DREYFUS OHIO MUNICIPAL MONEY MARKET FUND, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MARCH 31, 1995
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Dreyfus Ohio Municipal Money Market Fund, Inc. (the "Fund"), dated March
31, 1995, 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.
Premier Mutual Fund Services, Inc. (the "Distributor") 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
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . . . B-12
Shareholder Services Plan. . . . . . . . . . . . . . . . . . . . . . . . B-14
Redemption of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . . B-14
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . B-16
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . B-19
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . . . . B-20
Yield Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . B-20
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . B-21
Information About the Fund . . . . . . . . . . . . . . . . . . . . . . . B-22
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . . . . . . . . . . B-22
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-23
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-28
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . B-32
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . B-39
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 November 30, 1994,
computed on a monthly basis, was as follows:
Moody's Standard
Investors & Poor's
Service Inc. or Corporation Percentage
("Moody's") ("S&P") or of Value
VMIG 1/MIG 1,P- SP-1+/SP-1,A-1+/A-1 78.5%
Aaa/Aa AAA/AA 11.9
Not Rated Not Rated 9.6
------
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 categories for debt obligations by at least two
nationally recognized statistical rating organizations (or one rating
organization if the lease obligation was rated by only 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 the
seller or other responsible third party will either remarket or repurchase
the lease obligations within a short period after demand by the Fund. The
staff of the Securities and Exchange Commission currently considers certain
lease obligations to be illiquid. Accordingly, not more than 10% of the
value of the Fund's net assets will be invested in lease obligations that
are illiquid and in other illiquid securities. 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
is exercisable by the Fund no less frequently than annually upon no more
than 30 days' notice and (b) at the time of such purchase, the Manager
reasonably expects (i) based upon its assessment of current and historical
interest rate trends, that prevailing short-term tax-exempt rates will not
exceed the stated interest rate on the underlying Municipal Obligations at
the time of the next tender fee adjustment and (ii) that the circumstances
which might entitle the grantor of a tender option to terminate the tender
option would not occur prior to the time of the next tender opportunity.
At the time of each tender opportunity, the Fund will exercise the tender
option with respect to any tender option bonds unless the Manager
reasonably expects, (x) based upon its assessment of current and historical
interest rate trends, that prevailing short-term tax exempt rates will not
exceed the stated interest rate on the underlying Municipal Obligations at
the time of the next tender fee adjustment, and (y) that the circumstances
which might entitle the grantor of a tender option to terminate the tender
option would not occur prior to the time of the next tender opportunity.
The Fund will exercise the tender feature with respect to tender option
bonds, or otherwise dispose of its tender option bonds, prior to the time
the tender option is scheduled to expire pursuant to the terms of the
agreement under which the tender option is granted. The Fund otherwise
will comply with the provisions of Rule 2a-7 in connection with the
purchase of tender option bonds, including, without limitation, the
requisite determination by the 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 ratings 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 or S&P 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.
Illiquid Securities. If a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the Securities
Act of 1933, as amended, for certain restricted securities held by the
Fund, the Fund intends to treat such securities as liquid securities in
accordance with procedures approved by the Fund's Board of Directors.
Because it is not possible to predict with assurance how the market for
restricted securities pursuant to Rule 144A will develop, the Fund's Board
of Directors has directed the Manager to monitor carefully the Fund's
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information.
To the extent that, for a period of time, qualified institutional buyers
cease purchasing restricted securities pursuant to Rule 144A, the Fund's
investing in such securities may have the effect of increasing the level of
illiquidity in the Fund's portfolio during such period.
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. 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 insured, 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
subcustodian 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 Ohio Municipal Obligations. Investors
should consider carefully the special risks inherent in the Fund's
investment in Ohio Municipal Obligations. Nonmanufacturing industries now
employ more than three-fourths of all payroll employees in Ohio. However,
due to the continued importance of manufacturing industries (including
auto-related manufacturing), economic activity in Ohio tends to be more
cyclical than in some other states and in the nation as a whole. Although
Ohio's economy has improved since the 1980-82 national recession, the State
experienced an economic slowdown during its 1990-91 fiscal year, consistent
with national conditions during that period. For Ohio's 1994 fiscal year,
the Ohio Office of Budget and Mangement projected positive $106.6 and
$314.6 million ending fund and cash balances, respectively. Investors
should review Appendix A which sets forth additional information relating
to investing in Ohio Municipal Obligations.
Investment Restrictions. The Fund has adopted investment restrictions
numbered 1 through 5 and 7 through 11 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. Investment Restriction
number 6 is a non-fundamental policy and may be changed by a vote of a
majority of the Fund's Board members at any time. 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,
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 of the Fund
*DAVID W. BURKE, Director. Consultant to the Manager since 1994. From
October 1990 to August 1994, 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. He is also a Board member of 49 other Funds in The Dreyfus
Family of Funds. He is 58 years old and his is address is 200 Park
Avenue, New York, New York 10166.
SAMUEL CHASE, Director. Since 1982, President of Samuel Chase & Company,
Ltd., and from 1983 to 1990, Chairman of Chase, Brown & Blaxall, Inc.,
economic consulting firms. He is 63 years old and 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, from 1985 to 1987, President of Simon & Schuster-
Trade Division. She is 52 years old and her address is 1350 Avenue of the
Americas, New York, New York 10019.
