund's portfolio
securities is based upon their amortized cost, which does not take into
account unrealized capital gains or losses. This involves valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method
provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price
the Fund would receive if it sold the instrument.
Each Fund's Board has established, as a particular responsibility
within the overall duty of care owed to the Fund's shareholders, procedures
reasonably designed to stabilize the Fund's price per share as computed for
the purpose of purchases and redemptions at $1.00. Such procedures include
review of the Fund's portfolio holdings by the Board, at such intervals as
it may deem 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. In such review,
investments for which market quotations are readily available will be valued
at the most recent bid price or yield equivalent for such securities or for
securities of comparable maturity, quality and type, as obtained from one or
more of the major market makers for the securities to be valued. Other
investments and assets, to the extent a Fund is permitted to invest in such
instruments, will be valued at fair value as determined in good faith by the
Board. With respect to the Municipal Funds, market quotations and market
equivalents used in the Board's review are obtained from an independent
pricing service (the "Service") approved by the Board. The Service values
these Funds' investments based on methods which include considerations 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 a Fund's net asset value based upon
available market quotations or market equivalents and $1.00 per share based
on amortized cost will be examined by the Fund's Board. If such deviation
exceeds 1/2 of 1%, the Board promptly will consider what action, if any,
will be initiated. In the event a Fund's Board determines that a deviation
exists which may result in material dilution or other unfair results to
investors or existing shareholders, it has agreed to take such corrective
action as it regards as necessary and appropriate, including: selling
portfolio instruments prior to maturity to realize capital gains or losses
or to shorten average portfolio maturity; withholding dividends or paying
distributions
from capital or capital gains; redeeming shares in kind; or establishing a
net asset value per share by using available market quotations or market
equivalents.
New York Stock Exchange and Transfer Agent Closings. The holidays (as
observed) on which both the New York Stock Exchange and the Transfer Agent
are closed currently are: New Year's Day, Martin Luther King Jr. Day,
Presidents' Day, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Management believes that each Fund has qualified for the fiscal year
ended November 30, 1998 as a "regulated investment company" under the Code.
Each Fund intends to continue to so qualify if such qualification is in the
best interests of its shareholders. 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. If the
Fund did not qualify as a regulated investment company, it would be treated
for tax purposes as an ordinary corporation subject to Federal income tax.
Each Fund ordinarily declares dividends from its net investment income
on each day the New York Stock Exchange or, for the Government Money Fund
and Money Fund only, the Transfer Agent is open for business. The Fund's
earnings for Saturdays, Sundays and holidays are declared as dividends on
the preceding business day. Dividends usually are paid on the last calendar
day of each month and automatically are reinvested in additional shares at
net asset value or, at your option, paid in cash. If you redeem all shares
in your account at any time during the month, all dividends to which you are
entitled will be paid to you along with the proceeds of the redemption. If
you are an omnibus accountholder and indicate in a partial redemption
request that a portion of any accrued dividends to which such account is
entitled belongs to an underlying accountholder who has redeemed all shares
in his or her account, such portion of the accrued dividends will be paid to
you along with the proceeds of the redemption.
If you elect to receive dividends and distributions in cash, and your
dividend or distribution check is returned to the Fund as undeliverable or
remains uncashed for six months, the Fund reserves the right to reinvest
such dividends or distributions and all future dividends and distributions
payable to you in additional Fund shares at net asset value. No interest
will accrue on amounts represented by uncashed distribution or redemption
checks.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of any gain
realized from the sale or other disposition of certain market discount bonds
will be treated as ordinary income under Section 1276 of the Code.
With respect to the Municipal Funds, if, at the close of each quarter
of its taxable year, at least 50% of the value of the Fund's total assets
consists of Federal tax exempt obligations, then the Fund may designate and
pay Federal exempt-interest dividends from interest earned on all such tax
exempt obligations. Such exempt-interest dividends may be excluded by
shareholders of the Fund from their gross income for Federal income tax
purposes. Dividends derived from Taxable Investments, together with
distributions from any net realized short-term securities gains, generally are
taxable as ordinary income for Federal income tax purposes whether or not
reinvested. Distributions from net realized long-term securities gains
generally are taxable as long-term capital gains to a shareholder who is a
citizen or resident of the United States, whether or not reinvested and
regardless of the length of time the shareholder has held his shares.
With respect to the California Municipal Fund, if, at the close of each
quarter of its taxable year, at least 50% of the value of the Fund's total
assets consists of obligations which, when held by an individual, the
interest therefrom is exempt from California personal income tax, and if the
Fund qualifies as a management company under the California Revenue and
Taxation Code, then the Fund will be qualified to pay dividends to its
shareholders that are exempt from California personal income tax (but not
from California franchise tax) ("California exempt-interest dividends").
However, the total amount of California exempt-interest dividends paid by
the Fund to a non-corporate shareholder with respect to any taxable year
cannot exceed such shareholder's pro rata share of interest received by the
Fund during such year that is exempt from California taxation less any
expenses and expenditures deemed to have been paid from such interest.
For shareholders subject to the California personal income tax, exempt-
interest dividends derived from California Municipal Obligations will not be
subject to the California personal income tax. Distributions from net
realized short-term capital gains to California resident shareholders will
be subject to the California personal income tax distributed by the Fund as
ordinary income. Distributions from net realized long-term capital gains
may constitute long-term capital gains for individual California resident
shareholders. Unlike under Federal tax law, the California Municipal Fund's
shareholders will not be subject to California personal income tax, or
receive a credit for California taxes paid by the Fund, on undistributed
capital gains. In addition, California tax law does not consider any
portion of the exempt-interest dividends paid an item of tax preference for
the purpose of computing the California alternative minimum tax.
With respect to the Minnesota Municipal Fund, dividends paid by the
Fund to a Minnesota resident are not subject to the Minnesota personal
income tax to the extent that the dividends are attributable to income
received by the Fund as interest from Minnesota Municipal Obligations,
provided such attributable dividends represent 95% or more of the exempt-
interest dividends that are paid by the Fund. Moreover, dividends paid by
the Fund to a Minnesota resident are not subject to the Minnesota personal
income tax to the extent that the dividends are attributable to income
received by the Fund as interest from the Fund's investment in direct U.S.
Government obligations. Dividends and distributions by the Fund to a
Minnesota resident that are attributable to most other sources are subject
to the Minnesota personal income tax. Dividends and distributions from the
Fund will be included in the determination of taxable net income of
corporate shareholders who are subject to Minnesota income (franchise)
taxes. In addition, dividends attributable to interest received by the Fund
that is a preference item for Federal income tax purposes, whether or not
such interest is from a Minnesota Municipal Obligation, may be subject to
the Minnesota alternative minimum tax. The shares of the Fund are not
subject to property taxation by Minnesota or its political subdivisions.
YIELD INFORMATION
For the seven-day period ended November 30, 1998, the yield and
effective yield for Class A and Class B shares of each Fund were as follows:
Name of Fund and Class Yield Effective Yield
Government Money Fund
Class A 4.30% 4.39%
Class B 4.10% / 4.07%* 4.18% / 4.15%*
Money Fund
Class A 4.41% 4.51%
Class B 4.21% / 4.20%* 4.30% / 4.29%*
California Municipal Fund
Class A 2.52% 2.55%
Class B 2.06% / 2.00%* 2.08% / 2.02%*
Minnesota Municipal Fund
Class A 2.73% / 2.77% 2.77% / 2.60%
Class B 2.57% / 2.00%* 2.60% / 2.08%*
National Municipal Fund
Class A 2.73% / 2.77% -0- %
Class B 2.38% / 2.00%* 2.30% / 2.33%*
New York Municipal Fund
Class A 2.43% 2.46%
Class B 2.13% / 2.06%* 2.15% / 2.08%*
________________________
* Net of absorbed expenses.
Yield is computed in accordance with a standardized method which
involves determining the net change in the value of a hypothetical
pre-existing Fund account having a balance of one share at the beginning of
a seven calendar day period for which yield is to be quoted, dividing the
net change by the value of the account at the beginning of the period to
obtain the base period return, and annualizing the results (i.e.,
multiplying the base period return by 365/7). The net change in the value
of the account reflects the value of additional shares purchased with
dividends declared on the original share and any such additional shares and
fees that may be charged to shareholder accounts, in proportion to the
length of the base period and the Fund's average account size, but does not
include realized gains and losses or unrealized appreciation and
depreciation. Effective yield is computed by adding 1 to the base period
return (calculated as described above), raising that sum to a power equal to
365 divided by 7, and subtracting 1 from
the result. Both yield figures take into account any applicable
distribution and service fees. As a result, at any given time, the
performance of Class B shares should be expected to be lower than that of
Class A shares.
As to the Municipal Funds, 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.
Based upon a 1998 Federal and State of California income tax rate of 45.22%,
the tax equivalent yield for the 7-day period ended November 30, 1998 for
Class A and Class B shares of the California Municipal Fund was as follows:
Name of Fund and Class Tax Equivalent Yield
California Municipal Fund
Class A 4.60%
Class B 3.76% / 3.65%*
Based upon a 1998 Federal and State of Minnesota income tax rate of
44.73%, the tax equivalent yield for the seven-day period ended November 30,
1998 for the Class A and Class B shares of the Minnesota Municipal Fund was
as follows:
Name of Fund and Class Tax Equivalent Yield
Minnesota Municipal Fund
Class A 4.94% / 4.65
Class B 4.65% / 3.73%*
Based upon a 1998 Federal tax rate of 39.60%, the tax equivalent yield
for the seven-day period ended November 30, 1998 for the Class A and Class B
shares of National Municipal Fund was as follows:
Name of Fund and Class Tax Equivalent Yield
National Municipal Fund
Class A 4.52%
Class B 3.94% / 3.81%*
Based upon a combined 1998 Federal, New York State and New York City
personal income tax rate of 46.43%, the tax equivalent yield for the seven-
day period ended November 30, 1998 for Class A and Class B shares of the New
York Municipal Fund was as follows:
Name of Fund and Class Tax Equivalent Yield
New York Municipal Fund
Class A 4.54%
Class B 3.98% / 3.85%*
_____________
* Net of absorbed expenses.
The tax equivalent yields noted above for the National Municipal Fund
represent the application of the highest Federal marginal personal income
tax rate presently in effect. The tax equivalent figures, however, do not
include the potential effect of any state or local (including, but not
limited to, county, district or city) taxes, including applicable
surcharges. The tax equivalent yields noted above for the California
Municipal Fund represents the application of the highest Federal and State
of California marginal personal income tax rates presently in effect. The
tax equivalent yields noted above for the Minnesota Municipal Fund represent
the application of the highest Federal and State of Minnesota marginal
personal income tax rates presently in effect. The tax equivalent yields
noted above for the New York Municipal Fund represent the application of the
highest Federal, New York State, and New York City marginal personal income
tax rates in effect at that time. For Federal personal income tax purposes
a 39.6% tax rate has been used, for California State income tax purposes
the rate of 9.30% has been used, for Minnesota State income tax purposes,
the rate of 8.50 % has been used and for New York State and New York City
personal income tax purposes, the rates of 6.85% and 4.46%, respectively,
have been used. In addition, there may be pending legislation which could
affect such stated tax rates or yields. You should consult your tax
adviser, and consider your own factual circumstances and applicable tax
laws, in order to ascertain the relevant tax equivalent yield.
Yields will fluctuate and are not necessarily representative of future
results. You should remember that yield is a function of the type and
quality of the instruments in the portfolio, portfolio maturity and
operating expenses. Your principal in a Fund is not guaranteed. See
"Determination of Net Asset Value" for a discussion of the manner in which a
Fund's price per share is determined.
From time to time, each Municipal 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 being
representative of the Fund's past or future performance.
From time to time, advertising materials for a Fund may refer to or
discuss then-current or past economic conditions, developments and/or
events, or actual or proposed tax legislation, and may refer to statistical
or other information concerning trends relating to investment companies, as
compiled by industry associations such as the Investment Company Institute.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased directly from the issuer
or from an underwriter or a market maker for the securities. Usually no
brokerage commissions, as such, are paid by a Fund for such purchases.
Purchases from underwriters of portfolio securities include a concession
paid by the issuer to the underwriter and the purchase price paid to, and
sales price received from, market makers for the securities may include the
spread between the bid and asked price. No brokerage commissions have been
paid by any Fund to date.
Transactions are allocated to various dealers by the portfolio managers
of a Fund in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms and may be
selected based upon their sales of shares of a Fund or other funds advised
by the Manager or its affiliates.
Research services furnished by brokers through which a Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising 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.
INFORMATION ABOUT THE FUNDS
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Fund shares have equal rights as to dividends and in liquidation. Shares
have no preemptive or subscription rights and are freely transferable.
The Minnesota Municipal Fund and the National Municipal Fund are
separate series of the Company. Rule 18f-2 under the 1940 Act provides that
any matter required to be submitted under the provisions of the 1940 Act or
applicable state law or otherwise to the holders of the outstanding voting
securities of an investment company, such as the Company, will not be deemed
to have been effectively acted upon unless approved by the holders of a
majority of the outstanding shares of each series affected by such matter.
Rule 18f-2 further provides that a series shall be deemed to be affected by
a matter unless it is clear that the interests of each series in the matter
are identical or that the matter does not affect any interest of such
series. The Rule exempts the selection of independent accountants and the
election of Board members from the separate voting requirements of the Rule.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for each Fund to hold annual meetings of shareholders. As a
result, Fund shareholders may not consider each year the election of Board
members or the appointment of auditors. However, the holders of at least
10% of the shares outstanding and entitled to vote may require the Fund to
hold a special meeting of shareholders for purposes of removing a Board
member from office. Fund shareholders may remove a Board member by the
affirmative vote of a majority, in the case of the Government Money Fund,
National Municipal Fund and Money Fund, or two-thirds, in the case of the
California Municipal Fund and New York Municipal Fund, of the Fund's
outstanding voting shares. In addition, the Board will call a meeting of
shareholders for the purpose of electing Board members if, at any time, less
than a majority of the Board members then holding office have been elected
by shareholders.
The California Municipal Fund and New York Municipal Fund are organized
as unincorporated business trusts under the laws of the Commonwealth of
Massachusetts. Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Agreement and Declaration of Trust (the "Trust Agreement") for
each of these Funds 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 personally
liable for the obligations of the Fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its
obligations, a possibility which management believes is remote. Upon
payment of any liability incurred by the Fund, the shareholder paying such
liability will be entitled to reimbursement from the general assets of the
Fund. The Fund intends to conduct its operations in such a way so as to
avoid, as far as possible, ultimate liability of the shareholder for
liabilities of the Fund.
Each Fund sends annual and semi-annual financial statements to all its
share-
holders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for each Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares being sold pursuant to the Funds' Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as independent auditors of each
Fund.
APPENDIX A
(MONEY FUND ONLY)
Description of the two highest commercial paper, bond and other short-
and long-term rating categories assigned by Standard & Poor's Ratings Group
("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch IBCA, Inc.
("Fitch"), Duff & Phelps Credit Rating Co. ("Duff"), and Thomson BankWatch,
Inc. ("BankWatch"):
Commercial Paper and Short-Term Ratings
The designation A-1 by S&P 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. Capacity for timely payment on issues
with an A-2 designation is strong. However, the relative degree of safety
is not as high as for issues designated A-1.
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 of 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. Issues rated Prime-2
(P-2) have a strong capacity for repayment of short-term promissory
obligations. This ordinarily will be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
The rating Fitch-1 (Highest Grade) is the highest commercial paper
rating assigned by Fitch. Paper rated Fitch-1 is regarded as having the
strongest degree of assurance for timely payment. The rating Fitch-2 (Very
Good Grade) is the second highest commercial paper rating assigned by Fitch
which reflects an assurance of timely payment only slightly less in degree
than the strongest issues.
The rating Duff-1 is the highest commercial paper rating assigned by
Duff. Paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors which are supported by ample
asset protection. Risk factors are minor. Paper rated Duff-2 is regarded
as having good certainty of timely payment, good access to capital markets
and sound liquidity factors and company fundamentals. Risk factors are
small.
The rating TBW-1 is the highest short-term obligation rating assigned
by BankWatch. Obligations rated TBW-1 are regarded as having the strongest
capacity for timely repayment. Obligations rated TBW-2 are supported by a
strong capacity for timely repayment, although the degree of safety is not
as high as for issues rated TBW-1.
Bond and Long-Term Ratings
Bonds rated AAA are considered by S&P to be the highest grade
obligations and possess an extremely strong capacity to pay principal and
interest. Bonds rated AA by S&P are judged by S&P to have a very strong
capacity to pay principal and interest and, in the majority of instances,
differ only in small degrees from issues rated AAA. The rating AA may be
modified by the addition of a plus or minus sign to show relative standing
within the rating category.
Bonds rated Aaa by Moody's are judged to be of the best quality. Bonds
rated Aa by Moody's are judged by Moody's to be of high quality by all
standards and, together with the Aaa group they comprise what are generally
known as high-grade bonds. Bonds rated Aa are rated lower than Aaa bonds
because margins of protection may not be as large or fluctuations of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger.
Moody's applies numerical modifiers 1, 2 and 3 in the Aa rating category.
The modifier 1 indicates a ranking for the security in the higher end of
this rating category, the modifier 2 indicates a mid-range ranking, and the
modifier 3 indicates a ranking in the lower end of the rating category.
Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade,
broadly marketable, suitable for investment by trustees and fiduciary
institutions and liable to slight market fluctuation other than through
changes in the money rate. The prime feature of an AAA bond is a showing of
earnings several times or many times interest requirements, with such
stability of applicable earnings that safety is beyond reasonable question
whatever changes occur in conditions. Bonds rated AA by Fitch are judged by
Fitch to be of safety virtually beyond question and are readily salable,
whose merits are not unlike those of the AAA class, but whose margin of
safety is less strikingly broad. The issue may be the obligation of a small
company, strongly secured but influenced as to rating by the lesser
financial power of the enterprise and more local type of market.
