File Nos. 2-77767
811-3481
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 33 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 33 [X]
(Check appropriate box or boxes.)
GENERAL MUNICIPAL MONEY MARKET FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
X on December 1, 1999 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
----
<PAGE>
General Money Market Funds
General Money Market Fund
General Government Securities Money Market Fund
General Treasury Prime 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 December 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>
CONTENTS
THE FUNDS
Introduction......................................1
General Money Market Fund.........................2
General Government Securities Money
Market Fund.......................................4
General Treasury Prime Money Market
Fund..............................................6
General Municipal Money Market Fund...............8
General California Municipal Money
Market Fund......................................10
General Minnesota Municipal Money Market
Fund.............................................12
General New York Municipal Money Market
Fund.............................................14
Management.......................................16
Financial Highlights.............................17
YOUR INVESTMENT
Account Policies.................................20
Distributions and Taxes..........................22
Services for Fund Investors......................23
Instructions for Regular Accounts................24
Instructions for IRAs............................25
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 seven 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.
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:
o securities issued or guaranteed by the U.S. government or its agencies
o certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by domestic or foreign banks or their
subsidiaries or branches
o repurchase agreements
o asset-backed securities
o domestic and dollar-denominated foreign commercial paper, and other
short-term corporate obligations, including those with floating or variable
rates of interest
o 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:
o interest rates could rise sharply, causing the fund's share price to drop
o any of the fund's holdings could have its credit rating downgraded or
could default
o 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
o 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
PAST PERFORMANCE
The tables below show some of the risks of investing in Class A. The first table
shows changes in the fund's performance from year to year. The second table
averages the fund's performance over time. Both tables assume reinvestment of
dividends and distributions. Of course, past performance is no guarantee of
future results.
- ------------------------------------------------------------------------
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 year-to-date total return as of 9/30/99 was 3.32%.
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- -----------------------------------------------------------
4.93% 4.74% 5.19%
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.
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%
- -------------------------------------------------------------------
EXPENSE EXAMPLE
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------
$79 $246 $428 $954
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 Dreyfus 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.
<PAGE>
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 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.
PAST PERFORMANCE
The tables below show some of the risks of investing in Class A. The first table
shows changes in the fund's performance from year to year. The second table
averages the fund's performance over time. Both tables assume reinvestment of
dividends and distributions. Of course, past performance is no guarantee of
future results.
- ------------------------------------------------------------------------
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 year-to-date total return as of 9/30/99 was 3.25%.
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- --------------------------------------------------------------------
4.83% 4.70% 5.13%
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.
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.
<PAGE>
- ---------------------------------------------------------------------
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%
- -------------------------------------------------------------------
EXPENSE EXAMPLE
1 Year 3 Years 5 Years 10 Years
$79 $246 $428 $954
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 Dreyfus 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.
<PAGE>
GENERAL TREASURY PRIME
MONEY MARKET FUND
Ticker Symbol: N/A
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 only invests in securities issued or guaranteed as
to principal and interest by the U.S. government.
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>
PAST PERFORMANCE
As a new fund, past performance information is not available for the fund as of
the date of this prospectus.
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 0.05%
Other expenses 0.05%
- ---------------------------------------------------------------------
TOTAL 0.80%
- -------------------------------------------------------------------
EXPENSE EXAMPLE
1 Year 3 Years
$82 $255
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 Dreyfus 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.
<PAGE>
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. The fund also may invest in high quality, short-term structured
notes, which are derivative instruments whose value is tied to underlying
municipal obligations. Structured notes typically are purchased in privately
negotiated transactions from financial institutions. 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 of two types:
o GENERAL OBLIGATION BONDS, which are secured by the full faith and credit
of the issuer and its taxing power
o 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:
o interest rates could rise sharply, causing the fund's share price to drop
o any of the fund's holdings could have its credit rating downgraded or
could default
Derivative securities, such as structured notes, can be highly volatile, and the
possibility of default by the financial institution or counterparty may be
greater for these securities than for other types of money market instruments.
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.
PAST PERFORMANCE
The tables below show some of the risks of investing in Class A. The first
table shows changes in the fund's performance from year to year. The second
table averages the fund's performance over time. Both tables assume reinvestment
of dividends and distributions. Of course, past performance is no guarantee of
future results.
- -------------------------------------------------------------------------------
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: Q3 '94 +0.46%
The fund's year-to-date total return as of 9/30/99 was 1/97%.
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- ------------------------------------------------------------------------
2.98% 2.97% 3.51%
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.
<PAGE>
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%
- -------------------------------------------------------------------
EXPENSE EXAMPLE
1 Year 3 Years 5 Years 10 Years
$61 $192 $335 $750
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 Dreyfus 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.
<PAGE>
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. The fund also may invest in high
quality, short-term structured notes, which are derivative instruments whose
value is tied to underlying municipal obligations. Structured notes typically
are purchased in privately negotiated transactions from financial institutions.
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 of two types:
o GENERAL OBLIGATION BONDS, which are secured by the full faith and credit
of the issuer and its taxing power
o 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:
o interest rates could rise sharply, causing the fund's share price to drop
o any of the fund's holdings could have its credit rating downgraded or
could default
o California's economy and revenues underlying municipal obligations may
decline
o the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Derivative securities, such as structured notes, can be highly volatile and the
possibility of default by the financial institution or counterparty may be
greater for these securities than for other types of money market instruments.
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>
PAST PERFORMANCE
The tables below show some of the risks of investing in Class A. The first table
shows changes in the fund's performance from year to year. The second table
averages the fund's performance over time. Both tables assume reinvestment of
dividends and distributions. Of course, past performance is no guarantee of
future results.
- ------------------------------------------------------------------------
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 year-to-date total return as of 9/30/99 was 1.76%.
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- ------------------------------------------------------------------------
2.73% 2.87% 3.59%
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.
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%
- -------------------------------------------------------------------
EXPENSE EXAMPLE
1 Year 3 Years 5 Years 10 Years
$65 $205 $357 $798
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 Dreyfus 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.
<PAGE>
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 of two
types:
o GENERAL OBLIGATION BONDS, which are secured by the full faith and credit
of the issuer and its taxing power
o 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:
o interest rates could rise sharply, causing the fund's share price to drop
o any of the fund's holdings could have its credit rating downgraded or
could default
o Minnesota's economy and revenues underlying municipal obligations may
decline
o 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>
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 Dreyfus 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 was voluntary.
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.
<PAGE>
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. The fund also may invest in high
quality, short-term structured notes, which are derivative instruments whose
value is tied to underlying municipal obligations. Structured notes typically
are purchased in privately negotiated transactions from financial institutions.
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 of two types:
o GENERAL OBLIGATION BONDS, which are secured by the full faith and credit
of the issuer and its taxing power
o 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:
o interest rates could rise sharply, causing the fund's share price to drop
o any of the fund's holdings could have its credit rating downgraded or
could default
o New York's economy and revenues underlying municipal obligations may
decline
o the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Derivative securities, such as structured notes, can be highly volatile and the
possibility of default by the financial institution or counterparty may be
greater for these securities than for other types of money market instruments.
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.
PAST PERFORMANCE
The tables below show some of the risks of investing in Class A. The first table
shows changes in the fund's performance from year to year. The second table
averages the fund's performance over time. Both tables assume reinvestment of
dividends and distributions. Of course, past performance is no guarantee of
future results.
- ------------------------------------------------------------------------
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 year-to-date total return as of 9/30/99 was 1.76%.
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- ------------------------------------------------------------------------
2.73% 2.85% 3.43%
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.
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%
- -------------------------------------------------------------------
EXPENSE EXAMPLE
1 Year 3 Years 5 Years 10 Years
$69 $218 $379 $847
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 Dreyfus 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.
<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 more than
$118 billion in over 160 mutual fund portfolios. For the past fiscal year, each
operational fund (other than the Minnesota Municipal Money Market Fund) paid
Dreyfus a management fee at an annual rate of 0.50% of the fund's average daily
net assets. For General Minnesota Municipal Money Market Fund, no management fee
was paid to Dreyfus for such period. Dreyfus is the primary mutual fund business
of Mellon Financial Corporation, a global financial services company with
approximately $2.5 trillion in assets under management, administration or
custody, including approximately $450 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
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.
Dreyfus has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Dreyfus employees does not disadvantage any
Dreyfus-managed fund. Dreyfus portfolio managers and other investment personnel
who comply with the Policy's preclearance and disclosure procedures may be
permitted to purchase, sell or hold certain types of securities which also may
be or are held in the fund(s) they advise.
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>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of the Class A shares of each fund
(except General Treasury Prime Money Market Fund) for the periods indicated. As
a new fund, financial highlights information is not available for General
Treasury Prime Money Market Fund as of the date of this prospectus. "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 (except where
noted) by Ernst & Young LLP, whose report, along with the fund's financial
statements, is included in the annual report.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Six Months Ten Months
Ended Year Ended Ended
May 31, November 30, November 30, Year Ended January 31,
GENERAL MONEY MARKET FUND 1999 1998 1997(1) 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income - net .022 .049 .041 .047 .053 .037 .025
Distributions: Dividends from investment
income - net (.022) (.049) (.041) (.047) (.053) (.037) (.025)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Total return (%) 4.37(2) 4.98 4.99(2) 4.81 5.42 3.75 2.56
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .79(2) .77 .88(2) .84 .86 .94 .94
Ratio of net investment income
to average net assets (%) 4.34(2) 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) 859,159 835, 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.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Six Months Ten Month
Ended Year Ended Ended
May 31, November 30, November 30, Year Ended January 31,
GENERAL GOVERNMENT SECURITIES MONEY MARKET FUND 1999 1998 1997(1) 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income - net 0.21 .048 .040 .047 .052 .038 0.27
Distributions: Dividends from investment
income - net (.021) (.048) (.040) (.047) (.052) (.038) (.027)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Total return (%) 4.29(2) 4.88 4.84(2) 4.75 5.35 3.90 2.69
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .74(2) .77 .82(2) .82 .84 .83 .81
Ratio of net investment income
to average net assets (%) 4.26(2) 4.77 4.78(2) 4.65 5.22 3.82 2.66
Net assets, end of period ($ x 1,000) 542,168 539,878 510,289 519,861 530,054 513,345 536,884
(1) THE FUND CHANGED ITS FISCAL YEAR END FROM JANUARY 31 TO NOVEMBER 30.
(2) ANNUALIZED.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Six Months
Ended
May 31, Year Ended November 30,
GENERAL MUNICIPAL MONEY MARKET FUND 1999 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment operations:
Investment income - net .013 .030 .031 .029 .034 .023
Distributions:
Dividends from investment income - net (.013) (.030) (.031) (.029) (.034) (.023)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
Total return (%) 2.63(1) 3.02 3.14 2.97 3.41 2.27
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .59(1) .60 .62 .66 .66 .64
Ratio of net investment income to
average net assets (%) 2.61(1) 2.98 3.09 2.93 3.35 2.22
Net assets, end of period ($ x 1,000) 264,370 280,398 273,058 256,862 294,379 294,711
Net assets, en
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Six Months Four Months
Ended Year Ended Ended
GENERAL CALIFORNIA May 31, November 30, November 30, Year Ended July 31,
MUNICIPAL MONEY MARKET FUND 1999 1998 1997(1) 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Investment operations:
Investment income - net .011 .027 .010 .029 .029 .031 .023
Distributions:
Dividends from investment income - net (.011) (.027) (.010) (.029) (.029) (.031) (.023)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Total return (%) 2.39(2) 2.78 2.96(2) 2.95 2.94 3.14 2.27
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .63(2) .64 .70(2) .64 .65 .52 .33
Ratio of net investment income to average
net assets (%) 2.38(2) 2.74 2.97(2) 2.91 2.91 3.07 2.24
Decrease reflected on above expense ratios
due to actions by Dreyfus - - - - - .11 .28
Net assets, end of period ($ x 1,000) 404,432 335,726 361,102 327,226 390,155 463,404 699,105
(1) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO NOVEMBER 30.
(2) ANNUALIZED.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
(Unaudited)
Six Months Ended Period Ended
May 31, November 30,
GENERAL MINNESOTA MUNICIPAL MONEY MARKET FUND 1999 1998(1)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00
Investment operations: Investment income - net .013 .014
Distributions: Dividends from investment income - net (.013) (.014)
Net asset value, end of period 1.00 1.00
Total return (%) 2.57(2) 2.81(2)
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .65(2) .65(2)
Ratio of net investment income to average net assets (%) 2.73(2) 2.80(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .16(2) .76(2)
Net assets, end of period ($ x 1,000) 105 1,014
(1) FROM JUNE 1, 1998 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1998.
(2) ANNUALIZED.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Six Months
Ended
GENERAL NEW YORK May 31, Year Ended November 30,
MUNICIPAL MONEY MARKET FUND 1999 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income - net .012 .027 .029 .028 .032 .023
Distributions: Dividends from investment income-net (.012) (.027) (.029) (.028) (.032) (.023)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
Total return (%) 2.35(1) 2.77 2.98 2.84 3.28 2.34
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .68(1) .68 .66 .68 .58 .34
Ratio of net investment income to average net assets (%) 2.33(1) 2.74 2.94 2.80 3.23 2.33
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) -- -- -- -- .05 .32
Net assets, end of period ($ x 1,000) 380,829 405,054 440,750 507,537 636,013 689,918
(1) ANNUALIZED.
</TABLE>
<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, limitations and fees
which are different than those described here.
APPLICABLE TO GENERAL MONEY MARKET FUND, GENERAL GOVERNMENT SECURITIES MONEY
MARKET FUND AND GENERAL TREASURY PRIME MONEY MARKET FUND ONLY
YOUR PRICE FOR FUND SHARES is the fund's net asset value (NAV), which is
generally calculated twice a day, at 5:00 p.m. and 8:00 p.m., 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 12:00 noon,
you will receive the dividend declared that day. If your payments are received
in or converted into Federal Funds after 12:00 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 5:00 p.m. and Federal Funds
are received by 6:00 p.m., the shares will be purchased at the NAV determined at
5:00 p.m. and will receive the dividend declared that day. If such an order is
made after 5:00 p.m. but by 8:00 p.m., and Federal Funds are received by 11:00
a.m. the next business day, the shares will be purchased at the NAV determined
at 8:00 p.m. and will begin to accrue dividends on the next business day. All
times are Eastern time.
APPLICABLE TO GENERAL CALIFORNIA MUNICIPAL MONEY MARKET FUND, GENERAL MUNICIPAL
MONEY MARKET FUND, GENERAL MINNESOTA MUNICIPAL MONEY MARKET FUND AND GENERAL NEW
YORK MUNICIPAL MONEY MARKET FUND ONLY
YOUR PRICE FOR FUND SHARES is the fund's net asset value (NAV), which is
generally calculated twice a day, at 12:00 noon and 8:00 p.m., for the Minnesota
Municipal Money Market Fund and three times a day, at 12:00 noon, 2:00 p.m. and
8:00 p.m., for each other 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 12:00 noon
for the Minnesota Municipal Money Market Fund or by 4:00 p.m. for each other
municipal money market fund, you will receive the dividend declared that day. If
your payments are received in or converted into Federal Funds after 12:00 noon
for the Minnesota Municipal Money Market Fund or after 4:00 p.m. for each other
municipal money market fund, 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 12:00 noon for the Minnesota Municipal Money Market Fund or
by 2:00 p.m. for each other municipal money market fund, and Federal Funds are
received by 4:00 p.m., the shares will be purchased at the next NAV determined
after the telephone order is accepted and will receive the dividend declared
that day. If such an order is made after 12:00 noon for the Minnesota Municipal
Money Market Fund or after 2:00 p.m. for any of the other municipal money market
funds, but by 8:00 p.m., and Federal Funds are received by 11:00 a.m. the next
business day, the shares will be purchased at the NAV determined at 8:00 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.
<PAGE>
MINIMUM INVESTMENTS
Initial Additional
- ------------------------------------------------------------------------
REGULAR ACCOUNTS $2,500 $100; $500 FOR TELE-
TRANSFER INVESTMENTS
TRADITIONAL IRAS $750 no mininum
SPOUSAL IRAS $750 no mininum
ROTH IRAS $750 no mininum
EDUCATION IRAS $500 no mininum
AFTER THE FIRST YEAR
DREYFUS AUTOMATIC INVEST PLANS $100 $100
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.
CONCEPTS TO UNDERSTAND
Net Asset Value (NAV): a mutual fund's share price on a given day. A fund's NAV
is calculated by dividing the value of its net asserts by the number of existing
shares.
Amortized cost: a method of valuing a money market fund's portfolio securities,
which does not take into account unrealized gains or losses. As a result,
portfolio securities are valued at their acquisition cost, adjusted over time
based on the discounts or premiums reflected in their purchase price. This
method of valuation is designed to permit a fund to maintain a stable NAV.
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
Tele Transfer $500 $250,000 FOR JOINT ACCOUNTS EVERY 30 DAYS
WRITTEN SELL ORDERS
Some circumstances require written sell orders along with signature guarantees.
These include:
o amounts of $1,000 or more on accounts whose address has been changed
within the last 30 days
o 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:
o 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)
o refuse any purchase or exchange request in excess of 1% of the fund's
total assets
o change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions
o change its minimum investment amounts
o 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.
<PAGE>
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 ASSET BUILDER(R) For making automatic investments from a
designated bank account.
DREYFUS PAYROLL SAVINGS PLAN For making automatic investments through a
payroll deduction.
DREYFUS GOVERNMENT DIRECT For making automatic investments from your
DEPOSIT PRIVILEGE federal employment, Social Security or
other regular federal government check.
DREYFUS DIVIDEND SWEEP For automatically reinvesting the dividends
and distributions from one Dreyfus fund
into another (not available for IRAs).
FOR EXCHANGING SHARES
DREYFUS AUTO- EXCHANGE PRIVILEGE For making regular exchanges from one
Dreyfus fund into another.
FOR SELLING SHARES
DREYFUS AUTOMATIC WITHDRAWAL PLAN For making regular withdrawals from most
Dreyfus funds.
<PAGE>
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 SHARES WORTH $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.
24-HOUR AUTOMATED ACCOUNT ACCESS
You can easily manage your Dreyfus accounts, check your account balances,
transfer money between your Dreyfus funds, get price and yield information and
much more - when it's convenient for you.
ACCOUNT STATEMENTS
EVERY FUND INVESTOR automatically receives regular account statements. You will
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:
o for traditional, rollover, Roth and Education IRAs, call 1-800-645-6561
o for SEP-IRAs, Keogh accounts, 401(k) and 403(b) accounts, call
1-800-358-0910
<PAGE>
INSTRUCTIONS FOR REGULAR ACCOUNTS
<TABLE>
<CAPTION>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT TO SELL SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
IN WRITING
<S> <C> <C>
Complete the application. Fill out an investment slip, and Write a redemption check or write a letter of
write your account number on instruction that includes:
your check.
Mail your application and a check to: Mail the slip and the check to: your name(s) and signature(s)
The Dreyfus Family of Funds The Dreyfus Family of Funds your account number
P.O. Box 9387 P.O. Box 105 the fund name
Providence, RI 02940-9387 Newark, New Jersey 07101-0105 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 21).
Mail your request to:
The Dreyfus Family of Funds
P.O. Box 9671
Providence, RI 02940-9671
- -----------------------------------------------------------------------------------------------------------------------------------
BY TELEPHONE
WIRE Have your bank send your WIRE Have your bank send your WIRE Call us or your financial representative
investment to The Bank of New investments to The Bank of New to request your transaction. Be sure the fund
York, with these instructions York, with these instructions: has your bank account information on file.
Proceeds will be wired to your bank.
ABA# 021000018 ABA# 021000018 TELETRANSFER Call us or your financial
fund name and DDA# fund name and DDA# representative to request your transaction.
General Money Market Fund General Money Market Fund Be sure the fund has your bank account
DDA# 8900051957 DDA# 8900051957 information on file. Proceeds will be sent to
General Government Securities General Government Securities your bank by electronic check.
