<PAGE>
Dreyfus
Institutional
Money Market
Fund
Annual Report
December 31, 1997
<PAGE>
Dreyfus Institutional Money Market Fund
- --------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to report the performance for Dreyfus Institutional Money
Market Fund for the 12-month reporting period ended December 31, 1997 as shown
in the following table:
YIELD EFFECTIVE YIELD*
------- ----------------
Money Market Series............. 5.06% 5.17%
Government Securities Series.... 4.84% 4.95%
ECONOMIC REVIEW
In 1997, the U.S. economy put in its best growth performance of this business
cycle to date. In tandem, the labor market tightened markedly, marginally
boosting wage inflation towards year end. Yet price inflation decelerated and
bond yields fell. Although corporate profit growth was robust for much of the
year, strains began to appear in the second half in some sectors. The Federal
Reserve Board (the "Fed") tightened credit early in the year, then subsequently
stayed on hold, torn between strong economic reports at home and worsening
financial crises overseas. While the problems overseas may slow the U.S. economy
somewhat in 1998, incoming evidence indicates little adverse impact on economic
activity to date.
Real Gross Domestic Product (GDP) grew 3.8% in 1997, its best annual growth
since 1988. Almost all the major sectors contributed to growth. Households
enjoyed rising real incomes as wage increases outpaced price inflation. Moderate
interest rates buoyed housing demand. Tightening factory capacity boosted
capital spending, and until late in the year, steady foreign growth kept exports
robust. That all these sectors grew simultaneously in a late phase of the
business cycle was unusual. The year 1997 also saw a dramatic narrowing of the
Federal budget deficit. It is likely that the associated drop in Federal
borrowing boosted the supply of credit available to the private sector.
As mentioned, overall corporate profit growth rebounded in 1997, after
slowing in 1996. Profits from domestic sources generally did well. However,
profits from international sources began to show strains in the second half,
impacted by the rising dollar and by financial stresses overseas. More recently,
profits at some companies have been slowed by price weakness.
Economic data this winter show the economy still quite strong although some
leading statistics have begun to signal somewhat slower economic growth for
1998. First, recently slowing export orders and rising import orders imply a
widening trade deficit. Second, the number of announced layoffs has begun to
rise, indicating some future easing of labor market pressures. Once these
leading indicators actually show up in a slowing of the economy, market
expectations may shift to anticipate the possibility of a move by the Fed to
ease credit. At the start of 1998, there was uncertainty about both the severity
of Asian stresses and their impact on the U.S. economy.
MONEY MARKET OVERVIEW
The financial turmoil in Asia that started affecting security markets last
fall did not have much effect as yet on the money market before the close of
1997. However, shortly after year-end, interest rates began declining. Yet for
much of 1997, money market rates stayed within a narrow range.
Last March, when the Fed raised short-term rates by a quarter point, the
money market responded with a brief spurt in yields. As the year went on, the
chief influences on rates continued to be the outlook for inflation in the U.S.,
which was benign, and prospects for corporate profits, which continued favorable
for most of the year. In addition, the customary year-end refinancings sent
interest rates up for a while.
Indeed, until the Asian problems began weakening equity prices, the money
market appeared to be expecting a possible Fed move to raise interest rates.
Late in 1997 and especially in early 1998, the picture changed. Lately, the
market's
<PAGE>
expectations have focused more on a possible move by the Fed to reduce interest
rates. The reasoning is that such an action would be a preemptive strike
against an economic trend that hasn't been mentioned for years -- potential
deflation.
PORTFOLIO FOCUS
In this interest rate environment, we maintained the average maturity of the
Fund at approximately the industry average, with occasional periods of shorter
or longer maturity, as warranted by market conditions. This provided the Fund
with liquidity while seeking competitive yields without assuming undue market
risks. We believe this strategy has been in the best interests of our
shareholders. The currently volatile investment climate requires flexibility on
our part as managers. Of course, we will make adjustments to the portfolio as
required by the dynamics of the market.
Sincerely,
/s/ Patricia A. Larkin
Patricia A. Larkin
Senior Portfolio Manager
January 20, 1998
New York, N.Y.
* Effective yield takes into account the effect of compounding and is based on
dividends declared daily and reinvested monthly.
<PAGE>
Dreyfus Institutional Money Market Fund, Money Market Series
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1997
<TABLE>
<CAPTION>
Principal
Negotiable Bank Certificates of Deposit--3.8% Amount Value
- ------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Union Bank of California
5.68%, 2/20/98
(cost $20,000,000).......................................................... $20,000,000 $ 20,000,000
============
Commerical Paper--67.0%
- -------------------------------------------------------------------------------
ABN-Amro North American Finance Inc.
