DREYFUS INSTITUTIONAL MONEY MARKET FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MARCH 31, 1994, As Revised April 12, 1994
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus Institutional Money Market Fund (the "Fund"), dated March 31, 1994,
as it may be revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call the following numbers:
Call Toll Free -- 1-800-645-6561
In New York City -- Call 1-718-895-1396
On Long Island -- Call 794-5452
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Dreyfus Service Corporation (the "Distributor"), a wholly-owned
subsidiary of the Manager, is the distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . . . . .B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . .B-4
Management Agreement. . . . . . . . . . . . . . . . . . . . .B-7
Shareholder Services Plan . . . . . . . . . . . . . . . . . .B-9
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . .B-10
Redemption of Fund Shares . . . . . . . . . . . . . . . . . .B-11
Shareholder Services. . . . . . . . . . . . . . . . . . . . .B-13
Portfolio Transactions. . . . . . . . . . . . . . . . . . . .B-16
Determination of Net Asset Value. . . . . . . . . . . . . . .B-16
Dividends, Distributions and Taxes. . . . . . . . . . . . . .B-17
Yield Information . . . . . . . . . . . . . . . . . . . . . .B-17
Information About the Fund. . . . . . . . . . . . . . . . . .B-18
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors . . . . . . . . . . . .B-18
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . .B-19
Financial Statements. . . . . . . . . . . . . . . . . . . . .B-22
Report of Independent Auditors. . . . . . . . . . . . . . . .B-31
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."
Portfolio Securities. (Money Market Series only) Investments in time
deposits and certificates of deposit are limited to domestic banks having
total assets in excess of one billion dollars and London branches of such
domestic banks.
Both domestic banks and London branches of domestic banks are subject
to extensive but different governmental regulations which may limit both
the amount and types of loans which may be made and interest rates which
may be charged. In addition, the profitability of the banking industry is
dependent largely upon the availability and cost of funds for the purpose
of financing lending operations under prevailing money market conditions.
General economic conditions as well as exposure to credit losses arising
from possible financial difficulties of borrowers play an important part in
the operations of the banking industry.
Domestic commercial banks organized under Federal law are supervised
and examined by the Comptroller of the Currency and are required to be
members of the Federal Reserve System and to have their deposits insured by
the Federal Deposit Insurance Corporation. Domestic banks organized under
state law are supervised and examined by state banking authorities but are
members of the Federal Reserve System only if they elect to join. As a
result of Federal and state laws and regulations, domestic banks are, among
other things, generally required to maintain specified levels of reserves
and are subject to other regulations designed to promote financial
soundness. However, not all of such laws and regulations apply to the
London branches of domestic banks.
Investment Restrictions. The Fund has adopted the following
restrictions as fundamental policies which apply to both series. These
restrictions cannot be changed, as to either series, without approval by
the holders of a majority (as defined in the Investment Company Act of 1940
(the "Act")) of the outstanding voting shares of such series. Neither
series may:
1. Purchase common stocks, preferred stocks, warrants, other equity
securities, corporate bonds or debentures, state bonds, municipal bonds or
industrial revenue bonds.
2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes, including the meeting of redemption requests which
might otherwise require the untimely disposition of securities. Borrowing
in the aggregate may not exceed 10%, and borrowing for purposes other than
meeting redemptions may not exceed 5%, of the value of total assets of the
series with respect to which the borrowing is being made (including the
amount borrowed) valued at the lesser of cost or market less liabilities
(not including the amount borrowed) at the time the borrowing is made. The
borrowings will be repaid out of the assets of such series before any
additional investments are made by such series.
3. Pledge, hypothecate, mortgage or otherwise encumber its assets
except in an amount up to 15% of the value of its total assets but only to
secure borrowings for temporary or emergency purposes.
4. Sell securities short or purchase securities on margin.
5. Write or purchase put or call options.
6. Underwrite the securities of other issuers or purchase securities
with contractual or other restrictions on resale.
7. Purchase or sell real estate, real estate investment trust
securities, commodities, or oil and gas interests.
8. Make loans to others, except through the purchase of debt
obligations and through repurchase agreements referred to in the
Prospectus. However, the Government Securities Series may lend securities
to brokers, dealers and other institutional investors, but only when the
borrower deposits collateral consisting of cash or U.S. Treasury securities
with the Government Securities Series and agrees to maintain such
collateral so that it amounts at all times to at least 100% of the value of
the securities loaned. Such loans will not be made if, as a result, the
aggregate value of the securities loaned exceeds 20% of the value of the
Government Securities Series' total assets.
9. Invest in companies for the purpose of exercising control.
10. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or acquisition of
assets.
The following investment restrictions (11-12) apply only to the Money
Market Series. The Money Market Series may not:
11. Invest more than 15% of its assets in the obligations of any one
bank, or invest more than 5% of its assets in the commercial paper of any
one issuer. Notwithstanding the foregoing, to the extent required by the
rules of the Securities and Exchange Commission, the Money Market Series
will not invest more than 5% of its assets in the obligations of any one
bank.
12. Invest less than 25% of its assets in obligations issued by banks
or invest more than 25% of its assets in the securities of issuers in any
other industry, provided that there shall be no limitation on the purchase
of obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. Notwithstanding the foregoing, if at some future date
available yields on bank securities are significantly lower than yields on
other securities in which the Money Market Series may invest, the Money
Market Series may invest less than 25% of its assets in bank obligations.
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 series' shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interest of a series and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of such series' shares in the
state involved.
MANAGEMENT OF THE FUND
Trustees 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 Trustee who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Trustees and Officers of the Fund
*JOSEPH S. DiMARTINO, President, Trustee and Investment Officer.
President, Chief Operating Officer and a director of the Manager,
Executive Vice President and a director of the Distributor, and
an officer, director or trustee of other investment companies
advised or administered by the Manager. He is also a director of
Noel Group, Inc., a director and Corporate Member of The Muscular
Dystrophy Association and a trustee of Bucknell University. His
address is 200 Park Avenue, New York, New York 10166.
JOHN M. FRASER, JR., Trustee. President of Fraser Associates, a service
company for planning and arranging corporate meetings and other events.