Money Market Fund Money Market Fund
DDA# 8900052414 DDA# 8900052414 CHECK Call us or your financial
General Treasury Prime General Treasury Prime representative to request your transaction.
Money Market Fund Money Market Fund A check will be sent to the address of record.
DDA# 8900403349 DDA# 8900403349
General Municipal Money Market Fund General Municipal Money Market Fund
DDA# 8900052376 DDA# 8900052376
General California Municipal General California Municipal
Money Market Fund Money Market Fund
DDA# 8900052163 DDA# 8900052163
General Minnesota Municipal General Minnesota Municipal
Money Market Fund Money Market Fund
DDA# 8900337451 DDA# 8900337451
General New York Municipal General New York Municipal
Money Market Fund Money Market Fund
DDA# 8900052171 DDA# 8900052171
the share class the share class
your Social Security or tax ID number your account number
name(s) of investor(s) name(s) of investor(s)
dealer number if applicable dealer number if applicable
Call us to obtain an account number. ELECTRONIC CHECK Same as wire,
Return your application with the but insert "1111" before your
account number on the application. account number.
TELETRANSFER Request TeleTransfer
on your application. Call us to
request your transaction.
AUTOMATICALLY
WITH AN INITIAL INVESTMENT Indicate ALL SERVICES Call us or your financial AUTOMATIC WITHDRAWAL PLAN Call us or your
on your application which automatic representative to request a form to financial represent to request a form to
service(s) you want. Return your add any automatic investing service add the plan. Complete the form, specifying
application with your investment. (see "Services for Fund Investors"). the amount and frequency of withdrawals you
Complete and return the form along would like.
with any other required materials.
Be sure to maintain an account balance of
$5,000 or more.
</TABLE>
<PAGE>
INSTRUCTIONS FOR IRAS
<TABLE>
<CAPTION>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT TO SELL SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
IN WRITING
<S> <C> <C>
Complete an IRA application, making Fill out an investment slip, and Write a redemption check OR write a
sure to specify the fund name and write your account number on your letter of instruction that includes:
to indicate the year the contribution check. Indicate the year the
is for. contribution is for.
Mail your application and a check to: Mail in the slip and the check to: your name and signature
The Dreyfus Trust Company, Custodian The Dreyfus Trust Company, Custodian your account number and fund name
P.O. Box 6427 P.O. Box 6427, the dollar amount you want to sell
Providence, RI 02940-6427 Providence, RI 02940-6427 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 21).
Mail in your request to:
The Dreyfus Trust Company
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
General Treasury Prime
Money Market Fund
DDA# 8900403349
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 SYSTEMATIC WITHDRAWAL PLAN Call us to request
financial representative to instructions to establish the plan.
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.
</TABLE>
<PAGE>
For More Information
GENERAL MONEY MARKET FUND More information on each fund is available free
SEC file number: 811-3207 upon request, including the following:
GENERAL GOVERNMENT SECURITIES Annual/Semiannual Report
MONEY MARKET FUND
SEC file number: 811-3456 Describes a fund's performance, and lists
portfolio holdings.
GENERAL TREASURY PRIME STATEMENT OF ADDITIONAL INFORMATION (SAI)
MONEY MARKET FUND
SEC file number: 811-3456 Provides more details about each fund and its
policies. A current SAI is on file with the
GENERAL MUNICIPAL MONEY Securities and Exchange Commission (SEC)
MARKET FUND and is incorporated by reference (is legally
SEC file number: 811-3481 considered part of this prospectus).
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 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.
<PAGE>
General
Money Market
Funds
General Money Market Fund
General Government Securities
Money Market Fund
General Treasury
Prime 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 December 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>
More information on each fund can be found in
the fund's current annual/semiannual report.
See back cover.
Contents
The Funds
- ---------------------------------------------------------------
Introduction 1
General Money Market Fund 2
General Government Securities Money Market Fund 4
General Treasury Prime Money Market Fund 6
General Municipal Money Market Fund 8
General California Municipal Money Market Fund 10
General Minnesota Municipal Money Market Fund 12
General New York Municipal Money Market Fund 14
Management 16
Financial Highlights 17
Your Investment
- ---------------------------------------------------------------
Account Policies 20
Distributions and Taxes 22
Services for Fund Investors 23
Instructions for Regular Accounts 24
Instructions for IRAs 25
For More Information
- ---------------------------------------------------------------
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 seven 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:
o maintain an average dollar-weighted portfolio maturity of 90 days or less
o buy individual securities that have remaining maturities of 13 months or less
o 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:
o securities issued or guaranteed by the U.S. government or its agencies
o certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by domestic or foreign banks or their
subsidiaries or branches
o repurchase agreements
o asset-backed securities
o domestic and dollar-denominated foreign commercial paper, and other
short-term corporate obligations, including those with floating or variable
rates of interest
o 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:
o interest rates could rise sharply, causing the fund's share price to drop
o any of the fund's holdings could have its credit rating downgraded or
could default
o 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
o 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>
PAST PERFORMANCE
The two tables below show some of the risks of investing in Class B. The first
table shows changes in the fund's performance from year to year. The second
table averages the fund's performance over time. Both tables assume reinvestment
of dividends and distributions. Of course, past performance is no guarantee of
future results.
- ---------------------------------------------------------
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 year-to-date total return as of 9/30/99 was 3.16%.
- ---------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception
1 Year (3/31/95)
- ----------------------------- ---------------------------
4.73% 4.84%
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.
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 Dreyfus 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 was
voluntary.
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.
<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 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>
PAST PERFORMANCE
The tables below show some of the risks of investing in Class B. The first table
shows changes in the fund's performance from year to year. The second table
averages the fund's performance over time. Both tables assume reinvestment of
dividends and distributions. Of course, past performance is no guarantee of
future results.
- ---------------------------------------------------------
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 year-to-date total return as of 9/30/99 was 3.06%.
- ---------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception
1 Year (3/31/95)
- ----------------------------- ---------------------------
4.61% 4.72%
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.
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 Dreyfus 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 was
voluntary.
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.
<PAGE>
GENERAL TREASURY PRIME
MONEY MARKET FUND
Ticker Symbol: N/A
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 only invests in securities issued or guaranteed as
to principal and interest by the U.S. government.
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>
PAST PERFORMANCE
As a new fund, past performance information is not available for the fund as of
the date of this prospectus.
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
- ------------------- -------------
$107 $334
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 Dreyfus 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 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.
<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. The fund also may invest in high quality, short-term structured
notes, which are derivative instruments whose value is tied to underlying
municipal obligations. Structured notes typically are purchased in privately
negotiated transactions from financial institutions. 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 of two types:
o GENERAL OBLIGATION BONDS, which are secured by the full faith and credit
of the issuer and its taxing power
o 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:
o interest rates could rise sharply, causing the fund's share price to drop
o any of the fund's holdings could have its credit rating downgraded or
could default
Derivative securities, such as structured notes, can be highly volatile and the
possibility of default by the financial institution or counterparty may be
greater for these securities than for other types of money market instruments.
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.
PAST PERFORMANCE
The tables below show some of the risks of investing in Class B. The first table
shows changes in the fund's performance from year to year. The second table
averages the fund's performance over time. Both tables assume reinvestment of
dividends and distributions. Of course, past performance is no guarantee of
future results.
- ---------------------------------------------------------
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 year-to-date total return as of 9/30/99 was 1.68%.
- ---------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception
1 Year (3/31/95)
- ----------------------------- ---------------------------
2.60% 2.77%
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.
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 Dreyfus 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 was
voluntary.
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.
<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. The fund also may invest in high
quality, short-term structured notes, which are derivative instruments whose
value is tied to underlying municipal obligations. Structured notes typically
are purchased in privately negotiated transactions from financial institutions.
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 of two types:
o GENERAL OBLIGATION bonds, which are secured by the full faith and credit
of the issuer and its taxing power
o 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:
o interest rates could rise sharply, causing the fund's share price to drop
o any of the fund's holdings could have its credit rating downgraded or
could default
o California's economy and revenues underlying municipal obligations may
decline
o the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Derivative securities, such as structured notes, can be highly volatile and the
possibility of default by the financial institution or counterparty may be
greater for these securities than for other types of money market instruments.
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>
PAST PERFORMANCE
The tables below show some of the risks of investing in Class B. The first table
shows changes in the fund's performance from year to year. The second table
averages the fund's performance over time. Both tables assume reinvestment of
dividends and distributions. Of course, past performance is no guarantee of
future results.
- ---------------------------------------------------------
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 year-to-date total return as of 9/30/99 was 1.48%.
- ---------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception
1 Year (8/1/95)
- ----------------------------- ---------------------------
2.34% 2.52%
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.
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 Dreyfus 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 was
voluntary.
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.
<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 of two
types:
o GENERAL OBLIGATION BONDS, which are secured by the full faith and credit
of the issuer and its taxing power
o 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:
o interest rates could rise sharply, causing the fund's share price to drop
o any of the fund's holdings could have its credit rating downgraded or
could default
o Minnesota's economy and revenues underlying municipal obligations may
decline
o 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>
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 Dreyfus 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 was voluntary.
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.
<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. The fund also may invest in high
quality, short-term structured notes, which are derivative instruments whose
value is tied to underlying municipal obligations. Structured notes typically
are purchased in privately negotiated transactions from financial institutions.
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 of two types:
o GENERAL OBLIGATION BONDS, which are secured by the full faith and credit
of the issuer and its taxing power
o 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:
o interest rates could rise sharply, causing the fund's share price to drop
o any of the fund's holdings could have its credit rating downgraded or
could default
o New York's economy and revenues underlying municipal obligations may
decline
o the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Derivative securities, such as structured notes, can be highly volatile and the
possibility of default by the financial institution or counterparty may be
greater for these securities than for other types of money market instruments.
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>
PAST PERFORMANCE
The tables below show some of the risks of investing in Class B. The first table
shows changes in the fund's performance from year to year. The second table
averages the fund's performance over time. Both tables assume reinvestment of
dividends and distributions. Of course, past performance is no guarantee of
future results.
- ---------------------------------------------------------
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 year-to-date total return as of 9/30/99 was 1.52%.
- ---------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception
1 Year (9/8/95)
- ----------------------------- ---------------------------
2.42% 2.57%
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.
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 Dreyfus 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.
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.
<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 more than
$118 billion in over 160 mutual fund portfolios. For the past fiscal year, each
operational fund (other than the Minnesota Municipal Money Market Fund) paid
Dreyfus a management fee at an annual rate of 0.50% of the fund's average daily
net assets. For General Minnesota Municipal Money Market Fund, no management fee
was paid to Dreyfus for such period. Dreyfus is the primary mutual fund business
of Mellon Financial Corporation, a global financial services company with
approximately $2.5 trillion in assets under management, administration or
custody, including approximately $450 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
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.
Dreyfus has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is
to ensure that personal trading by Dreyfus employees does not disadvantage any
Dreyfus-managed fund. Dreyfus portfolio managers and other investment personnel
who comply with the Policy's preclearance and disclosure procedures may be
permitted to purchase, sell or hold certain types of securities which also may
be or are held in the fund(s) they advise.
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>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of the Class B shares of each fund
(except General Treasury Prime Money Market Fund) for the periods indicated. As
a new fund, financial highlights information is not available for General
Treasury Prime Money Market Fund as of the date of this prospectus. "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 (except where
noted) by Ernst & Young LLP, whose report, along with the fund's financial
statements, is included in the annual report.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------- ---------------------------------
(UNAUDITED)
SIX MONTHS TEN MONTHS
ENDED YEAR ENDED ENDED
MAY 31, NOVEMBER 30, NOVEMBER 30, YEAR ENDED JANUARY 31,
GENERAL MONEY MARKET FUND 1999 1998 1997(1) 1997 1996(2)
- -----------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income - net .021 .047 .039 .046 .043
Distributions: Dividends from investment income - net (.021) (.047) (.039) (.046) (.043)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
Total return (%) 4.17(3) 4.78 4.83(3) 4.65 5.18(3)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.00 1.00 1.00(3) 1.00 1.00(3)
Ratio of net investment income
to average net assets (%) 4.14(3) 4.66 4.78(3) 4.56 5.00(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .04(3) .06 .05(3) .07 .07(3)
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,679,456 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.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
SIX MONTHS TEN MONTHS
ENDED YEAR ENDED ENDED
MAY 31, NOVEMBER 30, NOVEMBER 30, YEAR ENDED JANUARY 31,
GENERAL GOVERNMENT SECURITIES MONEY MARKET FUND 1999 1998 1997(1) 1997 1996(2)
- ----------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income - net .020 .046 .038 .045 .042
Distributions: Dividends from investment income - net (.020) (.046) (.038) (.045) (.042)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
Total return (%) 4.05(3) 4.66 4.69(3) 4.58 5.04(3)
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.00(3) .97 1.00(3) 1.00 1.00(3)
Ratio of net investment income
to average net assets (%) 4.01(3) 4.55 4.60(3) 4.48 5.01(3)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .03(3) .05 .05(3) .08 .10(3)
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 650,987 645,984 364,845 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.
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
SIX MONTHS
ENDED
MAY 31, YEAR ENDED NOVEMBER 30,
GENERAL MUNICIPAL MONEY MARKET FUND 1999 1998 1997 1996 1995(1)
- ----------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income - net .011 .026 .028 .027 .020
Distributions: Dividends from investment income - net (.011) (.026) (.028) (.027) (.020)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
Total return (%) 2.23(2) 2.64 2.86 2.70 3.01(2)
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .98(2) .96 .95 .85 1.10(2)
Ratio of net investment income to average net assets (%) 2.22(2) 2.59 2.87 2.65 2.83(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .07(2) .09 .16 .29 .09(2)
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 401,156 377,636 263,008 17,491 3,024
1 FROM MARCH 31, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO NOVEMBER 30, 1995.
2 ANNUALIZED.
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------- --------------- --------------- --------------------------
(UNAUDITED)
SIX MONTHS FOUR MONTHS
ENDED YEAR ENDED ENDED
MAY 31, NOVEMBER 30, NOVEMBER 30, YEAR ENDED JULY 31,
GENERAL CALIFORNIA MUNICIPAL MONEY MARKET FUND 1999 1998 1997(1) 1997 1996(2)
- ----------------------------------------------------------------- --------------- --------------- ------------- ------------
PER SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income - net .002 .024 .009 .026 .025
Distributions: Dividends from investment income - net (.002) (.024) (.009) (.026) (.025)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
Total return (%) 2.01(3) 2.39 2.57(3) 2.61 2.56
- ----------------------------------------------------------------- -------------- --------------- ------------- ------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.00(3) 1.00 1.00(3) 1.00 1.00(3)
Ratio of net investment income to average net assets (%) 2.03(3) 2.34 2.62(3) 2.52 2.45
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .26(3) .07 .13(3) .07 .08
- ----------------------------------------------------------------- ------------- -------------- ------------- ------------
Net assets, end of period ($ x 1,000) 47,012 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>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------- --------------------------------------------
(UNAUDITED)
SIX MONTHS ENDED PERIOD ENDED
MAY 31, NOVEMBER 30,
GENERAL MINNESOTA MUNICIPAL MONEY MARKET FUND 1999 1998(1)
-------------------------------------------------------------------------- --------------------------------------------
<S> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00
Investment operations: Investment income - net .012 .013
Distributions: Dividends from investment income - net (.012) (.013)
Net asset value, end of period 1.00 1.00
Total return (%) 2.43 2.67(2)
-------------------------------------------------------------------------- --------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .80 .80(2)
Ratio of net investment income to average net assets (%) 2.39 2.63(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .50 .87(2)
-------------------------------------------------------------------------- --------------------------------------------
Net assets, end of period ($ x 1,000) 31,251 28,160
1 FROM JUNE 1, 1998 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1998.
2 ANNUALIZED.
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
SIX MONTHS ENDED
MAY 31, YEAR ENDED NOVEMBER 30,
GENERAL NEW YORK MUNICIPAL MONEY MARKET FUND 1999 1998 1997 1996 1995(1)
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income - net .010 .024 .027 .025 .006
Distributions: Dividends from investment income - net (.010) (.024) (.027) (.025) (.006)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
Total return (%) 2.01(2) 2.47 2.68 2.55 2.82(2)
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .98(2) .98 .95 .95 1.04(2)
Ratio of net investment income to average net assets (%) 2.00(2) 2.44 2.64 2.47 3.64(2)
Decrease reflected in above expense ratios
due to actions by Dreyfus (%) .09(2) .08 .08 .16 -
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 43,156 46,997 42,169 36,199 -
1 FROM SEPTEMBER 8, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO NOVEMBER 30, 1995.
2 ANNUALIZED.
</TABLE>
<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, limitations and fees
which are different than those described here.
APPLICABLE TO GENERAL MONEY MARKET FUND, GENERAL GOVERNMENT SECURITIES MONEY
MARKET FUND AND GENERAL TREASURY PRIME MONEY MARKET FUND ONLY
YOUR PRICE FOR FUND SHARES is the fund's net asset value (NAV), which is
generally calculated twice a day, at 5:00 p.m. and 8:00 p.m., 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 12:00 noon,
you will receive the dividend declared that day. If your payments are received
in or converted into Federal Funds after 12:00 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 5:00 p.m. and Federal Funds
are received by 6:00 p.m., the shares will be purchased at the NAV determined at
5:00 p.m. and will receive the dividend declared that day. If such an order is
made after 5:00 p.m. but by 8 p.m., and Federal Funds are received by 11:00 a.m.
the next business day, the shares will be purchased at the NAV determined at
8:00 p.m. and will begin to accrue dividends on the next business day. All times
are Eastern time.
APPLICABLE TO GENERAL CALIFORNIA MUNICIPAL MONEY MARKET FUND, GENERAL MUNICIPAL
MONEY MARKET FUND, GENERAL MINNESOTA MUNICIPAL MONEY MARKET FUND AND GENERAL NEW
YORK MUNICIPAL MONEY MARKET FUND ONLY
YOUR PRICE FOR FUND SHARES is the fund's net asset value (NAV), which is
generally calculated twice a day, at 12:00 noon and 8:00 p.m., for the Minnesota
Municipal Money Market Fund, and three times a day, at 12:00 noon, 2:00 p.m. and
8:00 p.m., for each other 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 12:00 noon
for the Minnesota Municipal Money Market Fund or by 4:00 p.m. for each other
municipal money market fund, you will receive the dividend declared that day. If
your payments are received in or converted into Federal Funds after 12:00 noon
for the Minnesota Municipal Money Market Fund or after 4:00 p.m. for each other
municipal money market fund, 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 12:00 noon for the Minnesota Municipal Money Market Fund or
by 2:00 p.m. for each other municipal money market fund, and Federal Funds are
received by 4:00 p.m., the shares will be purchased at the next NAV determined
after the telephone order is accepted and will receive the dividend declared
that day. If such an order is made after 12:00 noon for the Minnesota Municipal
Money Market Fund or after 2:00 p.m. for any of the other municipal money market
funds, but by 8:00 p.m., and Federal Funds are received by 11:00 a.m. the next
business day, the shares will be purchased at the NAV determined at 8:00 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.
CONCEPTS TO UNDERSTAND
Net Asset Value (NAV): a mutual fund's share price on a given day. A fund's NAV
is calculated by dividing the value of its net assets by the number of existing
shares.
Amortized cost: a method of valuing a money market fund's portfolio securities,
which does not take into account unrealized gains or losses. As a result,
portfolio securities are valued at their acquisition cost, adjusted over time
based on the discounts or premiums reflected in their purchase price. This
method of valuation is designed to permit a fund to maintain a stable NAV.
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:
o amounts of $1,000 or more on accounts whose address has been changed
within the last 30 days
o 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:
o 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)
o refuse any purchase or exchange request in excess of 1% of the fund's
total assets
o change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions
o change its minimum investment amounts
o 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.
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 PURCHASE 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 from a
ASSET BUILDER(R) designated bank account.
DREYFUS PAYROLL For making automatic investments through a
SAVINGS PLAN payroll deduction.
