DREYFUS
INSTITUTIONAL
MONEY MARKET
FUND
* NO SALES CHARGE
* NO REDEMPTION FEE
* FREE EXCHANGE BETWEEN
DREYFUS FUNDS BY PHONE
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PROSPECTUS
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May 1, 1997
As Revised August 25, 1997
TABLE OF CONTENTS PAGE
ANNUAL FUND OPERATING EXPENSES................... 2
CONDENSED FINANCIAL INFORMATION.................. 3
YIELD INFORMATION................................ 4
DESCRIPTION OF THE FUND.......................... 4
MANAGEMENT OF THE FUND........................... 6
HOW TO BUY SHARES................................ 7
SHAREHOLDER SERVICES............................. 9
HOW TO REDEEM SHARES............................. 11
SHAREHOLDER SERVICES PLAN........................ 13
DIVIDENDS, DISTRIBUTIONS AND TAXES............... 14
GENERAL INFORMATION.............................. 15
APPENDIX......................................... 17
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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Dreyfus Institutional Money Market Fund (the "Fund") is an open-end,
diversified, management investment company, known as a money market mutual
fund. The Fund's investment objective is to provide you with as high a level
of current income as is consistent with the preservation of capital and the
maintenance of liquidity.
The Fund permits you to invest in two separate portfolios, the Money Market
Series and the Government Securities Series. The Money Market Series invests
in short-term money market instruments consisting of securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities, bank
obligations, repurchase agreements and high grade commercial paper. The
Government Securities Series invests only in short-term securities issued or
guaranteed as to principal and interest by the U.S. Government.
You can invest, reinvest or redeem shares at any time without charge or
penalty. The Fund provides free redemption checks, which you can use in
amounts of $500 or more for cash or to pay bills. You continue to earn income
on the amount of the check until it clears.
The Dreyfus Corporation professionally manages the Fund's portfolios.
This Prospectus sets forth concisely information about the Fund that
you should know before investing. It should be read and retained for future
reference.
The Statement of Additional Information, dated May 1, 1997, As
Revised August 25, 1997, which may be further revised from time to time,
provides a further discussion of certain areas in this Prospectus and other
matters which may be of interest to some investors. It has been filed with
the Securities and Exchange Commission and is incorporated herein by
reference. The Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding the Fund.
For a free copy of the Statement of Additional Information, write to the Fund
at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or call
1-800-242-8671. When telephoning, ask for Operator 144.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT EACH SERIES WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY.
179/195p082597
<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Money Government
Market Securities
Series Series
_______ ____________
<S> <C> <C>
Management Fees ....................................................... .50% .50%
Other Expenses......................................................... .08% .13%
Total Fund Operating Expenses.......................................... .58% .63%
Example:
You would pay the following expenses on
a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the
end of each time period:
1 YEAR $ 6 $ 6
3 YEARS $19 $20
5 YEARS $32 $35
10 YEARS $73 $79
</TABLE>
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The amounts listed in the example should not be considered as
representative of past or future expenses and actual expenses may be greater
or less than those indicated. Moreover, while the example assumes a 5% annual
return, each series' actual performance will vary and may result in an actual
return greater or less than 5%.
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The purpose of the foregoing table is to assist you in
understanding the costs and expenses borne by each series, the payment of
which will reduce investors' annual return. You can purchase shares of either
series without charge directly from the Fund's distributor; you may be
charged a fee if you effect transactions in shares of either series through a
securities dealer, bank or other financial institution. See "Management of
the Fund" and "Shareholder Services Plan."
Page 2
Condensed Financial Information
The information in the following tables has been audited by Ernst &
Young LLP, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and related
notes are included in the Statement of Additional Information, available upon
request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share
of beneficial interest outstanding, total investment return, ratios to
average net assets and other supplemental data for each year indicated. This
information has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Money Market Series
__________________________________________________________________________________________
Year Ended December 31,
__________________________________________________________________________________________
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
INVESTMENT OPERATIONS:
Investment income-net .063 .071 .088 .077 .057 .035 .027 .036 .054 .049
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
DISTRIBUTIONS:
Dividends from investment
income-net...... (.063) (.071) (.088) (.077) (.057) (.035) (.027) (.036) (.054) (.049)
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN 6.44% 7.37% 9.14% 7.99% 5.85% 3.51% 2.76% 3.65% 5.57% 5.03%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets...... .50% .50% .50% .50% .60% .63% .63% .63% .62% .58%
Ratio of net investment income
to average net assets 6.25% 7.16% 8.79% 7.72% 5.73% 3.48% 2.72% 3.59% 5.43% 4.91%
Decrease reflected in above
expense ratios due
to undertakings by
The Dreyfus Corporation .06% .07% .07% .08% _ _ _ _ _ _
Net Assets,end of year
(000's omitted). $520,857 $707,023 $477,113 $401,461 $354,090 $329,574 $354,177 $362,825 $402,032 $483,156
Page 3
Government Securities Series
__________________________________________________________________________________________
Year Ended December 31,
__________________________________________________________________________________________
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
PER SHARE DATA:
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00
$1.00
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
INVESTMENT OPERATIONS:
Investment income-net .059 .068 .086 .076 .056 .034 .026 .034 .052 .047
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Dividends from investment
income-net.......... (.059) (.068) (.086) (.076) (.056) (.034) (.026) (.034) (.052) (.047)
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN 6.06% 6.99% 8.90% 7.85% 5.71% 3.44% 2.63% 3.49% 5.36% 4.84%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets.......... .50% .50% .50% .50% .65% .64% .65% .69% .65% .63%
Ratio of net investment income
to average net assets 5.87% 6.68% 8.54% 7.58% 5.64% 3.42% 2.61% 3.40% 5.23% 4.74%
Decrease reflected in above
expense ratios due
to undertakings by
The Dreyfus Corporation .07% .09% .11% .10% _ _ _ _ _ _
Net Assets,end of year
(000's omitted)..... $489,909 $272,232 $214,481 $246,174 $174,173 $192,141 $134,574 $120,281 $123,171 $102,726
</TABLE>
YIELD INFORMATION
From time to time, each series advertises its yield and effective
yield. Both yield figures are based on historical earnings and are not
intended to indicate future performance. It can be expected that these yields
will fluctuate substantially. The yield of a series refers to the income
generated by an investment in the series over a seven-day period (which
period will be stated in the advertisement). This income is then annualized.
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The effective yield is calculated similarly,
but, when annualized, the income earned by an investment in the series is
assumed to be reinvested. The effective yield will be slightly higher than
the yield because of the compounding effect of this assumed reinvestment.
Each series' yield and effective yield may reflect absorbed expenses pursuant
to any undertaking that may be in effect. See "Management of the Fund."
Yield information is useful in reviewing the Fund's performance,
but because yields will fluctuate, under certain conditions such information
may not provide a basis for comparison with domestic bank deposits, other
investments which pay a fixed yield for a stated period of time, or other
investment companies which may use a different method of computing yield.
Comparative performance information may be used from time to time
in advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., IBC's Money Fund Reporttrademark, Bank Rate
Monitortrademark, N. Palm Beach, Fla. 33408, Morningstar, Inc. and other
industry publications.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's investment objective is to provide you with as high a
level of current income as is consistent with the preservation of capital and
the maintenance of liquidity. It cannot be changed, as to a series, without
approval by the holders of a majority (as defined in the Investment Company
Act of 1940, as amended (the "1940 Act")) of such series' outstanding voting
shares. There can be no assurance that the series' investment
Page 4
objective will be achieved. Each series pursues this objective in the manner
described below. Securities in which the series invest may not earn as high a
level of current income as long-term or lower quality securities which
generally have less liquidity, greater market risk and more fluctuation in
market value.
MANAGEMENT POLICIES
Each series seeks to maintain a net asset value of $1.00 per share
for purchases and redemptions. To do so, the Fund uses the amortized cost
method of valuing each series' securities pursuant to Rule 2a-7 under the
1940 Act, which Rule includes various maturity, quality and diversification
requirements, certain of which are summarized below.
In accordance with Rule 2a-7, each series will maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 13 months or less and invest only
in U.S. dollar denominated securities determined in accordance with
procedures established by the Fund's Board to present minimal credit risks
and, with respect to the Money Market Series, which are rated in one of the
two highest rating categories for debt obligations by at least two nationally
recognized statistical rating organizations (or one rating organization if
the instrument was rated by only one such organization) or, if unrated, are
of comparable quality as determined in accordance with procedures established
by the Fund's Board. The nationally recognized statistical rating
organizations currently rating instruments of the type the Money Market
Series may purchase are Moody's Investors Service, Inc., Standard & Poor's
Ratings Group, Duff & Phelps Credit Rating Co., Fitch Investors Service,
L.P., IBCA Limited and IBCA Inc. and Thomson BankWatch, Inc., and their
rating criteria are described in the "Appendix" to the Statement of
Additional Information. For further information regarding the amortized cost
method of valuing securities, see "Determination of Net Asset Value" in the
Statement of Additional Information. There can be no assurance that the
series will be able to maintain a stable net asset value of $1.00 per share.
THE MONEY MARKET SERIES _ The Money Market Series invests in short-term
money market obligations, including securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities, certificates of
deposit, time deposits, bankers' acceptances and other short-term obligations
issued by domestic banks and London branches of domestic banks, repurchase
agreements, and high grade commercial paper and other short-term corporate
obligations. See "Appendix_Certain Portfolio Securities." Generally, at
least 25% of the value of the Money Market Series' total assets will be
invested in bank obligations. See "Investment Considerations and Risks"
below.
THE GOVERNMENT SECURITIES SERIES _ The Government Securities Series invests
only in short-term securities issued or guaranteed as to principal and
interest by the U.S. Government (whether or not subject to repurchase
agreements). See "Appendix_Certain Portfolio Securities." In addition, the
Government Securities Series is permitted to lend securities from its
portfolio. See "Appendix_Investment Techniques."
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL _ Each series attempts to increase yields by trading to take
advantage of short-term market variations. This policy is expected to result
in high portfolio turnover but should not adversely affect the series since
it usually does not pay brokerage commissions when it purchases short-term
debt obligations. The value of the portfolio securities held by the series
will vary inversely to changes in prevailing interest rates. Thus, if
interest rates have increased from the time a security was purchased, such
security, if sold, might be sold at a price less than its cost. Similarly, if
interest rates have declined from the time a security was purchased, such
security, if sold, might be sold at a price greater than its purchase cost.
