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PROSPECTUS JANUARY 20, 1994
DREYFUS CONNECTICUT
MUNICIPAL MONEY MARKET FUND, INC.
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DREYFUS CONNECTICUT MUNICIPAL MONEY MARKET FUND, INC. (THE "FUND")
IS AN OPEN-END, NON-DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY,
KNOWN AS A MONEY MARKET MUTUAL FUND. ITS GOAL IS TO PROVIDE YOU
WITH AS HIGH A LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL AND
STATE OF CONNECTICUT INCOME TAXES AS IS CONSISTENT WITH THE
PRESERVATION OF CAPITAL AND THE MAINTENANCE OF LIQUIDITY.
YOU CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME WITHOUT
CHARGE OR PENALTY.
THE FUND PROVIDES FREE REDEMPTION CHECKS, WHICH YOU CAN USE IN
AMOUNTS OF $500 OR MORE FOR CASH OR TO PAY BILLS. YOU CONTINUE TO
EARN INCOME ON THE AMOUNT OF THE CHECK UNTIL IT CLEARS. YOU CAN
PURCHASE OR REDEEM SHARES BY TELEPHONE USING DREYFUS
TELETRANSFER.
THE DREYFUS CORPORATION PROFESSIONALLY MANAGES THE FUND'S
PORTFOLIO.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL
BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
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THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE
FUND THAT YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND
RETAINED FOR FUTURE REFERENCE.
PART B (ALSO KNOWN AS THE STATEMENT OF ADDITIONAL INFORMATION),
DATED JANUARY 20, 1994, WHICH MAY BE REVISED FROM TIME TO TIME,
PROVIDES A FURTHER DISCUSSION OF CERTAIN AREAS IN THIS PROSPECTUS
AND OTHER MATTERS WHICH MAY BE OF INTEREST TO SOME INVESTORS. IT
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS INCORPORATED
HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO THE
FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK, 11556-
0144, OR CALL TOLL FREE 1-800-645-6561. WHEN TELEPHONING, ASK FOR
OPERATOR 666.
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THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. THE FUND'S SHARES INVOLVE
CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THE FUND'S YIELD FLUCTUATES AND IS NOT GUARANTEED.
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TABLE OF CONTENTS
PAGE
ANNUAL FUND OPERATING EXPENSES.............................. 2
CONDENSED FINANCIAL INFORMATION............................. 2
YIELD INFORMATION........................................... 3
DESCRIPTION OF THE FUND..................................... 3
MANAGEMENT OF THE FUND...................................... 8
HOW TO BUY FUND SHARES...................................... 8
SHAREHOLDER SERVICES........................................ 10
HOW TO REDEEM FUND SHARES................................... 12
SHAREHOLDER SERVICES PLAN................................... 15
DIVIDENDS, DISTRIBUTIONS AND TAXES.......................... 15
GENERAL INFORMATION......................................... 16
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees.................................... .50%
Shareholder Services Fees.......................... .04%
Other Expenses..................................... .13%
Total Fund Operating Expenses...................... .67%
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- ---------
You would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return
and (2) redemption at
the end of each time period: $7 $21 $37 $83
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THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE
EXAMPLE ASSUMES A 5% ANNUAL RETURN, THE FUND'S ACTUAL
PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER
OR LESS THAN 5%.
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The purpose of the foregoing table is to assist you in understanding the
various costs and expenses borne by the Fund, and therefore indirectly by
investors, the payment of which will reduce investors' return on an annual
basis. The information in the foregoing table does not reflect any fee waivers
or expense reimbursement arrangements that may be in effect.
You can purchase Fund shares without charge directly from Dreyfus
Service Corporation; you may be charged a nominal fee if you effect transactions
in Fund shares through a securities dealer, bank or other financial institution.
See "Management of the Fund."
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst &
Young, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and
related notes are included in the Statement of Additional Information, available
upon request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each year indicated. The
information has been derived from information provided in the Fund's financial
statements.
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------
PER SHARE DATA: 1990(1) 1991 1992 1993
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of year....................... $1.0000 $1.0000 $1.0000 $1.0002
------- ------- ------- -------
Investment Operations:
Investment income--net.................................. .0131 .0470 .0323 .0230
Net realized and unrealized gain (loss) on investments.. -- -- .0002 (.0004)
------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.................... .0131 .0470 .0325 .0226
------- -------- ------- -------
DISTRIBUTIONS:
Dividends from investment income_net.................... (.0131) (.0470) (.0323) (.0228)
Dividends from net realized gain on investment.......... __ __ __ (.0002)
------- -------- ------- -------
TOTAL DISTRIBUTIONS................................. (.0131) (.0470) (.0323) (.0230)
------- ------- ------- -------
Net asset value, end of year............................ $1.0000 $1.0000 $1.0002 $ .9998
======= ======= ======= =======
TOTAL INVESTMENT RETURN 5.95%(2) 4.80% 3.28% 2.34%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................. __ __ .04% .12%
Ratio of net investment income to average net assets.... 5.97%(2) 4.54% 3.22% 2.30%
Decrease reflected in above expense ratios due to undertakings
by The Dreyfus Corporation............................... 1.66%(2) .67% .63% .55%
Net Assets, end of year (000's omitted).................. $52,971 $187,301 $206,980 $212,288
- ---------------------------
(1) From July 12, 1990 (commencement of operations) to September 30, 1990.
(2) Annualized.
</TABLE>
Page 2
YIELD INFORMATION
From time to time, the Fund advertises its yield and effective yield. Both
yield figures are based on historical earnings and are not intended to indicate
future performance. It can be expected that these yields will fluctuate
substantially. The yield of the Fund refers to the income
generated by an investment in the Fund over a seven-day period (which
period will be stated in the advertisement). This income is then
annualized. That is, the amount of income generated by the investment
during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment. The effective yield
is calculated similarly, but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment. The Fund's yield and effective yield may
reflect absorbed expenses pursuant to any undertaking that may be in
effect. See "Management of the Fund."
Tax equivalent yield is calculated by determining the pre-tax yield which,
after being taxed at a stated rate,
would be equivalent to a stated yield or effective yield calculated as described
above.
Yield information is useful in reviewing the Fund's performance, but because
yields will fluctuate, such information under certain conditions
may not provide a basis for comparison with domestic bank deposits,
other investments which pay a fixed yield for a stated period of time, or other
investment companies which may use a different method of
computing yield.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., Bank Rate Monitor trademark, N. Palm Beach, Fla.
33408, IBC/Donoghue's Money Fund Report, Morningstar, Inc. and other
industry publications.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE - The Fund's goal is to provide you with as high a
level of current income exempt from Federal and State of Connecticut
income taxes as is consistent with the preservation of capital and the
maintenance of liquidity. To accomplish this goal, the Fund invests
primarily in the debt securities of the State of Connecticut, its political
subdivisions, authorities and corporations, the interest from which is, in the
opinion of bond counsel to the issuer, exempt from Federal income tax
and the State of Connecticut income tax on the taxable income of
individuals, trusts and estates (collectively, "Connecticut Municipal
Obligations"). To the extent acceptable Connecticut Municipal Obligations
are at any time unavailable for investment by the Fund, the Fund will
invest temporarily in other debt securities the interest from which is, in the
opinion of bond counsel to the issuer, exempt from Federal, but not
State of Connecticut, income tax. The Fund's investment objective cannot
be changed without approval by the holders of a majority (as defined in
the Investment Company Act of 1940) of the Fund's outstanding voting
shares. There can be no assurance that the Fund's investment objective
will be achieved. Securities in which the Fund will invest may not earn as high
a level of current income as long-term or lower quality securities
which generally have less liquidity, greater market risk and more
fluctuation in market value.
MUNICIPAL OBLIGATIONS - Debt securities the interest from which is, in
the opinion of bond counsel to the issuer, exempt from Federal income tax
("Municipal Obligations") generally include debt obligations issued to
obtain funds for various public purposes as well as certain industrial
development bonds issued by or on behalf of public authorities. Municipal
Obligations are classified as general obligation bonds, revenue bonds and notes.
General obligation bonds are secured by the issuer's pledge of its faith, credit
and taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source, but not from the general taxing
power. Tax exempt 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
(page3)
installment purchase contracts
for property or equipment issued by municipalities. Municipal Obligations bear
fixed, floating or variable rates of interest.
MANAGEMENT POLICIES - It is a fundamental policy of the Fund that it will invest
at least 80% of the value of its net assets (except when
maintaining a temporary defensive position) in Municipal Obligations.
Under normal circumstances, at least 65% of the value of the Fund's net assets
will be invested in Connecticut Municipal Obligations and the remainder may be
invested in securities that are not Connecticut
Municipal Obligations and therefore may be subject to Connecticut income taxes.
See "Risk Factors-Investing in Connecticut Municipal Obligations" below, and
"Dividends, Distributions and Taxes."
The Fund seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, the Fund uses the amortized cost
method of valuing its securities pursuant to Rule 2a-7 under the
Investment Company Act of 1940, certain requirements of which are
summarized as follows. In accordance with Rule 2a-7, the Fund will
maintain a dollar-weighted average portfolio maturity of 90 days or less,
purchase only instruments having remaining maturities of 13 months or
less and invest only in U.S. dollar denominated securities determined in
accordance with procedures established by the Board of Directors to
present minimal credit risks and which are rated in one of the two highest
rating categories for debt obligations by at least two nationally
recognized statistical rating organizations (or one rating organization if the
instrument was rated only by one such organization) or, if unrated, are of
comparable quality as determined in accordance with procedures
established by the Board of Directors. The nationally recognized
statistical rating organizations currently rating instruments of the type
the Fund may purchase are Moody's Investors Service, Inc. ("Moody's"), Standard
& Poor's Corporation ("S&P") and Fitch Investors Service, Inc. ("Fitch") and
their rating criteria are described in Appendix B to the
Fund's Statement of Additional Information. For further information
regarding the amortized cost method of valuing securities, see
"Determination of Net Asset Value" in the Fund's Statement of Additional
Information. There can be no assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share.
The Fund may invest more than 25% of the value of its total assets in
Municipal Obligations which are related in such a way that an economic, business
or political development or change affecting one such security
also would affect the other securities; for example, securities the
interest upon which is paid from revenues of similar types of projects. As
a result, the Fund may be subject to greater risk as compared to a fund
that does not follow this practice.
From time to time, the Fund may invest more than 25% of the value of
its total assets in industrial development bonds which, although issued by
industrial development authorities, may be backed only by the assets and
revenues of the non-governmental users. Interest on Municipal Obligations
(including certain industrial development bonds) which are specified
private activity bonds, as defined in the Internal Revenue Code of 1986, as
amended (the "Code"), issued after August 7, 1986, while exempt from
Federal income tax, is a preference item for the purpose of the alternative
minimum tax. Where a regulated investment company receives such
interest, a proportionate share of any exempt-interest dividend paid by
the investment company may be treated as such a preference item to shareholders.
The Fund may invest without limitation in such Municipal Obligations if The
Dreyfus Corporation determines that their purchase is consistent with the Fund's
investment objective.