DREYFUS GOVERNMENT For making automatic investments from your federal
DIRECT DEPOSIT employment, Social Security or other regular
PRIVILEGE federal government check.
DREYFUS DIVIDEND SWEEP For automatically reinvesting the dividends and
distributions from one Dreyfus fund into another
(not available for IRAs)
- -------------------------------------------------------------------------------
FOR EXCHANGING SHARES
DREYFUS AUTO-EXCHANGE For making regular exchanges from one Dreyfus fund
PRIVILEGE into another.
- -------------------------------------------------------------------------------
FOR SELLING SHARES
DREYFUS AUTOMATIC For making regular withdrawals from most Dreyfus
WITHDRAWAL PLAN funds.
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 post-date your checks
or use them to close your account.
EXCHANGE PRIVILEGE
YOU CAN EXCHANGE SHARES WORTH $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.
24-HOUR AUTOMATED ACCESS
You can easily manage your Dreyfus accounts, check your account balances,
transfer money between your Dreyfus funds, get price and yield information and
much more - when it's convenient for you.
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:
o for traditional, rollover, Roth and Education IRAs, call 1-800-645-6561
o for SEP-IRAs, Keogh accounts, 401(k) and 403(b) accounts, call
1-800-358-0910
<PAGE>
<TABLE>
<CAPTION>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT TO SELL SHARES
- ---------------------------------------- -------------------------------------- --------------------------------------
IN WRITING
<S> <C> <C>
Complete the application. Fill out an investment slip, and Write a redemption check OR write a
write your account number on your letter of instruction that includes:
Mail your application and a check to: check. your name(s) and signature(s)
The Dreyfus Family of Funds your account number
P.O. Box 9387 Mail the slip and the check to: the fund name
Providence, RI 02940-9387 The Dreyfus Family of Funds the dollar amount you want to sell
P.O. Box 105 how and where to send the proceeds
Newark, New Jersey 07101-0105
Obtain a signature guarantee or
other documentation, if required
(see page 21).
Mail your request to:
The Dreyfus Family of Funds
P.O. Box 9671
Providence, RI 02940-9671
- ---------------------------------------- -------------------------------------- --------------------------------------
BY TELEPHONE
WIRE Have your bank send your WIRE Have your bank send your WIRE Call us or your financial
investment to The Bank of New York, investment to The Bank of New York, representative to request your
with these instructions: with these instructions: transaction. Be sure the fund has
ABA# 021000018 ABA# 021000018 your bank account information on
fund name and DDA# fund name and DDA# file. Proceeds will be wired to your
General Money Market Fund General Money Market Fund bank.
DDA# 8900337451 DDA# 8900337451
General Government Securities General Government Securities TELETRANSFER Call us or your
Money Market Fund Money Market Fund financial representative to request
DDA# 8900052414 DDA# 8900052414 your transaction. Be sure the fund
General Treasury Prime General Treasury Prime has your bank account information on
Money Market Fund Money Market Fund file. Proceeds will be sent to your
DDA# 8900403349 DDA# 8900403349 bank by electronic check.
General Municipal Money General Municipal Money
Market Fund Market Fund CHECK Call us or your financial
DDA# 8900052376 DDA# 8900052376 representative to request your
General California Municipal General California Municipal transaction. A check will be sent to
Money Market Fund Money Market Fund the address of record.
DDA# 8900052163 DDA# 8900052163
General Minnesota Municipal General Minnesota Municipal
Money Market Fund Money Market Fund
DDA# 8900337451 DDA# 8900337451
General New York Municipal General New York Municipal
Money Market Fund Money Market Fund
DDA# 8900052171 DDA# 8900052171
the share class the share class
your Social Security or tax your account number
ID number name(s) of investor(s)
name(s) of investor(s) dealer number if applicable
dealer number if applicable
Call us to obtain an account number. ELECTRONIC CHECK Same as wire, but
Return your application with the insert "1111" before your account
account number on the application. number.
TELETRANSFER Request TeleTransfer on
your application. Call us to
request your transaction.
- ---------------------------------------- -------------------------------------- --------------------------------------
AUTOMATICALLY ALL SERVICES Call us or your AUTOMATIC WITHDRAWAL PLAN Call us
WITH AN INITIAL INVESTMENT Indicate on financial representative to request or your financial representative to
your application which automatic a form to add any automatic request a form to add the plan.
service(s) you want. Return your investing service (see "Services for Complete the form, specifying the
application with your investment. Fund Investors"). Complete and amount and frequency of withdrawals
return the form along with any other you would like.
required materials.
Be sure to maintain an account
balance of $5,000 or more.
</TABLE>
<PAGE>
INSTRUCTIONS FOR IRAS
<TABLE>
<CAPTION>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT TO SELL SHARES
- ---------------------------------------- -------------------------------------- --------------------------------------
IN WRITING
<S> <C> <C>
Complete an IRA application, making Fill out an investment slip, and Write a redemption check OR write a
sure to specify the fund name and to write your account number on your letter of instruction that includes:
indicate the year the contribution is check. Indicate the year the your name and signature
for. contribution is for. your account number and fund name
the dollar amount you want to sell
Mail your application and a check to: Mail in the slip and the check to: how and where to send the proceeds
The Dreyfus Trust Company, Custodian The Dreyfus Trust Company, Custodian whether the distribution is
P.O. Box 6427 P.O. Box 6427 qualified or premature
Providence, RI 02940-6427 Providence, RI 02940-6427 whether the 10% TEFRA should be withheld
Obtain a signature guarantee or
other documentation, if required
(see page 21).
Mail in your request to:
The Dreyfus Trust Company
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
General Treasury Prime
Money Market Fund
DDA# 8900403349
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 SYSTEMATIC WITHDRAWAL PLAN Call us
financial representative to request to request instructions to establish
a form to add any automatic the plan.
___________ 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.
</TABLE>
<PAGE>
FOR MORE INFORMATION
GENERAL MONEY MARKET FUND More information on each fund is available
SEC file number: 811-3207 free upon request, including the following:
GENERAL GOVERNMENT SECURITIES ANNUAL/SEMIANNUAL REPORT
MONEY MARKET FUND
SEC file number: 811-3456 Describes a fund's performance, and lists
portfolio holdings.
GENERAL TREASURY PRIME
MONEY MARKET FUND STATEMENT OF ADDITIONAL INFORMATION (SAI)
SEC file number: 811-3456
Provides more details about each fund and
GENERAL CALIFORNIA MUNICIPAL its policies. A current SAI is on file with
MONEY MARKET FUND the Securities and Exchange Commission
SEC file number: 811-4871 (SEC) and is incorporated by reference (is
legally considered part of this
GENERAL MINNESOTA MUNICIPAL prospectus).
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 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.
<PAGE>
GENERAL
MONEY MARKET
FUNDS
General Money Market Fund
General Treasury
Prime Money Market Fund
General Municipal Money Market Fund
Investing in high quality, short-term securities for current income, safety of
principal and liquidity
PROSPECTUS December 1, 1999
CLASS X 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>
CONTENTS
THE FUNDS
Introduction........................................1
General Money Market Fund...........................2
General Treasury Prime Money Market Fund............4
General Municipal Money Market Fund.................6
Management..........................................8
Financial Highlights................................9
YOUR INVESTMENT
Account Policies...................................10
Distributions and Taxes............................13
Services for Fund Investors........................13
Instructions for Regular Accounts..................15
Instructions for IRAs..............................16
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:
o maintain an average dollar-weighted portfolio maturity of 90 days or less
o buy individual securities that have remaining maturities of 13 months or
less
o buy only 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: N/A
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:
o securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities
o certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by domestic or foreign banks or their
subsidiaries or branches
o repurchase agreements
o asset-backed securities
o domestic and dollar-denominated foreign commercial paper, and other
short-term corporate obligations, including those with floating or variable
rates of interest
o 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:
o interest rates could rise sharply, causing the fund's share price to drop
o any of the fund's holdings could have its credit rating downgraded or could
default
o 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
o 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
PAST PERFORMANCE
The tables below show some of the risks of investing in the fund. The first
table shows the changes in the fund's Class A performance from year to year. The
second table averages the fund's Class A performance over time. Both tables
assume reinvestment of dividends and distributions. Class A shares are not
offered in this prospectus; however, except to the extent Class A and Class X
have different expenses and Class X may be subject to a contingent deferred
sales charge (CDSC), Class X should have similar annual returns to Class A,
since each invests in the same portfolio of securities. Of course, past
performance is no guarantee of future results.
- ---------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
CLASS A SHARES
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 YEAR-TO-DATE TOTAL RETURN AS OF 9/30/99 WAS 3.32%.
- ---------------------------------------------------------
Average annual total return AS OF 12/31/98
CLASS A SHARES
1 Year 5 Years 10 Years
- -------------------- ----------------- ------------------
4.93% 4.74% 5.19%
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.
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 in the table below.
- ----------------------------------------------------------
Fee Table
SHAREHOLDER TRANSACTIONS FEES (FEE PAID FROM YOUR ACCOUNT)
Maximum deferred sales charge (CDSC) 4.00%
AS A % OF THE PURCHASE OR SALE PRICE, WHICHEVER IS LESS
ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Rule 12b-1 fee 0.25%
Shareholder services fee 0.25%
Other expenses 0.05%
- ----------------------------- ----------------------------
TOTAL 1.05%
Expense example
1 Year 3 Years
- ------------------------ ---------- ----------
WITH REDEMPTION $507 $634
WITHOUT REDEMPTION $107 $334
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. Because actual
return and expenses will be different, the example is for comparison only.
CONCEPTS TO UNDERSTAND
MANAGEMENT FEE: the fee paid to Dreyfus for managing the fund's portfolio and
assisting in all aspects of the fund's operations.
RULE 12B-1 FEE: the fee paid to the fund's distributor for financing the sale
and distribution of Class X 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: the fee paid to the fund's distributor for providing
shareholder services.
OTHER EXPENSES: estimated fees to be paid by the fund for miscellaneous items
such as transfer agency, custody, professional and registration fees.
<PAGE>
GENERAL TREASURY PRIME
MONEY MARKET FUND
Ticker Symbol: N/A
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 only invests in securities issued or guaranteed as
to principal and interest by the U.S. government.
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>
PAST PERFORMANCE
As a new fund, past performance information is not available for the fund as of
the date of this prospectus.
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 in the table below.
- ----------------------------------------------------------
Fee Table
SHAREHOLDER TRANSACTIONS FEES (fee paid from your account)
Maximum deferred sales charge (CDSC) 4.00%
AS A % OF THE PURCHASE OR SALE PRICE, WHICHEVER IS LESS
ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Rule 12b-1 fee 0.25%
Shareholder services fee 0.25%
Other expenses 0.05%
- ----------------------------- ----------------------------
TOTAL 1.05%
Expense example
1 Year 3 Years
- ------------------------ ---------- ----------
WITH REDEMPTION $507 $634
WITHOUT REDEMPTION $107 $334
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. Because actual
return and expenses will be different, the example is for comparison only.
CONCEPTS TO UNDERSTAND
MANAGEMENT FEE: the fee paid to Dreyfus for managing the fund's portfolio and
assisting in all aspects of the fund's operations.
RULE 12B-1 FEE: the fee paid to the fund's distributor for financing the sale
and distribution of Class X 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: the fee paid to the fund's distributor for providing
shareholder services.
OTHER EXPENSES: estimated fees to be paid by the fund for miscellaneous items
such as transfer agency, custody, professional and registration fees.
<PAGE>
GENERAL MUNICIPAL MONEY MARKET FUND
Ticker Symbol: N/A
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. The fund also may invest in high quality, short-term structured
notes, which are derivative instruments whose value is tied to underlying
municipal obligations. Structured notes typically are purchased in privately
negotiated transactions from financial institutions. When the fund 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 of two types:
o GENERAL OBLIGATION BONDS, which are secured by the full faith and credit of
the issuer and its taxing power
o 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:
o interest rates could rise sharply, causing the fund's share price to drop
o any of the fund's holdings could have its credit rating downgraded or could
default
Derivative securities, such as structured notes, can be highly volatile and the
possibility of default by the financial institution or counterparty may be
greater for these securities than for other types of money market instruments.
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>
PAST PERFORMANCE
The tables below show some of the risks of investing in the fund. The first
table shows the changes in the fund's Class A performance from year to year. The
second table averages the fund's Class A performance over time. Both tables
assume reinvestment of dividends and distributions. Class A shares are not
offered in this prospectus; however, except to the extent Class A and Class X
have different expenses and Class X may be subject to a CDSC, Class X should
have similar annual returns to Class A, since each invests in the same portfolio
of securities. Of course, past performance is no guarantee of future results.
- ---------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
CLASS A SHARES
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 YEAR-TO-DATE TOTAL RETURN AS OF 9/30/99 WAS 1.97%.
- ---------------------------------------------------------
Average annual total return AS OF 12/31/98
CLASS A SHARES
1 Year 5 Years 10 Years
- -------------------- ----------------- ------------------
2.98% 2.97% 3.51%
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.
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 in the table below.
- ----------------------------------------------------------
Fee Table
SHAREHOLDER TRANSACTIONS FEES (fee paid from your account)
Maximum deferred sales charge (CDSC) 4.00%
AS A % OF THE PURCHASE OR SALE PRICE, WHICHEVER IS LESS
ANNUAL FUND OPERATING EXPENSES (EXPENSES PAID FROM FUND ASSETS)
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Rule 12b-1 fee 0.25%
Shareholder services fee 0.25%
Other expenses 0.05%
- ----------------------------- ----------------------------
TOTAL 1.05%
Expense example
1 Year 3 Years
- ------------------------ ---------- ----------
WITH REDEMPTION $507 $634
WITHOUT REDEMPTION $107 $334
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. Because actual
return and expenses will be different, the example is for comparison only.
CONCEPTS TO UNDERSTAND
MANAGEMENT FEE: the fee paid to Dreyfus for managing the fund's portfolio and
assisting in all aspects of the fund's operations.
RULE 12B-1 FEE: the fee paid to the fund's distributor to finance the sale of
Class X 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: the fee paid to the fund's distributor for providing
shareholder services.
OTHER EXPENSES: estimated fees to be paid by the fund for miscellaneous items
such as transfer agency, custody, professional and registration fees.
<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 more than
$118 billion in over 160 mutual fund portfolios. For the past fiscal year, each
operational fund paid Dreyfus an investment advisory fee at the annual rate of
0.50% of the fund's average daily net assets. Dreyfus is the primary mutual fund
business of Mellon Financial Corporation, a global financial services company
with approximately $2.5 trillion in assets under management, administration or
custody, including approximately $450 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
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.
Dreyfus has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Dreyfus employees does not disadvantage any
Dreyfus-managed fund. Dreyfus portfolio managers and other investment personnel
who comply with the Policy's preclearance and disclosure procedures may be
permitted to purchase, sell or hold certain types of securities which also may
be or are held in the fund(s) they advise.
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>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of the Class A shares of each fund
(except General Treasury Prime Money Market Fund) for the fiscal periods
indicated. As a new fund, financial highlights information is not available for
General Treasury Prime Money Market Fund as of the date of this prospectus.
"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 (except where
noted) by Ernst & Young LLP, whose report, along with the fund's financial
statements, is included in the annual report. No financial information is
provided for Class X shares which had not been offered as of the date of the
financial statements. The Rule 12b-1 distribution fee and shareholder services
fee paid by Class X will cause such shares to have a higher expense ratio, to
pay lower dividends, and to have a lower total investment return than Class A
shares.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS TEN MONTHS
ENDED YEAR ENDED ENDED
MAY 31, NOVEMBER 30, NOVEMBER 30, YEAR ENDED JANUARY 31,
GENERAL MONEY MARKET FUND 1999 1998 1997(1) 1997 1996 1995 1994
- -------------------------------------------------- ------------- ------------- --------- ---------- --------- ---------- -------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income - net .022 .049 .041 .047 .053 .037 .025
Distributions: Dividends from investment
income - net (.022) (.049) (.041) (.047) (.053) (.037) (.025)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Total return (%) 4.37(2) 4.98 4.99(2) 4.81 5.42 3.75 2.56
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .79(2) .77 .88(2) .84 .86 .94 .94
Ratio of net investment income
to average net assets (%) 4.34(2) 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) 859,159 835,706 903,313 764,119 654,581 572,116 616,072
1 THE FUND CHANGED ITS FISCAL YEAR END FROM JANUARY 31 TO NOVEMBER 30.
2 ANNUALIZED.
</TABLE>
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED
MAY 31, YEAR ENDED NOVEMBER 30,
GENERAL MUNICIPAL MONEY MARKET FUND 1999 1998 1997 1996 1995 1994
- ---------------------------------------------------- ------------ ------------ ------------- ------------ ------------- ---------
PER-SHARE DATA ($)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment operations:
Investment income - net .013 .030 .031 .029 .034 .023
Distributions:
Dividends from investment income - net (.013) (.030) (.031) (.029) (.034) (.023)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
Total return (%) 2.63(1) 3.02 3.14 2.97 3.41 2.27
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .59(1) .60 .62 .66 .66 .64
Ratio of net investment income to average net 2.61(1) 2.98 3.09 2.93 3.35 2.22
assets (%)
Net assets, end of period ($ x 1,000) 264,370 280,398 273,058 256,862 294,379 294,711
(1) ANNUALIZED.
</TABLE>
<PAGE>
YOUR INVESTMENT
ACCOUNT POLICIES
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.
YOU MAY BUY CLASS X SHARES ONLY IF you establish an Auto-Exchange Account
pursuant to which the Class X shares purchased will be exchanged for Class B
shares of up to five Dreyfus Premier funds within two years of your initial
purchase of Class X shares. Subsequent purchases of Class X shares of a fund
must be exchanged for Class B shares within two years of your initial purchase.
CLASS X SHARES AND CLASS B SHARES of the Dreyfus Premier funds are subject to a
contingent deferred sales charge (CDSC), which is assessed only if you sell your
shares within six years of purchase. Under certain circumstances, you may not
have to pay a CDSC when you sell shares. Consult your financial representative
or the Statement of Additional Information (SAI) to see if a CDSC waiver may
apply to you. The following table sets forth the rates of the CDSC for Class X
shares and Class B shares of the Dreyfus Premier funds for which Class X may be
automatically exchanged.
- ---------------------------------------------------------
Sales charges
CDSC - CHARGED WHEN YOU SELL SHARES
Contingent deferred sales
charge as a % of your
Time since you bought the initial investment or your
shares you are selling redemption (whichever is less)
- ----------------------------- ---------------------------
Up to 2 years 4.00%
2 - 4 years 3.00%
4 - 5 years 2.00%
5 - 6 years 1.00%
More than 6 years Shares will automatically
covert to Class A of the
selected Dreyfus Premier
Fund
CLASS X SHARES ALSO CARRY an annual Rule 12b-1 fee of 0.25% of the Class's
average daily net assets. The Class B shares of the Dreyfus Premier funds you
receive in exchange for your fund Class X shares will convert to Class A shares
of the Dreyfus Premier funds approximately six years after the date you
purchased the exchanged Class X shares. Upon conversion to Class A shares, Class
B shares of the Dreyfus Premier funds will not be subject to a CDSC. Class A
shares of the Dreyfus Premier funds are not subject to a Rule 12b-1 fee. Class A
shares of the Dreyfus Premier funds are subject to an annual shareholder
services fee of 0.25% paid to the distributor for providing shareholder
services.
You should invest in Class X shares of a fund only as part of a long-term
investment in the Dreyfus Family of Funds. If you are seeking only to invest in
a money market fund and do not expect to exchange fund shares for Class B shares
of a Dreyfus Premier fund, you should consider more suitable investments,
including another class of the fund's shares or other money market funds offered
by Dreyfus. Consult your financial representative for more details.