He was Executive Vice President of Flagship Cruises, Ltd. from September
1975 to June 1978. Prior thereto, he was Senior Vice President and
Resident Director of the Swedish-American Line for the United States
and Canada. His address is 133 East 64th Street, New York, New York
10021.
ROBERT R. GLAUBER, Trustee. Research Fellow, Center for Business and
Government at the John F. Kennedy School of Government, Harvard
University since January 1992. He was Under Secretary of the Treasury
for Finance at the U.S. Treasury Department from May 1989 to January
1992. For more than five years prior thereto, he was a Professor of
Finance at the Graduate School of Business Administration of Harvard
University and, from 1985 to 1989, Chairman of its Advanced Management
Program. His address is 79 John F. Kennedy Street, Cambridge,
Massachusetts 02138.
JAMES F. HENRY, Trustee. President of the Center for Public Resources, a
non-profit organization principally engaged in the development of
alternatives to business litigation. He was of counsel to the law firm
of Lovejoy, Wasson & Ashton from October 1975 to December 1976 and from
October 1979 to June 1983, and was a partner of that firm from January
1977 to September 1979. He was President and a director of the Edna
McConnell Clark Foundation, a philanthropic organization from
September 1971 to December 1976. His address is c/o Center for Public
Resources, 366 Madison Avenue, New York, New York 10017.
ROSALIND GERSTEN JACOBS, Trustee. Director of Merchandise and Marketing,
Corporate Property Investors, a real estate investment company. From
1974 to 1976, she was owner-manager of a merchandise and marketing
consulting firm. Prior to 1974, she was a Vice President of Macy's,
New York. Her address is c/o Corporate Property Investors, 305 East
47th Street, New York, New York 10017.
*IRVING KRISTOL, Trustee. Consultant to the Manager on economic matters.
He is also John M. Olin Distinguished Fellow of the American Enterprise
Institute for Public Policy Research, co-editor of The Public Interest
magazine, and an author or co-editor of several books. From 1969 to
1988, he was Professor of Social Thought at the Graduate School of
Business Administration, New York University; from September 1969 to
August 1979, he was Henry R. Luce Professor of Urban Values at New
York University; from 1975 to 1990, he was a director of Lincoln
National Corporation, an insurance company; and from 1977 to 1990,
he was a director of Warner-Lambert Company, a pharmaceutical and
consumer products company. His address is c/o The Public Interest,
1112 16th Street, N.W., Suite 530, Washington, D.C. 20036.
DR. PAUL A. MARKS, Trustee. President and Chief Executive Officer of
Memorial Sloan-Kettering Cancer Center. He was Vice President for
Health Sciences and director of the Cancer Center at Columbia
University from 1973 to 1980, and Professor of Medicine and of Human
Genetics and Development at Columbia University from 1968 to 1982.
He is also a director of Pfizer, Inc., a pharmaceutical company, Life
Technologies, Inc., a life science company providing products for cell
and molecular biology and microbiology, and National Health Laboratories,
a national clinical diagnostic laboratory. From 1976 to 1991, he was a
director of the Charles H. Revson Foundation; and from 1992 to 1993, he
was a director of Biotechnology General, Inc., a biotechnology
development company. His address is c/o Memorial Sloan-Kettering
Cancer Center, 1275 York Avenue, New York, New York 10021.
DR. MARTIN PERETZ, Trustee. Editor-in-Chief of The New Republic magazine
and a lecturer in Social Studies at Harvard University where he has been
a member of the faculty since 1965. He is a trustee of The Center for
Blood Research at the Harvard Medical School and a director
of Leukosite Inc., a biopharmaceutical company. From 1988 to 1989, he
was a director of Bank of Leumi Trust Company of New York; and from 1988
to 1991, he was a director of Carmel Container Corporation. His address
is c/o The New Republic, 1220 19th Street, N.W., Washington, D.C. 20036.
*HOWARD STEIN, Trustee. Chairman of the Board and Chief Executive Officer
of the Manager and Chairman of the Board of the Distributor. He is an
officer, general partner, director or trustee of other investment
companies advised or administered by the Manager. His address is 200
Park Avenue, New York, New York 10166.
*BERT W. WASSERMAN, Trustee. Executive Vice President and Chief Financial
Officer since January 1990, and a director from January 1990 to March
1993, of Time Warner Inc. From 1981 to 1990, he was President and a
director of Warner Communications Inc. He is also a member of the
Chemical Bank National Advisory Board. His address is c/o Time Warner
Inc., 75 Rockefeller Plaza, New York, New York 10019.
Mrs. Jacobs, Messrs. Fraser, Glauber, Henry, Kristol and Wasserman,
and Drs. Marks and Peretz are also directors of Dreyfus A Bonds Plus, Inc.,
Dreyfus Balanced Fund, Inc., Dreyfus Growth and Income Fund, Inc.,
Dreyfus Growth Opportunity Fund, Inc., Dreyfus International Equity
Fund, Inc., Dreyfus Money Market Instruments, Inc. and Dreyfus
Capital Growth Fund (A Premier Fund), and trustees of Dreyfus
Variable Investment Fund. Mr. Glauber also is a director of Dreyfus
Asset Allocation Fund, Inc., Dreyfus California Municipal Income,
Inc., The Dreyfus Fund Incorporated, Dreyfus Municipal Income, Inc.,
Dreyfus New York Municipal Income, Inc., Dreyfus Short Term Income
Fund, Inc. and Dreyfus Worldwide Dollar Money Market Fund, Inc., and
a trustee of Dreyfus Institutional Short Term Treasury Fund and Dreyfus
Short-Intermediate Municipal Bond Fund.
The Trustees, except Messrs. Glauber and Wasserman, were elected at a
meeting of shareholders held on November 13, 1986. No further shareholder
meetings will be held for the purpose of electing Trustees unless and until
such time as less than a majority of the Trustees holding office have been
elected by shareholders, at which time the Trustees then in office will
call a shareholders' meeting for the election of Trustees. Under the Act,
shareholders of record of not less than two-thirds of the outstanding
shares of the Fund may remove a Trustee through a declaration in writing or
by vote cast in person or by proxy at a meeting called for that purpose.