In either instance, if the security was purchased at face value and held to
maturity, no gain or loss would be realized.
FOREIGN SECURITIES _ Since the Money Market Series' portfolio may contain
securities issued by London branches of domestic banks, this series may be
subject to additional investment risks with respect to such
Page 5
securities that are different in some respects from those incurred by a fund
which invests only in debt obligations of U.S. domestic issuers. Such risks
include possible adverse political and economic developments, seizure or
nationalization of foreign deposits, and adoption of governmental
restrictions which might adversely affect or restrict the payment of
principal and interest on these securities.
BANK SECURITIES _ To the extent the Money Market Series' investments are
concentrated in the banking industry, the series will have correspondingly
greater exposure to the risk factors which are characteristic of such
investments. Sustained increases in interest rates can adversely affect the
availability or liquidity and cost of capital funds for a bank's lending
activities, and a deterioration in general economic conditions could increase
the exposure to credit losses. In addition, the value of and the investment re
turn on the Money Market Series' shares could be affected by economic or
regulatory developments in or related to the banking industry, which industry
also is subject to the effects of competition within the banking industry as
well as with other types of financial institutions. The Money Market Series,
however, will seek to minimize its exposure to such risks by investing only
in debt securities which are determined to be of high quality.
SIMULTANEOUS INVESTMENTS _ Investment decisions for the Fund are made
independently from those of other investment companies advised by The Dreyfus
Corporation. If, however, such other investment companies desire to invest
in, or dispose of, the same securities as the Fund, available investments or
opportunities for sales will be allocated equitably to each investment
company. In some cases, this procedure may adversely affect the price paid or
received by the Fund or the size of the position obtained for or disposed of
by the Fund.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER _ The Dreyfus Corporation, located at 200 Park Avenue,
New York, New York 10166, was formed in 1947 and serves as the Fund's
investment adviser. The Dreyfus Corporation is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank
Corporation ("Mellon"). As of July 31, 1997, The Dreyfus Corporation managed
or administered approximately $92 billion in assets for approximately 1.7
million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the Fund,
subject to the authority of the Fund's Board in accordance with Massachusetts
law.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including The Dreyfus Corporation, Mellon managed more than
$259 billion in assets as of March 31, 1997, including approximately $88
billion in proprietary mutual fund assets. As of March 31, 1997, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $1.061 trillion in
assets, including approximately $58 billion in mutual fund assets.
For the year ended December 31, 1996, the Fund paid The Dreyfus
Corporation a monthly management fee at the annual rate of .50 of 1% of the
value of each series' average daily net assets. From time to time, The
Dreyfus Corporation may waive receipt of its fees and/or voluntarily assume
certain expenses of either series of the Fund, which would have the effect of
lowering the expense ratio of that series and increasing yield to investors.
The Fund will not pay The Dreyfus Corporation at a later time for any amounts
it may waive, nor will the Fund reimburse The Dreyfus Corporation for any
amounts it may assume.
Page 6
In allocating brokerage transactions, The Dreyfus Corporation seeks
to obtain the best execution of orders at the most favorable net price.
Subject to this determination, The Dreyfus Corporation may consider, among
other things, the receipt of research services and/or the sale of shares of
the Fund or other funds managed, advised or administered by The Dreyfus
Corporation as factors in the selection of broker-dealers to execute
portfolio transactions for the Fund. See "Portfolio Transactions" in the
Statement of Additional Information.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay securities
dealers, banks or other financial institutions in respect of these services.
DISTRIBUTOR _ The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at 60 State Street, Boston, Massachusetts 02109.
The Distributor's ultimate parent is Boston Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN _ Dreyfus Transfer,
Inc., a wholly-owned subsidiary of The Dreyfus Corporation, P.O. Box 9671,
Providence, Rhode Island 02940-9671, is the Fund's Transfer and Dividend
Disbursing Agent (the "Transfer Agent"). The Bank of New York, 90 Washington
Street, New York, New York 10286, is the Fund's Custodian.
HOW TO BUY SHARES
Shares of each series are sold without a sales charge. You may be
charged a fee if you effect transactions in shares of either series through a
securities dealer, bank or other financial institution. Share certificates
are issued only upon your written request. No certificates are issued for
fractional shares. The Fund reserves the right to reject any purchase order.
The minimum initial investment in each series is $50,000, unless
you are a client of a securities dealer, bank or other financial institution
which maintains an omnibus account in the Fund and has made an aggregate
minimum initial purchase for its customers of $50,000. Subsequent investments
in either series must be at least $100. The initial investment must be
accompanied by the Account Application.
You may purchase Fund shares by check or wire. Checks should be
made payable to "The Dreyfus Family of Funds." Payments to open new accounts
which are mailed should be sent to The Dreyfus Family of Funds, P.O. Box
9387, Providence, Rhode Island 02940-9387, together with your Account
Application indicating the name of the series being purchased. For subsequent
investments, your Fund account number should appear on the check and an
investment slip should be enclosed and sent to The Dreyfus Family of Funds,
P.O. Box 105, Newark, New Jersey 07101-0105. Neither initial nor subsequent
investments should be made by third party check. Purchase orders may be
delivered in person only to a Dreyfus Financial Center. These orders will be
forwarded to the Fund and will be processed only upon receipt thereby. For
the location of the nearest Dreyfus Financial Center, please call one of the
telephone numbers listed under "General Information."
Wire payments may be made to The Bank of New York if your bank
account is in a commercial bank that is a member of the Federal Reserve
System or any other bank having a correspondent bank in New York City.
Immediately available funds may be transmitted by wire for the Money Market
Series to The Bank of New York, DDA #8900051922/Dreyfus Institutional Money
Market Fund/Money Market Series, or for the Government Securities Series to
The Bank of New York, DDA#8900051949/ Dreyfus Institutional Money Market Fund/
Government Securities Series, for purchase of Fund shares in your name. The
wire must include your Fund account number (for new accounts, your Taxpayer
Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial
Page 7
purchase of Fund shares is by wire, please call 1-800-645-6561 after
completing your wire payment to obtain your Fund account number. Please
include your Fund account number on the Account Application and promptly mail
the Account Application to the Fund, as no redemption will be permitted until
the Account Application is received. You may obtain further information about
remitting funds in this manner from your bank. All payments should be made in
U.S. dollars and, to avoid fees and delays, should be drawn only on U.S.
banks. A charge will be imposed if any check used for investment in your
account does not clear. The Fund makes available to certain large institutions
the ability to issue purchase instructions through compatible computer
facilities.
Shares also may be purchased through Dreyfus-Automatic Asset
BuilderRegistration Mark, Dreyfus Government Direct Deposit Privilege and
Dreyfus Payroll Savings Plan described under "Shareholder Services." These
services enable you to make regularly scheduled investments and may provide
you with a convenient way to invest for long-term financial goals. You should
be aware, however, that periodic investment plans do not guarantee a profit
and will not protect an investor against loss in a declining market.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
your Fund account number preceded by the digits "1111."
Each series' shares are sold on a continuous basis at the net asset
value per share next determined after an order and Federal Funds (monies of
member banks within the Federal Reserve System which are held on deposit at a
Federal Reserve Bank) are received by the Transfer Agent or other agent or
entity subject to the direction of such agents in written or telegraphic
form. If you do not remit Federal Funds, your payment must be converted into
Federal Funds. This usually occurs within one day of receipt of a bank wire
and within two business days of receipt of a check drawn on a member bank of
the Federal Reserve System. Checks drawn on banks which are not members of
the Federal Reserve System may take considerably longer to convert into
Federal Funds. Prior to receipt of Federal Funds, your money will not be
invested.
The net asset value per share of each series is determined twice
each business day at 12:00 Noon, New York time, and as of the close of
trading on the floor of the New York Stock Exchange (currently 4:00 p.m., New
York time), on each day the New York Stock Exchange or, with respect to the
Money Market Series, the Transfer Agent is open for business. Net asset value
per share is computed by dividing the value of the net assets of each series
(i.e., the value of its assets less liabilities) by the total number of
shares of such series outstanding. See "Determination of Net Asset Value" in
the Statement of Additional Information.
If your payments are received in or converted into Federal Funds by
12:00 Noon, New York time, by the Transfer Agent, you will receive the
dividend declared on that day. If your payments are received in or converted
into Federal Funds after 12:00 Noon, New York time, by the Transfer Agent,
your shares will begin to accrue dividends on the following business day.
Qualified institutions may telephone orders for purchase of either
series' shares by telephoning the Distributor or its designee toll free at
1-800-346-3621; in New York City, call 1-718-895-1650; on Long Island, call
794-5452. A telephone order placed with the Distributor or its designee in
New York will become effective at the price determined at 12:00 Noon, New
York time, and the shares purchased will receive the dividend on such series'
shares declared on that day if such order is placed by 12:00 Noon, New York
time, and Federal Funds are received by the Transfer Agent by 4:00 p.m., New
York time.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Account Application for further information concerning this
Page 8
requirement. Failure to furnish a certified TIN to the Fund could subject you
to a $50 penalty imposed by the Internal Revenue Service ("IRS").
PROCEDURES FOR MULTIPLE ACCOUNTS
Special procedures have been designed for banks and other
institutions that wish to open multiple accounts. The institution may open a
single master account by filing one application with the Transfer Agent and
may open individual sub-accounts at the same time or at some later date. For
further information, please refer to the Statement of Additional Information.
SHAREHOLDER SERVICES
FUND EXCHANGES _ You may purchase, in exchange for shares of a series,
shares of the Fund's other series or shares of certain other funds managed or
administered by The Dreyfus Corporation, to the extent such shares are
offered for sale in your state of residence. These funds have different
investment objectives which may be of interest to you. If you desire to use
this service, please call 1-800-645-6561 to determine if it is available and
whether any conditions are imposed by its use.