<PAGE>
BUYING SHARES
YOUR PRICE FOR FUND SHARES is the fund's net asset value (NAV), which is
generally calculated twice a day, at 5:00 p.m. and 8:00 p.m., for General Money
Market Fund and General Treasury Prime Money Market Fund and three times a day,
at 12:00 noon, 2:00 p.m. and 8:00 p.m., for General 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 12:00 noon
for the taxable money market funds or by 4:00 p.m. for the municipal money
market fund, you will receive the dividend declared that day. If your payments
are received in or converted into Federal Funds after 12:00 noon for the taxable
money market funds or after 4:00 p.m. for the municipal money market fund, 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
5:00 p.m. for the taxable money market funds or by 2:00 p.m. for the municipal
money market fund, and Federal Funds are received by 6:00 p.m. or 4:00 p.m.,
respectively, the shares will be purchased at the next NAV determined after the
telephone order is accepted, and will receive the dividend declared that day. If
such an order is made after 5:00 p.m. for the taxable money market funds or
after 2:00 p.m. for the municipal money market fund, but by 8:00 p.m., and
Federal Funds are received by 11:00 a.m. the next business day, the shares will
be purchased at the NAV determined at 8:00 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 plans.
- ---------------------------------------------------------
Minimum investments
Initial Additional
- ----------------------- ---------------- ----------------
REGULAR ACCOUNTS $2,500 $100
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE
FIRST YEAR
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.
CONCEPTS TO UNDERSTAND
Net Asset Value (NAV): a mutual fund's share price on a given day. A fund's NAV
is calculated by dividing the value of its net asserts by the number of existing
shares.
Amortized cost: a method of valuing a money market fund's portfolio securities,
which does not take into account unrealized gains or losses. As a result,
portfolio securities are valued at their acquisition cost, adjusted over time
based on the discounts or premiums reflected in their purchase price. This
method of valuation is designed to permit a fund to maintain a stable NAV.
<PAGE>
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.
TO KEEP YOUR CDSC AS LOW AS POSSIBLE, each time you request to sell shares we
will first sell shares that are subject to the lowest charge. The CDSC is based
on the lesser of the original purchase cost or the current market value of the
shares being sold.
BEFORE SELLING 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.
WRITTEN SELL ORDERS
Some circumstances require written sell orders along with signature guarantees.
These include:
o amounts of $1,000 or more on accounts whose address has been changed within
the last 30 days
o 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.
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
GENERAL POLICIES
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.
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:
o 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)
o refuse any purchase or exchange request in excess of 1% of the fund's total
assets
o change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions
o change its minimum investment amounts
o 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).
<PAGE>
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. You
may choose to receive your dividends and distributions in cash or automatically
reinvest them in shares of one of your Dreyfus Premier funds through Dreyfus
Dividend Sweep (not available for IRAs). 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).
The municipal money market fund anticipates that, under normal market
conditions, virtually all of its income dividends will be exempt from federal
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 AND DISTRIBUTIONS: income or interest paid by the fund's portfolio
investments and 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 PURCHASE fund shares may impose different
restrictions on the 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.
EXCHANGE PRIVILEGE
YOU CAN EXCHANGE CLASS X SHARES worth $500 or more from one fund into Class B
shares of a Dreyfus Premier fund (no minimum for retirement accounts). Class B
shares of a Dreyfus Premier fund may not be exchanged for Class X shares of a
fund. You can request your exchange by contacting your financial representative.
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.
DREYFUS AUTO-EXCHANGE PRIVILEGE
TO INVEST IN CLASS X SHARES OF A FUND, you will be required to participate in
the Dreyfus Auto-Exchange privilege. As a participant, you will have to
establish the time and amount of your automatic exchanges such that all of the
Class X shares purchased will have been exchanged for Class B shares of a
Dreyfus Premier fund within two years of your initial purchase. You can change
the time or amount of your automatic exchanges by contacting your financial
representative.
CDSC UNDER EXCHANGE AND AUTO-EXCHANGE PRIVILEGES
SHARES WILL BE EXCHANGED PURSUANT TO the Exchange privilege or Auto-Exchange
privilege at the then-current NAV. No CDSC will be imposed at the time of the
exchange; however, shares acquired through an exchange will be subject to the
higher CDSC applicable to the exchanged or acquired shares. For purposes of
computing any applicable CDSC, the length of time you have owned your shares
will be measured from the date of original purchase and will not be affected by
the exchange.
REINVESTMENT PRIVILEGE
UPON WRITTEN REQUEST YOU CAN reinvest up to the number of Class X shares you
sold within 45 days of selling them at the current share price. If you paid a
CDSC, it will be credited back to your account. This privilege may be used only
once.
DREYFUS DIVIDEND SWEEP
YOU CAN AUTOMATICALLY REINVEST YOUR DIVIDENDS and distributions from the fund
into one or more of the Dreyfus Premier funds you have selected (not available
for IRAs). You can set up this service with your application, or by calling your
financial representative or 1-800-645-6561.
24-HOUR AUTOMATED ACCOUNT ACCESS
YOU CAN EASILY MANAGE YOUR DREYFUS ACCOUNTS, check your account balances,
transfer money between your Dreyfus funds, get price and yield information and
much more -- when it's convenient for you.
ACCOUNT STATEMENTS
EVERY FUND INVESTOR AUTOMATICALLY RECEIVES regular account statements. You will
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
<PAGE>
INSTRUCTIONS FOR REGULAR ACCOUNTS
<TABLE>
<CAPTION>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT TO SELL SHARES
- ---------------------------------------- -------------------------------------- --------------------------------------
IN WRITING
<S> <C> <C>
Complete the application. Fill out an investment slip, and Write a letter of instruction that
write your account number on your includes:
Mail your application and a check to: check. your name(s) and signature(s)
Name of Fund your account number
P.O. Box 6587 Mail the slip and the check to: the fund name
Providence, RI 02940-6587 Name of Fund the dollar amount you want to sell
Attn: Institutional Processing P.O. Box 6587 how and where to send the proceeds
Providence, RI 02940-6587
Attn: Institutional Processing
Obtain a signature guarantee or
other documentation, if required
(see page 12)
Mail your request to:
The Dreyfus Family of Funds
P.O. Box 6587
Providence, RI 02940-6587
Attn: Institutional Processing
- ---------------------------------------- -------------------------------------- --------------------------------------
BY TELEPHONE
WIRE Have your bank send your WIRE Have your bank send your WIRE Call us or your financial
investment to The Bank of New York, investment to The Bank of New York, representative to request your
with these instructions: with these instructions: transaction. Be sure the fund has
ABA# 021000018 ABA# 021000018 your bank account information on
fund name and DDA# fund name and DDA# file. Proceeds will be wired to your
General Money Market Fund General Money Market Fund bank.
DDA# 8900051957 DDA# 8900051957
General Treasury Prime General Treasury Prime CHECK Call us or your financial
Money Market Fund Money Market Fund representative to request your
DDA# 8900403349 DDA# 8900403349 transaction. A check will be sent to
General Municipal Money General Municipal Money the address of record.
Market Fund Market Fund
DDA# 8900052376 DDA# 8900052376
the share class the share class
your Social Security or tax your account number
ID number name(s) of investor(s)
name(s) of investor(s) dealer number if applicable
dealer number if applicable
ELECTRONIC CHECK Same as wire, but
Call us to obtain an account number. insert "1111" before your account
Return your application with the number.
account number on the application.
</TABLE>
<PAGE>
INSTRUCTIONS FOR IRAS
<TABLE>
<CAPTION>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT TO SELL SHARES
- ---------------------------------------- -------------------------------------- --------------------------------------
IN WRITING
<S> <C> <C>
Complete an IRA application, making Fill out an investment slip, and Write a letter of instruction that
sure to specify the fund name and to write your account number on your includes:
indicate the year the contribution is check. Indicate the year the your name and signature
for. contribution is for. your account number and fund name
the dollar amount you want to sell
Mail your application and a check to: Mail in the slip and the check to: how and where to send the proceeds
The Dreyfus Trust Company, Custodian The Dreyfus Trust Company, Custodian whether the distribution is
P.O. Box 6427 P.O. Box 6427 qualified or premature
Providence, RI 02940-6427 Providence, RI 02940-6427 whether the 10% TEFRA
Attn: Institutional Processing Attn: Institutional Processing should be withheld
Obtain a signature guarantee or
other documentation, if required
(see page 12).
Mail in your request to:
The Dreyfus Trust Company
P.O. Box 6427
Providence, RI 02940-6427
Attn: Institutional Processing
- ---------------------------------------- -------------------------------------- --------------------------------------
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 Treasury Prime
Money Market Fund
DDA# 8900403349
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.
</TABLE>
The General Municipal Money Market Fund is not recommended for IRAs.
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
FOR MORE INFORMATION
GENERAL MONEY MARKET FUND
SEC file number: 811-3207
GENERAL TREASURY PRIME
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 a 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.
<PAGE>
- --------------------------------------------------------------------------------
GENERAL GOVERNMENT SECURITIES MONEY MARKET FUND
GENERAL MONEY MARKET FUND, INC.
GENERAL TREASURY PRIME MONEY MARKET FUND
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
December 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 (the "Government Money Fund"), General Money Market Fund, Inc. (the
"Money Fund"), General Treasury Prime Money Market Fund (the "Treasury 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 December 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 one of 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 GOVERNMENT MONEY FUND AND
THE TREASURY MONEY FUND ARE SEPARATE SERIES OF GENERAL GOVERNMENT SECURITIES
MONEY MARKET FUNDS, INC. (THE "GOVERNMENT COMPANY"). THE MINNESOTA MUNICIPAL
FUND AND THE NATIONAL MUNICIPAL FUND ARE SEPARATE SERIES OF GENERAL MUNICIPAL
MONEY MARKET FUNDS, INC. (THE "MUNICIPAL COMPANY"). THIS COMBINED STATEMENT OF
ADDITIONAL INFORMATION HAS BEEN PROVIDED FOR YOUR CONVENIENCE TO PROVIDE YOU
WITH THE OPPORTUNITY TO CONSIDER SEVEN INVESTMENT CHOICES IN ONE DOCUMENT.
<PAGE>
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE FUNDS.................................................B-3
MANAGEMENT OF THE FUNDS..................................................B-24
MANAGEMENT ARRANGEMENTS..................................................B-30
HOW TO BUY SHARES........................................................B-34
SERVICE PLAN AND DISTRIBUTION PLAN.......................................B-38
SHAREHOLDER SERVICES PLANS...............................................B-42
HOW TO REDEEM SHARES.....................................................B-42
SHAREHOLDER SERVICES.....................................................B-44
DETERMINATION OF NET ASSET VALUE.........................................B-48
DIVIDENDS, DISTRIBUTIONS AND TAXES.......................................B-49
YIELD INFORMATION........................................................B-51
PORTFOLIO TRANSACTIONS...................................................B-54
INFORMATION ABOUT THE FUNDS..............................................B-55
COUNSEL AND INDEPENDENT AUDITORS.........................................B-56
APPENDIX A...............................................................B-57
APPENDIX B...............................................................B-60
APPENDIX C...............................................................B-64
APPENDIX D...............................................................B-83
APPENDIX E...............................................................B-89
APPENDIX F...............................................................B-115
<PAGE>
DESCRIPTION OF THE FUNDS
Each of the Government Company, the Money Fund and the Municipal Company 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, the
Treasury 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, MONEY FUND AND TREASURY
MONEY FUND) The Treasury Money Market Fund only invests in securities issued or
guaranteed by the U.S. Government. Each of the Government Money Fund and Money
Fund may invest in securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, which include 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 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") or ("Moody's") or ("S&P") Fund Fund Fund Fund
- ------------------ ------------------ ----------------------- ----------- ---------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
F1+/F1 VMIG1/MIG1, P1 SP1+/SP1, A1+/A1 92.7% 80.0% 93.5% 95.1%
F2+/F2 VMIG2/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%
====== ====== ====== ======
- ----------
* 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.
</TABLE>
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.
INVESTMENT COMPANIES. (CALIFORNIA MUNICIPAL FUND, NATIONAL MUNICIPAL FUND
AND NEW YORK MUNICIPAL FUND) Each of these Funds may invest in securities issued
by other investment companies to the extent consistent with its investment
objective. Under the 1940 Act, a Fund's investment in such securities, subject
to certain exceptions, currently is limited to (i) 3% of the total voting stock
of any one investment company, (ii) 5% of the Fund's total assets with respect
to any one investment company and (iii) 10% of the Fund's total assets in the
aggregate. Investments in the securities of other investment companies may
involve duplication of advisory fees and certain other expenses.
STRUCTURED NOTES. (CALIFORNIA MUNICIPAL FUND, NATIONAL MUNICIPAL FUND AND
NEW YORK MUNICIPAL FUND) Each of these Funds may invest in structured notes,
which are derivative instruments whose value is tied to underlying Municipal
Obligations. Structured notes typically are purchased in privately negotiated
transactions from financial institutions. A number of different arrangements are
possible. Some notes may have characteristics typical of an auction rate
security where at specified intervals the interest rate on the note is adjusted,
and ownership changes, based on an auction mechanism. The interest rate on such
notes generally is below the coupon rate of the underlying Municipal Obligations
and generally is at a level comparable to that of a Municipal Obligation of
similar quality and having a maturity equal to the period between interest rate
adjustments. Others are similar to variable and floating rate securities, and
others can be issued with fixed rates. When a Fund purchases a structured note,
it will make a payment of principal to the counterparty. Some structured notes
have a guaranteed repayment of principal while others place a portion (or all)
of the principal at risk. The possibility of default by the counterparty or its
credit provider may be greater for structured notes than for other types of
money market instruments.
A Fund will purchase structured notes rated in one of the two highest
rating categories for debt obligations by at least two nationally recognized
statistical rating organizations (or one rating organization if the instrument
was rated by only one such organization) or, if unrated, determined to be of
comparable quality pursuant to procedures established by the Fund's Board. In
addition, the Manager will monitor the liquidity of structured notes purchased
and notes determined to be illiquid will be aggregated with other illiquid
securities and subject to the limitation that no more than 10% of the Fund's
assets be invested in illiquid securities.
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% 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
1997-98 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.
* * * * *
TREASURY MONEY FUND. The Treasury 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 Treasury Money 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 Treasury Money Fund may not:
1. Invest in commodities.
2. Borrow money, except 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. Purchase or sell securities on margin.
4. Issue any senior security (as such term is defined in Section 18(f) of
the 1940 Act).
5. Act as underwriter of securities of other issuers, 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.
6. Purchase, hold or deal in real estate, or oil, gas, or other mineral
leases or exploration or development programs, but the Fund may purchase and
sell securities that are secured by real estate or issued by companies that
invest in or deal in real estate.
7. Make loans to others, except through the purchase of debt obligations.
8. Invest more than 5% of its assets in the obligations of any one issuer,
except that up to 25% of the value of the Fund's total assets may be invested
without regard to any such limitations.
9. Invest more than 25% of its assets in the securities of issuers in any
industry, provided that there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government.
10. Pledge, mortgage, hypothecate or otherwise encumber its assets, except
to the extent necessary to secure permitted borrowings.
11. Enter into repurchase agreements.
* * * * *
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 5 as fundamental policies. Investment
restrictions numbered 6 through 10 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. 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. Act as underwriter of securities of other issuers, except (i) 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 (ii) 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.
3. 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.
4. Lend any security or make loans to others if, as a result, more than
33-1/3% of its total assets would be lent to others, except that this limitation
does not apply to the purchase of qualified debt obligations and the entry into
repurchase agreements.
5. 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.
6. Sell securities short or purchase securities on margin.
7. Invest in companies for the purpose of exercising control.
8. Invest in securities of other investment companies, except to the extent
permitted under the 1940 Act.
9. Pledge, hypothecate, mortgage or otherwise encumber its assets, except
to the extent necessary to secure permitted borrowings.
10. Enter into repurchase agreements providing for settlement in more than
seven days after notice or purchase securities which are illiquid if, in the
aggregate, more than 10% of the value of the Fund's net assets would be so
invested.
* * * * *
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 7 as fundamental policies. Investment
restriction numbered 8 through 12 are not fundamental policies 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. 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. Act as underwriter of securities of other issuers, except (i) 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 (ii) 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.
3. 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.
4. Lend any security or make loans to others if, as a result, more than
33-1/3% of its total assets would be lent to others, except that this limitation
does not apply to the purchase of qualified debt obligations and the entry into
repurchase agreements.
5. 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.
6. Purchase more than 10% of the voting securities of any issuer. This
restriction applies only with respect to 75% of the Fund's total assets.
7. 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.
8. Pledge, hypothecate, mortgage or otherwise encumber its assets, except
to the extent necessary to secure permitted borrowings and in connection with
the purchase of securities on a when-issued or forward commitment basis.
9. Sell securities short or purchase securities on margin.
10. Invest in companies for the purpose of exercising control.
11. Invest in securities of other investment companies, except to the
extent permitted under the 1940 Act.
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 5 as fundamental policies. Investment
restrictions numbered 6 through 10 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. 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. Act as underwriter of securities of other issuers, except (i) 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 (ii) 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.
3. 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.
4. Lend any security or make loans to others if, as a result, more than
33-1/3% of its total assets would be lent to others, except that this limitation
does not apply to the purchase of qualified debt obligations and the entry into
repurchase agreements.
5. 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.
6. Sell securities short or purchase securities on margin.
7. Invest in companies for the purpose of exercising control.
8. Invest in securities of other investment companies, except to the extent
permitted under the 1940 Act.
9. Pledge, hypothecate, mortgage or otherwise encumber its assets, except
to the extent necessary to secure permitted borrowings.
10. Enter into repurchase agreements providing for settlement in more than
seven days after notice or purchase securities which are illiquid if, in the
aggregate, more than 10% of the value of the Fund's net assets would be so
invested.
* * * * *
MUNICIPAL FUNDS. For purposes of Investment Restriction No. 5 for each
Municipal Fund other than the Minnesota Municipal Fund and Investment
Restriction No. 7 for the Minnesota 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 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 56 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 and TLC Beatrice International Holdings, Inc. He is 66 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 67 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 02159.
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.
Each Fund has a standing nominating committee comprised of its Board
members who are not "interested persons" of the Fund, as defined in the 1940
Act. The function of the nominating committee is to select and nominate all
candidates who are not "interested persons" of the Fund for election to the
Fund's Board.
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 indicated below for the fiscal year ended
November 30, 1998, and by all funds in the Dreyfus Family of Funds for which
such person is a Board member (the number of which is set forth in parenthesis
next to each Board member's total compensation)* for the year ended December 31,
1998, are set forth below.
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 serve.
** Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $1,348 for the Government Money Fund, $3,177 for the
Money Fund, $1,095 for the California Municipal Fund, $1,584 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 Municipal 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 42 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.
*FREDERICK C. DEY, VICE PRESIDENT, ASSISTANT TREASURER AND ASSISTANT SECRETARY.
Vice President, New Business Development of Funds Distributor, Inc. since
September 1994, and an officer of other investment companies advised or
administered by the Manager. He is 37 years old.
STEPHANIE D. PIERCE, VICE PRESIDENT, ASSISTANT SECRETARY AND ASSISTANT
TREASURER. Vice President and Cleint 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 31 years old.
*JOHN P. COVINO, VICE PRESIDENT AND ASSISTANT TREASURER. Vice President and
Treasury Group Manager of Treasury Servicing and Administration of Funds
Distributor, Inc. since December 1998. From December 1995 to November 1998,
he was employed by Fidelity Investments where he held multiple positions in
their Institutional Brokerage Group. Prior to joining Fidelity, he was
employed by SunGard Brokerage Systems where he was responsible for the
technology and development of the accounting product group. He is 35 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. 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. 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.
*KAREN JACOPPO-WOOD, VICE PRESIDENT AND ASSISTANT SECRETARY. Vice President and
Senior Counsel of Funds Distributor, Inc. since February 1997, and an
officer of other investment companies advised or administered by the
Manager. From June 1994 to January 1996, she was Manager of SEC
Registration at Scudder, Stevens & Clark, Inc. She is 32 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. 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 27 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, except those officers indicated by an (*), whose address is 60 State
Street, Boston, Massachusetts 02109.