Under the Fund's Agreement and Declaration of Trust, the Trustees are
required to call a meeting of shareholders for the purpose of voting upon
the question of removal of any such Trustee when requested in writing to do
so by the shareholders of record of not less than 10% of the Fund's
outstanding shares.
The Fund does not pay any remuneration to its officers and Trustees
other than fees and expenses to Trustees who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, which totalled $46,204 for the 1993 fiscal year for such
Trustees as a group.
For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Trustees of the Fund who
are not "interested persons" of the Fund, as defined in the Act, will be
selected and nominated by the Trustees who are not "interested persons" of
the Fund.
Officers of the Fund Not Listed Above
PATRICIA A. CUDDY, Senior Vice President and Investment Officer. An
employee of the Manager and an officer of other investment companies
advised or administered by the Manager.
MARK N. JACOBS, Vice President. Secretary and Deputy General Counsel of
the Manager and an officer of other investment companies advised or
administered by the Manager.
JEFFREY N. NACHMAN, Vice President-Financial. Vice President-Mutual Fund
Accounting of the Manager and an officer of other investment companies
advised or administered by the Manager.
JOHN J. PYBURN, Treasurer. Assistant Vice President of the Manager and an
officer of other investment companies advised or administered by the
Manager.
DANIEL C. MACLEAN, Secretary. Vice President and General Counsel of the
Manager, Secretary of the Distributor and an officer of other
investment companies advised or administered by the Manager.
THOMAS J. DURANTE, Controller. Senior Accounting Manager of the Fund
Accounting Department of the Manager and an officer of other investment
companies advised or administered by the Manager.
STEVEN F. NEWMAN, Assistant Secretary. Associate General Counsel of the
Manager and an officer of other investment companies advised or
administered by the Manager.
CHRISTINE PAVALOS, Assistant Secretary. Assistant Secretary of the
Manager, the Distributor and other investment companies advised or
administered by the Manager.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Trustees and officers of the Fund, as a group, owned less than 1% of
the Fund's shares of beneficial interest outstanding on March 1, 1994.
The following persons are also officers and/or directors of the
Manager: Julian M. Smerling, Vice Chairman of the Board of Directors; Alan
M. Eisner, Vice President and Chief Financial Officer; David W. Burke, Vice
President and Chief Administrative Officer; Robert F. Dubuss, Vice
President; Elie M. Genadry, Vice President--Institutional Sales; Peter A.
Santoriello, Vice President; Robert H. Schmidt, Vice President; Kirk V.
Stumpp, Vice President -- New Product Development; Philip L. Toia, Vice
President--Fixed-Income Research; Katherine C. Wickham, Assistant Vice
President; Maurice Bendrihem, Controller; and Mandell L. Berman, Alvin E.
Friedman, Lawrence M. Greene, Abigail Q. McCarthy and David B. Truman,
directors.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated June 2, 1986 with the Fund. As to each
series, the Agreement is subject to annual approval by (i) the Fund's Board
of Trustees or (ii) vote of a majority (as defined in the Act) of the
outstanding voting securities of such series, provided that in either event
the continuance also is approved by a majority of the Trustees 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. Shareholders approved the Agreement on November 13, 1986. The
Board of Trustees, including a majority of the Trustees who are not
"interested persons" of any party to the Agreement, last voted to renew the
Agreement at a meeting held on March 16, 1994. As to each series, the
Agreement is terminable without penalty on 60 days' notice by the Fund's
Board of Trustees, by vote of a majority of the outstanding voting
securities of such series or by the Manager. The Agreement will terminate
automatically, as to the relevant series, in the event of its assignment
(as defined in the Act).
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board of Trustees. The Manager is responsible for investment decisions and
provides the Fund with investment officers who are authorized by the Board
to execute purchases and sales of securities. The Fund's Investment
Officers are Patricia A. Cuddy, Joseph S. DiMartino, Barbara L. Kenworthy
and Patricia A. Larkin. 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 of securities for each series are
reported for the Board's 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: taxes, interest, brokerage fees and
commissions, if any, fees of Trustees who are not officers, directors,
employees, or holders of 5% or more of the outstanding voting securities of
the Manager, Securities and Exchange Commission fees, state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of independent
pricing services, costs of maintaining the Fund's existence, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of shareholders' reports and meetings, costs
of preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to existing
shareholders, and any extraordinary expenses. Expenses attributable to a
particular series are charged against the assets of that series; other
expenses of the Fund are allocated between the series on the basis
determined by the Board of Trustees, including, but not limited to,
proportionately in relation to the net assets of each series.
The Manager pays the salaries of all officers and employees employed
by both it and the Fund, maintains office facilities, and furnishes
statistical and research data, clerical help, accounting, data processing,
bookkeeping and internal auditing services, and certain other required
services. The Manager may make such advertising and promotional
expenditures, using its own resources, as it from time to time deems
appropriate.
The Manager, from time to time, from its own funds, other than the
management fee paid by the Fund, but including past profits, may make
payments for shareholder servicing and distribution services to the
Distributor. The Distributor in turn may pay part or all of such
compensation to securities dealers or other persons for their servicing or
distribution assistance.
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 each series' average daily net assets. All expenses are accrued
daily and deducted before declaration of dividends to investors. The
management fees paid by the Money Market Series to the Manager for the
fiscal years ended December 31, 1991, 1992 and 1993 amounted to $2,083,684,
$1,962,361 and $1,876,774, respectively. The management fees paid by the
Government Securities Series to the Manager for the fiscal years ended
December 31, 1991, 1992 and 1993 amounted to $1,157,108, $1,221,895 and
$844,481, respectively. These fees reflect reductions pursuant to various
undertakings by the Manager relating to expense limitations, which reduced
the management fee paid by the Money Market Series for the fiscal year
ended December 31, 1991 by $1,888, and the management fee paid by the
Government Securities Series during such year by $2,023.
The Manager has agreed that if in any fiscal year the aggregate
expenses of the Fund, exclusive of taxes, brokerage commissions, interest
and (with the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including the management fee,
exceed 1% of the value of the average net assets of either series for the
year, the Manager will bear such excess amount, initially as a reduction of
the management fee charged to the series.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of a series' net assets increases.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services Plan."
The Fund has adopted a Shareholder Services Plan (the "Plan") pursuant
to which the Fund reimburses the Distributor for certain allocated expenses
of providing personal services and/or maintaining shareholder accounts.
