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. 31 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 31 [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)
----
on (date) pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
X on April 1, 1999 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.
----
General Money Market Funds
Investing in high quality short-term securities for current income, safety of
principal and liquidity
General California Municipal Money Market Fund
General Government Securities Money Market Fund
General Minnesota Municipal Money Market Fund
General Money Market Fund
General Municipal Money Market Fund
General New York Municipal Money Market Fund
PROSPECTUS April 1, 1999
CLASS A SHARES
(reg.tm)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
<PAGE>
The Funds
Contents
The Funds
- --------------------------------------------------------------------------------
Introduction 1
General Money Market Fund 2
General Government Securities
Money Market Fund 4
General Municipal Money
Market Fund 6
General California Municipal
Money Market Fund 8
General Minnesota Municipal
Money Market Fund 10
General New York Municipal
Money Market Fund 12
Management 14
Financial Highlights 15
Your Investment
- --------------------------------------------------------------------------------
Account Policies 18
Distributions and Taxes 20
Services for Fund Investors 20
Instructions for Regular Accounts 22
Instructions for IRAs 23
For More Information
- --------------------------------------------------------------------------------
MORE INFORMATION ON EACH FUND CAN BE FOUND IN THE FUND'S CURRENT
ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Introduction
Each fund is a money market mutual fund with a separate investment portfolio and
operations and results which are unrelated to those of each other fund. This
combined prospectus has been prepared for your convenience so that you can
consider six investment choices in one document.
As a money market fund, each fund is subject to maturity, quality and
diversification requirements designed to help it maintain a stable share price.
Generally, each fund is required to invest at least 95% of its assets in the
securities of issuers with the highest credit rating or the unrated equivalent
as determined by Dreyfus, with the remainder invested in securities with the
second highest credit rating.
An investment in a fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although each fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in a fund.
Concepts to understand
MONEY MARKET FUND: a specific type of fund that seeks to maintain a $1.00 price
per share. Money market funds are subject to strict federal requirements and
must do the following:
(pound) maintain an average dollar-weighted portfolio maturity of 90 days or
less
(pound) buy individual securities that have remaining maturities of 13 months or
less
(pound) 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.
The Funds
<PAGE>
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:
(pound) securities issued or guaranteed by the U.S. government or its agencies
(pound) certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by domestic or foreign banks or their
subsidiaries or branches
(pound) repurchase agreements
(pound) asset-backed securities
(pound) domestic and dollar-denominated foreign commercial paper, and other
short-term corporate obligations, including those with floating or variable
rates of interest
(pound) 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:
(pound) interest rates could rise sharply, causing the fund's share price to
drop
(pound) any of the fund's holdings could have its credit rating downgraded or
could default
(pound) 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
(pound) 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 the fund's annual returns and long-term performance
for Class A. The first table shows you how the fund's performance has varied
from year to year. The second averages the fund's performance over time. Both
tables assume reinvestment of dividends and distributions. As with all mutual
funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
8.84 7.71 5.84 3.39 2.58 3.51 5.44 4.83 4.99 4.93
Year-by-year total return AS OF 12/31 EACH YEAR (%)
BEST QUARTER: Q2 '89 2.28%
WORST QUARTER: Q3 '93 0.63%
The fund's 7-day yield on 12/31/98 was 4.42%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
4.93% 4.74% 5.19%
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described 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%
12b-1 fee 0.20%
Shareholder services fee 0.03%
Other expenses 0.04%
- --------------------------------------------------------------------------------
TOTAL 0.77%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
<S> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$79 $246 $428 $954
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
12B-1 FEE: a fee of up to 0.20% to reimburse Premier Mutual Fund Services, Inc.,
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 of up to 0.25% 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.
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.
General Money Market Fund
<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 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
The two tables below show the fund's annual returns and long-term performance
for Class A. The first table shows you how the fund's performance has varied
from year to year. The second averages the fund's performance over time. Both
tables assume reinvestment of dividends and distributions. As with all mutual
funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
8.61 7.51 5.66 3.47 2.71 3.69 5.36 4.79 4.86 4.83
Year-by-year total return AS OF 12/31 EACH YEAR (%)
BEST QUARTER: Q2 '89 2.20%
WORST QUARTER: Q3 '93 0.66%
The fund's 7-day yield on 12/31/98 was 4.30%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
4.83% 4.70% 5.13%
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described 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%
12b-1 fee 0.20%
Shareholder services fee 0.02%
Other expenses 0.05%
- --------------------------------------------------------------------------------
TOTAL 0.77%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
<S> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$79 $246 $428 $954
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
12B-1 FEE: a fee of up to 0.20% to reimburse Premier Mutual Fund Services, Inc.,
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 of up to 0.25% 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.
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.
General Government Securities Money Market Fund
<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. When the portfolio manager believes that acceptable municipal
obligations are unavailable for investment, the fund may invest temporarily in
high quality, taxable money market instruments. Municipal obligations are
typically divided into two types:
(pound) GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
(pound) 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:
(pound) interest rates could rise sharply, causing the fund's share price to
drop
(pound) any of the fund's holdings could have its credit rating downgraded or
could default
Although the fund's objective is to generate income exempt from federal income
tax, interest from some of its holdings may be subject to the alternative
minimum tax. In addition, the fund occasionally may invest in taxable money
market instruments.
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class A. The first table shows you how the fund's performance has varied
from year to year. The second averages the fund's performance over time. Both
tables assume reinvestment of dividends and distributions. As with all mutual
funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
5.91 5.53 4.19 2.62 2.05 2.40 3.42 3.93 3.15 2.98
Year-by-year total return AS OF 12/31 EACH YEAR (%)
BEST QUARTER: Q2 '89 1.56%
WORST QUARTER: Q1 '94 0.46%
The fund's 7-day yield on 12/31/98 was 3.25%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
2.98% 2.97% 3.51%
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described 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 12b-1 distribution fees.
- --------------------------------------------------------------------------------
Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Shareholder services fee 0.03%
Other expenses 0.07%
- --------------------------------------------------------------------------------
TOTAL 0.60%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
<S> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$61 $192 $335 $750
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
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.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
SHAREHOLDER SERVICES FEE: a fee of up to 0.25% used to reimburse Dreyfus Service
Corporation for shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the fund for miscellaneous items such as transfer
agency, custody, professional and registration fees.
General Municipal Money Market Fund
<PAGE>
General California Municipal Money Market Fund
- ----------------------
Ticker Symbol: GCAXX
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal and California
state personal income taxes, as is consistent with the preservation of capital
and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal and
California state personal income taxes. When the portfolio manager believes that
acceptable California municipal obligations are unavailable for investment, the
fund may invest in securities that may be subject to California state income
tax, but are free from federal income tax. Municipal obligations are typically
divided into two types:
(pound) GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
(pound) 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:
(pound) interest rates could rise sharply, causing the fund's share price to
drop
(pound) any of the fund's holdings could have its credit rating downgraded or
could default
(pound) California's economy and revenues underlying municipal obligations may
decline
(pound) the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal and
California state income taxes, interest from some of its holdings may be subject
to the 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 two tables below show the fund's annual returns and long-term performance
for Class A. The first table shows you how the fund's performance has varied
from year to year. The second averages the fund's performance over time. Both
tables assume reinvestment of dividends and distributions. As with all mutual
funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
5.81 5.93 4.66 2.90 2.30 2.57 3.22 2.84 2.99 2.73
Year-by-year total return AS OF 12/31 EACH YEAR (%)
BEST QUARTER: Q4 '89 1.56%
WORST QUARTER: Q1 '94 0.51%
The fund's 7-day yield on 12/31/98 was 3.01%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
2.73% 2.87% 3.59%
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Account fees are paid, in certain
circumstances, from your account. 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 12b-1 distribution fees.
- --------------------------------------------------------------------------------
Fee table
Maximum account fee $12
CHARGED ONLY TO REGULAR ACCOUNTS WITH BALANCES
BELOW $2,000 (SEE "ACCOUNT POLICIES")
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Shareholder services fee 0.04%
Other expenses 0.10%
- --------------------------------------------------------------------------------
TOTAL 0.64%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
<S> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$65 $205 $357 $798
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
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.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
SHAREHOLDER SERVICES FEE: a fee of up to 0.25% used to reimburse Dreyfus Service
Corporation for shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the fund for miscellaneous items such as transfer
agency, custody, professional and registration fees.
General California Municipal Money Market Fund
<PAGE>
General Minnesota Municipal Money Market
- ------------------
Ticker Symbol: N/A
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal and Minnesota
state personal income taxes, as is consistent with the preservation of capital
and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal and
Minnesota state personal income taxes. When the portfolio manager believes that
acceptable Minnesota municipal obligations are unavailable for investment, the
fund may invest in securities that may be subject to Minnesota state income tax,
but are free from federal income tax. Municipal obligations are typically
divided into two types:
(pound) GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
(pound) 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:
(pound) interest rates could rise sharply, causing the fund's share price to
drop
(pound) any of the fund's holdings could have its credit rating downgraded or
could default
(pound) Minnesota's economy and revenues underlying municipal obligations may
decline
(pound) 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 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 as of the end of the fiscal year,
please refer to the Statement of Additional Information (SAI).
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described 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 12b-1 distribution fees.
- --------------------------------------------------------------------------------
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%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
<S> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$144 $446 $771 $1,691
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
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.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
SHAREHOLDER SERVICES FEE: a fee of up to 0.25% used to reimburse Dreyfus Service
Corporation for shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the fund for miscellaneous items such as transfer
agency, custody, professional and registration fees.
General Minnesota Municipal Money Market Fund
<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. When the portfolio manager
believes that acceptable New York municipal obligations are unavailable for
investment, the fund may invest in securities that may be subject to New York
state and New York city income taxes, but are free from federal income tax.
Municipal obligations are typically divided into two types:
(pound) GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
(pound) 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:
(pound) interest rates could rise sharply, causing the fund's share price to
drop
(pound) any of the fund's holdings could have its credit rating downgraded or
could default
(pound) New York's economy and revenues underlying municipal obligations may
decline
(pound) the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal, New
York state and New York city income taxes, interest from some of its holdings
may be subject to the 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 two tables below show the fund's annual returns and long-term performance
for Class A. The first table shows you how the fund's performance has varied
from year to year. The second averages the fund's performance over time. Both
tables assume reinvestment of dividends and distributions. As with all mutual
funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
5.43 5.76 4.28 2.63 1.97 2.46 3.28 2.79 3.00 2.73
Year-by-year total return AS OF 12/31 EACH YEAR (%)
BEST QUARTER: Q2 '90 1.45%
WORST QUARTER: Q1 '93 0.46%
The fund's 7-day yield on 12/31/98 was 2.96%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
2.73% 2.85% 3.43%
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Account fees are paid, in certain
circumstances, from your account. 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 12b-1 distribution fees.
- --------------------------------------------------------------------------------
Fee table
Maximum account fee $12
CHARGED ONLY TO REGULAR ACCOUNTS WITH BALANCES
BELOW $2,000 (SEE "ACCOUNT POLICIES")
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
Shareholder services fee 0.10%
Other expenses 0.08%
- --------------------------------------------------------------------------------
TOTAL 0.68%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
<S> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$69 $218 $379 $847
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
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.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
SHAREHOLDER SERVICES FEE: a fee of up to 0.25% used to reimburse Dreyfus Service
Corporation for shareholder account service and maintenance.
OTHER EXPENSES: fees paid by the fund for miscellaneous items such as transfer
agency, custody, professional and registration fees.
General New York Municipal Money Market Fund
<PAGE>
MANAGEMENT
The investment adviser for the fund is The Dreyfus Corporation, 200 Park Avenue,
New York, New York 10166. Founded in 1947, Dreyfus manages one of the nation's
leading mutual fund complexes, with more than $117 billion in more than 160
mutual fund portfolios. Dreyfus is the mutual fund business of Mellon Bank
Corporation, a broad-based financial services company with a bank at its core.
With more than $350 billion of assets under management and $1.7 trillion of
assets under administration and custody, Mellon provides a full range of
banking, investment and trust products and services to individuals, businesses
and institutions. Its mutual fund companies place Mellon as the leading bank
manager of mutual funds. Mellon is headquartered in Pittsburgh, Pennsylvania.
Management philosophy
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, the firm
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Concepts to understand
YEAR 2000 ISSUES: the fund could be adversely affected if the computer systems
used by Dreyfus and the fund's 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 the fund invests may be
adversely affected by year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each fund's Class A shares for
the fiscal periods indicated. "Total return" shows how much your investment in
the fund would have increased (or decreased) during each period, assuming you
had reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young LLP, whose report, along with the fund's
financial statements, is included in the annual report.
<TABLE>
<CAPTION>
YEAR ENDED TEN MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, YEAR ENDED JANUARY 31,
GENERAL MONEY MARKET FUND 1998 1997(1) 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .049 .041 .047 .053 .037 .025
Distributions: Dividends from investment
income -- net (.049) (.041) (.047) (.053) (.037) (.025)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
Total return (%) 4.98 4.99(2) 4.81 5.42 3.75 2.56
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .77 .88(2) .84 .86 .94 .94
Ratio of net investment income
to average net assets (%) 4.88 4.89(2) 4.71 5.28 3.68 2.53
Decrease reflected in above expense ratios
due to undertakings by the manager (%) -- -- -- .01 .04 .02
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 835,706 903,313 764,119 654,581 572,116 616,072
(1) THE FUND CHANGED ITS FISCAL YEAR END FROM JANUARY 31 TO NOVEMBER 30.
(2) ANNUALIZED.
YEAR ENDED TEN MONTHS ENDED
GENERAL GOVERNMENT SECURITIES NOVEMBER 30, NOVEMBER 30, YEAR ENDED JANUARY 31,
MONEY MARKET FUND 1998 1997(1) 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .048 .040 .047 .052 .038 .027
Distributions: Dividends from investment
income -- net (.048) (.040) (.047) (.052) (.038) (.027)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
Total return (%) 4.88 4.84(2) 4.75 5.35 3.90 2.69
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .77 .82(2) .82 .84 .83 .81
Ratio of net investment income
to average net assets (%) 4.77 4.78(2) 4.65 5.22 3.82 2.66
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 539,878 510,289 519,861 530,054 513,345 536,884
(1) THE FUND CHANGED ITS FISCAL YEAR END FROM JANUARY 31 TO NOVEMBER 30.
(2) ANNUALIZED.
Financial Highlights
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED NOVEMBER 30,
GENERAL MUNICIPAL MONEY MARKET FUND 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment operations:
Investment income -- net .030 .031 .029 .034 .023
Distributions:
Dividends from investment income -- net (.030) (.031) (.029) (.034) (.023)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
Total return (%) 3.02 3.14 2.97 3.41 2.27
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .60 .62 .66 .66 .64
Ratio of net investment income to average net assets (%) 2.98 3.09 2.93 3.35 2.22
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 280,398 273,058 256,862 294,379 294,711
YEAR ENDED FOUR MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, YEAR ENDED JANUARY 31,
GENERAL MONEY MARKET FUND 1998 1997(1) 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment operations:
Investment income -- net .027 .010 .029 .029 .031 .023
Distributions:
Dividends from investment income -- net (.027) (.010) (.029) (.029) (.031) (.023)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 1.00
Total return (%) 2.78 2.96(2) 2.95 2.94 3.14 2.27
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .64 .70(2) .64 .65 .52 .33
Ratio of net investment income to average net assets (%) 2.74 2.97(2) 2.91 2.91 3.07 2.24
Decrease reflected in above expense ratios
due to undertakings by the manager (%) -- -- -- -- .11 .28
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 335,726 361,102 327,226 390,155 463,404 699,105
(1) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO NOVEMBER 30.
(2) ANNUALIZED.
</TABLE>
<PAGE>
YEAR ENDED
NOVEMBER 30,
GENERAL MINNESOTA MUNICIPAL MONEY MARKET FUND 1998(1)
- --------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00
Investment operations: Investment income -- net .014
Distributions: Dividends from investment income -- net (.014)
Net asset value, end of period 1.00
Total return (%) 2.81(2)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .65(2)
Ratio of net investment income to average net assets (%) 2.80(2)
Decrease reflected in above expense ratios
due to undertakings by the manager (%) .76(2)
- --------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 1,014
(1) FROM JUNE 1, 1998 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1998.
(2) ANNUALIZED.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
GENERAL NEW YORK MUNICIPAL MONEY MARKET FUND 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .027 .029 .028 .032 .023
Distributions: Dividends from investment income -- net (.027) (.029) (.028) (.032) (.023)
Net asset value, end of period 1.00 1.00 1.00 1.00 1.00
Total return (%) 2.77 2.98 2.84 3.28 2.34
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .68 .66 .68 .58 .34
Ratio of net investment income to average net assets (%) 2.74 2.94 2.80 3.23 2.33
Decrease reflected in above expense ratios
due to undertakings by the manager (%) -- -- -- .05 .32
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 405,054 440,750 507,537 636,013 689,918
</TABLE>
Financial Highlights
<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.
YOUR PRICE FOR FUND SHARES is the fund's net asset value (NAV), which is
generally calculated twice a day, at 5 p.m. and 8 p.m. Eastern time for the
taxable money market funds and 12 noon and 8 p.m. Eastern time for the municipal
money market funds, every day the New York Stock Exchange or the fund's transfer
agent is open. Your order will be priced at the next NAV calculated after your
order is accepted by the fund's transfer agent or other entity authorized to
accept orders on behalf of the fund. Each fund's investments are valued based on
amortized cost.
IF YOUR PAYMENTS ARE RECEIVED in or converted into Federal Funds by 12 noon, you
will receive the dividend declared that day. If your payments are received in or
converted into Federal Funds after 12 noon, you will begin to accrue dividends
on the following business day. Qualified institutions may telephone orders to
buy shares. If such an order is made by 5 p.m. for the taxable money market
funds or 12 noon for the municipal money market funds, and Federal Funds are
received by 6 p.m. or 4 p.m., respectively, the shares will be purchased at the
NAV determined at 5 p.m. or 12 noon, as the case may be, and will receive the
dividend declared that day. If such an order is made after 5 p.m. for the
taxable money market funds or 12 noon for the municipal money market funds, but
by 8 p.m., and Federal Funds are received by 11 a.m. the next business day, the
shares will be purchased at the NAV determined at 8 p.m. and will begin to
accrue dividends on the next business day. All times are Eastern time.
BECAUSE THE MUNICIPAL MONEY MARKET FUNDS seek tax-exempt income, they are not
recommended for purchase in IRAs or other qualified plans.
- --------------------------------------------------------------------------------
Minimum investments
Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $2,500 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
<PAGE>
Selling shares
YOU MAY SELL 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
entity authorized to accept orders on behalf of the fund. Any certificates
representing fund shares being sold must be returned with your redemption
request. Your order will be processed promptly and you will generally receive
the proceeds within a week.
BEFORE SELLING OR WRITING A CHECK for recently purchased shares, please note
that if the fund has not yet collected payment for the shares you are selling,
it may delay sending the proceeds for up to eight business days or until it has
collected payment.
- --------------------------------------------------------------------------------
Limitations on selling shares by phone
Proceeds
sent by Minimum Maximum
- --------------------------------------------------------------------------------
CHECK NO MINIMUM $150,000 PER DAY
WIRE $1,000 $250,000 FOR JOINT ACCOUNTS
EVERY 30 DAYS
TELETRANSFER $500 $250,000 FOR JOINT ACCOUNTS
EVERY 30 DAYS
General policies
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
EACH FUND RESERVES THE RIGHT TO:
(pound) 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)
(pound) refuse any purchase or exchange request in excess of 1% of the fund's
total assets
(pound) change or discontinue its exchange privilege, or temporarily suspend
this privilege during unusual market conditions
(pound) change its minimum investment amounts
(pound) delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or during
unusual market conditions)
Each fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
(pound) amounts of $1,000 or more on accounts whose address has been changed
within the last 30 days
(pound) requests to send the proceeds to a different payee or address
Written sell orders of $100,000 or more must also be signature guaranteed.
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
Small account policies
To offset the relatively higher costs of servicing smaller accounts, the
California Municipal Money Market Fund and New York Municipal Money Market Fund
charge regular accounts with balances below $2,000 an annual fee of $12. The fee
will be imposed during the fourth quarter of each calendar year.
The fee will be waived for: any investor whose aggregate Dreyfus mutual fund
investments total at least $25,000; accounts participating in automatic
investment programs and accounts opened through a financial institution.
With respect to any fund, if your account falls below $500, the fund may ask you
to increase your balance. If it is still below $500 after 45 days, the fund may
close your account and send you the proceeds.
Your Investment
<PAGE>
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.
SERVICES FOR FUND INVESTORS
THE THIRD PARTY THROUGH WHOM YOU PURCHASED fund shares may impose different
restrictions on these services and privileges offered by the fund, or may not
make them available at all. Consult your financial representative for more
information on the availability of these services and privileges.
Automatic services
BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to certain
restrictions. You can set up most of these services with your application, or by
calling your financial representative or 1-800-645-6561.
- --------------------------------------------------------------------------------
For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.
DREYFUS PAYROLL For making automatic investments
SAVINGS PLAN through a payroll deduction.
DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one Dreyfus fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
DREYFUS AUTO- For making regular exchanges
EXCHANGE PRIVILEGE from one Dreyfus fund into
another.
- --------------------------------------------------------------------------------
For selling shares
DREYFUS AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most Dreyfus funds.
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.
<PAGE>
Exchange privilege
YOU CAN EXCHANGE $500 OR MORE from one Dreyfus fund into another (no minimum for
retirement accounts). You can request your exchange in writing or by phone. Be
sure to read the current prospectus for any fund into which you are exchanging.
Any new account established through an exchange will have the same privileges as
your original account (as long as they are available). There is currently no fee
for exchanges, although you may be charged a sales load when exchanging into any
fund that has one.
Dreyfus TeleTransfer privilege
TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the Dreyfus TeleTransfer privilege. You can set up TeleTransfer
on your account by providing bank account information and following the
instructions on your application.
The Dreyfus Touch((reg.tm))
FOR 24-HOUR AUTOMATED ACCOUNT ACCESS, use Dreyfus Touch. With a touch-tone
phone, you can easily manage your Dreyfus accounts, obtain information on other
Dreyfus mutual funds and get current stock market quotes.
Account statements
EVERY FUND INVESTOR automatically receives regular account statements. You'll
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
Retirement plans
A variety of retirement plans are offered for the taxable money market funds,
including traditional, Roth and Education IRAs. Here's where you call for
information:
(pound) for traditional, rollover, Roth and Education IRAs,
call 1-800-645-6561
(pound) for SEP-IRAs, Keogh accounts, 401(k) and 403(b) accounts, call
1-800-358-0910
Your Investment
<PAGE>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
The Dreyfus Family of Funds
P.O. Box 9387, Providence, RI 02940-9387
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: The Dreyfus Family of Funds
P.O. Box 105 Newark, New Jersey 07101-0105
By Telephone
WIRE Have your bank send your
investment to The Bank of New York, with these instructions:
* ABA# 021000018
* fund name and DDA#
* General Money Market Fund
DDA# 8900051957
* General Government Securities
Money Market Fund DDA# 8900052414
* General Municipal Money Market Fund
DDA# 8900052376
* General California Municipal
Money Market Fund DDA# 8900052163
* General Minnesota Municipal
Money Market Fund DDA# 8900337451
* General New York Municipal
Money Market Fund DDA# 8900052171
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to The Bank of New York, with these
instructions:
* ABA# 021000018
* fund name and DDA#
* General Money Market Fund DDA# 8900051957
* General Government Securities Money Market Fund DDA# 8900052414
* General Municipal Money Market Fund DDA# 8900052376
* General California Municipal Money Market Fund DDA# 8900052163
* General Minnesota Municipal Money Market Fund DDA# 8900337451
* General New York Municipal Money Market Fund DDA# 8900052171
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "1111"
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate on your application which automatic
service(s) you want. Return your application with your investment.
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials.
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 19)
Mail your request to: The Dreyfus Family of Funds P.O. Box 9671, Providence, RI
02940-9671
WIRE Call us or your financial representative to request your transaction. Be
sure the fund has your bank account information on file. Proceeds will be wired
to your bank.
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
CHECK Call us or your financial representative to request your transaction. A
check will be sent to the address of record.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
<PAGE>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427, Providence, RI 02940-6427
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail in the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427, Providence, RI 02940-6427
By Telephone
WIRE Have your bank send your investment to The Bank of New York, with these
instructions:
* ABA# 021000018
* fund name and DDA#
* General Money Market Fund DDA# 8900051957
* General Government Securities Money Market Fund DDA# 8900052414
* the share class
* your account number
* name of investor
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "1111"
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number and fund name
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 19).
Mail in your request to: The Dreyfus Trust Company P.O. Box 6427, Providence,
RI 02940-6427
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
Your Investment
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
For More Information
General Money Market Fund
- -----------------------------------
SEC file number: 811-3207
General Government Securities Money Market Fund
- -----------------------------------
SEC file number: 811-3456
General Municipal Money Market Fund
- ----------------------------------
SEC file number: 811-3481
General California Municipal Money Market Fund
- ----------------------------------
SEC file number: 811-4871
General Minnesota Municipal Money Market Fund
- ----------------------------------
SEC file number: 811-3481
General New York Municipal Money Market Fund
- -----------------------------------
SEC file number: 811-4870
More information on each fund is available free upon request, including the
following:
Annual/Semiannual Report
Describes the fund's performance, and lists portfolio holdings.
Statement of Additional Information (SAI)
Provides more details about each fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 1999, Dreyfus Service Corporation
GENAP0499
<PAGE>
General Money Market Funds
Investing in high quality short-term securities for current income, safety of
principal and liquidity
General California Municipal Money Market Fund
General Government Securities Money Market Fund
General Minnesota Municipal Money Market Fund
General Money Market Fund
General Municipal Money Market Fund
General New York Municipal Money Market Fund
PROSPECTUS April 1, 1999
CLASS B SHARES
(reg.tm)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
<PAGE>
The Funds
Contents
The Funds
- --------------------------------------------------------------------------------
Introduction 1
General Money Market Fund 2
General Government Securities
Money Market Fund 4
General Municipal Money
Market Fund 6
General California Municipal
Money Market Fund 8
General Minnesota Municipal
Money Market Fund 10
General New York Municipal
Money Market Fund 12
Management 14
Financial Highlights 15
Your Investment
- --------------------------------------------------------------------------------
Account Policies 18
Distributions and Taxes 20
Services for Fund Investors 20
Instructions for Regular Accounts 22
Instructions for IRAs 23
For More Information
- --------------------------------------------------------------------------------
MORE INFORMATION ON EACH FUND CAN BE FOUND IN THE FUND'S CURRENT
ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
Introduction
Each fund is a money market mutual fund with a separate investment portfolio and
operations and results which are unrelated to those of each other fund. This
combined prospectus has been prepared for your convenience so that you can
consider six investment choices in one document.
As a money market fund, each fund is subject to maturity, quality and
diversification requirements designed to help it maintain a stable share price.
Generally, each fund is required to invest at least 95% of its assets in the
securities of issuers with the highest credit rating or the unrated equivalent
as determined by Dreyfus, with the remainder invested in securities with the
second highest credit rating.
An investment in a fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although each fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in a fund.