Each Fund's Board members and officers, as a group, owned less than 1% of
the Fund's shares outstanding on November 1, 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 November 1, 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 Financial Corporation
("Mellon").
The Manager provides management services pursuant to separate Management
Agreements (respectively, the "Agreement") between the Company and the Manager.
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. 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 Kash, Vice Chairman and a director; Ronald P. O'Hanley III, Vice
Chairman; J. David Officer, 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. Elliot, 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, the
Money Fund and the Treasury Money Fund are Bernard W. Kiernan, Patricia A.
Larkin, James G. O'Connor and Thomas Riordan. The portfolio managers of the
Municipal Funds are Joseph P. Darcy, A. Paul Disdier, Douglas J. Gaylor, Joseph
Irace, Colleen Meehan, Richard J. Moynihan, W. Michael Petty, Jill C. Shaffro,
Scott Sprauer, 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 has a personal securities trading policy (the "Policy") which
restricts the personal securities transactions of its employees. Its primary
purpose is to ensure that personal trading by the Manager's employees does not
disadvantage any fund managed by the Manager. Under the Policy, the Manager's
employees must preclear personal transactions in securities not exempt under the
Policy. In addition, the Manager's employees must report their personal
securities transactions and holdings, which are reviewed for compliance with
Policy. In that regard, the Manager's portfolio managers and other investment
personnel also are subject to the oversight of Mellon's Investment Ethics
Committee. Portfolio managers and other investment personnel of the Manager who
comply with the Policy's preclearance and disclosure procedures, and the
requirements of the Committee, may be permitted to purchase, sell or hold
securities which also may be or are held in fund(s) they manage or for which
they otherwise provide investment advice.
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 indicated below 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,
1997:
<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 Fund $5,124,528 $3,330,297 $3,002,777 $2,622,700
Money Fund $13,222,636 $7,091,891 $5,285,812 $3,172,667
Fiscal Year Four-Month Period
Ended Ended FISCAL YEAR ENDED JULY 31,
NOVEMBER 30, 1998 NOVEMBER 30, 1997 1997 1996
----------------- ----------------- ---- ----
California Municipal Fund $1,794,867 $ 620,429 $1,836,034 $2,195,288
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NOVEMBER 30,
1998 1997 1996
---- ---- ----
<S> <C>
Minnesota Municipal Fund $65,816* N/A N/A
National Municipal Fund $3,038,316 $2,127,041 $1,566,276
New York Municipal Fund $2,369,250 $2,599,539 $2,945,172
- --------------------
* For the period from June 1, 1998 (commencement of operations) to November
30, 1998.
</TABLE>
The Treasury Money Fund has not completed its first fiscal year.
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 based on the amount invested through
such dealers in certain 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"). Generally, the fee paid
to dealers will not exceed 1% of the amount invested through such dealers. The
Distributor, however, may pay dealers a higher fee and 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"), 100 Church Street, 10th Floor, 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, Money Fund and Treasury 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
Builder(R), 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, MONEY FUND AND TREASURY 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.
MINNESOTA MUNICIPAL FUND--The 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, Eastern time, and as of 8:00 p.m., Eastern time.
If your payments are received in or converted into Federal Funds by 4:00
p.m., Eastern 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 4:00 p.m., Eastern 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. A
telephone order placed with the Distributor or its designee in New York will
become effective at the price determined at 12:00 Noon, Eastern 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
12:00 Noon, Eastern time, and Federal Funds are received by 4:00 p.m., Eastern
time, on that day. A telephone order placed with the Distributor or its designee
in New York after 12:00 Noon, Eastern time, but by 8:00 p.m., Eastern time, on a
given day will become effective at the price determined at 8:00 p.m., Eastern
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., Eastern
time, on the next business day.
<PAGE>
CALIFORNIA MUNICIPAL FUND, NATIONAL MUNICIPAL FUND AND NEW YORK MUNICIPAL
FUND--Each of these Funds determines its net asset value per share three times
each day the New York Stock Exchange or the Transfer Agent is open for business:
as of 12:00 Noon, Eastern time, as of 2:00 p.m., Eastern time, and as of 8:00
p.m., Eastern time.
If your payments are received in or converted into Federal Funds by 4:00
p.m., Eastern 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
4:00 p.m., Eastern time, you will begin to accrue dividends on the following
business day.
Qualified institutions may telephone orders for purchase of Fund shares. A
telephone order placed with the Distributor or its designee in New York will
become effective at the price determined at 12:00 Noon, or 2:00 p.m., Eastern
time, depending on when the order is accepted 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 2:00 p.m.,
Eastern time, and Federal Funds are received at 4:00 p.m., Eastern time, on that
day. A telephone order placed with the Distributor or its designee in New York
after 2:00 p.m., Eastern time, but by 8:00 p.m., Eastern time, on a given day
will become effective at the price determined at 8:00 p.m., Eastern 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, Money Fund and
Treasury 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 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. 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:
<TABLE>
<CAPTION>
TOTAL AMOUNT
PAID PURSUANT TO PRINTING AND
NAME OF FUND SERVICE PLAN DISTRIBUTOR PAYMENTS DREYFUS PAYMENTS IMPLEMENTATION
- ------------------- --------------------- ----------------------- ------------------- -----------------
Government
Money Fund
<S> <C> <C> <C> <C> <C>
- Class A $1,468,487 $ 410,171 $1,058,316 $ -0-
Money Fund
- Class A $3,215,190 $1,490,345 $1,724,844 $12,690
</TABLE>
The Treasury Money Fund has not completed its first fiscal year.
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.
The Treasury Money Fund has not completed its first fiscal year.
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 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:
<TABLE>
<CAPTION>
TOTAL AMOUNT
NAME OF FUND PAYABLE PURSUANT TO AMOUNT REIMBURSED PURSUANT TO NET AMOUNT PAID
AND CLASS SHAREHOLDER SERVICES PLAN UNDERTAKING BY FUND
Government Money Fund
<S> <C> <C> <C> <C>
- - 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.
</TABLE>
The Treasury Money Fund has not completed its first fiscal year.
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 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, any request for a
wire redemption will be effected as a Dreyfus TELETRANSFER transaction through
the ACH system unless more prompt transmittal specifically is requested. See
"How to Buy Shares--Dreyfus TELETRANSFER 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. 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 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 Touch(R)
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 BUILDER(R). 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. The 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, MONEY FUND AND TREASURY MONEY FUND) Each of the Government Money
Fund, Money Fund and Treasury 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 (except the Treasury Money Fund) has
qualified for the fiscal year ended November 30, 1998 as a "regulated investment
company" under the Code. It is expected that the Treasury Money Fund will
qualify 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, Money
Fund and Treasury 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 4.41% 4.51%
Class A 4.21% / 4.20%* 4.30% / 4.29%*
Class B
California Municipal Fund 2.52% 2.55%
Class A 2.06% / 2.00%* 2.08% / 2.02%*
Class B
Minnesota Municipal Fund 2.73% / 2.77% 2.77% / 2.60%
Class A 2.57% / 2.00%* 2.60% / 2.08%*
Class B
National Municipal Fund 2.73% / 2.77% -0-%
Class A 2.38% / 2.00%* 2.30% / 2.33%*
Class B
New York Municipal Fund 2.43% 2.46%
Class A 2.13% / 2.06%* 2.15% / 2.08%*
Class B
- ----------------
* Net of absorbed expenses.
The Treasury Money Fund has not completed its first fiscal year and,
therefore, no performance data have been provided for such Fund.
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 presently in effect. 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.
From time to time, advertising materials may refer to studies performed by
The Dreyfus Corporation or its affiliates, such as "The Dreyfus Tax Informed
Investing Study" or "The Dreyfus Grade Investment Comparison Study (1996 &
1997)" or such other studies.
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 Government Money Fund and Treasury Money Fund are separate series of
the Government Company. The Minnesota Municipal Fund and National Municipal Fund
are separate series of the Municipal 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 Government Company or
the Municipal 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, Money Fund and
Treasury 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.
<PAGE>
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 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.
<PAGE>
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.
<PAGE>
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 obligations. It does not purport to be a
complete description and is drawn from the Official Statement issued by the
State of California (the "State") for its public bond issue on December 9, 1998.
While the Fund has not independently verified such information, it has no reason
to believe that such information is not correct in all material respects.
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.
<TABLE>
<CAPTION>
POPULATION 1992-97
% INCREASE % INCREASE
OVER OVER CALIFORNIA
CALIFORNIA PRECEDING UNITED STATES PRECEDING AS % OF
YEAR POPULATION(A) YEAR POPULATION(A) YEAR UNITED STATES
<S> <C> <C> <C> <C> <C>
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.
</TABLE>
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.
<TABLE>
<CAPTION>
LABOR FORCE
1992-97
LABOR FORCE TRENDS (THOUSANDS) UNEMPLOYMENT RATE(%)
YEAR LABOR FORCE EMPLOYMENT CALIFORNIA UNITED STATES
<S> <C> <C> <C> <C>
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.
</TABLE>
EMPLOYMENT, INCOME, CONSTRUCTION AND RETAIL SALES
The following table shows California's nonagricultural employment
distribution and growth for 1990 and 1997.
<TABLE>
<CAPTION>
PAYROLL EMPLOYMENT BY MAJOR SECTOR
1990 AND 1997
Employment % Distribution
(Thousands) of Employment
INDUSTRY SECTOR 1990 1997 1990 1997
--------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
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
</TABLE>
- -------------------
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.
<PAGE>
APPENDIX D
INVESTING IN MINNESOTA MUNICIPAL OBLIGATIONS
RISK FACTORS -- INVESTING IN MINNESOTA MUNICIPAL OBLIGATIONS
The following information is a summary of special factors affecting
investments in Minnesotea municipal obligations. It does not purport to be a
complete description and is drawn from a recent Official Statement issued by the
State for a public bond issue. While the Fund has not independently verified
such information, it has no reason to believe that such information is not
correct in all material respects.
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 MinnesotaCare(R) 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
MinnesotaCare(R) 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 MinnesotaCare(R), 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%.
<PAGE>
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. While the Fund has not
independently verified such information, it has no reason to believe that such
information is not correct in all material respects.
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 ss. 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 ss.ss. 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 ss. 1983 and the
Equal Educational Opportunity Act, 20 USC ss.ss. 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.
<PAGE>
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 November 1, 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 5.3281%;
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 41.8011%;
Stifel Nicolaus & Co. Inc., for the Exclusive Benefit of
Customers, 500 N. Broadway, Saint Louis, MO 63102-2110 - owned
of record 29.2790%;
First Albany Corporation, P.O. Box 22024, Albany, New York
12201-2024 - owned of record 12.1556%;
Banc of America Securities LLC, Money Market Funds Omnibus, 600
Montgomery Street, Suite 4, San Francisco, CA 94111-2702 -
owned of record 5.8483%.
MONEY FUND
Class A: Banc of America Securities LLC, Money Market Funds
Omnibus, 600 Montgomery Street, Suite 4, San Francisco, CA
94111-2702 - owned of record 13.4070%;
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 41.5303%;
First Albany Corporation, P.O. Box 22024, Albany, New York
12201-2024 - owned of record 20.7233%;
Stifel Nicolaus & Co. Inc. for the Exclusive Benefit of
Customers, 500 N. Broadway, Saint Louis, MO 63102-2110 - owned of
record 17.9092%;
Banc of America Securities LLC, Money Market Fund Omnibus,
600 Montgomery Street, Suite 4, San Francisco, CA 94111-2702 -
owned of record 12.3249%.
CALIFORNIA MUNICIPAL FUND
Class A: Banc of America Securities LLC, Money Market Funds
Omnibus, 600 Montgomery Street, Suite 4, San Francisco, CA
94111-2702 - owned of record 27.8786%;
Peter L. S. Currie and Elizabeth M. Currie TTEES, The Currie
Family Trust, Palo Alto, CA 94301-3723 - owned of record 6.4970%;
Larry Ray Carter and Juana Joyce Carter TTEES, FBO The Carter
Revocable Trust, Los Gatos, CA 95032-5734 - owned of record
6.2321%;
Class B: Robert W. Baird & Co., Omnibus Account for the Exclusive Benefit
of Customers, P.O. Box 572, Milwaukee, WI 53201-0672 - owned of
record 75.2164%;
Stifel Nicolas & Co. Inc. for the Exclusive Benefit of Customers,
500 N. Broadway, Saint Louis, MO 63102-2110 - owned of record
11.7352%;
Banc of America Securities LLC, Money Market Funds Omnibus, 600
Montgomery Street, Suite 4, San Francisco, CA 94111-2702 - owned
of record 10.7697%;
MINNESOTA MUNICIPAL FUND
Class A: MBCIC, c/o Mellon Bank, Attn. Michael Botsford, 919 N. Market
Street, Wilmington, DE 19801-3023 - owned of record 97.1047%;
Class B: Banc of America Securities LLC, Money Market Funds
Omnibus, 600 Montgomery Street, Suite 4, San Francisco, CA
94111-2702 - owned of record 88.6171%;
Robert W. Baird & Co., Omnibus Account for the Exclusive Benefit
of Customers, P.O. Box 672, Milwaukee, WI 53201-0672 - owned of
record 11.0759%.
NATIONAL MUNICIPAL FUND
Class A: Banc of America Securities LLC, Money Market Funds
Omnibus, 600 Montgomery Street, Suite 4, San Francisco, CA
94111-2702 - owned of record 24.4081%;
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 66.8031%;
Stifel Nicolaus & Co. Inc. for the Exclusive Benefit of
Customers, 500 N. Broadway, Saint Louis, MO 63102-2110 - owned of
record 14.3550%;
George K. Baum & Company, Attn. Ron Frazier, Special Custody
Account for the Exclusive Benefit of Customers, 120 W. 12th
Street, Kansas City, MO 64105-1917 - owned of record 7.2486%;
Banc of America Securities LLC, Money Market Funds Omnibus, 600
Montgomery Street, Suite 4, San Franciso, CA 94111-2702 - owned
of record 6.3545%.
NEW YORK MUNICIPAL FUND
Class A: As of November 1, 1999, there were no shareholders who owned 5%
or more of the Class A shares of the New York Municipal Fund.
Class B: Banc of America Securities LLC, Money Market Funds Omnibus, 600
Montgomery Street, Suite 4, San Franciso, CA 94111-2702 - owned
of record 51.1606%;
First Albany Corporation, P.O. Box 22024, Albany, NY 12201-2024 -
owned of record 45.5680%.
<PAGE>
- --------------------------------------------------------------------------------
GENERAL MONEY MARKET FUND, INC.
GENERAL TREASURY PRIME MONEY MARKET FUND
GENERAL MUNICIPAL MONEY MARKET FUND
STATEMENT OF ADDITIONAL INFORMATION
December 1, 1999
CLASS X 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 X shares of General Money Market Fund, Inc. (the "Money
Fund"), General Treasury Prime Money Market Fund (the "Treasury Money Fund") and
General Municipal Money Market Fund (the "National Municipal Fund") (each, a
"Fund" and collectively, the "Funds"), dated December 1, 1999, as it may be
revised from time to time. To obtain a copy of the Prospectus for Class X shares
of a Fund, please write to a Fund at 144 Glenn Curtiss Boulevard, Uniondale, New
York 11556-0144, or call one of 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 THE OTHER FUND. THE TREASURY MONEY FUND IS A
SEPARATE SERIES OF GENERAL GOVERNMENT SECURITIES MONEY MARKET FUNDS, INC. (THE
"GOVERNMENT COMPANY"). THE NATIONAL MUNICIPAL FUND IS A SEPARATE SERIES OF
GENERAL MUNICIPAL MONEY MARKET FUNDS, INC. (THE "MUNICIPAL COMPANY"). THIS
COMBINED STATEMENT OF ADDITIONAL INFORMATION HAS BEEN PROVIDED FOR YOUR
CONVENIENCE TO PROVIDE YOU WITH THE OPPORTUNITY TO CONSIDER THREE INVESTMENT
CHOICES IN ONE DOCUMENT.
<PAGE>
TABLE OF CONTENTS
PAGE
Description of the Funds..................................................B-3
Management of the Funds...................................................B-18
Management Arrangements...................................................B-23
How to Buy Shares.........................................................B-27
Distribution Plan.........................................................B-30
Shareholder Services Plan.................................................B-30
How to Redeem Shares......................................................B-31
Shareholder Services......................................................B-34
Determination of Net Asset Value..........................................B-38
Dividends, Distributions and Taxes........................................B-39
Yield Information.........................................................B-40
Portfolio Transactions....................................................B-41
Information About the Funds...............................................B-41
Counsel and Independent Auditors..........................................B-42
Appendix A................................................................B-43
Appendix B................................................................B-46
Appendix C................................................................B-50
<PAGE>
DESCRIPTION OF THE FUNDS
Each of the Money Fund, the Government Company and the Municipal Company is
a Maryland corporation formed on April 8, 1982, April 8, 1982 and May 15, 1981,
respectively. Each Fund is an open-end management investment company, known as a
money market mutual fund. Each 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.
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. (MONEY FUND AND TREASURY MONEY FUND) The
Treasury Money Fund only invests in securities issued or guaranteed by the U.S.
Government. The Money Fund may invest in securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities, which include 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 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. (MONEY FUND) The Money Fund 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. (NATIONAL MUNICIPAL FUND) The National 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 or
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.
For the purpose of diversification under the Investment Company Act of
1940, as amended (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. (NATIONAL MUNICIPAL FUND) The National 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. (NATIONAL MUNICIPAL FUND) The National
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 the Fund's net assets will be
invested in lease obligations that are illiquid and in other illiquid
securities.
TENDER OPTION BONDS. (NATIONAL MUNICIPAL FUND) The National 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. (NATIONAL MUNICIPAL FUND) The National 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. (NATIONAL MUNICIPAL FUND) The National
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>
Moody's Investors Standard & Poor's Percentage of
Fitch IBCA, Inc. Service, Inc. Ratings Group Value
("Fitch") or ("Moody's") or ("S&P") National
Municipal
Fund
----------------------- ---------------------- -------------------- --------------------
<S> <C> <C> <C>
F1+/F1 VMIG1/MIG1, P1 SP1+/SP1, A1+/A1 93.5%
AAA/AA Aaa/Aa AAA/AA 1.5%
Not Rated Not Rated Not Rated 5.0%*
--------
100.0%
- ---------------
* 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.
</TABLE>
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, the Fund will attempt to use comparable ratings as standards for
its investments in accordance with its stated investment policies contained in
the Fund's Prospectus and this Statement of Additional Information. The ratings
of Moody's, S&P and Fitch represent their opinions as to the quality of the
Municipal Obligations which they undertake to rate. It should be emphasized,
however, that ratings are relative and subjective and are not absolute standards
of quality. Although these ratings may be an initial criterion for selection of
portfolio investments, the Manager also will evaluate these securities and the
creditworthiness of the issuers of such securities.
TAXABLE INVESTMENTS. (NATIONAL MUNICIPAL FUND) From time to time, on a
temporary basis other than for temporary defensive purposes (but not to exceed
20% of the value of the Fund's net assets) or for temporary defensive purposes,
the National 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. 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.
INVESTMENT COMPANIES. (NATIONAL MUNICIPAL FUND) The National Municipal Fund
may invest in securities issued by other investment companies to the extent
consistent with its investment objective. Under the 1940 Act, the Fund's
investment in such securities, subject to certain exceptions, currently is
limited to (i) 3% of the total voting stock of any one investment company, (ii)
5% of the Fund's total assets with respect to any one investment company and
(iii) 10% of the Fund's total assets in the aggregate. Investments in the
securities of other investment companies may involve duplication of advisory
fees and certain other expenses.