Bonds rated AAA by Duff are considered to be of the highest credit
quality. The risk factors are negligible, being only slightly more than
U.S. Treasury debt. Bonds rated AA are considered by Duff to be of high
credit quality with strong protection factors. Risk is modest but may vary
slightly from time to time because of economic conditions.
Fitch also assigns a rating to certain international and U.S. banks. A
Fitch bank rating represents Fitch's current assessment of the strength of
the bank and whether such bank would receive support should it experience
difficulties. In its assessment of a bank, Fitch uses a dual rating system
comprised of Legal Ratings and Individual Ratings. In addition, Fitch
assigns banks Long- and Short-Term Ratings as used in the corporate ratings
discussed above. Legal Ratings, which range in gradation from 1 through 5,
address the question of whether the bank would receive support from central
banks or shareholders if it experienced difficulties, and such ratings are
considered by Fitch to be a prime factor in its assessment of credit risk.
Individual Ratings, which range in gradations from A through E, represent
Fitch's assessment of a bank's economic merits and address the question of
how the bank would be viewed if it were entirely independent and could not
rely on support from state authorities or its owners.
In addition to ratings of short-term obligations, BankWatch assigns a
rating to each issuer it rates, in gradations of A through E. BankWatch
examines all segments of the organization including, where applicable, the
holding company, member banks or associations, and other subsidiaries. In
those instances where financial disclosure is incomplete or untimely, a
qualified rating (QR) is assigned to the institution. BankWatch also
assigns, in the case of foreign banks, a country rating which represents an
assessment of the overall political and economic stability of the country in
which the bank is domiciled.
APPENDIX B
(MUNICIPAL FUNDS)
Description of certain 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 of and provisions of the obligation; and
(3) protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
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, you 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
operating 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 a rating symbol 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 ratings
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.
APPENDIX C
INVESTING IN CALIFORNIA MUNICIPAL OBLIGATIONS
RISK FACTORS--INVESTING IN CALIFORNIA MUNICIPAL OBLIGATIONS
The following information is a summary of special factors affecting
investments in California Municipal Securities and is drawn from the
Official Statement issued by the State for its public bond issue on December
9, 1998. The sources of payment for such obligations and the marketability
thereof may be affected by financial or other difficulties experienced by
the State of California and certain of its municipalities and public
authorities. It does not purport to be a complete description and is based
on information from official statements relating to securities offerings of
California issuers.
State Finances
The Budget Process
The State's fiscal year begins on July 1 and ends on June 30. The
State operates on a budget basis, using a modified accrual system of
accounting, with revenues credited in the period in which they are
measurable and available and expenditures debited in the period in which the
corresponding liabilities are incurred.
The annual budget is proposed by the Governor by January 10 of each
year for the next fiscal year (the "Governor's Budget"). Under State law,
the annual proposed Governor's Budget cannot provide for projected
expenditures in excess of projected revenues and balances available from
prior fiscal years. Following the submission of the Governor's Budget, the
Legislature takes up the proposal.
Under the State Constitution, money may be drawn from the Treasury only
through an appropriation made by law. The primary source of the annual
expenditure authorizations is the Budget Act as approved by the Legislature
and signed by the Governor. The Budget Act must be approved by a two-thirds
majority vote of each House of the Legislature. The Governor may reduce or
eliminate specific line items in the Budget Act or any other appropriations
bill without vetoing the entire bill. Such individual line-item vetoes are
subject to override by a two-thirds majority vote of each House of the
Legislature.
Appropriations also may be included in legislation other than the
Budget Act (except for K-14 education) must be approved by a two-thirds
majority vote in each House of the Legislature and be signed by the
Governor. Bills containing K-14 education appropriations only require a
simple majority vote. Continuing appropriations, available without regard
to fiscal year, may also be provided by statute or the State Constitution.
Funds necessary to meet an appropriation need not be in the State
Treasury at the time such appropriation is enacted; revenues may be
appropriated in anticipation of their receipt.
The General Fund
The moneys of the State are segregated into the General Fund and over
900 Special Funds, including Bond, Trust and Pension Funds. The General
Fund consists of revenues received by the State Treasury and not required by
law to be credited to any other fund, as well as earnings from the
investment of State moneys not allocable to another fund. The General Fund
is the principal operating fund for the majority of governmental activities
and is the depository of most of the major revenue sources of the State.
The General Fund may be expended as a consequence of appropriation measures
enacted by the Legislature and approved by the Governor, as well as
appropriations pursuant to various constitutional authorizations and
initiative statutes.
The Special Fund for Economic Uncertainties
The Special Fund for Economic Uncertainties ("SFEU") is funded with
General Fund revenues and was established to protect the State from
unforeseen revenue reductions and/or unanticipated expenditure increases.
Amounts in the SFEU may be transferred by the State Controller as necessary
to meet cash needs of the General Fund. The State Controller is required to
return moneys so transferred without payment of interest as soon as there
are sufficient moneys in the General Fund.
The legislation creating the SFEU contains a continuous appropriation
from the General Fund authorizing the State Controller to transfer to the
SFEU, as of the end of each fiscal year, the lesser of (i) the unencumbered
balance in the General Fund and (ii) the difference between the State's
"appropriations subject to limitation" for the fiscal year then ended and
its "appropriations limit" as defined in Section 8 of Article XIII B of the
State Constitution and established in the Budget Act for that fiscal year,
as jointly estimated by the State's Legislative Analyst's Office and the
Department of Finance. In certain circumstances, moneys in the SFEU may be
used in connection with disaster relief.
For budgeting and accounting purposes, any appropriation made from the
SFEU is deemed an appropriation from the General Fund. For year-end
reporting purposes, the State Controller is required to add the balance in
the SFEU to the balance in the General Fund so as to show the total moneys
then available for General Fund purposes.
The SFEU projection reflects the enactment of the Budget Act on August
21, 1998. This figure contains the latest revenue projections and
expenditure amounts appropriated in the Budget Act and trailer bills at that
point in time. As in any year, the Budget Act and related trailer bills are
not the only pieces of legislation which appropriate funds. Other factors
including re-estimates of revenues and expenditures, existing statutory
requirements, and additional legislation introduced and passed by the
Legislature may impact the reserve amount.
In the Budget Act for Fiscal Year 1998-99, signed on August 21, 1998,
the Department of Finance projects the SFEU will have a balance of about
$1.255 billion at June 30, 1999.
Prior Fiscal Years' Financial Results
Fiscal Years Prior to 1995-96
Pressures on the State's budget in the late 1980's and early 1990's
were caused by a combination of external economic conditions (including a
recession which began in 1990) and growth of the largest General Fund
Programs - K-14 education, health, welfare and corrections - at rates faster
than the revenue base. During this period, expenditures exceeded revenues
in four out of six years up to 1992-93, and the State accumulated and
sustained a budget deficit approaching $2.8 billion at its peak at June 30,
1993. Between the 1991-92 and 1994-95 Fiscal Years, each budget required
multibillion dollar actions to bring projected revenues and expenditures
into balance, including significant cuts in health and welfare program
expenditures; transfers of program responsibilities and funding from the
State to local governments, transfer of about $3.6 billion in annual local
property tax revenues from other local governments to local school
districts, thereby reducing State funding for schools under Proposition 98;
and revenue increases (particularly in the 1991-92 Fiscal Year Budget), most
of which were for a short duration.
Despite these budget actions, the effects of the recession led to
large, unanticipated budget deficits. By the 1993-94 Fiscal Year, the
accumulated deficit was so large that it was impractical to budget to retire
it in one year, so a two-year program was implemented, using the issuance of
revenue anticipation warrants to carry a portion of the deficit over the end
of the fiscal year. When the economy failed to recover sufficiently in 1993-
94, a second two-year plan was implemented in 1994-95, again using cross-
fiscal year revenue anticipation warrants to partly finance the deficit into
the 1995-96 fiscal year.
Another consequence of the accumulated budget deficits, together with
other factors such as disbursement of funds to local school districts
"borrowed" from future fiscal years and hence not shown in the annual
budget, was to significantly reduce the State's cash resources available to
pay its ongoing obligations. When the Legislature and the Governor failed
to adopt a budget for the 1992-93 Fiscal Year by July 1, 1992, which would
have allowed the State to carry out its normal annual cash flow borrowing to
replenish its cash reserves, the State Controller issued registered warrants
to pay a variety of obligations representing prior years' or continuing
appropriations, and mandates from court orders. Available funds were used
to make constitutionally-mandated payments, such as debt service on bonds
and warrants. Between July 1 and September 4, 1992, when the budget was
adopted, the State Controller issued a total of approximately $3.8 billion
of registered warrants.
For several fiscal years during the recession, the State was forced to
rely on external debt markets to meet its cash needs, as a succession of
notes and revenue anticipation warrants were issued in the period from June
1992 to July 1994, often needed to pay previously maturing notes or
warrants. These borrowings were used also in part to spread out the
repayment of the accumulated budget deficit over the end of a fiscal year,
as noted earlier. The last and largest of these borrowings was $4.0 billion
of revenue anticipation warrants which were issued in July, 1994 and matured
on April 25, 1996.
1995-96 and 1996-97 Fiscal Years
The State's financial condition improved markedly during the 1995-96,
1996-97 and 1997-98 fiscal years, with a combination of better than expected
revenues, slowdown in growth of social welfare programs, and continued
spending restraint based on the actions taken in earlier years. The State's
cash position also improved, and no external deficit borrowing has occurred
over the end of these three fiscal years.
The economy grew strongly during these fiscal years, and as a result,
the General Fund took in substantially greater tax revenues (around $2.2
billion in 1995-96, $1.6 billion in 1996-97 and $2.2 billion in 1997-98)
than were initially planned when the budgets were enacted. These additional
funds were largely directed to school spending as mandated by Proposition
98, and to make up shortfalls from reduced federal health and welfare aid in
1995-96 and 1996-97. The accumulated budget deficit from the recession
years was finally eliminated. The Department of Finance estimates that the
State's budget reserve (the SFEU) totaled $639.8 million as of June 30, 1997
and $1.782 billion at June 30, 1998.
The following were major features of the 1997-98 Budget Act:
1. For the second year in a row, the Budget contained a large
increase in funding for K-14 education under Proposition 98,
reflecting strong revenues which exceeded initial budgeted
amounts. Part of the nearly $1.75 billion in increased spending
was allocated to prior fiscal years. Funds were provided to fully
pay for the cost-of-living-increase component of Proposition 98,
and to extend the class size reduction and reduction and reading
initiatives.
2. The Budget Act reflected the $1.228 billion pension case judgment
payment, and brought funding of the State's pension contribution
back to the quarterly basis which existed prior to the deferral
actions which were invalidated by the courts.
3. Funding from the General Fund for the University of California and
California State University was increased by about 6 percent ($121
million and $107 million, respectively), and there was no increase
in student fees.
4. Because of the effect of the pension payment, most other State
programs were continued at 1996-97 levels, adjusted for caseload
changes.
5. Health and welfare costs were contained, continuing generally the
grant levels from prior years, as part of the initial
implementation of the new CalWORKs program.
6. Unlike prior years, this Budget Act did not depend on uncertain
federal budget actions. About $300 million in federal funds,
already included in the federal FY 1997 and 1998 budgets, was
included in the Budget Act, to offset incarceration costs for
illegal aliens.
7. The Budget Act contained no tax increases, and no tax reductions.
The Renters Tax Credit was suspended for another year, saving
approximately $500 million.
The Department of Finance released updated estimates for the 1997-98
Fiscal Year on January 9, 1998 as part of the Governor's 1998-99 Fiscal Year
Budget Proposal. Total revenues and transfers are projected at $52.9
billion, up approximately $360 million from the Budget Act projection.
Expenditures for the fiscal year are expected to rise approximately $200
million above the original Budget Act, to $53.0 billion. The balance in the
budget reserve, the SFEU, is projected to be $329 million at June 30, 1998,
compared to $461 million at June 30, 1997.
Current State Budget
1998-99 Fiscal Year Budget
When the Governor released his proposed 1998-99 Fiscal Year Budget on
January 9, 1998, he projected General Fund revenues for the 1998-99 Fiscal
Year of $55.4 billion, and proposed expenditures in the same amount. By
the time the Governor released the May Revision to the 1998-99 Budget ("May
Revision") on May 14, 1998, the Administration projected that revenues for
the 1997-98 and 1998-99 Fiscal Years combined would be more than $4.2
billion higher than was projected in January. The Governor proposed that
most of this increased revenue be dedicated to fund a 75% cut in the Vehicle
License Fee ("VLF").
The Legislature passed the 1998-99 Budget Bill on August 11, 1998, and
the Governor signed it on August 21, 1998. Some 33 companion bills necessary
to implement the budget were also signed. In signing the Budget Bill, the
Governor used his line-item veto power to reduce expenditures by $1.360
billion from the General Fund, and $160 million from Special Funds. Of this
total, the Governor indicated that about $250 million of vetoed funds were
"set aside" to fund programs for education. Vetoed items included education
funds, salary increases and many individual resources and capital projects.
The 1998-99 Budget Act is based on projected General Fund revenues and
transfers of $57.0 billion (after giving effect to various tax reductions
enacted in 1997 and 1998), a 4.2% increase from the revised 1997-98 figures.
Special Fund revenues were estimated at $14.3 billion. The revenue
projections were based on the May Revision. Economic problems overseas since
that time may affect the May Revision projections. See "Economic
Assumptions" below.
After giving effect to the Governor's vetoes, the Budget Act provides
authority for expenditures of $57.3 billion from the General Fund (a 7.3%
increase from 1997-98), $14.7 billion from Special Funds, and $3.4 billion
from bond funds. The Budget Act projects a balance in the SFEU at June 30,
1999 (but without including the "set aside" veto amount) of $1.255 billion,
a little more than 2% of General Fund revenues. The Budget Act assumes the
State will carry out its normal intra-year cash flow borrowing in the amount
of $1.7 billion of revenue anticipation notes, which were issued on October
1, 1998.
The most significant feature of the 1998-99 budget was agreement on a
total of $1.4 billion of tax cuts. The central element is a bill which
provides for a phased-in reduction of the VLF. Since the VLF is currently
transferred to cities and counties, the bill provides for the General Fund
to replace the lost revenues. Starting on January 1, 1999, the VLF will be
reduced by 25%, at a cost to the General Fund of approximately $500 million
in the 1998-99 Fiscal Year and about $1 billion annually thereafter.
In addition to the cut in VLF, the 1998-99 budget includes both
temporary and permanent increase in the personal income tax dependent credit
($612 million General Fund cost in 1998-99, but less in future years), a
nonrefundable renters tax credit ($133 million), and various targeted
business tax credits ($106 million).
Other significant elements of the 1998-99 Budget Act are as follows:
1. Proposition 98 funding for K-12 schools is increased by $1.7
billion in General Fund moneys over revised 1997-98 levels, about $300
million higher than the minimum Proposition 98 guaranty. An additional $600
million was appropriated to "settle up" prior years' Proposition 98
entitlements, and was primarily devoted to one-time uses such as block
grants, deferred maintenance, and computer and laboratory equipment. Of the
1998-99 funds, major new programs include money for instructional and
library materials, deferred maintenance, support for increasing the school
year to 180 days and reduction of class sizes in Grade 9. The Governor held
$250 million of education funds which were vetoed as set-aside for enactment
of additional reforms. Overall, per-pupil spending for K-12 schools under
Proposition 98 is increased to $5,695, more than one-third higher than the
level in the last recession year of 1993-94. The Budget also includes $250
million as repayment of prior years' loans to schools, as part of the
settlement of the CTA v. Gould lawsuit.
2. Funding for higher education increased substantially above the
level called for in the Governor's four-year compact. General Fund support
was increased by $340 million (15.6%) for the University of California and
$267 million (14.1%) for the California State University system. In
addition, Community Colleges received a $300 million (6.6%) increase under
Proposition 98.
3. The Budget includes increased funding for health, welfare and
social services programs. A 4.9% grant increase was included in the basic
welfare grants, the first increase in those grants in 9 years. Future
increases will depend on sufficient General Fund revenue to trigger the
phased cuts in VLF described above.
4. Funding for the judiciary and criminal justice programs increased
by about 11% over 1997-98, primarily to reflect increased State support for
local trial courts and rising prison population.
5. Various other highlights of the Budget included new funding for
resources projects, dedication of $376 million of General Fund moneys for
capital outlay projects, funding of a 3% State employee salary increase,
funding of 2,000 new Department of Transportation positions to accelerate
transportation construction projects, and funding of the Infrastructure and
Economic Development Bank ($50 million).
6. The State of California received approximately $167 million of
federal reimbursements to offset costs related to the incarceration of
undocumented alien felons for federal fiscal year 1997. The State
anticipates receiving approximately $195 million in federal reimbursements
for federal fiscal year 1998.
After the Budget Act was signed, and prior to the close of the
Legislative session on August 31, 1998, the Legislature passed a variety of
fiscal bills. The Governor had until September 30, 1998 to sign or veto
these bills. The bills with the most significant fiscal impact which the
Governor signed include $235 million for certain water system improvements
in Southern California, $243 million for the State's share of the purchase
of environmentally sensitive forest lands, $178 million for state prisons,
$160 million for housing assistance ($40 million of which was included in
the 1998-99 Budget Act and an additional $120 million reflected in
Proposition IA), and $125 million for juvenile facilities. The Governor also
signed bills totaling $223 million for education programs which were part of
the Governor's $250 million veto "set aside," and $32 million for local
governments fiscal relief. In addition, he signed a bill reducing by $577
million the State's obligation to contribute to the State Teachers'
Retirement System in the 1998-99 Fiscal Year.
Based solely on the legislation enacted, on a net basis, the reserve
for June 30, 1999, was reduced by $256 million. On the other hand, 1997-98
revenues have been increased by $160 million. The revised June 30, 1999,
reserve is projected to be $1,159 million or $96 million below the level
projected at the Budget Act. The reserve projected in the Budget Act was
$1,255 million. It is important to emphasize that the new reserve level is
based on 1998-99 revenue and expenditure assumptions as of the Budget Act
except to augment for legislation signed after the budget enactment. These
assumptions will not be updated until the 1999-00 Governor's Budget is
released on January 10, 1999. In November, 1998, the Legislative Analyst's
Office released a report predicting that General Fund revenues for 1998-99
would be somewhat lower, and expenditures somewhat higher, than the Budget
Act forecasts, but the net variance would be within the projected $1.2
billion year-end reserve amount.