Concepts to understand
MONEY MARKET FUND: a specific type of fund that seeks to maintain a $1.00 price
per share. Money market funds are subject to strict federal requirements and
must do the following:
(pound) maintain an average dollar-weighted portfolio maturity of 90 days or
less
(pound) buy individual securities that have remaining maturities of 13 months or
less
(pound) 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
The Funds
<PAGE>
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:
(pound) securities issued or guaranteed by the U.S. government or its agencies
(pound) certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by domestic or foreign banks or their
subsidiaries or branches
(pound) repurchase agreements
(pound) asset-backed securities
(pound) domestic and dollar-denominated foreign commercial paper, and other
short-term corporate obligations, including those with floating or variable
rates of interest
(pound) 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:
(pound) interest rates could rise sharply, causing the fund's share price to
drop
(pound) any of the fund's holdings could have its credit rating downgraded or
could default
(pound) 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
(pound) 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 the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second averages the fund's performance over time. Both
tables assume reinvestment of dividends and distributions. As with all mutual
funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
4.68 4.84 4.73
Year-by-year total return AS OF 12/31 EACH YEAR (%)
BEST QUARTER: Q4 '97 1.22%
WORST QUARTER: Q4 '98 1.09%
The fund's 7-day yield on 12/31/98 was 4.25%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception
1 Year 3 Years (3/31/95)
- --------------------------------------------------------------------------------
4.73% 4.75% 4.84%
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described 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%
12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.11%
- --------------------------------------------------------------------------------
TOTAL 1.06%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
<S> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$108 $337 $585 $1,294
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
12B-1 FEE: a fee of up to 0.20% to reimburse Premier Mutual Fund Services, Inc.,
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.
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.
General Money Market Fund
<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 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
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second averages the fund's performance over time. Both
tables assume reinvestment of dividends and distributions. As with all mutual
funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
4.60 4.69 4.61
Year-by-year total return AS OF 12/31 EACH YEAR (%)
BEST QUARTER: Q4 '97 1.18%
WORST QUARTER: Q4 '98 1.06%
The fund's 7-day yield on 12/31/98 was 4.08%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception
1 Year 3 Years (3/31/95)
- --------------------------------------------------------------------------------
4.61% 4.64% 4.72%
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described 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%
12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.07%
- --------------------------------------------------------------------------------
TOTAL 1.02%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
<S> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$104 $325 $563 $1,248
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
12B-1 FEE: a fee of up to 0.20% to reimburse Premier Mutual Fund Services, Inc.,
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.
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.
General Government Securities Money Market Fund
<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. When the portfolio manager believes that acceptable municipal
obligations are unavailable for investment, the fund may invest temporarily in
high quality, taxable money market instruments. Municipal obligations are
typically divided into two types:
(pound) GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
(pound) 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:
(pound) interest rates could rise sharply, causing the fund's share price to
drop
(pound) any of the fund's holdings could have its credit rating downgraded or
could default
Although the fund's objective is to generate income exempt from federal income
tax, interest from some of its holdings may be subject to the alternative
minimum tax. In addition, the fund occasionally may invest in taxable money
market instruments.
<PAGE>
PAST PERFORMANCE
The two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second averages the fund's performance over time. Both
tables assume reinvestment of dividends and distributions. As with all mutual
funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
2.66 2.86 2.60
Year-by-year total return AS OF 12/31 EACH YEAR (%)
BEST QUARTER: Q2 '97 0.76%
WORST QUARTER: Q4 '98 0.61%
The fund's 7-day yield and tax equivalent yield on 12/31/98 was 2.83%. For the
fund's current yield, call toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception
1 Year 3 Years (3/31/95)
- --------------------------------------------------------------------------------
2.60% 2.71% 2.77%
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described 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%
12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.10%
- --------------------------------------------------------------------------------
TOTAL 1.05%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
<S> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$107 $334 $579 $1,283
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
12B-1 FEE: a fee of up to 0.20% to reimburse Premier Mutual Fund Services, Inc.,
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.
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.
General Municipal Money Market Fund
<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. When the portfolio manager believes that
acceptable California municipal obligations are unavailable for investment, the
fund may invest in securities that may be subject to California state income
tax, but are free from federal income tax. Municipal obligations are typically
divided into two types:
(pound) GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
(pound) 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:
(pound) interest rates could rise sharply, causing the fund's share price to
drop
(pound) any of the fund's holdings could have its credit rating downgraded or
could default
(pound) California's economy and revenues underlying municipal obligations may
decline
(pound) the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal and
California state income taxes, interest from some of its holdings may be subject
to the 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 two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second averages the fund's performance over time. Both
tables assume reinvestment of dividends and distributions. As with all mutual
funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
2.48 2.62 2.34
Year-by-year total return AS OF 12/31 EACH YEAR (%)
BEST QUARTER: Q2 '97 0.71%
WORST QUARTER: Q3 '98 0.53%
The fund's 7-day yield on 12/31/98 was 2.59%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception
1 Year 3 Years (8/1/95)
- --------------------------------------------------------------------------------
2.34% 2.48% 2.52%
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Account fees are paid, in certain
circumstances, from your account. Annual fund operating expenses are paid out of
fund assets, so their effect is included in the share price.
- --------------------------------------------------------------------------------
Fee table
Maximum account fee $12
CHARGED ONLY TO REGULAR ACCOUNTS WITH BALANCES
BELOW $2,000 (SEE "ACCOUNT POLICIES")
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.12%
- --------------------------------------------------------------------------------
TOTAL 1.07%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
<S> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$109 $340 $590 $1,306
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
12B-1 FEE: a fee of up to 0.20% to reimburse Premier Mutual Fund Services, Inc.,
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.
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.
General California Municipal Money Market Fund
<PAGE>
General Minnesota Municipal Money Market
- ------------------
Ticker Symbol: N/A
GOAL/APPROACH
The fund seeks to maximize current income exempt from federal and Minnesota
state personal income taxes, as is consistent with the preservation of capital
and the maintenance of liquidity.
To pursue this goal, the fund normally invests substantially all net assets in
municipal obligations, the interest from which is exempt from federal and
Minnesota state personal income taxes. When the portfolio manager believes that
acceptable Minnesota municipal obligations are unavailable for investment, the
fund may invest in securities that may be subject to Minnesota state income tax,
but are free from federal income tax. Municipal obligations are typically
divided into two types:
(pound) GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
(pound) 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:
(pound) interest rates could rise sharply, causing the fund's share price to
drop
(pound) any of the fund's holdings could have its credit rating downgraded or
could default
(pound) Minnesota's economy and revenues underlying municipal obligations may
decline
(pound) 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 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 as of the end of the fiscal year,
please refer to the Statement of Additional Information (SAI).
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described 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%
12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.72%
- --------------------------------------------------------------------------------
TOTAL 1.67%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
<S> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$170 $526 $907 $1,976
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
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.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
12B-1 FEE: a fee of up to 0.20% to reimburse Premier Mutual Fund Services, Inc.,
the fund's distributor, for distributing Class B shares. Because this fee is
paid out of the fund's assets on an ongoing basis, over time it will increase
the cost of your investment and may cost you more than paying other types of
sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General Minnesota Municipal Money Market Fund
<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. When the portfolio manager
believes that acceptable New York municipal obligations are unavailable for
investment, the fund may invest in securities that may be subject to New York
state and New York city income taxes, but are free from federal income tax.
Municipal obligations are typically divided into two types:
(pound) GENERAL OBLIGATION BONDS, which are secured by the full faith and
credit of the issuer and its taxing power
(pound) 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:
(pound) interest rates could rise sharply, causing the fund's share price to
drop
(pound) any of the fund's holdings could have its credit rating downgraded or
could default
(pound) New York's economy and revenues underlying municipal obligations may
decline
(pound) the fund's portfolio securities may be more sensitive to risks that are
specific to investing primarily in a single state
Although the fund's objective is to generate income exempt from federal, New
York state and New York city income taxes, interest from some of its holdings
may be subject to the 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 two tables below show the fund's annual returns and long-term performance
for Class B. The first table shows you how the fund's performance has varied
from year to year. The second averages the fund's performance over time. Both
tables assume reinvestment of dividends and distributions. As with all mutual
funds, the past is not a prediction of the future.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
2.51 2.70 2.42
Year-by-year total return AS OF 12/31 EACH YEAR (%)
BEST QUARTER: Q2 '97 0.70%
WORST QUARTER: Q4 '98 0.55%
The fund's 7-day yield on 12/31/98 was 2.61%. For the fund's current yield, call
toll-free 1-800-645-6561.
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/98
Inception
1 Year 3 Years (9/8/95)
- --------------------------------------------------------------------------------
2.42% 2.54% 2.57%
EXPENSES
As an investor, you pay certain fees and expenses in connection with the fund,
which are described in the table below. Account fees are paid, in certain
circumstances, from your account. Annual fund operating expenses are paid out of
fund assets, so their effect is included in the share price.
- --------------------------------------------------------------------------------
Fee table
Maximum account fee $12
CHARGED ONLY TO REGULAR ACCOUNTS WITH BALANCES
BELOW $2,000 (SEE "ACCOUNT POLICIES")
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.50%
12b-1 fee 0.20%
Shareholder services fee 0.25%
Other expenses 0.11%
- --------------------------------------------------------------------------------
TOTAL 1.06%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expense example
<S> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
$108 $337 $585 $1,294
</TABLE>
This example shows what you could pay in expenses over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. The figures
shown would be the same whether you sold your shares at the end of a period or
kept them. Because actual return and expenses will be different, the example is
for comparison only.
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.
Concepts to understand
MANAGEMENT FEE: the fee paid to the investment adviser for managing the fund's
portfolio and assisting in all aspects of the fund's operations.
12B-1 FEE: a fee of up to 0.20% to reimburse Premier Mutual Fund Services, Inc.,
the fund's distributor, for distributing Class B shares. Because this fee is
paid out of the fund's assets on an ongoing basis, over time it will increase
the cost of your investment and may cost you more than paying other types of
sales charges.
SHAREHOLDER SERVICES FEE: a fee paid to the fund's distributor for shareholder
account service and maintenance.
OTHER EXPENSES: a fee of 0.05% paid by the fund for sub-accounting services
provided by third parties and fees paid by the fund for miscellaneous items such
as transfer agency, custody, professional and registration fees.
General New York Municipal Money Market Fund
<PAGE>
MANAGEMENT
The investment adviser for the fund is The Dreyfus Corporation, 200 Park Avenue,
New York, New York 10166. Founded in 1947, Dreyfus manages one of the nation's
leading mutual fund complexes, with more than $117 billion in more than 160
mutual fund portfolios. Dreyfus is the mutual fund business of Mellon Bank
Corporation, a broad-based financial services company with a bank at its core.
With more than $350 billion of assets under management and $1.7 trillion of
assets under administration and custody, Mellon provides a full range of
banking, investment and trust products and services to individuals, businesses
and institutions. Its mutual fund companies place Mellon as the leading bank
manager of mutual funds. Mellon is headquartered in Pittsburgh, Pennsylvania.
Management philosophy
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, the firm
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
Concepts to understand
YEAR 2000 ISSUES: the fund could be adversely affected if the computer systems
used by Dreyfus and the fund's 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 the fund invests may be
adversely affected by year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each fund's Class B shares for
the fiscal periods indicated. "Total return" shows how much your investment in
the fund would have increased (or decreased) during each period, assuming you
had reinvested all dividends and distributions. These figures have been
independently audited by Ernst & Young LLP, whose report, along with the fund's
financial statements, is included in the annual report.
<TABLE>
<CAPTION>
YEAR ENDED TEN MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, YEAR ENDED JANUARY 31,
GENERAL MONEY MARKET FUND 1998 1997(1) 1997 1996(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .047 .039 .046 .043
Distributions: Dividends from investment income -- net (.047) (.039) (.046) (.043)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 4.78 4.83(3) 4.65 5.18(3)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.00 1.00(3) 1.00 1.00(3)
Ratio of net investment income to average net assets (%) 4.66 4.78(3) 4.56 5.00(3)
Decrease reflected in above expense ratios
due to undertakings by the manager (%) .06 .05(3) .07 .07(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 2,427,332 1,231,132 369,205 50,446
(1) THE FUND CHANGED ITS FISCAL YEAR END FROM JANUARY 31 TO NOVEMBER 30.
(2) FROM MARCH 31, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO JANUARY 31, 1996.
(3) ANNUALIZED.
YEAR ENDED TEN MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, YEAR ENDED JANUARY 31,
GENERAL GOVERNMENT SECURITIES MONEY MARKET FUND 1998 1997(1) 1997 1996(2)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .046 .038 .045 .042
Distributions: Dividends from investment income -- net (.046) (.038) (.045) (.042)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 4.66 4.69(3) 4.58 5.04(3)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .97 1.00(3) 1.00 1.00(3)
Ratio of net investment income to average net assets (%) 4.55 4.60(3) 4.48 5.01(3)
Decrease reflected in above expense ratios
due to undertakings by the manager (%) .05 .05(3) .08 .10(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 645,984 364,845 90,175 58
(1) THE FUND CHANGED ITS FISCAL YEAR END FROM JANUARY 31 TO NOVEMBER 30.
(2) FROM MARCH 31, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO JANUARY 31, 1996.
(3) ANNUALIZED.
Financial Highlights
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED NOVEMBER 30,
GENERAL MUNICIPAL MONEY MARKET FUND 1998 1997 1996 1995(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .026 .028 .027 .020
Distributions: Dividends from investment income -- net (.026) (.028) (.027) (.020)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.64 2.86 2.70 3.01(2)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .96 .95 .85 1.10(2)
Ratio of net investment income to average net assets (%) 2.59 2.87 2.65 2.83(2)
Decrease reflected in above expense ratios
due to undertakings by the manager (%) .09 .16 .29 .09(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 377,636 263,008 17,491 3,024
(1) FROM MARCH 31, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO NOVEMBER 30, 1995.
(2) ANNUALIZED.
YEAR ENDED FOUR MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, YEAR ENDED JULY 31,
GENERAL CALIFORNIA MUNICIPAL MONEY MARKET FUND 1998 1997(1) 1997 1996(2)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .024 .009 .026 .025
Distributions: Dividends from investment income -- net (.024) (.009) (.026) (.025)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.39 2.57(3) 2.61 2.56
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) 1.00 1.00(3) 1.00 1.00
Ratio of net investment income to average net assets (%) 2.34 2.62(3) 2.52 2.45
Decrease reflected in above expense ratios
due to undertakings by the manager (%) .07 .13(3) .07 .08
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 8,760 2,669 928 5,475
(1) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO NOVEMBER 30.
(2) FROM AUGUST 1, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO JULY 31, 1996.
(3) ANNUALIZED.
<PAGE>
YEAR ENDED NOVEMBER 30,
GENERAL MINNESOTA MUNICIPAL MONEY MARKET FUND 1998(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00
Investment operations: Investment income -- net .013
Distributions: Dividends from investment income -- net (.013)
Net asset value, end of period 1.00
Total return (%) 2.67(2)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .80(2)
Ratio of net investment income to average net assets (%) 2.63(2)
Decrease reflected in above expense ratios
due to undertakings by the manager (%) .87(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 28,160
(1) FROM JUNE 1, 1998 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1998.
(2) ANNUALIZED.
YEAR ENDED NOVEMBER 30,
GENERAL NEW YORK MUNICIPAL MONEY MARKET FUND 1998 1997 1996 1995(1)
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment operations: Investment income -- net .024 .027 .025 .006
Distributions: Dividends from investment income -- net (.024) (.027) (.025) (.006)
Net asset value, end of period 1.00 1.00 1.00 1.00
Total return (%) 2.47 2.68 2.55 2.82(2)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .98 .95 .95 1.04(2)
Ratio of net investment income to average net assets (%) 2.44 2.64 2.47 3.64(2)
Decrease reflected in above expense ratios
due to undertakings by the manager (%) .08 .08 .16 --
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 46,997 42,169 36,199 --
(1) FROM SEPTEMBER 8, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO NOVEMBER 30, 1995.
(2) ANNUALIZED.
</TABLE>
Financial Highlights
<PAGE>
Your Investment
ACCOUNT POLICIES
Buying shares
GENERAL FUNDS are designed primarily for people who are investing through a
third party such as a bank, broker-dealer or financial adviser. Third parties
with whom you open a fund account may impose policies, limitations, and fees
which are different than those described here.
YOUR PRICE FOR FUND SHARES is the fund's net asset value (NAV), which is
generally calculated twice a day, at 5 p.m. and 8 p.m. Eastern time for the
taxable money market funds and 12 noon and 8 p.m. Eastern time for the municipal
money market funds, every day the New York Stock Exchange or the fund's transfer
agent is open. Your order will be priced at the next NAV calculated after your
order is accepted by the fund's transfer agent or other entity authorized to
accept orders on behalf of the fund. Each fund's investments are valued based on
amortized cost.
IF YOUR PAYMENTS ARE RECEIVED in or converted into Federal Funds by 12 noon, you
will receive the dividend declared that day. If your payments are received in or
converted into Federal Funds after 12 noon, you will begin to accrue dividends
on the following business day. Qualified institutions may telephone orders to
buy shares. If such an order is made by 5 p.m. for the taxable money market
funds or 12 noon for the municipal money market funds, and Federal Funds are
received by 6 p.m. or 4 p.m., respectively, the shares will be purchased at the
NAV determined at 5 p.m. or 12 noon, as the case may be, and will receive the
dividend declared that day. If such an order is made after 5 p.m. for the
taxable money market funds or 12 noon for the municipal money market funds, but
by 8 p.m., and Federal Funds are received by 11 a.m. the next business day, the
shares will be purchased at the NAV determined at 8 p.m. and will begin to
accrue dividends on the next business day. All times are Eastern time.
BECAUSE THE MUNICIPAL MONEY MARKET FUNDS seek tax-exempt income, they are not
recommended for purchase in IRAs or other qualified retirement plans.
- --------------------------------------------------------------------------------
Minimum investments
Initial Additional
- --------------------------------------------------------------------------------
REGULAR ACCOUNTS $2,500 $100; $500 FOR
TELETRANSFER INVESTMENTS
TRADITIONAL IRAS $750 NO MINIMUM
SPOUSAL IRAS $750 NO MINIMUM
ROTH IRAS $750 NO MINIMUM
EDUCATION IRAS $500 NO MINIMUM
AFTER THE FIRST YEAR
DREYFUS AUTOMATIC $100 $100
INVESTMENT PLANS
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
You may be charged a fee for any check that does not clear. Maximum TeleTransfer
purchase is $150,000 per day.
<PAGE>
Selling shares
YOU MAY SELL 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
entity authorized to accept orders on behalf of the fund. Any certificates
representing fund shares being sold must be returned with your redemption
request. Your order will be processed promptly and you will generally receive
the proceeds within a week.
BEFORE SELLING OR WRITING A CHECK for recently purchased shares, please note
that if the fund has not yet collected payment for the shares you are selling,
it may delay sending the proceeds for up to eight business days or until it has
collected payment.
- --------------------------------------------------------------------------------
Limitations on selling shares by phone
Proceeds
sent by Minimum Maximum
- --------------------------------------------------------------------------------
CHECK NO MINIMUM $150,000 PER DAY
WIRE $1,000 $250,000 FOR JOINT ACCOUNTS
EVERY 30 DAYS
TELETRANSFER $500 $250,000 FOR JOINT ACCOUNTS
EVERY 30 DAYS
General policies
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on your application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify the order.
EACH FUND RESERVES THE RIGHT TO:
(pound) 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)
(pound) refuse any purchase or exchange request in excess of 1% of the fund's
total assets
(pound) change or discontinue its exchange privilege, or temporarily suspend
this privilege during unusual market conditions
(pound) change its minimum investment amounts
(pound) delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or during
unusual market conditions)
Each fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
Written sell orders
Some circumstances require written sell orders along with signature guarantees.
These include:
(pound) amounts of $1,000 or more on accounts whose address has been changed
within the last 30 days
(pound) requests to send the proceeds to a different payee or address
Written sell orders of $100,000 or more must also be signature guaranteed.
A SIGNATURE GUARANTEE helps protect against fraud. You can obtain one from most
banks or securities dealers, but not from a notary public. For joint accounts,
each signature must be guaranteed. Please call us to ensure that your signature
guarantee will be processed correctly.
Small account policies
To offset the relatively higher costs of servicing smaller accounts, the
California Municipal Money Market Fund and New York Municipal Money Market Fund
charge regular accounts with balances below $2,000 an annual fee of $12. The fee
will be imposed during the fourth quarter of each calendar year.
The fee will be waived for: any investor whose aggregate Dreyfus mutual fund
investments total at least $25,000; accounts participating in automatic
investment programs and accounts opened through a financial institution.
With respect to any fund, if your account falls below $500, the fund may ask you
to increase your balance. If it is still below $500 after 45 days, the fund may
close your account and send you the proceeds.
Your Investment
<PAGE>
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.
SERVICES FOR FUND INVESTORS
THE THIRD PARTY THROUGH WHOM YOU PURCHASED fund shares may impose different
restrictions on these services and privileges offered by the fund, or may not
make them available at all. Consult your financial representative for more
information on the availability of these services and privileges.
Automatic services
BUYING OR SELLING SHARES AUTOMATICALLY is easy with the services described
below. With each service, you select a schedule and amount, subject to certain
restrictions. You can set up most of these services with your application, or by
calling your financial representative or 1-800-645-6561.
- --------------------------------------------------------------------------------
For investing
DREYFUS AUTOMATIC For making automatic investments
ASSET BUILDER((reg.tm)) from a designated bank account.
DREYFUS PAYROLL For making automatic investments
SAVINGS PLAN through a payroll deduction.
DREYFUS GOVERNMENT For making automatic investments
DIRECT DEPOSIT from your federal employment,
PRIVILEGE Social Security or other regular
federal government check.
DREYFUS DIVIDEND For automatically reinvesting the
SWEEP dividends and distributions from
one Dreyfus fund into another
(not available for IRAs).
- --------------------------------------------------------------------------------
For exchanging shares
DREYFUS AUTO- For making regular exchanges
EXCHANGE PRIVILEGE from one Dreyfus fund into
another.
- --------------------------------------------------------------------------------
For selling shares
DREYFUS AUTOMATIC For making regular withdrawals
WITHDRAWAL PLAN from most Dreyfus funds.
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.
<PAGE>
Exchange privilege
YOU CAN EXCHANGE $500 OR MORE from one Dreyfus fund into another (no minimum for
retirement accounts). You can request your exchange in writing or by phone. Be
sure to read the current prospectus for any fund into which you are exchanging.
Any new account established through an exchange will have the same privileges as
your original account (as long as they are available). There is currently no fee
for exchanges, although you may be charged a sales load when exchanging into any
fund that has one.
Dreyfus TeleTransfer privilege
TO MOVE MONEY BETWEEN YOUR BANK ACCOUNT and your Dreyfus fund account with a
phone call, use the Dreyfus TeleTransfer privilege. You can set up TeleTransfer
on your account by providing bank account information and following the
instructions on your application.
The Dreyfus Touch((reg.tm))
FOR 24-HOUR AUTOMATED ACCOUNT ACCESS, use Dreyfus Touch. With a touch-tone
phone, you can easily manage your Dreyfus accounts, obtain information on other
Dreyfus mutual funds and get current stock market quotes.
Account statements
EVERY FUND INVESTOR automatically receives regular account statements. You'll
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
Retirement plans
A variety of retirement plans are offered for the taxable money market funds,
including traditional, Roth and Education IRAs. Here's where you call for
information:
(pound) for traditional, rollover, Roth and Education IRAs,
call 1-800-645-6561
(pound) for SEP-IRAs, Keogh accounts, 401(k) and 403(b) accounts, call
1-800-358-0910
Your Investment
<PAGE>
INSTRUCTIONS FOR REGULAR ACCOUNTS
TO OPEN AN ACCOUNT
In Writing
Complete the application.
Mail your application and a check to:
The Dreyfus Family of Funds
P.O. Box 9387, Providence, RI 02940-9387
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Mail the slip and the check to: The Dreyfus Family of Funds
P.O. Box 105 Newark, New Jersey 07101-0105
By Telephone
WIRE Have your bank send your
investment to The Bank of New York, with these instructions:
* ABA# 021000018
* fund name and DDA#
* General Money Market Fund
DDA# 8900051957
* General Government Securities
Money Market Fund DDA# 8900052414
* General Municipal Money Market Fund
DDA# 8900052376
* General California Municipal
Money Market Fund DDA# 8900052163
* General Minnesota Municipal
Money Market Fund DDA# 8900337451
* General New York Municipal
Money Market Fund DDA# 8900052171
* the share class
* your Social Security or tax ID number
* name(s) of investor(s)
* dealer number if applicable
Call us to obtain an account number. Return your application with the account
number on the application.
WIRE Have your bank send your investment to The Bank of New York, with these
instructions:
* ABA# 021000018
* fund name and DDA#
* General Money Market Fund DDA# 8900051957
* General Government Securities Money Market Fund DDA# 8900052414
* General Municipal Money Market Fund DDA# 8900052376
* General California Municipal Money Market Fund DDA# 8900052163
* General Minnesota Municipal Money Market Fund DDA# 8900337451
* General New York Municipal Money Market Fund DDA# 8900052171
* the share class
* your account number
* name(s) of investor(s)
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "1111"
TELETRANSFER Request TeleTransfer on your application. Call us to request your
transaction.
Automatically
WITH AN INITIAL INVESTMENT Indicate on your application which automatic
service(s) you want. Return your application with your investment.
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials.
TO SELL SHARES
Write a letter of instruction that includes:
* your name(s) and signature(s)
* your account number
* the fund name
* the dollar amount you want to sell
* how and where to send the proceeds
Obtain a signature guarantee or other documentation, if required (see page 19)
Mail your request to: The Dreyfus Family of Funds P.O. Box 9671, Providence, RI
02940-9671
WIRE Call us or your financial representative to request your transaction. Be
sure the fund has your bank account information on file. Proceeds will be wired
to your bank.
TELETRANSFER Call us or your financial representative to request your
transaction. Be sure the fund has your bank account information on file.
Proceeds will be sent to your bank by electronic check.
CHECK Call us or your financial representative to request your transaction. A
check will be sent to the address of record.
AUTOMATIC WITHDRAWAL PLAN Call us or your financial representative to request a
form to add the plan. Complete the form, specifying the amount and frequency of
withdrawals you would like.
Be sure to maintain an account balance of $5,000 or more.
<PAGE>
INSTRUCTIONS FOR IRAS
TO OPEN AN ACCOUNT
In Writing
Complete an IRA application, making sure to specify the fund name and to
indicate the year the contribution is for.
Mail your application and a check to:
The Dreyfus Trust Company, Custodian P.O. Box 6427, Providence, RI 02940-6427
TO ADD TO AN ACCOUNT
Fill out an investment slip, and write your account number on your check.
Indicate the year the contribution is for.
Mail in the slip and the check to: The Dreyfus Trust Company, Custodian P.O. Box
6427, Providence, RI 02940-6427
By Telephone
WIRE Have your bank send your investment to The Bank of New York, with these
instructions:
* ABA# 021000018
* fund name and DDA#
* General Money Market Fund DDA# 8900051957
* General Government Securities Money Market Fund DDA# 8900052414
* the share class
* your account number
* name of investor
* the contribution year
* dealer number if applicable
ELECTRONIC CHECK Same as wire, but before your account number insert "1111"
Automatically
ALL SERVICES Call us or your financial representative to request a form to add
any automatic investing service (see "Services for Fund Investors"). Complete
and return the form along with any other required materials. All contributions
will count as current year.
TO SELL SHARES
Write a letter of instruction that includes:
* your name and signature
* your account number and fund name
* the dollar amount you want to sell
* how and where to send the proceeds
* whether the distribution is qualified or premature
* whether the 10% TEFRA should be withheld
Obtain a signature guarantee or other documentation, if required (see page 19).
Mail in your request to: The Dreyfus Trust Company P.O. Box 6427, Providence,
RI 02940-6427
SYSTEMATIC WITHDRAWAL PLAN Call us to request instructions to establish the
plan.
Your Investment
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
For More Information
General Money Market Fund
- -----------------------------------
SEC file number: 811-3207
General Government Securities Money Market Fund
- -----------------------------------
SEC file number: 811-3456
General Municipal Money Market Fund
- ----------------------------------
SEC file number: 811-3481
General California Municipal Money Market Fund
- ----------------------------------
SEC file number: 811-4871
General Minnesota Municipal Money Market Fund
- ----------------------------------
SEC file number: 811-3481
General New York Municipal Money Market Fund
- -----------------------------------
SEC file number: 811-4870
More information on each fund is available free upon request, including the
following:
Annual/Semiannual Report
Describes the fund's performance, and lists portfolio holdings.