To request an exchange, you must give exchange instructions to the
Transfer Agent in writing or by telephone. Before any exchange, you must
obtain and should review a copy of the current prospectus of the fund into
which the exchange is being made. Prospectuses may be obtained by calling
1-800-645-6561. Except in the case of personal retirement plans, the shares
being exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, shares being exchanged must have a
value of at least the minimum initial investment required for the fund or
series into which the exchange is being made. The ability to issue exchange
instructions by telephone is given to all shareholders automatically, unless
you check the applicable "No" box on the Account Application, indicating that
you specifically refuse this Privilege. The Telephone Exchange Privilege may
be established for an existing account by written request signed by all
shareholders on the account, by a separate signed Shareholder Services Form,
available by calling 1-800-645-6561, or by oral request from any of the
authorized signatories on the account by calling 1-800-645-6561. If you
have established the Telephone Exchange Privilege, you may telephone exchange
instructions (including over The Dreyfus TouchRegistration Mark automated
telephone system) by calling 1-800-645-6561. If you are calling from
overseas, call 516-794-5452. See "How to Redeem Shares _ Procedures."
Upon an exchange into a new account, the following shareholder services
and privileges, as applicable and where available, will be automatically
carried over to the fund into which the exchange is made: Telephone
Exchange Privilege, Check Redemption Privilege, Wire Redemption
Privilege, Telephone Redemption Privilege and the dividend/capital
gain distribution option (except for Dreyfus Dividend Sweep)
selected by the investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. If you are exchanging into a fund that charges a
sales load, you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load, if the shares you are exchanging
were: (a) purchased with a sales load, (b) acquired by a previous exchange
from shares purchased with a sales load, or (c) acquired through reinvestment
of dividends or distributions paid with respect to the foregoing categories
of shares. To qualify, at the time of the exchange you must notify the
Transfer Agent. Any such qualification is subject to confirmation of your
holdings through a check of appropriate records. See "Shareholder Services"
in the Statement of Additional Information. No fees currently are charged
shareholders directly in connection with exchanges, although the Fund
reserves the right, upon not less than 60 days' written notice, to charge
shareholders a nominal administrative fee in accordance with rules
promulgated by the Securities and Exchange Commission. The Fund reserves the
right to reject any exchange request in whole or in part. The availability of
Fund Exchanges may be modified or terminated at any time upon notice to
shareholders. See "Dividends, Distributions and Taxes."
Page 9
DREYFUS AUTO-EXCHANGE PRIVILEGE _ Dreyfus Auto-Exchange Privilege enables
you to invest regularly (on a semi-monthly, monthly, quarterly or annual
basis), in exchange for shares of either series of the Fund, in shares of the
Fund's other series or certain other funds in the Dreyfus Family of Funds of
which you are a shareholder. The amount you designate, which can be expressed
either in terms of a specific dollar or share amount ($100 minimum), will be
exchanged automatically on the first and/or fifteenth of the month according
to the schedule you have selected. Shares will be exchanged at the
then-current net asset value; however, a sales load may be charged with
respect to exchanges into funds sold with a sales load. See "Shareholder
Services" in the Statement of Additional Information. The right to exercise
this Privilege may be modified or cancelled by the Fund or the Transfer
Agent. You may modify or cancel your exercise of this Privilege at any time
by mailing written notification to The Dreyfus Family of Funds, P.O. Box 9671,
Providence, Rhode Island 02940-9671. The Fund may charge a service fee for
the use of this Privilege. No such fee currently is contemplated. For more
information concerning this Privilege and the funds in the Dreyfus Family of
Funds eligible to participate in this Privilege, or to obtain a Dreyfus
Auto-Exchange Authorization Form, please call toll free 1-800-645-6561. See
"Dividends, Distributions and Taxes."
DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark _ Dreyfus-Automatic Asset
Builder permits you to purchase shares (minimum of $100 and maximum of
$150,000 per transaction) at regular intervals selected by you. Fund shares
are purchased by transferring funds from the bank account designated by you.
At your option, the bank account designated by you will be debited in the
specified amount, and Fund shares will be purchased, once a month, on either
the first or fifteenth day, or twice a month, on both days. Only an account
maintained at a domestic financial institution which is an Automated Clearing
House member may be so designated. To establish a Dreyfus-Automatic Asset
Builder account, you must file an authorization form with the Transfer Agent.
You may obtain the necessary authorization form by calling 1-800-645-6561.
You may cancel your participation in this Privilege or change the amount of
your purchase at any time by mailing written notification to The Dreyfus
Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. The
notification will be effective three business days following receipt. The
Fund may modify or terminate this Privilege at any time or charge a service
fee. No such fee currently is contemplated.
DREYFUS GOVERNMENT DIRECT DEPOSIT PRIVILEGE _ Dreyfus Government Direct
Deposit Privilege enables you to purchase shares (minimum of $100 and maximum
of $50,000 per transaction) by having Federal salary, Social Security, or
certain veterans', military or other payments from the Federal government
automatically deposited into your Fund account. You may deposit as much of
such payments as you elect. To enroll in Dreyfus Government Direct Deposit,
you must file with the Transfer Agent a completed Direct Deposit Sign-Up Form
for each type of payment that you desire to include in this Privilege. The
appropriate form may be obtained by calling 1-800-645-6561. Death or legal
incapacity will terminate your participation in this Privilege. You may elect
at any time to terminate your participation by notifying in writing the
appropriate Federal agency. Further, the Fund may terminate your
participation upon 30 days' notice to you.
DREYFUS PAYROLL SAVINGS PLAN _ Dreyfus Payroll Savings Plan permits you to
purchase shares (minimum of $100 per transaction) automatically on a regular
basis. Depending upon your employer's direct deposit program, you may have
part or all of your paycheck transferred to your existing Dreyfus account
electronically through the Automated Clearing House system at each pay
period. To establish a Dreyfus Payroll Savings Plan account, you must file an
authorization form with your employer's payroll department. Your employer
must complete the reverse side of the form and return it to The Dreyfus
Family of Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. You may
obtain the necessary authorization form by calling 1-800-645-6561. You may
change the amount of purchase or cancel the authorization only by written
notification to your employer. It is the sole responsibility of your
employer, not the Distributor, The Dreyfus Corporation, the Fund, the Transfer
Page 10
Agent or any other person, to arrange for transactions under the
Dreyfus Payroll Savings Plan. The Fund may modify or terminate this Privilege
at any time or charge a service fee. No such fee currently is contemplated.
DREYFUS DIVIDEND OPTIONS _ Dreyfus Dividend Sweep enables you to invest
automatically dividends or dividends and capital gain distributions, if any,
paid by the series in shares of another fund in the Dreyfus Family of Funds
of which you are a shareholder. Shares of the other fund will be purchased at
the then-current net asset value; however, a sales load may be charged with
respect to investments in shares of a fund sold with a sale load. If you are
investing in a fund that charges a sales load, you may qualify for share price
s which do not include the sales load or which reflect a reduced sales load.
If you are investing in a fund that charges a contingent deferred sales
charge, the shares purchased will be subject on redemption to the contingent
deferred sales charge, if any, applicable to the purchased shares. See
"Shareholder Services" in the Statement of Additional Information. Dreyfus
Dividend ACH permits you to transfer electronically dividends or dividends and
capital gain distributions, if any, from the series 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 these privileges or to request a
Dividend Options Form, please call toll free 1-800-645-6561. You may cancel
these privileges by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. To select a new
fund after cancellation, you must submit a new Dividend Options Form.
Enrollment in or cancellation of these privileges is effective three business
days following receipt. These privileges are available only for existing
accounts and may not be used to open new accounts. Minimum subsequent
investments do not apply to Dreyfus Dividend Sweep. The Fund may modify or
terminate these privileges at any time or charge a service fee. No such fee
currently is contemplated.
QUARTERLY DISTRIBUTION PLAN _ The Quarterly Distribution Plan permits you to
receive quarterly payments from the Fund consisting of proceeds from the
redemption of shares purchased for your account through the automatic
reinvestment of dividends declared on your account during the preceding
calendar quarter.
You may open a Quarterly Distribution Plan by submitting a request
to the Transfer Agent. The Quarterly Distribution Plan may be ended at any
time by you, the Fund or the Transfer Agent. Shares for which certificates
have been issued must be presented before redemption under the Quarterly
Distribution Plan.
AUTOMATIC WITHDRAWAL PLAN _ The Automatic Withdrawal Plan permits you to
request withdrawal of a specified dollar amount (minimum of $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. The Automatic Withdrawal Plan may be ended at any time by
you, the Fund or the Transfer Agent. Shares for which certificates have been
issued may not be redeemed through the Automatic Withdrawal Plan.
HOW TO REDEEM SHARES
GENERAL
You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined net asset value.
The Fund imposes no charges when shares are redeemed. Securities
dealers, banks and other financial institutions may charge their clients a
fee for effecting redemptions of Fund shares. Any certificates representing
Fund shares being redeemed must be submitted with the redemption request. If
you own shares in both series, any redemption request must clearly state from
which series you wish to redeem the shares. The value of the shares redeemed
may be more or less than their original cost, depending upon the series'
then-current net asset value.
Page 11
If a request for redemption is received in proper form by the
Transfer Agent by 12:00 Noon, New York time, the proceeds of the redemption,
if transfer by wire is requested, will be transmitted in Federal Funds
ordinarily on the same day and the shares will not receive the dividend
declared on that day. If the request is received later that day by the
Transfer Agent, the shares will receive the dividend declared on that day and
the proceeds of redemption, if wire transfer is requested, will be transmitted
in Federal Funds ordinarily on the next business day.
The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent or the Distributor or
its designee, as the case may be, of a redemption request in proper form,
except as provided by the rules of the Securities and Exchange Commission. HOW
EVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK OR THROUGH DREYFUS-AUTOMATIC
ASSET BUILDERRegistration Mark AND SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION
REQUEST TO THE TRANSFER AGENT, YOUR REDEMPTION WILL BE EFFECTIVE AND THE
REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE
OF YOUR PURCHASE CHECK OR DREYFUS-AUTOMATIC ASSET BUILDER ORDER, WHICH MAY
TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL NOT HONOR
REDEMPTION CHECKS UNDER THE CHECK REDEMPTION PRIVILEGE, AND WILL REJECT
REQUESTS TO REDEEM SHARES BY WIRE OR TELEPHONE, FOR A PERIOD OF EIGHT BUSINESS
DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK OR THE
DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY
WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR
ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS
EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL
BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares
will not be redeemed until the Transfer Agent has received your Account
Application.