ARNOLD S. HIATT, Director. Chairman of The Stride Rite Charitable
Foundation. From 1969 to June 1992, Chairman of the Board, President or
Chief Executive Officer of The Stride Rite Corporation, a multidivisional
footwear manufacturing and retailing company. Mr. Hiatt is also a
Director of the Cabot Corporation. He is 67 years old and 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., Bionaire
Inc. and Good Samaritan Health Systems, Inc. He is 71 years old and his
address is 745 Fifth Avenue, Suite 700, New York, New York 10151.
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. He is 44 years old and his address is 18 East 64th
Street, Suite 3D, New York, New York 10021.
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 typically pays its Directors an annual retainer and a per meeting
fee and reimburses them for their expenses. For the fiscal year ended
November 30, 1994, the aggregate amount of compensation paid to each
Director by the Fund and all other funds in the Dreyfus Family of Funds for
which such person is a Board member were as follows:
<TABLE>
<CAPTION>
(5)
Total Compensation
(3) From Fund and
(2) Pension or (4) From Fund Complex
(1) Aggregate Retirement Benefits Estimated Annual Paid To Board
Name of Board Compensation From Accrued as Part of Benefits Upon Members for the 1994
Member Fund* Fund's Expenses Retirement Calendar Year
-------------- ----------------- ------------------- ----------------- --------------------
<S> <C> <C> <C> <C>
David W. Burke $ 268 none none $27,898
Samuel Chase $1,000 none none $46,250
Joni Evans $1,000 none none $46,250
Arnold S. Hiatt $1,000 none none $42,750
David J. Mahoney $1,000 none none $43,000
Burton N. Wallack $1,000 none none $46,250
_____________________
* Amount does not include reimbursed expenses for attending Board meetings, which amounted to $420 for
all Directors as a group
</TABLE>
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment companies
advised or administered by the Manager. From December 1991 to July 1994,
she was President and Chief Compliance Officer of Funds Distributor, Inc.,
a wholly-owned subsidiary of The Boston Company, Inc. Prior to December
1991, she served as Vice President and Controller, and later as Senior
Vice President, of The Boston Company Advisors, Inc.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From February 1992 to
July 1994, he served as Counsel for The Boston Company Advisors, Inc.
From August 1990 to February 1992, he was employed as an Associate at
Ropes & Gray, and prior to August 1990, he was employed as an Associate at
Sidley & Austin.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment companies
advised or administered by the Manager. From 1988 to August 1994, he was
Manager of the High Performance Fabric Division of Springs Industries Inc.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From September 1992 to
August 1994, he was an attorney with the Board of Governors of the Federal
Reserve System.
JOSEPH S. TOWER, III, Assistant Treasurer. Senior Vice President Treasurer
and Chief Financial Officer of the Distributor and an officer of other
investment companies advised or administered by the Manager. From July
1988 to August 1994, he was employed by The Boston Company, Inc. where he
held various management positions in the Corporate Finance and Treasury
areas.
JOHN J. PYBURN, Assistant Treasurer. Vice President of the Distributor and
an officer of other investment companies advised or administered by the
Manager. From 1984 to July 1994, he was Assistant Vice President in the
Mutual Fund Accounting Department of the Manager.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From January 1992 to July 1994, he was a
Senior Legal Product Manager, and from January 1990 to January 1992, he
was mutual fund accountant, for The Boston Company Advisors, Inc.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From March 1992 to July 1994, she was a
Compliance Officer for The Managers Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts and, prior thereto, was
employed as a Research Assistant for the Bureau of National Affairs.
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 shares of Common Stock outstanding as of January 10, 1995.
The following entities are known by the Fund to be the holders of record
of 5% or more of the Fund's shares of Common Stock outstanding as of
January 10, 1995: Dreyfus Acquisition Corporation, a New York corporation
located at 200 Park Avenue, New York, NY 10166-0799, 3,410,349.650 (5.7%);
and Star Bank, Trust Division, P.O. Box 1118, Dept. 6120, Cincinnati, Ohio
45201-1118, 2,980,000.000 (5.0%).
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 August 24, 1994 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 on August 2, 1994, 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 January 24, 1995. 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 following persons are 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; Robert E. Riley,
President, Chief Operating Officer and a director; W. Keith Smith, Vice
Chairman and a director; Lawrence S. Kash, Vice Chairman--Distribution and
a director; Paul H. Snyder, Vice President and Chief Financial Officer;
Daniel C. Maclean, Vice President and General Counsel; Barbara E. Casey,
Vice President--Retirement Services; Henry D. Gottman, Vice President--
Retail; Elie M. Genadry, Vice President--Wholesale; Mark N. Jacobs, Vice
President--Fund Legal and Compliance and Secretary; Jeffrey N. Nachman,
Vice President--Mutual Fund Accounting; Diane Coffey, Vice President--
Corporate Communications; Philip L. Toia, Vice Chairman--Operations and
Administration; Katherine C. Wickham, Vice President--Human Resources;
Maurice Bendrihem, Controller; and Mandell L. Berman, Frank V. Cahouet,
Alvin E. Friedman, Lawrence M. Greene and David B. Truman, directors.