Statement of Additional Information (SAI)
Provides more details about each fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE Call your financial representative or 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents can be viewed online or
downloaded from: http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 1999, Dreyfus Service Corporation
GENBP0499
<PAGE>
GENERAL GOVERNMENT SECURITIES MONEY MARKET FUND, INC.
GENERAL MONEY MARKET FUND, INC.
GENERAL CALIFORNIA MUNICIPAL MONEY MARKET FUND
GENERAL MINNESOTA MUNICIPAL MONEY MARKET FUND
GENERAL MUNICIPAL MONEY MARKET FUND
GENERAL NEW YORK MUNICIPAL MONEY MARKET FUND
STATEMENT OF ADDITIONAL INFORMATION
APRIL 1, 1999
CLASS A AND CLASS B SHARES
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current combined
Prospectus for Class A or Class B shares of General Government Securities
Money Market Fund, Inc. (the "Government Money Fund"), General Money Market
Fund, Inc. (the "Money Fund"), General California Municipal Money Market
Fund (the "California Municipal Fund"), General Minnesota Municipal Money
Market Fund (the "Minnesota Municipal Fund"), General Municipal Money Market
Fund (the "National Municipal Fund") and General New York Municipal Money
Market Fund (the "New York Municipal Fund") (each, a "Fund" and
collectively, the "Funds"), dated April 1, 1999, as it may be revised from
time to time. To obtain a copy of the Prospectus for Class A or Class B
shares of a Fund, please write to a Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call the following numbers:
Call Toll Free 1-800-645-6561
In New York City -- Call 1-718-895-1396
Outside the U.S. -- Call 516-794-5452
The most recent Annual and Semi-Annual Report to Shareholders of each
Fund are separate documents supplied with this Statement of Additional
Information, and the financial statements, accompanying notes and reports of
independent auditors appearing in the Annual Report are incorporated by
reference into this Statement of Additional Information. When requesting a
copy of this Statement of Additional Information, you will receive the
report(s) for the Fund(s) in which you are a shareholder.
Each Fund is a separate investment portfolio with operations and
results that are unrelated to those of each other Fund. The Minnesota
Municipal Fund and the National Municipal Fund are separate series of
General Municipal Money Market Funds, Inc. (the "Company"). This combined
Statement of Additional Information has been provided for your convenience
to provide you with the opportunity to consider six investment choices in
one document.
TABLE OF CONTENTS
Page
DESCRIPTION OF THE FUNDS B-3
MANAGEMENT OF THE FUNDS B-25
MANAGEMENT ARRANGEMENTS B-31
HOW TO BUY SHARES B-36
SERVICE PLAN AND DISTRIBUTION PLAN B-39
SHAREHOLDER SERVICES PLANS B-42
HOW TO REDEEM SHARES B-43
SHAREHOLDER SERVICES B-46
DETERMINATION OF NET ASSET VALUE B-50
DIVIDENDS, DISTRIBUTIONS AND TAXES B-51
YIELD INFORMATION B-54
PORTFOLIO TRANSACTIONS B-56
INFORMATION ABOUT THE FUNDS B-57
COUNSEL AND INDEPENDENT AUDITORS B-58
APPENDIX A B-59
APPENDIX B B-62
APPENDIX C B-66
APPENDIX D B-79
APPENDIX E B-86
APPENDIX F B-99
DESCRIPTION OF THE FUNDS
Each of the Government Money Fund, the Company and the Money Fund is a
Maryland corporation formed on April 8, 1982, April 8, 1982 and May 15,
1981, respectively.
Each of the California Municipal Fund and the New York Municipal Fund
is a Massachusetts business trust that commenced operations on March 10,
1987 and December 2, 1986, respectively.
Each Fund is an open-end management investment company, known as a
money market mutual fund. Each of the Government Money Fund, the Money Fund
and the National Municipal Fund is a diversified fund, which means that,
with respect to 75% of its total assets, the Fund will not invest more than
5% of its assets in the securities of any single issuer. Each of the other
Funds is a non-diversified fund, which means that the proportion of the
Fund's assets that may be invested in the securities of a single issuer is
not limited by the Investment Company Act of 1940, as amended (the "1940
Act").
The Dreyfus Corporation (the "Manager") serves as each Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of each Fund's shares.
Certain Portfolio Securities
The following information supplements and should be read in conjunction
with the Funds' Prospectus.
U.S. Government Securities. (Government Money Fund and Money Fund)
Each of these Funds may invest in securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities, which include U.S.
Treasury securities that differ in their interest rates, maturities and
times of issuance. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities are supported by the full faith and credit of
the U.S. Treasury; others by the right of the issuer to borrow from the
Treasury; others by discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality; and others
only by the credit of the agency or instrumentality. These securities bear
fixed, floating or variable rates of interest. Interest may fluctuate based
on generally recognized reference rates or the relationship of rates. While
the U.S. Government currently provides financial support to such U.S.
Government-sponsored agencies or instrumentalities, no assurance can be
given that it will always do so, since it is not so obligated by law.
Repurchase Agreements. (Government Money Fund and Money Fund) Each of
these Funds may enter into repurchase agreements. In a repurchase
agreement, the Fund buys, and the seller agrees to repurchase, a security at
a mutually agreed upon time and price (usually within seven days). The
repurchase agreement thereby determines the yield during the purchaser's
holding period, while the seller's obligation to repurchase is secured by
the value of the underlying security. The Fund's custodian or sub-custodian
will have custody of, and will hold in a segregated account, securities
acquired by the Fund under a repurchase agreement. Repurchase agreements
are considered by the staff of the Securities and Exchange Commission to be
loans by the Fund entering into them. 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. 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. The Fund may enter into repurchase agreements
with certain banks or non-bank dealers.
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.
However, not all of such laws and regulations apply to the foreign branches
of domestic banks. 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.
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.
The payment of the management fee, as well as other operating expenses,
including fees under a Fund's Service Plan and/or Distribution Plan, will
have the effect of reducing the yield to the Fund's investors.
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 VMIG/MIG2,P2 SP2+/SP2 1.6%
==========
AAA/AA Aaa/Aa AAA/AA 2.2% 20.0% 1.5% .4%
========== ========= ========= =========
Not Rated Not Rated Not Rated 3.5%* -%* 5.0%* 4.5%*
========== ========= ========= =========
100.0% 100.0% 100.0% 100.0%
========== ========= ========= =========
_______________________________
* 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.
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 certain securities that are subject to
legal or contractual restrictions on resale, and repurchase agreements
providing for settlement in more than seven days after notice. As to these
securities, the Fund is subject to a risk that should the Fund desire to
sell them when a ready buyer is not available at a price the Fund deems
representative of their value, the value of the Fund's net assets could be
adversely affected.
Investment Techniques
In addition to the principal investment strategies discussed in the
Funds' Prospectus, the Funds also may engage in the investment techniques
described below.
Borrowing Money. (All Funds) Each Fund may borrow money from banks
for temporary or emergency (not leveraging) purposes in an amount up to 15%
(33 1/3% in the case of Minnesota Municipal Money Market Fund) of the value
of its total assets (including the amount borrowed) valued at the lesser of
cost or market, less liabilities (not including the amount borrowed) at the
time the borrowing is made. While borrowings exceed 5% of the value of a
Fund's total assets, the Fund will not make any additional investments.
Forward Commitments. (Municipal Funds) Each Municipal Fund may
purchase Municipal Obligations and other securities on a forward commitment
or when-issued basis, which means that delivery and payment take place a
number of days after the date of the commitment to purchase. The payment
obligation and the interest rate receivable on a forward commitment or when-
issued security are fixed when the Fund enters into the commitment, but the
Fund does not make payment until it receives delivery from the counterparty.
The Fund will commit to purchase such securities only with the intention of
actually acquiring the securities, but the Fund may sell these securities
before the settlement date if it is deemed advisable. The Fund will set
aside in a segregated account permissible liquid assets at least equal at
all times to the amount of the 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. 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. These and other
factors may have the effect of impairing the ability of the issuers of
California Municipal Obligations to pay interest on, or repay 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 1997, the State recorded
balanced budgets on a cash basis, with positive fund balances in the General
Fund. New York State ended its 1996-97 fiscal year on March 31, 1997 in
balance on a cash basis, with a cash surplus in the General Fund of
approximately $1.4 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).
8. Invest in companies for the purpose of exercising control.
9. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets.
10. Invest more than 25% of its assets in the securities of issuers in
any industry, provided that there shall be no limitation on investments in
obligations issued or guaranteed as to principal and interest by the U.S.
Government.
11. Pledge, mortgage, hypothecate or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings.
12. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if,
in the aggregate, more than 10% of the value of the Fund's net assets would
be so invested.
* * * * *
Money Fund. The Money Fund's investment objective is a fundamental
policy, which cannot be changed without approval by the holders of a
majority (as defined in the 1940 Act) of the Fund's outstanding voting
shares. In addition, the Money Fund has adopted investment restrictions
numbered 1 through 12 as fundamental policies. Investment restriction
number 13 is not a fundamental policy and may be changed by vote of a
majority of the Fund's Board members at any time. The Money Fund may not:
1. Purchase common stocks, preferred stocks, warrants or other equity
securities, or purchase corporate bonds or debentures, state bonds,
municipal bonds or industrial revenue bonds (except through the purchase of
debt obligations referred to in the Fund's prospectus).
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).
9. Invest more than 15% of its assets in the obligations of any one
bank, or invest more than 5% of its assets in the commercial paper of any
one issuer. Notwithstanding the foregoing, to the extent required by the
rules of the Securities and Exchange Commission, the Fund will not invest
more than 5% of its assets in the obligations of any one bank.
10. Invest less than 25% of its assets in securities issued by banks
or invest more than 25% of its assets in the securities of issuers in any
other industry, provided that there shall be no limitation on the purchase
of obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
11. Invest in companies for the purpose of exercising control.
12. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets.
13. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if,
in the aggregate, more than 10% of the value of the Fund's net assets would
be so invested.
* * * * *
California Municipal Fund. The California Municipal Fund's investment
objective is a fundamental policy, which cannot be changed without approval
by the holders of a majority (as defined in the 1940 Act) of the Fund's
outstanding voting shares. In addition, the California Municipal Fund has
adopted investment restrictions numbered 1 through 9 as fundamental
policies. Investment restrictions numbered 10 and 11 are not fundamental
policies and may be changed by vote of a majority of the Fund's Board
members at any time. The California Municipal Fund may not:
1. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the Prospectus.
2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the Fund's total
assets (including the amount borrowed) based on the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the value of the Fund's
total assets, the Fund will not make any additional investments.
3. Sell securities short or purchase securities on margin.
4. Underwrite the securities of other issuers, except that the Fund
may bid separately or as part of a group for the purchase of Municipal
Obligations directly from an issuer for its own portfolio to take advantage
of the lower purchase price available.
5. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
but this shall not prevent the Fund from investing in Municipal Obligations
secured by real estate or interests therein.
6. Make loans to others except through the purchase of qualified debt
obligations and the entry into repurchase agreements referred to above and
in the Fund's Prospectus.
7. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no such
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, securities issued by domestic banks and obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
8. Invest in companies for the purpose of exercising control.
9. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings.
11. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid if,
in the aggregate, more than 10% of the value of the Fund's net assets would
be so invested.
* * * * *
Minnesota Municipal Fund. The Minnesota Municipal Fund's investment
objective is a fundamental policy, which cannot be changed without approval
by the holders of a majority (as defined in the 1940 Act) of the Fund's
outstanding voting shares. In addition, the Minnesota Municipal Fund has
adopted investment restrictions numbered 1 through 7 as fundamental
policies. Investment restrictions numbered 8 through 13 are not fundamental
policies and may be changed by vote of a majority of the Fund's Board
members at any time. The Minnesota Municipal Fund may not:
1. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Fund's total assets).
2. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, the Fund may
lend its portfolio securities in an amount not to exceed 33-1/3% of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Fund's Board.
3. Underwrite the securities of other issuers, except to the extent
the Fund may bid separately or as part of a group for the purchase of
Municipal Obligations directly from an issuer for its own portfolio to take
advantage of the lower purchase price available, and except to the extent
the Fund may be deemed an underwriter under the Securities Act of 1933, as
amended, by virtue of disposing of portfolio securities.
4. Purchase or sell real estate, commodities or commodity contracts,
or oil and gas interests, but this shall not prevent the Fund from investing
in Municipal Obligations secured by real estate or interests therein.
5. Issue any senior security (as such term is defined in Section
18(f) of the 1940 Act).
6. Purchase securities on margin.
7. Invest more than 25% of its assets in the securities of issuers in
any single industry; provided that there shall be no limitation on the
purchase of Municipal Obligations and, for temporary defensive purposes,
securities issued by banks and obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
8. Sell securities short.
9. Invest in companies for the purpose of exercising control.
10. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act.
11. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings.
12. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the Fund's Prospectus.
13. Enter into repurchase agreements provided for settlement in more
than seven days after notice or purchase securities which are illiquid if,
in the aggregate, more than 10% of the value of the Fund's net assets would
be so invested.
* * * * *
National Municipal Fund. The National Municipal Fund's investment
objective is a fundamental policy, which cannot be changed without approval
by the holders of a majority (as defined in the 1940 Act) of the Fund's
outstanding voting shares. In addition, the National Municipal Fund has
adopted investment restrictions numbered 1 through 11 as fundamental
policies. Investment restriction number 12 is not a fundamental policy and
may be changed by vote of a majority of the Fund's Board members at any
time. The National Municipal Fund may not:
1. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the Prospectus.
2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the Fund's total
assets (including the amount borrowed) based on the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the value of the Fund's
total assets, the Fund will not make any additional investments.
3. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to secure borrowings for temporary or emergency purposes.
4. Sell securities short or purchase securities on margin.
5. Underwrite the securities of other issuers, except that the Fund
may bid separately or as part of a group for the purchase of Municipal
Obligations directly from an issuer for its own portfolio to take advantage
of the lower purchase price available.
6. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
but this shall not prevent the Fund from investing in Municipal Obligations
secured by real estate or interests therein.
7. Invest more than 25% of its assets in the securities of issuers
in any single industry; provided that there shall be no limitation on the
purchase of Municipal Obligations and, for defensive purposes, securities
issued by banks and obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities.
8. Invest more than 15% of its assets in the obligations of any one
bank, or invest more than 5% of its assets in the obligations of any other
issuer, except that up to 25% of the value of the Fund's total assets may be
invested, and securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities may be purchased, without regard to any such
limitations. Notwithstanding the foregoing, to the extent required by the
rules of the Securities and Exchange Commission, the Fund will not invest
more than 5% of its assets in the obligations of any one bank, except that
up to 25% of the value of the Fund's total assets may be invested without
regard to such limitation.
9. Make loans to others except through the purchase of qualified
debt obligations and the entry into repurchase agreements referred to above
and in the Prospectus.
10. Purchase more than 10% of the voting securities of any issuer or
invest in companies for the purpose of exercising control.
11. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets
and except for the purchase, to the extent permitted by Section 12 of the
1940 Act, of shares of registered unit investment trusts whose assets
consist substantially of Municipal Obligations.
12. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if,
in the aggregate, more than 10% of the value of the Fund's net assets would
be so invested.
* * * * *
New York Municipal Fund. The New York Municipal Fund's investment
objective is a fundamental policy, which cannot be changed without approval
by the holders of a majority (as defined in the 1940 Act) of the Fund's
outstanding voting shares. In addition, the New York Municipal Fund has
adopted investment restrictions numbered 1 through 9 as fundamental
policies. Investment restrictions numbered 10 and 11 are not fundamental
policies and may be changed by vote of a majority of the Fund's Board
members at any time. The New York Municipal Fund may not:
1. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the Prospectus.
2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the Fund's total
assets (including the amount borrowed) based on the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the value of the Fund's
total assets, the Fund will not make any additional investments.
3. Sell securities short or purchase securities on margin.
4. Underwrite the securities of other issuers, except that the Fund
may bid separately or as part of a group for the purchase of Municipal
Obligations directly from an issuer for its own portfolio to take advantage
of the lower purchase price available.
5. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
but this shall not prevent the Fund from investing in Municipal Obligations
secured by real estate or interests therein.
6. Make loans to others, except through the purchase of qualified
debt obligations and the entry into repurchase agreements referred to above
and in the Fund's Prospectus.
7. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no such
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, securities issued by domestic banks and obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
8. Invest in companies for the purpose of exercising control.
9. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets.
10. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings.
11. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if,
in the aggregate, more than 10% of the value of the Fund's net assets would
be so invested.
* * * * *
Municipal Funds. For purposes of Investment Restriction No. 7 for
each Municipal Fund, industrial development bonds, where the payment of
principal and interest is the ultimate responsibility of companies within
the same industry, are grouped together as an industry.
All Funds. If a percentage restriction is adhered to at the time of
investment, a later increase or decrease in percentage resulting from a
change in values or assets will not constitute a violation of such
restriction.
MANAGEMENT OF THE FUNDS
Each Fund's Board is responsible for the management and supervision of
the Fund. The Board approves all significant agreements between the Fund
and those companies that furnish services to the Fund. These companies are
as follows:
The Dreyfus Corporation Investment Adviser
Premier Mutual Fund Services, Inc. Distributor
Dreyfus Transfer, Inc. Transfer Agent
The Bank of New York Custodian
Board members and officers of each Fund, together with information as
to their principal business occupations during at least the last five years,
are shown below.
Board Members of the Funds
JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of
the Board of various funds in the Dreyfus Family of Funds. He also is
a director of The Noel Group, Inc., a venture capital company (for
which, from February 1995 until November 1997, he was Chairman of the
Board), The Muscular Dystrophy Association, HealthPlan Services
Corporation, a provider of marketing, administrative and risk
management services to health and other benefit programs, Carlyle
Industries, Inc. (formerly, Belding Heminway Company, Inc.), a button
packager and distributor, Career Blazers, Inc. (formerly, Staffing
Resources, Inc.), a temporary placement agency, and Century Business
Services, Inc., a provider of various outsourcing functions for small
and medium sized companies. For more than five years prior to January
1995, he was President, a director and, until August 1994, Chief
Operating Officer of the Manager and Executive Vice President and a
director of Dreyfus Service Corporation, a wholly-owned subsidiary of
the Manager and, until August 24, 1994, the Funds' distributor. From
August 1994 until December 31, 1994, he was a director of Mellon Bank
Corporation. He is 55 years old and his address is 200 Park Avenue, New
York, New York 10166.
CLIFFORD L. ALEXANDER, JR., Board Member. President of Alexander &
Associates, Inc., a management consulting firm. From 1977 to 1981, Mr.
Alexander served as Secretary of the Army and Chairman of the Board of
the Panama Canal Company, and from 1975 to 1977, he was a member of the
Washington, D.C. law firm of Verner, Liipfert, Bernhard, McPherson and
Alexander. He is a director of American Home Products Corporation, IMS
Health, a service provider of marketing information and information
technology, The Dun & Bradstreet Corporation, MCI WorldCom and Mutual
of America Life Insurance Company. He is 64 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 55 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 65 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 55 years old and his address is 70 Lincoln Center
Plaza, New York, New York 10023-6583.
For so long as a Fund's plan described in the sections captioned
"Service Plan and Distribution Plan" and "Shareholder Services Plans"
remains in effect, the Board members of the Fund who are not "interested
persons" of the Fund, as defined in the 1940 Act, will be selected and
nominated by the Board members who are not "interested persons" of the Fund.
Each Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by each Fund for the fiscal year
ended November 30, 1998, and by all other 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 (97)
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.
Government Money Fund $5,500 $80,918 (24)
Money Fund $5,500
California Municipal Fund $4,000
National/Minnesota Municipal Fund** $5,500
New York Municipal Fund $4,000
PEGGY C. DAVIS
Government Money Fund Money Fund $5,500 $64,000 (15)
Money Fund $5,500
California Municipal Fund $4,000
National/Minnesota Municipal Fund** $5,500
New York Municipal Fund $4,000
ERNEST KAFKA
Government Money Fund Money Fund $5,000 $57,500 (15)
Money Fund $5,000
California Municipal Fund $3,750
National/Minnesota Municipal Fund** $5,000
New York Municipal Fund $3,750
SAUL B. KLAMAN
Government Money Fund Money Fund $5,500 $64,000 (15)
Money Fund $5,500
California Municipal Fund $4,000
National/Minnesota Municipal Fund** $5,500
New York Municipal Fund $4,000
NATHAN LEVENTHAL
Government Money Fund Money Fund $5,500 $64,000 (15)
Money Fund $5,500
California Municipal Fund $4,000
National/Minnesota Municipal Fund** $5,500
New York Municipal Fund $4,000
_____________________________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $1348 for the Government Money Fund,
$3177 for the Money Fund, $1095 for the California Municipal Fund,
$1584 for the National/Minnesota Municipal Fund and $935 for the New
York Municipal Fund, for all Board members as a group.
** The National Municipal Fund and the Minnesota Municipal Fund are
separate series of the Company.
Officers of the Funds
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer, Chief Compliance Officer and a director of the Distributor and
Funds Distributor, Inc., the ultimate parent of which is Boston
Institutional Group, Inc., and an officer of other investment companies
advised or administered by the Manager. She is 41 years old.
MARGARET W. CHAMBERS, Vice President and Secretary. Senior Vice President
and General Counsel of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
August 1996 to March 1998, she was Vice President and Assistant General
Counsel for Loomis, Sayles & Company, L.P. From January 1986 to July
1996, she was an associate with the law firm of Ropes & Gray. She is
38 years old.
MICHAEL S. PETRUCELLI, Vice President, Assistant Secretary and Assistant
Treasurer. Senior Vice President of Funds Distributor, Inc., and an
officer of other investment companies advised or administered by the
Manager. From December 1989 through November 1996, he was employed by
GE Investment Services where he held various financial, business
development and compliance positions. He also served as Treasurer of
the GE Funds and as a Director of GE Investment Services. He is 36
years old.
STEPHANIE D. PIERCE, Vice President, Assistant Secretary and Assistant
Treasurer. Vice President and Client Development Manager of Funds
Distributor, Inc., and an officer of other investment companies advised
or administered by the Manager. From April 1997 to March 1998, she was
employed as a Relationship Manager with Citibank, N.A. From August
1995 to April 1997, she was an Assistant Vice President with Hudson
Valley Bank, and from September 1990 to August 1995, she was Second
Vice President with Chase Manhattan Bank. She is 30 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President of
the Distributor and Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
September 1989 to July 1994, she was an Assistant Vice President and
Client Manager for The Boston Company, Inc. She is 34 years old.
GEORGE A. RIO, Vice President and Assistant Treasurer. Executive Vice
President and Client Service Director of Funds Distributor, Inc., and
an officer of other investment companies advised or administered by the
Manager. From June 1995 to March 1998, he was Senior Vice President
and Senior Key Account Manager for Putnam Mutual Funds. From May 1994
to June 1995, he was Director of Business Development for First Data
Corporation. From September 1983 to May 1994, he was Senior Vice
President and Manager of Client Services and Director of Internal Audit
at The Boston Company, Inc. He is 43 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 36 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 29 years old.
CHRISTOPHER J. KELLEY, Vice President and Assistant Secretary. Vice
President and Senior Associate General Counsel of Funds Distributor,
Inc., and an officer of other investment companies advised or
administered by the Manager. From April 1994 to July 1996, he was
Assistant Counsel at Forum Financial Group. From October 1992 to March
1994, he was employed by Putnam Investments in legal and compliance
capacities. He is 33 years old.
KATHLEEN K. MORRISEY, Vice President and Assistant Secretary. Manager of
Treasury Services Administration of Funds Distributor, Inc., and an
officer of other investment companies advised or administered by the
Manager. From July 1994 to November 1995, she was a Fund Accountant
for Investors Bank & Trust Company. She is 26 years old.
ELBA VASQUEZ, Vice President and Assistant Secretary. Assistant Vice
President of Funds Distributor, Inc., and an officer of other
investment companies advised or administered by the Manager. From
March 1990 to May 1996, she was employed by U.S. Trust Company of New
York where she held various sales and marketing positions. She is 37
years old.
The address of each officer of the Funds is 200 Park Avenue, New York,
New York 10166.
Each Fund's Board members and officers, as a group, owned less than 1%
of the Fund's shares outstanding on January 4, 1999.
Set forth in "Appendix F" to this Statement of Additional Information
are the shareholders known by each Fund (as indicated) to own of record 5%
or more of such Fund's Class A or Class B shares outstanding on January
4, 1999. A shareholder who beneficially owns, directly or indirectly, more
than 25% of the Fund's voting securities may be deemed a "control person"
(as defined in the 1940 Act) of the Fund.
MANAGEMENT ARRANGEMENTS
Investment Adviser. The Manager is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). Mellon is a publicly owned multibank holding
company incorporated under Pennsylvania law in 1971 and registered under the
Federal Bank Holding Company Act of 1956, as amended. Mellon provides a
comprehensive range of financial products and services in domestic and
selected international markets. Mellon is among the twenty-five largest
bank holding companies in the United States based on total assets.
The Manager provides management services pursuant to separate
Management Agreements (respectively, the "Agreement") dated August 24, 1994
with respect to each Fund. As to each Fund, the Agreement is subject to
annual approval by (i) the Fund's Board or (ii) vote of a majority (as
defined in the 1940 Act) of the Fund's outstanding voting securities,
provided that in either event the continuance also is approved by a majority
of the Fund's Board members who are not "interested persons" (as defined in
the 1940 Act) of the Fund or the Manager, by vote cast in person at a
meeting called for the purpose of voting on such approval. Each Agreement,
other than for the Minnesota Municipal Fund, was approved by shareholders on
August 3, 1994 and was last approved by the Fund's Board, including a
majority of the Board members who are not "interested persons" of any party
to the Agreement, at a meeting held on September 16, 1998. With respect to
the Minnesota Municipal Fund, the Agreement was approved by the Fund's
initial shareholder on April 8, 1998 and by the Fund's Board, including a
majority of the Board members who are not "interested persons" of any party
to the Agreement, at a meeting held on April 8, 1998. As to each Fund, the
Agreement is terminable without penalty, on 60 days' notice, by the Fund's
Board or by vote of the holders of a majority of the Fund's shares or, upon
not less than 90 days' notice, by the Manager. Each Agreement will
terminate automatically, as to the relevant Fund, in the event of its
assignment (as defined in the 1940 Act).
The following persons are officers and/or directors of the Manager:
Christopher M. Condron, Chairman of the Board and Chief Executive Officer;
Stephen E. Canter, President, Chief Operating Officer, Chief Investment
Officer and a director; Thomas F. Eggers, Vice Chairman - Institutional;
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; Patrice M. Kozlowski, Vice President-
Corporate Communications; Mary Beth Leibig, Vice President-Human Resources;
Andrew S. Wasser, Vice President-Information Systems; Theodore A. Schacher,
Vice President; Wendy Strutt, Vice President; Richard Terres, Vice
President; William H. Maresca, Controller; James Bitetto, Assistant
Secretary; Steven F. Newman; Assistant Secretary; and Mandell L. Berman,
Burton C. Borgelt, Steven G. Elliott, Martin C. McGuinn, Richard W. Sabo and
Richard F. Syron, directors.
The Manager manages each Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board. The Manager is responsible for investment decisions and provides
each Fund with portfolio managers who are authorized by the Board to execute
purchases and sales of securities. The portfolio managers of the Government
Money Fund and the Money Fund are Bernard W. Kiernan, Patricia A. Larkin and
Thomas Riordan. The portfolio managers of the Municipal Funds are Joseph P.
