<PAGE>
Dreyfus
Money Market
Instruments, Inc.
Annual Report
December 31, 1997
<PAGE>
DREYFUS MONEY MARKET INSTRUMENTS, INC.
- ------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report the performance for Dreyfus Money Market
Instruments, Inc. for the 12-month reporting period ended December 31,
1997 as shown in the following table:
Yield Effective Yield*
----- ----------------
Money Market Series............... 4.66% 4.76%
Government Securities Series...... 4.62% 4.72%
ECONOMIC REVIEW
In 1997, the U.S. economy put in its best growth performance of this
business cycle to date. In tandem, the labor market tightened markedly,
marginally boosting wage inflation towards year end. Yet price inflation
decelerated and bond yields fell. Although corporate profit growth was
robust for much of the year, strains began to appear in the second half
in some sectors. The Federal Reserve Board (the "Fed") tightened credit
early in the year, then subsequently stayed on hold, torn between strong
economic reports at home and worsening financial crises overseas. While
the problems overseas may slow the U.S. economy somewhat in 1998,
incoming evidence indicates little adverse impact on economic activity
to date.
Real Gross Domestic Product (GDP) grew 3.8% in 1997, its best annual
growth since 1988. Almost all the major sectors contributed to growth.
Households enjoyed rising real incomes as wage increases outpaced price
inflation. Moderate interest rates buoyed housing demand. Tightening
factory capacity boosted capital spending, and until late in the year,
steady foreign growth kept exports robust. That many of these sectors
grew simultaneously in a late phase of the business cycle was unusual.
The year 1997 also saw a dramatic narrowing of the Federal budget
deficit. It is likely that the associated drop in Federal borrowing
boosted the supply of credit available to the private sector.
As mentioned, overall corporate profit growth rebounded in 1997,
after slowing in 1996. Profits from domestic sources generally did well.
However, profits from international sources began to show strains in the
second half, impacted by the rising dollar and by financial stresses
overseas. More recently, profits at some companies have been slowed by
price weakness.
Economic data this winter show the economy still quite strong
although some leading statistics have begun to signal somewhat slower
economic growth for 1998. First, recently slowing export orders and
rising import orders imply a widening trade deficit. Second, the number
of announced layoffs has begun to rise, indicating some future easing of
labor market pressures. Once these leading indicators actually show up
in a slowing of the economy, market expectations may shift to anticipate
the possibility of a move by the Fed to ease credit. At the start of
1998, there was uncertainty about both the severity of Asian stresses
and their impact on the U.S. economy.
MONEY MARKET OVERVIEW
The financial turmoil in Asia that started affecting security markets
last fall did not have much effect as yet on the money market before the
close of 1997. However, shortly after year end, interest rates began
declining. Yet for much of 1997, money market rates stayed within a
narrow range.
Last March, when the Fed raised short-term rates by a quarter point,
the money market responded with a brief spurt in yields. As the year
went on, the chief influences on rates continued to be the outlook for
inflation in the U.S., which was benign, and prospects for corporate
profits, which continued favorable for most of the year. In addition,
the customary year-end refinancings sent interest rates up for a while.
Indeed, until the Asian problems began weakening equity prices, the
money market appeared to be expecting a possible Fed move to raise
interest rates. Late in 1997 and especially in early 1998, the picture
changed. Lately, the market's
<PAGE>
expectations have focused more on a possible move by the Fed to reduce
interest rates. The reasoning is that such an action would be a
preemptive strike against an economic trend that hasn't been mentioned
for years -- potential deflation.
Portfolio Focus
In this interest rate environment, we maintained the average maturity
of the Fund at approximately the industry average, with occasional
periods of shorter or longer maturity, as warranted by market
conditions. This provided the Fund with liquidity while seeking
competitive yields without assuming undue market risks. We believe this
strategy has been in the best interests of our shareholders. The
currently volatile investment climate requires flexibility on our part
as managers. Of course, we will make adjustments to the portfolios as
required by the dynamics of the market.
Sincerely,
/s/ Patricia A. Larkin
Patricia A. Larkin
Senior Portfolio Manager
January 20, 1998
New York, N.Y.
* Effective yield takes into account the effect of compounding and is
based on dividends declared daily and reinvested monthly.