The Fund reserves the right to redeem your account in either series
at its option on not less than 30 days' written notice if your account's net
asset value is $500 or less and remains so during the notice period.
PROCEDURES
You may redeem shares by using the regular redemption procedure
through the Transfer Agent, or, if you have checked the appropriate box and
supplied the necessary information on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent, through the Check
Redemption Privilege, the Wire Redemption Privilege or the Telephone
Redemption Privilege. The Fund makes available to certain large institutions
the ability to issue redemption instructions through compatible computer
facilities. The Fund reserves the right to refuse any request made by wire or
telephone, including requests made shortly after a change of address, and may
limit the amount involved or the number of such requests. The Fund may modify
or terminate any redemption Privilege at any time or charge a service fee
upon notice to shareholders. No such fee currently is contemplated. Shares
for which certificates have been issued are not eligible for the Check
Redemption, Wire Redemption or Telephone Redemption Privilege.
You may redeem shares by telephone if you have checked the
appropriate box on the Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephonic
instructions (including over The Dreyfus TouchRegistration Mark automated
telephone system) from any person representing himself or herself to be you,
and reasonably believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such as requiring
a form of personal identification, to confirm that instructions are genuine
and, if it does not follow such procedures, the Transfer Agent or the Fund
may be liable for any losses due to unauthorized or fraudulent instructions.
Neither the Fund nor the Transfer Agent will be liable for following
telephone instructions reasonably believed to be genuine.
Page 12
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used.
REGULAR REDEMPTION _ Under the regular redemption procedure, you
may redeem shares by written request mailed to The Dreyfus Family of Funds,
P.O. Box 9671, Providence, Rhode Island 02940-9671. Redemption requests may
be delivered in person only to a Dreyfus Financial Center. THESE REQUESTS
WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT
THEREBY. For the location of the nearest Dreyfus Financial Center, please
call one of the telephone numbers listed under "General Information."
Redemption requests must be signed by each shareholder, including each owner
of a joint account, and each signature must be guaranteed. The Transfer Agent
has adopted standards and procedures pursuant to which signature-guarantees
in proper form generally will be accepted from domestic banks, brokers,
dealers, credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations, as well as from
participants in the New York Stock Exchange Medallion Signature Program, the
Securities Transfer Agents Medallion Program ("STAMP"), and the Stock
Exchanges Medallion Program. If you have any questions with respect to
signature-guarantees, please call one of the telephone numbers listed under
"General Information."
Redemption proceeds of at least $1,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE _ You may write Redemption Checks drawn on your
Fund account. Redemption Checks may be made payable to the order of any
person in the amount of $500 or more. Redemption Checks should not be used to
close your account. Redemption Checks are free, but the Transfer Agent will
impose a fee for stopping payment of a Redemption Check upon your request or
if the Transfer Agent cannot honor a Redemption Check because of insufficient
funds or other valid reason. You should date your Redemption Checks with the
current date when you write them. Please do not postdate your Redemption
Check. If you do, the Transfer Agent will honor, upon presentment, even if
presented before the date of the check, all postdated Redemption Checks which
are dated within six months of presentment for payment, if they are otherwise
in good order.
WIRE REDEMPTION PRIVILEGE _ You may request by wire or telephone that
redemption proceeds (minimum $1,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. You may also direct that redemption proceeds be paid by
check (maximum $150,000 per day) made out to the owners of record and mailed
to your address. Redemption proceeds of less than $1,000 will be paid
automatically by check. Holders of jointly registered Fund or bank accounts
may have redemption proceeds of not more than $250,000 wired within any
30-day period. You may telephone redemption requests by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452. The
Statement of Additional Information sets forth instructions for transmitting
redemption requests by wire.
TELEPHONE REDEMPTION PRIVILEGE _ You may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan pursuant to which
the Fund reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of
The Dreyfus Corporation, 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
Page 13
providing personal services and/or maintaining shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Fund and
providing reports and other information, and services related to the
maintenance of shareholder accounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from each series' net
investment income on each day the New York Stock Exchange or, with respect to
the Money Market Series, the Transfer Agent is open for business. Each
series' earnings for Saturdays, Sundays and holidays are declared as
dividends on the preceding business day. Dividends usually are paid on the
last business day of each month, and are automatically reinvested in
additional shares of the series from which they were paid at net asset value
or, at your option, paid in cash. If you redeem all shares in your account at
any time during the month, all dividends to which you are entitled are paid
to you along with the proceeds of the redemption. If you are an omnibus
accountholder and indicate in a partial redemption request that a portion of
any accrued dividends to which such account is entitled belongs to an
underlying accountholder who has redeemed all shares in his or her account,
such portion of the accrued dividends will be paid to you along with the
proceeds of the redemption. Distributions from net realized securities gains,
if any, generally are declared and paid by each series once a year, but the
Fund may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code of 1986, as amended
(the "Code"), in all events in a manner consistent with the provisions of the
1940 Act. The Fund will not make distributions from net realized long-term
securities gains unless capital loss carryovers, if any, have been utilized
or have expired. You may choose whether to receive distributions in cash or
to reinvest in additional shares of the series from which distributions were
paid at net asset value. All expenses are accrued daily and deducted before
declaration of dividends to investors.
Dividends derived from net investment income, together with
distributions from any net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by a series will be taxable to U.S. shareholders
as ordinary income, whether received in cash or reinvested in additional
shares of the series. No dividend will qualify for the dividends received
deduction allowable to certain U.S. corporations. Distributions from net
realized long-term securities gains of a series will be taxable as long-term
capital gains regardless of how long shareholders have held their shares and
whether such distributions are received in cash or reinvested in additional
shares. The Code provides that the net capital gain of an individual
generally will not be subject to Federal income tax at a rate in excess of
28%. Dividends and distributions may be subject to certain state and local
taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by a series to a foreign investor generally are
subject to U.S. nonresident withholding taxes at the rate of 30%, unless the
foreign investor claims the benefit of a lower rate specified in a tax
treaty. Distributions from net realized long-term securities gains paid by a
series to a foreign investor generally will not be subject to U.S.
nonresident withholding tax. However, such distributions may be subject to
backup withholding, as described below, unless the foreign investor certifies
his non-U.S. residency status.
The exchange of shares of one fund or series for shares of another
fund or series is treated for Federal income tax purposes as a sale of the
shares given in exchange by the shareholder and, therefore, an exchanging
shareholder may realize a taxable gain or loss.
Notice as to the tax status of your dividends and distributions
will be mailed to you annually. You also will receive periodic summaries of
your account which will include information as to dividends and distributions
from securities gains, if any, paid during the year. Dividends and
distributions attributable to interest
Page 14
from direct obligations of the United States and paid by a series to
individuals currently are not subject to tax in most states. Dividends and
distributions attributable to interest from other securities in which the
series may invest may be subject to state tax. The Fund intends to provide
shareholders with a statement which sets forth the percentage of dividends
and distributions paid by the series that is attributable to interest income
from direct obligations of the United States.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends and
distributions from net realized securities gains paid to a shareholder if
such shareholder fails to certify either that the TIN furnished in connection
with opening an account is correct, or that such shareholder has not received
notice from the IRS of being subject to backup withholding as a result of a
failure to properly report taxable dividend or interest income on a Federal
income tax return. Furthermore, the IRS may notify the Fund to institute
backup withholding if the IRS determines a shareholder's TIN is incorrect or
if a shareholder has failed to properly report taxable dividend and interest
income on a Federal income tax return.
A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax withheld as
a result of backup withholding does not constitute an additional tax imposed
on the record owner of the account, and may be claimed as a credit on the
record owner's Federal income tax return.
Management believes that each series of the Fund has qualified for
the fiscal year ended December 31, 1996 as a "regulated investment company"
under the Code. Each series of the Fund intends to continue to so qualify if
such qualification is in the best interests of its shareholders. Such
qualification relieves the series of any liability for Federal income taxes
to the extent its earnings are distributed in accordance with applicable
provisions of the Code. Each series is subject to a non-deductible 4% excise
tax, measured with respect to undistributed amounts of taxable investment
income and capital gains, if any.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
GENERAL INFORMATION
The Fund was incorporated under Maryland law on March l9, 1980. On
April 1, 1982, the Fund began offering shares of the Government Securities
Series, and on May 4, 1982, the Fund began offering shares of the Money
Market Series. On April 27, 1987, the Fund was reorganized as an
unincorporated business trust under the laws of the Commonwealth of
Massachusetts. The Fund is authorized to issue an unlimited number of shares
of beneficial interest, par value $.001 per share. Each share has one vote.
The Fund is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for
certain matters under the 1940 Act and for other purposes. A shareholder of
one series is not deemed to be a shareholder of any other series. For certain
matters Fund shareholders vote together as a group; as to others they vote
separately by series.
To date, two series of shares have been authorized. All
consideration received by the Fund for shares of one of the series and all
assets in which such consideration is invested, belong to that series
(subject only to the rights of creditors of the Fund) and will be subject to
the liabilities related thereto. The income attributable to, and the expenses
of, one series are treated separately from those of the other series.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Agreement and Declaration of Trust (the "Trust Agreement")
disclaims shareholder liability for acts or obligations of the Fund and
requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund or a Board
member. The Trust Agreement provides for indemnification from the Fund's
property for all losses and expenses of any shareholder held personally
liable for the obligations of the Fund. Thus, the risk of a shareholder's
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself
Page 15
would be unable to meet its obligations, a possibility which management
believes is remote. Upon payment of any liability incurred by the Fund, the
shareholder paying such liability will be entitled to reimbursement from the
general assets of the Fund. The Fund intends to conduct its operations in such
a way so as to avoid, as far as possible, ultimate liability of the
shareholders for liabilities of the Fund. As described under "Management of
the Fund" in the Statement of Additional Information, the Fund ordinarily will
not hold shareholder meetings; however, shareholders under certain
circumstances may have the right to call a meeting of shareholders for the
purpose of voting to remove Board members.
The Transfer Agent maintains a record of your ownership and sends
you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144
Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll
free 1-800-242-8671. In New York City, call 1-718-895-1396; outside the U.S.
and Canada, call 516-794-5452.