Darcy, A. Paul Disdier, Douglas J. Gaylor, Karen M. Hand, Stephen C. Kris,
Richard J. Moynihan, W. Michael Petty, Jill C. Shaffro, Samuel J. Weinstock
and Monica S. Wieboldt. The Manager also maintains a research department
with a professional staff of portfolio managers and securities analysts who
provide research services for each Fund and for other funds advised by the
Manager.
The Manager maintains office facilities on behalf of each Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Funds. The Manager may pay the Distributor for shareholder
services from the Manager's own assets, including past profits but not
including the management fee paid by the Funds. The Distributor may use
part or all of such payments to pay Service Agents (as defined below) in
respect of these services. The Manager also may make such advertising and
promotional expenditures using its own resources, as it from time to time
deems appropriate.
All expenses incurred in the operation of a Fund are borne by such
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by each Fund include: taxes, interest, brokerage fees and
commissions, if any, fees of Board members who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, Securities and Exchange Commission fees, state Blue Sky
qualification fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of maintaining the Fund's existence,
investor services (including, without limitation, telephone and personnel
expenses), costs of shareholder reports and meetings, costs of preparing and
printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders, and any
extraordinary expenses. Each Fund bears certain expenses in accordance with
separate written plans and also bears certain costs associated with
implementing and operating such plans. See "Service Plan and Distribution
Plan" and "Shareholder Services Plans."
As compensation for the Manager's services under the Agreement, each
Fund has agreed to pay the Manager a monthly management fee at the annual
rate of .50 of 1% of the value of such Fund's average daily net assets. All
fees and expenses are accrued daily and deducted before declaration of
dividends to investors. Set forth below are the total amounts paid by each
Fund to the Manager for each Fund's last three fiscal years, including for
the Government Money Fund, the Money Fund and the California Municipal Fund,
which changed their fiscal year end to November 30, the relevant period
ended November 30, 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 $5,124,528 $3,330,297 $3,002,777 $2,622,700
Fund
Money Fund $13,222,636 $7,091,891 $5,285,812 $3,172,667
Fiscal Year Four-Month Fiscal Year Ended July 31,
Ended Period
Ended
November 30, 1998 November 30, 1997 1996
1997
California Municipal $1,794,867 $ 620,429 $1,836,034 $2,195,288
Municipal Fund
Fiscal Year Ended November 30,
1998 1997 1996
Minnesota $65,816* N/A N/A
Municipal Fund
National Municipal $3,036,316 $2,127,041 $1,566,276
Fund
New York Municipal $2,369,250 $2,599,539 $2,945,172
Fund
____________________
* For the period from June 1, 1998 (commencement of operations) to
November 30, 1998.
</TABLE>
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. Premier Mutual Fund Services, Inc., located at 60 State
Street, Boston, Massachusetts 02109, serves as each Fund's distributor on a
best efforts basis pursuant to an agreement which is renewable annually.
The Distributor may pay dealers a fee of up to .5% of the amount
invested through such dealers in Fund shares by employees participating in
qualified or non-qualified employee benefit plans or other programs where
(i) the employers or affiliated employers maintaining such plans or programs
have a minimum of 250 employees eligible for participation in such plans or
programs, or (ii) such plan's or program's aggregate investment in the
Dreyfus Family of Funds or certain other products made available by the
Distributor to such plans or programs exceeds $1,000,000 ("Eligible Benefit
Plans"). Shares of funds in the Dreyfus Family of Funds then held by
Eligible Benefit Plans will be aggregated to determine the fee payable. The
Distributor reserves the right to cease paying these fees at any time. The
Distributor will pay such fees from its own funds, other than amounts
received from the Fund, including past profits or any other source available
to it.
Transfer and Dividend Disbursing Agent and Custodian. Dreyfus
Transfer, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of the
Manager, P.O. Box 9671, Providence, Rhode Island 02940-9671, is each Fund's
transfer and dividend disbursing agent. Under a separate transfer agency
agreement with each Fund, the Transfer Agent arranges for the maintenance of
shareholder account records for the Fund, the handling of certain
communications between shareholders and the Fund and the payment of
dividends and distributions payable by the Fund. For these services, the
Transfer Agent receives a monthly fee from each Fund computed on the basis
of the number of shareholder accounts it maintains for such Fund during the
month, and is reimbursed for certain out-of-pocket expenses.
The Bank of New York (the "Custodian"), 90 Washington Street, New York,
New York 10286, is each Fund's custodian. The Custodian has no part in
determining the investment policies of the Fund or which securities are to
be purchased or sold by the Fund. Under a separate custody agreement with
each Fund, the Custodian holds the Fund's securities and keeps all necessary
accounts and records. For its custody services, the Custodian receives a
monthly fee from each Fund based on the market value of the Fund's assets
held in custody and receives certain securities transactions charges.
HOW TO BUY SHARES
Each Fund's shares may be purchased only by clients of certain
financial institutions (which may include banks), securities dealers
("Selected Dealers"), and other industry professionals such as investment
advisers, accountants and estate planning firms (collectively, "Service
Agents") that have entered into service agreements with the Distributor.
For shareholders who purchase Fund shares from the Distributor, the
Distributor will act as Service Agent. Stock certificates are issued only
upon your written request. No certificates are issued for fractional
shares. Each Fund reserves the right to reject any purchase order.
The minimum initial investment in each Fund is $2,500, or $1,000 if you
are a client of a Service Agent which maintains an omnibus account in the
relevant Fund and has made an aggregate minimum initial purchase in the Fund
for its customers of $2,500. Subsequent investments must be at least $100.
For the Government Money Fund and the Money Fund, however, the minimum
initial investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs
(including regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs,
IRAs set up under a Simplified Employee Pension Plan ("SEP-IRAs") and
rollover IRAs) and 403(b)(7) Plans with only one participant and $500 for
Dreyfus-sponsored Education IRAs, with no minimum for subsequent purchases.
It is not recommended that the Municipal Funds be used as a vehicle for
Keogh, IRA or other qualified plans. The initial investment must be
accompanied by the Account Application. For full-time or part-time
employees of the Manager or any of its affiliates or subsidiaries, directors
of the Manager, Board members of a Fund advised by the Manager, including
members of each Fund's Board, or the spouse or minor child of any of the
foregoing, the minimum initial investment is $1,000. For full-time or part-
time employees of the Manager or any of its affiliates or subsidiaries who
elect to have a portion of their pay directly deposited into their Fund
accounts, the minimum initial investment is $50. The Government Money Fund
and the Money Fund reserve the right to offer Fund shares without regard to
minimum purchase requirements to employees participating in certain
qualified and non-qualified employee benefit plans or other programs where
contributions or account information can be transmitted in a manner and form
acceptable to such Fund. Each Fund reserves the right to vary further the
initial and subsequent investment minimum requirements at any time.
Fund shares also may be purchased through Dreyfus-Automatic Asset
Builderr, the Government Direct Deposit Privilege or the Payroll Savings
Plan described under "Shareholder Services." These services enable you to
make regularly scheduled investments and may provide you with a convenient
way to invest for long-term financial goals. You should be aware, however,
that periodic investment plans do not guarantee a profit and will not
protect you against loss in a declining market.
Service Agents may receive different levels of compensation for selling
different Classes of shares. Management understands that some Service
Agents may impose certain conditions on their clients which are different
from those described in the Funds' Prospectus and this Statement of
Additional Information, and, to the extent permitted by applicable
regulatory authority, may charge their clients direct fees. You should
consult your Service Agent in this regard.
Shares are sold on a continuous basis at the net asset value per share
next determined after an order in proper form and Federal Funds (monies of
member banks within the Federal Reserve System which are held on deposit at
a Federal Reserve Bank) are received by the Transfer Agent or other entity
authorized to receive orders on behalf of the Fund in written or telegraphic
form. If you do not remit Federal Funds, your payment must be converted
into Federal Funds. This usually occurs within one business day of receipt
of a bank wire and within two business days of receipt of a check drawn on a
member bank of the Federal Reserve System. Checks drawn on banks which are
not members of the Federal Reserve System may take considerably longer to
convert into Federal Funds. Prior to receipt of Federal Funds, your money
will not be invested. Net asset value per share of each Class is computed
by dividing the value of the Fund's net assets represented by such Class
(i.e., the value of its assets less liabilities) by the total number of
shares of such Class outstanding. See "Determination of Net Asset Value."
Government Money Fund and Money Fund--Each of these Funds determines its net
asset value per share twice each day the New York Stock Exchange or the
Transfer Agent is open for business: as of 5:00 p.m., New York time, and as
of 8:00 p.m., New York time.
If your payments are received in or converted into Federal Funds by
12:00 Noon, New York time, by the Transfer Agent on a business day, you will
receive the dividend declared that day. If your payments are received in or
converted into Federal Funds after 12:00 Noon, New York time, by the
Transfer Agent, you will begin to accrue dividends on the following business
day.
Qualified institutions may telephone orders for purchase of Fund shares
of each of these Funds. A telephone order placed with the Distributor or
its designee in New York will become effective at the price determined at
5:00 p.m., New York time, and the shares purchased will receive the dividend
on Fund shares declared on that day, if such order is placed with the
Distributor or its designee in New York by 5:00 p.m., New York time, and
Federal Funds are received by 6:00 p.m., New York time, on that day. A
telephone order placed with the Distributor or its designee in New York
after 5:00 p.m., New York time, but by 8:00 p.m., New York time, on a given
day will become effective at the price determined at 8:00 p.m., New York
time, on that day, and the shares purchased will begin to accrue dividends
on the next business day, if Federal Funds are received by 11:00 a.m., New
York time, on the next business day.
Municipal Funds--Each Municipal Fund determines its net asset value per
share twice each day the New York Stock Exchange or the Transfer Agent is
open for business: as of 12:00 Noon, New York time, and as of 8:00 p.m., New
York time.
If your payments are received in or converted into Federal Funds by
12:00 Noon, New York time, on a business day, you will receive the dividend
declared that day. If your payments are received in or converted into
Federal Funds after 12:00 Noon, New York time, you will begin to accrue
dividends on the following business day.
Qualified institutions may telephone orders for purchase of shares of
each of these Funds. A telephone order placed with the Distributor or its
designee in New York will become effective at the price determined at 12:00
Noon, New York time, on a given day, and the shares purchased will receive
the dividend on Fund shares declared on that day, if the telephone order is
placed with the Distributor or its designee by 12:00 Noon, New York time,
and Federal Funds are received at 4:00 p.m., New York time, on that day. A
telephone order placed with the Distributor or its designee in New York
after 12:00 Noon, New York time, but by 8:00 p.m., New York time, on a given
day will become effective at the price determined at 8:00 p.m., New York
time, on that day, and the shares purchased will begin to accrue dividends
on the next business day, if Federal Funds are received by 11:00 a.m., New
York time, on the next business day.
Using Federal Funds. The Transfer Agent or the Fund may attempt to
notify you upon receipt of checks drawn on banks that are not members of the
Federal Reserve System as to the possible delay in conversion into Federal
Funds and may attempt to arrange for a better means of transmitting the
money. If you are a customer of a Selected Dealer and your order to
purchase Fund shares is paid for other than in Federal Funds, the Selected
Dealer, acting on your behalf , will complete the conversion into, or itself
advance, Federal Funds, generally on the business day following receipt of
your order. The order is effective only when so converted and received by
the Transfer Agent. If you have sufficient Federal Funds or a cash balance
in your brokerage account with a Selected Dealer, your order to purchase
Fund shares will become effective on the day that the order, including
Federal Funds, is received by the Transfer Agent.
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 member may be so designated.
TeleTransfer purchase orders may be made at any time. Purchase orders
received by 4:00 p.m., New York time, on any business 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 business 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 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--TeleTransfer Privilege."
Reopening an Account. You may reopen an account with a minimum
investment of $100 without filing a new Account Application during the
calendar year the account is closed or during the following calendar year,
provided the information on the old Account Application is still applicable.
SERVICE PLAN AND DISTRIBUTION PLAN
Class A shares of each of the Government Money Fund and the Money Fund
are subject to a Service Plan and Class B shares of each Fund are subject to
a Distribution Plan.
Rule 12b-1 (the "Rule") adopted by the Securities and Exchange
Commission under the 1940 Act provides, among other things, that an
investment company may bear expenses of distributing its shares only
pursuant to a plan adopted in accordance with the Rule. The Board of each
of the Government Money Fund and the Money Fund has adopted separate plans
with respect to Class A and Class B of such Funds and the Board of each of
the Municipal Funds has adopted a plan with respect to Class B of such Funds
(each, a "Plan"). Under each Plan, the respective Fund bears directly the
costs of preparing, printing and distributing prospectuses and statements of
additional information and of implementing and operating the Plan. Under
each Plan adopted with respect to Class A of the Government Money Fund and
Money Fund (the "Service Plan"), the Fund reimburses (a) the Distributor for
payments made for distributing Class A shares and servicing shareholder
accounts ("Servicing") and (b) the Manager, Dreyfus Service Corporation and
any affiliate of either of them (collectively, "Dreyfus") for payments made
for Servicing. 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. Each Fund's Board believes that there is a reasonable likelihood
that each Plan will benefit the Fund and holders of the relevant Class of
shares.
A quarterly report of the amounts expended under each Plan, and the
purposes for which such expenditures were incurred, must be made to the
Fund's Board for its review. In addition, each Plan provides that it may
not be amended to increase materially the costs which the Fund may bear for
distribution pursuant to the Plan without shareholder approval of the
affected Class and that other material amendments of the Plan must be
approved by the Board, and by the Fund's Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund or the Manager
and have no direct or indirect financial interest in the operation of the
Plan or in any related agreements entered into in connection with such Plan,
by vote cast in person at a meeting called for the purpose of considering
such amendments. Each Plan is subject to annual approval by such vote of
the Board members cast in person at a meeting called for the purpose of
voting on the Plan. The Plan was last so approved on September 16, 1998
with respect to each Fund, except the Minnesota Municipal Fund, which so
approved the Plan on April 8, 1998. Each Plan is terminable at any time by
vote of a majority of the Fund's Board members who are not "interested
persons" and have no direct or indirect financial interest in the operation
of the Plan or in any of the related agreements or by vote of a majority of
the relevant Class of shares.
Set forth below are the total amounts paid by each of the Government
Money Fund and the Money Fund pursuant to its Service Plan with respect to
Class A (i) to the Distributor ("Distributor Payments") as reimbursement for
distributing Class A shares and Servicing, (ii) to Dreyfus for payments made
for Servicing ("Dreyfus Payments"), and (iii) for costs of preparing,
printing and distributing prospectuses and statement of additional
information and of implementing and operating the Service Plan ("Printing
and Implementation") for the Fund's fiscal year ended November 30, 1998:
Total Amount Printing and
Name of Fund Paid Pursuant to Distributor Payments Dreyfus Implementation
Service Plan Payments
Government
Money Fund
- Class A $1,468,487 $410,171 $1,058,316 $-0-
Money Fund
- Class A $3,215,190 $1,490,345 $1,724,845 $12,690
Set forth below are the total amounts paid by each Fund to the
Distributor pursuant to its Distribution Plan with respect to Class B for
the Fund's fiscal year ended November 30, 1998:
Total Amount Paid
Name of Fund Pursuant to
Distribution Plan
Government
Money Fund
- Class B $991,495
Money Fund
- Class B $3,564,210
California
Municipal Fund
- Class B $14,052
Minnesota
Municipal Fund
- Class B $25,313*
National
Municipal Fund
- Class B $646,579
New York
Municipal Fund
- Class B $93,487
________________
* For the period June 1, 1998 (commencement of operations) to November
30, 1998.
SHAREHOLDER SERVICES PLANS
Each Fund has adopted a Shareholder Services Plan with respect to Class
A pursuant to which the Fund reimburses Dreyfus Service Corporation an
amount not to exceed an annual rate of .25 of 1% of the value of the Fund's
average daily net assets attributable to Class A for certain allocated
expenses of providing personal services and/or maintaining shareholder
accounts. 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 1% of the value of the Fund's average daily net assets
attributable to Class B. Under each Shareholder Services Plan, the services
provided may include personal services relating to shareholder accounts,
such as answering shareholder inquiries regarding the Fund and providing
reports and other information, and services related to the maintenance of
shareholder accounts. As to each Fund, under the Shareholders Services Plan
for Class B, the Distributor may make payments to Service Agents in respect
of their services.
A quarterly report of the amounts expended under each Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Fund's Board for its review. In addition, each
Shareholder Services Plan provides that material amendments to the
Shareholder Services Plan must be approved by the Fund's Board, and by the
Board members who are not "interested persons" (as defined in the 1940 Act)
of the Fund and have no direct or indirect financial interest in the
operation of the Shareholder Services Plan, by vote cast in person at a
meeting called for the purpose of considering such amendments. Each
Shareholder Services Plan is subject to annual approval by such vote of its
Board members cast in person at a meeting called for the purpose of voting
on the Shareholder Services Plan. Each Shareholder Services Plan was last
so approved on September 16, 1998 with respect to each Fund, except the
Minnesota Municipal Fund, which so approved each Shareholder Services Plan
on April 8, 1998. Each Shareholder Services Plan is terminable at any time
by vote of a majority of the Board members who are not "interested persons"
and have no direct or indirect financial interest in the operation of the
Shareholder Services Plan.
Set forth below are the total amounts payable by each Fund pursuant to
its separate Shareholder Services Plans for Class A and Class B, the amounts
reimbursed to the Fund by the Manager pursuant to undertakings in effect, if
any, and the net amount paid by the Fund for the Fund's fiscal year ended
November 30, 1998:
Name of Fund Total Amount
and Class Payable Pursuant to Amount Reimbursed Net Amount Paid
Shareholder Services Plan Pursuant to Undertaking by Fund
Government
Money Fund
- - Class A $86,597 $ -0- $86,597
- - Class B $1,400,646 $269,700 $1,130,946
Money Fund
- - Class A $240,310 $ -0- $240,310
- - Class B $4,455,262 $1,046,213 $3,409,049
California
Municipal Fund
- - Class A $141,357 $ -0- $141,357
- - Class B $21,077 $4,897 $16,180
National
Municipal Fund
- - Class A $84,018 $ -0- $84,018
- - Class B $969,868 $282,750 $687,118
Minnesota
Municipal Fund
- - Class A $ -0-* $ -0-* $ -0-*
- - Class B $37,969 * $37,969* $ -0-*
Name of Fund Total Amount
and Class Payable Pursuant to Amount Reimbursed Net Amount Paid
Shareholder Services Plan Pursuant to Undertaking by Fund
New York
Municipal Fund
-Class A $412,841 $ -0- $412,841
-Class B $140,231 $38,784 $101,447
__________
* For the period June 1, 1998 (commencement of operations) to November
30, 1998.
HOW TO REDEEM SHARES
Check Redemption Privilege. Each Fund provides Redemption Checks
("Checks") automatically upon opening an account, unless you specifically
refuse the Check Redemption Privilege by checking the applicable "No" box on
the Account Application. The Check Redemption Privilege may be established
for an existing account by a separate signed Shareholder Services Form.
Checks will be sent only to the registered owner(s) of the account and only
to the address of record. The Account Application or Shareholder Services
Form must be manually signed by the registered owner(s). Checks are drawn
on your Fund account and may be made payable to the order of any person in
an amount of $500 or more. When a Check is presented to the Transfer Agent
for payment, the Transfer Agent, as your agent, will cause the Fund to
redeem a sufficient number of shares in your account to cover the amount
of the Check. Dividends are earned until the Check clears. After
clearance, a copy of the Check will be returned to you. You generally will
be subject to the same rules and regulations that apply to checking
accounts, although the election of this Privilege creates only a shareholder-
transfer agent relationship with the Transfer Agent.
You should date your Checks with the current date when you write them.
Please do not postdate your Checks. If you do, the Transfer Agent will
honor, upon presentment, even if presented before the date of the check, all
postdated Checks which are dated within six months of presentment for
payment, if they are otherwise in good order. If you hold shares in a
Dreyfus-sponsored IRA account, you may be permitted to make withdrawals from
your IRA account using checks furnished to you by The Dreyfus Trust Company.
Checks are free, but the Transfer Agent will impose a fee for stopping
payment of a Check upon your request or if the Transfer Agent cannot honor a
Check due to insufficient funds or other valid reason. If the amount of the
Check is greater than the value of the shares in your account, the Check
will be returned marked insufficient funds. Checks should not be used to
close an account.
Wire Redemption Privilege. By using this Privilege, you authorize the
Transfer Agent to act on wire, telephone or letter redemption instructions
from any person representing himself or herself to be you or a
representative of your Service Agent, and reasonably believed by the
Transfer Agent to be genuine. Ordinarily, each Fund will initiate payment
for shares redeemed pursuant to this Privilege on the same business day if
the Transfer Agent receives a redemption request in proper form prior to
5:00 p.m., New York time, on such day; otherwise the Fund will initiate
payment on the next business day. Redemption proceeds ($1,000 minimum) will
be transferred by Federal Reserve wire only to the commercial bank account
specified by you on the Account Application or the Shareholder Services
Form, or to a correspondent bank if your bank is not a member of the
Federal Reserve System. Fees ordinarily are imposed by such bank and borne
by you. 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."
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 Automated Clearing House member may be
designated. Redemption proceeds will be on deposit in your account at an
Automated Clearing House member bank ordinarily two days after receipt of
the redemption request. Holders of jointly registered Fund or bank accounts
may redeem through the 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 TeleTransfer privilege, any request for
a wire redemption will be effected as a TeleTransfer transaction through the
Automated Clearing House (ACH) system unless more prompt transmittal
specifically is requested. Redemption proceeds will be on deposit in your
account at an ACH member bank ordinarily two business days after receipt of
the redemption request. See "How to Buy Shares--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 and is a fundamental policy of the Fund which may not be changed
without shareholder approval. In the case of requests for redemption in
excess of such amount, each Fund's Board reserves the right to make payments
in whole or in part in securities or other assets of the Fund in case of an
emergency or any time a cash distribution would impair the liquidity of the
Fund to the detriment of the existing shareholders. In such event, the
securities would be valued in the same manner as the Fund's portfolio is
valued. If the recipient sold such securities, brokerage charges might be
incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b)
when trading in the markets a Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the Securities and Exchange
Commission so that disposal of a Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other periods
as the Securities and Exchange Commission by order may permit to protect a
Fund's shareholders.
SHAREHOLDER SERVICES
Fund Exchanges. Clients of certain Service Agents may purchase, in
exchange for shares of a Fund, shares of certain other funds managed or
administered by the Manager, to the extent such shares are offered for sale
in such client's state of residence. Shares of other funds purchased by
exchange will be purchased on the basis of relative net asset value per
share as follows:
A. Exchanges for shares of funds that are offered without a
sales load will be made without a sales load.
B. Shares of funds purchased without a sales load may be
exchanged for shares of other funds sold with a sales load, and
the applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
for shares of other funds sold without a sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load, and additional shares acquired through reinvestment of
dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load that could
have been imposed in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without giving effect to
any reduced loads, the difference will be deducted.
To accomplish an exchange under item D above, you or your Service
Agent acting on your behalf must notify the Transfer Agent of your prior
ownership of fund shares and your account number.
To request an exchange, you or your Service Agent acting on your
behalf must give exchange instructions to the Transfer Agent in writing or
by telephone. The ability to issue exchange instructions by telephone is
given to shareholders of each Fund automatically, unless you check the
applicable "No" box on the Account Application, indicating that you
specifically refuse this Privilege. By using the Telephone Exchange
Privilege, you authorize the Transfer Agent to act on telephonic
instructions (including over The Dreyfus Touchr automated telephone system)
from any person representing himself or herself to be you or a
representative of your Service Agent, and reasonably believed by the
Transfer Agent to be genuine. Telephone exchanges may be subject to
limitations as to the amount involved or the number of telephone exchanges
permitted. Shares issued in certificate form are not eligible for telephone
exchange. No fees currently are charged shareholders directly in connection
with exchanges, although each Fund reserve the right, upon not less than 60
days' written notice, to charge shareholders a nominal administrative fee in
accordance with rules promulgated by the Securities and Exchange Commission.
To establish a personal retirement plan by exchange, shares of the fund
being exchanged must have a value of at least the minimum initial investment
required for the fund into which the exchange is being made.
Auto-Exchange Privilege. The 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. This Privilege is available only for existing
accounts. Shares will be exchanged on the basis of relative net asset value
as described above under "Fund Exchanges." Enrollment in or modification or
cancellation of this Privilege is effective three business days following
notification by you. You will be notified if your account falls below the
amount designated to be exchanged under this Privilege. In this case, your
account will fall to zero unless additional investments are made in excess
of the designated amount prior to the next Auto-Exchange transaction.
Shares held under IRA and other retirement plans are eligible for this
Privilege. Exchanges of IRA shares may be made between IRA accounts and
from regular accounts to IRA accounts, but not from IRA accounts to regular
accounts. With respect to all other retirement accounts, exchanges may be
made only among those accounts.
Fund Exchanges and the Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the fund being
acquired legally may be sold. Shares may be exchanged only between accounts
having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. Each Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges service or the
Auto-Exchange Privilege may be modified or terminated at any time upon
notice to shareholders.
Dreyfus-Automatic Asset Builderr. Dreyfus-Automatic Asset Builder
permits you to purchases 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.
Government Direct Deposit Privilege. The 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.
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 Automated Clearing House 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 Payroll Savings Plan.
Dividend Options. 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 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"), provided, that 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.
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.
Quarterly Distribution Plan. The Quarterly Distribution Plan permits
you to receive quarterly payments from a Fund consisting of proceeds from
the redemption of shares purchased for your account through the automatic
reinvestment of dividends declared on your account during the preceding
calendar quarter.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits you
to request withdrawal of a specified dollar amount (minimum of $50) on
either a monthly or quarterly basis if you have a $5,000 minimum account.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends and
distributions, your shares will be reduced and eventually may be depleted.
Automatic Withdrawal may be terminated at any time by you, the Fund or the
Transfer Agent. Shares for which certificates have been issued may not be
redeemed through the Automatic Withdrawal Plan.
Corporate Pension/Profit-Sharing and Personal Retirement Plans.
(Government Money Fund and Money Fund) Each of the Government Money Fund and
the Money Fund makes available to corporations a variety of prototype
pension and profit-sharing plans, including a 401(k) Salary Reduction Plan.
In addition, these Funds make available Keogh Plans, IRAs (including regular
IRAs, spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs, rollover
IRAs and Education IRAs) and 403(b)(7) Plans. Plan support services also
are available. You can obtain details on the various plans by calling the
following numbers toll free: for Keogh Plans, please call 1-800-358-5566;
for IRAs (except SEP-IRAs), please call 1-800-645-6561; or for SEP-IRAs,
401(k) Salary Reduction Plans and 403(b)(7) Plans, please call 1-800-322-
7880.
If you wish to purchase Fund shares in conjunction with a Keogh Plan,
a 403(b)(7) Plan or an IRA, including a SEP-IRA, you may request from the
Distributor forms for adoption of such plans.
The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs
may charge a fee, payment of which could require the liquidation of shares.
All fees charged are described in the appropriate form.
Shares may be purchased in connection with these plans only by direct
remittance to the entity which acts as custodian. Such purchases will be
effective when payments received by the Transfer Agent are converted into
Federal Funds. Purchases for these plans may not be made in advance of
receipt of funds.
The minimum initial investment for corporate plans, salary reduction
plans, 403(b)(7) Plans and SEP-IRAs, with more than one participant, is
$2,500, with no minimum for subsequent purchases. The minimum initial
investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs (including
regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs, SEP-IRAs and
rollover IRAs) and 403(b)(7) Plans with only one participant and $500 for
Education IRAs, with no minimum for subsequent purchases.
You should read the prototype retirement plans and the applicable form
of custodial agreement for further details as to eligibility, service fees
and tax implications, and should consult a tax adviser.