Local Governments
The primary units of local government in California are the counties,
ranging in population from 1,200 in Alpine County to almost 9,600,000 in Los
Angeles County. Counties are responsible for the provision of many basic
services, including indigent health care, welfare, jails and public safety
in unincorporated areas. There are also about 480 incorporated cities, and
thousands of other special districts formed for education, utility and other
services. The fiscal condition of local governments has been constrained
since the enactment of "Proposition 13" in 1978, which reduced and limited
the future growth of property taxes, and limited the ability of local
governments to impose "special taxes" (those devoted to a specific purpose)
without two-thirds voter approval. Counties, in particular, have had fewer
options to raise revenues than many other local government entities, and
have been required to maintain many services.
Historically, funding for the State's trial court system was divided
between the State and the counties. However, Chapter 850, Statutes of 1997,
implemented a restructuring of the State's trial court funding system.
Funding for the courts, with the exception of costs for facilities, local
judicial benefits, and revenue collection, was consolidated at the State
level. The county contribution for both their general fund and fine and
penalty amounts is capped at the 1994-95 level and becomes part of the Trial
Court Trust Fund, which supports all trial court operations. The State
assumed responsibility for future growth in trial court funding. The
consolidation of funding is intended to streamline the operation of the
courts, provide a dedicated revenue source, and relieve fiscal pressure on
the counties. Beginning in 1998-99, the county general fund contribution
for court operations is reduced by $300 million, including $10.7 million to
buy out the contribution of the 20 smallest counties, and cities will retain
$62 million in fine and penalty revenue previously remitted to the state;
the General Fund backfilled the $362 million revenue loss to the Trial Court
Trust Fund. In addition to this general fund backfill, a $50 million
augmentation is included in the 1998 Budget Act for the trial courts to fund
workload increases and high priority issues such as court security. In
1999-2000, the county general fund contribution will be further reduced by
an additional $92 million to buy out the next 17 smallest counties and
reduce by 10 percent of the general fund contribution of the remaining 21
counties.
The entire statewide welfare system has been changed in response to the
change in federal welfare law enacted in 1996 (see "Welfare Reform" above).
Under the CalWORKs program, counties are given flexibility to develop their
own plans, consistent with state law, to implement the program and to
administer many of its elements, and their costs for administrative and
supportive services are capped at the 1996-97 levels. Counties are also
given financial incentives if, at the individual county level or statewide,
the CalWORKs program produces savings associated with specified standards.
Counties will still be required to provide "general assistance" aid to
certain persons who cannot obtain welfare from other programs.
In the aftermath of Proposition 13, the State provided aid from the
General Fund to make up some of the loss of property tax moneys, including
taking over the principal responsibility for funding K-12 schools and
community colleges. During the recession, the Legislature eliminated most of
the remaining components of post-Proposition 13 aid to local government
entities other than K-14 education districts, although it has also provided
additional funding sources (such as sales taxes) and reduced certain
mandates for local services. Since then the State has also provided
additional funding to counties and cities through such programs as health
and welfare realignment, welfare reform, trial court restructuring, the COPs
program supporting local public safety departments, and various other
measures.
In 1996, voters approved Proposition 218, entitled the "Right to Vote
on Taxes Act," which incorporates new Articles XIIIC and XIIID into the
California Constitution. These new provisions place limitations on the
ability of local government agencies to impose or raise various taxes, fees,
charges and assessments without voter approval. Certain "general taxes"
imposed after January 1, 1995 must be approved by voters in order to remain
in effect. In addition, Article XIIIC clarifies the right of local voters
to reduce taxes, fees, assessments or charges through local initiatives.
There are a number of ambiguities concerning the Proposition and its impact
on local governments and their bonded debt which will require interpretation
by the courts or the Legislature. Proposition 218 does not affect the State
or its ability to levy or collect taxes.
On December 23, 1997, a consortium of California counties filed a test
claim with the Commission on State Mandates (the "Commission") asking the
Commission to determine whether the property tax shift from counties to the
Educational Revenue Augmentation Fund, which is a funding source for
schools, is a reimbursable state mandated cost. On August 11, 1998, the
State Department of Justice, on behalf of the State Department of Finance,
filed a rebuttal in opposition to the counties' claim. The issue is
currently scheduled to be heard by the Commission on October 22, 1998. The
fiscal impact to the State General fund if the Commission determines that
the property tax shifts created a reimbursable state mandate could total
approximately $8 billion for the 1996-97 ($2.5 billion), 1997-98 ($2.6
billion) and 1998-99 ($2.7 billion) property tax shifts. Ongoing costs to
the State General Fund would be approximately $2.7 billion annually. Any
Commission decision adverse to the State can be appealed to the courts.
State Appropriations Limit
The State is subject to an annual appropriations limit imposed by
Article XIII B of the State Constitution (the "Appropriations Limit"). The
Appropriations Limit does not restrict appropriations to pay debt service on
the Bonds or other voter-authorized bonds.
Article XIII B prohibits the State from spending "appropriations
subject to limitation" in excess of the Appropriations Limit.
"Appropriations subject to limitation," with respect to the State, are
authorizations to spend "proceeds of taxes," which consist of tax revenues,
and certain other funds, including proceeds from regulatory licenses, user
charges or other fees to the extent that such proceeds exceed "the cost
reasonably borne by that entity in providing the regulation, product or
service," but "proceeds of taxes" exclude most state subventions to local
governments, tax refunds and some benefit payments such as unemployment
insurance. No limit is imposed on appropriations of funds which are not
"proceeds of taxes," such as reasonable user charges or fees and certain
other non-tax funds.
Not included in the Appropriations Limit are appropriations for the
debt service costs of bonds existing or authorized by January 1, 1979, or
subsequently authorized by the voters, appropriations required to comply
with mandates of courts or the federal government, appropriations for
qualified capital outlay projects, appropriations of revenues derived from
any increase in gasoline taxes and motor vehicle weight fees above January
1, 1990 levels, and appropriation of certain special taxes imposed by
initiative (e.g., cigarette and tobacco taxes). The Appropriations Limit
may also be exceeded in cases of emergency.
The State's Appropriations Limit in each year is based on the limit for
the prior year, adjusted annually for changes in State per capita personal
income and changes in population, and adjusted, when applicable, for any
transfer of financial responsibility of providing services to or from
another unit of government. The measurement of change in population is a
blended average of statewide overall population growth, and change in
attendance at local school and community college ("K-14") districts. The
Appropriations Limit is tested over consecutive two-year periods. Any
excess of the aggregate "proceeds of taxes" received over such two-year
transfers to K-14 districts and refunds to taxpayers.
The Legislature has enacted legislation to implement Article XIII B
which defines certain terms used in Article XIII B and sets forth the
methods for determining the Appropriations Limit. California Government
Code Section 7912 requires an estimate of the Appropriations Limit to be
included in the Governor's Budget, and thereafter to be subject to the
budget process and established in the Budget Act.
In the Budget Act for Fiscal Year 1998-99 enacted August 21, 1998, the
Department of Finance projects the State's Appropriations Subject to
Limitations will be $6.3 billion under the State's Appropriations Limit in
Fiscal Year 1998-99.
Proposition 98
On November 8, 1988, voters of the State approved Proposition 98, a
combined initiative constitutional amendment and statute called the
"Classroom Instructional Improvement and Accountability Act." Proposition 98
changed State funding of public education below the university level and the
operation of the State Appropriations Limit, primarily by guaranteeing K-14
schools a minimum share of General Fund revenues. Under Proposition 98 (as
modified by Proposition 111, which was enacted on June 5, 1990), K-14
schools are guaranteed the greater of (a) in general, a fixed percent of
General Fund revenues ("Test 1"), (b) the amount appropriated to K-14
schools in the prior year, adjusted for changes in the cost of living
(measured as in Article XIII B by reference to State per capita personal
income) and enrollment ("Test 2"), or (c) a third test, which would replace
Test 2 in any year when the percentage growth in per capita General Fund
revenues from the prior year plus one half of one percent is less than the
percentage growth in State per capita personal income ("Test 3"). Under
Test 3, schools would receive the amount appropriated in the prior year
adjusted for changes in enrollment and per capita General Fund revenues,
plus an additional small adjustment factor. If Test 3 is used in any year,
the difference between Test 3 and Test 2 would become a "credit" to schools
which would be the basis of payments in future years when per capita General
Fund revenue growth exceeds per capita personal income growth. Legislation
adopted prior to the end of the 1988-89 Fiscal Year, implementing
Proposition 98, determined the K-14 schools' funding guarantee under Test 1
to be 40.3 percent of the General Fund tax revenues, based on 1986-87
appropriations. However, that percent has been adjusted to approximately 35
percent to account for a subsequent redirection of local property taxes,
since such redirection directly affects the share of General Fund revenues
to schools.
Proposition 98 permits the Legislature by two-thirds vote of both
houses, with the Governor's concurrence, to suspend the K-14 schools'
minimum funding formula for a one-year period. Proposition 98 also contains
provisions transferring certain State tax revenues in excess of the Article
XIII B limit to K-14 schools.
During the recent recession, General Fund revenues for several years
were less than originally projected, so that the original Proposition 98
appropriations turned out to be higher than the minimum percentage provided
in the law. The Legislature responded to these developments by designating
the "extra" Proposition 98 payments in one year as a "loan" from future
years' Proposition 98 entitlements, and also intended that the "extra"
payments would not be included in the Proposition 98 "base" for calculating
future years' entitlements. By implementing these actions, per-pupil
funding from Proposition 98 sources stayed almost constant at approximately
$4,200 from Fiscal Year 1991-92 to Fiscal Year 1993-94.
In 1992, a lawsuit was filed, called California Teachers' Association
v. Gould, which challenged the validity of these off-budget loans. The
settlement of this case, finalized in July, 1996, provides, among other
things, that both the State and K-14 schools share in the repayment of prior
years' emergency loans to schools. Of the total $1.76 billion in loans, the
State will repay $935 million by forgiveness of the amount owed, while
schools will repay $825 million. The State share of the repayment will be
reflected as an appropriation above the current Proposition 98 base
calculation. The schools' share of the repayment will count as
appropriations that count toward satisfying the Proposition 98 guarantee, or
from "below" the current base. Repayments are spread over the eight-year
period of 1994-95 through 2001-02 to mitigate any adverse fiscal impact.
Substantially increased General Fund revenues, above initial budget
projections, in the fiscal years 1994-95 and thereafter have resulted or
will result in retroactive increases in Proposition 98 appropriations from
subsequent fiscal years' budgets. Because of the State's increasing
revenues, per-pupil funding at the K-12 level has increased by about 36%
from the level in place from 1991-92 through 1993-94, and is estimated at
about $5,695 per ADA in 1998-99. A significant amount of the "extra"
Proposition 98 monies in the last few years have been allocated to special
programs, most particularly an initiative to allow each classroom from
grades K-3 to have no more than 20 pupils by the end of the 1997-98 school
year. There are also new initiatives increasing instructional time, for
purchasing new instructional and library materials, and expanding teacher
preparation and support.
ECONOMY AND POPULATION
Introduction
California's economy, the largest among the 50 states and one of the
largest in the world, has major components in high technology, trade,
entertainment, agriculture, manufacturing, tourism, construction and
services. Since 1994, California's economy has been performing strongly
after suffering a deep recession between 1990-94.
Population and Labor Force
The State's July 1, 1997 population of over 32.9 million represented
over 12 percent of the total United States population.
California's population is concentrated in metropolitan areas. As of
the April 1, 1990 census, 96 percent resided in the 23 Metropolitan
Statistical Areas in the State. As of July 1, 1997, the 5-county Los
Angeles area accounted for 49 percent of the State's population, with 16.0
million residents, and the 10-county San Francisco Bay Area represented 21
percent, with a population of 6.9 million.
The following table shows California's population data for 1992 through
1997.
Population 1992-97
% Increase % Increase
Over Over California as %
California Preceding United States Preceding of United States
Year Population(a) Year Population(a) Year
1992 31,188,000 2.0 255,011,000 1.2 12.2
1993 31,517,000 1.1 257,795,000 1.1 12.2
1994 31,790,000 0.9 260,372,000 1.0 12.2
1995 32,063,000 0.9 262,890,000 1.0 12.2
1996 32,383,000 1.0 265,284,000 0.9 12.2
1997 32,957,000 1.8 267,575,000 0.9 12.3
________________________
(a)Population as of July 1.
SOURCE: U.S. Department of Commerce, Bureau of the Census; State of
California, Department of Finance.
The following table presents civilian labor force data for the resident
population, age 16 and over, for the years 1992 to 1997.
Labor Force
1992-97
Labor Force Trends (Thousands) Unemployment Rate(%)
Year Labor Force Employment California United States
1992 15,404 13,973 9.3 7.5
1993 15,359 13,918 9.4 6.9
1994 15,450 14,122 8.6 6.1
1995 15,412 14,203 7.8 5.6
1996 15,568 14,444 7.2 5.4
1997 15,971 14,965 6.3 4.9
____________________
SOURCE: State of California, Employment Development Department.
Employment, Income, Construction and Retail Sales
The following table shows California's nonagricultural employment
distribution and growth for 1990 and 1997.
Payroll Employment By Major Sector
1990 and 1997
Employment % Distribution
(Thousands) of Employment
Industry Sector 1990 1997 1990 1997
Mining.............................. 39 29 0.3 0.2
Construction........................ 605 554 4.8 4.2
Manufacturing
Nondurable goods.................. 721 728 5.7 5.5
High Technology................... 686 517 5.4 3.9
Other Durable goods............... 690 669 5.4 5.1
Transportation and Utilities........ 624 663 4.9 5.1
Wholesale and Retail Trade.......... 3,002 3,057 23.7 23.2
Finance, Insurance
and Real Estate................... 825 756 6.5 5.7
Services............................ 3,395 4,051 26.8 30.8
Government
Federal........................... 362 285 2.9 2.2
State and Local................... 1,713 1,858 13.5 14.1
TOTAL
AGRICULTURAL...................... 12,662 13,167 100 100
___________________
SOURCE: State of California, Employment Development Department and State of
California, Department of Finance.
The following tables show California's total and per capita income
patterns for selected years.
Total Personal Income 1992-97
California
Year Millions %Change California % of U.S.
1992 684,674 4.8(*) 13.1
1993 698,130 2.0 12.8
1994(a) 718,321 2.9 12.5
1995 754,269 5.0 12.4
1996 798,020 5.8 12.5
1997 846,017 6.0 12.5
_____________________
(*)Change from prior year.
(a)Reflects Northridge earthquake, which caused an estimated $15 billion
drop in personal income.
Note: Omits income for government employees overseas.
SOURCE: U.S. Department of Commerce, Bureau of Economic Analysis.
Per Capita Personal Income 1992-97
California
Year California % Change United States % Change % of U.S.
1992 22,163 3.2(*) 20,546 4.7(*) 107.9
1993 22,388 1.0 21,220 3.3 105.5
1994(a) 23,899 2.3 22,056 3.9 103.8
1995 23,901 4.4 23,063 4.6 103.6
1996 25,050 4.8 24,169 4.8 103.6
1997 26,218 4.7 25,298 4.7 103.6
________________________
(*)Change from prior year.
(a)Reflects Northridge earthquake, which caused an estimated $15 billion
drop in personal income.
SOURCE: U.S. Department of Commerce, Bureau of Economic Analysis.
LITIGATION
In the case of Board of Administration, California Public Employees'
Retirement System, et al. v. Pete Wilson, Governor, et al., plaintiffs
challenged the constitutionality of legislation which deferred payment of
the State's employer contribution to the Public Employees' Retirement System
beginning in Fiscal Year 1992-93. On January 11, 1995, the Sacramento County
Superior Court entered a judgment finding that the legislation
unconstitutionally impaired the vested contract rights of PERS members. The
judgment provides for issuance of a writ of mandate directing State
defendants to disregard the provisions of the legislation, to implement the
statute governing employer contributions that existed before the changes in
the legislation found to be unconstitutional, and to transfer to PERS the
contributions that were unpaid to date. On February 19, 1997, the State
Court of Appeal affirmed the decision of the Superior Court, and the Supreme
Court subsequently refused to hear the case, making the Court of Appeals'
ruling final.
On July 30, 1997, the Controller transferred $1.228 billion from the
General Fund to PERS in repayment of the principal amount determined to have
been improperly deferred. Subsequent State payments to PERS will be made on
a quarterly basis. On July 7, 1998, pursuant to Chapter 94, Statutes of
1998, the State paid PERS $332.7 million for the accrued interest on the
judgment and interest on the unpaid accrued interest amount. See "CURRENT
STATE BUDGET - 1998-99 Fiscal Year Budget" above.
On June 24, 1998, plaintiffs in Howard Jarvis Taxpayers Association et
al. v. Kathleen Connell filed a complaint for certain declaratory and
injunctive relief challenging the authority of the State Controller to make
payments from the State Treasury in the absence of a state budget. On July
21, 1998, the trial court issued a preliminary injunction prohibiting the
State Controller from paying moneys from the State Treasury for fiscal year
1998-99, with certain limited exceptions, in the absence of a state budget.
The preliminary injunction, among other things, prohibited the State
Controller from making any payments pursuant to any continuing
appropriation.
On July 22 and 27, 1998, various employee unions which had intervened
in the case appealed the trial court's preliminary injunction and asked the
Court of Appeal to stay the preliminary injunction. On July 28, 1998, the
Court of Appeal granted the unions' requests and stayed the preliminary
injunction pending the Court of Appeal's decision on the merits of the
appeal. On August 5, 1998, the Court of Appeal denied the plaintiffs'
request to reconsider the stay. Also on July 22, 1998, the State Controller
asked the California Supreme Court to immediately stay the trial court's
preliminary injunction and to overrule the order granting the preliminary
injunction on the merits. On July 29, 1998, the Supreme Court transferred
the State Controller's request to the Court of Appeal. The matters are now
pending before the Court of Appeal.