The Fund may purchase floating and variable rate demand notes and
bonds, which are tax exempt obligations ordinarily having stated
maturities in excess of 13 months, but which permit the holder to demand payment
of principal at any time, or at specified intervals not exceeding
13 months, in each case upon not more than 30 days' notice. Variable rate demand
notes include master demand notes which are obligations that
permit the Fund to invest fluctuating amounts, which may change daily
without penalty, pursuant to direct arrangements between the Fund, as
lender, and the borrower. The interest rates on these obligations fluctuate from
time to time. Frequently, such obligations are secured by letters of credit or
other credit support arrangements provided by banks. Use of
letters of credit or other credit support arrangements will not adversely affect
the tax exempt status of these obligations. Because these
obligations are direct lending arrangements between the
(page4)
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. Accordingly,
where these obligations are not secured by letters of credit or other
credit support arrangements, the Fund's right to redeem is dependent on
the ability of the borrower to pay principal and interest on demand. Each
obligation purchased by the Fund will meet the quality criteria
established for the purchase of Municipal Obligations. The Dreyfus Corporation,
on behalf of the Fund, will consider on an ongoing basis the creditworthiness of
the issuers of the floating and variable rate demand obligations in the Fund's
Portfolio. The Fund will not invest more than 10% of the value of its net assets
in floating or variable rate demand obligations as to which it cannot exercise
the demand feature on not more than seven days' notice if there is no secondary
market available for these obligations, and in other illiquid securities. See
"Certain Fundamental Policies" below.
The Fund may purchase from financial institutions participation
interests in Municipal Obligations (such as industrial development bonds
and municipal lease/purchase agreements). A participation interest gives
the Fund an undivided interest in the Municipal Obligation in the proportion
that the Fund's participation interest bears to the total principal amount
of the Municipal Obligation. These instruments may have fixed, floating or
variable rates of interest, with remaining maturities of 13 months or
less. If the participation interest is unrated, or has been given a rating below
that which otherwise is permissible for purchase by the Fund, the participation
interest will be backed by an irrevocable letter of credit or guarantee of a
bank that the Board of Directors has determined meets the prescribed quality
standards for banks set forth below, or the payment obligation otherwise will be
collateralized by U.S. Government securities. For certain participation
interests, the Fund will have the right to demand payment, on not more than
seven days' notice, for all or any part of the Fund's participation interest in
the Municipal Obligation, plus accrued interest. As to these instruments, the
Fund intends to exercise its right to demand payment only upon a default under
the terms of the Municipal Obligation, as needed to provide liquidity to meet
redemptions, or to maintain or improve the quality of its investment portfolio.
The Fund will not invest more than 10% of the value of its net assets in
participation interests that do not have this demand feature, and in other
illiquid securities. See "Certain Fundamental Policies" below.
The 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 Dreyfus Corporation, on behalf of the
Fund, will consider on an ongoing basis the creditworthiness of the
issuers of the underlying Municipal Obligations, 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 invest more than 10%
of the value of its net assets in securities that are illiquid, which could
include tender option bonds as to which it cannot exercise the tender
feature on not more than seven days' notice if there is no secondary
market available for these obligations. See "Certain Fundamental
Policies" below.
The 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
(page 5)
acquire stand-by
commitments solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes. The Fund may pay for stand-
by commitments if such action is deemed necessary, thus
increasing to a degree the cost of the underlying Municipal Obligation and
similarly decreasing such security's yield to investors.
From time to time, on a temporary basis other than for temporary defensive
purposes (but not to exceed 20% of the value of the Fund's net assets) or for
temporary defensive purposes, the Fund may invest in
taxable short-term investments ("Taxable Investments") consisting of:
notes of issuers having, at the time of purchase, a quality rating within
the two highest grades of Moody's, S&P or Fitch; obligations of the U.S.
Government, its agencies or instrumentalities; commercial paper rated
not lower than P-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. See "Dividends, Distributions
and Taxes." Except for temporary defensive purposes, at no time will more than
20% of the value of the Fund's net assets be invested in Taxable Investments. If
the Fund purchases Taxable Investments, it will value
them using the amortized cost method and comply with the provisions of
Rule 2a-7 relating to purchases of taxable instruments. When the Fund has
adopted a temporary defensive position, including when acceptable
Connecticut Municipal Obligations are unavailable for investment by the
Fund, in excess of 35% of the Fund's net assets may be invested in
securities that are not exempt from State of Connecticut income taxes.
Under normal market conditions, the Fund anticipates that not more than
5% of the value of its total assets will be invested in any one category of
Taxable Investments. Taxable Investments are more fully described in the
Statement of Additional Information to which reference hereby is made.
CERTAIN FUNDAMENTAL POLICIES - The Fund may (i) borrow money from
banks, but only for temporary or emergency (not leveraging) purposes in an
amount up to 15% of the value of the Fund's total assets (including the amount
borrowed) valued at the lesser of cost or market, less liabilities (not
including the amount borrowed) at the time the borrowing is made.
While borrowings exceed 5% of the Fund's total assets, the Fund will not
make any additional investments; (ii) pledge, hypothecate, mortgage or otherwise
encumber its assets, but only to secure borrowings for
temporary or emergency purposes; (iii) invest up to 25% of its total
assets in the securities of issuers in any industry, provided that there is no
such limitation on investments in Municipal Obligations and, for
temporary defensive purposes, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities; and (iv) invest up to 10% of its
net assets in repurchase agreements providing for settlement in more
than seven days after notice and in illiquid securities (which securities could
include participation interests (including, municipal lease/purchase agreements)
that are not subject to the demand feature described above,
and floating and variable rate demand obligations as to which the Fund
cannot exercise the related demand feature described above and as to
which there is no secondary market). This paragraph describes
fundamental policies that cannot be changed without approval by the
holders of a majority (as defined in the Investment Company Act of 1940)
of the Fund's outstanding voting shares. See "Investment Objective and
Management Policies-Investment Restrictions" in the Statement of
Additional Information.
RISK FACTORS - INVESTING IN CONNECTICUT MUNICIPAL OBLIGATIONS _
You should consider carefully the special risks inherent in the Fund's
investment in Connecticut Municipal Obligations. Connecticut's economy
relies in part on activities that may be adversely affected by cyclical change,
and recent declines in defense spending have had an impact on unemployment
levels. Although the State recorded General Fund surpluses
in its 1986 and 1987 fiscal years, Connecticut reported deficits from its
General Fund operations for the fiscal years 1988 through 1991. Together
with the deficit carried forward from the State's 1990 fiscal year, the
total General Fund deficit for the 1991 fiscal year was $965.7 million.
The total deficit was funded by the issuance of General Obligation
Economic Recovery Notes. The State Comptroller's annual report for the
fiscal year ended June 30, 1992 reflected a General Fund operating surplus
of $110 million. The State ended the 1993 fiscal year with a General Fund
operating surplus of $113.5 million. The Comptroller estimated the
General Fund operating surplus for fiscal year 1994 to be $52.7 million. The
Comptroller's monthly report for the
(page 6)
period ending November 30, 1993 estimated that the cumulative projected deficit
under GAAP for 1993 _ 94 to be approximately $470.9 million. As a result of the
recent recurring budgetary problems, S&P downgraded the
State's general obligation bonds from AA+ to AA in April 1990 and to AA+
in September 1991. Moody's and Fitch currently rate Connecticut's bonds
Aa and AA+, respectively. You should obtain and review a copy of the Statement
of Additional Information which more fully sets forth these
and other risk factors.
OTHER INVESTMENT CONSIDERATIONS - Even though interest-bearing
securities are investments which promise a stable stream of income, the prices
of such securities are inversely affected by changes in interest
rates and, therefore, are subject to the risk of market price fluctuations. The
values of fixed-income securities also may be affected by changes in
the credit rating or financial condition of the issuing entities.
New issues of Municipal Obligations usually are offered on a when-
issued basis, which means that delivery and payment for such Municipal
Obligations ordinarily take place within 45 days after the date of the
commitment to purchase. The payment obligation and the interest rate
that will be received on the Municipal Obligations are fixed at the time
the Fund enters into the commitment. The Fund will make commitments to purchase
such Municipal Obligations only with the intention of actually acquiring the
securities, but the Fund may sell these securities before the settlement date if
it is deemed advisable, although any gain realized on
such sale would be taxable. The Fund will not accrue income in respect of
a when-issued security prior to its stated delivery date. No additional when-
issued commitments will be made if more than 20% of the value of
the Fund's net assets would be so committed.
Municipal Obligations purchased on a when-issued basis and the
securities held in the Fund's portfolio are subject to changes in value
(both generally changing in the same way, i.e., appreciating when interest rates
decline and depreciating when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates. Municipal Obligations purchased on
a when-issued basis may expose the Fund to risk because
they may experience such fluctuations prior to their actual delivery.
Purchasing Municipal Obligations on a when-issued basis can involve the
additional risk that the yield available in the market when the delivery takes
place actually may be higher than that obtained in the transaction itself. A
segregated account of the Fund consisting of cash, cash
equivalents or U.S. Government securities or other high quality liquid debt
securities at least equal at all times to the amount of the when-issued
commitments will be established and maintained at the Fund's custodian
bank. Purchasing Municipal Obligations on a when-issued basis when the
Fund is fully or almost fully invested may result in greater potential
fluctuation in the value of the Fund's net assets and its net asset value
per share.
Certain municipal lease/purchase obligations in which the Fund may
invest may contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease payments in future years
unless money is appropriated for such purpose on a yearly basis. Although "non-
appropriation" lease/purchase obligations are secured by the leased property,
disposition of the leased property in the event of foreclosure might prove
difficult. In evaluating the credit quality of a municipal lease/purchase
obligation that is unrated, The Dreyfus Corporation 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 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 the 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.
(page7)
The Fund's classification as a "non-diversified" investment company
means that the proportion of the Fund's assets that may be invested in the
securities of a single issuer is not limited by the Investment Company Act
of 1940. A "diversified" investment company is required by the
Investment Company Act of 1940 generally to invest, with respect to 75%
of its total assets, not more than 5% of such assets in the securities of a
single issuer. However, the Fund intends to conduct its operations so as to
qualify as a "regulated investment company" for purposes of the Code,
which requires that, at the end of each quarter of its taxable year, (i) at
least 50% of the market value of the Fund's total assets be invested in
cash, U.S. Government securities, the securities of other regulated investment
companies and other securities, with such other securities of
any one issuer limited for the purposes of this calculation to an amount
not greater than 5% of the value of the Fund's total assets, and (ii) not more
than 25% of the value of its total assets be invested in the
securities of any one issuer (other than U.S. Government securities or the
securities of other regulated investment companies). Since a relatively
high percentage of the Fund's assets may be invested in the obligations of
a limited number of issuers, the Fund's portfolio securities may be more
susceptible to any single economic, political or regulatory occurrence
than the portfolio securities of a diversified investment company.
Investment decisions for the Fund are made independently from those of othe
investment companies advised by The Dreyfus Corporation. However,
if such other investment companies are prepared to invest in, or desire to
dispose of, Municipal Obligations or Taxable Investments at the same time
as the Fund, available investments or opportunities for sales will be allocated
equitably to each investment company. In some cases, this
procedure may adversely affect the size of the position obtained for or disposed
of by the Fund or the price paid or received by the Fund.
MANAGEMENT OF THE FUND
The Dreyfus Corporation, located at 200 Park Avenue, New York, New
York 10166, was formed in 1947 and serves as the Fund's investment
adviser. As of December 31, 1993, The Dreyfus Corporation managed or
administered approximately $78 billion in assets for more than 1.9
million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the
Fund, subject to the overall authority of the Fund's Board of Directors in
accordance with Maryland law.
Under the terms of the Management Agreement, the Fund has agreed to
pay The Dreyfus Corporation a monthly fee at the annual rate of .50 of 1%
of the value of the Fund's average daily net assets. From time to time, The
Dreyfus Corporation may waive receipt of its fees and/or voluntarily
assume certain expenses of the Fund, which would have the effect of
lowering the overall expense ratio of the Fund and increasing yield to investors
at the time such amounts are waived or assumed, as the case
may be. The Fund will not pay The Dreyfus Corporation at a later time for
any amounts it may waive, nor will the Fund reimburse The Dreyfus
Corporation for any amounts it may assume. For the fiscal year ended September
30, 1993, no management fee was paid by the Fund pursuant to
an undertaking by The Dreyfus Corporation.