DETERMINATION OF NET ASSET VALUE
Amortized Cost Pricing. The valuation of each Fund's portfolio
securities is based upon their amortized cost, which does not take into
account unrealized capital gains or losses. This involves valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method
provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price
the Fund would receive if it sold the instrument.
Each Fund's Board has established, as a particular responsibility
within the overall duty of care owed to the Fund's shareholders, procedures
reasonably designed to stabilize the Fund's price per share as computed for
the purpose of purchases and redemptions at $1.00. Such procedures include
review of the Fund's portfolio holdings by the Board, at such intervals as
it may deem appropriate, to determine whether the Fund's net asset value
calculated by using available market quotations or market equivalents
deviates from $1.00 per share based on amortized cost. In such review,
investments for which market quotations are readily available will be valued
at the most recent bid price or yield equivalent for such securities or for
securities of comparable maturity, quality and type, as obtained from one or
more of the major market makers for the securities to be valued. Other
investments and assets, to the extent a Fund is permitted to invest in such
instruments, will be valued at fair value as determined in good faith by the
Board. With respect to the Municipal Funds, market quotations and market
equivalents used in the Board's review are obtained from an independent
pricing service (the "Service") approved by the Board. The Service values
these Funds' investments based on methods which include considerations of:
yields or prices of municipal obligations of comparable quality, coupon,
maturity and type; indications of values from dealers; and general market
conditions. The Service also may employ electronic data processing
techniques and/or a matrix system to determine valuations.
The extent of any deviation between a Fund's net asset value based upon
available market quotations or market equivalents and $1.00 per share based
on amortized cost will be examined by the Fund's Board. If such deviation
exceeds 1/2 of 1%, the Board promptly will consider what action, if any,
will be initiated. In the event a Fund's Board determines that a deviation
exists which may result in material dilution or other unfair results to
investors or existing shareholders, it has agreed to take such corrective
action as it regards as necessary and appropriate, including: selling
portfolio instruments prior to maturity to realize capital gains or losses
or to shorten average portfolio maturity; withholding dividends or paying
distributions from capital or capital gains; redeeming shares in kind; or
establishing a net asset value per share by using available market
quotations or market equivalents.
New York Stock Exchange and Transfer Agent Closings. The holidays (as
observed) on which both the New York Stock Exchange and the Transfer Agent
are closed currently are: New Year's Day, Martin Luther King Jr. Day,
Presidents' Day, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Management believes that each Fund has qualified for the fiscal year
ended November 30, 1998 as a "regulated investment company" under the Code.
Each Fund intends to continue to so qualify if such qualification is in the
best interests of its shareholders. Such qualification relieves the Fund
of any liability for Federal income tax to the extent its earnings are
distributed in accordance with applicable provisions of the Code. If the
Fund did not qualify as a regulated investment company, it would be treated
for tax purposes as an ordinary corporation subject to Federal income tax.
Each Fund ordinarily declares dividends from its net investment income
on each day the New York Stock Exchange or, for the Government Money Fund
and Money Fund only, the Transfer Agent is open for business. The Fund's
earnings for Saturdays, Sundays and holidays are declared as dividends on
the preceding business day. Dividends usually are paid on the last calendar
day of each month and automatically are reinvested in additional shares at
net asset value or, at your option, paid in cash. If you redeem all shares
in your account at any time during the month, all dividends to which you are
entitled will be paid to you along with the proceeds of the redemption. If
you are an omnibus accountholder and indicate in a partial redemption
request that a portion of any accrued dividends to which such account is
entitled belongs to an underlying accountholder who has redeemed all shares
in his or her account, such portion of the accrued dividends will be paid to
you along with the proceeds of the redemption.
If you elect to receive dividends and distributions in cash, and your
dividend or distribution check is returned to the Fund as undeliverable or
remains uncashed for six months, the Fund reserves the right to reinvest
such dividends or distributions and all future dividends and distributions
payable to you in additional Fund shares at net asset value. No interest
will accrue on amounts represented by uncashed distribution or redemption
checks.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of any gain
realized from the sale or other disposition of certain market discount bonds
will be treated as ordinary income under Section 1276 of the Code.
With respect to the Municipal Funds, if, at the close of each
quarter of its taxable year, at least 50% of the value of the Fund's total
assets consists of Federal tax exempt obligations, then the Fund may
designate and pay Federal exempt-interest dividends from interest earned on
all such tax exempt obligations. Such exempt-interest dividends may be
excluded by shareholders of the Fund from their gross income for Federal
income tax purposes. Dividends derived from Taxable Investments, together
with distributions from any net realized short-term securities gains,
generally are taxable as ordinary income for Federal income tax purposes
whether or not reinvested. Distributions from net realized long-term
securities gains generally are taxable as long-term capital gains to a
shareholder who is a citizen or resident of the United States, whether or
not reinvested and regardless of the length of time the shareholder has held
his shares.
With respect to the California Municipal Fund, if, at the close of each
quarter of its taxable year, at least 50% of the value of the Fund's total
assets consists of obligations which, when held by an individual, the
interest therefrom is exempt from California personal income tax, and if the
Fund qualifies as a management company under the California Revenue and
Taxation Code, then the Fund will be qualified to pay dividends to its
shareholders that are exempt from California personal income tax (but not
from California franchise tax) ("California exempt-interest dividends").
However, the total amount of California exempt-interest dividends paid by
the Fund to a non-corporate shareholder with respect to any taxable year
cannot exceed such shareholder's pro rata share of interest received by the
Fund during such year that is exempt from California taxation less any
expenses and expenditures deemed to have been paid from such interest.
For shareholders subject to the California personal income tax, exempt-
interest dividends derived from California Municipal Obligations will not be
subject to the California personal income tax. Distributions from net
realized short-term capital gains to California resident shareholders will
be subject to the California personal income tax distributed by the Fund as
ordinary income. Distributions from net realized long-term capital gains
may constitute long-term capital gains for individual California resident
shareholders. Unlike under Federal tax law, the California Municipal Fund's
shareholders will not be subject to California personal income tax, or
receive a credit for California taxes paid by the Fund, on undistributed
capital gains. In addition, California tax law does not consider any
portion of the exempt-interest dividends paid an item of tax preference for
the purpose of computing the California alternative minimum tax.
With respect to the Minnesota Municipal Fund, dividends paid by the
Fund to a Minnesota resident are not subject to the Minnesota personal
income tax to the extent that the dividends are attributable to income
received by the Fund as interest from Minnesota Municipal Obligations,
provided such attributable dividends represent 95% or more of the exempt-
interest dividends that are paid by the Fund. Moreover, dividends paid by
the Fund to a Minnesota resident are not subject to the Minnesota personal
income tax to the extent that the dividends are attributable to income
received by the Fund as interest from the Fund's investment in direct U.S.
Government obligations. Dividends and distributions by the Fund to a
Minnesota resident that are attributable to most other sources are subject
to the Minnesota personal income tax. Dividends and distributions from the
Fund will be included in the determination of taxable net income of
corporate shareholders who are subject to Minnesota income (franchise)
taxes. In addition, dividends attributable to interest received by the Fund
that is a preference item for Federal income tax purposes, whether or not
such interest is from a Minnesota Municipal Obligation, may be subject to
the Minnesota alternative minimum tax. The shares of the Fund are not
subject to property taxation by Minnesota or its political subdivisions.
YIELD INFORMATION
For the seven-day period ended November 30, 1998, the yield and
effective yield for Class A and Class B shares of each Fund were as follows:
Name of Fund and Class Yield Effective Yield
Government Money Fund
Class A 4.30% 4.39%
Class B 4.10%/4.07%* 4.18%/4.15%*
Money Fund
Class A 4.41% 4.51%
Class B 4.21%/4.20%* 4.30%/4.29%*
California Municipal Fund
Class A 2.52% 2.55%
Class B 2.06%/2.00%* 2.08%/2.02%*
Minnesota Municipal Fund
Class A 2.73%/2.77%* 2.77%/2.60%*
Class B 2.57%/2.00%* 2.60%/2.08%*
National Municipal Fund
Class A 2.73%/2.77%* -0-%
Class B 2.38%/2.41%* 2.30%/2.33%*
New York Municipal Fund
Class A 2.43% 2.46%
Class B 2.13%/2.06%* 2.15%/2.08%*
________________
* Net of absorbed expenses.
Yield is computed in accordance with a standardized method which
involves determining the net change in the value of a hypothetical pre-
existing Fund account having a balance of one share at the beginning of a
seven calendar day period for which yield is to be quoted, dividing the net
change by the value of the account at the beginning of the period to obtain
the base period return, and annualizing the results (i.e., multiplying the
base period return by 365/7). The net change in the value of the account
reflects the value of additional shares purchased with dividends declared on
the original share and any such additional shares and fees that may be
charged to shareholder accounts, in proportion to the length of the base
period and the Fund's average account size, but does not include realized
gains and losses or unrealized appreciation and depreciation. Effective
yield is computed by adding 1 to the base period return (calculated as
described above), raising that sum to a power equal to 365 divided by 7, and
subtracting 1 from the result. Both yield figures take into account any
applicable distribution and service fees. As a result, at any given time,
the performance of Class B shares should be expected to be lower than that
of Class A shares.
As to the Municipal Funds, tax equivalent yield is computed by dividing
that portion of the yield or effective yield (calculated as described above)
which is tax exempt by 1 minus a stated tax rate and adding the quotient to
that portion, if any, of the yield of the Fund that is not tax exempt.
Based upon a 1998 Federal and State of California income tax rate of
45.22%, the tax equivalent yield for the 7-day period ended November 30,
1998 for Class A and Class B shares of the California Municipal Fund was as
follows:
Name of Fund and Class Tax Equivalent Yield
California Municipal Fund
Class A 4.60 %
Class B 3.76%/3.65%*
Based upon a 1998 Federal and State of Minnesota income tax rate of
44.73%, the tax equivalent yield for the seven-day period ended November 30,
1998 for the Class A and Class B shares of the Minnesota Municipal Fund was
as follows:
Name of Fund and Class Tax Equivalent Yield
Minnesota Municipal Fund
Class A 4.94%/4.65%*
Class B 4.65%/3.73%*
Based upon a 1998 Federal tax rate of 39.60 %, the tax equivalent
yield for the seven-day period ended November 30, 1998 for the Class A and
Class B shares of National Municipal Fund was as follows:
Name of Fund and Class Tax Equivalent Yield
National Municipal Fund
Class A 4.52%
Class B 3.94%/3.81 %*
Based upon a combined 1998 Federal, New York State and New York City
personal income tax rate of 46.43 %, the tax equivalent yield for the seven-
day period ended November 30, 1998 for Class A and Class B shares of the
New York Municipal Fund was as follows:
Name of Fund and Class Tax Equivalent Yield
New York Municipal Fund
Class A 4.54%
Class B 3.98%/3.85 %*
______________
* Net of absorbed expenses.
The tax equivalent yields noted above for the National Municipal Fund
represent the application of the highest Federal marginal personal income
tax rate presently in effect. The taxes 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
___% tax rate has been used, for California State income tax purposes the
rate of ___% has been used, for Minnesota State income tax purposes, the
rate of ____% has been used and for New York State and New York City
personal income tax purposes, the rates of ___% and ___%, respectively, have
been used. In addition, there may be pending legislation which could affect
such stated tax rates or yields. You should consult your tax adviser, and
consider your own factual circumstances and applicable tax laws, in order
to ascertain the relevant tax equivalent yield.
Yields will fluctuate and are not necessarily representative of future
results. You should remember that yield is a function of the type and
quality of the instruments in the portfolio, portfolio maturity and
operating expenses. Your principal in a Fund is not guaranteed. See
"Determination of Net Asset Value" for a discussion of the manner in which a
Fund's price per share is determined.
From time to time, each Municipal Fund may use hypothetical tax
equivalent yields or charts in its advertising. These hypothetical yields
or charts will be used for illustrative purposes only and not as being
representative of the Fund's past or future performance.
From time to time, advertising materials for a Fund may refer to or
discuss then-current or past economic conditions, developments and/or
events, or actual or proposed tax legislation, and may refer to statistical
or other information concerning trends relating to investment companies, as
compiled by industry associations such as the Investment Company Institute.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased directly from the issuer
or from an underwriter or a market maker for the securities. Usually no
brokerage commissions, as such, are paid by a Fund for such purchases.
Purchases from underwriters of portfolio securities include a concession
paid by the issuer to the underwriter and the purchase price paid to, and
sales price received from, market makers for the securities may include the
spread between the bid and asked price. No brokerage commissions have been
paid by any Fund to date.
Transactions are allocated to various dealers by the portfolio managers
of a Fund in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms and may be
selected based upon their sales of shares of a Fund or other funds advised
by the Manager or its affiliates.
Research services furnished by brokers through which a Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses of
its research department.
INFORMATION ABOUT THE FUNDS
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Fund shares have equal rights as to dividends and in liquidation. Shares
have no preemptive, subscription or conversion rights and are freely
transferable.
The Minnesota Municipal Fund and the National Municipal Fund are
separate series of the Company. Rule 18f-2 under the 1940 Act provides
that any matter required to be submitted under the provisions of the 1940
Act or applicable state law or otherwise to the holders of the outstanding
voting securities of an investment company, such as the Company, will not be
deemed to have been effectively acted upon unless approved by the holders of
a majority of the outstanding shares of each series affected by such matter.
Rule 18f-2 further provides that a series shall be deemed to be affected by
a matter unless it is clear that the interests of each series in the matter
are identical or that the matter does not affect any interest of such
series. The Rule exempts the selection of independent accountants and the
election of Board members from the separate voting requirements of the Rule.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for each Fund to hold annual meetings of shareholders. As a
result, Fund shareholders may not consider each year the election of Board
members or the appointment of auditors. However, the holders of at least
10% of the shares outstanding and entitled to vote may require the Fund to
hold a special meeting of shareholders for purposes of removing a Board
member from office. Fund shareholders may remove a Board member by the
affirmative vote of a majority, in the case of the Government Money Fund,
National Municipal Fund and Money Fund, or two-thirds, in the case of the
California Municipal Fund and New York Municipal Fund, of the Fund's
outstanding voting shares. In addition, the Board will call a meeting of
shareholders for the purpose of electing Board members if, at any time, less
than a majority of the Board members then holding office have been elected
by shareholders.
The California Municipal Fund and New York Municipal Fund are organized
as unincorporated business trusts under the laws of the Commonwealth of
Massachusetts. Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Agreement and Declaration of Trust (the "Trust Agreement") for
each of these Funds disclaims shareholder liability for acts or obligations
of the Fund and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Fund or
a Trustee. The Trust Agreement provides for indemnification from the Fund's
property for all losses and expenses of any shareholder held personally
liable for the obligations of the Fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its
obligations, a possibility which management believes is remote. Upon
payment of any liability incurred by the Fund, the shareholder paying such
liability will be entitled to reimbursement from the general assets of the
Fund. The Fund intends to conduct its operations in such a way so as to
avoid, as far as possible, ultimate liability of the shareholder for
liabilities of the Fund.
Each Fund sends annual and semi-annual financial statements to all its
share-holders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for each Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares being sold pursuant to the Funds' Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as independent auditors of each
Fund.
APPENDIX A
(MONEY FUND ONLY)
Description of the two highest commercial paper, bond and other short-
and long-term rating categories assigned by Standard & Poor's Ratings Group
("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch IBCA, Inc.
("Fitch"), Duff & Phelps Credit Rating Co. ("Duff"), and Thomson BankWatch,
Inc. ("BankWatch"):
Commercial Paper and Short-Term Ratings
The designation A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are denoted
with a plus sign (+) designation. Capacity for timely payment on issues
with an A-2 designation is strong. However, the relative degree of safety
is not as high as for issues designated A-1.
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity for
repayment of short-term promissory obligations and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return of funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity. Issues rated Prime-2
(P-2) have a strong capacity for repayment of short-term promissory
obligations. This ordinarily will be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
The rating Fitch-1 (Highest Grade) is the highest commercial paper
rating assigned by Fitch. Paper rated Fitch-1 is regarded as having the
strongest degree of assurance for timely payment. The rating Fitch-2 (Very
Good Grade) is the second highest commercial paper rating assigned by Fitch
which reflects an assurance of timely payment only slightly less in degree
than the strongest issues.
The rating Duff-1 is the highest commercial paper rating assigned by
Duff. Paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors which are supported by ample
asset protection. Risk factors are minor. Paper rated Duff-2 is regarded
as having good certainty of timely payment, good access to capital markets
and sound liquidity factors and company fundamentals. Risk factors are
small.
The rating TBW-1 is the highest short-term obligation rating assigned
by BankWatch. Obligations rated TBW-1 are regarded as having the strongest
capacity for timely repayment. Obligations rated TBW-2 are supported by a
strong capacity for timely repayment, although the degree of safety is not
as high as for issues rated TBW-1.
Bond and Long-Term Ratings
Bonds rated AAA are considered by S&P to be the highest grade
obligations and possess an extremely strong capacity to pay principal and
interest. Bonds rated AA by S&P are judged by S&P to have a very strong
capacity to pay principal and interest and, in the majority of instances,
differ only in small degrees from issues rated AAA. The rating AA may be
modified by the addition of a plus or minus sign to show relative standing
within the rating category.
Bonds rated Aaa by Moody's are judged to be of the best quality. Bonds
rated Aa by Moody's are judged by Moody's to be of high quality by all
standards and, together with the Aaa group they comprise what are generally
known as high-grade bonds. Bonds rated Aa are rated lower than Aaa bonds
because margins of protection may not be as large or fluctuations of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger.
Moody's applies numerical modifiers 1, 2 and 3 in the Aa rating category.
The modifier 1 indicates a ranking for the security in the higher end of
this rating category, the modifier 2 indicates a mid-range ranking, and the
modifier 3 indicates a ranking in the lower end of the rating category.
Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade,
broadly marketable, suitable for investment by trustees and fiduciary
institutions and liable to slight market fluctuation other than through
changes in the money rate. The prime feature of an AAA bond is a showing of
earnings several times or many times interest requirements, with such
stability of applicable earnings that safety is beyond reasonable question
whatever changes occur in conditions. Bonds rated AA by Fitch are judged by
Fitch to be of safety virtually beyond question and are readily salable,
whose merits are not unlike those of the AAA class, but whose margin of
safety is less strikingly broad. The issue may be the obligation of a small
company, strongly secured but influenced as to rating by the lesser
financial power of the enterprise and more local type of market.
Bonds rated AAA by Duff are considered to be of the highest credit
quality. The risk factors are negligible, being only slightly more than
U.S. Treasury debt. Bonds rated AA are considered by Duff to be of high
credit quality with strong protection factors. Risk is modest but may vary
slightly from time to time because of economic conditions.
Fitch also assigns a rating to certain international and U.S. banks. A
Fitch bank rating represents Fitch's current assessment of the strength of
the bank and whether such bank would receive support should it experience
difficulties. In its assessment of a bank, Fitch uses a dual rating system
comprised of Legal Ratings and Individual Ratings. In addition, Fitch
assigns banks Long- and Short-Term Ratings as used in the corporate ratings
discussed above. Legal Ratings, which range in gradation from 1 through 5,
address the question of whether the bank would receive support from central
banks or shareholders if it experienced difficulties, and such ratings are
considered by Fitch to be a prime factor in its assessment of credit risk.
Individual Ratings, which range in gradations from A through E, represent
Fitch's assessment of a bank's economic merits and address the question of
how the bank would be viewed if it were entirely independent and could not
rely on support from state authorities or its owners.
In addition to ratings of short-term obligations, BankWatch assigns a
rating to each issuer it rates, in gradations of A through E. BankWatch
examines all segments of the organization including, where applicable, the
holding company, member banks or associations, and other subsidiaries. In
those instances where financial disclosure is incomplete or untimely, a
qualified rating (QR) is assigned to the institution. BankWatch also
assigns, in the case of foreign banks, a country rating which represents an
assessment of the overall political and economic stability of the country in
which the bank is domiciled.
APPENDIX B
(MUNICIPAL FUNDS)
Description of certain S&P, Moody's and Fitch ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable, and will include:
(1) likelihood of default-capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation; (2) nature of and provisions of the obligation; and
(3) protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics are given a plus (+) designation.
Commercial Paper Ratings
The rating A is the highest rating and is assigned by S&P to issues
that are regarded as having the greatest capacity for timely payment.
Issues in this category are delineated with the numbers 1, 2 and 3 to
indicate the relative degree of safety. Paper rated A-1 indicates that the
degree of safety regarding timely payment is either overwhelming or very
strong. Those issues determined to possess overwhelming safety
characteristics are denoted with a plus sign (+) designation.
Moody's
Municipal Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities. Bonds in the Aa category which Moody's
believes possess the strongest investment attributes are designated by the
symbol Aa1.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity for
repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity. Issuers rated Prime-2
(P-2) have a strong ability for repayment of senior short-term debt
obligations. Capitalization characteristics, while still appropriate, may
be more affected by external conditions. Ample alternate liquidity is
maintained.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings recognize
the difference between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower and short-term cyclical elements are
critical in short-term ratings, while other factors of major importance in
bond risk, long-term secular trends for example, may be less important over
the short run.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand feature
is not rated, as NR. Short-term ratings on issues with demand features are
differentiated by the use of the VMIG symbol to reflect such characteristics
as payment upon periodic demand rather than fixed maturity dates and payment
relying on external liquidity. Additionally, you should be alert to the
fact that the source of payment may be limited to the external liquidity
with no or limited legal recourse to the issuer in the event the demand is
not met.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when Moody's
assigns a MIG or VMIG rating, all categories define an investment grade
situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
Fitch
Municipal Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The ratings
take into consideration special features of the issue, its relationship to
other obligations of the issuer, the current financial condition and
operating performance of the issuer and of any guarantor, as well as the
political and economic environment that might affect the issuer's future
financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
Although the credit analysis is similar to Fitch's bond ratings
analysis, the short-term rating places greater emphasis than bond ratings on
the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-
1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the F-1+ and F-1 categories.
[TO BE UPDATED]
APPENDIX C
INVESTING IN CALIFORNIA MUNICIPAL OBLIGATIONS
RISK FACTORS--INVESTING IN CALIFORNIA MUNICIPAL OBLIGATIONS
Certain California (the "State") constitutional amendments, legislative
measures, executive orders, civil actions and voter initiatives, as well as
the general financial condition of the State, could adversely affect the
ability of issuers of California Municipal Obligations to pay interest and
principal on such obligations. The following information constitutes only a
brief summary, does not purport to be a complete description, and is based
on information drawn from official statements relating to securities
offerings of the State of California and various local agencies, available
as of the date of this Statement of Additional Information. While the Fund
has not independently verified such information, it has no reason to believe
that such information is not correct in all material respects.
Recent Developments. From mid-1990 to late 1993, the State suffered a
recession with the worst economic, fiscal and budget conditions since the
1930s. Construction, manufacturing (especially aerospace), exports and
financial services, among others, were all severely affected. Job losses
have been the worst of any post-war recession. Unemployment reached 10.1%
in January 1994, but fell sharply to 7.7% in October and November 1994.
According to the State's Department of Finance, recovery from the recession
in California began in 1994.
The recession seriously affected State tax revenues, which basically
mirror economic conditions. It also has caused increased expenditures for
health and welfare programs. The State also has been facing a structural
imbalance in its budget with the largest programs supported by the General
Fund (K-12 schools and community colleges, health and welfare, and
corrections) growing at rates higher than the growth rates for the principal
revenue sources of the General Fund. As a result, the State experienced
recurring budget deficits in the late 1980s and early 1990s. The State
Controller reported that expenditures exceeded revenues for four of the five
years ending with 1991-92. However, at June 30, 1996, according to the
Department of Finance, the State's Special Fund for Economic Uncertainties
("SFEU") had a small negative balance of approximately $87 million, all but
eliminating the accumulated budget deficit from early 1990's.
The accumulated budget deficits over the past several years, together
with expenditures for school funding which have not been reflected in the
budget, and reduction of available internal borrowable funds, have combined
to significantly deplete the State's cash resources to pay its ongoing
expenses. In order to meet its cash needs, the State has had to rely for
several years on a series of external borrowings, including borrowings past
the end of a fiscal year. Such borrowings are expected to continue in
future fiscal years. To meet its cash flow needs in the 1994-95 fiscal year
the State issued, in July and August 1994, $4.0 billion of revenue
anticipation warrants which mature on April 25, 1996, and $3.0 billion of
revenue anticipation notes which matured on June 28, 1995.
The State issued $3.0 billion of revenue anticipation notes for 1996-97
fiscal year end on August 7, 1996, which matured on June 30, 1997.
As a result of the deterioration in the State's budget and cash
situation, the rating agencies reduced the State's credit ratings. Between
October 1991 and July 1994, the rating on the State's general obligation
bonds was reduced by S&P from "AAA" to "A," by Moody's from "Aaa" to "A1"
and by Fitch from "AAA" to "A."
The 1996-97 Fiscal Year Budget projects $47.6 billion of General Fund
revenues and transfers and $47.3 billion of budgeted expenditures.
It projects $50.7 billion of General Fund revenues and transfers and
$50.3 billion of budgeted expenditures and projects a balance in the SEFU of
$552 million on June 30, 1998.
The 1997-98 Fiscal Year Budget was released by the Governor on January
9, 1997.
On December 6, 1994, Orange County, California (the "County"), together
with its pooled investment funds (the "County Funds") filed for protection
under Chapter 9 of the Federal Bankruptcy Code, after reports that the County
Funds had suffered significant market losses in their investments, causing a
liquidity crisis for the County Funds and the County. More than 200 other
public entities, most of which, but not all, are located in the County, were
also depositors in the Funds. As of mid-January 1995, following a
restructuring of most of the Funds' assets to increase their liquidity and
reduce their exposure to interest rate increases, the County estimated the
County Funds' loss at about $1.69 billion, or about 23% of their initial
deposits of approximately $7.5 billion. Many of the entities which deposited
monies in the Funds, including the County, are facing cash flow difficulties
because of the bankruptcy filing and may be required to reduce programs or
capital projects. This may also effect their ability to meet there
outstanding obligations.
The State has no existing obligation with respect to any outstanding
obligations or securities of the County or any of the other participating
entities. However, in the event the County is unable to maintain county
administered State programs because of insufficient resources, it may be
necessary for the State to intervene, but the State cannot presently predict
what, if any, action may occur.
State Finances. State moneys are segregated into the General Fund and
approximately 800 Special Funds including, Bond, Trust and Pension Funds.
The General Fund consists of the revenues received into the State Treasury
and earnings from State investments, which are not required by law to be
credited to any other fund. The General Fund is the principal operating
fund for the majority of governmental activities and is the depository of
most major State revenue sources.
The SFEU is funded with General Fund revenues and was established to
protect the State from unforeseen reduced levels of revenues and/or
unanticipated expenditure increases. Amounts in the SFEU may be transferred
by the Controller as necessary to meet cash needs of the General Fund. The
Controller is required to return moneys so transferred without payment of
interest as soon as there are sufficient moneys in the General Fund. 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 Controller is required to add the balance in the SFEU to the
balance in the General Fund so as to show the total monies then available
for General Fund purposes.
Inter-fund borrowing has been used for many years to meet temporary
imbalances of receipts and disbursements in the General Fund. As of June
30, 1996, the General Fund had outstanding loans from the SFEU and Special
Funds in the amount of $1.5 billion.
Articles XIIIA and XIIIB. XIIC and XIIID to the State Constitution and
Other Revenue Law Changes. Prior to 1977, revenues of the State government
experienced significant growth primarily as a result of inflation and
continuous expansion of the tax base of the State. In 1978, State voters
approved an amendment to the State Constitution known as Proposition 13,
which added Article XIIIA to the State Constitution, reducing ad valorem
local property taxes by more than 50%. In addition, Article XIIIA provides
that additional taxes may be levied by cities, counties and special
districts only upon approval of not less than a two-thirds vote of the
"qualified electors" of such district, and requires not less than a two-
thirds vote of each of the two houses of the State Legislature to enact any
changes in State taxes for the purpose of increasing revenues, whether by
increased rate or changes in methods of computation.