In Jordan v. Department of Motor Vehicles, plaintiff challenged the
validity and constitutionality of the State's smog impact fee and requested
a refund of the fee. In October 1997, the trial court ruled in favor of
plaintiff and, in addition, ordered the State to provide refunds to all
persons who paid the smog impact fee from three years before the filing of
the lawsuit in 1995 to the present. Plaintiff asserts that the total amount
required to be refunded will exceed $350 million. The State has appealed.
A judgment was entered for plaintiffs in California Ambulance
Association v. Shalala et al., described at page 63 of Exhibit I to this
Appendix. The Ninth Circuit Court of Appeals, however, reversed the trial
court's decision. Plaintiffs filed a petition for certiorari at the United
States Supreme Court, which the State opposed. The petition is currently
pending at the Supreme Court.
A judgment was entered for plaintiff in August 1998 in the case of
Ceridian Corporation v. Franchise Tax Board, described at pages 63-64 of
Exhibit 1. The State will appeal.
In Hathaway, et al. v. Wilson, et al., described at page 65 of Exhibit
1, the plaintiffs and the State reached a settlement which resolved all the
issues presented in the case. Pursuant to the settlement, judgment was
entered in August 1998, requiring the State to return $19,427,000 from the
General Fund to one special fund.
In Thomas Hayes v. Commission on State Mandates, described at page 64
of Exhibit 1, the Commission on State Mandates is now expected to issue a
final consolidated decision in late 1998.
In February 1998, the Court of Appeal in California State Employees
Association v. Wilson, described at page 64 of Exhibit 1, modified, then
affirmed, a judgment in favor of the plaintiffs invalidating the transfer of
$12,290,000 from the State Highway Account to the General Fund.
In July 1998, the parties in Beno v. Sullivan and Welch v. Anderson,
described at page 65 of Exhibit 1, entered into a settlement agreement in
which the State agreed to pay $42 million in return for plaintiffs'
agreement to dismiss both actions.
Information Technology
The State's reliance on information technology in every aspect of its
operations has made Year 2000-related ("Y2K") information technology ("IT")
issues a high priority for the State. The Department of Information
Technology ("DOIT"), an independent office reporting directly to the
Governor, is responsible for ensuring the State's information technology
processes are fully functional before the year 2000. The DOIT has created a
Year 2000 Task Force and a California 2000 Office to establish statewide
policy requirements; to gather, coordinate, and share information; and to
monitor statewide progress. In December 1996, the DOIT began requiring
departments to report on Y2K activities and currently requires departmental
monthly reporting of Y2K status. The DOIT has emphasized to departments that
efforts should be focused on applications that support mission-critical
business practices.
The risks posed by Y2K information technology related issues are not
confined to computer systems, but also include problems presented by
embedded microchips (products or systems that contain microchips to perform
functions such as traffic control, instruments used in hospitals or medical
laboratories, and California Aqueduct monitoring). To address these
problems, the Governor issued Executive Order W-163-97, broadening the
responsibilities of the DOIT to resolve these issues as well as legal
questions associated with Y2K issues. The executive order also required
that mission critical systems be remediated by December 31, 1998, that
purchases of new systems, hardware, software and equipment be Year 2000
compliant and further limited new computer projects to those required by law
until a department's Y2K problems are resolved. The DOIT has also more
recently required departments to address interfacing of State IT systems
with external IT systems, and to report on contingency planning status for
problems which might occur if IT systems are not fully remediated by the end
of 1999.
In its quarterly report for the period ending June 30, 1998 (the "July
Quarterly Report"), the DOIT reported that departments under its supervision
had identified 642 mission critical IT systems out of a total of 2,432
systems. Of the mission-critical systems, 87 were reported as already Y2K
compliant. Of the remaining 555 mission critical systems requiring
remediation, 128 were reported as completed. While the DOIT does not
oversee certain independent State entities, such as the judiciary, the
Legislature, the University of California and California State University
System, it believes these other agencies are well under way with their own
Y2K remediation plans.
In its quarterly report for the period ending September 30, 1998 (the
"October Quarterly Report"), the DOIT updated its survey of State
departments, and reported that the number of mission-critical systems
needing remediation was reduced to 532, and 220 of them had been remediated.
However, the DOIT reported that fewer projects were completed by September
30, 1998 than had been planned by departments, and more projects were
falling into fourth quarter 1998 and first quarter 1999. Thus, some
mission-critical systems (less than 10%) would not meet the Governor's
Executive Order target to be remediated by December 31, 1998.
In late August, 1998, the State Auditor ("BSA") released a report on
"Year 2000 Computer Problems." The BSA surveyed 39 State departments and
compared their status to the March 31, 1998 DOIT quarterly report. (The
work for BSA's report was done before the DOIT July Quarterly Report was
ready.) The BSA Report concluded that some agencies had fallen behind
schedule by as much as 1-3 months compared to their March expectations. The
BSA Report also noted concern that departments were not making adequate
plans to test remediated systems, were not focusing sufficiently on problems
associated with data interface with other governmental and private bodies,
and were not far enough along in developing "business continuation plans" to
ensure continued operations after January 1, 2000 in the event of IT
problems. The DOIT responded in some detail to the BSA report, generally
agreeing with its identification of issue areas, and stating that it was
following up on all areas with the departments.
In the July Quarterly Report, the DOIT estimates total Y2K costs
identified by the departments under its supervision at about $239 million,
of which more than $100 million was projected to be expended in fiscal years
1998-99 and 1999-2000. The October Quarterly Report indicated the total
costs were now estimated to be at least $290 million, and the estimate would
likely increase in the future. These costs are part of much larger overall
IT costs incurred annually by State departments and do not include costs for
remediation for embedded technology, desktop systems and additional costs
resulting from discoveries in the testing process. For fiscal year 1998-99,
the Legislature created a $20 million fund for unanticipated Y2K costs,
which can be increased if necessary.
Although the DOIT reports that State departments are making substantial
progress overall toward the goal of Y2K compliance, the task is very large
and will likely encounter unexpected difficulties. The State cannot predict
whether all mission critical systems will be ready and tested by late 1999
or what impact failure of any particular IT system(s) or of outside
interfaces with State IT systems might have. The State Treasurer's Office
and the State Controller's Office report that they are both on schedule to
complete their Y2K remediation projects by December 31, 1998, allowing full
testing during 1999. These systems include debt service payments on State
debt and the State fiscal and accounting system.
APPENDIX D
INVESTING IN MINNESOTA MUNICIPAL OBLIGATIONS
RISK FACTORS -- INVESTING IN MINNESOTA MUNICIPAL OBLIGATIONS
State Government. The State of Minnesota was formally organized as a
territory in 1849 and was admitted to the Union in 1858 as the 32nd state.
Bordered by Canada on the north, Lake Superior and Wisconsin on the east,
Iowa on the south, and North and South Dakota on the west, it is the 12th
largest and 20th most populous state in the Union.
The Minnesota Constitution organizes State government into three
branches: Executive, Legislative and Judicial. The Legislative Branch is
composed of a Senate and a House of Representatives. Fiscal administration
is performed by the Department of Finance under the control and supervision
of the Commissioner of Finance.
State and State-Related Indebtedness. The Minnesota Constitution
authorizes public debt to be incurred for the acquisition and betterment of
public land, buildings and other improvements of a capital nature or for
appropriations or loans to Minnesota state agencies or political
subdivisions for this purpose, as the Legislature by the three-fifths vote
of each House may direct, and to finance the development of agricultural
resources of the State by extending credit on real estate security, as the
Legislature may direct. All such debt is evidenced by the issuance of State
of Minnesota bonds maturing within 20 years of their date of issue, for
which the full faith and credit and taxing powers of the State are
irrevocably pledged. There is no limitation as to the amount or interest
rate of such general obligation issues.
As of November 1, 1998, the outstanding principal amount of all
Minnesota general obligation bonds was approximately $2.4 billion.
The Minnesota Constitution limits Minnesota general obligation debt to
(i) short-term debt for Minnesota operating purposes, (ii) short-term debt
for making loans to school districts and (iii) voter-approved long-term
debt.
Short-term debt for operating purposes is limited to an amount not in
excess of 15 percent of undedicated revenues received during the preceding
fiscal year and must be issued only to meeting obligations incurred pursuant
to appropriation and repaid during the fiscal year in which incurred. The
April, 1998, end of session cash flow analysis for Minnesota's Statutory
General Fund indicates that Minnesota will have a positive cash flow balance
during the Current Biennium which began on July 1, 1997 and ends June 30,
1999. Minnesota has no short-term debt outstanding and, therefore,
Minnesota does not expect to do any short-term borrowing for cash flow
purposes during the Current Biennium.
There are also various Minnesota authorities and special purpose
agencies created by the state which issue bonds secured by specific
revenues. Such debt is not a general obligation of the State of Minnesota.
Constitutional and Statutory Provisions Relating to Minnesota and Local
Funding. Minnesota revenues in Minnesota are generated primarily from
individual income taxes, corporate franchise taxes, sales and use taxes,
insurance gross earnings taxes, estate taxes, motor vehicle excise taxes,
excise taxes on liquor and tobacco, mortgage taxes, deed taxes, legalized
gambling taxes, rental motor vehicle taxes, 900 telephone service taxes,
taconite and iron ore taxes, and health care provider taxes. In addition to
the major taxes described above, other sources of non-dedicated revenue
include minor taxes, 60% of Minnesota's lottery net proceeds, unrestricted
grants, fees and charges of Minnesota state agencies and departments, and
investment income. County, municipal and certain special purpose districts
(such as water, flood or mosquito control districts) are authorized to levy
property taxes within specified legislative limits. A portion of
Minnesota's revenues is allocated from state government to other
governmental units within Minnesota such as municipal and county
governments, school districts and state agencies through a complex series of
appropriations and financial aid formulas. This financial interdependency
of the Minnesota state government with other units of government, subject
all levels of government, in varying degrees, to fluctuations in Minnesota's
overall economy.
Minnesota's constitutional prescribed fiscal period is a biennium, and
Minnesota operates on a biennial budget basis with revenues created in the
period in which they are collected and expenditures debited in the period in
which the corresponding liabilities are incurred. The biennium begins on
July 1st of the odd numbered year and runs through June 30th of the next odd
numbered year.
Minnesota's ability to appropriate funds is limited by the Minnesota
Constitution, which directs that Minnesota government shall not in any
biennium appropriate funds in excess of projected tax revenues from all
sources. Minnesota is authorized to levy additional taxes to resolve any
inadvertent shortfalls.
Appropriations for each biennium are enacted during the final
legislative session of the immediately preceding biennium. A revenue
forecast is prepared during the legislative session to provide the
legislature with updated information for the appropriations process. During
each biennium, regular forecasts of revenues and expenditures are prepared.
Minnesota's biennial appropriation process relies on revenue
forecasting as the basis for establishing aggregate expenditure levels.
Risks are inherent in the revenue and expenditure forecasts. Assumptions
about U.S. economic activity and federal tax and expenditure policies
underlie these forecasts. Any federal law changes that increase federal
income taxes or reduce federal spending programs may adversely affect these
forecasts. Finally, even if economic and federal tax assumptions are
correct, revenue forecasts are still subject to some normal level of error.
The correctness of revenue forecasts and the strength of Minnesota's overall
economy may restrict future aid or appropriations from Minnesota government
to other units of government.
Prior to the Current Biennium, Minnesota law established a Budget
Reserve and Cash Flow Account in the Accounting General Fund which served
two functions. However, in 1995 the Minnesota Legislature departed the
Budget Reserve and Cash Flow Account into two separate accounts: the Cash
Flow Account and the Budget Reserve Account, each having a different
function. The Cash Flow Account was established in the General Accounting
Fund for the purpose of providing sufficient cash balances to cover monthly
revenue and expenditure imbalances. The use of funds from the Cash Flow
Account is governed by statute. The Cash Flow Account balance is set for
the Current Biennium at $350 million. No provision has been made for
increasing the balance of the Cash Flow Account from increases in forecast
revenues over forecast expenditures. The Budget Reserve Account was
established in the Accounting General Fund for the purpose of reserving
funds to cushion the State from an economic downturn. The use of funds from
the Budget Reserve Account and the allocation of surplus forecast balances
to the Budget Reserve Account are governed by statute. The Budget Reserve
Account balance is set for the Current Biennium at $613 million.
For the fiscal year ended June 30, 1995, net revenues received were
$8.984 billion. After total expenditures and net transfers of $8.894
billion, Fiscal Year 1995 ended with an Unrestricted Accounting General Fund
balance of $445 million and an Unreserved Accounting General Fund balance of
$1.021 million.
For the fiscal year ended June 30, 1996, net revenues received were
$9.617 billion and total expenditures and net transfers were $9.302 billion.
For the fiscal year ended June 30, 1997, net revenues received were
$10.538 billion. After total expenditures and net transfers of $10.229
billion, Fiscal Year 1997 ended with an Unrestricted Accounting General Fund
balance of $1.167 billion.
Based on end of 1998 legislative session estimates, total revenues for
the Current Biennium, which began July 1, 1997 and ends on June 30, 1999,
are estimated to be approximately $10.365 billion for fiscal year 1998 and
$10.613 billion for fiscal year 1999.
In 1992 the Minnesota Legislature established the MinnesotaCarer
program to provide subsidized health care insurance for long-term uninsured
Minnesotans, reform individual and small group health insurance regulations,
create a health care analysis unit to collect condition-specific data about
health care practices in order to develop practice parameters for health
care providers, implement certain cost containment measures into the system,
and establish an office of rural health to ensure the health care needs of
all Minnesotans are being met. The program is not part of the Accounting
General Fund. A separate account, called the Health Care Access Fund, has
been established in Minnesota's Special Reserve Fund to account for revenues
and expenditures for the MinnesotaCarer program. Program expenditures are
limited to revenues received in the Health Care Access Fund. Program
revenues are derived from dedication of insurance premiums paid by
individuals, five cents of the state cigarette tax through December 31,
1993, and permanent taxes including a 2% gross revenue tax on hospitals,
health care providers and wholesale drug distributors, a 2% use tax on
prescription drugs and a 1% gross premium tax on nonprofit health service
plans and HMOs. A previously required transfer from the Health Care Access
Fund to the Accounting General Fund was eliminated after Fiscal year 1995.
The purpose of the transfer was to pay for increased costs in the generally
funded Medicaid (MA) and General Assistance Medical Care (GAMC) programs,
due to applicants found ineligible for MinnesotaCarer, but qualifying for MA
or GAMC.
The 1993 Legislature adopted legislation establishing a school district
credit enhancement program. The legislation authorizes and directs the
Commissioner of Finance, under certain circumstances and subject to the
availability of funds, to issue a warrant and authorize the Commissioner of
Children, Families and Learning to pay debt service coming due on school
district tax and state-aid anticipation certificates of indebtedness and
school district general obligation bonds in the event that the school
district notifies the Commissioner of Children, Families and Learning that
it does not have sufficient money in its debt service fund for that purpose,
or the paying agent informs the Commissioner of Children, Families and
Learning that it has not received from the school district timely payment of
moneys to be used to pay debt service. The legislation appropriates
annually from the Accounting General Fund to the Commissioner of Children,
Families and Learning the amount needed to pay any warrants which are
issued. The amounts paid on behalf of any school district are required to
be repaid by it with interest, either through a reduction of subsequent
state-aid payments or by the levy of an ad valorem tax which may be made
with the approval of the Commissioner of Children, Families and Learning.
As of October l, 1998, there were approximately $103 million of certificates
of indebtedness enrolled in the program, all of which will mature within a
13 month period. The State has not had to make any debt service payments on
behalf of school districts under the program and does not expect to make any
payments in the future. The state expects that school districts will issue
certificates of indebtedness next year and will enroll these certificates in
the program in about the same amount of principal as this year.
School districts may issue certificates of indebtedness or capital
notes to purchase certain equipment. The certificates or notes may be
issued by resolution of the Board, are general obligations of the school
district and must be payable in not more than five years. As of October 1,
1998, there are approximately $17 million principal amount of certificates
and notes enrolled in the program.
School districts are authorized to issue general obligation bonds only
when authorized by school district electors or special law, and only after
levying a direct, irrevocable ad valorem tax on all taxable property in the
school district for the years and in amounts sufficient to produce sums not
less than 5% in excess of the principal of an interest on the bonds when
due. As of October 1, 1998, the total amount of principal on certificates
and capital notes issued for equipment and bonds, plus the interest on these
obligations, through the year 2026, is approximately $5.3 billion.
The amount of revenue generated by Minnesota's tax structure, because
of the dependence on the income and sales taxes, is sensitive to the status
of the national and local economy. There can be no assurance that the
financial problems referred to or similar future problems will not affect
the market value or marketability of the Minnesota Municipal Obligations or
the ability of the issuers thereof to pay the interest or principal of such
obligations.
Minnesota general obligation bonds are rated Aaa by Moody's and AA+ by
S&P and AAA by Fitch.
Selected Economic and Demographic Factors. Diversity and a significant
natural resource base are two important characteristics of Minnesota's
economy. Minnesota's economy is being lifted by strong earnings growth in
the service industry, rising housing construction, and job gains which are
slowly firming up to labor market.
When viewed in 1997 at a highly aggregative level of detail, the
structure of Minnesota's economy parallels the structure of the U.S. economy
as a whole. Minnesota employment in ten major industrial sectors was
distributed in approximately the same proportions as national employment.
In all sectors, the share of total Minnesota employment was within two
percentage points of national employment share.
Minnesota's employment in the durable goods industries continues to be
highly concentrated in industries specializing in the manufacturing of
industrial machinery, fabricated metal and instruments. This emphasis is
partially explained by the location in Minnesota of computer-related
equipment manufacturers. Further, manufacturers of food products, wood
products, and printed and published materials joined the high technology
manufacturing group which has lead to significant business expansion in
Minnesota in this decade.