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 portfolio managers who are authorized by the
Board of Directors to execute purchases and sales of securities. The
Fund's portfolio managers are Richard J. Moynihan, Joseph P. Darcy, 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 certain Directors, 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 maintains office facilities on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services of the Fund. 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 the Manager's 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 November 30, 1992 and 1993, no
management fee was paid by the Fund pursuant to an undertaking by the
Manager. The management fee paid by the Fund for the fiscal year ended
November 30, 1994 was $12,667, which amount reflects the reduction of
$308,073, 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.
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, bank or other financial institution and his order to
purchase Fund shares is paid for other than in Federal Funds, the
securities dealer, bank or other financial institution 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 securities dealer, bank or other financial institution 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 Shareholder Services Form on file.
If the proceeds of a particular redemption are to be wired to an account at
any other bank, the request must be in writing and signature-guaranteed.
See "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 monthly from the investor's account, which on smaller accounts
could constitute a substantial portion of distributions. 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.
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 has adopted a Shareholder Services Plan (the "Plan"), pursuant to
which the Fund reimburses Dreyfus Service Corporation, a wholly-owned
subsidiary of the Manager, 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 was so approved on July 14, 1993.
The Plan is terminable at any time by vote of a majority of the Directors
who are not "interested persons" and who have no direct or indirect
financial interest in the operation of the Plan.
For the fiscal year ended November 30, 1994, $33,951 was chargeable to the
Fund under the Plan.
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 same business day if the Transfer Agent receives the
redemption request in proper form prior to Noon on such day; otherwise the
Fund will initiate payment on the next business day. Redemption proceeds
will be transferred by Federal Reserve wire only to the commercial bank
account specified by the investor on the Account Application or Shareholder
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
___________________ _________________
114295 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 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 in case of an emergency or any
time a cash distribution would impair the liquidity of the Fund to the
detriment of the existing shareholders. In such event, the securities
would be valued in the same manner as the Fund's portfolio is valued. If
the recipient sold such securities, brokerage charges 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."
Fund Exchanges. 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 request an exchange, an investor must give exchange instructions to the
Transfer Agent in writing or by telephone. The ability to issue exchange
instructions by telephone is given to all Fund shareholders automatically,
unless the investor checks the applicable "NO" box on the Account
Application, indicating that the investor specifically refuses this
Privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic 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 Privilege 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 "Fund Exchanges."
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, an investor's account
will fall to zero unless additional investments are made in excess of the
designated amount prior to the next Auto-Exchange transactions. Shares
held under IRA and other retirements plans are eligible for this Privilege.
Exchanges of IRA shares may be made between IRA accounts and from regular
accounts to IRA accounts, but not from IRA accounts to regular accounts.
With respect to all other retirement accounts, exchanges may be made only
among those accounts.
Fund Exchanges and the Dreyfus Auto-Exchange Privilege are available to
shareholders residing 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.
Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges services or
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
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. 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 stock certificates have been
issued may not be redeemed through the Automatic Withdrawal Plan.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep 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. Dividends and distributions paid by a fund may be invested without
imposition of a sales load in shares of other funds that are offered
without a sales load.
B. Dividends and distributions paid by a fund which does not charge a
sales load may be invested in shares of other funds sold with a sales
load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund 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.
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
purposes 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
actions, 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 the 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 any gains
realized from the sale or other disposition of certain market discount
bonds will be treated as ordinary income under Section 1276 of the Internal
Revenue Code of 1986, as amended.
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 November 30, 1994, the Fund's yield was
3.33% and effective yield was 3.38%. These yields reflect the then current
waiver of a portion of the management fee, without which the Fund's seven-
day yield and effective yield for the seven-day period ended November 30,
1994 would have been 2.93% and 2.97%, 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 dividends declared on the original share and any such
additional shares and fees that may be charged to shareholder accounts, in
proportion to the length of the base period and the Fund's average account
size, but does not include realized gains and losses or unrealized
appreciation and depreciation. Effective yield is computed by adding 1 to
the base period return (calculated as described above), raising that sum to
a power equal to 365 divided by 7, and subtracting 1 from the result.
Based upon a combined 1995 Federal and State of Ohio tax rate (after
giving effect to the Federal deduction for Ohio taxes) of 44.13%, the
Fund's tax equivalent yield for the seven-day period ended November 30,
1994 was 5.96%. Without the waiver of a portion of the management fee
discussed above then in effect, the Fund's seven-day tax equivalent yield
for the period ended November 30, 1994 would have been 5.24%. 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 Ohio marginal personal income tax rates presently in
effect. For Federal income tax purposes, a 39.60% tax rate has been used.
For Ohio personal income tax purposes, a 7.50% tax rate has been used. The
tax equivalent figure, however, does not reflect 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 yield. 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 fluctuate and are not necessarily representative of future results.
The investor 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 representative of the Fund's
past or future performance.
Advertising materials for the Fund also may refer to or discuss then-
current or past economic conditions, developments, and/or events, and
actual or proposed tax legislation. From time to time, advertising
materials for the Fund may also 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 purchases 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 portfolio
managers 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.
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, acts as 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, Seven 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 LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX A
Risk Factors -- Investing in Ohio 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, including 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.
State Economy and Budget. Non-manufacturing industries now employ
more than three-fourths of all payroll workers in the State of Ohio.