Primarily as a result of the reductions in local property tax revenues
received by local governments following the passage of Proposition 13, the
Legislature undertook to provide assistance to such governments by
substantially increasing expenditures from the General Fund for that purpose
beginning in the 1978-79 fiscal year. In recent years, in addition to such
increased expenditures, the indexing of personal income tax rates (to adjust
such rates for the effects of inflation), the elimination of certain
inheritance and gift taxes and the increase of exemption levels for certain
other such taxes had a moderating impact on the growth in State revenues.
In addition, the State has increased expenditures by providing a variety of
tax credits, including renters' and senior citizens' credits and energy
credits.
The State is subject to an annual "appropriations limit" imposed by
Article XIIIB of the State Constitution adopted in 1979. Article XIIIB
prohibits the State from spending "appropriations subject to limitation" in
excess of the appropriations limit imposed. "Appropriations subject to
limitations" 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 such entity in providing the regulation,
product or service." One of the exclusions from these limitations is "debt
service" (defined as "appropriations required to pay the cost of interest
and redemption charges, including the funding of any reserve or sinking fund
required in connection therewith, on indebtedness existing or legally
authorized as of January 1, 1979 or on bonded indebtedness thereafter
approved" by the voters). In addition, appropriations required to comply
with mandates of courts or the Federal government and, pursuant to
Proposition 111 enacted in June 1990, appropriations for qualified capital
outlay projects and appropriations of revenues derived from any increase in
gasoline taxes and motor vehicle weight fees above January 1, 1990 levels
are not included as appropriations subject to limitation. In addition, a
number of recent initiatives were structured or proposed to create new tax
revenues dedicated to certain specific uses, with such new taxes expressly
exempted from the Article XIIIB limits (e.g., increased cigarette and
tobacco taxes enacted by Proposition 99 in 1988). The appropriations limit
also may be exceeded in cases of emergency. However, unless the emergency
arises from civil disturbance or natural disaster declared by the Governor,
and the appropriations are approved by two-thirds of the Legislature, the
appropriations limit for the next three years must be reduced by the amount
of the excess.
The State's appropriations limit in each year is based on the limit for
the prior year, adjusted annually for changes in California 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. As
amended by Proposition 111, the appropriations limit is tested over
consecutive two-year periods. Any excess of the aggregate "proceeds of
taxes" received over such two-year periods above the combined appropriations
limits for those two years is divided equally between transfers to
K-14 districts and refunds to taxpayers.
As originally enacted in 1979, the State's appropriations limit was
based on its 1978-79 fiscal year authorizations to expend proceeds of taxes
and was adjusted annually to reflect changes in cost of living and
population (using different definitions, which were modified by Proposition
111). Commencing with the 1991-92 fiscal year, the State's appropriations
limit is adjusted annually based on the actual 1986-87 limit, and as if
Proposition 111 had been in effect. The State Legislature has enacted
legislation to implement Article XIIIB which defines certain terms used in
Article XIIIB and sets forth the methods for determining the State's
appropriations limit. Government Code Section 7912 requires an estimate of
the State's 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.
For the 1993-94 fiscal year, the State appropriations limit was $36.60
billion, and appropriations subject to limitation were $6.55 billion under
the limit. The limit for the 1994-95 fiscal year was $37.55 billion, and
appropriations subject to limitations were $5.93 billion under the limit.
The limit for the 1992 fiscal year was $39.31 billion, and the
appropriations subject to limitation were estimated to be $5.12 billion
under the limit. The limit for the 1996-97 fiscal year was $42 billion, and
the appropriations subject to limitation were estimated to be $7.12 billion
under the limit.
In November 1988, State voters approved Proposition 98, which changed
State funding of public education below the university level and the
operation of the State's 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 in June 1990), K-14
schools are guaranteed the greater of (a) 40.3% 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 XIIIB by
reference to California per capita personal income) and enrollment ("Test
2"), or (c) a third test, which would replace the second test in any year
when the percentage growth in per capita General Fund revenues from the
prior year plus .5% is less than the percentage growth in California 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.
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. In the fall of 1989, the
Legislature and the Governor utilized this provision to avoid having 40.3%
of revenues generated by a special supplemental sales tax enacted for
earthquake relief go to K-14 schools. Proposition 98 also contains
provisions transferring certain State tax revenues in excess of the Article
XIIIB limit to K-14 schools.
The 1991-92 Budget Act, applying "Test 2" of Proposition 98,
appropriated approximately $18.4 billion for K-14 schools pursuant to
Proposition 98. During the course of the fiscal year, revenues proved to be
substantially below expectations. By the time the Governor's Budget was
introduced in January 1992, it became clear that per capita growth in
General Fund revenues for 1991-92 would be far smaller than the growth in
California per capita personal income and the Governor's Budget therefore
reflected a reduction in Proposition 98 funding in 1991-92 by applying "Test
3" rather than "Test 2."
In response to the changing revenue situation and to fully fund the
Proposition 98 guarantee in both the 1991-92 and 1992-93 fiscal years
without exceeding it, the Legislature enacted several bills as part of the
1992-93 budget package which responded to the fiscal crisis in education
funding. Fiscal year 1991-92 Proposition 98 appropriations for K-14 schools
were reduced by $1.083 billion. In order to not adversely impact cash
received by school districts, however, a short-term loan was appropriated
from the non-Proposition 98 State General Fund. The Legislature then
appropriated $16.6 billion to K-14 schools for 1992-93 (the minimum
guaranteed by Proposition 98), but designated $1.083 billion of this amount
to "repay" the prior year loan, thereby reducing cash outlays in 1992-93 by
that amount. In addition to reducing the 1991-92 fiscal year appropriations
for K-14 schools by $1.083 billion and converting the amount to a loan (the
"inter-year adjustment"), Chapter 703, Statutes of 1992 also made an
adjustment to "Test 1," based on the additional $1.2 billion of local
property taxes that were shifted to schools and community colleges. The
"Test 1" percentage changed from 40% to 37%. Additionally, Chapter 703
contained a provision that if an appellate court should determine that the
"Test 1" recalculation or the inter-year adjustment is unconstitutional,
unenforceable or invalid, Proposition 98 would be suspended for the 1992-93
fiscal year, with the result that K-14 schools would receive the amount
intended by the 1992-93 Budget Act compromise.
The State Controller stated in October 1992 that, because of a drafting
error in Chapter 703, he could not implement the $1.083 billion reduction of
the 1991-92 school funding appropriation, which was part of the inter-year
adjustment. The Legislature untimely enacted corrective legislation as part
of the 1993-94 Budget package to implement the $1.083 billion inter-year
adjustment as originally intended.
In the 1992-93 Budget Act, a new loan of $732 million was made to K-12
schools in order to maintain per-average daily attendance ("ADA") funding at
the same level as 1991-92, at $4,187. An additional loan of $241 million
was made to community college districts. These loans are to be repaid from
future Proposition 98 entitlements. (The teachers' organization lawsuit
also seeks to declare invalid the provision making the $732 million a loan
"repayable" from future years' Proposition 98 funds. Including both State
and local funds, and adjusting for the loans and repayments, on a cash
basis, total Proposition 98 K-12 funding in 1992-93 increased to $21.5
billion, 2.4% more than the amount in 1992-93 ($21.0 billion).
Based on revised State tax revenues and estimated decreased reported
pupil enrollment, the 1993-94 Budget Act projected that the 1992-93
Proposition 98 Budget Act appropriations of $16.6 billion exceeded a revised
minimum guarantee by $313 million. As a result, the 1993-94 Budget Act
reverted $25 million in 1992-93 appropriations to the General Fund.
Limiting the reversion to this amount ensures that per ADA funding for
general purposes will remain at the prior year level of $4,217 per pupil.
The 1993-94 Governor's Budget subsequently proposed deficiency funding of
$121 million for school apportionments and special education, increasing
funding per pupil in 1992-93 to $4,244. The 1993-94 Budget Act also
designated $98 million in 1992-93 appropriations toward satisfying prior
years' guarantee levels, an obligation that resulted primarily from updating
State tax revenues for 1991-92, and designates $190 million as a loan
repayable from 1993-94 funding.
The 1993-94 Budget Act projected the Proposition 98 minimum funding
level at $13.5 billion based on the "Test 3" calculation where the guarantee
is determined by the change in per capita growth in General Fund revenues,
which are projected to decrease on a year-over-year basis. This amount also
takes into account increased property taxes transferred to school districts
from other local governments.
Legislation accompanying the 1993-94 Budget Act (Chapter 66/93)
provided a new loan of $609 million to K-12 schools in order to maintain per
ADA funding at $4,217 and a loan of $178 million to community colleges.
These loans have been combined with the K-14 1992-93 loans into one loan
totaling $1.760 billion. Repayment of this loan would be from future years'
Proposition 98 entitlements, and would be conditioned on maintaining current
funding levels per pupil for K-12 schools. Chapter 66 also reduced the
"Test 1" percentage to 35% to reflect the property tax shift among local
government agencies.
The 1994-95 Budget Act appropriated $14.4 billion of Proposition 98
funds for K14 schools based on Test 2. This exceeds the minimum Proposition
98 guarantee by $8 million to maintain K-12 funding per pupil at $4,217.
Based upon updated State revenues, growth rates and inflation factors, the
1994-95 Budget Act appropriated an additional $286 million within
Proposition 98 for the 1993-94 fiscal year, to reflect a need in
appropriations for school districts and county offices of education, as well
as an anticipated deficiency in special education fundings. These and other
minor appropriation adjustments increase the 1993-94 Proposition 98
guarantee to $13.8 billion, which exceeds the minimum guarantee in that year
by $272 million and provides per pupil funding of $4,225.
The 1995-96 Governor's Budget adjusts the 1993-94 minimum guarantee to
reflect changes in enrollment and inflation, and 1993-94 Proposition 98
appropriations were increased to $14.1 billion, primarily to reflect changes
in the statutory continuous appropriation for apportionments. The revised
appropriations now exceed the minimum guarantee by $32 million. This
appropriation level still provides per-pupil funding of $4,225.
The 1994-95 Proposition 98 minimum guarantee also has been adjusted for
changes in factors described above, and is now calculated to be $14.9
billion. Within the minimum guarantee, the dollars per pupil have been
maintained at the prior year's level; consequently, the 1994-95 minimum
guarantee now includes a loan repayment of $135 million, and the per-pupil
funding increases to $4,231.
The 1995-96 Governor's Budget proposes to appropriate $15.9 billion of
Proposition 98 funds to K-14 to meet the guarantee level. Included within
the guarantee is a loan repayment of $379 million for the combined
outstanding loans of $1.76 billion. Funding per pupil is estimated to
increase by $61 over 1994-95 to $4,292.
In November 1996, State voters approved Proposition 218, which added
Articles XIIIC and XIIID to the State Constitution generally requiring voter
approval of most tax or fee increases by local governments and curtailing
local governments' use of benefit assessments to fund certain property-
related services to finance infrastructure. The amendments extend to all
local government entities the requirement that all taxes for general
purposes be approved by a majority vote and that all taxes for special
purposes be approved by a two-thirds majority vote (including the
ratification of those taxes that have been imposed since January 1, 1995 up
to the effective date of the amendments). Proposition 218 also limits the
use of special assessments or "property-related" fees to services or
infrastructure that confer a "special benefit" to specific property; police,
fire and other services are now deemed to benefit the public at large and,
therefore, could not be funded by special assessments. Finally, the
amendments enable the voters to use their initiative power to repeal
previously-authorized taxes, assessments, fees and charges. It remains to
be seen what impact these Articles will have on existing and future
California debt obligations.
Sources of Tax Revenue. The California personal income tax, which in
1994-95 contributed about 43% of General Fund revenues, is closely modeled
after the Federal income tax law. It is imposed on net taxable income
(gross income less exclusions and deductions). The tax is progressive with
rates ranging from 1% to 9.3%. Personal, dependent, and other credits are
allowed against the gross tax liability. In addition, taxpayers may be
subject to an alternative minimum tax ("AMT") which is much like the Federal
AMT. This is designed to ensure that excessive use of tax preferences does
not reduce taxpayers' liabilities below some minimum level. Legislation
enacted in July 1991 added two new marginal tax rates, at 10% and 11%,
effective for tax years 1991 through 1995. After 1995, the maximum personal
income tax rate returned to 9.3%, and the AMT rate dropped from 8.5% to 7%.
The personal income tax is adjusted annually by the change in the
consumer price index to prevent taxpayers from being pushed into higher tax
brackets without a real increase in income.
The sales tax is imposed upon retailers for the privilege of selling
tangible personal property in California. Most retail sales and leases are
subject to the tax. However, exemptions have been provided for certain
essentials such as food for home consumption, prescription drugs, gas,
electricity and water. Sales tax accounted for about 34% of General Fund
revenue in 1994-95. Bank and corporation tax revenues comprised about 13%
of General Fund revenue in 1994-95. In 1989, Proposition 99 added a 25
cents per pack excise tax on cigarettes, and a new equivalent excise tax on
other tobacco products. Legislation enacted in 1993 added an additional 2
cents per pack for the purpose of funding breast cancer research.
General Financial Condition of the State. In the years following
enactment of the Federal Tax Reform Act of 1986, and conforming changes to
the State's tax laws, taxpayer behavior became more difficult to predict,
and the State experienced a series of fiscal years in which revenue came in
significantly higher or lower than original estimates. The 1989-90 fiscal
year ended with revenues below estimates and the SFEU was fully depleted by
June 30, 1990. This date essentially coincided with the date of the most
recent recession, and the State subsequently accumulated a budget deficit in
the SFEU approaching $2.8 billion at its peak. The State's budget problems
in recent years also have been caused by a structural imbalance which has
been identified by the current and previous Administrations. The largest
General Fund programs -- K-14 education, health, welfare and corrections --
were increasing faster than the revenue base, driven by the State's rapid
population increases.
Starting in the 1990-91 fiscal year, each budget required multibillion
dollar actions to bring projected revenues and expenditures into balance and
to close large "budget gaps" which were identified. The Legislature and
Governor eventually agreed on significant cuts in program expenditures, some
transfers of program responsibilities and funding from the State to local
governments, revenue increases (particularly in the 1991-92 fiscal year
budget), and various one-time adjustments and accounting changes. However,
as the recession took hold and deepened after the summer of 1990, revenues
dropped sharply and expenditures for health and welfare programs increased
as job losses mounted, so that the State ended each of the 1990-91 and 1991-
92 fiscal years with an unanticipated deficit in the budget reserve, the
SFEU, as compared to projected positive balances.
As a result of the revenue shortfalls accumulating for the previous two
fiscal years, the Controller in April 1992 indicated that cash resources
(including borrowing from Special Funds) would not be sufficient to meet all
General Fund obligations due on June 30 and July 1, 1992. On June 25, 1992,
the Controller issued $475 million of 1992 Revenue Anticipation Warrants
(the "1992 Warrants") in order to provide funds to cover all necessary
payments from the General Fund at the end of the 1991-92 fiscal year and on
July 1, 1992. The 1992 Warrants were paid on July 24, 1992. In addition to
the 1992 Warrants, the Controller reported that as of June 30, 1992, the
General Fund had borrowed $1.336 billion from the SFEU and $4.699 billion
from other Special Funds, using all but about $183 million of borrowable
cash resources.
To balance the 1992-93 Governor's Budget, program reductions totaling
$4.365 billion and a revenue and transfer increase of $872 million were
proposed for the 1991-92 and 1992-93 fiscal years. Economic performance in
the State continued to be sluggish after the 1992-93 Governor's Budget was
prepared. By the time of the "May Revision," issued on May 20, 1992, the
Administration estimated that the 1992-93 Budget needed to address a gap of
about $7.9 billion, much of which was needed to repay the accumulated budget
deficits of the previous two years.
The severity of the budget actions needed led to a long delay in
adopting the budget. With the failure to enact a budget by July 1, 1992,
the State had no legal authority to pay many of its vendors until the budget
was passed. Starting on July 1, 1992, the Controller was required to issue
"registered warrants" in lieu of normal warrants backed by cash to pay many
State obligations. Available cash was used to pay constitutionally mandated
and priority obligations, such as debt service on bonds and revenue
anticipation warrants. Between July 1 and September 4, 1992, the Controller
issued an aggregate of approximately $3.8 billion of registered warrants
payable from the General Fund, all of which were called for redemption by
September 4, 1992 following enactment of the 1992-93 Budget Act and issuance
by the State of $3.3 billion of interim notes.
The Legislature enacted the 1992-93 Budget Bill on August 29, 1992, and
it was signed by the Governor on September 2, 1992. The 1992-93 Budget Act
provided for expenditures of $57.4 billion and consisted of General Fund
expenditures of $40.8 billion and Special Fund and Bond Fund expenditures of
$16.6 billion. The Department of Finance estimated a balance in the SFEU of
$28 million on June 30, 1993.
The $7.9 billion budget gap was closed primarily through cuts in the
program expenditures (principally for health and welfare programs, aid to
schools and support for higher education), together with some increases in
revenues from accelerated collections and changes in tax laws to confirm to
Federal law changes, and a variety of on-time inter-fund transfers and
deferrals. The other major component of the budget compromise was a law
requiring local governments to transfer a total of $1.3 billion to K-12
school and community college districts, thereby reducing by that amount
General Fund support for those districts under Proposition 98.
In May 1993, the Department of Finance projected that the General Fund
would end the fiscal year on June 30, 1993 with an accumulated budget
deficit of about $2.8 billion, and a negative fund balance of about $2.2
billion (the difference being certain reserves for encumbrances and school
funding costs). As a result, the State issued $5 billion of revenue
anticipation notes and warrants.
The Governor's 1993-94 Budget, introduced on January 8, 1993, proposed
General Fund expenditures of $37.3 billion, with projected revenues of $39.9
billion. It also proposed Special Fund expenditures of $12.4 billion and
Special Fund revenues of $12.1 billion. The 1993-94 fiscal year represented
the third consecutive year the Governor and the Legislature were faced with
a very difficult budget environment, requiring revenue actions and
expenditure cuts totaling billions of dollars to produce a balanced budget.
To balance the budget in the face of declining revenues, the Governor
proposed a series of revenue shifts from local government, reliance on
increased Federal aid and reductions in state spending.
The "May Revision" of the Governor's Budget, released on May 20, 1993,
indicated that the revenue projections of the January Budget Proposal were
tracking well, with the full year 1992-93 about $80 million higher than the
January projection. Personal income tax revenue was higher than projected,
sales tax was close to target, and bank and corporation taxes were lagging
behind projections. The May Revision projected the State would have an
accumulated deficit of about $2.75 billion by June 30, 1993. The Governor
proposed to eliminate this deficit over an 18-month period. He also agreed
to retain the 0.5% sales tax scheduled to expire June 30 for a six-month
period, dedicated to local public safety purposes, with a November election
to determine a permanent extension. Unlike previous years, the Governor's
Budget and May Revision did not calculate a "gap" to be closed, but rather
set forth revenue and expenditure forecasts and proposals designed to
produce a balanced budget.
The 1993-94 Budget Act was signed by the Governor on June 30, 1993,
along with implementing legislation. The Governor vetoed about $71 million
in spending. With enactment of the Budget Act, the State carried out its
regular cash flow borrowing program for the fiscal year, which included the
issuance of approximately $2 billion of revenue anticipation notes that
matured on June 28, 1994.
The 1993-94 Budget Act was predicated on General Fund revenues and
transfers estimated at $40.6 billion, about $700 million higher than the
January Governor's Budget, but still about $400 million below 1992-93 (and
the second consecutive year of actual decline). The principal reasons for
declining revenues were the continued weak economy and the expiration (or
repeal) of three fiscal steps taken in 1991--a half cent temporary sales
tax, a deferral of operating loss carry forwards, and repeal by initiative
of a sales tax on candy and snack foods.
The 1993-94 Budget Act also assumed Special Fund revenues of $11.9
billion, an increase of 2.9% over 1992-93.
The 1993-94 Budget Act included General Fund expenditures of $38.5
billion (a 6.3% reduction from projected 1992-93 expenditures of $41.1
billion), in order to keep a balanced budget within the available revenues.
The Budget also included Special Fund expenditures of $12.1 billion, a 4.2%
increase.
The 1993-94 Budget Act contained no General Fund tax/revenue increases
other than a two year suspension of the renters' tax credit.
Administration reports during the course of the 1993-94 fiscal year
indicated that while economic recovery appeared to have started in the
second half of the fiscal year, recessionary conditions continued longer
than had been anticipated when the 1993-94 Budget Act was adopted. Overall,
revenues for the 1993-94 fiscal year were about $800 million lower than
original projections, and expenditures were about $780 million higher,
primarily because of higher health and welfare caseloads, lower property
taxes which require greater State support for K-14 education to make up to
shortfall, and lower than anticipated Federal government payments for
immigration-related costs. The reports in May and June 1994, indicated that
revenues in the second half of the 1993-94 fiscal year were very close to
the projections made in the Governor's Budget of January 10, 1994, which was
consistent with a slow turn around in the economy.
The Department of Finance's July 1994 Bulletin, which included final
June receipts, reported that June revenues were $114 million (2.5%) above
projection, with final end-of-year results at $377 million (about 1%) above
the May Revision projections. Part of this result was due to the end-of-
year adjustments and reconciliations. Personal income tax and sales tax
continued to track projections. The largest factor in the higher than
anticipated revenues was from bank and corporation taxes, which were $140
million (18.4%) above projection in June.
During the 1993-94 fiscal year, the State implemented the Deficit
Retirement Plan, which was part of the 1993-94 Budget Act, by issuing $1.2
billion of revenue anticipation warrants in February 1994 that matured
December 21, 1994. This borrowing reduced the cash deficit at the end of the
1993-94 fiscal year. Nevertheless, because of the $1.5 billion variance
from the original 1993-94 Budget Act assumptions, the General Fund ended the
fiscal year at June 30, 1994 carrying forward an accumulated deficit of
approximately $1.8 billion.
Because of the revenue shortfall and the State's reduced internal
borrowable cash resources, in addition to the $1.2 billion of revenue
anticipation warrants issued as part of the Deficit Retirement Plan, the
State issued an additional $2.0 billion of revenue anticipation warrants
that matured July 26, 1994, which were needed to fund the State's
obligations and expenses through the end of the 1993-94 fiscal year.
The 1994-95 fiscal year represented the fourth consecutive year the
Governor and Legislature were faced with a very difficult budget environment
to produce a balanced budget. Many program cost and budgetary adjustments
had already been made in the last three years. The Governor's Budget
Proposal, as updated in May and June 1994, proposed a two-year solution to
pass the accumulated deficit. The budget proposal set forth revenue and
expenditure forecasts and revenue and expenditure proposals which estimated
operating surpluses for the budget for both 1994-95 and 1995-96, and lead to
the elimination of the accumulated budget deficit, estimated at about $1.8
billion at June 30, 1994, by June 30, 1996.
The 1994-95 Budget Act, signed by the Governor on July 8, 1994,
projected revenues and transfers of $41.9 billion, $2.1 billion higher than
revenues in 1993-94. This reflected the Administration's forecast of an
improving economy. Also included in this figure was the projected receipt
of about $360 million from the Federal government to reimburse the State's
cost of incarcerating undocumented immigrants, most of which eventually was
not received.
The 1994-95 Budget Act projected Special Fund revenues of $12.1
billion, a decrease of 2.4% from 1993-94 estimated revenues.
The 1994-95 Budget Act projected General Fund expenditures of $40.9
billion, an increase of $1.6 billion over the 1993-94 fiscal year. The 1994-
95 Budget Act also projected Special Fund expenditures of $13.7 billion, a
5.4% increase over 1993-94 fiscal year estimated expenditures.
The 1994-95 Budget Act contained no tax increases. Under legislation
enacted for the 1993-94 Budget Act, the renters' tax credit was suspended
for two years (1993 and 1994). A ballot proposition to permanently restore
the renters' tax credit after 1995 failed at the June 1994 election. The
Legislature enacted a further one-year suspension of the renters' tax
credit, for 1995, saving about $390 million in the 1995-96 fiscal year.
The 1995-96 Budget Act was signed by the Governor on August 3, 1995, 34
days after the start of the fiscal year. The Budget Act projected General
Fund revenues and transfers of $44.1 billion, a 3.5% increase from the prior
year. Expenditures were budgeted at $43.4 billion, a 4% increase. The
Budget Act also projected Special Fund revenues of $12.7 billion and
appropriated Special Fund expenditures of $13.0 billion.
Final data for the 1995-96 Fiscal Year showed revenues and transfers of
$46.1 billion, some $2 billion over the original fiscal year estimate, which
was attributed to the strong economic recovery. Expenditures also
increased, to an estimated $45.4 billion, as a result of the requirement to
expend revenues for schools under Proposition 98, and among other things,
failure of the federal government to enact welfare reform during the fiscal
year and to budget new aid for illegal immigrant costs, both of which had
been counted on to allow reductions in State costs. Available internal
borrowable resources (available cash, after payment of all obligations due)
on June 30, 1996 was approximately $3.8 billion, representing a significant
improvement in the State's cash position, and ending the need for deficit
borrowing over the end of the fiscal year. The State's improved cash
position allowed it to repay the $4.0 billion Revenue Anticipation Warrant
issue on April 25, 1996, and to issue only $2.0 billion in revenue
anticipation notes during the fiscal year, which matured on June 28, 1996.
The 1996-97 Budget Act was signed by the Governor on July 15, 1996,
along with various implementing bills. The Governor vetoed about $82
million of appropriations (both General Fund and Special Fund). With the
signing of the Budget Act, the State implemented its regular cash flow
borrowing program with the issuance of $3.0 billion of Revenue Anticipation
Notes to mature on June 30, 1997. The Budget Act appropriated a modest
budget reserve in the SFEU of $305 million, as of June 30, 1997. The
Department of Finance projected that, on June 30, 1997, the State's
available internal borrowable (cash) resources will be $2.9 billion, and
after payment of all obligations due by that date, so that no cross-fiscal
year borrowing will be needed.
The Legislature rejected the Governor's proposed 15% cut in personal
income taxes (to be phased in over three years), and did not approve a 5%
cut in bank and corporation taxes, which was to be effective for income
years starting on January 1, 1997. As a result, revenues for the fiscal
year were estimated to total $47.64 billion, a 3.3% increase over the final
estimated 1995-96 revenues. Special Fund revenues were estimated to be
$13.3 billion.
The Budget Act contained General Fund appropriations totaling $47.25
billion, a 4.0% increase over the final estimated 1995-96 expenditures.
Special Fund expenditures were budgeted at $12.6 billion.
With the continued strong economic recovery in the State, the
Department of Finance has estimated, in connection with the release of the
Governor's 1997-98 Budget Proposal, that revenues for the 1996-97 fiscal
year will exceed initial projections by about $760 million. This increase
will be offset by higher expenditures for K-14 school aid (pursuant to
Proposition 98) and for health and welfare costs, because Federal law
changes and other Federal actions did not provide as much assistance to the
State as was initially planned in the Budget Act. The Department's updated
projections show a balance in the SFEU of $197 million, slightly lower than
projected in July 1996. The Department also projects the State's cash
position will be stronger than originally estimated, with unused internal
borrowable resources at June 30, 1997 of approximately $4.3 billion.
[TO BE UPDATED]
APPENDIX D
INVESTING IN MINNESOTA MUNICIPAL OBLIGATIONS
RISK FACTORS -- INVESTING IN MINNESOTA MUNICIPAL OBLIGATIONS
State Government. The State of Minnesota was formally organized as a
territory in 1849 and was admitted to the Union in 1858 as the 32nd state.