The importance of Minnesota's rich natural resource base for overall
employment is apparent in the employment mix in non-durable goods
industries. In 1997, approximately 30% of Minnesota's non-durable goods
employment was concentrated in food and kindred industries, and
approximately 17% in paper and allied industries. This compares to
approximately 22% and 9%, respectively, for comparable sectors in the
national economy. Both of these industries rely heavily on renewable
resources in Minnesota. Over half of Minnesota's acreage is devoted to
agricultural purposes and nearly one-third to forestry. Printing and
publishing are also relatively more important in Minnesota than in the U.S.
Mining is currently a less significant factor in the Minnesota economy
than it once was. Mining employment, primarily in the iron ore or taconite
industry, dropped from 17.3 per thousand in 1979 to 7.9 per thousand in
1997. It is not expected that mining employment will soon return to 1979
levels. However, Minnesota retains vast quantities of taconite as well as
copper, nickel, cobalt and peat which may be utilized in the future.
While Minnesota's involvement in the defense industry is limited, as
military procurement cuts continue, Minnesota employers may face challenges
in maintaining employment and sales. More importantly, Minnesota firms
producing electronic components, communication equipment, electrical
equipment, chemicals, plastics, computers and software may face additional
competition from companies converting from military to civilian production.
Minnesota resident population grew from 4,085,000 in 1980 to 4,387 in
1990 or, at an average annual compound rate of .7%. In comparison, U.S.
population grew at an annual compound rate of .9% during this period.
Minnesota population is currently forecast by the U.S. Department of
Commerce to grow at an annual compound rate of .8% through 2005.
Employment and Income Growth in Minnesota. In the period 1980 to 1990,
overall employment growth in Minnesota lagged behind national growth.
However, manufacturing has been a strong sector, with Minnesota employment
outperforming its U.S. counterpart in both the 1980-1990 and 1990-1997
periods.
In spite of the strong manufacturing sector, during the 1980 to 1990
period, total employment in Minnesota increased 17.9% as compared to 20.1%
nationally. Most of Minnesota's slower growth can be associated with
declining agricultural employment and two recessions in the U.S. economy in
the early 1980's which were more severe in Minnesota than nationwide.
Minnesota non-farm employment growth generally kept pace with the nation in
the period after the 1981-82 recession ended in late 1982. In the period
1990 to 1997, non-farm employment growth in Minnesota exceeded national
growth. Minnesota's non-farm employment grew 16.7% compared to 12.2%
nationwide.
Since 1980, Minnesota per capita personal income has been within six
percentage points of national per capita personal income. The state's per
capita income, which is computed by dividing personal income by total
resident population, has generally remained above the national average in
spite of the early 1980's recessions and some difficult years in
agriculture. In 1997, Minnesota per capita personal income was 103.9% of
its U.S. counterpart.
Another measure of the vitality of Minnesota's economy is its
unemployment rate. During 1996 and 1997, respectively, Minnesota's monthly
unemployment rate was generally less than the national unemployment rate,
averaging 3.3% in 1997, as compared to the national average of 4.9%.
APPENDIX E
INVESTING IN NEW YORK MUNICIPAL OBLIGATIONS
RISK FACTORS--INVESTING IN NEW YORK MUNICIPAL OBLIGATIONS
The following information is a summary of special factors affecting
investments in New York municipal obligations. It does not purport to be a
complete description and is based on information from the Annual Information
Statement of the State of New York dated June 26, 1998 and a supplement
thereto dated November 4, 1998. The factors affecting the financial
condition of New York State (the "State") and New York City (the "City") are
complex and the following description constitutes only a summary.
General
New York is the third most populous state in the nation and has a
relatively high level of personal wealth. The state's economy is diverse,
with a comparatively large share of the nation's finance, insurance,
transportation, communications and services employment, and a very small
share of the nation's farming and mining activity. The State's location and
its excellent air transport facilities and natural harbors have made it an
important link in international commerce. Travel and tourism constitute an
important part of the economy. Like the rest of the nation, New York has a
declining proportion of its workforce engaged in manufacturing, and an
increasing proportion engaged in service industries.
Services: The services sector, which includes entertainment, personal
services, such as health care and auto repairs, and business-related
services, such as information processing, law and accounting, is the State's
leading economic sector. The services sector accounts for more than three
of every ten nonagricultural jobs in New York and has a noticeably higher
proportion of total jobs than does the rest of the nation.
Manufacturing: Manufacturing employment continues to decline in
importance in New York, as in most other states, and New York's economy is
less reliant on this sector than is the nation. The principal manufacturing
industries in recent years produced printing and publishing materials,
instruments and related products, machinery, apparel and finished fabric
products, electronic and other electric equipment, food and related
products, chemicals and allied products, and fabricated metal products.
Trade: Wholesale and retail trade is the second largest sector in terms
of nonagricultural jobs in New York but is considerably smaller when
measured by income share. Trade consists of wholesale businesses and retail
businesses, such as department stores and eating and drinking
establishments.
Finance, Insurance and Real Estate: New York City is the nation's
leading center of banking and finance and, as a result, this is a far more
important sector in the State than in the nation as a whole. Although this
sector accounts for under one-tenth of all nonagricultural jobs in the
State, it contributes over one-sixth of all nonfarm labor and proprietors'
income.
Agriculture: Farming is an important part of the economy of large
regions of the State, although it constitutes a very minor part of total
State output. Principal agricultural products of the State include milk and
dairy products, greenhouse and nursery products, apples and other fruits,
and fresh vegetables. New York ranks among the nation's leaders in the
production of these commodities.
Government: Federal, State and local government together are the third
largest sector in terms of nonagricultural jobs, with the bulk of the
employment accounted for by local governments. Public education is the
source of nearly one-half of total state and local government employment.
Relative to the nation, the State has a smaller share of manufacturing
and construction and a larger share of service-related industries. The
State's finance, insurance, and real estate share, as measured by income, is
particularly large relative to the nation. The State is likely to be less
affected than the nation as a whole during an economic recession that is
concentrated in manufacturing and construction, but likely to be more
affected during a recession that is concentrated in the service-producing
sector.
Economic Outlook
U. S. Economy
Economic growth during both 1998 and 1999 is expected to be slower than
it was during 1997. The financial and economic turmoil which started in
Asia and has spread to other parts of the world is expected to continue to
negatively affect U.S. trade balances throughout most of 1999. In addition,
growth in domestic consumption, which has been a major driving force behind
the nation's strong economic performance in recent years, is expected to
slow in 1999 as consumer confidence retreats from historic highs and the
stock market ceases to provide large amounts of extra discretionary income.
However, the lower short-term interest rates which are expected to be in
force during 1999 should help prevent a recession. The revised forecast
projects real GDP growth of 3.4 percent in 1998, moderately below the 1997
growth rate. In 1999, real GDP growth is expected to fall further, to 1.6
percent. The growth of nominal GDP is projected to decline from 5.9 percent
in 1997 to 4.6 percent in 1998 and 3.7 percent in 1999. The inflation rate
is expected to drop to 1.7 percent in 1998 before rising to 2.7 percent in
1999. The annual rate of job growth is expected to be 2.5 percent in 1998,
almost equaling the strong growth rate experienced in 1997. In 1999,
however, employment growth is forecast to slow markedly, to 1.9 percent.
Growth in personal income and wages is expected to slow in 1998 and again in
1999.
State Economy
Continued growth is projected in 1998 and 1999 for employment, wages,
and personal income, although, for 1999, a significant slowdown in the
growth rates of personal income and wages are expected. The growth of
personal income is projected to rise from 4.7 percent in 1997 to 5.0 percent
in 1998, but then drop to 3.4 percent in 1999, in part because growth in
bonus payments is expected to moderate significantly, a distinct shift from
the unusually high increases of the last few years. Overall employment
growth is expected to be 2.0 percent in 1998, the strongest in a decade, but
is expected to drop to 1.0 percent in 1999, reflecting the slowing growth of
the national economy, continued spending restraint in government, less
robust profitability in the financial sector and continued restructuring in
the manufacturing, health care, and banking sectors.
State Financial Plan
The State Constitution requires the Governor to submit to the
legislature a balanced executive budget which contains a complete plan of
expenditures (the "State Financial Plan") for the ensuing fiscal year and
all moneys and revenues estimated to be available therefor, accompanied by
bills containing all proposed appropriations or reappropriations and any new
or modified revenue measures to be enacted in connection with the executive
budget. A final budget must be approved before the statutory deadline of
April 1. The State Financial Plan is updated quarterly pursuant to law.
1998-99 Fiscal Year
The State's current fiscal year began on April 1, 1998 and ends on
March 31, 1999 and is referred to herein as the State's 1998-99 fiscal year.
The Legislature adopted the debt service component of the State budget for
the 1998-99 fiscal year on March 30, 1998 and the remainder of the budget on
April 18, 1998. In the period prior to adoption of the budget for the
current fiscal year, the Legislature also enacted appropriations to permit
the State to continue its operations and provide for other purposes. On
April 25, 1998, the Governor vetoed certain items that the Legislature added
to the Executive Budget. The Legislature had not overridden any of the
Governor's vetoes as of the start of the legislative recess on June 19, 1998
(under the State Constitution, the Legislature can override one or more of
the Governor's vetoes with the approval of two-thirds of the members of each
house).
General Fund disbursements in 1998-99 are now projected to grow by
$2.43 billion over 1997-98 levels, or $690 million more than proposed in the
Governor's Executive Budget, as amended. The change in General Fund
disbursements from the Executive Budget to the enacted budget reflects
legislative additions (net of the value of the Governor's vetoes), actions
taken at the end of the regular legislative session, as well as spending
that was originally anticipated to occur in 1997-98 but is now expected to
occur in 1998-99. The State projects that the 1998-99 State Financial Plan
is balanced on a cash basis, with an estimated reserve for future needs of
$761 million.
The State's enacted budget includes several new multi-year tax
reduction initiatives, including acceleration of State-funded property and
local income tax relief for senior citizens under the School Tax Relief
Program (STAR), expansion of the child care income-tax credit for middle-
income families, a phased-in reduction of the general business tax, and
reduction of several other taxes and fees, including an accelerated phase-
out of assessments on medical providers. The enacted budget also provides
for significant increases in spending for public schools, special education
programs, and for the State and City university systems. It also allocates
$50 million for a new Debt Reduction Reserve Fund (DRRF) that may eventually
be used to pay debt service costs on or to prepay outstanding State-
supported bonds.
The 1998-99 State Financial Plan projects a closing balance in the
General Fund of $1.42 billion that is comprised of a reserve of $761 million
available for future needs, a balance of $400 million in the Tax
Stabilization Reserve Fund (TSRF), a balance of $158 million in the
Community Projects Fund (CPF), and a balance of $100 million in the
Contingency Reserve Fund (CRF). The TSRF can be used in the event of an
unanticipated General Fund cash operating deficit, as provided under the
State Constitution and State Finance Law. The CPF is used to finance
various legislative and executive initiatives. The CRF provides resources
to help finance any extraordinary litigation costs during the fiscal year.
Many complex political, social and economic forces influence the
State's economy and finances, which may in turn affect the State's Financial
Plan. These forces may affect the State unpredictably from fiscal year to
fiscal year and are influenced by governments, institutions, and
organizations that are not subject to the State's control. The State
Financial Plan is also necessarily based upon forecasts of national and
State economic activity. Economic forecasts have frequently failed to
predict accurately the timing and magnitude of changes in the national and
the State economies. The Division of Budget believes that its projections
of receipts and disbursements relating to the current State Financial Plan,
and the assumptions on which they are based, are reasonable. Actual
results, however, could differ materially and adversely from the projections
set forth herein, and those projections may be changed materially and
adversely from time to time. See "Special Considerations" below for a
discussion of risks and uncertainties faced by the State.
Second Update (current fiscal year)
On October 30, 1998, the State issued the second of its three quarterly
updates to the 1998-99 Financial Plan. In the Mid-Year Update, the State
continues to project that the State Financial Plan for 1998-99 will remain
in balance. The State now projects total receipts in 1998-99 of $37.84
billion, an increase of $29 million over the amount projected in the First
Quarterly Update. The State has made no changes to its July disbursement
projections, with total disbursements of $36.78 billion expected for the
current fiscal year. The additional receipts increase the State's projected
surplus (reserve for future needs) by $29 million over the July estimate, to
$1.04 billion.
The Financial Plan now projects a closing balance in the General Fund
of $1.7 billion. The balance is comprised of the $1.04 billion reserve for
future needs, $400 million in the Tax Stabilization Reserve Fund, $100
million in the Contingency Reserve Fund (after a planned deposit of $32
million in 1998-99), and $158 million in the Community Projects Fund.
The State ended the first six months of 1998-99 fiscal year with a
General Fund cash balance of $5.02 billion, roughly $143 million higher than
projected in the cash flow accompanying the July Update to the Financial
Plan. Total receipts, including transfers from other funds, were
approximately $52 million higher than expected, with the increase comprised
of additional tax revenues ($22 million) and transfers from other funds ($30
million). Total spending through the first six months of the fiscal year
was $16.28 billion, or $91 million lower than projected in July. This
variance resulted primarily from higher spending in Grants to Local
Governments ($27 million), offset by lower spending in State Operations
($124 million). These variances are timing-related and should not affect
total disbursements for the fiscal year.
Outyear Projections Of Receipts And Disbursements
State law requires the Governor to propose a balanced budget each year.
In recent years, the State has closed projected budget gaps of $5.0 billion
(1995-96), $3.9 billion (1996-97), $2.3 billion (1997-98), and less than $1
billion (1998-99). The State, as a part of the 1998-99 Executive Budget
projections submitted to the Legislature in February 1998, projected a 1999-
00 General Fund budget gap of approximately $1.7 billion and a 2000-01 gap
of $3.7 billion. As a result of changes made in the 1998-99 enacted budget,
the 1999-00 gap is now expected to be roughly $1.3 billion, or about $400
million less than previously projected, after application of reserves
created as part of the 1998-99 budget process. Such reserves would not be
available against subsequent year imbalances.
Sustained growth in the State's economy could contribute to closing
projected budget gaps over the next several years, both in terms of higher-
than-projected tax receipts and in lower-than-expected entitlement spending.
However, the State's projections in 1999-00 currently assume actions to
achieve $600 million in lower disbursements and $250 million in additional
receipts from the settlement of State claims against the tobacco industry.
Consistent with past practice, the projections do not include any costs
associated with new collective bargaining agreements after the expiration of
the current round of contracts at the end of the 1998-99 fiscal year. The
State expects that the 1999-00 Financial Plan will achieve savings from
initiatives by State agencies to deliver services more efficiently,
workforce management efforts, maximization of federal and non-General Fund
spending offsets, and other actions necessary to bring projected
disbursements and receipts into balance.
The State will formally update its outyear projections of receipts and
disbursements for the 2000-01 and 2001-02 fiscal years as a part of the 1999-
00 Executive Budget process, as required by law. The revised expectations
for years 2000-01 and 2001-02 will reflect the cumulative impact of tax
reductions and spending commitments enacted over the last several years as
well as new 1999-00 Executive Budget recommendations. The STAR program,
which dedicates a portion of personal income tax receipts to fund school tax
reductions, has a significant impact on General Fund receipts. STAR is
projected to reduce personal income tax revenues available to the General
Fund by an estimated $1.3 billion in 2000-01. Measured from the 1998-99
base, scheduled reductions to estate and gift, sales and other taxes,
reflecting tax cuts enacted in 1997-98 and 1998-99, will lower General Fund
taxes and fees by an estimated $1.8 billion in 2000-01. Disbursement
projections for the outyears currently assume additional outlays for school
aid, Medicaid, welfare reform, mental health community reinvestment, and
other multi-year spending commitments in law. See "Special Considerations"
below for a description of other risks and uncertainties associated with the
State Financial Plan process.
Special Considerations
The economic and financial condition of the State may be affected by
various financial, social, economic and political factors. These factors
can be very complex, may vary from fiscal year to fiscal year, and are
frequently the result of actions taken not only by the State and its
agencies and instrumentalities, but also by entities, such as the federal
government, that are not under the control of the State. Because of the
uncertainty and unpredictability of these factors, their impact cannot, as a
practical matter, be included in the assumptions underlying the State's
projections at this time.
The State Financial Plan is based upon forecasts of national and State
economic activity developed through both internal analysis and review of
State and national economic forecasts prepared by commercial forecasting
services and other public and private forecasters. Economic forecasts have
frequently failed to predict accurately the timing and magnitude of changes
in the national and the State economies. Many uncertainties exist in
forecasts of both the national and State economies, including consumer
attitudes toward spending, the extent of corporate and governmental
restructuring, the condition of the financial sector, federal fiscal and
monetary policies, the level of interest rates, and the condition of the
world economy, which could have an adverse effect on the State. There can
be no assurance that the State economy will not experience results in the
current fiscal year that are worse than predicted, with corresponding
material and adverse effects on the State's projections of receipts and
disbursements.
Projections of total State receipts in the Financial Plan are based on
the State tax structure in effect during the fiscal year and on assumptions
relating to basic economic factors and their historical relationships to
State tax receipts. In preparing projections of State receipts, economic
forecasts relating to personal income, wages, consumption, profits and
employment have been particularly important. The projection of receipts
from most tax or revenue sources is generally made by estimating the change
in yield of such tax or revenue source caused by economic and other factors,
rather than by estimating the total yield of such tax or revenue source from
its estimated tax base. The forecasting methodology, however, ensures that
State fiscal year collection estimates for taxes that are based on a
computation of annual liability, such as the business and personal income
taxes, are consistent with estimates of total liability under such taxes.
Projections of total State disbursements are based on assumptions
relating to economic and demographic factors, levels of disbursements for
various services provided by local governments (where the cost is partially
reimbursed by the State), and the results of various administrative and
statutory mechanisms in controlling disbursements for State operations.
Factors that may affect the level of disbursements in the fiscal year
include uncertainties relating to the economy of the nation and the State,
the policies of the federal government, and changes in the demand for and
use of State services.
An additional risk to the State Financial Plan arises from the
potential impact of certain litigation and of federal disallowances now
pending against the State, which could adversely affect the State's
projections of receipts and disbursements. The State Financial Plan assumes
no significant litigation or federal disallowance or other federal actions
that could affect State finances, but has significant reserves in the event
of such an action.