STRUCTURED NOTES. (NATIONAL MUNICIPAL FUND) The National Municipal Fund may
invest in structured notes, which are derivative instruments whose value is tied
to underlying Municipal Obligations. Structured notes typically are purchased in
privately negotiated transactions from financial institutions. A number of
different arrangements are possible. Some notes may have characteristics typical
of an auction rate security where at specified intervals the interest rate on
the note is adjusted, and ownership changes, based on an auction mechanism. The
interest rate on such notes generally is below the coupon rate of the underlying
Municipal Obligation and generally is at a level comparable to that of a
Municipal Obligation of similar quality and having a maturity equal to the
period between interest rate adjustments. Others are similar to variable and
floating rate securities, and others can be issued with fixed rates. When the
Fund purchases a structured note, it will make a payment of principal to the
counterparty. Some structured notes have a guaranteed repayment of principal
while others place a portion (or all) of the principal at risk. The possibility
of default by the counterparty or its credit provider may be greater for
structured notes than for other types of money market instruments.
The Fund will purchase structured notes rated in one of the two highest
rating categories for debt obligations by at least two nationally recognized
statistical rating organizations (or one rating organization if the instrument
was rated by only one such organization) or, if unrated, determined to be of
comparable quality pursuant to procedures established by the Fund's Board. In
addition, the Manager will monitor the liquidity of structured notes purchased
and notes determined to be illiquid will be aggregated with other illiquid
securities and subject to the limitation that no more than 10% of the Fund's
assets be invested in illiquid securities.
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% 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. (NATIONAL MUNICIPAL FUND) The National 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 the Fund to risks because they may experience such fluctuations
prior to their actual delivery. Purchasing securities on a when-issued basis can
involve the additional risk that the yield available in the market when the
delivery takes place actually may be higher than that obtained in the
transaction itself. Purchasing securities on a forward commitment or when-issued
basis when the Fund is fully or almost fully invested may result in greater
potential fluctuation in the value of the Fund's net assets and its net asset
value per share.
INVESTMENT CONSIDERATIONS AND RISKS
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. (NATIONAL MUNICIPAL FUND) The National
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, or securities whose issuers are
located in the same state. As a result, the Fund 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 National
Municipal Fund 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.
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
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.
* * * * *
TREASURY MONEY FUND. The Treasury 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 Treasury Money 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 Treasury Money Fund may not:
1. Invest in commodities.
2. Borrow money, except 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. Purchase or sell securities on margin.
4. Issue any senior security (as such term is defined in Section 18(f) of
the 1940 Act).
5. Act as underwriter of securities of other issuers, 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.
6. Purchase, hold or deal in real estate, or oil, gas, or other mineral
leases or exploration or development programs, but the Fund may purchase and
sell securities that are secured by real estate or issued by companies that
invest in or deal in real estate.
7. Make loans to others, except through the purchase of debt obligations.
8. Invest more than 5% of its assets in the obligations of any one issuer,
except that up to 25% of the value of the Fund's total assets may be invested
without regard to any such limitations.
9. Invest more than 25% of its assets in the securities of issuers in any
industry, provided that there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government.
10. Pledge, mortgage, hypothecate or otherwise encumber its assets, except
to the extent necessary to secure permitted borrowings.
11. Enter into repurchase agreements.
* * * * *
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 7 as fundamental policies. Investment
restriction numbered 8 through 12 are not fundamental policies 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. 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. Act as underwriter of securities of other issuers, except (i) 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 (ii) 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.
3. 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.
4. Lend any security or make loans to others if, as a result, more than
33-1/3% of its total assets would be lent to others, except that this limitation
does not apply to the purchase of qualified debt obligations and the entry into
repurchase agreements.
5. 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.
6. Purchase more than 10% of the voting securities of any issuer. This
restriction applies only with respect to 75% of the Fund's total assets.
7. 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.
8. Pledge, hypothecate, mortgage or otherwise encumber its assets, except
to the extent necessary to secure permitted borrowings and in connection with
the purchase of securities on a when-issued or forward commitment basis.
9. Sell securities short or purchase securities on margin.
10. Invest in companies for the purpose of exercising control.
11. Invest in securities of other investment companies, except to the
extent permitted under the 1940 Act.
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.
* * * * *
NATIONAL MUNICIPAL FUND. For purposes of Investment Restriction No. 5 for
the 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 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 56 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 67 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 02159.
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.
Each Fund has a standing nominating committee comprised of its Board
members who are not "interested persons" of the Fund, as defined in the 1940
Act. The function of the nominating committee is to select and nominate all
candidates who are not "interested persons" of the Fund for election to the
Fund's Board.
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 indicated below for the fiscal year ended
November 30, 1998, and by all funds in the Dreyfus Family of Funds for which
such person is a Board member (the number of which is set forth in parenthesis
next to each Board member's total compensation)* for the year ended December 31,
1998, are set forth below.
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)
Money Fund $6,875
National Municipal Fund*** $6,875
CLIFFORD L. ALEXANDER, JR.
$80,918 (38)
Money Fund $5,500
National Municipal Fund*** $5,500
PEGGY C. DAVIS
$64,000 (29)
Money Fund $5,500
National Municipal Fund*** $5,500
ERNEST KAFKA
$57,500 (29)
Money Fund $5,000
National Municipal Fund*** $5,000
SAUL B. KLAMAN
$64,000 (29)
Money Fund $5,500
National Municipal Fund*** $5,500
NATHAN LEVENTHAL
$64,000 (29)
Money Fund $5,500
National Municipal Fund*** $5,500
- -------------------------------------
* Represents the number of separate portfolios comprising the investment
companies in the Fund Complex, including the Funds, for which the Board
members serve.
** Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $3,177 for the Money Fund and $1,584 for the National
Municipal Fund, for all Board members as a group.
*** Represents aggregate amount paid by the Municipal Company, of which the
National Municipal Fund is a series.
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 42 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.
*FREDERICK C. DEY, VICE PRESIDENT, ASSISTANT TREASURER AND ASSISTANT SECRETARY.
Vice President, New Business Development of Funds Distributor, Inc. since
September 1994, and an officer of other investment companies advised or
administered by the Manager. He is 37 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 31 years old.
*JOHN P. COVINO, VICE PRESIDENT AND ASSISTANT TREASURER. Vice President and
Treasury Group Manager of Treasury Servicing and Administration of Funds
Distributor, Inc. since December 1998. From December 1995 to November 1998,
he was employed by Fidelity Investments where he held multiple positions in
their Institutional Brokerage Group. Prior to joining Fidelity, he was
employed by SunGard Brokerage Systems where he was responsible for the
technology and development of the accounting product group. He is 35 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. 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. 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.
*KAREN JACOPPO-WOOD, VICE PRESIDENT AND ASSISTANT SECRETARY. Vice President and
Senior Counsel of Funds Distributor, Inc. since February 1997, and an
officer of other investment companies advised or administered by the
Manager. From June 1994 to January 1996, she was Manager of SEC
Registration at Scudder, Stevens & Clark, Inc. She is 32 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. 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 27 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, except those officers indicated by an (*), whose address is 60 State
Street, Boston, Massachusetts 02109.
Each Fund's Board members and officers, as a group, owned less than 1% of
the Fund's shares outstanding on November 1, 1999.
Set forth in "Appendix C" 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 X shares outstanding on November 1, 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 Financial Corporation
("Mellon").
The Manager provides management services pursuant to separate Management
Agreements (respectively, the "Agreement") between the Company and the Manager.
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. 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. Elliot, 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 Money Fund and the Treasury
Money Fund are Bernard W. Kiernan, Patricia A. Larkin, James G. O'Connor and
Thomas Riordan. The portfolio managers of the National Municipal Fund are Joseph
P. Darcy, A. Paul Disdier, Douglas J. Gaylor, Joseph Irace, Colleen Meehan,
Richard J. Moynihan, W. Michael Petty, Jill C. Shaffro, Scott Sprauer, 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 has a personal securities trading policy (the "Policy") which
restricts the personal securities transactions of its employees. Its primary
purpose is to ensure that personal trading by the Manager's employees does not
disadvantage any Dreyfus-managed fund. Under the Policy, the Manager's employees
must preclear personal transactions in securities not exempt under the Policy.
In addition, of the Manager's employees must report their personal securities
transactions and holdings, which are reviewed for compliance with the Policy. In
that regard, portfolio managers and other investment personnel of the Manager
also are subject to the oversight of Mellon's Investment Ethics Committee.
Portfolio managers and other investment personnel of the Manager who comply with
the Policy's preclearance and disclosure procedures, and the requirements of the
Committee, may be permitted to purchase, sell or hold securities which also may
be or are held in the fund(s) they manage or for which they otherwise provide
investment advice.
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 "Distribution Plan"
and "Shareholder Services Plan."
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 the 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 indicated below to the
Manager for each Fund's last three fiscal years, including for the Money Fund,
which changed its fiscal year end to November 30, the ten-month period ended
November 30, 1997:
<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>
Money Fund $13,222,636 $7,091,891 $5,285,812 $3,172,667
</TABLE>
FISCAL YEAR ENDED NOVEMBER 30,
1998 1997 1996
---- ---- ----
National Municipal Fund $3,038,316 $2,127,041 $1,566,276
The Treasury Money Fund has not completed its first fiscal year.
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 based on the amount invested through
such dealers in certain 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"). Generally, the fee paid
to dealers will not exceed 1% of the amount invested through such dealers. The
Distributor, however, may pay dealers a higher fee and 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"), 100 Church Street, 10th Floor, 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
You may buy Class X shares only if you establish an Auto-Exchange Account
pursuant to which the Class X shares purchased will be exchanged for Class B
shares of up to five designated Dreyfus Premier funds within two years of your
initial purchase of Class X 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 Money
Fund and Treasury 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 National Municipal Fund 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 Money Fund reserves 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 the Fund. Each Fund reserves the
right to vary further the initial and subsequent investment minimum requirements
at any time.
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 authorized entity 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."
MONEY FUND AND TREASURY 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., Eastern time, and as of 8:00 p.m.,
Eastern time.
If your payments are received in or converted into Federal Funds by 12:00
Noon, Eastern 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, Eastern 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. 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., Eastern 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., Eastern time, and Federal Funds are received by 6:00 p.m., Eastern time,
on that day. A telephone order placed with the Distributor or its designee in
New York after 5:00 p.m., Eastern time, but by 8:00 p.m., Eastern time, on a
given day will become effective at the price determined at 8:00 p.m., Eastern
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., Eastern
time, on the next business day.
NATIONAL MUNICIPAL FUND--The National Municipal Fund determines its net
asset value per share three times each day the New York Stock Exchange or the
Transfer Agent is open for business: as of 12:00 Noon, Eastern time, as of 2:00
p.m., Eastern time, and as of 8:00 p.m., Eastern time.
If your payments are received in or converted into Federal Funds by 4:00
p.m., Eastern 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
4:00 p.m., Eastern time, you will begin to accrue dividends on the following
business day.
Qualified institutions may telephone orders for purchase of Fund shares. A
telephone order placed with the Distributor or its designee in New York will
become effective at the price determined at 12:00 Noon, or 2:00 p.m., Eastern
time, depending on when the order is accepted 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 2:00 p.m.,
Eastern time, and Federal Funds are received at 4:00 p.m., Eastern time, on that
day. A telephone order placed with the Distributor or its designee in New York
after 2:00 p.m., Eastern time, but by 8:00 p.m., Eastern time, on a given day
will become effective at the price determined at 8:00 p.m., Eastern 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., Eastern 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.
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.
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 Fund has adopted a distribution plan
with respect to Class X (each, a "Plan"). Under the Plan, the Fund pays the
Distributor a fee at the annual rate of .25% of the value of the Fund's average
daily net assets attributable to Class X for distributing Class X shares. Each
Fund's Board believes that there is a reasonable likelihood that the Plan will
benefit the Fund and holders of Class X shares.
A quarterly report of the amounts expended under the Plan, and the purposes
for which such expenditures were incurred, must be made to the Fund's Board for
its review. In addition, the 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 and that other material amendments of
the 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 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 the Plan, by vote
cast in person at a meeting called for the purpose of considering such
amendments. The 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. 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 holders of Class X shares.
SHAREHOLDER SERVICES PLAN
Each Fund has adopted a Shareholder Services Plan with respect to Class X
pursuant to which the Fund pays the Distributor for the provision of certain
services to the holders of Class X shares a fee at the annual rate of .25% of
the value of the Fund's average daily net assets attributable to Class X. Under
the 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, the Distributor may make payments to
Service Agents in respect of these services.
A quarterly report of the amounts expended under the Shareholder Services
Plan, and the purposes for which such expenditures were incurred, must be made
to the Fund's Board for its review. In addition, the 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. The 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 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.
HOW TO REDEEM SHARES
CONTINGENT DEFERRED SALES CHARGE. A contingent deferred sales charge (CDSC)
payable to the Distributor is imposed on any redemption of Class X shares which
reduces the current net asset value of your Class X shares to an amount which is
lower than the dollar amount of all payments by you for the purchase of Class X
shares of the Fund held by you at the time of redemption.
If the aggregate value of Class X shares redeemed has declined below their
original cost as a result of the Fund's performance, a CDSC may be applied to
the then-current net asset value rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the charge will
depend on the number of years for the time you purchased the Class X shares
until the time of redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the purchase of Class X
shares, all payments during a month will be aggregated and deemed to have been
made on the first day of the month.
THE TERMS AND TIME PERIODS CONTAINED IN THIS SECTION ARE APPLICABLE TO
CLASS B SHARES OF THE DREYFUS PREMIER FUNDS INTO WHICH CLASS X SHARES MUST BE
EXCHANGED PURSUANT TO THE DREYFUS AUTO-EXCHANGE PRIVILEGE.
The following table sets forth the rates of the CDSC for Class X shares
(and Class B shares of the Dreyfus Premier funds for which Class X shares may be
exchanged):
YEAR SINCE CDSC AS A % OF AMOUNT
PURCHASE PAYMENT INVESTED OR REDEMPTION
WAS MADE PROCEEDS
First..................................... 4.00
Second.................................... 4.00
Third..................................... 3.00
Fourth.................................... 3.00
Fifth..................................... 2.00
Sixth..................................... 1.00
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
For example, with respect to Class B shares of the selected Dreyfus Premier
funds, it will be assumed that the redemption is made first of amounts
representing shares acquired pursuant to the reinvestment of dividends and
distributions; then of amounts representing the increase in net asset value of
Class B shares above the total amount of payments for the purchase of Class B
shares made during the preceding six years; then of amounts representing the
cost of shares purchased six years prior to the redemption; and finally, of
amounts representing the cost of shares held for the longest period of time
within the applicable six-year period.
WAIVER OF CDSC. The CDSC applicable to Class X shares (and Class B shares
of the selected Dreyfus Premier funds) may be waived in connection with (a)
redemptions made within one year after the death or disability, as defined in
Section 72(m)(7) of the Code, of the shareholder, (b) redemptions by employees
participating in Eligible Benefit Plans, (c) redemptions as a result of a
combination of any investment company with the Fund by merger, acquisition of
assets or otherwise, (d) a distribution following retirement under a
tax-deferred retirement plan or upon attaining age 70 1/2 in the case of an IRA
or Keogh plan or custodial account pursuant to Section 403(b) of the Code, and
(e) redemptions pursuant to the Automatic Withdrawal Plan (offered only in
Dreyfus Premier funds). If the Fund's Board determines to discontinue the waiver
of the CDSC, the disclosure herein will be revised appropriately. Any Fund
shares subject to a CDSC which were purchased prior to the termination of such
waiver will have the CDSC waived as provided in the Fund's Prospectus or
Statement of Additional Information at the time of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption you must
notify the Transfer Agent or your Service Agent must notify the Distributor. Any
such qualification is subject to confirmation of your entitlement.
CONVERSION TO CLASS A SHARES OF DREYFUS PREMIER FUNDS. Approximately six
years after the date of purchase of Class X shares, the Class B shares of the
Dreyfus Premier funds received in exchange for your Class X shares automatically
will convert to Class A shares of the Dreyfus Premier fund, based on the
relative net asset values for shares of each such Class. Class B shares of the
Dreyfus Premier funds that have been acquired through the reinvestment of
dividends and distributions will be converted on a pro rata basis together with
other Class B shares, in the proportion that a shareholder's shares converting
to Class A shares bears to the total Class B shares of the Dreyfus Premier funds
not acquired through the reinvestment of dividends and distributions.
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."
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
National Municipal Fund, or 5:00 p.m., New York time, with respect to the 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. 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 Class X shares of a Fund, Class B shares of Dreyfus Premier funds, or 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 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.
E. Shares of funds subject to a contingent deferred sales charge ("CDSC")
that are exchanged for shares of another fund will be subject to the
higher applicable CDSC of the two funds, and for purposes of
calculating CDSC rates and conversion periods, if any, will be deemed
to have been held since the date the shares being exchanged were
initially purchased.
To accomplish an exchange under item D above, 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, your Service Agent acting on your behalf must give
exchange instructions to the Transfer Agent. 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. The Dreyfus Auto-Exchange Privilege
permits you to purchase, in exchange for shares of a Fund, Class B shares of up
to five designated Dreyfus Premier 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 Dreyfus 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 Dreyfus
Auto-Exchange Privilege may be modified or terminated at any time upon notice to
shareholders.
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 one or more of the Dreyfus Premier funds you
have selected for auto-exchange. Shares of the Dreyfus Premier 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 that are offered
without a sales load.
B. Dividends and distributions paid by a fund which does not charge a
sales load may be invested in shares of other funds sold with a sales
load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund 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 Automated Clearing House member may be so designated. Banks may
charge a fee for this service.
CORPORATE PENSION/PROFIT-SHARING AND PERSONAL RETIREMENT PLANS. (MONEY FUND
AND TREASURY MONEY FUND) Each of the Money Fund and Treasury 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 National Municipal
Fund, 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 the National Municipal Fund's 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 (except the Treasury Money Fund) has
qualified for the fiscal year ended November 30, 1998 as a "regulated investment
company" under the Code. It is expected that the Treasury Money Fund will
qualify 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 Money Fund and Treasury 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 National 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 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.
YIELD INFORMATION
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 shareholder service fees.
As to the National Municipal Fund, tax equivalent yield is computed by
dividing that portion of the yield or effective yield (calculated as described
above) which is tax exempt by 1 minus a stated tax rate and adding the quotient
to that portion, if any, of the yield of the Fund that is not tax exempt.
The tax equivalent yields for the National Municipal Fund will represent
the application of the highest Federal marginal personal income tax rate in
effect. The tax equivalent figures, however, will not include the potential
effect of any state or local (including, but not limited to, county, district or
city) taxes, including applicable surcharges. 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, the National 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.
From time to time, advertising materials may refer to studies performed by
The Dreyfus Corporation or its affiliates, such as "The Dreyfus Tax Informed
Investing Study" or "The Dreyfus Grade Investment Comparison Study (1996 &
1997)" or such other studies.
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 Treasury Money Fund is a separate series of the Government Company. The
National Municipal Fund is a separate series of the Municipal 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 Government Company or the Municipal 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 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.
Each Fund sends annual and semi-annual financial statements to all its
shareholders.
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.
<PAGE>
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 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.
<PAGE>
APPENDIX B
(NATIONAL MUNICIPAL FUND ONLY)
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.
<PAGE>
Appendix C
Set forth below, as to Class X shares 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 November 1, 1999.
MONEY FUND
Dreyfus Trust Co., Custodian, FBO Margaret E. Fuller, under IRA Rollover Plan,
Baltimore, MD 21228-2214 - owned of record 17.5458%;
Tally Ho LLC, 495 West Street, Reno, NV 89503-4710 - owned of record 11.3075%;
Charles E. Kull and Jennifer Kull, JTWROS, Massillion, OH 44647-9795 - owned of
record 7.5873%;
Dreyfus Trust Co., Custodian, FBO John C. Bluthardt, Under IRA Plan, New Castle,
PA 16105-1411 - owned of record 7.5573%;
Debra Brown and Kim Brown, JTWROS, Massillion, OH 44646-7842 - owned of record
7.0918%;
Nina Gerety, Larkspur, CA 94939-2169 - owned of record 7.0745%;
Roland G. Schrader and Peggy Wood and Pamela Ranck, JTWROS, Glen Burnie, MD
21060-1405 - owned of record 6.7779%;
Dreyfus Trust Co., Custodian, FBO Robyn H. Turton, Under IRA Plan, Huntersville,
NC 28078-7609 - owned of record 5.8939%.