Page 16
APPENDIX
INVESTMENT TECHNIQUES
LENDING PORTFOLIO SECURITIES _ The Government Securities Series may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions.
The Government Securities Series continues to be entitled to payments in
amounts equal to the interest or other distributions payable on the loaned
securities which affords the series an opportunity to earn interest on the
amount of the loan and on the loaned securities' collateral. Loans of
portfolio securities may not exceed 20% of the value of the Government
Securities Series' total assets, and the series will receive collateral
consisting of cash or U.S. Treasury securities which will be maintained at
all times in an amount equal to at least 100% of the current market value of
the loaned securities. Such loans are terminable by the Fund at any time upon
specified notice. The Government Securities Series might experience risk of
loss if the institution with which it has engaged in a portfolio loan
transaction breaches its agreement with the Fund.
BORROWING _ Each series may borrow money from banks for temporary or
emergency (not leveraging) purposes in an amount up to 15% of the value of
its total assets (including the amount borrowed) valued at the lesser of cost
or market, less liabilities (not including the amount borrowed) at the time
the borrowing is made. While such borrowings exceed 5% of the value of the
series' total assets, the series will not make any additional investments.
CERTAIN PORTFOLIO SECURITIES
U.S. GOVERNMENT SECURITIES _ Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. The Money Market Series and the Government Securities Series may
invest in Treasury Bills, Treasury Notes and Treasury Bonds. In addition, the
Money Market Instruments may invest in obligations issued or guaranteed by
U.S. Government agencies and instrumentalities. Some obligations issued or
guaranteed by U.S. Government agencies and instrumentalities are supported by
the full faith and credit of the U.S. Treasury; others by the right of the
issuer to borrow from the Treasury; others by discretionary authority of the
U.S. Government to purchase certain obligations of the agency or
instrumentality; and others only by the credit of the agency or
instrumentality. These securities bear fixed, floating or variable rates of
interest. While the U.S. Government currently provides financial support to
such U.S. Government-sponsored agencies or instrumentalities, no assurance
can be given that it will always do so, since it is not so obligated by law.
REPURCHASE AGREEMENTS _ In a repurchase agreement, a series buys, and the
seller agrees to repurchase, a security at a mutually agreed upon time and
price (usually within seven days). The repurchase agreement thereby
determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. Repurchase agreements could involve risks in the event of a default
or insolvency of the other party to the agreement, including possible delays
or restrictions upon the series' ability to dispose of the underlying
securities. The series may enter into repurchase agreements with certain banks
or non-bank dealers.
BANK OBLIGATIONS _ The Money Market Series may purchase certificates of
deposit, time deposits, bankers' acceptances and other short-term obligations
issued by domestic banks, London branches of domestic banks, and loan
associations and other banking institutions. With respect to such securities
issued by London branches of domestic banks, the Fund may be subject to
additional investment risks that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers. See "Description of the Fund _ Investment Considerations and Risks
_ Foreign Securities."
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period
of time.
Page 17
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable interest
rates.
COMMERCIAL PAPER _ The Money Market Series may purchase commercial paper
consisting of short-term, unsecured promissory notes issued to finance
short-term credit needs. The commercial paper purchased by the Money Market
Series will consist only of direct obligations issued by domestic and foreign
entities. The other corporate obligations in which the Money Market Series
may invest consist of high quality, U.S. dollar denominated short-term bonds
and notes (including variable amount master demand notes) issued by domestic a
nd foreign corporations, including banks.
FLOATING AND VARIABLE RATE OBLIGATIONS _ The Money Market Series may purchase
floating and variable rated demand notes and bonds, which are obligations
ordinarily having stated maturities in excess of 13 months, but which permit
the holder to demand payment of principal any time, or at specified intervals
not exceeding 13 months, in each case upon not more than 30 days' notice.
Variable rate demand notes include master demand notes which are obligations
that permit the Money Market Series to invest fluctuating amounts, at varying
rates of interest, pursuant to direct arrangements between the Money Market
Series, as lender, and the borrower. These obligations permit daily changes in
the amounts borrowed. Because these obligations are direct lending
arrangements between the lender and borrower, it is not contemplated that
such instruments generally will be traded, and there generally is no
established secondary market for these obligations, although they are
redeemable at face value, plus accrued interest. Accordingly, where these
obligations are not secured by letters of credit or other credit support
arrangements, the Money Market Series' right to redeem is dependent on the
ability of the borrower to pay principal and interest on demand.
ILLIQUID SECURITIES _ Each series may invest up to 10% of the value of its
net assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the series' investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, and repurchase agreements providing for
settlement in more than seven days after notice. As to these securities, the
series is subject to a risk that should the series desire to sell them when a
ready buyer is not available at a price the Fund deems representative of
their value, the value of the series' net assets could be adversely affected.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 18
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Page 19
Registration Mark
Page 20
____________________________________________________________________________
DREYFUS INSTITUTIONAL MONEY MARKET FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 1997
AS REVISED AUGUST 25, 1997
____________________________________________________________________________
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 May 1, 1997, As
Revised August 25, 1997, as it may be further 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
Outside the U.S. and Canada -- Call 516-794-5452
The Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies B-2
Management of the Fund B-5
Management Agreement B-10
Purchase of Shares B-12
Shareholder Services Plan B-13
Redemption of Shares B-14
Shareholder Services B-16
Portfolio Transactions B-18
Determination of Net Asset Value B-19
Dividends, Distributions and Taxes B-20
Yield Information B-20
Information About the Fund B-21
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors B-21
Appendix B-22
Financial Statements B-25
Report of Independent Auditors B-35
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Description of the
Fund" and "Appendix."
Portfolio Securities
Bank Obligations. (Money Market Series only) Investments in time
deposits and certificates of deposit are limited to domestic banks having
total assets in excess of $1 billion 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.
Foreign Government Obligations. (Money Market Series only) The Money
Market Series may invest in obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions, agencies or
instrumentalities that are determined by the Manager to be of comparable
quality to the other obligations in which the Money Market Series may
invest. Such securities also include debt obligations of supranational
entities. Supranational entities include international organizations
designated or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and
related government agencies. Examples include the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development
Bank.
Repurchase Agreements. The Fund's custodian or sub-custodian will have
custody of, and will hold in a segregated account, securities acquired by
the series under a repurchase agreement. Repurchase agreements are
considered by the staff of the Securities and Exchange Commission to be
loans by the series which enters into them. In an attempt to reduce the
risk of incurring a loss on a repurchase agreement, the series will enter
into repurchase agreements only with domestic banks with total assets in
excess of $1 billion, or primary government securities dealers reporting to
the Federal Reserve Bank of New York, with respect to securities of the type
in which the series may invest or government securities regardless of their
remaining maturities, and will require that additional securities be
deposited with it if the value of the securities purchased should decrease
below resale price.
Illiquid Securities. Where a substantial market of qualified
institutional buyers develops for certain restricted securities purchased by
the series pursuant to Rule 144A under the Securities Act of 1933, as
amended, the Fund intends to treat such securities as liquid securities in
accordance with procedures approved by the Fund's Board. Because it is not
possible to predict with assurance how the market for restricted securities
pursuant to Rule 144A will develop, the Fund's Board has directed the
Manager to monitor carefully the series' investments in such securities with
particular regard to trading activity, availability of reliable price
information and other relevant information. To the extent that, for a
period of time, qualified institutional buyers cease purchasing restricted
securities pursuant to Rule 144A, a series' investing in such securities may
have the effect of increasing the level of illiquidity in the series'
portfolio during such period.
Management Policies
Lending Portfolio Securities. (Government Securities Series only) In
connection with its securities lending transactions, the Government
Securities Series may return to the borrower or a third party which is
unaffiliated with the Fund, and which is acting as a "placing broker," a
part of the interest earned from the investment of collateral received for
securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the series must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value of
the securities rises above the level of such collateral; (3) the series must
be able to terminate the loan at any time; (4) the series must receive
reasonable interest on the loan, as well as any interest or other
distributions payable on the loaned securities, and any increase in market
value; and (5) the series may pay only reasonable custodian fees in
connection with the loan.
Investment Restrictions
The Fund has adopted investment restrictions numbered 1 through 10,
with respect to each series, and investment restrictions numbered 12 and 13,
with respect to the Money Market Series only, as fundamental policies, which
cannot be changed, as to a series, without approval by the holders of a
majority (as defined in the Investment Company Act of 1940, as amended (the
"1940 Act")) of the outstanding voting shares of such series. Investment
restriction number 11 is not a fundamental policy and may be changed, as to
a series, by vote of a majority of the Fund's Board members at any time.
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, in an amount up to 15% of the value of a series' total
assets (including the amount borrowed) based on the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the value of the series'
total assets, the series will not make any additional investments.
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.
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.
11. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid if,
in the aggregate, more than 10% of the value of the series' net assets would
be so invested.
The following investment restrictions numbered 12 and 13, which are
fundamental policies, apply only to the Money Market Series. The Money
Market Series may not:
12. 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.
13. 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
Board members 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 Board member who is deemed to be an "interested
person" of the Fund, as defined in the 1940 Act, is indicated by an
asterisk.
Board Members of the Fund
JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of
the Board of various funds in the Dreyfus Family of Funds. He is also
Chairman of the Board of Directors of Noel Group, Inc., a venture
capital company; and a director of The Muscular Dystrophy Association,
HealthPlan Services Corporation, Belding Heminway Company, Inc., a
manufacturer and marketer of industrial threads and buttons, Curtis
Industries, Inc., a national distributor of security products,
chemicals and other hardware, and Staffing Resources, Inc. For more
than five years prior to January 1995, he was President and a director
and, until August 1994, Chief Operating Officer of the Manager and
Executive Vice President and a director of Dreyfus Service Corporation,
a wholly-owned subsidiary of the Manager and, until August 24, 1994,
the Fund's distributor. From August 1994 to December 31, 1994, he was
a director of Mellon Bank Corporation. Mr. DiMartino is 53 years old
and his address is 200 Park Avenue, New York, New York 10166.