The Dreyfus Corporation may pay Dreyfus Service Corporation for shareholder
and distribution services from its own monies, including past profits but not
including the management fee paid by the Fund. Dreyfus Service Corporation may
pay part or all of these payments to securities dealers or others for servicing
and distribution.
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence,
Rhode Island 02940-9671, is the Fund's Transfer and Dividend Disbursing
Agent (the "Transfer Agent"). The Bank of New York, 110 Washington
Street, New York, New York 10286, is the Fund's Custodian.
HOW TO BUY FUND SHARES
The Fund's distributor is Dreyfus Service Corporation, a wholly-owned
subsidiary of The Dreyfus Corporation, located at 200 Park Avenue, New
York, New York 10166. The shares it distributes are not deposits or obligations
of The Dreyfus Security Savings Bank, F.S.B., and therefore are not insured by
the Federal Deposit Insurance Corporation.
(page 8)
You can purchase Fund shares without a sales charge directly from
Dreyfus Service Corporation; you may be charged a nominal fee if you
effect transactions in Fund shares through a securities dealer, bank or
other financial institution. Share certificates are issued only upon your
written request. No certificates are issued for fractional shares. It is not
recommended that the Fund be used as a vehicle for Keogh, IRA or other qualified
plans. The Fund reserves the right to reject any purchase order.
The minimum initial investment is $2,500, or $1,000 if you are a client of a
securities dealer, bank or other financial institution which has made
an aggregate minimum initial purchase for its customers of $2,500. Subsequent
investments must be at least $100. The initial investment
must be accompanied by the Fund's Account Application. For full-time or part-
time employees of The Dreyfus Corporation or any of its affiliates or
subsidiaries, directors of The Dreyfus Corporation, Board members of a
fund advised by The Dreyfus Corporation, including members of the 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 Dreyfus
Corporation or any of its affiliates or subsidiaries who elect to have a portion
of their pay directly deposited into their Fund account, the minimum initial
investment is $50. The Fund reserves the right to vary further the initial and
subsequent investment minimum requirements at any time.
You may purchase Fund shares by check or wire, or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable
to "The Dreyfus Family of Funds." Payments to open new accounts which
are mailed should be sent to The Dreyfus Family of Funds, P.O. Box 9387,
Providence, Rhode Island 02940-9387, together with your Account
Application. For subsequent investments, your Fund account number should appear
on the check and an investment slip should be enclosed and sent to
The Dreyfus Family of Funds, P.O. Box 105, Newark, New Jersey 07101-
0105. Neither initial nor subsequent investments should be made by third party
check. Purchase orders may be delivered in person only to a Dreyfus Financial
Center. THESE ORDERS WILL BE FORWARDED TO THE FUND AND
WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For the location of the
nearest Dreyfus Financial Center, please call one of the telephone numbers
listed under "General Information."
Wire payments may be made if your account is in a commercial bank
that is a member of the Federal Reserve System or any other bank having a
correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, DDA #8900052694/Dreyfus Connecticut
Municipal Money Market Fund, Inc., for purchase of Fund shares
in your name. The wire must include your Fund account number (for new accounts,
your Taxpayer Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase of Fund
shares is by wire, please call 1-800-645-6561
after completing your wire payment to obtain your Fund account number. Please
include your Fund account number on the Fund's Account
Application and promptly mail the Account Application to the Fujnd, as no
redemptions will be permitted until the Account Application is received.
You may obtain further information about remitting funds in this manner
from your bank. All payments should be made in U.S. dollars and, to avoid fees
and delays, should be drawn only on U.S. banks. A charge will be
imposed if any check used for investment in your account does not clear.
The Fund makes available to certain large institutions the ability to issue
purchase instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of funds
from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct
the institution to transmit immediately available funds through the
Automated Clearing House to The Bank of New York with instructions to
credit your Fund account. The instructions must specify your Fund account
registration and your Fund account number PRECEDED BY THE DIGITS
"1111."
Fund shares are sold on a continuous basis at the net asset value per share
next determined after an order in proper form and Federal Funds
(monies of member banks within the Federal Reserve System which are
held on deposit at a Federal Reserve Bank) are received by the Transfer Agent.
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 or within two business days
of receipt of a check drawn on a member bank of the Federal Reserve
(page 9)
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. The
Fund's net asset value per share is determined as of 12:00 Noon,
New York time, on each day the New York Stock Exchange is open for
business. Net asset value per share is computed by dividing the value of
the Fund's net assets (i.e., the value of its assets less liabilities) by the
total number of shares outstanding. See "Determination of Net Asset
Value" in the Fund's Statement of Additional Information.
If your payments are received in or converted into Federal Funds by
12:00 Noon, New York time, by the Transfer Agent, 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.
These orders will become effective at the price determined at 12:00 Noon,
New York time, and the shares purchased will receive the dividend on Fund shares
declared on that day, if the telephone order is placed by 12:00
Noon, New York time, and Federal Funds are received by 4:00 p.m., New York time,
on that day.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes"
and the Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject
you to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
DREYFUS TELETRANSFER PRIVILEGE - You may purchase Fund shares
(minimum $500, maximum $150,000 per day) by telephone if you have
checked the appropriate box and supplied the necessary information on the Fund's
Account Application or have filed an Optional 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. The Fund may
modify or terminate this Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of Fund shares by telephoning 1-800-221-
4060 or, if you are calling from overseas, call 1-401-455-3306.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE - The Exchange Privilege enables you to purchase, in exchange
for shares of the Fund, shares of certain other funds managed or administered by
The Dreyfus Corporation, to the extent such shares are offered for sale in your
state of residence. These funds have different investment objectives which may
be of interest to you. If you desire to
use this Privilege, you should consult Dreyfus Service Corporation to determine
if it is available and whether any conditions are imposed on its use.
To use this Privilege, you must give exchange instructions to the Transfer
Agent in writing, by wire or by telephone. If you previously have established
the Telephone Exchange Privilege, you may telephone exchange instructions by
calling 1-800-221-4060 or, if you are calling from
overseas, call 1-401-455-3306. See "How to Redeem Fund
Shares-Procedures." Before any exchange, you must obtain and should
review a copy of the current prospectus of the fund into which the
exchange is being made. Prospectuses may be obtained from Dreyfus
Service Corporation. Except in the case of Personal Retirement Plans, the shares
being exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares
being exchanged must have a value of at least the minimum initial
investment required for the fund into which the exchange is being made.
Telephone exchanges may be made only if the appropriate "YES" box has
been checked on the Account Application, or a separate signed Optional Services
Form is on file with the Transfer Agent. Upon an exchange into a
new account, the following shareholder services and privileges, as
applicable and where available, will be automatically carried over to the fund
in which the exchange is made: Exchange Privilege,
Check Redemption Privilege, Wire Redemption Privilege, Telephone
Redemption Privilege, Dreyfus TELETRANSFER Privilege, and the dividend
and capital gain distribution option (except for the
(page 10)
Dreyfus Dividend Sweep Privilege) selected by the investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges into funds sold
with a sales load. If you are exchanging into a fund that charges a sales load,
you may qualify for share prices which do not include the sales load or which
reflect a reduced sales load, if the shares of the fund from which you are
exchanging were: (a) purchased with a sales load, (b)
acquired by a previous exchange from shares purchased with a sales load,
or (c) acquired through reinvestment of dividends or distributions paid
with respect to the foregoing categories of shares. To qualify, at the time of
your exchange you must notify the Transfer Agent. Any such
qualification is subject to confirmation of your holdings through a check
of appropriate records. See "Shareholder Services" in the Statement of
Additional Information. No fees currently are charged shareholders
directly in connection with exchanges, although the Fund reserves the
right, upon not less than 60 days' written notice, to charge shareholders a
nominal fee in accordance with rules promulgated by the Securities and Exchange
Commission. The Fund reserves the right to reject any exchange request in whole
or in part. The Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
The exchange of shares of one fund for shares of another is treated for Federal
income tax purposes as a sale of the shares given in exchange
by the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
DREYFUS AUTO-EXCHANGE PRIVILEGE - Dreyfus Auto-Exchange Privilege
enables you to invest regularly (on a semi-monthly, monthly, quarterly or annual
basis), in exchange for shares of the Fund, in shares of other funds in the
Dreyfus Family of Funds of which you are currently an investor. The amount you
designate, which can be expressed either in terms of a
specific dollar or share amount ($100 minimum), will be exchanged automatically
on the first and/or fifteenth of the month according to the schedule you have
selected. Shares will be exchanged at the then-current
net asset value; however, a sales load may be charged with respect to exchanges
into funds sold with a sales load. See "Shareholder Services" in the Statement
of Additional Information. The right to exercise this
Privilege may be modified or cancelled by the Fund or the Transfer Agent. You
may modify or cancel your exercise of this Privilege at any time by writing to
The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671.
The Fund may charge a service fee for the use of this Privilege, although no
such fee currently is contemplated. The exchange of shares of one fund for
shares of another is treated for Federal income tax purposes as a sale of the
shares given in exchange by the shareholder and, therefore, an exchanging
shareholder may realize a taxable gain or loss.
For more information concerning this Privilege and the funds in the
Dreyfus Family of Funds eligible to participate in this Privilege, or to obtain
a Dreyfus Auto-Exchange Authorization Form, please call toll free 1-800-645-
6561.
DREYFUS-AUTOMATIC ASSET BUILDER - Dreyfus-AUTOMATIC Asset Builder
permits you to purchase Fund shares (minimum of $100 and maximum of
$150,000 per transaction) at regular intervals selected by you. Fund
shares are purchased by transferring funds from the bank account
designated by you. At your option, the bank account designated by you will
be debited in the specified amount, and Fund shares will be purchased,
once a month, on either the first or fifteenth day, or twice a month, on
both days. Only an account maintained at a domestic financial institution which
is an Automated Clearing House member may be so designated. To establish a
Dreyfus-AUTOMATIC Asset Builder account, you must file an authorization form
with the Transfer Agent. You may obtain the necessary authorization form from
Dreyfus Service Corporation. You may cancel your participation in this Privilege
or change the amount of purchase at any
time by mailing written notification to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671, and the notification will
be effective three business days following receipt. The Fund may modify
or terminate this Privilege at any time or charge a service fee. No such
fee currently is contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE - Dreyfus Government
Direct Deposit Privilege enables you to purchase Fund shares (minimum of
$100 and maximum of $50,000 per transaction) by having Federal salary,
Social Security, or certain veterans', military or other payments from the
Federal government automatically deposited into your Fund
account. You may deposit as much of such payments as you elect. To enroll
in Dreyfus Government Direct Deposit, you must file with the Transfer
Agent a completed Direct Deposit Sign-
(page 11)
Up Form for each type of payment
that you desire to include in the Privilege. The appropriate form may be
obtained from Dreyfus Service Corporation. Death or legal incapacity will
terminate your participation in this Privilege. You may elect at any time
to terminate your participation by notifying in writing the appropriate Federal
agency. Further, the Fund may terminate your participation upon
30 days' notice to you.
DREYFUS DIVIDEND SWEEP PRIVILEGE - Dreyfus Dividend Sweep Privilege
enables you to invest automatically dividends or dividends and capital
gain distributions, if any, paid by the Fund in shares of another fund in the
Dreyfus Family of Funds of which you are a shareholder. Shares of the
other fund will be purchased at the then-current net asset value; however,
a sales load may be charged with respect to investments in shares of a
fund sold with a sales load. If you are investing in a fund that charges a sales
load, you may qualify for share prices which do not include the sales load or
which reflect a reduced sales load. If you are investing in a fund that charges
a contingent deferred sales charge, the shares purchased will
be subject on redemption to the contingent deferred sales charge, if any,
applicable to the purchased shares. See "Shareholder Services" in the Statement
of Additional Information. For more information concerning
this Privilege and the funds in the Dreyfus Family of Funds eligible to
participate in this Privilege, or to request a Dividend Sweep Authorization
Form, please call toll free 1-800-645-6561. You may cancel this Privilege
by mailing written notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. To select a new fund after cancellation,
you must submit a new authorization form. Enrollment in or cancellation of this
Privilege is effective three business days following receipt. This Privilege is
available only for existing accounts and may not be used to open new accounts.