The services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Fund and
providing reports and other information, and services related to the
maintenance of shareholder accounts.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Trustees for their review. In addition, the Plan provides that material
amendments of the Plan must be approved by the Board of Trustees, and by
the Trustees 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 Trustees cast in person at a meeting called for the
purpose of voting on the Plan. The Plan is terminable at any time by vote
of a majority of the Trustees who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Plan.
The shareholder services fees paid by the Money Market Series and the
Government Securities Series for the fiscal year ended December 31, 1993
amounted to $88,393 and $49,489, respectively.
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 a 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.
Procedures for Multiple Accounts. The Transfer Agent will provide
each institution with a written confirmation for each transaction in a
sub-account. Duplicate confirmations may be transmitted to the beneficial
owner of the sub-account at no additional charge. Upon receipt of funds
for investment by interbank wire, the Transfer Agent or First Interstate
Bank of California will promptly confirm the receipt of the investment by
telephone or return wire to the transmitting bank, if the investor so
requests.
The Transfer Agent also will provide each institution with a monthly
statement setting forth, for each sub-account, the share balance, income
earned for the month, income earned for the year to date and the total
current value of the account.
Transactions Through Securities Dealers. Fund shares may be purchased
and redeemed through securities dealers who 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 not take physical delivery of share 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. In some states, banks or other institutions effecting
transactions in Fund shares may be required to register as dealers pursuant
to state law.
There is no sales or service charge by the Fund or the Distributor
although investment dealers, banks and other financial 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.
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. Shareholders generally will be subject to the
same rules and regulations that apply to checking accounts, although the
election of this Privilege creates only a shareholder-transfer agent
relationship with the Transfer Agent.
If the amount of the Check is greater than the value of the shares in
the 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 redemption request is
received by the Transfer Agent in proper form prior to 12:00 Noon, New York
time, 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
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at
1-800-654-7171, toll free. Investors should advise the operator that the
above transmittal code must be used and should also inform the operator of
the Transfer Agent's answer back sign.
To change the commercial bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent.
This request must be signed by each shareholder, with each signature
guaranteed as described below under "Share Certificates; Signatures."
Share Certificates; Signatures. Any certificate 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 Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchanges Medallion Program. Guarantees
must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification. For more information with respect to signature-guarantees,
please call one of the telephone numbers listed on the cover.
Redemption Commitment. 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 relevant series' 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 Trustees reserves the right to make payments in
whole or part in securities or other assets of the relevant series in case
of an emergency or any time a cash distribution would impair the liquidity
of such series to the detriment of the existing shareholders. In such
event, the securities would be valued in the same manner as the series'
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 periods when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services."
Exchange Privilege. Shares of other funds purchased by exchange will
be purchased on the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the applicable sales
load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales load,
and additional shares acquired through reinvestment of dividends or
distributions of any such funds (collectively referred to herein as
"Purchased Shares") may be exchanged for shares of other funds sold with a
sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable to the
Offered Shares exceeds the maximum sales load that could have been imposed
in connection with the Purchased Shares (at the time the Purchased Shares
were acquired), without giving effect to any reduced loads, the difference
will be deducted.
To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their
account number.
To use this Privilege, an investor must give exchange instructions to
the Transfer Agent in writing, by wire or by telephone. Telephone
exchanges may be made only if the appropriate "YES" box has been checked on
the Account Application or a separate signed Shareholder Services Form is
on file with the Transfer Agent. By using this Privilege, the investor
authorizes the Transfer Agent to act on exchange instructions from any
person representing himself or herself to be the investor, and reasonably
believed by the Transfer Agent to be genuine. Telephone exchanges may be
subject to limitations as to the amount involved or the number of
telephone exchanges permitted. Shares issued in certificate form are not
eligible for telephone exchanges.
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 certain other funds in the Dreyfus Family of Funds. This Privilege is
available only for existing accounts. Shares will be exchanged on the
basis of relative net asset value set forth above under "Exchange
Privilege." Enrollment in or modification or cancellation of this
Privilege is effective three business days following notification by the
investor. An investor will be notified if his account falls below the
amount designated to be exchanged under this Privilege. In this case, 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
transaction. Shares held under IRA and other retirement plans are eligible
for this Privilege. Exchanges of IRA shares may be made between IRA
accounts and from regular accounts to IRA accounts, but not from IRA
accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.
The Exchange Privilege and Dreyfus Auto-Exchange Privilege are
available to shareholders resident in any state in which shares of the fund
being acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Shareholder Services Forms and prospectuses of the other funds may be
obtained from the Distributor, 144 Glenn Curtiss Boulevard, Uniondale, New
York 11556-0144. The Fund reserves the right to reject any exchange
request in whole or in part. The Exchange Privilege or Dreyfus Auto-
Exchange Privilege may be modified or terminated at any time upon notice to
shareholders.
Dreyfus Dividend Sweep Privilege. Dreyfus Dividend Sweep Privilege
allows investors to invest on the payment date their dividends or dividends
and capital gain distributions, if any, from 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.
Dreyfus Dividend ACH. Dreyfus Dividend ACH permits a shareholder to
transfer electronically on the payment date their dividends or dividends
and capital gains, if any, from the Fund to a designated bank account.
Only an account maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. Banks may charge a
fee for this service. For more information concerning Dreyfus Dividend
ACH, or to request a Dividend Options form, please call toll free 1-800-
645-6561. You may cancel this privilege by mailing written notification to
The Dreyfus Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-
9671. Enrollment or cancellation is effective three business days
following receipt. This privilege is available only for existing accounts.
The Fund may modify or terminate this privilege at any time or charge a
service fee. No such fee is currently contemplated. Shares held under
Keogh plans, IRAs or other retirement plans are not eligible for this
privilege.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from the issuer or from
an underwriter or a market maker for the securities. Usually no brokerage
commissions are paid by the Fund for such purchases. Purchases from
underwriters of portfolio securities include a concession paid by the
issuer to the underwriter and the purchase price paid to market makers for
the securities may include the spread 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 Investment
Officers of the Fund in their best judgment. The primary consideration is
prompt and effective execution of orders at the most favorable price.