*DAVID P. FELDMAN, Board Member. Trustee of Corporate Property Investors, a
real estate investment company, and a director of several mutual funds
in the 59 Wall Street Mutual Funds Group, and of the Jeffrey Company, a
private investment company. From July 1961 to his retirement in April
1997, he was employed by AT&T Investment Management Corporation, most
recently serving as Chairman and Chief Executive Officer. Mr. Feldman
is 57 years old and his address is One Oak Way, Berkley Heights, New
Jersey 07922.
JOHN M. FRASER, JR., Board Member. President of Fraser Associates, a
service company for planning and arranging corporate meetings and other
events. From September 1975 to June 1978, he was Executive Vice
President of Flagship Cruises, Ltd. Prior thereto, he was Senior Vice
President and Resident Director of the Swedish-American Line for the
United States and Canada. Mr. Fraser is 75 years old and his address
is 133 East 64th Street, New York, New York 10021.
ROBERT R. GLAUBER, Board Member. 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. He is also a director of Mid Ocean Reinsurance Co., Ltd.,
Cooke & Bieler, investment counselors, NASD Regulation, Inc. and the
Federal Reserve Bank of Boston. Mr. Glauber is 58 years old and his
address is 79 John F. Kennedy Street, Cambridge, Massachusetts 02138.
JAMES F. HENRY, Board Member. President of the CPR Institute for Dispute
Resolution, 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. Mr. Henry is 66
years old and his address is c/o CPR Institute for Dispute Resolution,
366 Madison Avenue, New York, New York 10017.
ROSALIND GERSTEN JACOBS, Board Member. Director of Merchandise and
Marketing, Corporate Property Investors, a real estate investment
company. From 1974 to 1976, she was owner and manager of a merchandise
and marketing consulting firm. Prior to 1974, she was a Vice President
of Macy's, New York. Mrs. Jacobs is 71 years old and her address is
c/o Corporate Property Investors, 305 East 47th Street, New York, New
York 10017.
IRVING KRISTOL, Board Member. 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 May 1981 to December 1994, he was a consultant to the
Manager on economic matters; 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. Mr. Kristol
is 77 years old and his address is c/o The Public Interest, 1112 16th
Street, N.W., Suite 530, Washington, D.C. 20036.
DR. PAUL A. MARKS, Board Member. 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 Tulerik, Inc., a
biotechnology company, and a general partner of LINC Venture Lease
Partners II, L.P., a limited partnership engaged in leasing. Dr. Marks
is 70 years old and his address is c/o Memorial Sloan-Kettering Cancer
Center, 1275 York Avenue, New York, New York 10021.
DR. MARTIN PERETZ, Board Member. 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 the Academy
for Liberal Education, an accrediting agency for colleges and
universities certified by the U.S. Department of Education; and a
director of Leukosite Inc., a biopharmaceutical company. From 1988 to
1989, he was a director of Bank Leumi Trust Company of New York; and
from 1988 to 1991, he was a director of Carmel Container Corporation.
Dr. Peretz is 57 years old and his address is c/o The New Republic,
1220 19th Street, N.W., Washington, D.C. 20036.
BERT W. WASSERMAN, Board Member. Financial Consultant. From January 1990
to March 1995, Executive Vice President and Chief Financial Officer,
and from January 1990 to March 1993 a director, of Time Warner Inc.;
from 1981 to 1990, he was a member of the office of the President and a
director of Warner Communications Inc. He is also a director of The New
Germany Fund, Mountasia Entertainment International, Inc., the Lillian
Vernon Corporation, Winstar Communications, Inc. and International
Discount Telecommunications Corp. Mr. Wasserman is 64 years old and
his address is 126 East 57th Street, Suite 12 North, New York, New York
10022-3613.
No further shareholder meetings will be held for the purpose of
electing Board members unless and until such time as less than a majority of
the Board members holding office have been elected by shareholders, at which
time the Board members then in office will call a shareholders' meeting for
the election of Board members. Under the Act, shareholders of record of not
less than two-thirds of the outstanding shares of the Fund may remove a
Board member through a declaration in writing or by vote cast in person or
by proxy at a meeting called for that purpose. Board members are required
to call a meeting of shareholders for the purpose of voting upon the
question of removal of any such Board member when requested in writing to do
so by the shareholders of record of not less than 10% of the Fund's
outstanding shares.
For as long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Board members of the Fund
who are not "interested persons" of the Fund, as defined in the 1940 Act,
will be selected and nominated by the Board Members who are not "interested
persons" of the Fund.
The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by the Fund and by all other funds in
the Dreyfus Family of Funds for which such person is a Board member (the
number of which is set forth in parenthesis next to each Board member's
total compensation) for the year ended December 31, 1996, were as follows:
Total
Compensation from
Aggregate Fund and Fund
Name of Board Compensation from Complex Paid to
Member Fund* Board Members
Joseph S. DiMartino $ 8,750 $517,075 (93)
David P. Feldman $ 7,000 $122,257 (37)
John M. Fraser, Jr. $ 7,000 $ 73,563 (14)
Robert R. Glauber $ 7,000 $103,549 (20)
James F. Henry $ 7,000 $ 59,973(10)
Rosalind Gersten Jacobs $ 6,500 $ 93,900 (20)
Irving Kristol $ 7,000 $ 59,973 (10)
Dr. Paul A. Marks $ 6,500 $ 55,223 (10)
Dr. Martin Peretz $ 7,000 $ 59,973 (10)
Bert W. Wasserman $ 7,000 $ 59,973 (10)
_______________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $2,189 for all Board members as a group.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer and a director of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
December 1991 to July 1994, she was President and Chief Compliance
Officer of Funds Distributor, Inc., the ultimate parent of which is
Boston Institutional Group, Inc. She is 39 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President,
General Counsel and Secretary of the Distributor and an officer of
other investment companies advised or administered by the Manager.
From February 1992 to July 1994, he served as Counsel for The Boston
Company Advisors, Inc. He is 32 years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Supervisor of
Treasury Services and Administration of Funds Distributor, Inc. and an
officer of other investment companies advised or administered by the
Manager. From April 1993 to January 1995, he was a Senior Fund
Accountant for Investors Bank & Trust Company. From December 1991 to
March 1993, he was employed as a Fund Accountant at The Boston Company,
Inc. He is 28 years old.
MARK A. KARPE, Vice President and Assistant Secretary. Senior Paralegal of
the Distributor and an officer of other investment companies advised or
administered by the Manager. Prior to August 1993, he was employed as
an Associate Examiner at the National Association of Securities
Dealers, Inc. He is 28 years old.
ELIZABETH A. KEELEY, Vice President and Assistant Secretary. Assistant Vice
President of the Distributor since September 1995 and an officer of
other investment companies advised or administered by the Manager. She
is 27 years old.
RICHARD INGRAM, Vice President and Assistant Treasurer. Senior Vice
President and Director of Client Services and Treasury Operations of
Funds Distributor, Inc. and an officer of other investment companies
advised or administered by the Manager. From March 1994 to November
1995, he was Vice President and Division Manager for First Data
Investor Services Group. From 1989 to 1995, he was Vice President,
Assistant Treasurer and Tax Director - Mutual Funds of The Boston
Company, Inc. He is 41 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President and
Manager of Treasury Services and Administration of Funds Distributor,
Inc. and an officer of other investment companies advised or
administered by the Manager. From September 1989 to July 1994, she was
an Assistant Vice President and Client Manager for The Boston Company,
Inc. She is 33 years old.
MICHAEL S. PETRUCELLI, Vice President and Assistant Treasurer. Director of
Strategic Client Initiatives for Funds Distributor, Inc. and an officer
of other investment companies advised or administered by the Manager.
From December 1989 through November 1996, he was employed with GE
Investments where he held various financial, business development and
compliance positions. He also served as Treasurer of the GE Funds and
as Director of GE Investment Services. He is 35 years old.
JOSEPH F. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer and Chief Financial Officer of the Distributor and
an officer of other investment companies advised or administered by the
Manager. From July 1988 to August 1994, he was employed by The Boston
Company, Inc. where he held various management positions in the
Corporate Finance and Treasury areas. He is 34 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
The Fund's Board members and officers, as a group, owned less than 1%
of the Fund's shares of outstanding on April 15 , 1997.
The following shareholders are known by the Fund to own of record 5% or
more of the Money Market Series indicated series shares outstanding on April
15 , 1997: Capital Network Services, Branch 5/026, Attn: Jena Ruhland, One
Bush Street, 11th Floor, San Francisco, California, 94104--6.53%.
MANAGEMENT AGREEMENT
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Management of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated August 24, 1994 with the Fund. As to each
series, the Agreement is subject to annual approval by (i) the Fund's Board
or (ii) vote of a majority (as defined in the 1940 Act) of the outstanding
voting securities of such series, provided that in either event the
continuance also is approved by a majority of the Board members who are not
"interested persons" (as defined in the 1940 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 August 2,
1994. The Fund's Board, including a majority of the Board members who are
not "interested persons" of any party to the Agreement, last voted to renew
the Agreement at a meeting held on March 10, 1997. As to each series, the
Agreement is terminable without penalty on 60 days' notice by the Fund's
Board or by vote of a majority of the outstanding voting securities of such
series or, on 90 days' notice, by the Manager. The Agreement will terminate
automatically, as to the relevant series, in the event of its assignment (as
defined in the 1940 Act).
The following persons are officers and/or directors of the Manager: W.
Keith Smith, Chairman of the Board; Christopher M. Condron, President, Chief
Executive Officer, Chief Operating Officer and a director; Stephen E.
Canter, Vice Chairman, Chief Investment Officer and a director; Lawrence S.
Kash, Vice Chairman--Distribution and a director; William T. Sandalls, Jr.,
Senior Vice President and Chief Financial Officer; Mark N. Jacobs, Vice
President, General Counsel and Secretary; Patrice M. Kozlowski, Vice
President--Corporate Communications; Mary Beth Leibig, Vice President--Human
Resources; Jeffrey N. Nachman, Vice President--Mutual Fund Accounting;
Andrew S. Wasser, Vice President--Information Services; Elvira Oslapas,
Assistant Secretary; and Mandell L. Berman, Burton C. Borgelt and Frank V.
Cahouet, directors.
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the Fund's
Board. The Manager is responsible for investment decisions and provides the
Fund with portfolio managers who are authorized by the Board to execute
purchases and sales of securities. The Fund's portfolio managers are
Bernard W. Kiernan, Jr., Patricia A. Larkin and Thomas Riordan. 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.