Minimum subsequent investments do not
apply. The Fund may modify or terminate this Privilege at any time or
charge a service fee. No such fee currently is contemplated.
DREYFUS PAYROLL SAVINGS PLAN - Dreyfus Payroll Savings Plan permits
you to purchase Fund shares (minimum of $100 per transaction)
automatically on a regular basis. Depending upon your employer's direct deposit
program, you may have part or all of your paycheck transferred to your existing
Dreyfus account electronically through the Automated
Clearing House system at each pay period. To establish a Dreyfus Payroll Savings
Plan account, you must file an authorization form with your employer's payroll
department. Your employer must complete the reverse
side of the form and return it to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671. You may obtain the necessary
authorization form from Dreyfus Service Corporation. You may change the amount
of purchase or cancel the authorization only by written
notification to your employer. It is the sole responsibility of your employer,
not Dreyfus Service Corporation, The Dreyfus Corporation, the
Fund, the Transfer Agent or any other person, to arrange for transactions under
the Dreyfus Payroll Savings Plan. The Fund may modify or terminate
this Privilege at any time or charge a service fee. No such fee currently is
contemplated.
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. An application for the Automatic Withdrawal Plan can be obtained from
Dreyfus Service Corporation. There is a service charge of 50cents for each
withdrawal check. The Automatic Withdrawal Plan may be ended 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.
HOW TO REDEEM FUND SHARES
GENERAL - You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as
described below. When a request is received in proper form, the Fund will redeem
the shares at the next determined net asset value.
The Fund imposes no charges when shares are redeemed directly through
Dreyfus Service Corporation. Securities dealers, banks and other financial
institutions may charge a nominal fee for effecting redemptions of )Fund shares.
Any certificates representing Fund shares being redeemed must be submitted with
the redemption request. The value of the shares redeemed may be
more or less than their original cost, depending upon the Fund's then-
current net asset value.
(page 12)
The Fund ordinarily will make payment for all shares redeemed within seven
days after receipt by the Transfer Agent of a redemption request in proper form,
except as provided by the rules of the Securities and
Exchange Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY
CHECK, BY DREYFUS TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-
AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY SUBMIT A WRITTEN
REDEMPTION REQUEST TO THE TRANSFER AGENT, YOUR REDEMPTION WILL BE
EFFECTIVE AND THE REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU
PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK, DREYFUS
TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER,
WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE
FUND WILL NOT HONOR REDEMPTION CHECKS UNDER THE CHECK REDEMPTION
PRIVILEGE, AND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE OR
TELEPHONE OR PURSUANT TO THE DREYFUS TELETRANSFER PRIVILEGE, FOR
A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER
AGENT OF THE PURCHASE CHECK, THE DREYFUS TELETRANSFER PURCHASE
OR THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH
REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR
SHARES WERE PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A
SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER THE
REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE,
DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL
BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP.
Fund shares will not be redeemed until the Transfer Agent has received
your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if your account's net asset value is $500
or less and remains so during the notice period.
PROCEDURES - You may redeem Fund shares by using the regular
redemption procedure through the Transfer Agent, using the Check
Redemption Privilege, through the Wire Redemption Privilege, through the
Telephone Redemption Privilege, or through the Dreyfus TELETRANSFER Privilege.
The Fund makes available to certain large institutions the
ability to issue redemption instructions through compatible computer facilities.
You may redeem or exchange Fund shares by telephone if you have
checked the appropriate box on the Fund's Account Application or have
filed an Optional Services Form with the Transfer Agent. If you select a
telephone redemption or exchange privilege, you authorize the Transfer
Agent to act on telephone instructions from any person representing
himself or herself to be you and reasonably believed by the Transfer Agent
to be genuine. The Fund will require the Transfer Agent to employ
reasonable procedures, such as requiring a form of personal identification, to
confirm that instructions are genuine and, if it does not follow such
procedures, the Fund or the Transfer Agent may be liable for any losses
due to unauthorized or fraudulent instructions. Neither the Fund nor the
Transfer Agent will be liable for following telephone instructions
reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to request a
redemption or exchange of Fund shares. In such cases, you should consider using
the other redemption procedures described herein. Use of
these other redemption procedures may result in your redemption request
being processed at a later time than it would have been if telephone redemption
had been used.
REGULAR REDEMPTION - Under the regular redemption procedure, you may
redeem your shares by written request mailed to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. Redemption requests
may be delivered in person only to a Dreyfus Financial Center. THESE REQUESTS
WILL BE FORWARDED TO THE FUND AND WILL BE
PROCESSED ONLY UPON RECEIPT THEREBY. For the location of the nearest
Dreyfus Financial Center, please call one of the telephone numbers listed under
"General Information." Redemption requests must be signed by each shareholder,
including each owner of a joint account, and each signature
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. If you have any questions with respect to signature-guarantees, please
call the telephone number listed under "General Information."
(page 13)
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written signature-
guaranteed request.
CHECK REDEMPTION PRIVILEGE - You may request on the Account
Application, Optional Services Form or by later written request that the
Fund provide Redemption Checks drawn on the Fund's account. Redemption
Checks may be made payable to the order of any person in the amount of
$500 or more. Redemption Checks should not be used to close your account.
Redemption Checks are free, but the Transfer Agent will impose a fee for
stopping payment of a Redemption Check upon your request or if the
Transfer Agent cannot honor the Redemption Check due to insufficient
funds or other valid reason. You should date your Redemption Checks with
the current date when your write them. Please do not postdate your
Redemption Checks. If you do, effective February 1, 1994, the Transfer
Agent will honor, upon presentment, even if presented before the date of
the check, all postdated Redemption Checks which are dated within six
months of presentment for payment, if they are otherwise in good order. Shares
for which certificates have been issued may not be redeemed by Redemption Check.
This Privilege may be modified or terminated at any
time by the Fund or the Transfer Agent upon notice to shareholders.
WIRE REDEMPTION PRIVILEGE - You may request by wire or telephone that redemption
proceeds (minimum $1,000) be wired to your account at a bank
which is a member of the Federal Reserve System, or a correspondent bank
if your bank is not a member. To establish the Wire Redemption Privilege,
you must check the appropriate box and supply the necessary information
on the Fund's Account Application or file an Optional Services Form with
the Transfer Agent. You may direct that redemption proceeds be paid by
check (maximum $150,000 per day) made out to the owners of record and
mailed to your address. Redemption proceeds of less than $1,000 will be
paid automatically by check. Holders of jointly registered Fund or bank accounts
may have redemption proceeds of only up to $250,000 wired
within any 30-day period. You may telephone redemption requests by
calling 1-800-221-4060 or, if you are calling from overseas, call 1-401-455-
3306. The Fund reserves the right to refuse any redemption request, including
requests made shortly after a change in address, and may limit
the amount involved or the number of such requests. This Privilege may be
modified or terminated at any time by the Transfer Agent or the Fund. The Fund's
Statement of Additional Information sets forth instructions for transmitting
redemption requests by wire. Shares held under Keogh Plans,
IRAs or other retirement plans, and shares for which certificates have
been issued, are not eligible for this Privilege.
TELEPHONE REDEMPTION PRIVILEGE - You may redeem Fund shares
(maximum $150,000 per day) by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed an
Optional Services Form with the Transfer Agent. The redemption proceeds
will be paid by check and mailed to your address. You may telephone redemption
instructions by calling 1-800-221-4060 or, if you are calling
from overseas, call 1-401-455-3306. The Fund reserves the right to
refuse any request made by telephone, including requests made shortly
after a change of address, and may limit the amount involved or the
number of telephone redemption requests. This Privilege may be modified
or terminated at any time by the Transfer Agent or the Fund. Shares held under
Keogh Plans, IRAs or other retirement plans, and shares for which
the certificates have been issued, are not eligible for this Privilege.
DREYFUS TELETRANSFER PRIVILEGE - You may redeem Fund shares
(minimum $500 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Fund's Account
Application or have filed an Optional Services Form with the Transfer
Agent. The proceeds will be transferred between your Fund account and the bank
account designated in one of these documents. Only such an account maintained in
a domestic financial institution which is an Automated
Clearing House member may be so 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 or, at your request, paid by
check (maximum $150,000 per day) and mailed to your
address. Holders of jointly registered Fund or bank accounts may redeem through
the Dreyfus TELETRANSFER )Privilege for transfer to their
bank account only up to $250,000 within any 30-day period. The Fund
reserves the right to refuse any request made by telephone, including requests
made shortly after a change of address, and may limit the amount involved or the
number of such requests. The Fund may modify or
terminate this Privilege at any
(page 14)
time or charge a service fee upon notice to shareholders. No such fee currently
is contemplated.
If you have selected the Dreyfus TELETRANSFER Privilege, you may request
a Dreyfus TELETRANSFER redemption by telephoning 1-800-221-4060 or,
if you are calling from overseas, call 1-401-455-3306. Shares held under Keogh
Plans, IRAs or other retirement plans, and shares issued in
certificate form, are not eligible for this Privilege.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan 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 for
certain allocated expenses of providing personal services and/or maintaining
shareholder accounts. The services provided may include
personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder
accounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from net investment income on
each day the New York Stock Exchange is open for business. Dividends
usually are paid on the last calendar day of each month and are
automatically reinvested in additional Fund shares at net asset value or,
at your option, paid in cash. The Fund's earnings for Saturdays, Sundays
and holidays are declared as dividends on the preceding business day. 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. Distributions from net realized securities
gains, if any, generally are declared and paid once a year, but the Fund may
make distributions on a more frequent basis to comply with the
distribution requirements of the Code, in all events in a manner consistent with
the provisions of the Investment Company Act of 1940. The Fund will
not make distributions from net realized securities gains unless capital
loss carryovers, if any, have been utilized or have expired. You may choose
whether to receive distributions in cash or to reinvest in additional Fund
shares at net asset value. All expenses are accrued daily and deducted
before declaration of dividends to investors.
Dividends paid by the Fund that qualify as exempt-interest dividends
for Federal income tax purposes are not subject to the Connecticut income
tax on individuals, trusts and estates, to the extent that such dividends
are derived from income received by the Fund as interest from Connecticut
Municipal Obligations or as interest from obligations the interest with respect
to which Connecticut is prohibited by Federal law from taxing. Dividends
derived from other sources, including distributions that qualify
as capital gain dividends for Federal income tax purposes, are taxable by
Connecticut. In the case of a shareholder subject to the Federal
alternative minimum tax, the portion of exempt-interest dividends paid by
the Fund treated as a preference item for purposes of such tax may be
subject to the net Connecticut minimum tax. Dividends qualifying as exempt-
interest dividends for Federal income tax purposes that are distributed by the
Fund to entities taxed as corporations under the Connecticut corporation
business tax are not exempt from that tax.
Fund shares are not subject to property taxation by the State of Connecticut
or its political subdivisions.