<PAGE>
DREYFUS MONEY MARKET INSTRUMENTS, INC., MONEY MARKET SERIES
- ------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--15.2% AMOUNT VALUE
- ------------------------------------------------------------------------------- ------------ -----------
<S> <C> <C>
Industrial Bank Japan, Ltd. (Yankee)
5.87%, 1/5/98............................................................... $ 2,000,000 $ 2,000,000
Sumitomo Bank Ltd. (Yankee)
5.67%, 4/7/98............................................................... 5,000,000 5,000,000
SwedBank (Yankee)
5.79%, 10/2/98.............................................................. 5,000,000 5,000,000
Union Bank California
5.68%, 2/20/98.............................................................. 6,000,000 6,000,000
------------
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $18,000,000).......................................................... $ 18,000,000
============
COMMERICAL PAPER--58.5%
- -------------------------------------------------------------------------------
Bankers Trust N.Y. Corp.
5.66%, 1/20/98.............................................................. $ 6,000,000 $ 5,982,583
Chase Manhattan Corp.
5.65%, 1/26/98.............................................................. 6,000,000 5,977,125
Finova Capital Corp.
5.81%, 3/23/98.............................................................. 5,000,000 4,935,875
General Electric Capital Corp.
5.66%, 1/12/98.............................................................. 6,000,000 5,989,825
General Motors Acceptance Corp.
5.74%-5.81%, 2/6/98-4/30/98................................................. 6,000,000 5,940,679
Goldman Sachs Group L.P.
5.84%, 1/16/98.............................................................. 4,000,000 3,990,333
Lehman Brothers Holdings Inc.
5.85%, 5/18/98.............................................................. 5,000,000 4,891,922
Merrill Lynch & Co. Inc.
5.76%, 1/6/98............................................................... 6,000,000 5,995,342
Morgan (J.P.) & Co.
5.80%, 3/25/98.............................................................. 6,000,000 5,920,873
Paine Webber Group Inc.
5.76%, 3/9/98............................................................... 6,000,000 5,937,467
Salomon Inc.
5.84%, 2/2/98............................................................... 5,000,000 4,974,800
Santander Finance (DE) Inc.
5.64%, 1/30/98.............................................................. 5,000,000 4,977,888
UBS Finance (Delaware)Inc.
6.75%, 1/2/98............................................................... 4,000,000 3,999,250
------------
TOTAL COMMERCIAL PAPER
(cost $69,513,962).......................................................... $ 69,513,962
============
BANK NOTES--4.2%
- -------------------------------------------------------------------------------
BankBoston, N.A.
5.71%, 12/10/98(a)
(cost $5,000,000)........................................................... $ 5,000,000 $ 5,000,000
============
</TABLE>
<PAGE>
DREYFUS MONEY MARKET INSTRUMENTS, INC., MONEY MARKET SERIES
- ------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
CORPORATE NOTES--13.5% AMOUNT VALUE
- ------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
CTN Trust Series 1
5.97%, 9/2/98(a,b,c)........................................................ $ 4,990,000 $ 5,000,855
PNC Bank N.A.
5.68%, 2/18/98(a)........................................................... 5,000,000 4,999,619
PHH Corp.
5.93%, 6/24/98(a)........................................................... 6,000,000 6,000,000
------------
TOTAL CORPORATE NOTES
(cost $16,000,474).......................................................... $ 16,000,474
============
U.S. GOVERNMENT AGENCIES--4.2%
- -------------------------------------------------------------------------------
Federal Farm Credit Bank
Floating Rate Notes
5.67%, 10/23/98(a)
(cost $4,997,795)........................................................... $ 5,000,000 $ 4,997,795
============
TIME DEPOSITS--8.3%
- -------------------------------------------------------------------------------
Berliner Handels-und Frankforter Bank (Grand Cayman)
6.75%, 1/2/98............................................................... $ 4,000,000 $ 4,000,000
Fleet Bank (Grand Cayman)
5.5%, 1/2/98................................................................ 1,846,000 1,846,000
Westdeutsche Landesbank (Grand Cayman)
6.75%, 1/2/98............................................................... 4,000,000 4,000,000
------------
TOTAL TIME DEPOSITS
(cost $9,846,000)........................................................... $ 9,846,000
============
TOTAL INVESTMENTS (cost $123,358,231)....................................103.9% $123,358,231
====== ============
LIABILITIES, LESS CASH AND RECEIVABLES................................... (3.9%) $ (4,591,190)
====== ============
NET ASSETS...............................................................100.0% $118,767,041
====== ============
<FN>
NOTES TO STATEMENT OF INVESTMENTS:
- ------------------------------------------------------------------------
(a) Variable interest rate--subject to periodic change.