Bordered by Canada on the north, Lake Superior and Wisconsin on the east,
Iowa on the south, and North and South Dakota on the west, it is the 12th
largest and 20th most populous state in the Union.
The Minnesota Constitution organizes State government into three
branches: Executive, Legislative and Judicial. The Legislative Branch is
composed of a Senate and a House of Representatives. Fiscal administration
is performed by the Department of Finance under the control and supervision
of the Commissioner of Finance.
State and State-Related Indebtedness. The Minnesota Constitution
authorizes public debt to be incurred for the acquisition and betterment of
public land, buildings and other improvements of a capital nature or for
appropriations or loans to Minnesota state agencies or political
subdivisions for this purpose, as the Legislature by the three-fifths vote
of each House may direct, and to finance the development of agricultural
resources of the State by extending credit on real estate security, as the
Legislature may direct. All such debt is evidenced by the issuance of State
of Minnesota bonds maturing within 20 years of their date of issue, for
which the full faith and credit and taxing powers of the State are
irrevocably pledged. There is no limitation as to the amount or interest
rate of such general obligation issues.
As of August 1, 1997, the outstanding principal amount of all Minnesota
general obligation bonds was approximately $2.2 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
May, 1995, end of the first special 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, 1995 and ends June 30, 1997. 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. A more recent
cash flow analysis is not available. The Department of Finance is in the
process of developing a new cash flow forecasting model and expects to do
its next cash flow analysis in connection with the November, 1996 revenue
and expenditure forecast.
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 $270 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, total revenues are estimated
to be approximately $9.237 billion. Total expenditures and transfers are
estimated at $9.363 billion and after deducting a Cash Flow Account
appropriations carry forward of $350 million and a Budget Reserve Account
carry forward of $220 million, it is estimated that an Unrestricted
Accounting General Fund balance of $324 million will remain.
For the fiscal year ended June 30, 1997, total revenues are estimated
to have been approximately $9.215 billion. Total expenditures and transfers
are estimated at $9.488 billion and after deducting a Cash Flow Account
appropriations carry forward of $350 million and a Budget Reserve Account
carry forward of $270 million, it is estimated that an Unrestricted
Accounting General Fund balance of $1.025 million will remain.
As of February 1997 total revenues for the next biennium, which begins
on July 1, 1997 and ends on June 30, 1999, are estimated to be approximately
$10.163 billion for fiscal year 1998 and $10.589 billion for fiscal year
1999. Further revenue estimates for the next biennium will be available in
the middle part of June 1997.
In 1992 the Minnesota Legislature established the MinnesotaCarer
program to provide subsidized health care insurance for long-term uninsured
Minnesotans, reform individual and small group health insurance regulations,
create a health care analysis unit to collect condition-specific data about
health care practices in order to develop practice parameters for health
care providers, implement certain cost containment measures into the system,
and establish an office of rural health to ensure the health care needs of
all Minnesotans are being met. The program is not part of the Accounting
General Fund. A separate account, called the Health Care Access Fund, has
been established in Minnesota's Special Reserve Fund to account for revenues
and expenditures for the MinnesotaCarer program. Program expenditures are
limited to revenues received in the Health Care Access Fund. Program
revenues are derived from dedication of insurance premiums paid by
individuals, five cents of the state cigarette tax through December 31,
1993, and permanent taxes including a 2% gross revenue tax on hospitals,
health care providers and wholesale drug distributors, a 2% use tax on
prescription drugs and a 1% gross premium tax on nonprofit health service
plans and HMOs. A previously required transfer from the Health Care Access
Fund to the Accounting General Fund was eliminated after Fiscal year 1995.
The purpose of the transfer was to pay for increased costs in the generally
funded Medicaid (MA) and General Assistance Medical Care (GAMC) programs,
due to applicants found ineligible for MinnesotaCarer, but qualifying for MA
or GAMC.
The 1993 Legislature adopted legislation establishing a school district
credit enhancement program. The legislation authorizes and directs the
Commissioner of Finance, under certain circumstances and subject to the
availability of funds, to issue a warrant and authorize the Commissioner of
Children, Families and Learning to pay debt service coming due on school
district tax and state-aid anticipation certificates of indebtedness and
school district general obligation bonds in the event that the school
district notifies the Commissioner of Children, Families and Learning that
it does not have sufficient money in its debt service fund for that purpose,
or the paying agent informs the Commissioner of Children, Families and
Learning that it has not received from the school district timely payment of
moneys to be used to pay debt service. The legislation appropriates
annually from the Accounting General Fund to the Commissioner of Children,
Families and Learning the amount needed to pay any warrants which are
issued. The amounts paid on behalf of any school district are required to
be repaid by it with interest, either through a reduction of subsequent
state-aid payments or by the levy of an ad valorem tax which may be made
with the approval of the Commissioner of Children, Families and Learning.
As of October l, 1996, there were approximately $190 million of certificates
of indebtedness enrolled in the program, all of which will mature before the
end of the 1997 calendar year. 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 in 1998 and will
enroll these certificates in the program in about the same amount of
principle as 1997.
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,
1996 there are approximately $12 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, 1996, 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 $3.5 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 1995 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 1995, approximately 29.0% of Minnesota's non-durable goods
employment was concentrated in food and kindred industries, and
approximately 18.8% in paper and allied industries. This compares to
approximately 21.7% and 8.9%, 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 formerly. Mining employment, primarily in the iron ore or taconite
industry, dropped from 17.3 per thousand in 1979 to 7.9 per thousand in
1995. 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.
Job expansion and business start-ups improved remarkably in this decade
with an average rate for new businesses at 2%, while business dissolutions
were on the decline.
Finally, despite a state economy that is outperforming the national
economy, the future economic outlook is guarded primarily because the growth
of the health care industry has slowed significantly and the mainframe
computer and airline industries face continued softness.
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 1990-1995
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 1995, non-farm employment growth in Minnesota exceeded national
growth. Minnesota's non-farm employment grew 11.5% compared to 6.6%
nationwide.
Since 1980, Minnesota per capita personal income has been within three
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 1994, Minnesota per capita personal income was 103.0% of
its U.S. counterpart.
Another measure of the vitality of Minnesota's economy is its
unemployment rate. During 1994 and 1995, respectively, Minnesota's monthly
unemployment rate was generally less than the national unemployment rate,
averaging 3.6% in 1995, as compared to the national average of 5.2%.
[TO BE UPDATED]
APPENDIX E
INVESTING IN NEW YORK MUNICIPAL OBLIGATIONS
RISK FACTORS--INVESTING IN NEW YORK MUNICIPAL OBLIGATIONS
The financial condition of New York State (the "State") and certain of
its public bodies (the "Agencies") and municipalities, particularly New York
City (the "City"), could affect the market values and marketability of New
York Municipal Obligations which may be held by the Fund. The following
information constitutes only a brief summary, does not purport to be a
complete description, and is based on information drawn from official
statements relating to securities offerings of the State, the City and the
Municipal Assistance Corporation for the City of New York ("MAC") available
as of the date of this Statement of Additional Information. While the Fund
has not independently verified such information, it has no reason to believe
that such information is not correct in all material respects.
A national recession commenced in mid-1990. The downturn continued
through the remainder of the 1990-91 fiscal year, and was followed by a
period of weak economic growth during the remainder of the 1991 calendar
year. For the calendar year 1992, the national economy continued to
recover, although at a rate below all post-war recoveries. The recession
was more severe in the State than in other parts of the nation, owing to a
significant retrenchment in the financial services industry, cutbacks in
defense spending, and an overbuilt real estate market. The State economy
remained in recession until 1993, when employment growth resumed. Since
early 1993, the State has gained approximately 100,000 jobs. The State's
economy expanded modestly during 1995. Although industries that export
goods and services abroad are expected to benefit from the lower dollar,
growth will be slowed by government cutbacks at all levels. On an average
annual basis, employment growth in 1995 was estimated to be about the same
as 1994. Both personal income and wages were estimated to have recorded
moderate gains in 1995. Employment growth is expected to slow significantly
in 1996 as the pace of national economic growth slackens, entire industries
experience consolidations, and governmental employment continues to shrink.
Personal income is estimated to have increased by approximately 5.0% in
1996.
The State's budget for the 1996-97 fiscal year was enacted by the
Legislature on July 13, 1996, more than three months after the start of the
fiscal year. Prior to adoption of the budget, the Legislature enacted
appropriations for disbursements considered to be necessary for State
operations and other purposes, including all necessary appropriations for
debt service. The State Financial Plan for the 1996-97 fiscal year was
formulated on July 25, 1996 and is based on the State's budget as enacted by
the Legislature and signed into law by the Governor, as well as actual
results for the first quarter of the 1996-97 fiscal year.
After adjustments for comparability between fiscal years, the adopted
1996-97 budget projects a year-over-year increase in General Fund
disbursements of 0.2%. Adjusted State Funds (excluding Federal grants)
disbursements are projected to increase by 1.6% from the prior fiscal year.
All Governmental Funds projected disbursements increase by 4.1% over the
prior fiscal year, after adjustments for comparability.
The 1996-97 State Financial Plan is projected to be balanced on a cash
basis. As compared to the Governor's proposed budget as revised on March
20, 1996, the State's adopted budget for 1996-97 increases General Fund
spending by $842 million, primarily from increases for education, special
education and higher education ($563 million). The balance represents
funding increases to a variety of other programs, including community
projects and increased assistance to fiscally distressed cities. Resources
used to fund these additional expenditures include $540 million in increased
revenues projected for 1996-97 based on higher-than-projected tax
collections during the first half of calendar 1996, $110 million in
projected receipts from a new State tax amnesty program, and other resources
including certain non-recurring resources. The total amount of non-
recurring resources included in the 1996-97 State budget is projected to be
$1.3 billion, or 3.9% of total General Fund receipts.
The State revised the cash-basis 1996-97 State Financial Plan on
January 14, 1997, in conjunction with the release of the Executive Budget
for the 1997-98 fiscal year. The 1996-97 General Fund Financial Plan
continues to be balanced. The Division of the Budget projects that, prior
to taking the actions described below, the General Fund Financial Plan would
have shown an operating surplus of approximately $1.3 billion. These
actions include implementing reduced personal income tax withholding to
reflect the impact of tax reduction actions which took effect on January 1,
1997. The Financial Plan assumes the use of $250 million for this purpose.
In addition, $943 million is projected to be used to pay tax refunds during
the 1996-97 fiscal year or reserved to pay refunds during the 1997-98 fiscal
year, which produces a benefit for the 1997-98 Financial Plan. Finally, $65
million is projected to be deposited into the Tax Stabilization Reserve Fund
("TSRF") (in addition to the required deposit of $15 million), increasing
the cash balance in that fund to $317 million by the end of 1996-97.
The projected surplus results primarily from growth in the underlying
forecast for projected receipts. As compared to the enacted budget,
revenues are expected to increase by more than $1 billion, while
disbursements are expected to fall by $228 million. These changes from
original Financial Plan projections reflect actual results through December
1996 as well as modified economic and social services caseload projections
for the balance of the fiscal year. The General Funds closing balance is
expected to be $358 million at the end of 1996-97.
The 1997-98 Financial Plan projects balance on a cash basis in the
General Fund. It reflects a continuing strategy of substantially reduced
State spending, including program restructurings, reductions in social
welfare spending, and efficiency and productivity initiatives. Total
General Fund receipts and transfers from other funds are projected to be
$32.88 billion, a decrease of $88 million from total receipts projected in
the current fiscal year. Total General Fund disbursements and transfers to
other funds are projected to be
$32.84 billion, a decrease of $56 million from spending totals projected for
the current fiscal year.
The State Financial Plan was 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. Many uncertainties exist in forecasts of both the national and
State economies, including consumer attitudes toward spending, Federal
financial and monetary policies, the availability of credit 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
worse-than-predicted results, with corresponding material and adverse
effects on the State's projections of receipts and disbursements.
There can be no assurance that the State will not face substantial
potential budget gaps in future years resulting from a significant disparity
between tax revenues projected from a lower recurring receipts base and the
spending required to maintain State programs at current levels. To address
any potential budgetary imbalance, the State may need to take significant
actions to align recurring receipts and disbursements in future fiscal
years.
On June 6, 1990, Moody's changed its ratings on all the State's
outstanding general obligation bonds from A1 to A. On March 26, 1990 and
January 13, 1992, S&P changed its ratings on all of the State's outstanding
general obligation bonds from AA- to A and from A to A-, respectively. In
February 1991, Moody's lowered its rating on the City's general obligation
bonds from A to Baa1 and in July 1995, S&P lowered its rating on such bonds
from A- to BBB+. Ratings reflect only the respective views of such
organizations, and their concerns about the financial condition of New York
State and City, the debt load of the State and City and any economic
uncertainties about the region. There is no assurance that a particular
rating will continue for any given period of time or that any such rating
will not be revised downward or withdrawn entirely if, in the judgment of
the agency originally establishing the rating, circumstances so warrant.
(1) The State, Agencies and Other Municipalities. During the mid-
1970s, some of the Agencies and municipalities (in particular, the City)
faced extraordinary financial difficulties, which affected the State's own
financial condition. These events, including a default on short-term notes
issued by the New York State Urban Development Corporation ("UDC") in
February 1975, which default was cured shortly thereafter, and a
continuation of the financial difficulties of the City, created substantial
investor resistance to securities issued by the State and by some of its
municipalities and Agencies. For a time, in late 1975 and early 1976, these
difficulties resulted in a virtual closing of public credit markets for
State and many State related securities.
In response to the financial problems confronting it, the State
developed and implemented programs for its 1977 fiscal year that included
the adoption of a balanced budget on a cash basis (a deficit of $92 million
that actually resulted was financed by issuing notes that were paid during
the first quarter of the State's 1978 fiscal year). In addition,
legislation was enacted limiting the occurrence of additional so-called
"moral obligation" and certain other Agency debt, which legislation does
not, however, apply to MAC debt.
GAAP-Basis Projected Results--1996-97 Fiscal Year. For the 1996-97 fiscal
year, the General Fund GAAP Financial Plan is projected to show total
revenues of $33.04 billion, total expenditures of $32.92 billion, and net
other financing sources and uses of $771 million. The surplus of $886
million primarily reflects an increase in projected revenues.
GAAP-Basis Results--1995-96 Fiscal Year. The State completed its 1995-96
fiscal year with a combined Governmental Funds operating surplus of $432
million, which included an operating surplus in the General Fund of $380
million, in the Capital Projects Funds of $276 million and in the Debt
Service Funds of $185 million. There was an operating deficit of $409
million in the Special Revenue Funds. The State's Combined Balance Sheet as
of March 31, 1996 showed an accumulated deficit in its combined Governmental
Funds of $1.23 billion, reflecting liabilities of $14.59 billion and assets
of $13.35 billion. This accumulated Governmental Funds deficit includes a
$2.93 billion accumulated deficit in the General Fund and an accumulated
deficit of $712 million in the Capital Projects Fund type as partially
offset by accumulated surpluses of $468 million and $1.94 billion in the
Special Revenue and Debt Service Fund types, respectively.
GAAP-Basis Results--1994-95 Fiscal Year. The State's Combined Balance Sheet
as of March 31, 1995 showed an accumulated deficit in its combined
Governmental Funds of $1.666 billion reflecting liabilities of $14.778
billion and assets of $13.112 billion. This accumulated Governmental Funds
deficit includes a $3.308 billion accumulated deficit in the General Fund,
as well as accumulated surpluses in the special Revenue and Debt Service
Fund types of $877 million and $1.753 billion, respectively, and a $988
million accumulated deficit in the Capital Projects Fund type.
The State completed its 1994-95 fiscal year with a combined
Governmental Funds operating deficit of $1.791 billion, which included
operating deficits in the General Fund of $1.426 billion, in the Capital
Projects Funds of $366 million, and in the Debt Service Funds of $38
million. There was an operating surplus in the Special Revenue Funds of $39
million.
GAAP-Basis Results--1993-94 Fiscal Year. The State reported a General Fund
operating surplus of $914 million for the 1993-94 fiscal year, as compared
to an operating surplus of $2.065 billion for the prior fiscal year. The
1993-94 fiscal year surplus reflects several major factors, including the
cash basis surplus recorded in 1993-94, the use of $671 million of the 1992-
93 surplus to fund operating expenses in 1993-94, net proceeds of $575
million in bonds issued by the New York Local Government Assistance
Corporation ("LGAC") and the accumulation of a $265 million balance in the
Contingency Reserve Fund ("CRF"). Revenues increased $543 million (1.7%)
over prior fiscal year revenues with the largest increase occurring in
personal income taxes. Expenditures increased $1.659 billion (5.6%) over
the prior fiscal year, with the largest increase occurring in State aid for
social services programs.
The Special Revenue Fund and Debt Service Fund ended 1993-94 with
operating surpluses of $149 million and $23 million, respectively. The
Capital Projects Fund ended with an operating deficit of $35 million.
GAAP-Basis Results--1992-93 Fiscal Year. The State completed its 1992-93
fiscal year with a GAAP-basis operating surplus of $2.065 billion in the
General Fund and an accumulated deficit of $2.551 billion. The Combined
Statement of Revenues, Expenditures and Changes in Fund Balances reported
total revenues of $31.085 billion, total expenditures of $29.337 billion,
and net other financing sources and uses of $317 million. The surplus
primarily reflects the 1992-93 cash-basis surplus and the net proceeds of
$881 million in bonds issued by LGAC.
The Special Revenue, Debt Service and Capital Projects Fund types ended
the 1992-93 fiscal year with GAAP-basis operating surpluses of $131 million,
$381 million, and $57 million, respectively.
State Financial Plan--Cash-Basis Results--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. General
Fund moneys are also transferred to other funds, primarily to support
certain capital projects and debt service payments in other fund types.
In the State's 1996-97 fiscal year, the General Fund is expected to
account for approximately 47% of total Governmental Funds disbursements and
71% of total State Funds disbursements. The General Fund is projected to be
balanced on a cash basis for the 1996-97 fiscal year. Total receipts and
transfers from other funds are projected to be $33.17 billion, an increase
of $365 million from the prior fiscal year. Total General Fund
disbursements and transfers to other funds are projected to be $33.12
billion, an increase of $444 million from the total in the prior fiscal
year.
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"). First, the
national recession, and then the lingering economic slowdown in the New York
and regional economy, resulted in repeated shortfalls in receipts and three
budget deficits. During its last four fiscal years, however, the State
recorded balanced budgets on a cash basis, with positive fund balances as
described below.
The State ended its 1995-96 fiscal year on March 31, 1996 with a
General Fund cash surplus. The Division of the Budget reported that
revenues exceeded projections by $270 million, while spending for social
service programs was lower than forecast by $120 million and all other
spending was lower by $55 million. From the resulting benefit of $445
million, a $65 million voluntary deposit was made into the TSRF, and $380
million was used to reduce 1996-97 Financial Plan liabilities by
accelerating 1996-97 payments, deferring 1995-96 revenues, and making a
deposit to the tax refund reserve account.
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 the $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 includes $237 million on deposit in the TSRF, to be used in the
event of any future General Fund deficit as provided under the State
Constitution and State Finance Law. In addition, $41 million is on deposit
in the CRF. The CRF was established in State fiscal year 1993-94 to assist
the State in financing the costs of extraordinary litigation. The remaining
$9 million reflects amounts on deposit in the Revenue Accumulation Fund.
This fund was created to hold certain tax receipts temporarily before their
deposit to other accounts. In addition, $678 million was on deposit in the
tax refund reserve account, of which $521 million was necessary to complete
the restructuring of the State's cash flow under the LGAC program.
General Fund receipts totaled $32.81 billion, a decrease of 1.1% from
1994-95 levels. This decrease reflects the impact of tax reductions enacted
and effective in both 1994 and 1995. General Fund disbursements totaled
$32.68 billion for the 1995-96 fiscal year, a decrease of 2.2% from 1994-95
levels.
The State ended its 1994-95 fiscal year with the General Fund in
balance. The $241 million decline in the fund balance reflects the planned
use of $264 million from the CRF, partially offset by the required deposit
of $23 million to the TSRF. In addition, $278 million was on deposit in the
tax refund reserve account, $250 million of which was deposited to continue
the process of restructuring the State's cash flow as part of the LGAC
program. The closing fund balance of $158 million reflects $157 million in
the TSRF and $1 million in the CRF.
General Fund receipts totaled $33.16 billion, an increase of 2.9% from
1993-94 levels. General Fund disbursements totaled $33.40 billion for the
1994-95 fiscal year, an increase of 4.7% from the previous fiscal year. The
increase in disbursements was primarily the result of one-time litigation
costs for the State, funded by the use of the CRF, offset by $188 million in
spending reductions initiated in January 1995 to avert a potential gap in
the 1994-95 State Financial Plan. These actions included savings from a
hiring freeze, halting the development of certain services, and the
suspension of non-essential capital projects.
The State ended its 1993-94 fiscal year with a General Fund cash
surplus, primarily the result of an improving national economy, State
employment growth, tax collections that exceeded earlier projections and
disbursements that were below expectations. A deposit of $268 million was
made to the CRF, with a withdrawal during the year of $3 million, and a
deposit of $67 million was made to the TSRF. These three transactions
resulted in the change in fund balance of $332 million. In addition, a
deposit of $1.14 billion was made to the tax refund reserve account, of
which $1.03 billion was available for budgetary purposes in the 1994-95
fiscal year. The remaining $114 million was redeposit in the tax refund
reserve account at the end of the State's 1994-95 fiscal year to continue
the process of restructuring the State's cash flow as part of the LGAC
program. The General Fund closing balance was $399 million, of which $265
million was on deposit in the CRF and $134 million in the TSRF. The CRF was
initially funded with a transfer of $100 million attributable to a positive
margin recorded in the 1992-93 fiscal year.
General Fund receipts totaled $32.23 billion, an increase of 2.6% from
1992-93 levels. General Fund disbursements totaled $31.90 billion for the
1993-94 fiscal year, 3.5% higher than the previous fiscal year. Receipts
were higher in part due to improved tax collections from renewed State
economic growth, although the State continued to lag behind the national
economic recovery. Disbursements were higher due in part to increased local
assistance costs for school aid and social services, accelerated payment of
certain Medicaid expenses, and the cost of an additional payroll for State
employees.
Cash-Basis Results--Other Governmental Funds. 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, beginning in the 1993-94 fiscal year, 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").
The Special Revenue Funds account for State receipts from specific
sources that are legally restricted in use to specified purposes and include
all moneys received from the Federal government. Revenues in Special
Revenue Funds in the State's 1995-96 fiscal year increased $1.45 billion
over the prior fiscal year as a result of increases in federal grants and
lottery revenues. Disbursements from Special Revenue Funds in the State's
1995-96 fiscal year increased $1.21 billion over the prior fiscal year as a
result of increased costs for social services programs and an increase in
the distribution of lottery proceeds to school districts.
The Capital Projects Funds are used to finance the acquisition and
construction of major capital facilities and to aid local government units
and Agencies in financing capital construction. Revenues in the Capital
Projects Funds in the State's 1995-96 fiscal year increased $260 million
primarily because a larger share of the petroleum business tax was shifted
from the General Fund to the Dedicated Highway and Bridge Trust Fund and by
an increase in federal grant revenues. Expenditures increased $194 million
because of increased expenditures for education and health and environmental
projects.
The Debt Service Funds serve to fulfill State debt service on long-term
general obligation State debt and other State lease/purchase and contractual
obligation financing commitments. Revenues in the Debt Service Funds in the
State's 1995-96 fiscal year increased $10 million because of increases in
both dedicated taxes and mental hygiene patient fees. Expenditures
increased $201 million.
State Borrowing Plan. The State anticipates that its capital programs
will be financed, in part, through borrowings by the State and public
authorities in the 1996-97 fiscal year. The State expects to issue $411
million in general obligation bonds (including $153.6 million for purposes
of redeeming outstanding BANs) and $154 million in general obligation
commercial paper. The Legislature has also authorized the issuance of up to
$101 million in COPs during the State's 1996-97 fiscal year for equipment
purchases. The projection of the State regarding its borrowings for the
1996-97 fiscal year may change if circumstances require.
State Agencies. The fiscal stability of the State is related, at least
in part, to the fiscal stability of its localities and various of its
Agencies. Various Agencies have issued bonds secured, in part, by non-
binding statutory provisions for State appropriations to maintain various
debt service reserve funds established for such bonds (commonly referred to
as "moral obligation" provisions).
At September 30, 1995, there were 17 Agencies that had outstanding debt
of $100 million or more. The aggregate outstanding debt, including
refunding bonds, of these 17 Agencies was $73.45 billion as of September 30,
1995. As of March 31, 1995, aggregate Agency debt outstanding as State-
supported debt was $27.9 billion and as State-related was $36.1 billion.
Debt service on the outstanding Agency obligations normally is paid out of
revenues generated by the Agencies' projects or programs, but in recent
years the State has provided special financial assistance, in some cases on
a recurring basis, to certain Agencies for operating and other expenses and
for debt service pursuant to moral obligation indebtedness provisions or
otherwise. Additional assistance is expected to continue to be required in
future years.
Several Agencies have experienced financial difficulties in the past.
Certain Agencies continue to experience financial difficulties requiring
financial assistance from the State. Failure of the State to appropriate
necessary amounts or to take other action to permit certain Agencies to meet
their obligations could result in a default by one or more of such Agencies.
If a default were to occur, it would likely have a significant effect on the
marketability of obligations of the State and the Agencies. These Agencies
are discussed below.
The New York State Housing Finance Agency ("HFA") provides financing
for multifamily housing, State University construction, hospital and nursing
home development, and other programs. In general, HFA depends upon
mortgagors in the housing programs it finances to generate sufficient funds
from rental income, subsidies and other payments to meet their respective
mortgage repayment obligations to HFA, which provide the principal source of
funds for the payment of debt service on HFA bonds, as well as to meet
operating and maintenance costs of the projects financed. From January 1,
1976 through March 31, 1987, the State was called upon to appropriate a
total of $162.8 million to make up deficiencies in the debt service reserve
funds of HFA pursuant to moral obligation provisions. The State has not
been called upon to make such payments since the 1986-87 fiscal year.
UDC has experienced, and expects to continue to experience, financial
difficulties with the housing programs it had undertaken prior to 1975,
because a substantial number of these housing program mortgagors are unable
to make full payments on their mortgage loans. Through a subsidiary, UDC is
currently attempting to increase its rate of collection by accelerating its
program of foreclosures and by entering into settlement agreements. UDC has
been, and will remain, dependent upon the State for appropriations to meet
its operating expenses. The State also has appropriated money to assist in
the curing of a default by UDC on notes which did not contain the State's
moral obligation provision.
The MTA oversees New York City's subway and bus lines by its
affiliates, the New York City Transit Authority and the Manhattan and Bronx
Surface Transit Operating Authority (collectively, the "TA"). Through MTA's
subsidiaries, the Long Island Rail Road Company, the Metro-North Commuter
Railroad Company and the Metropolitan Suburban Bus Authority, the MTA
operates certain commuter rail and bus lines in the New York metropolitan
area. In addition, the Staten Island Rapid Transit Authority, an MTA
subsidiary, operates a rapid transit line on Staten Island. Through its
affiliated agency, the Triborough Bridge and Tunnel Authority (the "TBTA"),
the MTA operates certain toll bridges and tunnels. Because fare revenues
are not sufficient to finance the mass transit portion of these operations,
the MTA has depended and will continue to depend for operating support upon
a system of State, local government and TBTA support and, to the extent
available, Federal operating assistance, including loans, grants and
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.
Over the past several years the State has enacted several taxes--
including a surcharge on the profits of banks, insurance corporations and
general business corporations doing business in the 12-county region (the
"Metropolitan Transportation Region") served by the MTA and a special .25%
regional sales and use tax--that provide additional revenues for mass
transit purposes, including assistance to the MTA. In addition, since 1987,
State law has required that the proceeds of .25% mortgage recording tax paid
on certain mortgages in the Metropolitan Transportation Region be deposited
in a special MTA fund for operating or capital expenses. Further, 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
1996-97 State fiscal year, total State assistance to the MTA is estimated at
approximately $1.09 billion.