Except for dividends from Taxable Investments, the Fund anticipates
that substantially all dividends paid by the Fund will not be subject to Federal
income tax. Dividends derived from Taxable Investments, together
with distributions from any net realized short-term securities gains and gains
from the sale or other disposition of certain market discount bonds, are subject
to Federal income tax as ordinary income whether or not reinvested. No dividend
paid by the Fund will qualify for the dividends received deduction allowable to
certain U.S. corporations. Distributions
from net realized long-term securities gains of the Fund generally are taxable
as long-term capital gains for Federal income tax purposes if you
are a citizen or resident of the United States. The Code provides that the net
capital gain of an individual generally will not be subject to Federal income
tax at a rate in excess of 28%. Under the Code, interest on indebtedness
incurred or continued to purchase or carry Fund shares which
is deemed to relate to exempt-interest dividends is not deductible.
Although all or a substantial portion of the dividends paid by the Fund may
be excluded by shareholders of the Fund from their gross income for Federal
income tax purposes, the Fund may purchase specified private
(page 15)
activity bonds, the interest from which may be (i) a preference item for
purposes of the alternative minimum tax, (ii) a component of the
"adjusted current earnings" preference item for purposes of the corporate
alternative minimum tax as well as a component in computing the
corporate environmental tax or (iii) a factor in determining the extent to which
a shareholder's Social Security benefits are taxable. If the Fund purchases such
securities, the portion of the Fund's dividends related thereto will not
necessarily be tax exempt to an investor who is subject
to the alternative minimum tax and/or tax on Social Security benefits and
may cause an investor to be subject to such taxes.
Notice as to the tax status of your dividends and distributions will be
mailed to you annually. You also will receive periodic summaries of your account
which will include information as to dividends and distributions
from securities gains, if any, paid during the year. These statements set forth
the dollar amount of income exempt from Federal tax and the dollar amount, if
any, subject to Federal tax. These dollar amounts will vary depending on the
size and length of time of your investment in the Fund. If the Fund pays
dividends derived from taxable income, it intends to
designate as taxable the same percentage of the day's dividend as the
actual taxable income earned on that day bears to total income earned on
that day. Thus, the percentage of the dividend designated as taxable, if
any, may vary from day to day.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31%, of taxable dividends and
distributions from net realized securities gains of the Fund paid to a
shareholder if such shareholder fails to certify either that the TIN furnished
in connection with opening an account is correct, or that such shareholder has
not received notice from the IRS of being subject to
backup withholding as a result of a failure to properly report taxable dividend
or interest income on a Federal income tax return. Furthermore,
the IRS may notify the Fund to institute backup withholding if the IRS
determines a shareholder's TIN is incorrect or if a shareholder has failed
to properly report taxable dividend and interest income on a Federal
income tax return.
A TIN is either the Social Security number or employer identification number
of the record owner of the account. Any tax withheld as a result of backup
withholding does not constitute an additional tax imposed on the record owner of
the account, and may be claimed as a credit on the record owner's Federal income
tax return.
Management of the Fund believes that the Fund has qualified for the fiscal
year ended September 30, 1993 as a "regulated investment
company" under the Code. The Fund intends to continue to so qualify if
such qualification is in the best interests of its shareholders. Such
qualification relieves the Fund of any liability for Federal income tax to the
extent its earnings are distributed in accordance with applicable provisions of
the Code. The Fund is subject to a non-deductible 4% excise tax, measured with
respect to certain undistributed amounts of taxable investment income and
capital gains.
You should consult your tax adviser regarding specific questions as to
Federal, state or local taxes.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on May 16, 1990, and commenced
operations on July 12, 1990. The Fund is authorized to issue 1 billion shares of
Common Stock, par value $.001 per share. Each share has
one vote.
Unless otherwise required by the Investment Company Act of 1940, ordinarily
it will not be necessary for the Fund to hold annual meetings of shareholders.
As a result, Fund shareholders may not consider each year
the election of Directors or the appointment of auditors. However,
pursuant to the Fund's By-Laws, 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 Director from office
and the holders of at least 25% of such shares may require the Fund to
hold a special meeting of shareholders for any other purpose. Fund shareholders
may remove a Director by the affirmative vote of a majority of the Fund's
outstanding voting shares. In addition, the Board of Directors will call a
meeting of shareholders for the purpose of electing Directors if, at any time,
less than a majority of the Directors then holding office have been elected by
shareholders.
(page 16)
The Transfer Agent maintains a record of your ownership and will send
confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll
free 1-800-645-6561.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND IN THE FUND'S OFFICIAL SALES LITERATURE IN
CONNECTION WITH THE OFFER OF THE FUND'S SHARES, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY
PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
(page 17)
DREYFUS CONNECTICUT MUNICIPAL MONEY MARKET FUND, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
JANUARY 20, 1994
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Dreyfus Connecticut Municipal Money Market Fund, Inc. (the "Fund"),
dated January 20, 1994, as it may be revised from time to time. To obtain
a copy of the Fund's Prospectus, please write to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or call toll free
1-800-645-6561.
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Dreyfus Service Corporation (the "Distributor"), a wholly-owned
subsidiary of the Manager, is the distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . . . . B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . B-7
Management Agreement. . . . . . . . . . . . . . . . . . . . B-10
Shareholder Services Plan . . . . . . . . . . . . . . . . . B-12
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . B-12
Redemption of Fund Shares . . . . . . . . . . . . . . . . . B-14
Shareholder Services. . . . . . . . . . . . . . . . . . . . B-16
Determination of Net Asset Value. . . . . . . . . . . . . . B-18
Dividends, Distributions and Taxes. . . . . . . . . . . . . B-19
Yield Information . . . . . . . . . . . . . . . . . . . . . B-19
Portfolio Transactions. . . . . . . . . . . . . . . . . . . B-21
Information About the Fund. . . . . . . . . . . . . . . . . B-21
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . B-22
Appendix A. . . . . . . . . . . . . . . . . . . . . . . . . B-23
Appendix B. . . . . . . . . . . . . . . . . . . . . . . . . B-26
Financial Statements. . . . . . . . . . . . . . . . . . . . B-30
Report of Independent Auditors. . . . . . . . . . . . . . . B-36
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Description
of the Fund."
The average distribution of investments (at value) in Municipal
Obligations by ratings for the fiscal year ended September 30, 1993,
computed on a monthly basis, was as follows:
Fitch Investors Moody's Standard & Poor's
Service, Inc. Investors Service, Corporation Percentage
("Fitch") or Inc. ("Moody's") or ("S&P")
of Value
F-1+/F-1 VMIG 1/MIG 1, P-1 SP-1+/SP-1, A-1+/A-1 71.3%
F-2 VMIG 2/MIG 2, P-2 SP-2, A-2 1.6%
AAA/AA Aaa/Aa AAA/AA 19.3%
Not Rated Not Rated Not Rated 7.8%
100.0%
Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligations may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses and
lending such funds to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or on
behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated
housing facilities, sports facilities, convention or trade show facilities,
airport, mass transit, industrial, port or parking facilities, air or water
pollution control facilities and certain local facilities for water supply,
gas, electricity, or sewage or solid waste disposal; the interest paid on
such obligations may be exempt from Federal income tax, although current
tax laws place substantial limitations on the size of such issues. Such
obligations are considered to be Municipal Obligations if the interest paid
thereon qualifies as exempt from Federal income tax in the opinion of bond
counsel to the issuer. There are, of course, variations in the security of
Municipal Obligations, both within a particular classification and between
classifications.
Floating and variable rate demand notes and bonds are tax exempt
obligations ordinarily having stated maturities in excess of 13 months, but
which permit the holder to demand payment of principal at any time, or at
specified intervals not exceeding 13 months, in each case upon not more
than 30 days' notice. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon
a specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand obligation is based on a known lending rate,
such as a bank's prime rate, and is adjusted automatically each time such
rate is adjusted. The interest rate on a variable rate demand obligation
is adjusted automatically at specified intervals.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation, and rating of the issue.
The imposition of the Fund's management fee, as well as other operating
expenses, will have the effect of reducing the yield to investors.
Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such
purpose on a yearly basis. 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
that 10% of the value of the Fund's net assets will be invested in lease
obligations that are illiquid and in other illiquid securities. See
"Investment Restriction No. 6" below.
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
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 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 the tender option
bonds, or otherwise dispose of the 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 Board of Directors 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.
Ratings of Municipal Obligations. If, subsequent to its purchase by
the Fund, (a) an issue of rated Municipal Obligations ceases to be rated in
the highest rating category by at least two rating organizations (or one
rating organization if the instrument was rated by only one such
organization) or the Fund's Board determines that it is no longer of
comparable quality or (b) the Manager becomes aware that any portfolio
security not so highly rated or any unrated security has been given a
rating by any rating organization below the rating organization's second
highest rating category, the Fund's Board will reassess promptly whether
such security presents minimal credit risk and will cause the Fund to take
such action as it determines is in the best interest of the Fund and its
shareholders; provided that the reassessment required by clause (b) is not
required if the portfolio security is disposed of or matures within five
business days of the Manager becoming aware of the new rating and the
Fund's Board is subsequently notified of the Manager's actions.
To the extent the ratings given by Moody's, S&P or Fitch for Municipal
Obligations may change as a result of changes in such organizations or
their rating systems, the Fund will attempt to use comparable ratings as
standards for its investments in accordance with the investment policies
contained in the Fund's Prospectus and this Statement of Additional
Information. The ratings of Moody's, S&P and Fitch represent their
opinions as to the quality of the Municipal Obligations which they
undertake to rate. It should be emphasized, however, that ratings are
relative and subjective and are not absolute standards of quality.
Although these ratings may be an initial criterion for selection of
portfolio investments, the Manager also will evaluate these securities and
the creditworthiness of the issuers of such securities.
Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. Treasury Bills have initial maturities of one year or less;
Treasury Notes have initial maturities of one to ten years; and Treasury
Bonds generally have initial maturities of greater than ten years. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, for example, Government National Mortgage Association
pass-through certificates, are supported by the full faith and credit of
the U.S. Treasury; others, such as those of the Federal Home Loan Banks, by
the right of the issuer to borrow from the U.S. Treasury; others, such as
those issued by the Federal National Mortgage Association, by discretionary
authority of the U.S. Government to purchase certain obligations of the
agency or instrumentality; and others, such as those issued by the Student
Loan Marketing Association, only by the credit of the agency or
instrumentality. These securities bear fixed, floating or variable rates
of interest. Interest rates may fluctuate based on generally recognized
reference rates or the relationship of rates. While the U.S. Government
provides financial support to such U.S. Government-sponsored agencies or
instrumentalities, no assurance can be given that it will always do so,
since it is not so obligated by law. The Fund will invest in such
securities only when it is satisfied that the credit risk with respect to
the issuer is minimal.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified
period of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate.
Investments in time deposits generally are limited to London branches of
domestic banks that have total assets in excess of one billion dollars.
Time deposits which may be held by the Fund will not benefit from insurance
from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments
reflect the obligation both of the bank and of the drawer to pay the face
amount of the instrument upon maturity. Other short-term bank obligations
may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.
Repurchase agreements involve the acquisition by the Fund of an
underlying debt instrument, subject to an obligation of the seller to
repurchase, and the Fund to resell, the instrument at a fixed price usually
not more than one week after its purchase. The Fund's custodian 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. In an attempt to reduce the risk of
incurring a loss on a repurchase agreement, the Fund will enter into
repurchase agreements only with domestic banks with total assets in excess
of one billion dollars or primary government securities dealers reporting
to the Federal Reserve Bank of New York, with respect to securities of the
type in which the Fund may invest, and will require that additional
securities be deposited with it if the value of the securities purchased
should decrease below resale price. The Manager will monitor on an ongoing
basis the value of the collateral to assure that it always equals or
exceeds the repurchase price. Certain costs may be incurred by the Fund in
connection with the sale of the securities if the seller does not
repurchase them in accordance with the repurchase agreement. In addition,
if bankruptcy proceedings are commenced with respect to the seller of the
securities, realization on the securities by the Fund may be delayed or
limited. The Fund will consider on an ongoing basis the creditworthiness
of the institutions with which it enters into repurchase agreements.