(b) This note was acquired for investment, not with intent to distribute
or sell.
(c) Security restricted as to public resale. This security was acquired
on 12/15/97 at a cost of 100.2327. At December 31, 1997 the
aggregate value of this security is $5,000,855, representing
approximately 4.2% of net assets and is valued at amortized cost.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS MONEY MARKET INSTRUMENTS, INC., GOVERNMENT SECURITIES SERIES
- ------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
DATE OF PRINCIPAL
U.S. TREASURY BILLS--10.5% PURCHASE AMOUNT VALUE
- ----------------------------------------------------------------- ---------- ------------ ------------
<S> <C> <C> <C>
1/22/98
(cost $39,879,600).......................................... 5.18% $ 40,000,000 $ 39,879,600
============
U.S. TREASURY NOTES--45.3%
- -----------------------------------------------------------------
7.875%, 1/15/98................................................ 5.52% $42,000,000 $ 42,035,402
6.00%, 5/31/98................................................. 5.50 30,000,000 30,045,259
8.25%, 7/15/98................................................. 5.40 25,000,000 25,317,061
6.25%, 7/31/98................................................. 5.46 30,000,000 30,099,215
6.00%, 9/30/98................................................. 5.48 25,000,000 25,063,347
5.125%, 11/30/98............................................... 5.63 20,000,000 19,901,270
------------
TOTAL U.S. TREASURY NOTES
(cost $172,461,554)............................................ $172,461,554
============
REPURCHASE AGREEMENTS--42.7%
- -----------------------------------------------------------------
Barclays De Zoette Wedd Securities, Inc.
dated 12/31/97, due 1/2/98 in the amount of $11,911,920
(fully collateralized by $7,881,000 U.S. Treasury
Notes, 6.25%, due 7/31/98, and $4,140,000 U.S. Treasury
Bills, due 10/15/98, value $12,080,923)..................... 5.92% $11,908,000 $ 11,908,000
CIBC Wood Gundy Security Corp.
dated 12/31/97, due 1/2/98 in the amount of $45,016,250
(fully collateralized by $45,307,000 U.S. Treasury
Notes 4.75%-6.00%, due 5/31/98 to 9/30/98, value
$45,557,888)................................................ 6.50 45,000,000 45,000,000
Donaldson, Lufkin & Jenrette Securities, Inc.
dated 12/31/97, due 1/2/98 in the amount of $45,016,250
(fully collateralized by $45,499,000 U.S. Treasury
Notes, 5.125%, due 11/30/98, value $45,470,094)............. 6.50 45,000,000 45,000,000
SBC Warburg Dillon Reed Inc.
dated 12/31/97, due 1/2/98 in the amount of $16,005,822
(fully collateralized by $16,527,000 U.S. Treasury
Bills, due 3/26/98, value $16,328,015)...................... 6.55 16,000,000 16,000,000
UBS Securities Inc.
dated 12/31/97, due 1/2/98 in the amount of $45,016,250
(fully collateralized by $44,836,000 U.S. Treasury
Notes, 9.00%, due 5/15/98, value $45,895,204)............... 6.50 45,000,000 45,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $162,908,000)............................................ $162,908,000
============
TOTAL INVESTMENTS (cost $375,249,154)....................... 98.5% $375,249,154
====== ============
CASH AND RECEIVABLES (NET).................................. 1.5% $ 5,742,663
====== ============
NET ASSETS ................................................100.0% $380,991,817
====== ============
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS MONEY MARKET INSTRUMENTS, INC.