Subject to that primary consideration, dealers may be selected for
research, statistical or other services to enable the Manager to supplement
its own research and analysis with the views and information of other
securities firms. Securities transactions are not directed to securities
firms in consideration of sales of Fund shares or of shares of other funds
advised by the Manager.
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.
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 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 Trustees has established, as a particular responsibility
within the overall duty of care owed to the Fund's investors, procedures
reasonably designed to stabilize the Fund's price per share as computed for
the purpose of sales and redemptions at $1.00. Such procedures include
review of the Fund's portfolio holdings by the Board of Trustees, at such
intervals as it may deem appropriate, to determine whether the Fund's net
asset value calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost. In such
review, investments for which market quotations are readily available will
be valued at the most recent bid price or yield equivalent for such
securities or for securities of comparable maturity, quality and type, as
obtained from one or more of the major market makers for the securities to
be valued. Other investments and assets will be valued at fair value as
determined in good faith by the Board of Trustees.
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 Trustees. If such
deviation exceeds 1/2 of 1%, the Board of Trustees will consider promptly
what action, if any, will be initiated. In the event the Board of Trustees
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.
New York Stock Exchange and Transfer Agent Closings. The holidays
(as observed) on which the New York Stock Exchange and the Transfer Agent
are closed currently are: New Year's Day, Presidents' Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. In addition, the
New York Stock Exchange is closed on Good Friday.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of 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 December 31, 1993, the Money Market
Series' yield was 2.79% and its effective yield was 2.83%. For the
seven-day period ended December 31, 1993, the Government Securities Series'
yield was 2.51% and its effective yield was 2.54%. 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.
Yields will fluctuate and are not necessarily representative of future
results. Investors should remember that yield is a function of the type
and quality of the instruments in the portfolio, portfolio maturity and
operating expenses. An investor's principal in the Fund is not guaranteed.
See "Determination of Net Asset Value" for a discussion of the manner in
which the Fund's price per share is determined.
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 share has one vote and, when issued and paid for in accordance
with the terms of the offering, is fully paid and non-assessable. Shares
have no preemptive, subscription, or conversion rights and are freely
transferable.
The Fund sends 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,
acts as custodian. First Interstate Bank of California, 707 Wilshire
Boulevard, Los Angeles, California 90017, serves as a sub-custodian of the
Fund's investments. The Shareholder Services Group, Inc., a subsidiary of
First Data Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671,
is the Fund's transfer and dividend disbursing agent. The Bank of New
York, First Interstate Bank of California and The Shareholder Services
Group, Inc. have no part in determining the investment policies of the Fund
or which securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares of beneficial interest being sold pursuant to the Fund's Prospectus.
Ernst & Young, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX
Description of the two highest commercial paper, bond and other short-
and long-term rating categories assigned by Standard & Poor's Corporation
("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch Investors
Service, Inc. ("Fitch"), Duff & Phelps, Inc. ("Duff"), IBCA Limited and
IBCA Inc. ("IBCA") and Thomson BankWatch, Inc. ("BankWatch"):
Commercial Paper and Short-Term Ratings
The designation A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. 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.
Those issues determined to possess overwhelming safety characteristics are
denoted with a plus sign (+) designation.
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. Issues rated Prime-2 (P-2) have a
strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
The rating Fitch-1 (Highest Grade) is the highest commercial paper
rating assigned by Fitch. Paper rated Fitch-1 is regarded as having the
strongest degree of assurance for timely payment. The rating Fitch-2 (Very
Good Grade) is the second highest commercial paper rating assigned by Fitch
which reflects an assurance of timely payment only slightly less in degree
than the strongest issues.
The rating Duff-1 is the highest commercial paper rating assigned by
Duff. Paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors which are supported by
ample asset protection. Risk factors are minor. Paper rated Duff-2 is
regarded as having good certainty of timely payment, good access to capital
markets and sound liquidity factors and company fundamentals. Risk factors
are small.
The designation A1 by IBCA indicates that the obligation is supported
by a very strong capacity for timely repayment. Those obligations rated
A1+ are supported by the highest capacity for timely repayment.
Obligations rated A2 are supported by a strong capacity for timely
repayment, although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
The rating TBW-1 is the highest short-term obligation rating assigned
by BankWatch. Obligations rated TBW-1 are regarded as having the strongest
capacity for timely repayment. Obligations rated TBW-2 are supported by a
strong capacity for timely repayment, although the degree of safety is not
as high as for issues rated TBW-1.
Bond and Long-Term Ratings
Bonds rated AAA are considered by S&P to be the highest grade
obligations and possess an extremely strong capacity to pay principal and
interest. Bonds rated AA by S&P are judged by S&P to have a very strong
capacity to pay principal and interest, and in the majority of instances,
differ only in small degree from issues rated AAA. The rating AA may be
modified by the addition of a plus or minus sign to show relative standing
within the rating category.
Bonds rated Aaa are judged by Moody's to be of the best quality.
Bonds rated Aa by Moody's are judged by Moody's to be of high quality by
all standards. Together with the Aaa group, they comprise what are
generally known as high-grade bonds. Bonds rated Aa are rated lower than
Aaa bonds because margins of protection may not be as large or fluctuations
of protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger.
Moody's applies the numerical modifiers 1, 2 and 3 in the Aa rating
category. The modifier 1 indicates a ranking for the security in the
higher end of this rating category, the modifier 2 indicates a mid-range
ranking and the modifier 3 indicates a ranking in the lower end of the
rating category.
Bonds rated AAA by Fitch are judged by Fitch to be strictly
high-grade, broadly marketable and suitable for investment by trustees and
fiduciary institutions and liable to but slight market fluctuation other
than through changes in the money rate. The prime feature of an AAA bond
is a showing of earnings several times or many times interest requirements,
with such stability of applicable earnings that safety is beyond reasonable
question whatever changes occur in conditions. Bonds rated AA by Fitch are
judged by Fitch to be of safety virtually beyond question and are readily
salable, whose merits are not unlike those of the AAA class, but whose
margin of safety is less strikingly broad. The issue may be the obligation
of a small company, strongly secured but influenced as to rating by the
lesser financial power of the enterprise and more local type of market.