The Manager maintains office facilities, on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing services, and certain other
required services to the Fund. The Manager may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
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 Board members 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 registrars and custodians,
transfer and dividend disbursing agents' fees, outside auditing and legal
expenses, costs of independent pricing services, costs of maintaining the
Fund's existence, all costs of insurance obtained other than under a blanket
policy covering one or more other investment companies managed by the
Manager, costs attributable to investor services (including, allocable
telephone and personnel expenses), costs of shareholders' reports and
meetings, costs of preparing and printing prospectuses 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 members, including, but not
limited to, proportionately in relation to the net assets of each series.
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, 1994, 1995 and 1996 amounted to $1,745,382,
$1,732,707 and $2,208,098, respectively. The management fees paid by the
Government Securities Series to the Manager for the fiscal years ended
December 31, 1994, 1995 and 1996 amounted to $581,006, $770,698 and
$761,707, respectively.
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 Fund may deduct from the management fees charged to the series or
the Manager will bear such excess amount.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of a series' net assets increases.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Shares."
The Distributor. The Distributor serves as the Fund's distributor on a
best efforts basis 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. In some states,
certain financial institutions effecting transactions in Fund shares may be
required to register as dealers pursuant to state law.
Using Federal Funds. Dreyfus Transfer, 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 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.
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.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Shareholder Services
Plan."
The Fund has adopted a Shareholder Services Plan (the "Plan") pursuant
to which the Fund reimburses Dreyfus Service Corporation 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
Board for its review. In addition, the Plan provides that material
amendments of the Plan must be approved by the Board, and by the Board
members who are not "interested persons" (as defined in the 1940 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 Board members cast in person at a meeting called for the purpose
of voting on the Plan. The Plan was last so approved on May 29, 1996. The
Plan is terminable at any time by vote of a majority of the Board members
who are not "interested persons" and have no direct or indirect financial
interest in the operation of the Plan.
The fees paid by the Money Market Series and the Government Securities
Series pursuant to the Plan for the fiscal year ended December 31, 1996
amounted to $53,687 and $53,700, respectively.
REDEMPTION OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Shares."
Check Redemption Privilege. An investor may indicate on the Account
Application, Shareholder Service Form or by later written request that the
Fund provide Redemption Checks ("Checks") drawn on the investor's Fund
account. Checks will be sent only to the registered owner(s) of the account
and only to the address of record. The Account Application, Shareholder
Services Form 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 ($1,000 minimum) 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, or to a
correspondent bank if the investor's bank is not a member of the Federal
Reserve System. Fees ordinarily are imposed by such bank and 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 Fund's Board reserves the right to make payments in whole
or part in securities (including non-marketable 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 might 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."
Fund Exchanges. Shares of other funds purchased by exchange will be
purchased on the basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a sales
load, and additional shares acquired through reinvestment of
dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load that could
have been imposed in connection with the Purchased Shares (at the
time the Purchased Shares were acquired), without giving effect to
any reduced loads, the difference will be deducted.
To accomplish an exchange under item D above, shareholders must notify
the Transfer Agent of their prior ownership of fund shares and their account
number.
To request an exchange, an investor must give exchange instructions to
the Transfer Agent in writing or by telephone. The ability to issue
exchange instructions by telephone is given to all Fund shareholders
automatically, unless the investor checks the applicable "No" box on the
Account Application, indicating that the investor specifically refuses this
privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions (including
over The Dreyfus Touchr automated telephone system) 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.
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 "Fund Exchanges."
Enrollment in or modification or cancellation of this Privilege is effective
three business days following notification by the investor. An investor
will be notified if his account falls below the amount designated to be
exchanged under this Privilege. In this case, an investor's account will
fall to zero unless additional investments are made in excess of the
designated amount prior to the next Auto-Exchange 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.
Fund Exchanges 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 by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges service or
Dreyfus Auto-Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest automatically 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.
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 Fund's portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses of
its research department.
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 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 Fund's Board 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 purchases and redemptions at $1.00. Such procedures include review of
the Fund's portfolio holdings by the Board, 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.
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 Fund's Board. If such
deviation exceeds 1/2 of 1%, the Board will consider promptly what action,
if any, will be initiated. In the event the Board 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, 1996, the Money Market
Series' yield was 4.93% and its effective yield was 5.05%. For the
seven-day period ended December 31, 1996, the Government Securities Series'
yield was 4.80% and its effective yield was 4.91%. 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.
From time to time, the Fund in its advertising and sales literature may
refer to the growth of assets managed or administered by the Manager over
certain time periods.
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.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise, to the holders of the outstanding voting securities of an
investment company, such as the Fund, will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each series affected by such matter. Rule 18f-2
further provides that a series shall be deemed to be affected by a matter
unless it is clear that the interests of each series in the matter are
identical or that the matter does not affect any interest of such series.
However, the Rule exempts the selection of independent accountants and the
election of Board members from the separate voting requirements of the Rule.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN,
COUNSEL AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with the Fund,
the Transfer Agent arranges for the maintenance of shareholder account
records for the Fund, the handling of certain communications between
shareholders and the Fund and the payment of dividends and distributions
payable by the Fund. For these services, the Transfer Agent receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Fund during the month, and is reimbursed for certain out-
of-pocket expenses. For the fiscal year ended December 31, 1996, the Fund
paid the Transfer Agent $65,098.
The Bank of New York, 90 Washington Street, New York, New York 10286,
acts as custodian.
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX
Description of the two highest commercial paper, bond and other short-
and long-term rating categories assigned by Standard & Poor's Ratings Group
("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch Investors
Service, L.P. ("Fitch"), Duff & Phelps Credit Rating Co. ("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.
<TABLE>
<CAPTION>
Dreyfus Institutional Money Market Fund, Money Market Series
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1996
Principal
Negotiable Bank Certificates of Deposit--8.7% Amount Value
- ---------------------------------------------------------------------------- ----------- ------------
<S> <C> <C>
Chase Manhattan Bank USA
5.45%, 6/9/97............................................................. $12,000,000 $ 12,000,000
Old Kent Bank & Trust Co.
4.80%, 2/28/97............................................................ 10,000,000 10,036,402
Providian National Bank
5.45%, 3/20/97............................................................ 20,000,000 20,011,422
-------------
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $42,047,824)........................................................ $ 42,047,824
=============
Commercial Paper--34.5%
- ---------------------------------------------------------------------------
ABN-AMRO North America Finance Inc.
5.58%, 2/28/97............................................................ $ 9,000,000 $ 8,921,265
Bear Stearns Companies Inc.
5.45%, 6/10/97............................................................ 10,000,000 9,764,445
Chrysler Financial Corp.
5.49%, 1/21/97-2/19/97.................................................... 19,000,000 18,903,550
Dresdner U.S. Finance Inc.
5.63%, 1/6/97............................................................. 20,000,000 19,985,000
General Electric Capital Corp.
5.46%, 6/10/97............................................................ 15,000,000 14,645,333
General Motors Acceptance Corp.
5.48%-5.58%, 4/7/97-5/12/97............................................... 22,000,000 21,632,287
Goldman Sachs & Co.
5.52%, 8/1/97............................................................. 20,000,000 19,375,778
PaineWebber Group Inc.
5.50%-5.67%, 4/1/97-6/2/97................................................ 20,000,000 19,636,236
Svenska Handelsbanken Inc.
5.50%, 4/1/97............................................................. 24,000,000 23,678,400
SwedBank Inc.
5.57%, 2/12/97............................................................ 10,000,000 9,936,883
-------------
TOTAL COMMERCIAL PAPER
(cost $166,479,177)....................................................... $166,479,177
=============
Corporate Notes--18.4%
- ----------------------------------------------------------------------------
Bear Stearns Companies Inc.
5.43%, 9/3/97............................................................. $10,000,000 $ 10,001,931
Heller Financial Inc.
5.65%, 5/15/97............................................................ 6,000,000 6,044,810
Lehman Brothers Inc.
5.55%, 8/15/97............................................................ 19,510,000 19,711,586
Merrill Lynch & Co. Inc.
5.45%-5.47%, 5/13/97-10/27/97 (a)......................................... 23,000,000 22,997,457
PNC Bank N.A.
5.61%, 5/15/97 (a)........................................................ 10,000,000 9,996,388
<PAGE>
Dreyfus Institutional Money Market Fund, Money Market Series
- --------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1996
Principal
Corporate Notes (continued) Amount Value
- ---------------------------------------------------------------------------- ----------- ------------
Salomon Inc.
5.49%, 11/10/97 (a)....................................................... $20,000,000 $ 20,000,000
------------
TOTAL CORPORATE NOTES
(cost $88,752,172)........................................................ $ 88,752,172
============
U.S. Government Agencies--24.4%
- ----------------------------------------------------------------------------
Federal Farm Credit Banks,
Floating Rate Notes
5.33%-5.48%, 7/25/97-10/23/98 (a)........................................ $58,000,000 $ 57,952,812
Federal National Mortgage Association,
Floating Rate Notes
5.34%-5.36%, 11/21/97-5/14/98 (a)........................................ 45,000,000 45,055,661
Notes
5.32%, 12/9/97........................................................... 15,000,000 14,993,253
------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $118,001,726)....................................................... $118,001,726
============
Time Deposits--4.1%
- ---------------------------------------------------------------------------
Republic National Bank of New York (London)
6.25%, 1/2/97
(cost $20,000,000)....................................................... $20,000,000 $ 20,000,000
============
Repurchase Agreements--9.1%
- ---------------------------------------------------------------------------
Lanston (Aubrey G.) & Co., Inc.
6.80%, dated 12/31/96, due 1/2/97 in the amount of
$36,013,600 (fully collateralized by $35,884,000 U.S. Treasury
Notes 5.875% to 6.50%, due from 5/15/97 to 7/31/97
value $36,445,760)........................................................ $36,000,000 $ 36,000,000
Barclays de Zoette Wedd Securities Inc.