- ------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1997
<TABLE>
<CAPTION>
MONEY GOVERNMENT
MARKET SECURITIES
SERIES SERIES
------------ ------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments
(including repurchase agreements of $162,908,000 for
the Government Securities Series)--Note 2(b)......... $123,358,231 $375,249,154
Cash................................................... 114,736 2,209,419
Interest receivable.................................... 419,639 3,968,716
Prepaid expenses and other assets...................... 12,219 25,816
------------ ------------
123,904,825 381,453,105
------------- ------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.......... 71,049 245,328
Payable for investment securities purchased............ 5,000,000 --
Accrued expenses and other liabilities................. 66,735 215,960
------------ ------------
5,137,784 461,288
------------ ------------
NET ASSETS.................................................................. $118,767,041 $380,991,817
============ ============
REPRESENTED BY: Paid-in capital........................................ $118,789,299 $380,992,064
Accumulated net realized gain (loss) on investments.... (22,258) (247)
------------ ------------
NET ASSETS.................................................................. $118,767,041 $380,991,817
============ ============
NET ASSET VALUE PER SHARE
-------------------------
MONEY GOVERNMENT
MARKET SECURITIES
SERIES SERIES
------------ ------------
Net Assets.................................................................. $118,767,041 $380,991,817
Shares Outstanding.......................................................... 118,772,799 380,992,064
NET ASSET VALUE PER SHARE................................................... $1.00 $1.00
===== =====
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS MONEY MARKET INSTRUMENTS, INC.
- ------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MONEY GOVERNMENT
MARKET SECURITIES
SERIES SERIES
------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME Interest Income............................ $ 7,356,989 $23,405,731
------------ -----------
EXPENSES--Note 2(c): Management fee--Note 3(a).................. $ 649,781 $ 2,132,396
Shareholder servicing costs--Note 3(b)..... 545,877 1,210,358
Registration fees.......................... 33,630 30,824
Custodian fees............................. 30,125 105,254
Directors' fees and expenses--Note 3(c).... 18,392 58,714
Professional fees.......................... 15,960 59,208
Prospectus and shareholders' reports....... 10,407 33,240
Miscellaneous.............................. 7,061 78,286
------------ ------------
Total Expenses........................... 1,311,233 3,708,280
Less--reduction in management fee due to
undertaking--Note 3(a)................... (11,671) --
------------ ------------
Net Expenses............................. 1,299,562 3,708,280
------------ ------------
INVESTMENT INCOME--NET................................................... 6,057,427 19,697,451
NET REALIZED GAIN (LOSS) ON INVESTMENTS--Note 2(b)....................... (3,878) 7,009
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $ 6,053,549 $19,704,460
============ ============
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS MONEY MARKET INSTRUMENTS, INC.
- ----------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MONEY MARKET SERIES GOVERNMENT SECURITIES SERIES
------------------------------ -------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------ -------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Investment income--net....................... $ 6,057,427 $ 6,377,549 $ 19,697,451 $ 19,732,585
Net realized gain (loss) on investments...... (3,878) (18,380) 7,009 (7,256)
-------------- -------------- -------------- --------------
Net Increase (Decrease) in Net Assets
Resulting from Operations........... 6,053,549 6,359,169 19,704,460 19,725,329
-------------- -------------- -------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net....................... (6,057,427) (6,377,549) (19,697,451) (19,732,585)
Net realized gain on investments............. -- (1,686) -- (6,324)
-------------- -------------- -------------- --------------
Total Dividends........................... (6,057,427) (6,379,235) (19,697,451) (19,738,909)
-------------- -------------- -------------- --------------
CAPITALSTOCK TRANSACTIONS:
($1.00 per share):
Net proceeds from shares sold................ 301,641,056 315,705,868 1,411,479,603 1,516,154,559
Dividends reinvested......................... 4,474,950 4,720,481 12,621,559 13,459,323
Cost of shares redeemed...................... (316,689,108) (335,234,637) (1,484,884,885) (1,519,275,272)
-------------- -------------- -------------- --------------
Increase (Decrease) in Net Assets from
Capital Stock Transactions............. (10,573,102) (14,808,288) (60,783,723) 10,338,610
-------------- -------------- -------------- --------------
Total Increase (Decrease) in Net Assets (10,576,980) (14,828,354) (60,776,714) 10,325,030
NET ASSETS:
Beginning of Period.......................... 129,344,021 144,172,375 441,768,531 431,443,501
-------------- -------------- -------------- --------------
End of Period................................ $ 118,767,041 $ 129,344,021 $ 380,991,817 $ 441,768,531
============== ============== ============== ==============
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS MONEY MARKET INSTRUMENTS, INC., MONEY MARKET SERIES