Risk Factors--Investing in Connecticut Municipal Obligations.
Investors should consider carefully the special risks inherent in the
Fund's investment in Connecticut Municipal Obligations. Connecticut's
economy relies in part on activities that may be adversely affected by
cyclical change, and recent declines in defense spending have had an impact
on unemployment levels. Although the State recorded General Fund surpluses
in its fiscal years 1985 through 1987, Connecticut reported deficits from
its General Fund operations for the fiscal years 1988 through 1991.
Together with the deficit carried forward from the State's 1990 fiscal
year, the total General Fund deficit for the 1991 fiscal year was $965.7
million. The total deficit was funded by the issuance of General
Obligation Economic Recovery Notes. The Comptroller's annual reports for
the fiscal years ended June 30, 1992 and 1993 reflected General Fund
operating surpluses of $110 million and $113.5 million, respectively. The
Comptroller estimated the General Fund operating surplus for fiscal year
1994 to $52.7 million. The Comptroller's monthly report for the period
ended November 30, 1993 estimated that on a GAAP basis the cumulative
deficit was $470.9 million for fiscal 1993-94. S&P, Moody's and Fitch
currently rate Connecticut's bonds AA-, Aa and AA+, respectively.
Investment Restrictions. The Fund has adopted the following
restrictions as fundamental policies. These restrictions cannot be changed
without approval by the holders of a majority (as defined in the Investment
Company Act of 1940, as amended (the "Act")) of the Fund's outstanding
voting shares. The 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. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid
(which securities could include participation interests (including
municipal lease/purchase agreements) that are not subject to the demand
feature described in the Fund's Prospectus and floating and variable rate
demand obligations as to which the Fund cannot exercise the demand feature
described in the Fund's Prospectus on less than seven days' notice and as
to which there is no secondary market) if, in the aggregate, more than 10%
of its net assets would be so invested.
7. 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.
8. 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.
9. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no such
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
10. 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.
For purposes of Investment Restriction No. 9, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together
as an "industry." If a percentage restriction is adhered to at the time of
investment, a later increase or decrease in percentage resulting from a
change in values or assets will not constitute a violation of such
restriction.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interests of the Fund and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of Fund shares in the state
involved.
MANAGEMENT OF THE FUND
Directors and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Director who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Directors and Officers of the Fund
DAVID W. BURKE, Director. Since October 1990, Vice President and Chief
Administrative Officer of the Manager. During the period 1977-1990,
Mr. Burke was involved in the management of national television news,
as Vice-President and Executive Vice President of ABC News, and
subsequently as President of CBS News.
SAMUEL CHASE, Director. Since 1982, President of Samuel Chase & Company,
Ltd., an economic consulting firm. From 1983 to 1989, Chairman of
Chase, Brown & Blaxall, Inc., an economic consulting firm. His
address is 4410 Massachusetts Avenue, N.W., Suite 408, Washington,
D.C. 20016.
JONI EVANS, Director. Senior Vice President of the William Morris Agency.
From September 1987 to May 1993, Executive Vice President of Random
House, Inc., and from January 1991, to May 1993, President and
Publisher of Turtle Bay Books; from January 1987 to December 1990,
Publisher of Random House Adult Trade Division; and from 1985 to 1987,
President of Simon & Schuster-Trade Division. Her address is 1350
Avenue of the Americas, New York, New York 10019.
*LAWRENCE M. GREENE, Director. Legal Consultant to and a director of the
Manager, Executive Vice President and a director of the Distributor
and an officer, director or trustee of other investment companies
advised or administered by the Manager. His address is 200 Park
Avenue, New York, New York 10166.
ARNOLD S. HIATT, Director. Chairman of The Stride Rite Foundation. From
1969 to June 1992, Chairman of the Board, President or Chief Executive
Officer of The Stride Rite Corporation, a multi-divisional footwear
manufacturing and retailing company. Mr. Hiatt is also a director of
The Cabot Corporation. His address is 400 Atlantic Avenue, Boston,
Massachusetts 02110.
DAVID J. MAHONEY, Director. President of David Mahoney Ventures since
1983. From 1968 to 1983, he was Chairman and Chief Executive Officer
of Norton Simon Inc., a producer of consumer products and services.
Mr. Mahoney is also a director of National Health Laboratories Inc.
and a director and member of the Executive Committee of NYNEX
Corporation. His address is 745 Fifth Avenue, Suite 700, New York,
New York 10151.
*RICHARD J. MOYNIHAN, Director, President and Investment Officer. An
employee of the Manager and an officer, director or trustee of other
investment companies advised or administered by the Manager. His
address is 200 Park Avenue, New York, New York 10166.
BURTON N. WALLACK, Director. President and co-owner of Wallack Management
Company, a real estate management company managing real estate in the
New York City area. His address is 18 East 64th Street, Suite 3D, New
York, New York 10031.
Each of the "non-interested" Directors is also a director of Dreyfus
BASIC Municipal Money Market Fund, Inc., Dreyfus California Tax Exempt Bond
Fund, Inc., Dreyfus GNMA Fund, Inc., Dreyfus Intermediate Municipal Bond
Fund, Inc., Dreyfus Michigan Municipal Money Market Fund, Inc., Dreyfus New
Jersey Municipal Money Market Fund, Inc., Dreyfus New York Tax Exempt Bond
Fund, Inc. and Dreyfus Ohio Municipal Money Market Fund, Inc. and a trustee
of Dreyfus Massachusetts Municipal Money Market Fund, Dreyfus Massachusetts
Tax Exempt Bond Fund, Dreyfus New York Tax Exempt Intermediate Bond Fund,
Dreyfus New York Tax Exempt Money Market Fund and Dreyfus Pennsylvania
Municipal Money Market Fund.
For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Directors of the Fund
who are not "interested persons" of the Fund, as defined in the Act, will
be selected and nominated by the Directors who are not "interested persons"
of the Fund.
The Fund does not pay any remuneration to its officers and Directors
other than fees and expenses to Directors who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, which totalled $5,358 for the fiscal year ended September 30,
1993 for all such Directors as a group.
Officers of the Fund Not Listed Above
A. PAUL DISDIER, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
KAREN M. HAND, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
STEPHEN C. KRIS, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
JILL C. SHAFFRO, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
L. LAWRENCE TROUTMAN, Vice President and Investment Officer. An employee
of the Manager and an officer of other investment companies advised
and administered by the Manager.
SAMUEL J. WEINSTOCK, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised and
administered by the Manager.
MONICA S. WIEBOLDT, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised and
administered by the Manager.
DANIEL C. MACLEAN, Vice President. Vice President and General Counsel of
the Manager, Secretary of the Distributor and an officer or director
of other investment companies advised or administered by the Manager.
JEFFREY N. NACHMAN, Vice President-Financial. Vice President-Mutual Fund
Accounting of the Manager and an officer of other investment companies
advised or administered by the Manager.
JOHN J. PYBURN, Treasurer. Assistant Vice President of the Manager and an
officer of other investment companies advised or administered by the
Manager.
PAUL T. MOLLOY, Controller. Senior Accounting Manager in the Fund
Accounting Department of the Manager and an officer of other
investment companies advised or administered by the Manager.
MARK N. JACOBS, Secretary. Secretary and Deputy General Counsel of the
Manager and an officer of other investment companies advised or
administered by the Manager.
ROBERT I. FRENKEL, Assistant Secretary. Senior Assistant General Counsel
of the Manager and an officer of other investment companies advised or
administered by the Manager.
CHRISTINE PAVALOS, Assistant Secretary. Assistant Secretary of the
Manager, the Distributor and other investment companies advised or
administered by the Manager.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Directors and officers of the Fund, as a group, owned less than 1% of
the Fund's Common Stock outstanding on December 29, 1993.
The following persons are also officers and/or directors of the
Manager: Howard Stein, Chairman of the Board and Chief Executive Officer;
Julian M. Smerling, Vice Chairman of the Board of Directors; Joseph S.
DiMartino, President, Chief Operating Officer and a director; Alan M.
Eisner, Vice President and Chief Financial Officer; David W. Burke, Vice
President and Chief Administrative Officer; Robert F. Dubuss, Vice
President; Elie M. Genadry, Vice President--Institutional Sales; Peter A.
Santoriello, Vice President; Robert H. Schmidt, Vice President; Kirk V.
Stumpp, Vice President--New Product Development; Philip L. Toia, Vice
President; Katherine C. Wickham, Assistant Vice President; Maurice
Bendrihem, Controller; and Mandell L. Berman, Alvin E. Friedman, Abigail Q.
McCarthy and David B. Truman, directors.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated May 23, 1990 with the Fund, which is
subject to annual approval by (i) the Fund's Board of Directors or (ii)
vote of a majority (as defined in the Act) of the outstanding voting
securities of the Fund, provided that in either event the continuance also
is approved by a majority of the Directors who are not "interested persons"
(as defined in the Act) of the Fund or the Manager, by vote cast in person
at a meeting called for the purpose of voting on such approval. The
Agreement was approved by shareholders at a shareholders' meeting held on
September 12, 1991, and was last approved by the Fund's Board of Directors,
including a majority of the Directors who are not "interested persons" of
any party to the Agreement, at a meeting held on March 31, 1993. The
Agreement is terminable without penalty, on 60 days' notice, by the Fund's
Board of Directors or by vote of the holders of a majority of the Fund's
shares, or, on not less than 90 days' notice, by the Manager. The
Agreement will terminate automatically in the event of its assignment (as
defined in the Act).
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board of Directors. The Manager is responsible for investment decisions
and provides the Fund with Investment Officers who are authorized by the
Board of Directors to execute purchases and sales of securities. The
Fund's Investment Officers are Richard J. Moynihan, A. Paul Disdier, Karen
M. Hand, Stephen C. Kris, Jill C. Shaffro, L. Lawrence Troutman, Samuel J.
Weinstock and Monica S. Wieboldt. The Manager also maintains a research
department with a professional staff of portfolio managers and securities
analysts who provide research services for the Fund as well as for other
funds advised by the Manager. All purchases and sales are reported for the
Directors' review at the meeting subsequent to such transactions.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include: organizational costs, taxes, interest,
brokerage fees and commissions, if any, fees of Directors 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, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance premiums,
industry association fees, outside auditing and legal expenses, costs of
maintaining corporate existence, costs of independent pricing services,
costs attributable to investor services (including, without limitation,
telephone and personnel expenses), costs of shareholders' reports and
corporate 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.
The Manager pays the salaries of all officers and employees employed
by both it and the Fund, maintains office facilities, and furnishes
statistical and research data, clerical help, accounting, data processing,
bookkeeping and internal auditing and certain other required services. The
Manager also may make such advertising and promotional expenditures, using
its own resources, as it from time to time deems appropriate.
As compensation for its services, the Fund has agreed to pay the
Manager a monthly management fee at the annual rate of .50 of 1% of the
value of the Fund's average daily net assets. All fees and expenses are
accrued daily and deducted before the declaration of dividends to
shareholders. For the fiscal years ended September 30, 1991, 1992 and
1993, no management fee was paid by the Fund pursuant to undertakings by
the Manager.
The Manager has agreed that if in any fiscal year the aggregate
expenses of the Fund, exclusive of taxes, brokerage, interest on borrowings
and (with the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including the management fee,
exceed the expense limitation of any state having jurisdiction over the
Fund, the Fund may deduct from the payment to be made to the Manager under
the Agreement, or the Manager will bear, such excess expense to the extent
required by state law. Such deduction or payment, if any, will be
estimated daily, and reconciled and effected or paid, as the case may be,
on a monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services Plan."