In 1981, the State Legislature authorized procedures for the adoption,
approval and amendment of a five-year plan for the capital program designed
to upgrade the performance of the MTA's transportation systems and to
supplement, replace and rehabilitate facilities and equipment, and also
granted certain additional bonding authorization therefor.
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 a new $11.98 billion MTA capital plan for the
1995 through 1999 calendar years (the "1995-99 Capital Program"), and
authorized the MTA to submit the 1995-99 Capital Program to the Capital
Program Review Board for approval. This plan supersedes the overlapping
portion of the MTA's 1992-96 Capital Program. This 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 $5.1 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 such governmental actions will be taken,
that sources currently identified will not be decreased or eliminated, or
that the 1995-1999 Capital Program will not be delayed or reduced. If the
MTA capital program is delayed or reduced because of funding shortfalls or
other factors, ridership and fare revenues may decline, which could, among
other things, impair the MTA's ability to meet its operating expenses
without additional State assistance.
The cities, towns, villages and school districts of the State are
political subdivisions of the State with the powers granted by the State
Constitution and statutes. As the sovereign, the State retains broad powers
and responsibilities with respect to the government, finances and welfare of
these political subdivisions, especially in education and social services.
In recent years the State has been called upon to provide added financial
assistance to certain localities.
Other Localities. Certain localities in addition to the City could
have financial problems leading to requests for additional State assistance
during the last several State fiscal years. The potential impact on the
State of such actions by localities is not included in the projections of
the State receipts and disbursements in the State's 1996-97 fiscal year.
Fiscal difficulties experienced by the City of Yonkers resulted in the
re-establishment of the Financial Control Board for the City of Yonkers by
the State in 1984. That Board is charged with oversight of the fiscal
affairs of Yonkers. Future actions taken by the State to assist Yonkers
could result in increased State expenditures for extraordinary local
assistance.
Beginning in 1990, the City of Troy experienced a series of budgetary
deficits that resulted in the establishment of a Supervisory Board for the
City of Troy in 1994. The Supervisory Board's powers were increased in
1995, when Troy MAC was created to help Troy avoid default on certain
obligations. The legislation creating Troy MAC prohibits the City of Troy
from seeking federal bankruptcy protection while Troy MAC bonds are
outstanding.
Seventeen municipalities received extraordinary assistance during the
1996 legislative session through $50 million in special appropriations
targeted for distressed cities.
Municipalities and school districts have engaged in substantial short-
term and long-term borrowings. In 1994, the total indebtedness of all
localities in the State, other than the City, was approximately $17.7
billion. A small portion (approximately $82.9 million) of this indebtedness
represented borrowing to finance budgetary deficits and was issued pursuant
to enabling State legislation. State law requires the Comptroller to review
and make recommendations concerning the budgets of those local government
units other than the City authorized by State law to issue debt to finance
deficits during the period that such deficit financing is outstanding.
Seventeen localities had outstanding indebtedness for deficit financing at
the close of their fiscal year ending in 1994.
From time to time, Federal expenditure reductions could reduce, or in
some cases eliminate, Federal funding of some local programs and accordingly
might impose substantial increased expenditure requirements on affected
localities to increase local revenues to sustain those expenditures. If the
State, the City or any of the Agencies were to suffer serious financial
difficulties jeopardizing their respective access to the public credit
markets, the marketability of notes and bonds issued by localities within
the State could be adversely affected. Localities also face anticipated and
potential problems resulting from certain pending litigation, judicial
decisions and long-range economic trends. The longer-range, potential
problems of declining city population, increasing expenditures and other
economic trends could adversely affect localities and require increasing
State assistance in the future.
Certain litigation pending against the State or its officers or
employees could have a substantial or long-term adverse effect on State
finances. Among the more significant of these litigations are those that
involve: (i) the validity and fairness of agreements and treaties by which
various Indian tribes transferred title to the State of approximately six
million acres of land in central New York; (ii) certain aspects of the
State's Medicaid rates and regulations, including reimbursements to
providers of mandatory and optional Medicaid services; (iii) contamination
in the Love Canal area of Niagara Falls; (iv) a challenge to the State's
practice of reimbursing certain Office of Mental Health patient-care
expenses with clients' Social Security benefits; (v) a challenge to the
methods by which the State reimburses localities for the administrative
costs of food stamp programs; (vi) a challenge to the State's possession of
certain funds taken pursuant to the State's Abandoned Property law; (vii)
alleged responsibility of State officials to assist in remedying racial
segregation in the City of Yonkers; (viii) an action, in which the State is
a third party defendant, for injunctive or other appropriate relief,
concerning liability for the maintenance of stone groins constructed along
certain areas of Long Island's shoreline; (ix) actions challenging the
constitutionality of legislation enacted during the 1990 legislative session
which changed the actuarial funding methods for determining contributions to
State employee retirement systems; (x) an action against State and City
officials alleging that the present level of shelter allowance for public
assistance recipients is inadequate under statutory standards to maintain
proper housing; (xi) an action challenging legislation enacted in 1990 which
had the effect of deferring certain employer contributions to the State
Teachers' Retirement System and reducing State aid to school districts by a
like amount; (xii) a challenge to the constitutionality of financing
programs of the Thruway Authority authorized by Chapters 166 and 410 of the
Laws of 1991 (described below in this Part); (xiii) a challenge to the
constitutionality of financing programs of the Metropolitan Transportation
Authority and the Thruway Authority authorized by Chapter 56 of the Laws of
1993 (described below in this Part); (xiv) challenges to the delay by the
State Department of Social Services in making two one-week Medicaid payments
to the service providers; (xv) challenges by commercial insurers, employee
welfare benefit plans, and health maintenance organizations to provisions of
Section 2807-c of the Public Health Law which impose 13%, 11% and 9%
surcharges on inpatient hospital bills and a bad debt and charity care
allowance on all hospital bills paid by such entities; (xvi) challenges to
the promulgation of the State's proposed procedure to determine the
eligibility for and nature of home care services for Medicaid recipients;
(xvii) a challenge to State implementation of a program which reduces
Medicaid benefits to certain home-relief recipients; and (xviii) challenges
to the rationality and retroactive application of State regulations
recelebrating nursing home Medicaid rates.
(2) New York City. In the mid-1970s, the City had large accumulated
past deficits and until recently was not able to generate sufficient tax and
other ongoing revenues to cover expenses in each fiscal year. However, the
City has achieved balanced operating results for each of its fiscal years
since 1981 as reported in accordance with the then-applicable GAAP
standards. The City's ability to maintain balanced operating results in
future years is subject to numerous contingencies and future developments.
In 1975, the City became unable to market its securities and entered a
period of extraordinary financial difficulties. In response to this crisis,
the State created MAC to provide financing assistance to the City and also
enacted the New York State Financial Emergency Act for the City of New York
(the "Emergency Act") which, among other things, created the Financial
Control Board (the "Control Board") to oversee the City's financial affairs
and facilitate its return to the public credit markets. The State also
established the Office of the State Deputy Comptroller ("OSDC") to assist
the Control Board in exercising its powers and responsibilities. On June
30, 1986, the Control Board's powers of approval over the City Financial
Plan were suspended pursuant to the Emergency Act. However, the Control
Board, MAC and OSDC continue to exercise various monitoring functions
relating to the City's financial condition. The City prepares and operates
under a four-year financial plan which is submitted annually to the Control
Board for review and which the City periodically updates.
The City's independently audited operating results for each of its
fiscal years from 1981 through 1995 show a General Fund surplus reported in
accordance with GAAP. The City has eliminated the cumulative deficit in its
net General Fund position.
During the 1990 and 1991 fiscal years, as a result of a slowing
economy, the City has experienced significant shortfalls in almost all of
its major tax sources and increases in social services costs, and was
required to take actions to close substantial budget gaps in order to
maintain balanced budgets in accordance with the Financial Plan.
According to a recent OSDC economic report, the City's economy was slow
to recover from the recession and was expected to have experienced a weak
employment situation, and moderate wage and income growth, during the 1995-
96 period. Also, Financial Plan reports of OSDC, the Control Board, and the
City Comptroller have variously indicated that many of the City's balanced
budgets have been accomplished, in part, through the use of non-recurring
resource, tax and fee increases, personnel reductions and additional State
assistance; that the City has not yet brought its long-term expenditures in
line with recurring revenues; that the City's proposed gap-closing programs,
if implemented, would narrow future budget gaps; that these programs tend to
rely heavily on actions outside the direct control of the City; and that the
City is therefore likely to continue to face futures projected budget gaps
requiring the City to reduce expenditures and/or increase revenues.
According to the most recent staff reports of OSDC, the Control Board and
the City Comptroller during the four-year period covered by the current
Financial Plan, the City is relying on obtaining substantial resources from
initiatives needing approval and cooperation of its municipal labor unions,
Covered Organizations, and City Council, as well as the State and Federal
governments, among others, and there can be no assurance that such approval
can be obtained.
The City requires certain amounts of financing for seasonal and capital
spending purposes. The City issued $1.75 billion of notes for seasonal
financing purposes during the 1994 fiscal year. The City's capital
financing program projects long-term financing requirements of approximately
$17 billion for the City's fiscal years 1995 through 1998 for the
construction and rehabilitation of the City's infrastructure and other fixed
assets. The major capital requirement include expenditures for the City's
water supply system, and waste disposal systems, roads, bridges, mass
transit, schools and housing. In addition, the City and the Municipal Water
Finance Authority issued about $1.8 billion in refunding bonds in the 1994
fiscal year.
State Economic Trends. The State historically has been one of the
wealthiest states in the nation. For decades, however, the State has grown
more slowly than the nation as a whole, gradually eroding its relative
economic position. Statewide, urban centers have experienced significant
changes involving migration of the more affluent to the suburbs and an
influx of generally less affluent residents. Regionally, the older
Northeast cities have suffered because of the relative success that the
South and the West have had in attracting people and business. The City has
also had to face greater competition as other major cities have developed
financial and business capabilities which make them less dependent on the
specialized services traditionally available almost exclusively in the City.
During the 1982-83 recession, overall economic activity in the State
declined less than that of the nation as a whole. However, in the calendar
years 1984 through 1991, the State's rate of economic expansion was somewhat
slower than that of the nation. In the 1990-91 recession, the economy of
the State, and that of the rest of the Northeast, was more heavily damaged
than that of the nation as a whole and has been slower to recover. The
total employment growth rate in the State has been below the national
average since 1984. The unemployment rate in the State dipped below the
national rate in the second half of 1981 and remained lower until 1991;
since then, it has been higher. According to data published by the U.S.
Bureau of Economic Analysis, during the past ten years, total personal
income in the State rose slightly faster than the national average only from
1986 through 1988.
APPENDIX F
Set forth below, as to each share Class of each Fund, as applicable,
are those shareholders known by the Fund to own of record 5% or more of a
Class of shares of the Fund outstanding as of _January 4, 1999.
Government Money Fund
Class A: Boston Safe Deposit & Trust Co. TTEE, as agent - Omnibus
Account, 1 Cabot Road, Medford, MA 02155-5141 - owned of record
6.1603%
Class B: Robert W. Baird & Co., Omnibus Account for the Exclusive Benefit
of Customers, P.O. Box 672, Milwaukee, WI 53201-0672 - owned of
record 42.0382%;
Stifel Nicolaus & Co. Inc., for the Exclusive Benefit of
Customers, Attn. Money Fund Dept., 500 N. Broadway, Saint Louis,
MO 63102-2110 - owned of record 27.9079%;
First Albany Corporation, P.O. Box 22024, Albany, New York 12201-
2024 - owned of record 12.3761%;
Olcoba Co., 7575 Golden Valley, MN 55427-4572 - owned of record
6.0094%
Money Fund
Class A: NationsBanc Montgomery Securities LLC, Money Market Funds
Omnibus, 600 Montgomery Street, Suite 4, San Francisco, CA 94111-
02702 - owned of record 14.0392%
Class B: Robert W. Baird & Co., Omnibus Account for the Exclusive Benefit
of Customers, P.O. Box 672, Milwaukee, WI 53201-2024 - owned of
record 40.8057%;
First Albany Corporation, P.O. Box 22024, Albany, NY 12201-2024 -
owned of record 22.6502%;
Stifel Nicolaus & Co. Inc. for the Exclusive Benefit of Customers,
500 N. Broadway, Saint Louis, MO 63102-2110 - owned of record
18.1161%;
NationsBanc Montgomery Securities LLC, Money Market Fund Omnibus,
600 Montgomery Street, Suite 4, San Francisco, CA 94111-2702 -
owned of record 8.0239%
California Municipal Fund
Class A: NationsBanc Montgomery Securities LLC, Money Market Funds Omnibus,
600 Montgomery Street, Suite 4, San Francisco, CA 94111-2702 -
owned of record 17.1357%
Class B: Robert W. Baird & Co., Omnibus Account for the Exclusive
Benefit of Customers, P.O. Box 572, Milwaukee, WI 532031-0672 -
owned of record 78.0738%;
First Albany Corporation, P.O. Box 22024, Albany, New York 12201-2024-
owned of record 8.5518%
NationsBanc Montgomery Securities LLC, Money Market Funds Omnibus,
600 Montgomery Street, Suite 4, San Francisco, CA 94111-2702 -
owned of record 6.2260%;
Stifel Nicolaus & Co. Inc. for the Exclusive Benefit of Customers,
500 N. Broadway, Saint Louis, MO 63102-2110 - owned of record
6.0875%
Minnesota Municipal Fund
Class A: MBCIC, c/o Mellon Bank, Attn. Michael Botsford, 919 N Market
Street, Wilmington, De 19801-3023 - owned of record 99.7052%
Class B: NationsBanc Montgomery Securities LLC, Money Market Funds
Omnibus, 600 Montgomery Street, Suite 4, San Francisco, CA 94111-
2702 - owned of record 92.8857%
National Municipal Fund
Class A: NationsBanc Montgomery Securities LLC, Money Market Funds Omnibus,
600 Montgomery Street, Suite 4, San Francisco, CA 94111-2702 -
owned of record 26.6291%
Class B: Robert W. Baird & Co., Omnibus Accounts for the Exclusive Benefit
of Customers, P.O. Box 672, Milwaukee, WI 53201-0672 - owned of
record 42.0383%;
Stifel Nicolaus & Co. Inc for the Exclusive Benefit of Customers,
500 N Broadway, Saint Louis, MO 63102-2110 - owned of record
16.3868%;
George K. Baum & Company, Attn. Ron Frazier, 120 W 12th Street,
Kansas City, WI 53201-0672 - owned of record 9.9699%
New York Municipal Fund
Class A: As of January 4, 1999, there were no shareholders who owned 5% or
more of the Class A shares of the New York Municipal Fund
Class B: First Albany Corporation, P.O. Box 22024, Albany, NY 11201-2024 -
owned of record 88.6012%;
Robert W. Baird & Co., Omnibus Account for the Exclusive Benefit
of Customers, P.O, Box 672, Milwaukee, WI 53201-0672 - owned of
record 7.0359%
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.
(n) Financial Data Schedule.
Item 23. Exhibits (Continued)
________ ____________________
(o) Rule 18f-3 Plan is incorporated by reference to Exhibit (18) to Post-
Effective Amendment No. 30 to the Registration Statement on Form N-1A,
filed on April 28, 1998.
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.
<TABLE>
<CAPTION>
ITEM 26. Business and Other Connections of Investment Adviser (continued)
Officers and Directors of Investment Adviser
<S> <C> <C> <C>
Name and Position
With Dreyfus Other Businesses Position Held Dates
Christopher M. Condron Mellon Preferred Director 3/96 - 11/96
Chairman of the Board and Capital Corporation*
Chief Executive Officer
TBCAM Holdings, Inc.* President 10/97 - 6/98
Chairman 10/97 - 6/98
The Boston Company Chairman 1/98 - 6/98
Asset Management, LLC* President 1/98 - 6/98
The Boston Company President 9/95 - 1/98
Asset Management, Inc.* Chairman 4/95 - 1/98
Chief Executive Officer 4/95 - 4/97
Pareto Partners Partner Representative 11/95 - 5/97
271 Regent Street
London, England W1R 8PP
Franklin Portfolio Holdings, Inc.* Director 1/97 - Present
Franklin Portfolio
Associates Trust* Trustee 9/95 - 1/97
Certus Asset Advisors Corp.**
Director 6/95 - Present
The Boston Company of Director 6/95 - 4/96
Southern California Chief Executive Officer 6/95 - 4/96
Los Angeles, CA
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
Access Capital Strategies Corp. Director 5/95 - 1/97
124 Mount Auburn Street
Suite 200 North
Cambridge, MA 02138
Mellon Bank, N.A. + Chief Operating Officer 3/98 - Present
President 3/98 - Present
Vice Chairman 11/94 - Present
Christopher M. Condron Mellon Bank Corporation+ Chief Operating Officer 1/99 - Present
Chairman and Chief President 1/99 - Present
Executive Director 1/98 - Present
Officer (Continued) Vice Chairman 11/94 - 1/99
The Boston Company Financial Director 4/94- 8/96
Services, Inc.* President 4/94 - 8/96
The Boston Company, Inc.* Vice Chairman 1/94 - Present
Director 5/93 - Present
Laurel Capital Advisors, LLP+ Exec. Committee 1/98 - Present
Member
Laurel Capital Advisors+ Trustee 10/93 - 1/98
Boston Safe Deposit and Trust Chairman 3/93 - 2/96
Company of CA Chief Executive Officer 6/93 - 2/96
Los Angeles, CA Director 6/89 - 2/96
MY, Inc.* President 9/91 - 3/96
Director 9/91 - 3/96
Reco, Inc.* President 8/91 - 11/96
Director 8/91 - 11/96
Boston Safe Deposit and Trust Director 6/89 - 2/96
Company of NY
New York, NY
Boston Safe Deposit and Trust President 9/89 - 6/96
Company* Director 5/93 -Present
The Boston Company Financial President 6/89 - Present
Strategies, Inc. * Director 6/89 - Present
The Boston Company Financial President 6/89 - 1/97
Strategies Group, Inc. * Director 6/89- 1/97
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 Chief Executive Officer 2/81 - 12/96
York, PA Chairman 3/89 - 1/96
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
Founders Asset Management, LLC Acting Chief Executive 7/98 - 12/98
2930 East Third Ave. Officer
Denver, CO 80206
The Dreyfus Trust Company+++ Director 6/95 - Present
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 - Present
500 Grant Street Director 9/88 - Present
Pittsburgh, PA 15258 Vice President 9/88 - Present
Treasurer 9/88 - Present
Mellon Financial Company+ Principal Exec. Officer 1/88 - Present
Chief Financial Officer 8/87 - Present
Director 8/87 - Present
President 8/87 - Present
Mellon Overseas Investments Director 4/88 - Present
Corporation+ Chairman 7/89 - 11/97
President 4/88 - 11/97
Chief Executive Officer 4/88 - 11/97
Mellon International Investment Director 9/89 - 8/97
Corporation+
Mellon Financial Services Treasurer 12/87 - Present
Corporation # 5+
Lawrence S. Kash Dreyfus Investment Director 4/97 - Present
Vice Chairman Advisors, Inc.++
And Director
Dreyfus Brokerage Services, Inc. Chairman 11/97 - Present
401 North Maple Ave. Chief Executive Officer 11/97 - Present
Beverly Hills, CA
Dreyfus Service Corporation++ Director 1/95 - Present
President 9/96 - Present
Dreyfus Precious Metals, Inc.++ + Director 3/96 - 12/98
President 10/96 - 12/98
Dreyfus Service Director 12/94 - Present
Organization, Inc.++ President 1/97 - Present
Executive Vice President 12/94 - 1/97
Seven Six Seven Agency, Inc. ++ Director 1/97 - Present
Dreyfus Insurance Agency of Chairman 5/97 - Present
Massachusetts, Inc.++++ President 5/97 - Present
Director 5/97 - Present
The Dreyfus Trust Company+++ Chairman 1/97 - Present
President 2/97 - Present
Chief Executive Officer 2/97 - Present
Director 12/94 - Present
The Dreyfus Consumer Credit Chairman 5/97 - Present
Corporation++ President 5/97 - Present
Director 12/94 - Present
The Boston Company Advisors* Chairman 8/93 - 11/95
The Boston Company Advisors, Chairman 12/95 - Present
Inc. Chief Executive Officer 12/95 - Present
Wilmington, DE President 12/95 - Present
Cornice Acquisition Board of Managers 12/97 - Present
Company, LLC
Denver, CO
The Boston Company, Inc.* Director 5/93 - Present
President 5/93 - Present
Mellon Bank, N.A.+ Executive Vice President 2/92 - Present
Laurel Capital Advisors, LLP+ President 12/91 - Present
Executive Committee 12/91 - Present
Member
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
Martin G. McGuinn Mellon Bank, N. A. + Chairman 3/98 - Present
Director (Continued) Chief Executive Officer 3/98 - Present
Director 1/98 - Present
Vice Chairman 1/90 - 1/99
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
And Director Dreyfus Insurance Agency of Director 5/98 - Present
Massachusetts, Inc.++++
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
Company* President 7/96 - Present
Executive Vice President 7/96 - 1/99
1/91 - 7/96
Mellon Trust of New York Director
1301 Avenue of the Americas 6/96 - Present
New York, NY 10019
Mellon Trust of California Director 6/96 - Present
400 South Hope Street
Suite 400
Los Angeles, CA 90071
J. David Officer Mellon Bank, N.A.+ Executive Vice President 2/94 - Present
Vice Chairman and
Director (Continued) 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 2930 East Third Avenue Chief Executive Officer 12/98 - Present
Denver, CO. 80206
Prudential Securities Senior Vice President 07/91 - 11/98
New York, NY Regional Director 07/91 - 11/98
Richard F. Syron American Stock Exchange Chairman 4/94 - Present
Director 86 Trinity Place Chief Executive Officer 4/94 - Present
New York, NY 10006
Thomas F. Eggers Dreyfus Service Corporation++ Executive Vice President 4/96 - Present
Vice Chairman - Institutional Director 9/96 - Present
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
Ronald P. O'Hanley McKinsey & Company, Inc. Partner 8/86 - 2/97
Vice Chairman (Continued) Boston, MA
Mark 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
Lion Management, Inc.++ Director 1/88 - 10/96
Vice President 1/88 - 10/96
Secretary 1/88 - 10/96
The Dreyfus Consumer Credit Secretary 4/83 - 3/96
Corporation++
Dreyfus Service Director 3/97 - Present
Organization, Inc.++ Assistant Secretary 4/83 -3/96
Major Trading Corporation++ Assistant Secretary 5/81 - 8/96
William H. Maresca The Dreyfus Trust Company+++ Director 3/97 - Present
Controller
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 Assistant Treasurer 3/93 - Present
Organization, Inc.++
Dreyfus Insurance Agency of Assistant Treasurer 5/98 - Present
Massachusetts, Inc.++++
William T. Sandalls, Jr. Dreyfus Transfer, Inc. Chairman 2/97 - Present
Executive Vice President One American Express Plaza,
Providence, RI 02903
William T. Sandalls, Jr. Dreyfus Service Corporation++ Director 1/96 - Present
Executive Vice President Treasurer 1/96 - 2/97
(Continued) 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
Dreyfus Acquisition Corporation++ Director VP and CFO 1/96 - 8/96
Vice President 1/96 - 8/96
Chief Financial Officer 1/96 - 8/96
Lion Management, Inc.++ Director 1/96 - 10/96
President 1/96 - 10/96
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
Dreyfus Partnership President 1/97 - 6/97
Management, Inc.++ Director 1/96 - 6/97
Dreyfus Service Organization, Director 1/96 - 6/97
Inc.++ Executive Vice President 1/96 - 6/97
Treasurer 10/96 - Present
Dreyfus Insurance Agency of Director 5/97 - Present
Massachusetts, Inc.++++ Treasurer 5/97 - Present
Executive Vice President 5/97 - Present
Major Trading Corporation++ Director 1/96 - 8/96
Treasurer 1/96 - 8/96
The Dreyfus Trust Company+++ Director 1/96 - 4/97
Treasurer 1/96 - 4/97
Chief Financial Officer 1/96 - 4/97
Dreyfus Personal Director 1/96 - 4/97
Management, Inc.++ Treasurer 1/96 - 4/97
Patrice M. Kozlowski None
Vice President - Corporate
Communications
Mary Beth Leibig None
Vice President -
Human Resources
Andrew S. Wasser Mellon Bank Corporation+ Vice President 1/95 - Present
Vice President -
Information Systems
Theodore A. Schachar Dreyfus Service Corporation++ Vice President -Tax 10/96 - Present
Vice President - Tax
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
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 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
</TABLE>
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
(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
Michael S. Petrucelli++ Senior Vice President Vice President,
Assistant Treasurer
and Assistant
Secretary
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.
Item 28. Location of Accounts and Records
________ ________________________________
1. The Bank of New York
90 Washington 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant 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 29th day of January 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 1/29/99
______________________________ Executive Officer)
Marie E. Connolly
/s/Joseph F. Tower* Assistant Treasurer (Principal 1/29/99
_____________________________ Financial and Accounting Officer)
Joseph F. Tower
/s/Joseph S. DiMartino* Chairman of the Board of 1/29/99
______________________________ Directors
Joseph S. DiMartino
/s/Clifford L. Alexander, Jr.* Director 1/29/99
_____________________________
Clifford L. Alexander, Jr.
/s/Peggy C.Davis* Director 1/29/99
_____________________________
Peggy C.Davis
/s/Ernest Kafka* Director 1/29/99
_____________________________
Ernest Kafka
/s/Saul B. Klaman* Director 1/29/99
______________________________
Saul B. Klaman
/s/Nathan Leventhal* Director 1/29/99
_____________________________
Nathan Leventhal
*BY: /s/ Stephanie Pierce
__________________________
Stephanie Pierce,
Attorney-in-Fact
GENERAL MUNICIPAL MONEY MARKET FUNDS, INC.
INDEX OF EXHIBITS
(j) Consent of Independent Auditors
(n) Financial Data Schedule
Other Exhibits
(a) Power of Attorney
(b) Certificate of Assistant 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 SIGNATURE LOGO]
New York, New York
January 28, 1999
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</TABLE>
Item 23.(b)
Other Exhibits (a)
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Margaret W. Chambers,
Marie E. Connolly, Christopher J. Kelley, Kathleen K. Morrisey, Michael S.
Petrucelli, Stephanie Pierce and Elba Vasquez 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 15, 1998
- --------------------------------
Clifford L. Alexander, Jr.
/s/Peggy C. Davis June 15, 1998
- --------------------------------
Peggy C. Davis
/s/Joseph S. DiMartino June 15, 1998
- --------------------------------
Joseph S. DiMartino
/s/Ernst Kafka June 15, 1998
- --------------------------------
Ernst Kafka
/s/Saul B. Klaman June 15, 1998
- --------------------------------
Saul B. Klaman
/s/Nathan Leventhal June 15, 1998
- --------------------------------
Nathan Leventhal
Item 23.(b)
Other Exhibits (b)
GENERAL MUNICIPAL MONEY MARKET FUNDS, INC.
Certificate of Assistant Secretary
The undersigned, Michael S. Petrucelli, 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, Christopher J. Kelley, Kathleen K. Morrisey,
Michael S. Petrucelli, Stephanie Pierce and Elba Vasquez 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, Christopher J. Kelley, Kathleen K. Morrisey,
Michael S. Petrucelli, Stephanie Pierce and Elba Vasquez
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, 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 January 21, 1999.
/s/ Stephanie Pierce
-------------------------
Stephanie Pierce
Vice President, Assistant
Treasurer and Assistant
Secretary