- -----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share
of Common Stock outstanding, total investment return, ratios to average
net assets and other supplemental data for each period indicated. This
information has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------
PER SHARE DATA: 1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................. $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income--net............................... .047 .046 .053 .034 .026
------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income--net................ (.047) (.046) (.053) (.034) (.026)
------ ------ ------ ------ ------
Net asset value, end of period....................... $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN................................. 4.76% 4.73% 5.46% 3.42% 2.64%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.............. 1.00% .93% .84% .88% .83%
Ratio of net investment income to average net assets. 4.66% 4.63% 5.33% 3.35% 2.62%
Decrease reflected in above expense ratios due to
undertakings by the Manager....................... .01% -- -- -- --
Net Assets, end of period (000's Omitted)............ $118,767 $129,344 $144,172 $170,548 $207,537
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS MONEY MARKET INSTRUMENTS, INC., GOVERNMENT SECURITIES SERIES
- -----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share
of Common Stock outstanding, total investment return, ratios to average
net assets and other supplemental data for each period indicated. This
information has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
PER SHARE DATA: 1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................. $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
Investment Operations:
Investment income--net............................... .046 .045 .051 .033 .025
------ ------ ------ ------ ------
Distributions:
Dividends from investment income--net................ (.046) (.045) (.051) (.033) (.025)
------ ------ ------ ------ ------
Net asset value, end of period....................... $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN................................. 4.72% 4.60% 5.18% 3.31% 2.48%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.............. .87% .90% .83% .88% .80%
Ratio of net investment income to average net assets. 4.62% 4.50% 5.07% 3.24% 2.46%
Net Assets, end of period (000's Omitted)............ $380,992 $441,769 $431,444 $465,956 $520,708
</TABLE>
See notes to financial statements.
<PAGE>
DREYFUS MONEY MARKET INSTRUMENTS, INC.
- ------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--GENERAL:
Dreyfus Money Market Instruments, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 ("Act") as a diversified open-
end management investment company and operates as a series company
issuing two classes of Common Stock: the Money Market Series and the
Government Securities Series. The Fund accounts separately for the
assets, liabilities and operations of each series. The Fund's investment
objective is to provide investors with as high a level of current income
as is consistent with the preservation of capital and the maintenance of
liquidity. The Dreyfus Corporation ("Manager") serves as the Fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank,
N.A.
Premier Mutual Fund Services, Inc. is the distributor of the Fund's
shares, which are sold to the public without a sales charge. The Fund is
authorized to issue 5 billion shares of $.01 par value Common Stock for
the Money Market Series and 10 billion shares of $.01 par value Common
Stock for the Government Securities Series.
It is the Fund's policy to maintain a continuous net asset value per
share of $1.00 for each series; 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 per share of $1.00 for each series.
The Fund's financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from
those estimates.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES:
(A) PORTFOLIO VALUATION: Investments in securities 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. Realized gain and loss
from securities transactions are recorded on the identified cost basis.
Interest income is recognized on the accrual basis. Cost of investments
represents amortized cost.
The Fund may enter into repurchase agreements with financial
institutions, deemed to be creditworthy by the Fund's Manager, subject
to the seller's agreement to repurchase and the Fund's agreement to
resell such securities at a mutually agreed upon price. Securities
purchased subject to repurchase agreements are deposited with the Fund's
custodian and, pursuant to the terms of the repurchase agreement, must
have an aggregate market value greater than or equal to the repurchase
price plus accrued interest at all times. If the value of the underlying
securities falls below the value of the repurchase price plus accrued
interest, the Fund will require the seller to deposit additional
collateral by the next business day. If the request for additional
collateral is not met, or the seller defaults on its repurchase
obligation, the Fund maintains the right to sell the underlying
securities at market value and may claim any resulting loss against the
seller.
(C) EXPENSES: Expenses directly attributable to each series are charged
to that series' operations; expenses which are applicable to both series
are allocated between them.