However, due to the continued importance of manufacturing industries
(including auto-related manufacturing), economic activity in Ohio, as in
many other industrially developed states, tends to be more cyclical than in
some other states and in the nation as a whole. Agriculture also is an
important segment of the Ohio economy. The financial condition of the
State has fluctuated in a pattern related to national economic conditions,
with periods of prolonged stringency characterizing fiscal years 1980
through 1983. Additionally, the 1980-82 recession brought with it a
substantial increase in bankruptcies and foreclosures. While the State's
economy improved since 1983, the State experienced an economic slowdown in
1990-91, consistent with the national economic conditions during that
period.
The State constitution imposes a duty on the Ohio General Assembly to
"provide for raising revenue, sufficient to defray the expenses of the
state, for each year, and also a sufficient sum to pay the principal and
interest as they become due on the state debt." The State is effectively
precluded by law from ending a fiscal year or a biennium in a "deficit"
position. State borrowing to meet casual deficits or failures in revenues
or to meet expenses not otherwise provided for is limited by the
constitution to $750,000.
The State carries out most of its operations through the General
Revenue Fund ("GRF") which receives general State revenues not otherwise
dedicated pursuant to certain constitutional and statutory claims on State
revenues. The GRF sources consist primarily of personal income and sales-
use taxes. The GRF ending (June 30) fund balance is reduced during less-
favorable national economic periods and then increases during more
favorable economic periods.
The Office of Budget and Management ("OBM") projects positive $106.6
million and $314.6 million ending fund and cash balances, respectively, for
the GRF for fiscal year 1994. In addition, as of May 31, 1994 the Budget
Stabilization Fund ("BSF") had a cash balance of $21.0 million.
The GFR appropriations bill for the biennium ending June 30, 1995 was
passed on June 30, 1993 and promptly signed, with selective vetoes, by the
Governor. The Act provides for total GRF biennial expenditures of
approximately $30.7 billion, an increase over those for the 1992-93 fiscal
biennium. Authorized expenditures in fiscal year 1994 are 9.2% higher than
in fiscal year 1993 (taking into account fiscal year 1993 expenditure
reductions), and for fiscal year 1995 are 6.6% higher than in fiscal year
1994. Pursuant to April 1994 legislation, the OBM Director is to make a
partial repayment to the BSF after the end of fiscal year 1994 of any GRF
fund balance in excess of $300 million.
State statutory provisions permit the adjustment of payment schedules
and the use of the Total Operating Fund ("TOF") to manage temporary GRF
cash flow deficiencies. The State has not undertaken external revenue
anticipation borrowing.
TOF includes the total consolidated total cash balances, revenues,
disbursements and transfers of the GRF and several other specified funds.
TOF cash balance at May 31, 1994 was $2.984 billion. These cash balances
are consolidated only for the purpose of meeting cash flow requirements
and, except for the GRF, a positive cash balance must be maintained for
each discrete fund included in the TOF. The GRF is permitted to incur a
temporary cash deficiency by drawing upon the available consolidated cash
balance in the TOF. The amount of that permitted GRF cash deficiency at
any time is limited to 10% of GRF revenues for the then-preceding fiscal
year. As projected by OBM for the fiscal year ending June 30, 1993, cash
flow deficiencies occurred in August 1992 through May 1993, with the
highest deficiency being $768.6 million in December 1992. In addition, GRF
cash flow deficiencies have occurred in six months of fiscal year 1994.
State Debt. The Ohio Constitution prohibits the incurrence or
assumption of debt by the State without a popular vote except to (i) cover
causal deficits or failures in revenues limited in amount to $750,000 and
(ii) repel invasion, suppress insurrection or defend the State in war.
At various times from 1921, the voters of Ohio, by thirteen specific
constitutional amendments, authorized the incurrence of up to $4.664
billion in State debt to which taxes or excises were pledged for payment.
As of June 1994, excluding Highway Obligations Bonds discussed below, and
the recently authorized parks, recreation and natural resources bonds,
approximately $3.235 billion had been issued, of which $2.514 billion had
been retired and approximately $712.6 million (all evidenced by bonds)
remained outstanding. The only such debt still authorized to be incurred
is a portion of the Highway Obligations Bonds and Coal Development Bonds as
well as State general obligation bonds for local government infrastructure
projects, described below and recently authorized general obligation park
bonds.
The total voted authorization of State debt includes authorization for
$500 million in Highway Obligations to be outstanding at any one time, with
no more than $100 million to be issued in any one calendar year. As
Highway Obligations are retired, additional Highway Obligations may be
issued so long as the principal amount outstanding does not exceed $500
million. As of June 16, 1994, approximately $1.545 billion in Highway
Obligations had been issued and $446.3 million were outstanding.
A 1985 constitutional amendment authorized up to $100 million in State
full faith and credit obligations for coal research and development to be
outstanding at any one time. In addition, the General Assembly has
authorized the issuance of an additional $35 million of Coal Development
Bonds. As of June 16, 1994, $80 million of Coal Development Bonds were
issued, of which $43.1 million were outstanding as of June 1994.
A 1987 State constitutional amendment authorizes the issuance of $1.2
billion of State full faith and credit obligations for infrastructure
improvements of which no more than $120 million may be issued in any
calendar year. As of June 1, 1994, approximately $720.0 million of such
obligations were issued, of which $645.2 million were outstanding.