5.83%, 7/13/98.............................................................. $23,300,000 $ 22,601,731
Bear Stearns Companies Inc.
5.74%-5.81%, 3/2/98-3/20/98................................................. 20,000,000 19,783,500
Canadian Imperial Holdings Inc.
5.72%, 2/13/98.............................................................. 25,000,000 24,831,643
Den Daske Corp.Inc.
5.82%, 6/29/98.............................................................. 25,000,000 24,303,889
FINOVA Capital Corp.
5.79%-5.82%, 2/23/98-4/21/98................................................ 25,000,000 24,701,435
Generale Bank Inc.
5.71%, 1/6/98............................................................... 20,000,000 19,984,583
General Electric Capital Corp.
5.74%-5.78%, 1/27/98-6/30/98................................................ 50,000,000 49,008,725
General Motors Acceptance Corp.
5.82%, 2/17/98.............................................................. 10,000,000 9,925,061
Goldman Sachs Group L.P.
5.84%, 1/16/98.............................................................. 20,000,000 19,951,667
Lehman Brothers Holdings Inc.
5.75%, 1/23/98.............................................................. 20,000,000 19,931,250
Merrill Lynch & Co.Inc.
5.73%, 3/11/98.............................................................. 15,000,000 14,839,862
PaineWebber Group Inc.
5.87%-5.89%, 1/2/98-2/17/98................................................. 27,000,000 26,850,029
Salomon Inc.
5.87%, 1/20/98.............................................................. 20,000,000 19,938,672
SwedBank Inc.
5.66%, 1/26/98.............................................................. 20,000,000 19,923,611
Toronto-Dominion Holdings (USA) Inc.
5.74%, 2/23/98.............................................................. 25,000,000 24,791,681
UBS Finance (Delaware) Inc.
6.75%, 1/2/98............................................................... 15,000,000 14,997,188
------------
TOTAL COMMERCIAL PAPER
(cost $356,364,527)......................................................... $356,364,527
============
Bank Notes--3.2%
- -------------------------------------------------------------------------------
BankBoston, N.A.
5.71%, 12/10/98 (a)
(cost $17,000,000).......................................................... $17,000,000 $ 17,000,000
============
</TABLE>
<PAGE>
Dreyfus Institutional Money Market Fund, Money Market Series
- --------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1997
<TABLE>
<CAPTION>
Principal
Corporate Notes--10.3% Amount Value
- ------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Bankers Trust New York Corp.
5.68%, 9/4/98 (a)........................................................... $ 3,000,000 $ 2,998,911
CTN Trust Series 1
5.97%, 9/2/98 (a,b,c)....................................................... 20,000,000 20,043,509
Heller Financial Inc.
5.82%, 3/16/98.............................................................. 5,000,000 5,034,476
Lehman Brothers Holdings Inc.
5.74%, 5/11/98.............................................................. 5,000,000 5,029,843
PNC Bank N.A.
5.68%-5.69%, 2/18/98-4/24/98 (a)............................................ 15,000,000 14,998,411
Salomon Inc.
5.97%, 2/27/98.............................................................. 6,500,000 6,526,516
------------
TOTAL CORPORATE NOTES
(cost $54,631,666).......................................................... $ 54,631,666
============
Time Deposits--3.8%
- -------------------------------------------------------------------------------
Republic National Bank of New York (London)
5.00%, 1/2/98
(cost $20,000,000).......................................................... $20,000,000 $ 20,000,000
============
Repurchase Agreements--8.5%
- -------------------------------------------------------------------------------
Barclays De Zoette Wedd Securities Inc.
4.25%, dated 12/31/97, due 1/2/98 in the amount of
$10,229,415 (fully collateralized by $10,830,000 U.S. Treasury
Bills due 10/15/98, value $10,380,173)...................................... $10,227,000 $ 10,227,000
SBC Warburg Dillon Read Inc.
6.55%, dated 12/31/97, due 1/2/98 in the amount of
$35,012,736 (fully collateralized by $36,373,000 U.S. Treasury
Bills due 5/7/98, value $35,711,011)........................................ 35,000,000 35,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $45,227,000).......................................................... $ 45,227,000
============
TOTAL INVESTMENTS (cost $513,223,193)............................... 96.6% $513,223,193
======= ============
CASH AND RECEIVABLES (NET).......................................... 3.4% $ 18,213,063
======= ============
NET ASSETS ........................................................ 100.0% $531,436,256
======= ============
<FN>
Notes to Statement of Investments:
- --------------------------------------------------------------------------------
(a) Variable interest rate--subject to periodic change.