Bonds rated AAA by Duff are considered to be of the highest credit
quality. The risk factors are negligible, being only slightly more than
U.S. Treasury debt. Bonds rated AA are considered to be of high credit
quality with strong protection factors. Risk is modest but may vary
slightly from time to time because of economic conditions.
Obligations rated AAA by IBCA have the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest
is substantial, such that adverse changes in business, economic or
financial conditions are unlikely to increase investment risk
significantly. Obligations rated AA by IBCA have a very low expectation of
investment risk. Capacity for timely repayment of principal and interest
is substantial. Adverse changes in business, economic or financial
conditions may increase investment risk albeit not very significantly.
IBCA also assigns a rating to certain international and U.S. banks.
An IBCA bank rating represents IBCA's current assessment of the strength of
the bank and whether such bank would receive support should it experience
difficulties. In its assessment of a bank, IBCA uses a dual rating system
comprised of Legal Ratings and Individual Ratings. In addition, IBCA
assigns banks long- and short-term ratings as used in the corporate ratings
discussed above. Legal Ratings, which range in gradations from 1 through
5, address the question of whether the bank would receive support provided
by central banks or shareholders if it experienced difficulties, and such
ratings are considered by IBCA to be a prime factor in its assessment of
credit risk. Individual Ratings, which range in gradations from A through
E, represent IBCA's assessment of a bank's economic merits and address the
question of how the bank would be viewed if it were entirely independent
and could not rely on support from state authorities or its owners.
In addition to ratings of short-term obligations, BankWatch assigns a
rating to each issuer it rates, in gradations of A through E. BankWatch
examines all segments of the organization including, were applicable, the
holding company, member banks or associations, and other subsidiaries. In
those instances where financial disclosure is incomplete or untimely, a
qualified rating (QR) is assigned to the institution. BankWatch also
assigns, in the case of foreign banks, a country rating which represents a
assessment of the overall political and economic stability of the country
in which the bank is domiciled.
DREYFUS INSTITUTIONAL MONEY MARKET FUND, MONEY MARKET SERIES
STATEMENT OF INVESTMENTS DECEMBER 31, 1993
<TABLE>
<CAPTION>
PRINCIPAL
COMMERCIAL PAPER-55.6% AMOUNT VALUE
------------- -------------
<S> <C> <C>
Abbey National North America
3.43%, 6/1/94.............................................................. $ 5,000,000 $ 4,929,324
Bankers Trust New York Corp.
3.25%, 3/18/94............................................................. 15,000,000 14,898,667
CS First Boston Group Inc.
3.38%, 2/18/94............................................................. 15,000,000 14,932,800
Central Hispano North American Capital Corp.
3.34%, 1/10/94............................................................. 15,000,000 14,987,625
Den Danske Corp. Inc.
3.36%, 2/2/94.............................................................. 10,000,000 9,970,400
General Electric Capital Corp.
3.23%, 1/18/94............................................................. 15,000,000 14,977,687
General Electric Capital Services Inc.
3.25%, 1/3/94.............................................................. 10,000,000 9,998,194
General Motors Acceptance Corp.
3.41-3.44%, 2/3/94-2/22/94................................................. 15,000,000 14,935,420
Goldman Sachs Group L.P.
3.41%, 6/28/94............................................................. 15,000,000 14,753,025
Indosuez North America Inc.
3.43%, 1/27/94............................................................. 9,000,000 8,978,095
Merrill Lynch & Co. Inc.
3.28%, 3/14/94............................................................. 15,000,000 14,903,100
Morgan Stanley Group Inc.
3.30%, 1/3/94.............................................................. 10,000,000 9,998,167
NationsBank Corp.
3.54%, 3/29/94............................................................. 10,000,000 9,916,625
Nordbanken North America Inc.
3.40-3.47%, 1/14/94-2/15/94................................................ 14,000,000 13,968,043
SwedBank Inc.
3.50%, 2/28/94............................................................. 15,000,000 14,917,350
UBS Finance (Delaware) Inc.
3.25%, 1/3/94.............................................................. 10,000,000 9,998,194
-------------
TOTAL COMMERCIAL PAPER (cost $197,062,716)..................................... $ 197,062,716
=============
BANK NOTES-17.8%
First National Bank of Chicago
3.18%, 10/26/94............................................................ $ 10,000,000(a)$ 10,000,000
Huntington National Bank
3.68%, 1/21/94............................................................. 10,000,000 10,000,045
Morgan (J.P.) Delaware
3.70%, 1/14/94............................................................. 15,000,000 15,002,111
PNC Bank
3.65-3.70%, 7/28/94-9/5/94................................................. 15,000,000 15,016,126
Society National Bank
3.49%, 1/14/94............................................................. 8,000,000(a) 7,999,858
3.60%, 2/1/94.............................................................. 5,000,000 4,999,912
-------------
TOTAL BANK NOTES (cost $63,018,052)............................................ $ 63,018,052
=============
DREYFUS INSTITUTIONAL MONEY MARKET FUND, MONEY MARKET SERIES
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1993
PRINCIPAL
CORPORATE NOTES-11.1% AMOUNT VALUE
------------- -------------
Bear Stearns Companies Inc.
3.49%, 9/13/94............................................................. $ 15,000,000(a)$ 15,000,000
Ford Motor Credit Co.
5.50%, 12/12/94............................................................ 5,000,000 5,077,649
General Motors Acceptance Corp.
8.30%, 7/18/94............................................................. 4,000,000 4,092,818
Lehman Brothers Holdings Inc.
3.58%, 5/19/94............................................................. 15,000,000 (a) 15,000,000
-------------
TOTAL CORPORATE NOTES (cost $39,170,467)....................................... $ 39,170,467
=============
U.S. GOVERNMENT AGENCIES-4.6%
Federal National Mortgage Association, Discount Notes
3.56-3.60%, 10/13/94-11/22/94
(cost $16,182,184)......................................................... $ 16,700,000 $ 16,182,184
=============
TIME DEPOSIT-2.3%
Republic National Bank of New York (London)
2.38%, 1/3/94
(cost $8,226,000).......................................................... $ 8,226,000 $ 8,226,000
=============
REPURCHASE AGREEMENTS-9.0%
Kidder, Peabody & Co. Inc.