The Fund as adopted a Shareholder Services Plan (the "Plan") pursuant
to which the Fund reimburses the Distributor for certain allocated expenses
of providing personal services and/or maintaining shareholder accounts.
The services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Fund and
providing reports and other information, and services related to the
maintenance of shareholder accounts.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Directors for their review. In addition, the Plan provides that material
amendments of the Plan must be approved by the Board of Directors, and by
the Directors who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in the operation
of the Plan, by vote cast in person at a meeting called for the purpose of
considering such amendments. The Plan is subject to annual approval by
such vote of the Directors cast in person at a meeting called for the
purpose of voting on the Plan. The Plan is terminable at any time by vote
of a majority of the Directors who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Plan.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor also
acts as distributor for the other funds in the Dreyfus Family of Funds and
for certain other investment companies.
Using Federal Funds. The Shareholder Services Group, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), or the Fund
may attempt to notify the investor upon receipt of checks drawn on banks
that are not members of the Federal Reserve System as to the possible delay
in conversion into Federal Funds and may attempt to arrange for a better
means of transmitting the money. If the investor is a customer of a
securities dealer ("Selected Dealer") and his order to purchase Fund shares
is paid for other than in Federal Funds, the Selected Dealer, acting on
behalf of its customer, will complete the conversion into, or itself
advance, Federal Funds generally on the business day following receipt of
the customer order. The order is effective only when so converted and
received by the Transfer Agent. An order for the purchase of Fund shares
placed by an investor with sufficient Federal Funds or cash balance in his
brokerage account with a Selected Dealer will become effective on the day
that the order, including Federal Funds, is received by the Transfer Agent.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made between the hours of 8:00 a.m. and 4:00 p.m., New York time, on
any business day that the Transfer Agent and the New York Stock Exchange
are open. Such purchases will be credited to the shareholder's Fund
account on the next bank business day. To qualify to use the Dreyfus
TeleTransfer Privilege, the initial payment for purchase of Fund shares
must be drawn on, and redemption proceeds paid to, the same bank and
account as are designated on the Account Application or Optional 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 "Redemption of Fund Shares--Dreyfus TeleTransfer
Privilege."
Transactions Through Securities Dealers. Fund shares may be purchased
and redeemed through securities dealers which may charge a nominal
transaction fee for such services. Some dealers will place the Fund's
shares in an account with their firm. Dealers also may require that the
customer invest more than the $1,000 minimum investment; the customer not
take physical delivery of stock certificates; the customer not request
redemption checks to be issued in the customer's name; fractional shares
not be purchased; monthly income distributions be taken in cash; or other
conditions.
There is no sales or service charge by the Fund or the Distributor,
although investment dealers, banks and other institutions may make
reasonable charges to investors for their services. The services provided
and the applicable fees are established by each dealer or other institution
acting independently of the Fund. The Fund has been given to understand
that these fees may be charged for customer services including, but not
limited to, same-day investment of client funds; same-day access to client
funds; advice to customers about the status of their accounts, yield
currently being paid or income earned to date; provision of periodic
account statements showing security and money market positions; other
services available from the dealer, bank or other institution; and
assistance with inquiries related to their investment. Any such fees will
be deducted from the investor's account monthly and on smaller accounts
could constitute a substantial portion of the distribution. Small,
inactive, long-term accounts involving monthly service charges may not be
in the best interest of investors. Investors should be aware that they may
purchase shares of the Fund directly from the Fund without imposition of
any maintenance or service charges, other than those already described
herein.
Reopening an Account. An investor 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.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Check Redemption Privilege. An investor may indicate on the Account
Application or by later written request that the Fund provide Redemption
Checks ("Checks") drawn on the Fund's account. Checks will be sent only to
the registered owner(s) of the account and only to the address of record.
The Account Application or later written request must be manually signed by
the registered owner(s). Checks 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 the investor's agent,
will cause the Fund to redeem a sufficient number of shares in the
investor's 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 the investor. Investors generally will be subject to the same
rules and regulations that apply to checking accounts, although election of
this Privilege creates only a shareholder-transfer agent relationship with
the Transfer Agent.
If the amount of the Check is greater than the value of the shares in
an investor's 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, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor, and reasonably believed by the Transfer Agent to be genuine.
Ordinarily, the Fund will initiate payment for shares redeemed pursuant to
this Privilege on the next business day after receipt if the Transfer Agent
receives the redemption request in proper form. Redemption proceeds will
be transferred by Federal Reserve wire only to the commercial bank account
specified by the investor on the Account Application or Optional Services
Form. Redemption proceeds, if wired, must be in the amount of $1,000 or
more and will be wired to the investor's account at the bank of record
designated in the investor's file at the Transfer Agent, if the investor's
bank is a member of the Federal Reserve System, or to a correspondent bank
if the investor's bank is not a member. Fees ordinarily are imposed by
such bank and usually are borne by the investor. Immediate notification by
the correspondent bank to the investor's bank is necessary to avoid a delay
in crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at 1-800-654-
7171, toll free. Investors should advise the operator that the above
transmittal code must be used and should also inform the operator of the
Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive wire
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Stock Certificates; Signatures."
Dreyfus TeleTransfer Privilege. Investors should be aware that if
they have selected the Dreyfus TeleTransfer Privilege, any request for a
wire redemption will be effected as a Dreyfus TeleTransfer transaction
through the Automated Clearing House ("ACH") system unless more prompt
transmittal specifically is requested. Redemption proceeds will be on
deposit in the investor's account at an ACH member bank ordinarily two
business days after receipt of the redemption request. See "Purchase of
Fund Shares--Dreyfus TeleTransfer Privilege."
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 the telephone number listed on the cover.
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of
the Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such
amount, the Board of Directors 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 this event, the
securities would be valued in the same manner as the portfolio of the Fund
is valued. If the recipient sold such securities, brokerage charges would
be incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services."
Exchange Privilege. 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
without a sales load 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, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their
account number.
To use this Privilege, an investor must give exchange instructions to
the Transfer Agent in writing, by wire or by telephone. Telephone
exchanges may be made only if the appropriate "YES" box has been checked on
the Account Application or a separate signed Optional Services Form is on
file with the Transfer Agent. By using this Privilege, the investor
authorizes the Transfer Agent to act on telephonic, telegraphic or written
exchange instructions from any person representing himself or herself to be
the investor, 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.
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.
For Dreyfus-sponsored Keogh Plans, IRAs and IRAs set up under a Simplified
Employee Pension Plan ("SEP-IRAs") with only one participant, the minimum
initial investment is $750. To exchange shares held in Corporate Plans,
403(b)(7) Plans and SEP-IRAs with more than one participant, the minimum
initial investment is $100 if the plan has at least $2,500 invested among
the funds in the Dreyfus Family of Funds. To exchange shares held in
Personal Retirement Plans, the shares exchanged must have a current value
of at least $100.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange permits an
investor to purchase, in exchange for shares of the Fund, shares of another
fund 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 "Exchange Privilege." Enrollment in
or modification or cancellation of this Privilege is effective three
business days following notification by the investor. An investor will be
notified if his account falls below the amount designated to be exchanged
under this Privilege. In this case, the investor's account will fall to
zero unless additional investments are made in excess of the designated
amount prior to the next Auto-Exchange transaction. Shares 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.
The Exchange Privilege and Dreyfus Auto-Exchange Privilege are
available to shareholders resident in any state in which shares of the fund
being acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Optional Services Forms and prospectuses of the other funds may be
obtained from the Distributor, 144 Glenn Curtiss Boulevard, Uniondale, New
York 11556-0144. The Fund reserves the right to reject any exchange
request in whole or in part. The Exchange Privilege or Dreyfus Auto-
Exchange Privilege may be modified or terminated at any time upon notice to
shareholders.
Dreyfus Dividend Sweep Privilege. Dreyfus Dividend Sweep Privilege
allows investors to invest on the payment date their dividends or dividends
and capital gain distributions, if any, paid by the Fund in shares of
another fund in the Dreyfus Family of Funds of which the investor is 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. Dividend and distributions paid by the 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 which
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.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends
and distributions, the investor's shares will be reduced and eventually may
be depleted. An Automatic Withdrawal Plan may be established by completing
the appropriate application available from the Distributor. There is a
service charge of $.50 for each withdrawal check. Automatic Withdrawal may
be terminated at any time by the investor, the Fund or the Transfer Agent.
Shares for which certificates have been issued may not be redeemed through
the Automatic Withdrawal Plan.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
Amortized Cost Pricing. The valuation of the Fund's portfolio
securities is based upon their amortized cost, which does not take into
account unrealized capital gains or losses. This involves valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While
this method 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.
The Board of Directors has established, as a particular responsibility
within the overall duty of care owed to the Fund's investors, procedures
reasonably designed to stabilize the Fund's price per share as computed for
the purpose of sales and redemptions at $1.00. Such procedures include
review of the Fund's portfolio holdings by the Board of Directors, at such
intervals as it deems appropriate, to determine whether the Fund's net
asset value calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost. Market
quotations and market equivalents used in such review are obtained from an
independent pricing service (the "Service") approved by the Board of
Directors. The Service values the Fund's investments based on methods
which include consideration of: yields or prices of municipal bonds of
comparable quality, coupon, maturity and type; indications of values from
dealers; and general market conditions. The Service also may employ
electronic data processing techniques and/or a matrix system to determine
valuations.
The extent of any deviation between the Fund's net asset value based
upon available market quotations or market equivalents and $1.00 per share
based on amortized cost will be examined by the Board of Directors. If
such deviation exceeds 1/2 of 1%, the Board of Directors will consider what
action, if any, will be initiated. In the event the Board of Directors
determines that a deviation exists which may result in material dilution or
other unfair results to investors or existing shareholders, it has agreed
to take such corrective action as it regards as necessary and appropriate,
including: selling portfolio instruments prior to maturity to realize
capital gains or losses or to shorten average portfolio maturity;
withholding dividends or paying distributions from capital or capital
gains; redeeming shares in kind; or establishing a net asset value per
share by using available market quotations or market equivalents.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of the gain
realized from the disposition of certain market discount bonds will be
treated as ordinary income under Section 1276 of the Code.
YIELD INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Yield
Information."
For the seven-day period ended September 30, 1993, the Fund's yield
was 2.56% and effective yield was 2.59%. These yield figures reflect the
waiver of the management fee, without which the Fund's yield and effective
yield for the seven-day period ended September 30, 1993 would have been
2.06% and 2.08%, respectively. See "Management of the Fund" in the
Prospectus. 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 div-
idends 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.
Based upon a combined 1993 Federal and Connecticut state tax rate of
42.32%, which reflects the Federal deduction for the Connecticut tax, the
Fund's tax equivalent yield for the seven-day period ended September 30,
1993 was 4.44%. Without the management fee waiver then in effect, the
Fund's tax equivalent yield for the seven-day period ended September 30,
1993 would have been 3.57%. See "Management of the Fund" in the
Prospectus. Tax equivalent yield is computed by dividing that portion of
the yield or effective yield (calculated as described above) which is tax
exempt by 1 minus a stated tax rate and adding the quotient to that
portion, if any, of the yield of the Fund that is not tax exempt.
The tax equivalent yield noted above represents the application of the
highest Federal and State of Connecticut marginal personal income tax rates
in effect during 1993. For Federal income tax purposes, a 39.60% tax rate
has been used. For Connecticut income tax purposes, a 4.5% tax rate on
individuals, trusts and estates has been used. The tax equivalent figure,
however, does not include the potential effect of any local (including, but
not limited to, county, district or city) taxes, including applicable
surcharges. In addition, there may be pending legislation which could
affect such stated tax rates or yields. Each investor should consult its
tax adviser, and consider its own factual circumstances and applicable tax
laws, in order to ascertain the relevant tax equivalent yield.