A constitutional amendment adopted in November 1990, authorizes
greater State and political subdivision participation in the provision of
housing for individuals and families. This supplements the previously
constitutionally authorized loans-for-lenders and other housing assistance
programs, financed in part with State Revenue Bonds. The amendment
authorizes the General Assembly to provide for State assistance for housing
in a variety of manners. The General Assembly could authorize State
borrowing for the purpose, and the issuance of State obligations secured by
a pledge of all or a portion of State revenues or receipts, although the
obligations may not be supported by the State's full faith and credit.
A constitutional amendment approved by the voters in November 1993
authorizes $200.0 million in state general obligation bonds to be
outstanding for parks, recreation and natural resource purposes (no more
than $50.0 million to be issued in any one fiscal year). The General
Assembly in the general capital appropriations act for the 1995-96 capital
appropriations biennium authorized the Commissioners of the Sinking Fund to
issue $100.0 million of such obligations.
In addition, an initiative petition currently is being circulated
calling for submission at the November 1994 general election of a
constitutional amendment adding express exclusions from sales or other
excise taxes upon food. The amendment's full effect is not yet
determinable, but estimates of resulting reduced annual State-level
revenues range from $60 million to $68.5 million. In OBM's judgment, if
approved, the amendment would not have a materially negative effect on
State finances and appropriations for the remainder of the current
biennium.
In addition, the State constitution authorizes the issuance, for
certain purposes, of State obligations not secured by a pledge of taxes or
excises to pay principal and interest. Such special obligations include
bonds and notes issued by, among others, the Ohio Public Facilities
Commission ("OPFC") and the Ohio Building Authority ("OBA"). As of June
16, 1994, the OPFC had issued $3.272 billion for higher education
facilities, approximately $2.026 billion of which were outstanding, $917.5
million for mental health facilities, approximately $463.3 million of which
were outstanding and $145.0 million for parks and recreation facilities,
approximately $86.5 million of which were outstanding.
Only a portion of State capital needs can be met by direct GRF
appropriations; therefore, additional State borrowing for capital purposes
has been and will be required. Under present constitutional limitations,
most of that borrowing will be primarily by lease-rental supported
obligations such as those issued by OPFC and OBA.
The general capital appropriations act for the 1995-96 capital
appropriations biennium authorizes additional borrowing. It authorizes
issuance by OPFC of obligations, in addition to those previously authorized
by the General Assembly, in the amounts of $679.2 million for higher
education capital facilities projects (a substantial number of which are
renovations of equipment and improvements to existing facilities), $77.5
million for mental health and retardation facilities projects, and $30.0
million for parks and recreation facilities. It also authorized the OBA to
issue obligations, in addition to those previously authorized by the
General Assembly, in the amounts of $221.0 million for Department of
Rehabilitation Correction Facilities, $48.0 million for Department of Youth
Services facilities, $230.3 million for Department of Administrative
Services facilities, $42.5 million for Ohio Arts Facilities Commission
facilities, $11.2 million for Department of Public Safety and other
miscellaneous capital improvements facilities and $43.95 million for Ohio
Department of Transportation facilities. In addition, the Treasurer of
State was authorized to issue obligations in addition to those previously
authorized by the General Assembly, in the amounts of $70.0 million for the
Department of Education and, $240.0 million ($120 million for calendar year
1995 and $120 million for calendar year 1996) for the Public Works
Commission. The Commissioners of the Sinking Fund presently have General
Assembly authorization to issue $70.0 million of Coal Development Bonds and
$118.17 million of Highway Obligations Bonds.
A November 1986 act (the "Rail Act") authorizes the Ohio High-Speed
Rail Authority (the "Rail Authority") to issue obligations to finance the
cost of inter-city high-speed rail service projects within the State,
either directly or by loans to other entities. The Tax Reform Act of 1986
included a special transition provision (which expired October 1, 1990)
exempting up to $2 billion of State obligations from certain of its
provisions. The Rail Authority has considered financing plan options and
the general possibility of issuing bonds or notes. The Rail Act prohibits,
without express approval by joint resolution of the General Assembly, the
collapse of any escrow of financing proceeds for any purpose other than
payment of the original financing, the substitution of any other security,
and the application of any proceeds to loans or grants. The Rail Act
authorizes the Rail Authority, but only with subsequent General Assembly
action, to pledge the faith and credit of the State but not the State's
power to levy and collect taxes (except ad valorem property taxes if
subsequently authorized by the General Assembly) to secure debt service on
any post-escrow obligations and, provided it obtains the annual consent of
the State Controlling Board, to pledge to and use for the payment of debt
service on any such obligations all excises, fees, fines and forfeitures
and other revenues (except highway receipts) of the State after provision
for the payment of certain other State obligations.
Notwithstanding the constitutional provisions prohibiting the
incurrence of certain debt without popular vote, the State and State
agencies have issued revenue bonds that are payable from net revenues of
revenue-producing facilities or categories of facilities, which revenue
bonds are not "debt" within the meaning of such constitutional provisions.
Investment in such bonds carries the risk that the issuing agency or the
specific revenue source may not provide sufficient funds to service the
debt incurred. Certain of these bonds consist of those issued by the Ohio
Turnpike Commission and the State Parking Commission.
The State is a party to various legal proceedings seeking damages or
injunctive relief and generally incidental to its operations. In
particular, litigation contesting the Ohio system of school funding is
pending in two county common pleas courts.