NATIONAL MUNICIPAL FUND
Premier Mutual Fund Services, Inc. c/o Funds Distributor, Inc., Attn: Elizabeth
Keeley, 60 State Street, Suite 1300, Boston, MA 02109-1800 - owned of record
100.0000%.
<PAGE>
GENERAL MUNICIPAL MONEY MARKET FUNDS, INC.
PART C. OTHER INFORMATION
-------------------------
Item 23. Exhibits.
- ------- ----------
(a) Registrant's Articles of Incorporation are incorporated by reference
to Exhibit (1)(a) of Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A, filed on March 29, 1995.
Registrant's Articles of Amendment and Articles Supplementary are
incorporated by reference to Exhibits (1)(b) and (1)(c), respectively,
to Post-Effective Amendment No. 30 to the Registration Statement on
Form N-1A, filed on April 28, 1998.
(b) Registrant's By-Laws, as amended, are incorporated by reference to
Exhibit (2) to Post-Effective Amendment No. 30 to the Registration
Statement on Form N-1A, filed on April 28, 1998.
(d) Management Agreement is incorporated by reference to Exhibit (5) to
Post-Effective Amendment No. 30 to the Registration Statement on Form
N-1A, filed on April 28, 1998.
(e) Distribution Agreement is incorporated by reference to Exhibit (6)(a)
to Post-Effective Amendment No. 30 to the Registration Statement on
Form N-1A, filed on April 28, 1998. Forms of Service Agreement are
incorporated by reference to Exhibit (6)(b) to Post-Effective
Amendment No. 30 to the Registration Statement on Form N-1A, filed on
April 28, 1998.
(g) Amended and Restated Custody Agreement is incorporated by reference to
Exhibit (8)(a) to Post-Effective Amendment No. 20 to the Registration
Statement on Form N-1A, filed on March 29, 1995. Forms of
Sub-Custodian Agreements are incorporated by reference to Exhibit 8(b)
of Post-Effective Amendment No. 18 to the Registration Statement on
Form N-1A, effective on February 25, 1994.
(h) Shareholder Services Plans, with respect to Class A and Class B, are
incorporated by reference to Exhibits (9)(a) and (9)(b), respectively,
to Post-Effective Amendment No. 30 to the Registration Statement on
Form N-1A, filed on April 28, 1998.
(i) Opinion and Consent of Registrant's Counsel is incorporated by
reference to Exhibit (10) to Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A, filed on March 29, 1995.
(j) Consent of Independent Auditors.
(m) Rule 12b-1 Distribution Plan (Class B) is incorporated by reference to
Exhibit (15)(b) to Post-Effective Amendment No. 30 to the Registration
Statement on Form N-1A, filed on April 28, 1998.
(o) Revised Rule 18f-3 Plan.
OTHER EXHIBITS
(a) Powers of Attorney of the Board members and officers.
(b) Certificate of Secretary.
Item 24. Persons Controlled by or under Common Control with Registrant
- ------- -------------------------------------------------------------
Not Applicable.
Item 25. Indemnification
- ------- ---------------
Reference is made to Article SEVENTH of the Registrant's Articles of
Incorporation which are incorporated by reference to Exhibit (1)(a) to
Post-Effective Amendment No. 20 to the Registration Statement on Form
N-1A, filed March 29, 1995 and to Section 2-418 of the Maryland
General Corporation Law. The application of these provisions is
limited by Article VIII of the Registrant's By-Laws, as amended,
incorporated by reference to Exhibit (2) to Post-Effective Amendment
No. 30 to the Registration Statement on Form N-1A, filed on April 28,
1998, and by the following undertaking set forth in the rules
promulgated by the Securities and Exchange Commission:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
such Act and will be governed by the final adjudication of such
issue.
Reference is also made to the Distribution Agreement which is
incorporated by reference to Exhibit (15)(b) to Post-Effective
Amendment No. 30 to the Registration Statement on Form N-1A, filed on
April 28, 1998.
Item 26. Business and Other Connections of Investment Adviser.
- ------- ----------------------------------------------------
The Dreyfus Corporation ("Dreyfus") and subsidiary companies comprise
a financial service organization whose business consists primarily of
providing investment management services as the investment adviser and
manager for sponsored investment companies registered under the
Investment Company Act of 1940 and as an investment adviser to
institutional and individual accounts. Dreyfus also serves as
sub-investment adviser to and/or administrator of other investment
companies. Dreyfus Service Corporation, a wholly-owned subsidiary of
Dreyfus, serves primarily as a registered broker-dealer of shares of
investment companies sponsored by Dreyfus and of other investment
companies for which Dreyfus acts as investment adviser, sub-investment
adviser or administrator. Dreyfus Investment Advisers, Inc., another
wholly-owned subsidiary, provides investment management services to
various pension plans, institutions and individuals.
<PAGE>
Item 26. Business and Other Connections of Investment Adviser (Continued)
Officers and Directors of Investment Adviser
<TABLE>
<CAPTION>
Name and Position
WITH DREYFUS OTHER BUSINESSES POSITION HELD DATES
<S> <C> <C> <C>
CHRISTOPHER M. CONDRON Franklin Portfolio Associates, LLC* Director 1/97 - Present
Chairman of the Board and
Chief Executive Officer TBCAM Holdings, Inc.* Director 10/97 - Present
President 10/97 - 6/98
Chairman 10/97 - 6/98
The Boston Company Director 1/98 - Present
Asset Management, LLC* Chairman 1/98 - 6/98
President 1/98 - 6/98
The Boston Company President 9/95 - 1/98
Asset Management, Inc.* Chairman 4/95 - 1/98
Franklin Portfolio Holdings, Inc.* Director 1/97 - Present
Certus Asset Advisors Corp.** Director 6/95 -Present
Mellon Capital Management Director 5/95 -Present
Corporation***
Mellon Bond Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Bond Associates+ Trustee 5/95 -1/98
Mellon Equity Associates, LLP+ Executive Committee 1/98 - Present
Member
Mellon Equity Associates+ Trustee 5/95 - 1/98
Boston Safe Advisors, Inc. * Director 5/95 - Present
President 5/95 - Present
Mellon Bank, N.A.+ Director 1/99 - Present
Chief Operating Officer 3/98 - Present
President 3/98 - Present
Vice Chairman 11/94 - 3/98
Mellon Bank Corporation+ Chief Operating Officer 1/99 - Present
President 1/99 - Present
Director 1/98 - Present
Vice Chairman 11/94 - 1/99
The Boston Company, Inc.* Vice Chairman 1/94 - Present
Director 5/93 - Present
Laurel Capital Advisors, LLP+ Exec. Committee 1/98 - 8/98
Member
Laurel Capital Advisors+ Trustee 10/93 - 1/98
Boston Safe Deposit and Trust Director 5/93 -Present
Company*
The Boston Company Financial President 6/89 - Present
Strategies, Inc.* Director 6/89 - Present
MANDELL L. BERMAN Self-Employed Real Estate Consultant, 11/74 - Present
Director 29100 Northwestern Highway Residential Builder and
Suite 370 Private Investor
Southfield, MI 48034
BURTON C. BORGELT DeVlieg Bullard, Inc. Director 1/93 - Present
Director 1 Gorham Island
Westport, CT 06880
Mellon Bank Corporation+ Director 6/91 - Present
Mellon Bank, N.A.+ Director 6/91 - Present
Dentsply International, Inc. Director 2/81 - Present
570 West College Avenue
York, PA
Quill Corporation Director 3/93 - Present
Lincolnshire, IL
STEPHEN E. CANTER Dreyfus Investment Chairman of the Board 1/97 - Present
President, Chief Operating Advisors, Inc.++ Director 5/95 - Present
Officer, Chief Investment President 5/95 - Present
Officer, and Director
Newton Management Limited Director 2/99 - Present
London, England
Mellon Bond Associates, LLP+ Executive Committee 1/99 - Present
Member
Mellon Equity Associates, LLP+ Executive Committee 1/99 - Present
Member
Franklin Portfolio Associates, LLC* Director 2/99 - Present
Franklin Portfolio Holdings, Inc.* Director 2/99 - Present
The Boston Company Asset Director 2/99 - Present
Management, LLC*
TBCAM Holdings, Inc.* Director 2/99 - Present
Mellon Capital Management Director 1/99 - Present
Corporation***
Founders Asset Management, LLC**** Member, Board of 12/97 - Present
Managers
Acting Chief Executive 7/98 - 12/98
Officer
The Dreyfus Trust Company+++
Director 6/95 - Present
Chairman 1/99 - Present
President 1/99 - Present
Chief Executive Officer 1/99 - Present
THOMAS F. EGGERS Dreyfus Service Corporation++ Executive Vice President 4/96 - Present
Vice Chairman - Institutional Director 9/96 - Present
and Director
Founders Asset Management, LLC**** Member, Board of Managers 2/99 - Present
Dreyfus Service Organization++ Director 3/99 - Present
Dreyfus Insurance Agency of Director 3/99 - Present
Massachusetts, Inc.+++
Dreyfus Brokerage Services, Inc. Director 11/97 - 6/98
401 North Maple Avenue
Beverly Hills, CA.
STEVEN G. ELLIOTT Mellon Bank Corporation+ Senior Vice Chairman 1/99 - Present
Director Chief Financial Officer 1/90 - Present
Vice Chairman 6/92 - 1/99
Treasurer 1/90 - 5/98
Mellon Bank, N.A.+ Senior Vice Chairman 3/98 - Present
Vice Chairman 6/92 - 3/98
Chief Financial Officer 1/90 - Present
Mellon EFT Services Corporation Director 10/98 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Mellon Financial Services Director 1/96 - Present
Corporation #1 Vice President 1/96 - Present
Mellon Bank Center, 8th Floor
1735 Market Street
Philadelphia, PA 19103
Boston Group Holdings, Inc.* Vice President 5/93 - Present
APT Holdings Corporation Treasurer 12/87 - Present
Pike Creek Operations Center
4500 New Linden Hill Road
Wilmington, DE 19808
Allomon Corporation Director 12/87 - Present
Two Mellon Bank Center
Pittsburgh, PA 15259
Collection Services Corporation Controller 10/90 - 2/99
500 Grant Street Director 9/88 - 2/99
Pittsburgh, PA 15258 Vice President 9/88 - 2/99
Treasurer 9/88 - 2/99
Mellon Financial Company+ Principal Exec. Officer 1/88 - Present
Chief Financial Officer 8/87 - Present
Mellon Overseas Investments Director 8/87 - Present
Corporation+ President 8/87 - Present
Director 4/88 - Present
Chairman 7/89 - 11/97
Mellon International Investment President 4/88 - 11/97
Corporation+ Chief Executive Officer 4/88 - 11/97
Director 9/89 - 8/97
Mellon Financial Services Treasurer 12/87 - Present
Corporation #5+
Mellon Financial Markets, Inc.+ Director 1/99 - Present
Mellon Financial Services Director 1/99 - Present
Corporation #17
Fort Lee, NJ
Mellon Mortgage Company Director 1/99 - Present
Houston, TX
Mellon Ventures, Inc.+ Director 1/99 - Present
LAWRENCE S. KASH Dreyfus Investment Director 4/97 - Present
Vice Chairman Advisors, Inc.++
And Director
Dreyfus Brokerage Services, Inc. Chairman 11/97 - 2/99
401 North Maple Ave. Chief Executive Officer 11/97 - 2/98
Beverly Hills, CA
Dreyfus Service Corporation++ Director 1/95 - 2/99
President 9/96 - 3/99
Dreyfus Precious Metals, Inc.+++ Director 3/96 - 12/98
President 10/96 - 12/98
Dreyfus Service Director 12/94 - 3/99
Organization, Inc.++ President 1/97 - 3/99
Seven Six Seven Agency, Inc.++ Director 1/97 - 4/99
Dreyfus Insurance Agency of Chairman 5/97 - 3/99
Massachusetts, Inc.++++ President 5/97 - 3/99
Director 5/97 - 3/99
The Dreyfus Trust Company+++ Chairman 1/97 - 1/99
President 2/97 - 1/99
Chief Executive Officer 2/97 - 1/99
Director 12/94 - Present
The Dreyfus Consumer Credit Chairman 5/97 - 6/99
Corporation++ President 5/97 - 6/99
Director 12/94 - 6/99
Founders Asset Management, LLC**** Member, Board of Managers 12/97 - Present
The Boston Company Advisors, Chairman 12/95 - Present
Inc. Chief Executive Officer 12/95 - Present
Wilmington, DE President 12/95 - Present
The Boston Company, Inc.* Director 5/93 - Present
President 5/93 - Present
Mellon Bank, N.A.+ Executive Vice President 6/92 - Present
Laurel Capital Advisors, LLP+ Chairman 1/98 - 8/98
Executive Committee 1/98 - 8/98
Member
Chief Executive Officer 1/98 - 8/98
President 1/98 - 8/98
Laurel Capital Advisors, Inc.+ Trustee 12/91 - 1/98
Chairman 9/93 - 1/98
President and CEO 12/91 - 1/98
Boston Group Holdings, Inc.* Director 5/93 - Present
President 5/93 - Present
MARTIN G. MCGUINN Mellon Bank Corporation+ Chairman 1/99 - Present
Director Chief Executive Officer 1/99 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 1/99
Mellon Bank, N. A. + Chairman 3/98 - Present
Chief Executive Officer 3/98 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 3/98
Mellon Leasing Corporation+ Vice Chairman 12/96 - Present
Mellon Bank (DE) National Director 4/89 - 12/98
Association
Wilmington, DE
Mellon Bank (MD) National Director 1/96 - 4/98
Association
Rockville, Maryland
Mellon Financial Vice President 9/86 - 10/97
Corporation (MD)
Rockville, Maryland
J. DAVID OFFICER Dreyfus Service Corporation++ Executive Vice President 5/98 - Present
Vice Chairman Director 3/99 - Present
And Director
Dreyfus Service Organization++ Director 3/99 - Present
Dreyfus Insurance Agency of Director 5/98 - Present
Massachusetts, Inc.++++
Dreyfus Brokerage Services, Inc. Chairman 3/99 - Present
401 North Maple Avenue
Beverly Hills, CA
Seven Six Seven Agency, Inc.++ Director 10/98 - Present
Mellon Residential Funding Corp.+ Director 4/97 - Present
Mellon Trust of Florida, N.A. Director 8/97 - Present
2875 Northeast 191st Street
North Miami Beach, FL 33180
Mellon Bank, NA+ Executive Vice President 7/96 - Present
The Boston Company, Inc.* Vice Chairman 1/97 - Present
Director 7/96 - Present
Mellon Preferred Capital Director 11/96 - Present
Corporation*
RECO, Inc.* President 11/96 - Present
Director 11/96 - Present
The Boston Company Financial President 8/96 - Present
Services, Inc.* Director 8/96 - Present
Boston Safe Deposit and Trust Director 7/96 - Present
Company* President 7/96 - 1/99
Mellon Trust of New York Director 6/96 - Present
1301 Avenue of the Americas
New York, NY 10019
Mellon Trust of California Director 6/96 - Present
400 South Hope Street
Suite 400
Los Angeles, CA 90071
Mellon Bank, N.A.+ Executive Vice President 2/94 - Present
Mellon United National Bank Director 3/98 - Present
1399 SW 1st Ave., Suite 400
Miami, Florida
Boston Group Holdings, Inc.* Director 12/97 - Present
Dreyfus Financial Services Corp.+ Director 9/96 - Present
Dreyfus Investment Services Director 4/96 - Present
Corporation+
RICHARD W. SABO Founders Asset Management LLC**** President 12/98 - Present
Director Chief Executive Officer 12/98 - Present
Prudential Securities
New York, NY Senior Vice President 07/91 - 11/98
Regional Director 07/91 - 11/98
RICHARD F. SYRON Thermo Electron President 6/99 - Present
Director 81 Wyman Street Chief Executive Officer 6/99 - Present
Waltham, MA 02454-9046
American Stock Exchange Chairman 4/94 -6/99
86 Trinity Place Chief Executive Officer 4/94 - 6/99
New York, NY 10006
RONALD P. O'HANLEY Franklin Portfolio Holdings, Inc.* Director 3/97 - Present
Vice Chairman
TBCAM Holdings, Inc.* Chairman 6/98 - Present
Director 10/97 - Present
The Boston Company Asset Chairman 6/98 - Present
Management, LLC* Director 1/98 - 6/98
The Boston Company Asset Director 2/97 - 12/97
Management, Inc.*
Boston Safe Advisors, Inc.* Chairman 6/97 - Present
Director 2/97 - Present
Pareto Partners Partner Representative 5/97 - Present
271 Regent Street
London, England W1R 8PP
Mellon Capital Management Director 5/97 -Present
Corporation***
Certus Asset Advisors Corp.** Director 2/97 - Present
Mellon Bond Associates+ Trustee 2/97 - Present
Chairman 2/97 - Present
Mellon Equity Associates+ Trustee 2/97 - Present
Chairman 2/97 - Present
Mellon-France Corporation+ Director 3/97 - Present
Laurel Capital Advisors+ Trustee 3/97 - Present
MARK N. JACOBS Dreyfus Investment Director 4/97 - Present
General Counsel, Advisors, Inc.++ Secretary 10/77 - 7/98
Vice President, and
Secretary The Dreyfus Trust Company+++ Director 3/96 - Present
The TruePenny Corporation++ President 10/98 - Present
Director 3/96 - Present
Dreyfus Service Director 3/97 - 3/99
Organization, Inc.++
WILLIAM H. MARESCA The Dreyfus Trust Company+++ Chief Financial Officer 3/99 - Present
Controller Treasurer 9/98 - Present
Director 3/97 - Present
Dreyfus Service Corporation++ Chief Financial Officer 12/98 - Present
Dreyfus Consumer Credit Corp. ++ Treasurer 10/98 -Present
Dreyfus Investment Treasurer 10/98 - Present
Advisors, Inc. ++
Dreyfus-Lincoln, Inc. Vice President 10/98 - Present
4500 New Linden Hill Road
Wilmington, DE 19808
The TruePenny Corporation++ Vice President 10/98 - Present
Dreyfus Precious Metals, Inc.+++ Treasurer 10/98 - 12/98
The Trotwood Corporation++ Vice President 10/98 - Present
Trotwood Hunters Corporation++ Vice President 10/98 - Present
Trotwood Hunters Site A Corp.++ Vice President 10/98 - Present
Dreyfus Transfer, Inc. Chief Financial Officer 5/98 - Present
One American Express Plaza,
Providence, RI 02903
Dreyfus Service Treasurer 3/99 - Present
Organization, Inc.++ Assistant Treasurer 3/93 - 3/99
Dreyfus Insurance Agency of
Massachusetts, Inc.++++ Assistant Treasurer 5/98 - Present
WILLIAM T. SANDALLS, JR. Dreyfus Transfer, Inc. Chairman 2/97 - Present
Executive Vice President One American Express Plaza,
Providence, RI 02903
Dreyfus Service Corporation++ Director 1/96 - Present
Executive Vice President 2/97 - Present
Chief Financial Officer 2/97-12/98
Dreyfus Investment Director 1/96 - Present
Advisors, Inc.++ Treasurer 1/96 - 10/98
Dreyfus-Lincoln, Inc. Director 12/96 - Present
4500 New Linden Hill Road President 1/97 - Present
Wilmington, DE 19808
Seven Six Seven Agency, Inc.++ Director 1/96 - 10/98
Treasurer 10/96 - 10/98
The Dreyfus Consumer Director 1/96 - Present
Credit Corp.++ Vice President 1/96 - Present
Treasurer 1/97 - 10/98
The Dreyfus Trust Company +++ Director 1/96 - Present
Dreyfus Service Organization, Treasurer 10/96- 3/99
Inc.++
Dreyfus Insurance Agency of Director 5/97 - 3/99
Massachusetts, Inc.++++ Treasurer 5/97- 3/99
Executive Vice President 5/97 - 3/99
DIANE P. DURNIN Dreyfus Service Corporation++ Senior Vice President - 5/95 - 3/99
Vice President - Product Marketing and
Development Advertising Division
PATRICE M. KOZLOWSKI NONE
Vice President - Corporate
Communications
MARY BETH LEIBIG NONE
Vice President -
Human Resources
THEODORE A. SCHACHAR Dreyfus Service Corporation++ Vice President -Tax 10/96 - Present
Vice President - Tax
The Dreyfus Consumer Credit Chairman 6/99 - Present
Corporation++ President 6/99 - Present
Dreyfus Investment Advisors, Inc.++ Vice President - Tax 10/96 - Present
Dreyfus Precious Metals, Inc.+++ Vice President - Tax 10/96 - 12/98
Dreyfus Service Organization, Inc.++ Vice President - Tax 10/96 - Present
WENDY STRUTT None
Vice President
RICHARD TERRES None
Vice President
ANDREW S. WASSER Mellon Bank Corporation+ Vice President 1/95 - Present
Vice-President -
Information Systems
JAMES BITETTO The TruePenny Corporation++ Secretary 9/98 - Present
Assistant Secretary
Dreyfus Service Corporation++ Assistant Secretary 8/98 - Present
Dreyfus Investment Assistant Secretary 7/98 - Present
Advisors, Inc.++
Dreyfus Service Assistant Secretary 7/98 - Present
Organization, Inc.++
STEVEN F. NEWMAN Dreyfus Transfer, Inc. Vice President 2/97 - Present
Assistant Secretary One American Express Plaza Director 2/97 - Present
Providence, RI 02903 Secretary 2/97 - Present
Dreyfus Service Secretary 7/98 - Present
Organization, Inc.++ Assistant Secretary 5/98 - 7/98
- --------
* The address of the business so indicated is One Boston Place, Boston, Massachusetts, 02108.