Yields will fluctuate and are not necessarily representative of future
results. Investors should remember that yield is a function of the type
and quality of the instruments in the portfolio, portfolio maturity and
operating expenses. An investor's principal in the Fund is not guaranteed.
See "Determination of Net Asset Value" for a discussion of the manner in
which the Fund's price per share is determined.
From time to time, the Fund may use hypothetical tax equivalent yields
or charts in its advertising. These hypothetical yields or charts will be
used for illustrative purposes only and not as being representative of the
Fund's past or future performance.
From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic conditions, developments and/or
events, including those relating to or arising from actual or proposed tax
legislation. From time to time, advertising materials for the Fund also
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 from and sold to parties
acting as either principal or agent. Newly-issued securities ordinarily
are purchased directly from the issuer or from an underwriter; other
purchases and sales usually are placed with those dealers from which it
appears that the best price or execution will be obtained. Usually no
brokerage commissions, as such, are paid by the Fund for such purchase and
sales, although the price paid usually includes an undisclosed compensation
to the dealer acting as agent. The prices paid to underwriters of newly-
issued securities usually include a concession paid by the issuer to the
underwriter, and purchases of after-market securities from dealers
ordinarily are executed at a price between the bid and asked price. No
brokerage commissions have been paid by the Fund to date.
Transactions are allocated to various dealers by the Fund's Investment
Officers 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.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses
of its research department.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-
assessable. Fund shares are of one class and have equal rights as to
dividends and in liquidation. Shares have no preemptive, subscription or
conversion rights and are freely transferable.
The Fund will send annual and semi-annual financial statements to all
its shareholders.
On December 29, 1993, Olsen & Co., Corporate Actions 040503, P.O. Box
4044, Boston, Massachusetts 02211, beneficially owned 9.8% of the Fund's
shares.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York, New York 10286,
is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9671, is the Fund's transfer and dividend disbursing agent.
Neither The Bank of New York nor the Shareholder Services Group, Inc. has
any part in determining the investment policies of the Fund or which
portfolio securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York 10004-
2696, as counsel for the Fund, has rendered its opinion as to certain legal
matters regarding the due authorization and valid issuance of the shares of
Common Stock being sold pursuant to the Fund's Prospectus.
Ernst & Young, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX A
RISK FACTORS -- INVESTING IN CONNECTICUT MUNICIPAL 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
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.
Connecticut's economy is diverse, with manufacturing, services and
trade accounting for approximately 70% of total non-agricultural
employment. The State's manufacturing industry is diversified, but from
1970 to 1992 manufacturing employment declined 30.8%, while non-
manufacturing employment increased 60.8%, particularly in the service,
trade and finance categories, resulting in an increase of 27% in total
growth in non-agricultural sectors. Defense-related business plays an
important role in the Connecticut economy, and economic activity has been
affected by the volume of defense contracts awarded to Connecticut firms.
In the past ten years, Connecticut ranked from sixth to eleventh among all
states in total defense contract awards, receiving 2.8% of all such
contracts in 1992. In recent years the Federal government has reduced the
amount of defense-related spending and the largest defense-related
employers in the State have announced substantial labor force reductions.
The effect of such future reductions on the Connecticut economy suggests
that the defense sector is not as promising as it once was.
Connecticut has a high level of personal income. According to Bureau
of Economic Analysis figures, personal income of State residents for
calendar year 1992 was $89.0 billion, a 5.2% increase over the previous
year. Total personal income in the State increased 29.6% from 1987 to 1992
and 11.1% from 1989 to 1992, compared with national increases of 35.4% and
17.5%, respectively. According to U.S. Department of Commerce projections,
the State is expected to continue to rank among the highest in state per
capita income. As of November 1993, the estimated rate of unemployment
(on a seasonably adjusted basis) in the State was 6.3%.
While the State's General Fund ended fiscal 1984-85, 1985-86 and 1986-
87 with operating surpluses of approximately $365.5 million, $250.1 million
and $365.2 million, respectively, the State recorded operating deficits of
$115.6 million, $28 million, $259.5 million and $808.5 million for fiscal
1987-88, 1988-89, 1989-90 and 1990-91, respectively. Together with the
deficit carried forward from fiscal 1989-90, the total deficit for the
fiscal year 1990-91 was $965.7 million. The total deficit amount was
funded by the issuance of General Obligation Economic Recovery Notes. The
Comptroller's annual report for the fiscal year ended June 30, 1992
reflected a General Fund operating surplus of $110.2 million, which surplus
was used to retire $110.1 million of the States's Economic Recovery Notes.
The Comptroller's annual report for the fiscal year ended June 30, 1993
reflected a General Fund operating surplus of $113.5 million. The
unappropriated surplus in the General Fund is deemed to be appropriated for
debt service for the fiscal year ending June 30, 1994.
Since 1988, the Comptroller's annual report has reported results on
the basis of both the modified cash basis required by State law and the
modified accrual basis used for GAAP financial reporting. The
Comptroller's monthly report for the period ended November 30, 1993 stated
that on a GAAP basis the cumulative deficit is $470.9 million for fiscal
1993-94. The modified cash basis of accounting used for statutory
financial reporting and the modified accrual basis used for GAAP financial
reporting are different and, as a result, often produce varying financial
results, primarily because of differences in the recognition of revenues
and expenditures.
The budget adopted by the General Assembly for fiscal 1993-94
projected General Fund expenditures of $7.69 billion and estimated General
Fund revenues of $7.695 billion. For fiscal 1994-95, the adopted budget
anticipates General Fund expenditures of $8.116 billion and General Fund
revenues of 8.117 billion.
The State finances its operations primarily through the General Fund.
All tax and most non-tax revenues of the State, except for motor fuels
taxes and other transportation related taxes, fees and revenues, are paid
into, and substantially all expenditures pursuant to legislative
appropriations are made out of, the General Fund. The State derives over
70% of its revenues from taxes. Miscellaneous fees, receipts, transfers
and Federal grants account for most of the other State revenue. The Sales
and Use Taxes, the corporation business tax and the recently enacted broad
based personal income tax are the major revenue raising taxes.
On November 3, 1992, Connecticut voters approved a constitutional
amendment which requires a balanced budget for each year and imposes a cap
on the growth of expenditures. The General Assembly is required by the
constitutional amendment to adopt by three-fifths vote certain spending cap
definitions. The statutory spending cap limits the growth of expenditures
to either (1) the rolling five-year average annual growth in personal
income, or (2) the increase in the consumer price index for urban consumers
during the preceding twelve-month period, whichever is greater.
Expenditures for the payment of bonds, notes and other evidences of
indebtedness are excluded from the constitutional and statutory definitions
of general budget expenditures. To preclude shifting expenditures out of
the General Fund to other funds, the spending cap applies to all
appropriated funds combined. For fiscal 1993-94 and for fiscal 1994-95,
permitted growth in capped expenditures is 5.82% and 4.49%, respectively.
The adoption Budget for fiscal 1993-94 and 1994-95 is approximately $58
million and $24 million, respectively, below the spending cap.
The State has no constitutional or other organic limit on its power to
issue obligations or incur indebtedness other than that it may only borrow
for public purposes. There are no reported court decisions relating to
State bonded indebtedness other than two cases validating the legislative
determination of the public purpose for improving employment opportunities
and related activities. The State Constitution has never contained
provisions requiring submission of the questions of incurring indebtedness
to a public referendum. Therefore, the authorization and issuance of State
debt, including the purpose, amount and nature thereof, the method and
manner of the incurrence of such debt, the maturity and terms of repayment
thereof, and other related matters are statutory.
The State has established a program of temporary note issuances to
cover periodic cash flow requirements. The maximum volume of cash flow
borrowing is determined based upon the State's actual cash needs on a daily
basis. The State, as of April 17, 1990, commenced a program permitting the
issuance of up to $539 million of General Obligation Temporary Notes (the
"April 1990 Program"). Under the April 1990 Program, the State may issue
notes during a five-year period concluding in April of 1995. Additionally,
a separate $200 million temporary note program commenced as of April 30,
1991 and concluded on October 31, 1991. There are currently no notes
outstanding under either program.
The General Assembly has empowered, pursuant to bond acts in effect,
the State Bond Commission to authorize general obligation bonds in the
amount of $9,392,375,363. As of January 1, 1994, the State Bond Commission
has authorized $7,545,471,616 in such bonds and the balance of
$1,846,903,747 was available for authorization. From such total
authorizations of $7,545,471,616, bonds in the aggregate of
$6,477,041,771.44 have been issued and the balance of $1,068,429,844.56
remained authorized but unissued as of January 1, 1994.
General obligation bonds issued by Connecticut municipalities are
payable primarily from ad valorem taxes on property subject to taxation by
the municipality. Certain Connecticut municipalities have experienced
severe fiscal difficulties and have reported operating and accumulated
deficits in recent years. The most notable of these is the City of
Bridgeport.
S&P, Moody's and Fitch rated Connecticut's Municipal Bonds AA-, Aa and
AA+, respectively.
APPENDIX B
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 and provisions of
the obligation; and (3) protection afforded by, and relative position of,
the obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
The AA rating may be modified by the addition of a plus (+) or minus (-)
sign to show relative standing within the category.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics are given a plus (+) designation.
Commercial Paper Ratings
The 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.
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. Moody's applies the numerical modifiers 1,
2 and 3 to show relative standing within the rating category. The modifier
1 indicates a ranking for the security in the higher end of a rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates a ranking in the lower end of a rating category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings
recognize the difference between short-term credit risk and long-term risk.
Factors affecting the liquidity of the borrower and short-term cyclical
elements are critical in short-term ratings, while other factors of major
importance in bond risk, long-term secular trends for example, may be less
important over the short run.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand feature
is not rated, as NR. Short-term ratings on issues with demand features are
differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon periodic demand rather than fixed maturity
dates and payment relying on external liquidity. Additionally, investors
should be alert to the fact that the source of payment may be limited to
the external liquidity with no or limited legal recourse to the issuer in
the event the demand is not met.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when Moody's
assigns a MIG or VMIG rating, all categories define an investment grade
situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
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.
Fitch
Municipal Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
Plus (+) and minus (-) signs are used with 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 rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations in
a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues carrying this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2
Good Credit Rating. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------
PER SHARE DATA: 1990(1) 1991 1992 1993
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of year....................... $1.0000 $1.0000 $1.0000 $1.0002
------- ------- ------- -------
Investment Operations:
Investment income--net.................................. .0131 .0470 .0323 .0230
Net realized and unrealized gain (loss) on investments.. -- -- .0002 (.0004)
------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.................... .0131 .0470 .0325 .0226
------- -------- ------- -------
DISTRIBUTIONS:
Dividends from investment income_net.................... (.0131) (.0470) (.0323) (.0228)
------- -------- ------- -------
Dividends from net realized gain on investment.......... __ __ __ (.0002)
------- -------- ------- -------
TOTAL DISTRIBUTIONS................................. (.0131) (.0470) (.0323) (.0230)
Net asset value, end of year............................ $1.0000 $1.0000 $1.0002 $ .9998
======= ======= ======= =======
TOTAL INVESTMENT RETURN 5.95%(2) 4.80% 3.28% 2.34%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................. __ __ .04% .12%
Ratio of net investment income to average net assets.... 5.97%(2) 4.54% 3.22% 2.30%
Decrease reflected in above expense ratios due to undertakings
by The Dreyfus Corporation............................... 1.66%(2) .67% .63% .55%
Net Assets, end of year (000's omitted).................. $52,971 $187,301 $206,980 $212,288
- ---------------------------
(1) From July 12, 1990 (commencement of operations) to September 30, 1990.
(2) Annualized.
</TABLE>