The Division of the Budget believes that its projections of receipts
and disbursements relating to the current State Financial Plan, and the
assumptions on which they are based, are reasonable. Actual results,
however, could differ materially and adversely from the projections set
forth herein. In the past, the State has taken management actions to
address potential Financial Plan shortfalls, and DOB believes it could take
similar actions should variances occur in its projections for the current
fiscal year.
Despite recent budgetary surpluses recorded by the State, actions
affecting the level of receipts and disbursements, the relative strength of
the State and regional economy, and actions by the federal government have
helped to create projected structural budget gaps for the State. These gaps
result from a significant disparity between recurring revenues and the costs
of maintaining or increasing the level of support for State programs. To
address a potential imbalance in any given fiscal year, the State would be
required to take actions to increase receipts and/or or reduce disbursements
as it enacts the budget for that year, and, under the State Constitution,
the Governor is required to propose a balanced budget each year. There can
be no assurance, however, that the Legislature will enact the Governor's
proposals or that the State's actions will be sufficient to preserve
budgetary balance in a given fiscal year or to align recurring receipts and
disbursements in future fiscal years. For example, the fiscal effects of
tax reductions adopted in the last several fiscal years (including 1998-99)
are projected to grow more substantially beyond the 1998-99 fiscal year,
with the incremental annual cost of all currently enacted tax reductions
estimated at over $4 billion by the time they are fully effective in State
fiscal year 2002-03. These actions will place pressure on future budget
balance in New York State.
1998-99 State Financial Plan
Four governmental fund types comprise the State Financial Plan: the
General Fund, the Special Revenue Funds, the Capital Projects Funds, and the
Debt Service Funds.
General Fund
The General Fund is the principal operating fund of the State and is
used to account for all financial transactions except those required to be
accounted for in another fund. It is the State's largest fund and receives
almost all State taxes and other resources not dedicated to particular
purposes. In the State's 1998-99 fiscal year, the General Fund is expected
to account for approximately 47.6 percent of all Governmental Funds
disbursements and 70.1 percent of total State Funds disbursements. General
Fund moneys are also transferred to other funds, primarily to support
certain capital projects and debt service payments in other fund types.
Total receipts and transfers from other funds are projected to be $37.56
billion, an increase of $3.01 billion from the 1997-98 fiscal year. Total
General Fund disbursements and transfers to other funds are projected to be
$36.78 billion, an increase of $2.43 billion from the 1997-98 fiscal year.
Projected General Fund Receipts
Total General Fund receipts in 1998-99 are projected to be $37.56
billion, an increase of over $3 billion from the $34.55 billion recorded in
1997-98. This total includes $34.36 billion in tax receipts, $1.40 billion
in miscellaneous receipts, and $1.80 billion in transfers from other funds.
The transfer of a portion of the surplus recorded in 1997-98 to 1998-99
exaggerates the "real" growth in State receipts from year to year by
depressing reported 1997-98 figures and inflating 1998-99 projections.
Conversely, the incremental cost of tax reductions newly effective in 1998-
99 and the impact of statutes earmarking certain tax receipts to other funds
work to depress apparent growth below the underlying growth in receipts
attributable to expansion of the State's economy. On an adjusted basis,
State tax revenues in the 1998-99 fiscal year are projected to grow at
approximately 7.5 percent, following an adjusted growth of roughly nine
percent in the 1997-98 fiscal year. The discussion below summarizes the
State's projections of General Fund taxes and other revenues for the 1998-99
Fiscal year.
The Personal Income Tax is imposed on the income of individuals,
estates and trusts and is based with certain modifications on federal
definitions of income and deductions. This tax continues to account for
over half of the State's General Fund receipts base. Net personal income
tax collections are projected to reach $21.24 billion, nearly $3.5 billion
above the reported 1997-98 collection total. Since 1997 represented the
completion of the 20 percent income tax reduction program enacted in 1995,
growth from 1997 to 1998 will be unaffected by major income tax reductions.
Adding to the projected annual growth is the net impact of the transfer of
the surplus from 1997-98 to the current year which affects reported
collections by over $2.4 billion on a year-over-year basis, as partially
offset by the diversion of slightly over $700 million in income tax receipts
to the STAR fund to finance the initial year of the school tax reduction
program. The STAR program was enacted in 1997 to increase the State share
of school funding and reduce residential school taxes. Adjusted for these
transactions, the growth in net income tax receipts is roughly $1.7 billion,
an increase of over 9 percent. This growth is largely a function of over 8
percent growth in income tax liability projected for 1998 as well as the
impact of the 1997 tax year settlement on 1998-99 net collections.
User taxes and fees are comprised of three-quarters of the State four
percent sales and use tax (the balance, one percent, flows to support Local
Government Assistance Corporation (LGAC) debt service requirements),
cigarette, alcoholic beverage, container, and auto rental taxes, and a
portion of the motor fuel excise levies. Also included in this category are
receipts from the motor vehicle registration fees and alcoholic beverage
license fees. A portion of the motor fuel tax and motor vehicle
registration fees and all of the highway use tax are earmarked for dedicated
transportation funds.
Receipts from user taxes and fees are projected to total $7.14 billion,
an increase of $107 million from reported collections in the prior year.
The sales tax component of this category accounts for all of the 1998-99
growth, as receipts from all other sources decline $100 million. The growth
in yield of the sales tax in 1998-99, after adjusting for tax law and other
changes, is projected at 4.7 percent. The yields of most of the excise
taxes in this category show a long-term declining trend, particularly
cigarette and alcoholic beverage taxes. These General Fund declines are
exacerbated in 1998-99 by revenue losses from scheduled and newly enacted
tax reductions, and by an increase in earmarking of motor vehicle
registration fees to the Dedicated Highway and Bridge Trust Fund.
Business taxes include franchise taxes based generally on net income of
general business, bank and insurance corporations, as well as gross-receipts-
based taxes on utilities and gallonage-based petroleum business taxes.
Beginning in 1994, a 15 percent surcharge on these levies began to be phased
out and, for most taxpayers, there is no surcharge liability for taxable
periods ending in 1997 and thereafter.
Total business tax collections in 1998-99 are now projected to be $4.96
billion, $91 million less than received in the prior fiscal year. The
category includes receipts from the largely income-based levies on general
business corporations, banks and insurance companies, gross receipts taxes
on energy and telecommunication service providers and a per-gallon
imposition on petroleum business. The year-over-year decline in projected
receipts in this category is largely attributable to statutory changes
between the two years. These include the first year of utility-tax rate
cuts and the Power for Jobs tax reduction program for energy providers, and
the scheduled additional diversion of General Fund petroleum business and
utility tax receipts to other funds. In addition, profit growth is also
expected to slow in 1998.
Other taxes include estate, gift and real estate transfer taxes, a tax
on gains from the sale or transfer of certain real estate (this tax was
repealed in 1996), a pari-mutuel tax and other minor levies. They are now
projected to total $1.02 billion -- $75 million below last year's amount.
Two factors account for a significant part of the expected decline in
collections from this category. First, the effects of the elimination of
the real property gains tax collections; second, a decline in estate tax
receipts, following the explosive growth recorded in 1997-98, when receipts
expanded by over 16 percent.
Miscellaneous receipts include investment income, abandoned property
receipts, medical provider assessments, minor federal grants, receipts from
public authorities, and certain other license and fee revenues. Total
miscellaneous receipts are projected to reach $1.40 billion, down almost
$200 million from the prior year, reflecting the loss of non-recurring
receipts in 1997-98 and the growing effects of the phase-out of the medical
provider assessments.
Transfers from other funds to the General Fund consist primarily of tax
revenues in excess of debt service requirements, particularly the one
percent sales tax used to support payments to LGAC. Transfers from other
funds are expected to total $1.8 billion, or $222 million less than total
receipts from this category during 1997-98. Total transfers of sales taxes
in excess of LGAC debt service requirements are expected to increase by
approximately $51 million, while transfers from all other funds are expected
to fall by $273 million, primarily reflecting the absence, in 1998-99, of a
one-time transfer of nearly $200 million for retroactive reimbursement of
certain social services claims from the federal government.
Projected General Fund Disbursements
General Fund disbursements in 1998-99, including transfers to support
capital projects, debt service and other funds are estimated at $36.78
billion. This represents an increase of $2.43 billion or 7.1 percent from
1997-98. Nearly one-half of the growth is for educational purposes,
reflecting increased support for public schools, special education programs
and the State and City university systems. The remaining increase is
primarily for Medicaid, mental hygiene, and other health and social welfare
programs, including children and family services. The 1998-99 Financial
Plan also includes funds for the current negotiated salary increases for
State employees, as well as increased transfers for debt service.
Grants to Local Governments is the largest category of General Fund
disbursements and includes financial assistance to local governments and not-
for-profit corporations, as well as entitlement benefits to individuals.
The 1998-99 Financial Plan projects spending of $25.14 billion in this
category, an increase of $1.88 billion or 8.1 percent over the prior year.
The largest annual increases are for educational programs, Medicaid, other
health and social welfare programs, and community projects grants.
The 1998-99 budget provides $9.65 billion in support of public schools.
The year-to-year increase of $769 million is comprised of partial funding
for a 1998-99 school year increase of $847 million as well as the remainder
of the 1997-98 school year increase that occurs in State fiscal year 1998-
99. Spending for all other educational programs, which includes the State
and City university systems, the Tuition Assistance Programs, and
handicapped programs, is estimated at $3.00 billion, an increase of $270
million over 1997-98 levels.
Medicaid costs are estimated at $5.60 billion, an increase of $144
million from the prior year. After adjusting 1997-98 for the $116 million
prepayment of an additional Medicaid cycle, Medicaid spending is projected
to increase $260 million or 4.9 percent. Disbursements for all other health
and social welfare programs are projected to total $3.63 billion, an
increase of $131 million from 1997-98. This includes an increase in support
for children and families and local public health programs, offset by a
decline in welfare spending of $75 million that reflects continuing State
and local efforts to reduce welfare fraud, declining caseloads, and the
impact of State and federal welfare reform legislation.
Remaining disbursements primarily support community-based mental
hygiene programs, community and public health programs, local transportation
programs, and revenue sharing payments to local governments. Revenue
sharing and other general purpose aid to local governments are projected at
$837 million, an increase of approximately $37 million from 1997-98.
State operations spending reflects the administrative costs of
operating the State's agencies, including the prison system, mental hygiene
institutions, the State University system (SUNY), the Legislature, and the
court system. Personal service costs account for approximately 73 percent
of spending in this category. Since January 1995, the State's workforce has
been reduced by about 10 percent and is projected to remain at its current
level of approximately 191,000 persons in 1998-99.
State operations spending is projected at $6.70 billion, an increase of
$511 million of 8.3 percent from the prior year. This increase is primarily
due to an additional payroll cycle in 1998-99, a 3.5 percent general salary
increase on October 1, 1998 for most State employees, the loss of federal
receipts that would otherwise lower General Fund spending in mental hygiene
programs, and a projected 15.6 percent increase in the Judiciary's budget.
General State charges account primarily for the costs of providing
fringe benefits for State employees, including contributions to pension
systems, the employer's share of social security contributions, employer
contributions toward the cost of health insurance, and the costs of
providing worker's compensation and unemployment insurance benefits. This
category also reflects certain fixed costs such as payments in lieu of
taxes, and payments of judgments against the State or its public officers.
Disbursements in this category are estimated at $2.22 billion, a
decrease of $50 million from the prior year. This annual decline reflects
projected decreases in pension costs and Court of Claims payments, offset by
modest projected increases for health insurance contributions, social
security costs, and the loss of reimbursements due to a reduction in the
fringe benefit rate charged to positions financed by non-General Fund
sources.
Debt service paid from the General Fund reflects debt service on short-
term obligations of the State, and includes only interest costs on the
State's commercial paper program. The 1998-99 debt service estimate is $11
million, reflecting relative stability in short-term interest rates. The
State's short-term TRAN borrowing program was eliminated in 1995.
Transfers to other funds from the General Fund are made primarily to
finance certain portions of State capital projects spending and debt service
on long-term bonds where these costs are not funded from other sources.
Transfers in support of debt service are projected at $2.13 billion in
1998-99, an increase of $110 million from 1997-98. The increase reflects
the impact of certain prior year bond sales (net of refunding savings), and
certain bond sales planned to occur during the 1998-99 fiscal year. The
State Financial Plan also establishes a transfer of $50 million to the new
Debt Reduction Reserve Fund. The Fund may be used, subject to enactment of
new appropriations, to pay the debt service costs on or to prepay State-
supported bonds.
Transfers in support of capital projects provide General Fund support
for projects not otherwise financed through bond proceeds, dedicated taxes
and other revenues, or federal grants. These transfers are projected at
$200 million for 1998-99, comparable to last year.
Remaining transfers from the General Fund to other funds are estimated
to decline $59 million in 1998-99 to $327 million. This decline is
primarily the net impact of one-time transfers in 1997-98 to the State
University Tuition Stabilization Fund and to the Lottery Fund to support
school aid, offset by a 1998-99 increase in the State subsidy to the Roswell
Park Cancer Research Institute.
Non-recurring Resources
The Division of the Budget estimates that the 1998-99 State Financial
Plan contains actions that provide non-recurring resources or savings
totaling approximately $64 million, the largest of which is a retroactive
reimbursement of federal welfare claims.
The 1998-99 Financial Plan projects a closing fund balance in the
General Fund of $1.42 billion. This fund balance is composed of a reserve
of $761 million available for future needs, a $400 million balance in the
TSRF, a $158 million balance in the CPF, and a balance of $100 million in
the CRF, after a projected deposit of $32 million in 1998-99.
Other Governmental Funds
In addition to the General Fund, the State Financial Plan includes
Special Revenue Funds, Capital Projects Funds and Debt Service Funds which
are discussed below. Amounts below do not include other sources and uses of
funds transferred to or from other fund types.
Special Revenue Funds
Special Revenue Funds are used to account for the proceeds of specific
revenue sources such as federal grants that are legally restricted, either
by the Legislature or outside parties, to expenditures for specified
purposes. Although activity in this fund type is expected to comprise
approximately 41 percent of total governmental funds receipts in the 1998-99
fiscal year, three-quarters of that activity relates to federally-funded
programs.
Total disbursements for programs supported by Special Revenue Funds are
projected at $29.97 billion, an increase of $2.32 billion or 8.4 percent
from 1997-98. Federal grants account for approximately three-quarters of
all spending in the Special Revenue fund type. Disbursements from federal
funds are estimated at $21.78 billion, an increase of $1.12 billion or 5.4
percent. The single largest program in this fund group is Medicaid, which
is projected at $13.65 billion, an increase of $465 million or 3.5 percent
above last year. Federal support for welfare programs is projected at $2.53
billion, similar to 1997-98. The remaining growth in federal funds is
primarily due to the new Child Health Plus program, estimated at $197
million in 1998-99. This program will expand health insurance coverage to
children of indigent families.
State special revenue spending is projected to be $8.19 billion, an
increase of $1.20 billion or 17.2 percent from last year's levels. Most of
this projected increase in spending is due to the $704 million cost of the
first phase of the STAR program, as well as $231 million in additional
operating assistance for mass transportation, and $113 million for the State
share of the new Child Health Plus program.
Capital Projects Funds
Capital Projects Funds account for the financial resources used in the
acquisition, construction, or rehabilitation of major State capital
facilities, and for capital assistance grants to certain local governments
or public authorities. This fund type consists of the Capital Projects
Fund, which is supported by tax receipts transferred from the General Fund,
and various other capital funds established to distinguish specific capital
construction purposes supported by other revenues. In the 1998-99 fiscal
year, activity in these funds is expected to comprise 5.5 percent of total
governmental receipts.
Capital Projects Funds spending in fiscal year 1998-99 is projected at
$4.14 billion, an increase of $575 million or 16.1 percent from last year.
The major components of this expected growth are transportation and
environmental programs, including continued increased spending for 1996
Clean Water/Clean Air Bond Act projects and higher projected disbursements
from the Environmental Protection Fund (EPF). Another significant component
of this projected increase is in the area of public protection, primarily
for facility rehabilitation and construction of additional prison capacity.
Debt Service Funds
Debt Service Funds are used to account for the payment of principal and
interest on long-term debt of the State and to meet commitments under lease-
purchase and other contractual-obligation financing arrangements. This fund
type is expected to comprise 3.8 percent of total governmental fund receipts
in the 1998-99 fiscal year. Receipts in these funds in excess of debt
service requirements may be transferred to the General Fund, Capital
Projects Funds and Special Revenue Funds, pursuant to law.
Total disbursements form the Debt Service Fund type are estimated at
$3.36 billion in 1998-99, an increase of $275 million or 8.9 percent from
1997-98 levels. Of the increase, $102 million is for transportation
purposes, including debt service on bonds issued for State and local highway
and bridge programs financed through the New York State Thruway Authority
and supported by the Dedicated Highway and Bridge Trust Fund. Another $45
million is for education purposes, including State and City University
programs financed through the Dormitory Authority of the State of New York
(DASNY). The remainder is for a variety of programs in such areas as mental
health and corrections, and for general obligation financings.
Year 2000 Compliance
New York State is currently addressing "Year 2000" data processing
compliance issues. The Year 2000 compliance issue ("Y2K") arises because
most computer software programs allocate two digits to the data field for
"year" on the assumption that the first two digits will be "19." Such
programs will thus interpret the year 2000 as the year 1900 absent
reprogramming. Y2K could impact both the ability to enter data into
computer programs and the ability of such programs to correctly process
data.
In 1996, the State created the Office for Technology (OFT) to help
address statewide technology issues, including the Year 2000 issue. OFT has
estimated that investments of at least $140 million will be required to
bring approximately 350 State mission-critical and high-priority computer
systems not otherwise scheduled for replacement into Year 2000 compliance,
and the State is planning to spend $100 million in the 1998-99 fiscal year
for this purpose. Mission-critical computer applications are those which
impact the health, safety and welfare of the State and its citizens, and for
which failure to be in Y2K compliance could have a material and adverse
impact upon State operations. High-priority computer applications are those
that are critical for a State agency to fulfill its mission and deliver
services, but for which they are manual alternatives. Work has been
completed on roughly 20 percent of these systems. All remaining unfinished
mission-critical and high-priority systems have at least 40 percent or more
of the work completed. Contingency planning is underway for those systems
which may be non-compliant prior to failure dates. The enacted budget also
continues funding for major systems scheduled for replacement, including the
State payroll, civil service, tax and finance and welfare management
systems, for which Year 2000 compliance is included as a part of the
project.