The outstanding State Bonds issued by the OPFC and the OBA are rated
A+ by S&P and A1 by Moody's. The State's general obligation debt is rated
as Aa by Moody's and by S&P as AAA.
State Employees and Retirement Systems. The State has established
five public retirement systems to provide retirement, disability retirement
and survivor benefits. Three cover both State and local employees, one
State employees only and one local government employees only. The Public
Employees Retirement System ("PERS"), the largest of the five, covers both
State and local public employees. The State Teachers Retirement System
("STRS") and School Employees Retirement System ("SERS") primarily cover
school district employees and public higher education employees. The
Highway Patrol Retirement System ("HPRS") covers State troopers and the
Police and Fire Pension and Disability System ("PFPDS") covers local safety
forces.
As of the most recent year reported by the particular system, the
unfunded accrued liabilities of STRS and SERS were $8.264 billion and
$2.592 billion, respectively, and the unfunded accrued liabilities of PERS,
HPRS and PFPDS was $5.374 billion, $72.8 million and $840.2 million,
respectively.
State Municipalities. Ohio has a mixture of urban and rural
population, with approximately three-quarters urban. There are
approximately 943 incorporated cities and villages (populations under
5,000) in the State; six cities have populations of over 100,000 and
nineteen over 50,000. A 1979 act established procedures for identifying
and assisting those few cities and villages experiencing defined "fiscal
emergencies."
A commission composed of State and local officials, and private sector
members experienced in business and finance appointed by the Governor, is
to monitor the fiscal affairs of a municipality facing substantial
financial problems. That act requires the municipality to develop, subject
to approval and monitoring by its commission, a financial plan to eliminate
deficits and cure any defaults and otherwise remedy fiscal emergency
conditions, and to take other actions required under its financial plan.
It also provides enhanced protection for the municipality's bonds and notes
and, subject to the act's stated standards and controls, permits the State
to purchase limited amounts of the municipality's short-term obligations
(used only once, in 1980).
In the fifteen years that the act has been in effect, it has been
applied to 11 cities and to 12 villages. The situations in nine cities and
nine villages have been resolved and their commissions terminated. Only
the Cities of East Cleveland and Nelsonville and three of the villages
remain under the procedure.
Summary. Many factors affect or could affect the financial condition
of the State and other issuers of debt obligations, many of which are not
within the control of the State or such issuers. There can be no assurance
that such factors and the resulting impact on State and local governmental
finances will not affect adversely the market value of Ohio Municipal
Obligations held in the portfolio of the Fund or the ability of the
respective obligors to make required payments on such obligations.
APPENDIX B
Description of 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 ratings may be modified by the addition of a plus (+) or a minus (-)
sign, which is used 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.
SP-2
The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.
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 Aa 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 apply 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.
Short-Term Ratings
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as the F-1+ and F-1 categories.
<TABLE>
<CAPTION>
DREYFUS OHIO MUNICIPAL MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS NOVEMBER 30, 1994
PRINCIPAL
TAX EXEMPT INVESTMENTS-100.0% AMOUNT VALUE
----------- ------------
<S> <C> <C>
OHIO-98.3%
City of Akron, Sewer Systems Revenue, Special Assessment Notes, VRDN
3.75% (LOC; Credit Suisse) (a,b)........................................ $ 2,500,000 $ 2,500,000
City of Cleveland, BAN 3.66%, 12/1/94....................................... 1,000,000 1,000,000
Cleveland-Cuyahoga County Port Authority, Revenue, VRDN
(Rock and Roll Hall of Fame Project) 3.75% (LOC; Credit Local de France) (a,b). 4,000,000 4,000,000
Cleveland Public Power Systems, Revenue, BAN 4%, 12/29/94................... 5,000,000 5,002,267
Columbus, Sewer Revenue, Refunding, VRDN 3.60% (a).......................... 3,000,000 3,000,000
Franklin County, IDR, VRDN, Refunding:
(Berwick Steel Co.) 3.875% (LOC; Sanwa Bank) (a,b)...................... 1,000,000 1,000,000
(Physicians Building Limited) 3.80% (LOC; Bank One Corp.) (a,b)......... 1,005,000 1,005,000
Geauga County, IDR, VRDN (General Signal Corp. Project)
3.75% (LOC; Wachovia Bank) (a,b)........................................ 2,000,000 2,000,000
Hillsboro, IDR, VRDN (TD Manufacturing Co. Limited Project)
4.125% (LOC; Sanwa Bank) (a,b).......................................... 180,000 180,000
Montgomery County, IDR, VRDN (Modern Industrial Plastics Project)
4% (LOC; Industrial Bank of Japan) (a,b)................................ 3,000,000 3,000,000
City of North Olmstead, BAN:
4.20%, 6/22/95.......................................................... 1,000,000 1,001,602
4.34%, 8/17/95.......................................................... 3,360,000 3,365,490
Ohio Air Quality Development Authority:
PCR (Ohio Edison Project) 4.25%, Series C, 9/1/95 (LOC; Barclays Bank) (b) 2,000,000 2,000,000
Revenue, VRDN (JMG Funding Limited Partnership Project)
3.70%, Series A (LOC; Societe Generale) (a,b)......................... 2,000,000 2,000,000
Ohio Housing Finance Agency, SFMR
3.40%, Series A-2, 12/1/94 (GIC; Morgan Stanley)........................ 600,000 600,000
Ohio State University, General Receipts, VRDN
3.70%, Series B (Guaranteed by; Ohio State University) (a).............. 2,750,000 2,750,000
Piqua, IDR, VRDN (Berwick Steel Co. Project) 4.125% (LOC; Sanwa Bank) (a,b). 2,800,000 2,800,000
Scioto County, Marine Terminal Facility Revenue, Refunding, VRDN
(Norfolk Southern Corp. Project) 3.60% (a).............................. 7,500,000 7,500,000
City of Sharonville, IDR, VRDN (Edgecomb Metals Co. Project)
3.75% (LOC; Banque Nationale de Paris) (a,b)............................ 1,150,000 1,150,000
Stark County, BAN 3.88%, 4/7/95............................................. 3,040,000 3,041,830
Student Loan Funding Corp. of Cincinnati, Student Loan Revenue, VRDN
3.65%, Series 1983A (LOC; Fuji Bank) (a,b).............................. 1,000,000 1,000,000
Summit County:
BAN 3.70%, Series A, 3/9/95............................................. 2,000,000 2,001,036
IDR (Texlar Inc. Project) 4.15%, 5/1/95 (LOC; Bank One Corp.) (b)....... 380,000 380,000