3.20%, dated 12/31/93, due 1/3/94 in the amount of $20,005,333
(fully collateralized by $20,690,000 U.S. Treasury Bills due
6/2/94 to 11/17/94, value $20,305,439)..................................... $ 20,000,000 $ 20,000,000
Lehman Government Securities Inc.
3.00%, dated 12/31/93, due 1/3/94 in the amount of $11,764,941
(fully collateralized by $12,300,000 U.S. Treasury Bills due
11/17/94, value $11,921,621)............................................... 11,762,000 11,762,000
-------------
TOTAL REPURCHASE AGREEMENTS (cost $31,762,000)................................. $ 31,762,000
=============
TOTAL INVESTMENTS (cost $355,421,419)................................... 100.4% $ 355,421,419
====== =============
LIABILITIES, LESS CASH AND RECEIVABLES.................................. (.4%) $ (1,244,052)
====== =============
NET ASSETS.............................................................. 100.0% $ 354,177,367
====== =============
NOTE TO STATEMENT OF INVESTMENTS;
(a) Variable interest rate - subject to periodic change.
</TABLE>
See notes to financial statements.
DREYFUS INSTITUTIONAL MONEY MARKET FUND, GOVERNMENT SECURITIES SERIES
STATEMENT OF INVESTMENTS DECEMBER 31, 1993
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
DATE OF PRINCIPAL
U.S. TREASURY BILLS-14.7% PURCHASE AMOUNT VALUE
---------- ------------- -------------
<S> <C> <C> <C>
5/5/94........................................................ 3.21% $ 15,000,000 $ 14,839,403
6/2/94........................................................ 3.23 5,000,000 4,933,394
-------------
TOTAL U.S. TREASURY BILLS (cost $19,772,797)...................... $ 19,772,797
=============
U.S. TREASURY NOTES-42.0%
7.00%, 1/15/94................................................ 3.23% $ 10,000,000 $ 10,016,636
4.875%, 1/31/94............................................... 3.45 5,000,000 5,005,485
5.375%, 2/28/94............................................... 3.33 3,000,000 3,009,487
5.375%, 4/30/94............................................... 3.20 5,000,000 5,034,395
4.25%, 7/31/94................................................ 3.39 15,000,000 15,069,412
6.875%, 8/15/94............................................... 3.33 10,000,000 10,213,469
8.625%, 8/15/94............................................... 3.41 8,000,000 8,251,159
-------------
TOTAL U.S. TREASURY NOTES (cost $56,600,043)...................... $ 56,600,043
=============
REPURCHASE AGREEMENTS-42.3%
Bear, Stearns & Co. Inc.
dated 12/31/93, due 1/3/94 in the amount of $15,004,000
(fully collateralized by $15,670,000 U.S. Treasury
Strips due 11/15/94, value $15,190,106)....................... 3.20% $ 15,000,000 $ 15,000,000
First Interstate Bank of California
dated 12/31/93, due 1/3/94 in the amount of $7,875,739
(fully collateralized by $7,965,000 U.S. Treasury
Bills due 1/6/94, value $7,961,787)........................... 2.65 7,874,000 7,874,000
Kidder, Peabody & Co. Inc.
dated 12/31/93, due 1/3/94 in the amount of $19,005,067
(fully collateralized by $19,751,000 U.S. Treasury
Bills due from 6/2/94 to 10/20/94, value $19,298,199)......... 3.20 19,000,000 19,000,000
Yamaichi International (America) Inc.
dated 12/31/93, due 1/3/94 in the amount of $15,004,000
(fully collateralized by $14,680,000 U.S. Treasury
Notes 8.50% due 3/31/94, value $15,189,162)................... 3.20 15,000,000 15,000,000
-------------
TOTAL REPURCHASE AGREEMENTS (cost $56,874,000).................... $ 56,874,000
=============
TOTAL INVESTMENTS (cost $133,246,840)...................... 99.0% $ 133,246,840
====== =============
CASH AND RECEIVABLES (NET)................................. 1.0% $ 1,326,712
====== =============
NET ASSETS................................................. 100.0% $ 134,573,552
====== =============
See notes to financial statements.
</TABLE>
DREYFUS INSTITUTIONAL MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1993
MONEY GOVERNMENT
MARKET SECURITIES
SERIES SERIES
------------- -------------
ASSETS:
<S> <C> <C>
Investments in securities, at value (including repurchase agreements of
$56,874,000 for the Government Securities Series)-Note 2(a,b).......... $ 355,421,419 $133,246,840
Cash....................................................................... __ 115,816
Interest receivable........................................................ 1,286,956 1,312,522
Prepaid expenses........................................................... 39,078 8,144
------------- -------------
356,747,453 134,683,322
------------- -------------
LIABILITIES:
Due to The Dreyfus Corporation............................................. 153,992 65,039
Due to Custodian........................................................... 2,330,627 __
Accrued expenses........................................................... 85,467 44,731
------------- -------------
2,570,086 109,770
------------- -------------
NET ASSETS..................................................................... $ 354,177,367 $ 134,573,552
============= =============
REPRESENTED BY:
Paid-in capital............................................................ $ 354,412,802 $134,705,128
Accumulated net realized (loss) on investments............................. (235,435) (131,576)
------------- -------------
NET ASSETS at value applicable to 354,412,802 and 134,705,128 shares
outstanding (unlimited number of $.001 par value shares of
Beneficial Interest authorized)............................................ $ 354,177,367 $ 134,573,552
============= =============
NET ASSET VALUE, offering and redemption price per share:
Money Market Series
($354,177,367 / 354,412,802 shares).................................... $1.00
=====
Government Securities Series
($134,573,552 / 134,705,128 shares).................................... $1.00
=====
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1993
GOVERNMENT
MONEY MARKET SECURITIES
SERIES SERIES
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME............................................................ $ 12,559,649 $ 5,502,540
------------- -------------
EXPENSES-Note 2(c):
Management fee-Note 3(a)............................................... $ 1,876,774 $ 844,481
Shareholder servicing costs-Note 3(b).................................. 252,996 104,754
Custodian fees......................................................... 84,559 86,604
Registration fees...................................................... 42,077 16,728
Professional fees...................................................... 39,893 16,448
Trustees' fees and expenses-Note 3(c).................................. 31,779 14,425
Prospectus and shareholders' reports................................... 9,652 6,768
Miscellaneous.......................................................... 10,343 4,195
------------- -------------
TOTAL EXPENSES.................................................... 2,348,073 1,094,403
------------- -------------
INVESTMENT INCOME-NET.......................................................... 10,211,576 4,408,137
NET REALIZED GAIN ON INVESTMENTS............................................... 7,405 13,181
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $ 10,218,981 $ 4,421,318
============= =============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