OFT is monitoring compliance on a quarterly basis and is providing
assistance and assigning resources to accelerate compliance for mission-
critical systems, with most compliance testing expected to be completed by
mid-1999. There can be no guarantee, however, that all of the State's
mission-critical and high-priority computer systems will be Year 2000
compliant and that there will not be an adverse impact upon State operations
or State finances as a result.
Cash-Basis Results for Prior Fiscal Years
The State reports its financial results on two bases of accounting: the
cash basis, showing receipts and disbursements; and the modified accrual
basis, prescribed by Generally Accepted Accounting Principles ("GAAP"),
showing revenues and expenditures.
General Fund 1995-96 through 1997-98
The General Fund is the principal operating fund of the State and is
used to account for all financial transactions, except those required to be
accounted for in another fund. It is the State's largest fund and receives
most State taxes and other resources not dedicated to particular purposes.
General Fund moneys are also transferred to other funds, primarily to
support certain capital projects and debt service payments in other fund
types. A narrative description of cash-basis results in the General Fund is
presented below.
New York State's financial operations have improved during recent
fiscal years. During the period 1989-90 through 1991-92, the State incurred
General Fund operating deficits that were closed with receipts from the
issuance of tax and revenue anticipation notes ("TRANs"). A national
recession, followed by the lingering economic slowdown in New York and the
regional economy, resulted in repeated shortfalls in receipts and three
budget deficits during those years. During its last six fiscal years,
however, the State has recorded balanced budgets on a cash basis, with
positive fund balances as described below.
1997-98 Fiscal Year
The State ended its 1997-98 fiscal year in balance on a cash basis,
with a General Fund cash surplus as reported by DOB of approximately $2.04
billion. The cash surplus was derived primarily from higher-than-
anticipated receipts and lower spending on welfare, Medicaid, and other
entitlement programs.
The General Fund had a closing balance of $638 million, an increase of
$205 million from the prior fiscal year. The balance is held in three
accounts within the General Fund: the Tax Stabilization Reserve Fund
(TSRF), the Contingency Reserve Fund (CRF) and the Community Projects Fund
(CPF). The TSRF closing balance was $400 million, following a required
deposit of $15 million (repaying a transfer made in 1991-92) and an
extraordinary deposit of $68 million made from the 1997-98 surplus. The CRF
closing balance was $68 million, following a $27 million deposit from the
surplus. The CPF, which finances legislative initiatives, closed the fiscal
year with a balance of $170 million, an increase of $95 million. The
General Fund closing balance did not include $2.39 billion in the tax refund
reserve account, of which $521 million was made available as a result of the
Local Government Assistance Corporation (LGAC) financing program and was
required to be on deposit on March 31, 1998.
General Fund receipts and transfers from other funds for the 1997-98
fiscal year (including net tax refund reserve account activity) totaled
$34.55 billion, an annual increase of $1.51 billion, or 4.57 percent over
1996-97. General Fund disbursements and transfers to other funds were
$34.35 billion, an annual increase of $1.45 billion or 4.41 percent.
1996-97 Fiscal Year
The State ended its 1996-97 fiscal year on March 31, 1997 in balance on
a cash basis, with a General Fund cash surplus as reported by DOB of
approximately $1.42 billion. The cash surplus was derived primarily from
higher-than-expected receipts and lower-than-expected spending for social
services programs.
The General Fund closing balance was $433 million, an increase of $146
million from the 1995-96 fiscal year. The balance included $317 million in
the TSRF, after a required deposit of $15 million and an additional deposit
of $65 million in 1996-97. In addition, $41 million remained on deposit in
the CRF. The remaining $75 million reflected amounts then on deposit in the
Community Projects Fund. The General Fund closing balance did not include
$1.86 billion in the tax refund reserve account, of which $521 million was
made available as a result of the LGAC financing program and was required to
be on deposit as of March 31, 1997.
General Fund receipts and transfers from other funds for the 1996-97
fiscal year totaled $33.04 billion, an increase of 0.7 percent from the
previous fiscal year (including net tax refund reserve account activity).
General Fund disbursements and transfers to other funds totaled $32.90
billion for the 1996-97 fiscal year, an increase of 0.7 percent from the
1995-96 fiscal year.
1995-96 Fiscal Year
The State ended its 1995-96 fiscal year on March 31, 1996 with a
General Fund cash surplus, as reported by DOB, of $445 million. The cash
surplus was derived from higher-than-expected receipts, savings generated
through agency cost controls, and lower-than-expected welfare spending.
The General Fund closing fund balance was $287 million, an increase of
$129 million from 1994-95 levels. The $129 million change in fund balance
is attributable to a $65 million voluntary deposit to the TSRF, a $15
million required deposit to the TSRF, a $40 million deposit to the CRF, and
a $9 million deposit to the Revenue Accumulation Fund. The closing fund
balance included $237 million on deposit in the TSRF. In addition, $41
million was on deposit in the CRF. The remaining $9 million reflected
amounts then on deposit in the Revenue Accumulation Fund. The General Fund
closing balance did not include $678 million in the tax refund reserve
account of which $521 million was made available as a result of the LGAC
financing program and was required to be on deposit as of March 31, 1996.
General Fund receipts and transfers from other funds (including net
refund reserve account activity) totaled $32.81 billion, a decrease of 1.1
percent from 1994-95 levels. General Fund disbursements and transfers to
other funds totaled $32.68 billion for the 1995-96 fiscal year, a decrease
of 2.2 percent from 1994-95 levels.
Other Governmental Funds (1995-96 through 1997-98)
Activity in the three other governmental funds has remained relatively
stable over the last three fiscal years, with federally-funded programs
comprising approximately two-thirds of these funds. The most significant
change in the structure of these funds has been the redirection of a portion
of transportation-related revenues from the General Fund to two new
dedicated funds in the Special Revenue and Capital Projects fund types.
These revenues are used to support the capital programs of the Department of
Transportation and the Metropolitan Transportation Authority (MTA).
In the Special Revenue Funds, disbursements increased from $26.26
billion to $27.65 billion over the last three years, primarily as a result
of increased costs for the federal share of Medicaid. Other activity
reflected dedication of taxes to a new fund for mass transportation, new
lottery games, and new fees for criminal justice programs.
Disbursements in the Capital Projects Funds declined over the three
year period from $3.97 billion to $3.56 billion as spending for
miscellaneous capital programs decreased, partially offset by increases for
mental hygiene, health and environmental programs. The composition of this
fund type's receipts also changed as the dedicated transportation taxes
began to be deposited, general obligation bond proceeds declined
substantially, federal grants remained stable, and reimbursements from
public authority bonds (primarily transportation related) increased.
Activity in the Debt Service Funds reflected increased use of bonds
during the three-year period for improvements to the State's capital
facilities and the continued costs of the LGAC fiscal reform program. The
increases were moderated by the refunding savings achieved by the State over
the last several years using strict present value savings criteria. The
growth in LGAC debt service was offset by reduced short-term borrowing costs
reflected in the General Fund.
Litigation
State Finance Policies
Insurance Law
Proceedings have been brought by two groups of petitioners challenging
regulations promulgated by the Superintendent of Insurance that established
excess medical malpractice premium rates for fiscal years 1986-87 through
1996-97 (New York State Health Maintenance Organization Conference, Inc., et
al. v. Muhl, et al. ["HMO"], and New York State Conference of Blue Cross and
Blue Shield Plans, et al. v. Muhl, et al. ["Blue Cross 'I' and 'II'"],
Supreme Court, Albany County). By order filed January 22, 1997, the Court
in Blue Cross I permitted the plaintiffs in HMO to intervene and dismissed
the challenges to the rates for the period prior to 1995-96. By decision
dated July 24, 1997, the Court in Blue Cross I held that the determination
made by the Superintendent in establishing the 1995-96 rate was arbitrary
and capricious and directed that premiums paid pursuant to that
determination be returned to the payors. The State has appealed this
decision. The petitioners did not cross appeal. In Blue Cross II, by
amended judgment dated April 2, 1998, the Supreme Court annulled the
regulation setting the 1996-97 premium rate and directed that all 1996-97
excess malpractice premiums be returned to the payors. The State will not
be obligated in either case to pay moneys to any petitioner. Adverse
determinations would result in refunds from the affected insurers.
Tax Law
In New York Association of Convenience Stores, et al. v. Urbach, et
al., petitioners, New York Association of Convenience Stores, National
Association of Convenience Stores, M.W.S. Enterprises, Inc. and Sugarcreek
Stores, Inc. seek to compel respondents, the Commissioner of Taxation and
Finance and the Department of Taxation and Finance, to enforce sales and
excise taxes imposed pursuant to Tax Law Articles 12-A, 20 and 28 on tobacco
products and motor fuel sold to non-Indian consumers on Indian reservations.
In orders dated August 13, 1996 and August 24, 1996, the Supreme Court,
Albany County, ordered, inter alia, that there be equal implementation and
enforcement of said taxes for sales to non-Indian consumers on and off
Indian reservations, and further ordered that, if respondents failed to
comply within 120 days, no tobacco products or motor fuel could be
introduced onto Indian reservations other than for Indian consumption or,
alternately, the collection and enforcement of such taxes would be suspended
statewide. Respondents appealed to the Appellate Division, Third
Department, and invoked CPLR 5519(a)(1), which provides that the taking of
the appeal stayed all proceedings to enforce the orders pending the appeal.
Petitioner's motion to vacate the stay was denied. In a decision entered
May 8, 1997, the Third Department modified the orders by deleting the
portion thereof that provided for the statewide suspension of the
enforcement and collection of the sales and excise taxes on motor fuel and
tobacco products. The Third Department held, inter alia, that petitioners
had not sought such relief in their petition and that it was an error for
the Supreme Court to have awarded such undemanded relief without adequate
notice of its intent to do so. On May 22, 1997, respondents appealed to the
Court of Appeals on other grounds, and again invoked the statutory stay. On
October 23, 1997, the Court of Appeals granted petitioners' motion for leave
to cross-appeal from the portion of the Third Department's decision that
deleted the statewide suspension of the enforcement and collection of the
sales and excise taxes on motor fuel and tobacco. The case was argued
before the Court of Appeals on March 24, 1998.
Clean Water/Clean Air Bond Act of 1996
In Robert L. Schulz, et al. v. The New York State Executive, et al.
(Supreme Court, Albany County, commenced October 16, 1996), plaintiffs
challenge the enactment of the Clean Water/Clean Air Bond Act of 1996 and
its implementing legislation (1996 Laws of New York, Chapters 412 and 413).
Plaintiffs claim, inter alia, that the Bond Act and its implementing
legislation violate provisions of the State Constitution requiring that such
debt be authorized by law for some single work or purpose distinctly
specified therein and forbidding incorporation of other statutes by
reference.
In an opinion dated June 9, 1998, the Court of Appeals affirmed the
July 17, 1997 order of the Appellate Division, Third Department, affirming
the lower court dismissal of this case.
Line Item Veto
In an action commenced in June 1998 by the Speaker of the Assembly of
the State of New York against the Governor of the State of New York (Silver
v. Pataki, Supreme Court, New York County), the Speaker challenges the
Governor's application of his constitutional line item veto authority to
certain portions of budget bills adopted by the State Legislature contained
in Chapters 56, 57 and 58 of the Laws of 1998.
State Programs
Medicaid
Several cases challenge provisions of Chapter 81 of the Laws of 1995
which alter the nursing home Medicaid reimbursement methodology on and after
April 1, 1995. Included are New York State Health Facilities Association,
et al. v. DeBuono, et al., St. Luke's Nursing Center, et al. v. DeBuono, et
al., New York Association of Homes and Services for the Aging v DeBuono et
al (three cases), Healthcare Association of New York State v. DeBuono and
Bayberry Nursing Home et al. v. Pataki, et al. Plaintiffs allege that the
changes in methodology have been adopted in violation of procedural and
substantive requirements of State and federal law.
In a consolidated action commenced in 1992, Medicaid recipients and
home health care providers and organizations challenge promulgation by the
State Department of Social Services (DSS) in June 1992 of a home assessment
resource review instrument (HARRI), which is to be used by DSS to determine
eligibility for and the nature of home care services for Medicaid
recipients, and challenge the policy of DSS of limiting reimbursable hours
of service until a patient is assessed using the HARRI (Dowd, et al. v.
Bane, Supreme Court, New York County).
In several cases, plaintiffs seek retroactive claims for reimbursement
for services provided to Medicaid recipients who were also eligible for
Medicare during the period January 1, 1987 to June 2, 1992. Included are
Matter of New York State Radiological Society v. Wing, Appel v. Wing, E.F.S.
Medical Supplies v. Dowling, Kellogg v. Wing, Lifshitz v. Wing, New York
State Podiatric Medical Association v. Wing and New York State Psychiatric
Association v. Wing. These cases were commenced after the State's
reimbursement methodology was held invalid in New York City Health and
Hospital Corp. v. Perales. The State contends that these claims are
time-barred. In a judgment dated September 5, 1996, the Supreme Court,
Albany County, dismissed Matter of New York State Radiological Society v.
Wing as time-barred. By order dated November 26, 1997, the Appellate
Division, Third Department, affirmed that judgment. By decision dated June
9, 1998, the Court of Appeals denied leave to appeal.
Several cases, including Port Jefferson Health Care Facility, et al. v.
Wing (Supreme Court, Suffolk County), challenge the constitutionality of
Public Health Law 2807-d, which imposes a tax on the gross receipts
hospitals and residential health care facilities receive from all patient
care services. Plaintiffs allege that the tax assessments were not
uniformly applied, in violation of federal regulations. In a decision dated
June 30, 1997, the Court held that the 1.2 percent and 3.8 percent
assessments on gross receipts imposed pursuant to Public Health Law
2807-d(2)(b)(ii) and 2807-d(2)(b)(iii), respectively, are unconstitutional.
An order entered August 27, 1997 enforced the terms of the decision. The
State has appealed that order.
Shelter Allowance
In an action commenced in March 1987 against State and New York City
officials (Jiggetts, et al. v. Bane, et al., Supreme Court, New York
County), plaintiffs allege that the shelter allowance granted to recipients
of public assistance is not adequate for proper housing. In a decision
dated April 16, 1997, the Court held that the shelter allowance promulgated
by the Legislature and enforced through DSS regulations is not reasonably
related to the cost of rental housing in New York City and results in
homelessness to families in New York City. A judgment was entered on July
25, 1997, directing, inter alia, that the State (i) submit a proposed
schedule of shelter allowances (for the Aid to Dependent Children program
and any successor program) that bears a reasonable relation to the cost of
housing in New York City; and (ii) compel the New York City Department of
Social Services to pay plaintiffs a monthly shelter allowance in the full
amount of their contract rents, provided they continue to meet the
eligibility requirements for public assistance, until such time as a lawful
shelter allowance is implemented, and provide interim relief to other
eligible recipients of Aid to Dependent Children under the interim relief
system established in this case. The State has appealed to the Appellate
Division, First Department from each and every provision of this judgment
except that portion directing the continued provision of interim relief.
Civil Rights Claims
In an action commenced in 1980 (United States, et al. v. Yonkers Board
of Education, et al.), the United States District Court for the Southern
District of New York found, in 1985, that Yonkers and its public schools
were intentionally segregated. In 1986, the District Court ordered Yonkers
to develop and comply with a remedial educational improvement plan (EIP I).
On January 19, 1989, the District Court granted motions by Yonkers and the
NAACP to add the State Education Department, the Yonkers Board of Education,
and the State Urban Development Corporation as defendants, based on
allegations that they had participated in the perpetuation of the segregated
school system. On August 30, 1993, the District Court found that vestiges
of a dual school system continued to exist in Yonkers. On March 27, 1995,
the District Court made factual findings regarding the role of the State and
the other State defendants (the State) in connection with the creation and
maintenance of the dual school system, but found no legal basis for imposing
liability. On September 3, 1996, the United States Court of Appeals for the
Second Circuit, based on the District Court's factual findings, held the
State defendants liable under 42 USC 1983 and the Equal Educational
Opportunity Act, 20 USC 1701, et seq., for the unlawful dual school
system, because the State, inter alia, had taken no action to force the
school district to desegregate despite its actual or constructive knowledge
of de jure segregation. By order dated October 8, 1997, the District Court
held that vestiges of the prior segregated school system continued to exist
and that, based on the State's conduct in creating and maintaining that
system, the State is liable for eliminating segregation and its vestiges in
Yonkers and must fund a remedy to accomplish that goal. Yonkers presented a
proposed educational improvement plan (EIP II) to eradicate these vestiges
of segregation. The October 8, 1997 order of the District Court ordered
that EIP II be implemented and directed that, within 10 days of the entry of
the Order, the State make available to Yonkers $450,000 to support planning
activities to prepare the EIP II budget for 1997-98 and the accompanying
capital facilities plan. A final judgment to implement EIP II was entered
on October 14, 1997. On November 7, 1997, the State appealed that judgment
to the Second Circuit. The appeal is pending. Additionally, the Court
adopted a requirement that the State pay to Yonkers approximately $9.85
million as its pro rata share of the funding of EIP I for the 1996-97 school
year. The requirement for State funding of EIP I was reduced to an order on
December 2, 1997 and reduced to a judgment on February 10, 1998. The State
appealed that order to the Second Circuit on December 31, 1997 and amended
the notice of appeal after entry of the judgment. That appeal has been
consolidated with the appeal of the EIP II appeal, and is also pending.
On June 15, 1998, the District Court issued an opinion setting
forth the formula for the allocation of the costs of EIP I and EIP II
between the State and the City for the school years 1997-98 through 2005-06.
That opinion has not yet been reduced to an order.
Real Property Claims
On March 4, 1985 in Oneida Indian Nation of New York, et al. v.
