Dreyfus Senior Portfolio Manager Colleen Meehan says in her latest monthly "Tax Exempt Money Market Commentary," "Investor demand and continued decreasing supply have kept yields on variable-rate demand notes (VRDNs) at historical lows. The SIFMA index, a weekly high-grade market index comprised of seven-day tax-exempt VRDNs produced by Municipal Market Data Group, averaged 0.05% for 2014. In the first quarter of 2015 the average maintained a historical low of 0.02%. We continue to maintain high levels of liquidity and weighted average maturities within the industry averages. In general, municipal credit quality has continued to improve as most states and many local governments have recovered slowly from the recession. In particular, state general funds have shown consecutive quarters of growth in personal income tax and sales tax revenue, both important sources of revenue. Careful and well-researched credit selection remains key. State general obligation bonds, essential-service revenue bonds issued by water, sewer and electric enterprises, certain local credits with strong financial positions and stable tax bases, and various healthcare and education issuers should remain stable credits. The industry continues to analyze the money market regulatory reforms (implementation October 2016) and the recent proposals with regard to the proposed amendment addressing the removal of credit ratings and IRS tax compliance relief." (See also, Dreyfus Senior Portfolio Manager Patricia Larkin's latest monthly "Taxable Money Market Commentary," which discusses recent Fed statements.)

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