5.50%, dated 12/31/96, due 1/2/97 in the amount of
$8,176,498 (fully collateralized by $8,185,000 U.S. Treasury
Notes 5.50%, due 9/30/97, value $8,278,318)............................... 8,174,000 8,174,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $44,174,000)........................................................ $ 44,174,000
============
TOTAL INVESTMENTS
(cost $479,454,899).............................................. 99.2% $479,454,899
======= ============
CASH AND RECEIVABLES (NET).......................................... .8% $ 3,700,781
======= ============
NET ASSETS.......................................................... 100.0% $483,155,680
======= ============
<FN>
Notes to Statement of Investments:
- -------------------------------------------------------------------------------
(a) Variable interest rates--subject to periodic change.
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Institutional Money Market Fund, Money Market Series, Government Securities Series
- --------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1996
Annualized
Yield on
Date of Principal
U.S. Treasury Bills--23.9% Purchase Amount Value
- ------------------------------------------------------------------ ------------- ----------- ------------
<S> <C> <C> <C>
2/6/97......................................................... 4.88% $ 5,000,000 $ 4,976,700
3/6/97......................................................... 5.29 10,000,000 9,910,622
7/24/97........................................................ 5.59 5,000,000 4,849,833
8/21/97........................................................ 5.91 5,000,000 4,819,717
-----------
TOTAL U.S. TREASURY BILLS
(cost $24,556,872)............................................. $24,556,872
-----------
-----------
U.S. Treasury Notes--34.2%
- ------------------------------------------------------------------
6.875%, 2/28/97................................................ 5.30% $10,000,000 $10,023,833
6.625%, 3/31/97................................................ 5.57 5,000,000 5,010,130
6.50%, 4/30/97 ................................................ 5.21 5,000,000 5,019,516
5.875%, 7/31/97................................................ 5.20 10,000,000 10,024,394
6%, 8/31/97 ................................................... 5.55 5,000,000 5,011,914
-----------
TOTAL U.S. TREASURY NOTES
(cost $35,089,787)............................................. $35,089,787
===========
Repurchase Agreements--41.1%
- ------------------------------------------------------------------
Lanston (Aubrey G.) & Co., Inc.
dated 12/31/96, due 1/2/97 in the amount of $5,001,563
(fully collateralized by $4,994,000 U.S. Treasury
Notes 5.50%, due 9/30/97, value $5,050,558).................... 5.63% $ 5,000,000 $ 5,000,000
Bear Stearns & Co. Inc.
dated 12/31/96, due 1/2/97 in the amount of $10,003,694
(fully collateralized by $10,645,000 U.S. Treasury
Bills due 10/16/97, value $10,180,976)......................... 6.65 10,000,000 10,000,000
Daiwa Securities America Inc.
dated 12/31/96, due 1/2/97 in the amount of $7,002,683
(fully collateralized by $7,042,000 U.S. Treasury
Notes 6.375%, due 6/30/97, value $7,287,011)................... 6.90 7,000,000 7,000,000
Nikko Securities Co. International, Inc.
dated 12/31/96, due 1/2/97 in the amount of $6,002,250
(fully collateralized by $5,934,000 U.S. Treasury
Notes 7.375%, due 11/15/97, value $6,059,432).................. 6.75 6,000,000 6,000,000
<PAGE>
Dreyfus Institutional Money Market Fund, Government Securities Series
- --------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1996
Annualized
Yield on
Date of Principal
Repurchase Agreements (continued) Purchase Amount Value
- ------------------------------------------------------------------ ------------- ----------- ------------
SBC Capital Corp.
dated 12/31/96, due 1/2/97 in the amount of $4,216,405
(fully collateralized by $4,476,000 U.S. Treasury
Bills due 9/18/97, value $4,291,821)........................... 6.00% $ 4,215,000 $ 4,215,000
UBS Securities Inc.
dated 12/31/96, due 1/2/97 in the amount of $10,003,722
(fully collateralized by $10,062,000 U.S. Treasury
Notes 6.50% due 4/30/97, value $10,200,509).................... 6.70 10,000,000 10,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $42,215,000)............................................. $ 42,215,000
============
TOTAL INVESTMENTS
(cost $101,861,659)..................................... 99.2% $101,861,659
====== ============
CASH AND RECEIVABLES (NET) .................................. .8% $ 863,906
====== ============
NET ASSETS.................................................100.0% $102,725,565
====== ============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Institutional Money Market Fund
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1996
Money Government
Market Securities
Series Series
-------------- -------------
<S> <C> <C> <C>
ASSETS: Investments in securities, at value
(including repurchase agreements of $44,174,000 and
$42,215,000 for the Money Market Series and the
Government Securities Series, respectively)--Note 2(a,b) $479,454,899 $101,861,659
Cash............................................. 1,320,672 233,604
Interest receivable.............................. 2,641,065 728,880
Prepaid expenses ................................ 14,319 12,598
------------ ------------
483,430,955 102,836,741
----------- ------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 200,082 51,015
Accrued expenses................................. 75,193 60,161
----------- ------------
275,275 111,176
----------- ------------
NET ASSETS..................................................................... $483,155,680 $102,725,565
============ ============
REPRESENTED BY: Paid-in capital.................................. $483,167,356 $102,786,227
Accumulated net realized gain (loss) on investments (11,676) (60,662)
------------ ------------
NET ASSETS..................................................................... $483,155,680 $102,725,565
============ ============
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized). 483,167,356 102,786,227
NET ASSET VALUE, offering and redemption price per share....................... $1.00 $1.00
===== =====
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Dreyfus Institutional Money Market Fund
- --------------------------------------------------------------------------------
Statement of Operations Year Ended December 31, 1996
Money Government
Market Securities
Series Series
------------ ----------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME: Interest Income.................................. $24,257,175 $8,168,684
------------ -----------
EXPENSES--Note 2(c): Management fee--Note 3(a)......................... $ 2,208,098 $ 761,707
Shareholder servicing costs--Note 3(b)........... 156,505 66,655
Custodian fees................................... 86,803 67,721
Trustees' fees and expenses--Note 3(c)............ 54,113 19,179
Professional fees................................ 23,555 13,813
Registration fees................................ 17,387 18,538
Prospectus and shareholders' reports............. 8,425 159
Miscellaneous.................................... 4,959 5,839
------------ -----------
Total Expenses.............................. 2,559,845 953,611
------------ -----------
INVESTMENT INCOME--NET.......................................................... 21,697,330 7,215,073
NET REALIZED GAIN (LOSS) ON INVESTMENTS--Note 2(b).............................. 80,184 21,014
------------ -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................... $21,777,514 $7,236,087
============ ===========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional Money Market Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Money Market Series Government Securities Series
-------------------------------- ------------------------------
Year Ended December 31, Year Ended December 31,
-------------------------------- ------------------------------
1996 1995 1996 1995
--------------- --------------- ------------- ----------------
<S> <C> <C> <C> <C>
OPERATIONS:
Investment income--net........................$ 21,697,330 $ 18,813,579 $ 7,215,073 $ 8,067,225
Net realized gain (loss) on investments...... 80,184 155,073 21,014 41,000
--------------- --------------- ------------- -------------
Net Increase (Decrease) in Net Assets
Resulting from Operations................ 21,777,514 18,968,652 7,236,087 8,108,225
--------------- --------------- ------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net........................ (21,697,330) (18,813,579) (7,215,073) (8,067,225)
--------------- --------------- ------------- -------------
BENEFICIAL INTEREST TRANSACTIONS:
($1.00 per share):
Net proceeds from shares sold................ 5,173,786,531 4,216,643,080 574,692,866 553,280,575
Dividends reinvested......................... 2,582,594 2,451,545 1,899,711 2,467,638
Cost of shares redeemed...................... (5,095,326,061) (4,180,042,611) (597,059,331) (552,899,065)
--------------- --------------- ------------- -------------
Increase (Decrease) in Net Assets from
Beneficial Interest Transactions......... 81,043,064 39,052,014 (20,466,754) 2,849,148
--------------- --------------- ------------- -------------
Total Increase (Decrease) in
Net Assets............................ 81,123,248 39,207,087 (20,445,740) 2,890,148
NET ASSETS:
Beginning of Period.......................... 402,032,432 362,825,345 123,171,305 120,281,157
--------------- --------------- ------------- -------------
End of Period................................ $ 483,155,680 $ 402,032,432 $ 102,725,565 $ 123,171,305
=============== =============== ============= =============
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional Money Market Fund, Money Market Series
- --------------------------------------------------------------------------------
Financial Highlights
Reference is made to page 3 of the Fund's Prospectus
dated May 1, 1997.
<PAGE>
Dreyfus Institutional Money Market Fund, Government Securities Series
- --------------------------------------------------------------------------------
Financial Highlights
Reference is made to page 4 of the Fund's Prospectus
dated May 1, 1997.
<PAGE>
Dreyfus Institutional Money Market Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--General:
Dreyfus Institutional Money Market Fund (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. 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. acts as the 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. There is
no assurance, however, that the Fund will be able to maintain a stable net asset
value per share of $1.00.
The Series' 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 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 among them on a pro rata basis.
(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 Institutional Money Market Fund
- --------------------------------------------------------------------------------
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
$12,000 available for Federal income tax purposes to be applied against future
net securities profits, if any, realized subsequent to December 31, 1996. If not
applied, the carryover expires in 2002.
The Government Securities Series has an unused capital loss carryover of
approximately $61,000 available for Federal income tax purposes to be applied
against future net securities profits, if any, realized subsequent to December
31, 1996. If not applied, the carryover expires in 1997.
At December 31, 1996, 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 .50 of 1% of
the value of the average daily net assets of each series and is payable monthly.
(b) Pursuant to the Fund's 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, 1996, the Money Market Series and the
Government Securities Series were charged an aggregate of $53,687 and $53,700,
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. With respect to the
Money Market Series and the Government Securities Series, such compensation
amounted to $58,736 and $6,362, respectively, during the period ended December
31, 1996.
(c) Each trustee 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 Institutional Money Market Fund
- --------------------------------------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors
Shareholders and Board of Trustees
Dreyfus Institutional Money Market Fund
We have audited the accompanying statement of assets and liabilities,
including the statements of investments, of Dreyfus Institutional Money Market
Fund (comprising, respectively, the Money Market Series and the Government
Securities Series) as of December 31, 1996, 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, 1996 by correspondence with the custodians 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 the Dreyfus Institutional Money Market
Fund at December 31, 1996, 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 7, 1997