** The address of the business so indicated is One Bush Street, Suite 450, San Francisco, California 94104.
*** The address of the business so indicated is 595 Market Street, Suite 3000, San Francisco, California 94105.
**** The address of the business so indicated is 2930 East Third Avenue, Denver, Colorado 80206.
+ The address of the business so indicated is One Mellon Bank Center, Pittsburgh, Pennsylvania 15258.
++ The address of the business so indicated is 200 Park Avenue, New York, New York 10166.
+++ The address of the business so indicated is 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
++++ The address of the business so indicated is 53 State Street, Boston, Massachusetts 02109
**** The address of the business so indicated is 2930 East Third Avenue, Denver, Colorado 80206.
</TABLE>
<PAGE>
Item 27. Principal Underwriters
- -------- ----------------------
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Funds, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management Funds
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Debt and Equity Funds
28) Dreyfus Index Funds, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Preferred Money Market Fund
31) Dreyfus Institutional Short Term Treasury Fund
32) Dreyfus Insured Municipal Bond Fund, Inc.
33) Dreyfus Intermediate Municipal Bond Fund, Inc.
34) Dreyfus International Funds, Inc.
35) Dreyfus Investment Grade Bond Funds, Inc.
36) Dreyfus Investment Portfolios
37) The Dreyfus/Laurel Funds, Inc.
38) The Dreyfus/Laurel Funds Trust
39) The Dreyfus/Laurel Tax-Free Municipal Funds
40) Dreyfus LifeTime Portfolios, Inc.
41) Dreyfus Liquid Assets, Inc.
42) Dreyfus Massachusetts Intermediate Municipal Bond Fund
43) Dreyfus Massachusetts Municipal Money Market Fund
44) Dreyfus Massachusetts Tax Exempt Bond Fund
45) Dreyfus MidCap Index Fund
46) Dreyfus Money Market Instruments, Inc.
47) Dreyfus Municipal Bond Fund, Inc.
48) Dreyfus Municipal Cash Management Plus
49) Dreyfus Municipal Money Market Fund, Inc.
50) Dreyfus New Jersey Intermediate Municipal Bond Fund
51) Dreyfus New Jersey Municipal Bond Fund, Inc.
52) Dreyfus New Jersey Municipal Money Market Fund, Inc.
53) Dreyfus New Leaders Fund, Inc.
54) Dreyfus New York Insured Tax Exempt Bond Fund
55) Dreyfus New York Municipal Cash Management
56) Dreyfus New York Tax Exempt Bond Fund, Inc.
57) Dreyfus New York Tax Exempt Intermediate Bond Fund
58) Dreyfus New York Tax Exempt Money Market Fund
59) Dreyfus U.S. Treasury Intermediate Term Fund
60) Dreyfus U.S. Treasury Long Term Fund
61) Dreyfus 100% U.S. Treasury Money Market Fund
62) Dreyfus U.S. Treasury Short Term Fund
63) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
64) Dreyfus Pennsylvania Municipal Money Market Fund
65) Dreyfus Premier California Municipal Bond Fund
66) Dreyfus Premier Equity Funds, Inc.
67) Dreyfus Premier International Funds, Inc.
68) Dreyfus Premier GNMA Fund
69) Dreyfus Premier Worldwide Growth Fund, Inc.
70) Dreyfus Premier Municipal Bond Fund
71) Dreyfus Premier New York Municipal Bond Fund
72) Dreyfus Premier State Municipal Bond Fund
73) Dreyfus Premier Value Fund
74) Dreyfus Short-Intermediate Government Fund
75) Dreyfus Short-Intermediate Municipal Bond Fund
76) The Dreyfus Socially Responsible Growth Fund, Inc.
77) Dreyfus Stock Index Fund, Inc.
78) Dreyfus Tax Exempt Cash Management
79) The Dreyfus Third Century Fund, Inc.
80) Dreyfus Treasury Cash Management
81) Dreyfus Treasury Prime Cash Management
82) Dreyfus Variable Investment Fund
83) Dreyfus Worldwide Dollar Money Market Fund, Inc.
84) Founders Funds, Inc.
85) General California Municipal Bond Fund, Inc.
86) General California Municipal Money Market Fund
87) General Government Securities Money Market Fund, Inc.
88) General Money Market Fund, Inc.
89) General Municipal Bond Fund, Inc.
90) General Municipal Money Market Funds, Inc.
91) General New York Municipal Bond Fund, Inc.
92) General New York Municipal Money Market Fund
<PAGE>
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
- ------------------ --------------------------- -------------
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Chief Treasurer
Compliance Officer
Joseph F. Tower, III+ Director, Senior Vice President, Vice President
Treasurer and Chief Financial and Assistant
Officer Treasurer
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Jean M. O'Leary+ Assistant Vice President, None
Assistant Secretary and
Assistant Clerk
William J. Nutt+ Chairman of the Board None
Patrick W. McKeon+ Vice President None
Joseph A. Vignone+ Vice President None
- --------------------------------
+ Principal business address is 60 State Street, Boston, Massachusetts 02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
<PAGE>
Item 28. Location of Accounts and Records
--------------------------------
1. The Bank of New York
100 Church Street
New York, New York 10286
2. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
3. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 29. Management Services
- ------- -------------------
Not Applicable
Item 30. Undertakings
- -------- ------------
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement under Rule
485(b) under the Securities Act of 1933 and has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, and State of New York on the
30th day of November, 1999.
GENERAL MUNICIPAL MONEY MARKET FUNDS, INC.
BY: /s/Marie E. Connolly*
------------------------------------------
Marie E. Connolly, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signatures Title Date
- -------------------------- -------------- --------
/s/Marie E. Connolly* President and Treasurer (Principal 11/30/99
- -------------------------- Executive Officer)
Marie E. Connolly
/s/Joseph F. Tower* Assistant Treasurer (Principal 11/30/99
- -------------------------- Financial and Accounting Officer)
Joseph F. Tower
/s/Joseph S. DiMartino* Chairman of the Board of 11/30/99
- ------------------------- Directors
Joseph S. DiMartino
/s/Clifford L. Alexander, Jr.* Director 11/30/99
- -----------------------------
Clifford L. Alexander, Jr.
/s/Peggy C.Davis* Director 11/30/99
- -----------------------------
Peggy C.Davis
/s/Ernest Kafka* Director 11/30/99
- -----------------------------
Ernest Kafka
/s/Saul B. Klaman* Director 11/30/99
- -----------------------------
Saul B. Klaman
/s/Nathan Leventhal* Director 11/30/99
- -----------------------------
Nathan Leventhal
*BY: /s/ Stephanie Pierce
-------------------------
Stephanie Pierce,
Attorney-in-Fact
<PAGE>
GENERAL MUNICIPAL MONEY MARKET FUNDS, INC.
Post-Effective Amendment No. 33 to
Registration Statement on Form N-1A under
the Securities Act of 1933 and
the Investment Company Act of 1940
-----------
EXHIBITS
-----------
INDEX TO EXHIBITS
(j) Consent of Independent Auditors.
(o) Revised Rule 18f-3 Plan.
Other Exhibits
--------------
(a) Powers of Attorney of the Board members and officers.
(b) Certificate of Secretary.
EXHIBIT (J)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Counsel and Independent Auditors" and to the use of our report
dated January 5, 1999, which is incorporated by reference, in this Registration
Statement (Form N-1A No. 2-77767) of General Municipal Money Market Funds, Inc.
ERNST & YOUNG LLP
New York, New York
November 26, 1999
EXHIBIT (O)
THE DREYFUS FAMILY OF FUNDS
(GENERAL FAMILY OF FUNDS)
RULE 18F-3 PLAN
Rule 18f-3 under the Investment Company Act of 1940, as amended (the
"1940 Act"), requires that the Board of an investment company desiring to offer
multiple classes pursuant to said Rule adopt a plan setting forth the separate
arrangement and expense allocation of each class, and any related conversion
features or exchange privileges.
The Board, including a majority of the non-interested Board members,
of each of the investment companies, or series thereof, listed on Schedule A
attached hereto (each, a "Fund") which desires to offer multiple classes has
determined that the following plan is in the best interests of each class
individually and the Fund as a whole:
1. CLASS DESIGNATION: Fund shares shall be divided into Class A, Class
B and Class X, except as otherwise indicated on Schedule A attached hereto.
2. DIFFERENCES IN SERVICES: The services offered to shareholders of
each Class shall be substantially the same, except for certain services provided
to each Class pursuant to separate plans adopted by the Fund's Board and except
that the Automatic Withdrawal Plan and the Checkwriting Privilege shall be
available only to holders of Class A or Class B shares.
3. DIFFERENCES IN DISTRIBUTION ARRANGEMENTS: Shares of each Class
shall be offered at net asset value.
Class A shares of each Fund listed on Schedule B attached hereto shall
be subject to annual payments for distributing Class A shares and servicing
shareholder accounts at the rate of up to .20% of the value of the average daily
net assets of Class A pursuant to a Service Plan adopted in accordance with Rule
12b-1 under the 1940 Act.
Class B shares of each Fund shall be subject to annual payments for
distributing Class B shares at the rate of up to .20% of the value of the
average daily net assets of Class B pursuant to a Distribution Plan adopted in
accordance with Rule 12b-1 under the 1940 Act. Class B shares shall be charged
directly for sub-accounting services at the annual rate of .05% of the value of
the average daily net assets of Class B.
Class X shares of each Fund offering such Class shall be subject to a
contingent deferred sales charge (a "CDSC"), as such term is defined under the
Conduct Rules of the National Association of Securities Dealers, Inc. (the
"NASD"), and to payments for distributing Class X shares at the rate of .25% of
the value of the average daily net assets of Class X pursuant to a Distribution
Plan adopted in accordance with Rule 12b-1 under the 1940 Act. The amount of and
provisions relating to the CDSC are set forth on Schedule C attached hereto.
Each Class of shares shall be subject to a separate Shareholder
Services Plan. Under the respective Shareholder Services Plan, Class A shares
shall be subject to payments in an amount not to exceed an annual rate of .25%
of the value of the average daily net assets of Class A, and each of Class B and
Class X shares shall be subject to an annual service fee at the rate of .25% of
the value of the average daily net assets of Class B and Class X, respectively.
The fee payable pursuant to each Shareholder Services Plan is intended to be a
"service fee" as defined under the Conduct Rules of the NASD.
4. EXPENSE ALLOCATION: The following expenses shall be allocated, to
the extent practicable, on a Class-by- Class basis: (a) fees under the Service
Plan, if any, Distribution Plans and Shareholder Services Plans; (b) printing
and postage expenses related to preparing and distributing materials, such as
shareholder reports, prospectuses and proxies, to current shareholders of a
specific Class; (c) Securities and Exchange Commission and Blue Sky registration
fees incurred by a specific Class; (d) the expense of administrative personnel
and services as required to support the shareholders of a specific Class; (e)
litigation or other legal expenses relating solely to a specific Class; (f)
transfer agent fees identified by the Fund's transfer agent as being
attributable to a specific Class; and (g) Board members' fees incurred as a
result of issues relating to a specific Class.
5. EXCHANGE PRIVILEGES: Class X shares of a Fund shall be exchangeable
only for Class X shares of another Fund or for Class B shares of a Dreyfus
Premier fund and shares of certain other Classes of other investment companies
managed or administered by The Dreyfus Corporation or its affiliates as
specified from time to time. Shares of each other Class shall be exchangeable
only for shares of certain other investment companies specified from time to
time.
Dated: July 19, 1995
Amended: April 14, 1999
<PAGE>
SCHEDULE A
General California Municipal Money Market Fund
Class A
Class B
General Government Securities Money Market Funds, Inc.
--General Government Securities Money Market Fund
Class A
Class B
--General Treasury Prime Money Market Fund
Class A
Class B
Class X
General Money Market Fund, Inc.
Class A
Class B
Class X
General Municipal Money Market Funds, Inc.
--General Minnesota Municipal Money Market Fund
Class A
Class B
--General Municipal Money Market Fund
Class A
Class B
Class X
General New York Municipal Money Market Fund
Class A
Class B
<PAGE>
SCHEDULE B
General Government Securities Money Market Funds, Inc.
--General Government Securities Money Market Fund
--General Treasury Prime Money Market Fund
General Money Market Fund, Inc.
<PAGE>
SCHEDULE C
CONTINGENT DEFERRED SALES CHARGE--CLASS X SHARES--A CDSC payable to the Fund's
Distributor shall be imposed on any redemption of Class X shares which reduces
the current net asset value of such Class X shares to an amount which is lower
than the dollar amount of all payments by the redeeming shareholder for the
purchase of Class X shares of the Fund held by such shareholder at the time of
redemption. No CDSC shall be imposed to the extent that the net asset value of
the Class X shares redeemed does not exceed (i) the current net asset value of
Class X shares acquired through reinvestment of dividends or capital gain
distributions, plus (ii) increases in the net asset value of the shareholder's
Class X shares above the dollar amount of all payments for the purchase of Class
X shares of the Fund held by such shareholder at the time of redemption.
If the aggregate value of the Class X shares redeemed has declined
below their original cost as a result of the Fund's performance, a CDSC may be
applied to the then-current net asset value rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the charge
shall depend on the number of years from the time the shareholder purchased the
Class X shares until the time of redemption of such shares. Solely for purposes
of determining the number of years from the time of any payment for the purchase
of Class X shares, all payments during a month shall be aggregated and deemed to
have been made on the first day of the month. The following table sets forth the
rates of the CDSC:
CDSC AS A % OF
YEAR SINCE AMOUNT INVESTED
PURCHASE PAYMENT OR REDEMPTION
WAS MADE PROCEEDS
- ---------------- -----------
First.............................................. 4.00
Second............................................. 4.00
Third.............................................. 3.00
Fourth............................................. 3.00
Fifth.............................................. 2.00
Sixth.............................................. 1.00
<PAGE>
In determining whether a CDSC is applicable to a redemption, the
calculation shall be made in a manner that results in the lowest possible rate.
Therefore, it shall be assumed that the redemption is made first of amounts
representing shares acquired pursuant to the reinvestment of dividends and
distributions; then of amounts representing the increase in net asset value of
Class X shares above the total amount of payments for the purchase of Class X
shares made during the preceding six years; then of amounts representing the
cost of shares purchased six years prior to the redemption; and finally, of
amounts representing the cost of shares held for the longest period of time
within the applicable six-year period.
WAIVER OF CDSC--The CDSC shall be waived in connection with (a) redemptions made
within one year after the death or disability, as defined in Section 72(m)(7) of
the Internal Revenue Code of 1986, as amended (the "Code"), of the shareholder,
(b) redemptions 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 Fund's Distributor exceeds one million dollars,
(c) redemptions as a result of a combination of any investment company with the
Fund by merger, acquisition of assets or otherwise, (d) a distribution following
retirement under a tax-deferred retirement plan or upon attaining age 70-1/2 in
the case of an IRA or Keogh plan or custodial account pursuant to Section 403(b)
of the Code, and (e) redemptions pursuant to any systematic withdrawal plan as
described in the Fund's prospectus. Any Fund shares subject to a CDSC which were
purchased prior to the termination of such waiver shall have the CDSC waived as
provided in the Fund's prospectus at the time of the purchase of such shares.
OTHER EXHIBITS (A)
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Margaret W. Chambers,
Marie E. Connolly, Douglas C. Conroy, Frederick C. Dey, Christopher J. Kelley,
Kathleen K. Morrisey, Stephanie Pierce, Elba Vasquez and Karen Jacoppo-Wood and
each of them, with full power to act without the other, his or her true and
lawful attorney-in-fact and agent, with name, place and stead, in any and all
capacities (until revoked in writing) to sign any and all amendments to the
Registration Statement of General Municipal Money Market Funds, Inc. (including
post-effective amendments and amendments thereto), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
/s/Clifford L. Alexander, Jr. June 1, 1999
- --------------------------------
Clifford L. Alexander, Jr.
/s/Peggy C. Davis June 1, 1999
- --------------------------------
Peggy C. Davis
/s/Joseph S. DiMartino June 1, 1999
- --------------------------------
Joseph S. DiMartino
/s/Ernst Kafka June 1, 1999
- --------------------------------
Ernst Kafka
/s/Saul B. Klaman June 1, 1999
- --------------------------------
Saul B. Klaman
/s/Nathan Leventhal June 1, 1999
- --------------------------------
Nathan Leventhal
OTHER EXHIBITS (B)
GENERAL MUNICIPAL MONEY MARKET FUNDS, INC.
Certificate of Assistant Secretary
The undersigned, Stephanie Pierce, Vice President, Assistant Treasurer
and Assistant Secretary of General Municipal Money Market Funds, Inc. (the
"Fund"), hereby certifies that set forth below is a copy of the resolution
adopted by the Fund's Board authorizing the signing by Margaret W. Chambers,
Marie E. Connolly, Douglas C. Conroy, Frederick C. Dey, Christopher J. Kelley,
Kathleen K. Morrisey, Stephanie Pierce, Elba Vasquez and Karen Jacoppo-Wood on
behalf of the proper officers of the Fund pursuant to a power of attorney:
RESOLVED, that the Registration Statement and any and all
amendments and supplements thereto, may be signed by any one of
Margaret W. Chambers, Marie E. Connolly, Douglas C. Conroy,
Frederick C. Dey, Christopher J. Kelley, Kathleen K. Morrisey,
Stephanie Pierce, Elba Vasquez and Karen Jacoppo-Wood as the
attorney-in-fact for the proper officers of the Fund, with full
power of substitution and resubstitution; and that the
appointment of each of such persons as such attorney-in-fact,
hereby is authorized and approved; and that such
attorneys-in-fact; and each of them, shall have the full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in connection with such
Registration Statement and any and all amendments and supplements
thereto, as fully to all intents and purposes as the officer, for
whom he or she is acting as attorney-in-fact, might or could do
in person.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Fund on September 21, 1999.
/s/ Stephanie Pierce
-------------------------
Stephanie Pierce
Vice President, Assistant
Treasurer and Assistant Secretary