County of Oneida, the United States Supreme Court affirmed a judgment of the
United States Court of Appeals for the Second Circuit holding that the
Oneida Indians have a common-law right of action against Madison and Oneida
Counties for wrongful possession of 872 acres of land illegally sold to the
State in 1795. At the same time, however, the Court reversed the Second
Circuit by holding that a third-party claim by the counties against the
State for indemnification was not properly before the federal courts. The
case was remanded to the District Court for an assessment of damages, which
action is still pending. The counties may still seek indemnification in the
State courts.
Several other actions involving Indian claims to land in upstate
New York are also pending. Included are Cayuga Indian Nation of New York v.
Cuomo, et al., and Canadian St. Regis Band of Mohawk Indians, et al. v.
State of New York et al., both in the United States District Court for the
Northern District of New York. The Supreme Court's holding in Oneida Indian
Nation of New York may impair or eliminate certain of the State's defenses
to these actions but may enhance others.
Authorities and Localities
Public Authorities
The fiscal stability of the State is related in part to the fiscal
stability of its public authorities. For the purposes of this summary,
public authorities refer to public benefit corporations created pursuant to
State law, other than local authorities. Public authorities are not subject
to the constitutional restrictions on the incurrence of debt which apply to
the State itself and may issue bonds and notes within the amounts and
restrictions set forth in legislative authorization. The State's access to
the public credit markets could be impaired and the market price of its
outstanding debt may be materially and adversely affected if any of its
public authorities were to default on their respective obligations. As of
December 31, 1997, there were 17 public authorities that had outstanding
debt of $100 million or more, and the aggregate outstanding debt, including
refunding bonds, of all State authorities was $84 billion, only a portion of
which constitutes State-supported or State-related debt.
The State has numerous public authorities with various
responsibilities, including those which finance, construct and/or operate
revenue producing public facilities. Public authorities generally pay their
operating expenses and debt service costs from revenues generated by the
projects they finance or operate, such as tolls charged for the use of
highways, bridges or tunnels, charges for public power, electric and gas
utility services, rentals charged for housing units, and charges for
occupancy at medical care facilities. Also, there are statutory
arrangements providing for State local assistance payments otherwise payable
to localities to be made under certain circumstances to public authorities.
Although the State has no obligation to provide additional assistance to
localities whose local assistance payments have been paid to public
authorities under these arrangements, the affected localities may seek
additional State assistance if local assistance payments are diverted. Some
authorities also receive moneys from State appropriations to pay for the
operating costs of certain of their programs. As described below, the MTA
receives the bulk of this money in order to provide transit and commuter
services.
Beginning in 1998, the Long Island Power Authority (LIPA) assumed
responsibility for the provision of electric utility services previously
provided by Long Island Lighting Company for Nassau, Suffolk and a portion
of Queen Counties, as part of an estimated $7 billion financing plan. As of
the date of this AIS, LIPA has issued over $5 billion in bonds secured
solely by ratepayer charges. LIPA's debt is not considered either State-
supported or State-related debt.
Metropolitan Transportation Authority
The MTA oversees the operation of subway and bus lines in New York City
by its affiliates, the New York City Transit Authority and the Manhattan and
Bronx Surface Transit Operating Authority (collectively, the "TA"). The MTA
operates certain commuter rail and bus services in the New York Metropolitan
area through MTA's subsidiaries, the Long Island Rail Road Company, the
Metro-North Commuter Railroad Company, and the Metropolitan Suburban Bus
Authority. In addition, the Staten Island Rapid Transit Operating
Authority, an MTA subsidiary, operates a rapid transit line on Staten
Island. Through its affiliated agency, the Triborough Bridge and Tunnel
Authority (the "TBTA"), the MTA operates certain intrastate toll bridges and
tunnels. Because fare revenues are not sufficient to finance the mass
transit portion of these operations, the MTA has depended on, and will
continue to depend on, operating support from the State, local governments
and TBTA, including loans, grants and subsidies. If current revenue
projections are not realized and/or operating expenses exceed current
projections, the TA or commuter railroads may be required to seek additional
State assistance, raise fares or take other actions.
Since 1980, the State has enacted several taxes-including a surcharge
on the profits of banks, insurance corporations and general business
corporations doing business in the 12-county Metropolitan Transportation
Region served by the MTA and a special one-quarter of 1 percent regional
sales and use tax--that provide revenues for mass transit purposes,
including assistance to the MTA. Since 1987, State law also has required
that the proceeds of a one-quarter of 1 percent mortgage recording tax paid
on certain mortgages in the Metropolitan Transportation Region be deposited
in a special MTA fund for operating or capital expenses. In 1993, the State
dedicated a portion of certain additional State petroleum business tax
receipts to fund operating or capital assistance to the MTA. For the 1998-
99 fiscal year, State assistance to the MTA is projected to total
approximately $1.3 billion, an increase of $133 million over the 1997-98
fiscal year.
State legislation accompanying the 1996-97 adopted State budget
authorized the MTA, TBTA and TA to issue an aggregate of $6.5 billion in
bonds to finance a portion of the $12.17 billion MTA capital plan for the
1995 through 1999 calendar years (the "1995-99 Capital Program"). In July
1997, the Capital Program Review Board ("CPRB") approved the 1995-99 Capital
Program (subsequently amended in August 1997), which supersedes the
overlapping portion of the MTA's 1992-96 Capital Program. The 1995-99
Capital Program is the fourth capital plan since the Legislature authorized
procedures for the adoption, approval and amendment of MTA capital programs
and is designed to upgrade the performance of the MTA's transportation
systems by investing in new rolling stock, maintaining replacement schedules
for existing assets and bringing the MTA system into a state of good repair.
The 1995-99 Capital Program assumes the issuance of an estimated $5.2
billion in bonds under this $6.5 billion aggregate bonding authority. The
remainder of the plan is projected to be financed through assistance from
the State, the federal government, and the City of New York, and from
various other revenues generated from actions taken by the MTA.
There can be no assurance that all the necessary governmental actions
for future capital programs will be taken, that funding sources currently
identified will not be decreased or eliminated, or that the 1995-99 Capital
Program, or parts thereof, will not be delayed or reduced. Should funding
levels fall below current projections, the MTA would have to revise its 1995-
99 Capital Program accordingly. If the 1995-99 Capital Program is delayed
or reduced, ridership and fare revenues may decline, which could, among
other things, impair the MTA's ability to meet its operating expenses
without additional assistance.
The City of New York
The fiscal health of the State may also be affected by the fiscal
health of New York City (the "City"), which continues to receive significant
financial assistance from the State. State aid contributes to the City's
ability to balance its budget and to meet its cash requirements. The State
may also be affected by the ability of the City and certain entities issuing
debt for the benefit of the City to market their securities successfully in
the public credit markets.
The City has achieved balanced operating results for each of its fiscal
years since 1981 as measured by the GAAP standards in force at that time.
The City prepares a four-year financial plan ("Financial Plan") annually and
updates it periodically, and prepares a comprehensive annual financial
report describing its most recent fiscal year each October.
The City of New York
Fiscal Oversight
In response to the City's fiscal crisis in 1975, the State took action
to assist the City in returning to fiscal stability. Among those actions,
the State established the Municipal Assistance Corporation for the City of
New York to provide financing assistance to the City; the New York State
Financial Control Board (the "Control Board") to oversee the City's
financial affairs; and the Office of the State Deputy Comptroller for the
City of New York ("OSDC") to assist the Control Board in exercising its
powers and responsibilities. A "control period" existed from 1975 to 1986
during which the City was subject to certain statutorily-prescribed fiscal
controls. The Control Board terminated the Control Period in 1986 when
certain statutory conditions were met. State law requires the Control Board
to reimpose a control period upon the occurrence, or "substantial likelihood
and imminence" of the occurrence, of certain events, including (but not
limited to) a City operating budget deficit of more than $100 million of
impaired access to the public credit markets.
Currently, the City and its Covered Organizations (i.e., those which
received or may receive moneys from the City directly, indirectly or
contingently) operate under the Financial Plan. The City's Financial Plan
summarizes its capital, revenue and expense projections and outlines
proposed gap-closing programs for years with projected budget gaps. The
City's projections set forth in the Financial Plan are based on various
assumptions and contingencies, some of which are uncertain and may not
materialize. Unforeseen developments and changes in major assumptions could
significantly affect the city's ability to balance its budget as required by
State law and to meet its annual cash flow and financing requirements.
To successfully implement its Financial Plan, the City and certain
entities issuing debt for the benefit of the city must market their
securities successfully. The City issues securities to finance, refinance
and rehabilitate infrastructure and other capital needs, as well as for
seasonal financing needs. In 1997, the State created the New York City
Transitional Finance Authority ("TFA") to finance a portion of the City's
capital program because the City was approaching its State Constitutional
general debt limit. Without the additional financing capacity of the TFA,
projected contracts for City capital projects would have exceeded the City's
debt limit during City fiscal year 1997-98. Despite this additional
financing mechanism, the City currently projects that, if no further action
is taken, it will reach its debt limit in City fiscal year 1999-2000. On
June 2, 1997, an action was commenced seeking a declaratory judgment
declaring the legislation establishing the TFA to be unconstitutional. On
November 25, 1997 the State Supreme Court found the legislation establishing
the TFA to be constitutional and granted the defendants' motion for summary
judgment. The plaintiffs have appealed the decision. Future developments
concerning the City or entities issuing debt for the benefit of the City,
and public discussion of such developments, as well as prevailing market
conditions and securities credit ratings, may affect the ability or cost to
sell securities issued by the City or such entities and may also affect the
market for their outstanding securities.
Monitoring Agencies
The staffs of the Control Board, OSDC and the City Comptroller issue
periodic reports on the City's Financial Plans. The reports analyze the
City's forecasts of revenues and expenditures, cash flow, and debt service
requirements, as well as evaluate compliance by the City and its Covered
Organizations with the Financial Plan. According to recent staff reports,
while economic growth in New York City has been slower than in other regions
of the country, a surge in Wall Street profitability resulted in increased
tax revenues and generated a substantial surplus for the City in City fiscal
year 1996-97. Recent staff reports also indicate that the City projects a
substantial surplus for City fiscal year 1997-98. Although several sectors
of the City's economy have expanded recently, especially tourism and
business and professional services, City tax revenues remain heavily
dependent on the continued profitability of the securities industries and
the course of the national economy. These reports have also indicated that
recent City budgets have been balanced in part through the use of non-
recurring resources and that the City's Financial Plan tends to rely on
actions outside its direct control. These reports have indicated that the
City has not yet brought its long-term expenditure growth in line with
recurring revenue growth and that the City is likely to continue to face
substantial gaps between forecast revenues and expenditures in future years
that must be closed with reduced expenditures and/or increased revenues. In
addition to these monitoring agencies, the Independent Budget Office ("IBO")
has been established pursuant to the City Charter to provide analysis to
elected officials and the public on relevant fiscal and budgetary issues
affecting the City.
Other Localities
Certain localities outside New York City have experienced financial
problems and have requested and received additional State assistance during
the last several State fiscal years. The cities of Yonkers and Troy
continue to operate under State-ordered control agencies. The potential
impact on the State of any future requests by localities for additional
oversight or financial assistance is not included in the projections of the
State's receipts and disbursements for the State's 1998-99 fiscal year.
Eighteen municipalities received extraordinary assistance during the
1996 legislative session through $50 million in special appropriations
targeted for distressed cities, and twenty-eight municipalities received
more than $32 million in targeted unrestricted aid in the 1997-98 budget.
Both of these emergency aid packages were largely continued through the 1998-
99 budget. The State also dispersed an additional $21 million among all
cities, towns and villages after enacting a 3.9 percent increase in General
Purpose State Aid in 1997-98 and continued this increase in 1998-99.
The 1998-99 budget includes an additional $29.4 million in unrestricted
aid targeted to 57 municipalities across the State. Other assistance for
municipalities with special needs totals more than $25.6 million. Twelve
upstate cities will receive $24.2 million in one-time assistance from a cash
flow acceleration of State aid.
The appropriation and allocation of general purpose local government
aid among localities, including New York City, is currently the subject of
investigation by a State commission. While the distribution of general
purpose local government aid was originally based on a statutory formula, in
recent years both the total amount appropriated and the amounts appropriated
to localities have been determined by the Legislature. A State commission
was established to study the distribution and amounts of general purpose
local government aid and recommend a new formula by June 30, 1999, which may
change the way aid is allocated.
Municipalities and school districts have engaged in substantial short-
term and long-term borrowings. In 1996, the total indebtedness of all
localities in the State other than New York City was approximately $20.0
billion. A small portion (approximately $77.2 million) of that indebtedness
represented borrowing to finance budgetary deficits and was issued pursuant
to State enabling legislation. State law requires the Comptroller to review
and make recommendations concerning the budgets of those local government
units other than New York City that are authorized by State law to issue
debt to finance deficits during the period that such deficit financing is
outstanding. Twenty-one localities had outstanding indebtedness for deficit
financing at the close of their fiscal year ending in 1996.
Like the State, local governments must respond to changing political,
economic and financial influences over which they have little or no control.
Such changes may adversely affect the financial condition of certain local
governments. For example, the federal government may reduce (or in some
cases eliminate) federal funding of some local programs which, in turn, may
require local governments to fund these expenditures from their own
resources. It is also possible that the State, New York City, or any of
their respective public authorities may suffer serious financial
difficulties that could jeopardize local access to the public credit
markets, which may adversely affect the marketability of notes and bonds
issued by localities within the State. Localities may also face
unanticipated problems resulting from certain pending litigation, judicial
decisions and long-range economic trends. Other large-scale potential
problems, such as declining urban populations, increasing expenditures, and
the loss of skilled manufacturing jobs, may also adversely affect localities
and necessitate State assistance.
APPENDIX F
Set forth below, as to each share Class of each Fund, as applicable,
are those shareholders known by the Fund to own of record 5% or more of a
Class of shares of the Fund outstanding as of January 4, 1999.
Government Money Fund
Class A: Boston Safe Deposit & Trust Co. TTEE, as agent - Omnibus Account,
1 Cabot Road, Medford, MA 02155-5141 - owned of record 6.1603%.
Class B: Robert W. Baird & Co., Omnibus Account for the Exclusive Benefit
of Customers, P.O. Box 672, Milwaukee, WI 53201-0672 - owned of
record 42.0382%;
Stifel Nicolaus & Co. Inc., for the Exclusive Benefit of
Customers, Attn. Money Fund Dept., 500 N. Broadway, Saint Louis,
MO 63102-2110 - owned of record 27.9079%;
First Albany Corporation, P.O. Box 22024, Albany, New York 12201-
2024 - owned of record 12.3761%;
Olcoba Co., 7575 Golden Valley, MN 55427-4572 - owned of record
6.0094%
Money Fund
Class A: NationsBanc Montgomery Securities LLC, Money Market Funds Omnibus,
600 Montgomery Street, suite 4, San Francisco, CA 94111-02702 -
owned of record 14.0392%
Class B: Robert W. Baird & Co., Omnibus Account for the Exclusive Benefit
of Customers, P.O. Box 672, Milwaukee, WI 53201-2024 - owned of
record 40.8057%;
First Albany Corporation, P.O. Box 22024, Albany, New York 12201-
2024 - owned of record 22.6502%;
Stifel Nicolaus & Co. Inc. for the Exclusive Benefit of Customers,
500 N. Broadway, Saint Louis, MO 63102-2110 - owned of record
18.1161%;
NationsBanc Montgomery Securities LLC, Money Market Fund Omnibus,
600 Montgomery Street, Suite 4, San Francisco, CA 94111-2702 -
owned of record 8.0239%
California Municipal Fund
Class A: NationsBanc Montgomery Securities LLC, Money Market Funds Omnibus,
600 Montgomery Street, Suite 4, San Francisco, CA 94111-2702 -
owned of record 17.1357%
Class B: Robert W. Baird & Co., Omnibus Account for the Exclusive Benefit
of Customers, P.O. Box 572, Milwaukee, WI 532031-0672 - owned of
record 78.0738%;
First Albany Corporation, P.O. Box 22024, Albany, New York 12201-
2024 - owned of record 8.5518%;
NationsBanc Montgomery Securities LLC, Money Market Funds Omnibus,
600 Montgomery Street, Suite 4, San Francisco, CA 94111-2702 -
owned of record 6.2260%;
Stifel Nicolaus & Co. Inc. for the Exclusive Benefit of Customers,
500 N. Broadway, Saint Louis, MO 63102-2110 - owned of record
6.0875%
Minnesota Municipal Fund
Class A: MBCIC, c/o Mellon Bank, Attn. Michael Botsford, 919 N. Market
Street, Wilmington, DE 19801-3023 - owned of record 99.7052%
Class B: NationsBanc Montgomery Securities LLC, Money Market Funds Omnibus,
600 Montgomery Street, Suite 4, San Francisco, CA 94111-2702 -
owned of record 92.8857%
National Municipal Fund
Class A: NationsBanc Montgomery Securities LLC, Money Market Funds Omnibus,
600 Montgomery Street, Suite 4, San Francisco, CA 94111-2702 -
owned of record 26.6291%
Class B: Robert W. Baird & Co., Omnibus Accounts for the Exclusive Benefit
of Customers, P.O. Box 672, Milwaukee, WI 53201-0672 - owned of
record 42.0383%;
Stifel Nicolaus & Co. Inc. for the Exclusive Benefit of Customers,
500 N. Broadway, Saint Louis, MO 63102-2110 - owned of record
16.3868%;
George K. Baum & Company, Attn. Ron Frazier, 120 W. 12th Street,
Kansas City, WI 53201-0672 - owned of record 9.9699%
New York Municipal Fund
Class A: As of January 4, 1999, there were no shareholders who owned 5% or
more of the Class A shares of the New York Municipal Fund.
Class B: First Albany Corporation, P.O. Box 22024, Albany, NY 11201-2024 -
owned of record 88.6012%;
Robert W. Baird & Co., Omnibus Account for the Exclusive Benefit
of Customers, P.O. Box 672, Milwaukee, WI 53201-0672 - owned of
record 7.0359%