City of Toledo, City Services Special Assessment Notes, Refunding
4.15%, 6/1/95 (LOC; Sumitomo Bank) (b).................................. 1,740,000 1,741,635
DREYFUS OHIO MUNICIPAL MONEY MARKET FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) NOVEMBER 30, 1994
PRINCIPAL
TAX EXEMPT INVESTMENTS (CONTINUED) AMOUNT VALUE
----------- ------------
OHIO (CONTINUED)
Toledo-Lucas County Port Authority, Development Revenue, VRDN
(Frostbite Brands Inc. Project) 4.40% (LOC; Old Kent Bank and Trust) (a,b). $ 1,200,000 $ 1,200,000
University of Cincinnati, General Receipts, BAN 4.75%, 8/30/95.............. 2,000,000 2,010,041
Warren County, IDR, VRDN (Johnson and Hardin Enterprises)
4%, Series A (LOC; PNC Bank of Ohio) (a,b).............................. 1,800,000 1,800,000
U.S. RELATED_1.7%
Puerto Rico Industrial Medical and Environmental Pollution Control Facilities
Financing Authority, Revenue (Reynolds Metals Co. Project)
4% (LOC; ABN-Amro Bank) (b)............................................. 1,000,000 1,000,728
---------
TOTAL INVESTMENTS (cost $60,029,629)........................................ $60,029,629
============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
BAN Bond Anticipation Notes PCR Pollution Control Revenue
GIC Guaranteed Investment Contract SFMR Single Family Mortgage Revenue
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
LOC Letter of Credit
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
------------ ------------------ --------------------
<S> <C> <C>
VMIG1/MIG1, P1 (c) SP1+/SP1, A1+/A1 (c) 77.1%
Aaa/Aa (d) AAA/AA (d) 9.9
Not Rated (e) Not Rated (e) 13.0
-------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(b) Secured by letters of credit. At November 30, 1994, 45.6% of the
Fund's net assets are backed by letters of credit issued by domestic
banks, foreign banks and brokerage firms.
(c) P1 and A1 are the highest ratings assigned tax-exempt commercial
paper by Moody's and Standard & Poor's, respectively.
(d) Notes which are not MIG or SP rated are represented by bond ratings
of the issuers.
(e) Securities which, while not rated by Moody's and Standard & Poor's,
respectively, have been determined by the Fund's Board of Directors to be
of comparable quality to those rated securities in which the Fund may
invest.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS OHIO MUNICIPAL MONEY MARKET FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES NOVEMBER 30, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value_Note 1(a).......................... $60,029,629
Cash.................................................................... 2,521,810
Interest receivable..................................................... 529,999
Prepaid expenses........................................................ 21,871
----------
63,103,309
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 5,208
Accrued expenses........................................................ 44,765 49,973
-------- ----------
NET ASSETS ................................................................ $63,053,336
===========
REPRESENTED BY:
Paid-in capital......................................................... $63,101,420
Accumulated net realized (loss) on investments.......................... (48,084)
----------
NET ASSETS at value applicable to 63,101,420 shares outstanding
(1 billion shares of $.001 par value Common Stock authorized)........... $63,053,336
===========
NET ASSET VALUE, offering and redemption price per share
($63,053,336 / 63,101,420 shares)....................................... $1.00
=====
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS OHIO MUNICIPAL MONEY MARKET FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED NOVEMBER 30, 1994
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $1,881,522
EXPENSES:
Management fee_Note 2(a)............................................. $320,740
Shareholder servicing costs_Note 2(b)................................. 88,508
Auditing fees......................................................... 27,978
Legal fees............................................................ 12,890
Organization expenses................................................. 10,723
Prospectus and shareholders' reports.................................. 9,806
Custodian fees........................................................ 7,752
Directors' fees and expenses_Note 2(c)................................ 5,420
Registration fees..................................................... 2,439
Miscellaneous......................................................... 4,112
--------
490,368
Less_reduction in management fee due to
undertakings_Note 2(a)............................................ 308,073
--------
TOTAL EXPENSES.................................................. 182,295
----------
INVESTMENT INCOME_NET...................................................... 1,699,227
NET REALIZED (LOSS) ON INVESTMENTS_Note 1(b)............................... (48,084)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,651,143
===========
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS OHIO MUNICIPAL MONEY MARKET FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED NOVEMBER 30,
-------------------------------
1993 1994
_______ _______
<S> <C> <C>
OPERATIONS:
Investment income_net.................................................. $ 1,531,546 $ 1,699,227
Net realized (loss) on investments...................................... -- (48,084)
------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 1,531,546 1,651,143
------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net.................................................. (1,531,546) (1,699,227)
Net realized gain on investments........................................ (710) --
------------- --------------
TOTAL DIVIDENDS....................................................... (1,532,256) (1,699,227)
------------- --------------
CAPITAL STOCK TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold........................................... 141,631,122 274,495,559
Dividends reinvested.................................................... 1,442,164 1,498,252
Cost of shares redeemed................................................. (141,739,582) (276,775,461)
------------- --------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL
STOCK TRANSACTIONS................................................ 1,333,704 (781,650)
------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... 1,332,994 (829,734)
NET ASSETS:
Beginning of year....................................................... 62,550,076 63,883,070
------------- --------------
End of year............................................................. $ 63,883,070 $ 63,053,336
============ =============
</TABLE>
See notes to financial statements.