MONEY MARKET SERIES GOVERNMENT SECURITIES SERIES
----------------------------- -----------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------------- -----------------------------
1992 1993 1992 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Investment income-net...................................... $ 13,650,377 $ 10,211,576 $ 8,354,015 $ 4,408,137
Net realized gain on investments........................... 32,651 7,405 81,639 13,181
------------- ------------- ------------- -------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.......................... 13,683,028 10,218,981 8,435,654 4,421,318
------------- ------------- ------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net...................................... (13,650,377) (10,211,576) (8,354,015) (4,408,137)
------------- ------------- ------------- -------------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold.............................. 4,369,666,648 5,849,191,027 1,179,715,052 695,721,400
Dividends reinvested....................................... 4,001,629 2,014,356 1,865,660 879,189
Cost of shares redeemed.................................... (4,398,216,961) (5,826,609,515) (1,163,694,834) (754,181,180)
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS................... (24,548,684) 24,595,868 17,885,878 (57,580,591)
------------- ------------- ------------- -------------
TOTAL INCREASE (DECREASE) IN
NET ASSETS................................. (24,516,033) 24,603,273 17,967,517 (57,567,410)
NET ASSETS:
Beginning of year.......................................... 354,090,127 329,574,094 174,173,445 192,140,962
------------- ------------- ------------- -------------
End of year................................................ $ 329,574,094 $ 354,177,367 $ 192,140,962 $ 134,573,552
============= ============= ============= =============
See notes to financial statements.
</TABLE>
DREYFUS INSTITUTIONAL MONEY MARKET FUND, MONEY MARKET SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 3 of the Fund's Prospectus dated March 31, 1994.
See notes to financial statements.
DREYFUS INSTITUTIONAL MONEY MARKET FUND, GOVERNMENT SECURITIES SERIES
FINANCIAL HIGHLIGHTS (CONTINUED)
Reference is made to page 3 of the Fund's Prospectus dated March 31, 1994.
See notes to financial statements.
DREYFUS INSTITUTIONAL MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-GENERAL:
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 Beneficial Interest:
the Money Market Series and the Government Securities Series. The Fund
accounts separately for the assets, liabilities and operations of each
series. Dreyfus Service Corporation ("Distributor"), a wholly-owned
subsidiary of The Dreyfus Corporation ("Manager"), acts as the exclusive
distributor of the Fund's shares, which are sold to the public without a
sales charge.
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.
NOTE 2-SIGNIFICANT ACCOUNTING POLICIES:
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost,
which has been determined by the Fund's Board of Trustees 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
custodians 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.
(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 provisions
available to certain investment companies, as defined in applicable
sections of the Internal Revenue Code, and to make distributions of
taxable income sufficient to relieve it from all, or substantially all,
Federal income taxes.
The Money Market Series has an unused capital loss carryover of
approximately $235,000 available for Federal income tax purposes to be
applied against future net securities profits, if any, realized subsequent
to December 31, 1993. The carryover does not include net realized
securities losses from November 1, 1993 through December 31, 1993
which are treated for Federal income tax purposes as arising in 1994. If
not applied, $155,000 of the carryover expires in 1995, and $80,000
expires in 1996.
DREYFUS INSTITUTIONAL MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Government Securities Series has an unused capital loss carryover
of approximately $131,000 available for Federal income tax purposes to
be applied against future net securities profits, if any, realized
subsequent to December 31, 1993. If not applied, $43,000 of the carryover
expires in 1995, $24,000 expires in 1996 and $64,000 expires in 1997.
At December 31, 1993, 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 Statement 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 1/2 of 1% of the average daily value of the
net assets of each series and is payable monthly.
The Agreement provides for an expense reimbursement from the
Manager should the aggregate expenses of either series, exclusive of
taxes, interest on borrowings, brokerage commissions and extraordinary
expenses, exceed 1% of the average daily value of such series' net assets
for any full year. No expense reimbursement was required pursuant to the
Agreement for the year ended December 31, 1993.
(B) Pursuant to the Fund's Shareholder Services Plan, each series
reimburses the Distributor an amount not to exceed an annual rate of .25
of 1% of the value of a series' 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 December 31, 1993, the Money Market Series and the
Government Securities Series were charged an aggregate of $88,393 and
$49,489, respectively, pursuant to the Shareholder Services Plan.
(C) Certain officers and trustees of the Fund are "affiliated persons,"
as defined in the Act, of the Manager and/or the Distributor. Each trustee
who is not an "affiliated person" receives from the Fund an annual fee of
$4,500 and an attendance fee of $500 per meeting.
(D) On December 5, 1993, the Manager entered into an Agreement and
Plan of Merger providing for the merger of the Manager with a subsidiary
of Mellon Bank Corporation ("Mellon").
Following the merger, it is planned that the Manager will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a
number of contingencies, including the receipt of certain regulatory
approvals and the approvals of the stockholders of the Manager and of
Mellon. The merger is expected to occur in mid-1994, but could occur
significantly later.
Because the merger will constitute an "assignment" of the Fund's
Management Agreement with the Manager under the Investment Company
Act of 1940, and thus a termination of such Agreement, the Manager will
seek prior approval from the Fund's Board and shareholders.
DREYFUS INSTITUTIONAL MONEY MARKET FUND
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS INSTITUTIONAL MONEY MARKET FUND
We have audited the accompanying statement of assets and liabilities
of Dreyfus Institutional Money Market Fund (comprising, respectively, the
Money Market Series and the Government Securities Series) including the
statements of investments, as of December 31, 1993, 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 December 31,
1993 by correspondence with the custodians and others. 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 Institutional Money Market Fund, at December 31,
1993, 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
New York, New York
February 9, 1994