(D) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund, with
respect to both series, to declare dividends from * investment income-
net on each business day; such dividends are paid monthly. Dividends
from net realized capital gain, with respect to both series, are
normally declared and paid annually, but each series may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. However, to the extent that a
net realized capital gain of either series can be reduced by a capital
loss carryover of that series, such gain will not be distributed.
<PAGE>
DREYFUS MONEY MARKET INSTRUMENTS, INC.
- ------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
(E) FEDERAL INCOME TAXES: It is the policy of each series to continue
to qualify as a regulated investment company, if such qualification is
in the best interests of its shareholders, by complying with the
applicable provisions of the Internal Revenue Code, and to make
distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
The Money Market Series has an unused capital loss carryover of
approximately $22,000 available for Federal income tax purposes to be
applied against future net securities profits, if any, realized
subsequent to December 31, 1997. If not applied, $18,000 of the
carryover expires in fiscal 2004 and $4,000 expires in fiscal 2005.
The Government Securities Series has an unused capital loss carryover
of approximately $3,700 available for Federal income tax purposes to be
applied against future net securities profits, if any, realized
subsequent to December 31, 1997. If not applied, the carryover expires
in fiscal 2004.
At December 31, 1997, the cost of investments of each series for
Federal income tax purposes was substantially the same as the cost for
financial reporting purposes (see the Statements of Investments).
NOTE 3--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the
Manager, the management fee for each series is computed at the annual
rate of .50 of 1% of the value of the average daily net assets of each
series and is payable monthly.
The Agreement provides that if in any full fiscal year the aggregate
expenses of either series, exclusive of taxes, brokerage commissions,
interest on borrowings and extraordinary expenses, exceed 1% of the
value of such series' average daily net assets, the Fund may deduct from
payments to be made to the Manager, or the Manager will bear the amount
of such excess. The reduction in management fee, pursuant to the
undertaking, amounted to $11,671 during the period ended December 31,
1997.
(B) Under the Shareholder Services Plan, each series reimburses
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
an amount not to exceed an annual rate of .25 of 1% of the value of each
series' average daily net assets for certain allocated expenses of
providing personal services and/or maintaining shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Fund and
providing reports and other information, and services related to the
maintenance of shareholder accounts. During the period ended December
31, 1997, the Money Market Series and the Government Securities Series
were charged $324,158 and $885,159, respectively, pursuant to the
Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned
subsidiary of the Manager, under a transfer agency agreement for
providing personnel and facilities to perform transfer agency services
for the Fund. During the period ended December 31, 1997, the Money
Market Series and the Government Securities Series, were charged
$121,209 and $232,044, respectively, pursuant to the transfer agency
agreement.
(C) Each director who is not an "affiliated person" as defined in the
Act receives from the Fund an annual fee of $4,500 and an attendance fee
of $500 per meeting. The Chairman of the Board receives an additional
25% of such compensation.
<PAGE>
DREYFUS MONEY MARKET INSTRUMENTS, INC.
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REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS MONEY MARKET INSTRUMENTS, INC.
We have audited the accompanying statement of assets and liabilities,
including the statements of investments, of Dreyfus Money Market
Instruments, Inc. (comprising, respectively, the Money Market Series and
the Government Securities Series), as of December 31, 1997, 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 and financial
highlights. Our procedures included confirmation of securities owned as
of December 31, 1997 by correspondence with the custodian and brokers.
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 each of the respective series constituting Dreyfus
Money Market Instruments, Inc. at December 31, 1997, the results of
their operations for the year then ended, the changes in their 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
New York, New York
February 6, 1998
<PAGE>
DREYFUS MONEY MARKET INSTRUMENTS, INC.
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IMPORTANT TAX INFORMATION (UNAUDITED)
For State individual income tax purposes, the Government Securities
Series hereby designates 37.18% of the ordinary income dividends paid
during its fiscal year ended December 31, 1997 as attributable to
interest income from direct obligations of the United States. Such
dividends are currently exempt from taxation for individual income tax
purposes in most states, including New York, California and the District
of Columbia.
<PAGE>
[LOGO]
DREYFUS MONEY MARKET
INSTRUMENTS, INC.
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 008/060AR9712