DREYFUS OHIO MUNICIPAL MONEY MARKET FUND, INC.
FINANCIAL HIGHLIGHTS
Reference is made to page 3 of the Prospectus dated March 31, 1995.
DREYFUS OHIO MUNICIPAL MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940
("Act") as a non-diversified open-end management investment company. Dreyfus
Service Corporation, until August 24, 1994, acted as the exclusive
distributor of the Fund's shares, which are sold to the public without a
sales charge. Dreyfus Service Corporation is a wholly-owned subsidiary of The
Dreyfus Corporation ("Manager"). Effective August 24, 1994, the Manager
became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Services, Inc., a provider of mutual fund
administration services, the parent company of which is Boston Institutional
Group, Inc.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00; the Fund has adopted certain investment, portfolio valuation
and dividend and distribution policies to enable it to do so. There is no
assurance, however, that the Fund will be able to maintain a stable net asset
value of $1.00.
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost,
which has been determined by the Fund's Board of Directors to represent the
fair value of the Fund's investments.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Interest income, adjusted
for amortization of premiums and, original issue discounts on investments, is
earned from settlement date and recognized on the accrual basis. Realized
gain and loss from securities transactions are recorded on the identified
cost basis.
The Fund follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to
declare dividends daily from investment income-net. Such dividends are paid
monthly. Dividends from net realized capital gain, if any, are normally
declared and paid annually, but the Fund may make distributions on a more
frequent basis to comply with the distribution requirements of the Internal
Revenue Code. To the extent that net realized capital gain can be offset by
capital loss carryovers, if any, it is the policy of the Fund not to
distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
At November 30, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
The Fund has an unused capital loss carryover of approximately
$48,000 available for Federal income tax purposes to be applied against
future net securities profits, if any realized subsequent to November 30,
1994. If not applied, the carryover expires in fiscal 2002.
DREYFUS OHIO MUNICIPAL MONEY MARKET FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the
Manager, the management fee is computed at the annual rate of .50 of 1% of
the average daily value of the Fund's net assets and is payable monthly. The
Agreement provides for an expense reimbursement from the Manager should the
Fund's aggregate expenses, exclusive of taxes, brokerage, interest on
borrowings and extraordinary expenses, exceed the expense limitation of any
state having jurisdiction over the Fund for any full fiscal year. However, the
Manager had undertaken from December 1, 1993 through October 4, 1994 to
waive receipt of the management fee payable to it by the Fund, and thereafter
had undertaken through January 30, 1995, to reduce the management fee paid by
the Fund, to the extent that the Fund's aggregate expenses (excluding certain
expenses as described above) exceeded specified annual percentages of the
Fund's average daily net assets. The reduction in management fee, pursuant to
the undertakings amounted to $308,073 for the year ended November 30, 1994.
The Manager has currently undertaken from January 31, 1995 through
March 31, 1995, or until such time as the net assets of the Fund exceed $100
million, regardless of whether they remain at that level, to waive receipt of
management fee paid by the Fund in excess of an annual rate of .20 of 1% of
the Fund's average daily net assets.
(B) Pursuant to the Fund's Shareholder Services Plan, 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
servicing 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. During the year
ended November 30, 1994, the Fund was charged an aggregate of $33,951
pursuant to the Shareholder Services Plan.
(C) Prior to August 24, 1994, certain officers and directors of the
Fund were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each director who is not an "affiliated person"
receives an annual fee of $1,000.
DREYFUS OHIO MUNICIPAL MONEY MARKET FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS OHIO MUNICIPAL MONEY MARKET FUND, INC.
We have audited the accompanying statement of assets and liabilities
of Dreyfus Ohio Municipal Money Market Fund, Inc., including the statement of
investments, as of November 30, 1994, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of
the two years in the period then ended, and financial highlights for each of
the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of November 30, 1994 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Ohio Municipal Money Market Fund, Inc. at November 30,
1994, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
(Ernst & Young LLP Signature Logo)
New York, New York
January 6, 1995