(b) This note was acquired for investment, not with intent to distribute or
sell.
(c) Security restricted as to public resale. This security was acquired on
12/11/97 at a cost of 100.2327. At December 31, 1997 the aggregate value
of this security is $20,043,509, representing approximately 3.8% of net
assets and is valued at amortized cost.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional Money Market Fund, Government Securities Series
- --------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1997
<TABLE>
<CAPTION>
Annualized
Yield on
Date of Principal
U.S. Treasury Bills--27.2% Purchase Amount Value
- -------------------------------------------------------------------- -------- ------------ -------------
<S> <C> <C> <C>
1/2/98......................................................... 4.00% $19,387,000 $ 19,384,846
1/22/98........................................................ 5.18 10,000,000 9,969,900
------------
TOTAL U.S. TREASURY BILLS
(cost $29,354,746)............................................. $ 29,354,746
============
U.S. Treasury Notes--28.0%
- --------------------------------------------------------------------
6%, 9/30/98.................................................... 5.37% $22,000,000 $ 22,056,267
5.125%, 11/30/98............................................... 5.63 8,100,000 8,060,014
------------
TOTAL U.S. TREASURY NOTES
(cost $30,116,281)............................................. $ 30,116,281
============
Repurchase Agreements--44.4%
- --------------------------------------------------------------------
Barclays De Zoette Wedd Securities, Inc.
dated 12/31/97, due 1/2/98 in the amount of
$6,804,833 (fully collateralized by
$7,205,000 U.S. Treasury Bills, due
10/15/98, value $6,905,738).................................... 4.85% $ 6,803,000 $ 6,803,000
CIBC Wood Gundy Security Corp.
dated 12/31/97, due 1/2/98 in the amount of
$12,004,333 (fully collateralized by
$12,087,000 U.S. Treasury Notes 4.75%, due
9/30/98, value $12,149,012).................................... 6.50 12,000,000 12,000,000
Donaldson, Lufkin &Jenrette Securities Inc.
dated 12/31/97, due 1/2/98 in the amount of
$12,004,333 (fully collateralized by
$11,856,000 U.S. Treasury Notes 5.625%, due
1/31/98, value $12,125,861).................................... 6.50 12,000,000 12,000,000
SBC Warburg Dillon Reed Inc.
dated 12/31/97, due 1/2/98 in the amount of
$5,001,819 (fully collateralized by
$5,197,000 U.S. Treasury Bills, due
5/7/98, value $5,102,415)...................................... 6.55 5,000,000 5,000,000
UBS Securities Inc.
dated 12/31/97, due 1/2/98 in the amount of
$12,004,333 (fully collateralized by
$12,240,000 U.S. Treasury Notes 4.75%, due
10/31/98, value $12,242,346)................................... 6.50 12,000,000 12,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $47,803,000)............................................. $ 47,803,000
============
TOTAL INVESTMENTS
(cost $107,274,027).................................. 99.6% $107,274,027
======= ============
CASH AND RECEIVABLES (NET).............................. .4% $ 420,381
======= ============
NET ASSETS ............................................ 100.0% $107,694,408
======= ============
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional Money Market Fund
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1997
<TABLE>
<CAPTION>
Government
Money Market Securities
Series Series
------------ -------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments
(including repurchase agreements of $45,227,000
and $47,803,000 for the Money Market Series and
the Government Securities Series, respectively)--Note 2(b) $513,223,193 $107,274,027
Cash............................................. 17,160,820 81,769
Interest receivable.............................. 1,334,420 381,498
Prepaid expenses................................. 28,157 32,274
------------ ------------
531,746,590 107,769,568
------------ ------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 243,336 59,096
Accrued expenses................................. 66,998 16,064
------------ ------------
310,334 75,160
------------ ------------
NET ASSETS..................................................................... $531,436,256 $107,694,408
============ ============
REPRESENTED BY: Paid-in capital.................................. $531,442,837 $107,694,379
Accumulated net realized gain (loss) on investments (6,581) 29
------------ ------------
NET ASSETS..................................................................... $531,436,256 $107,694,408
============ ============
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized). 531,442,837 107,694,379
NET ASSET VALUE, offering and redemption price per share....................... $1.00 $1.00
===== =====
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional Money Market Fund
- --------------------------------------------------------------------------------
Statement of Operations Year Ended December 31, 1997
<TABLE>
<CAPTION>
Money Government
Market Securities
Series Series
------------ ------------
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income.............................. $29,268,655 $ 8,229,291
----------- ------------
EXPENSES--Note 2(c): Management fee--Note 3(a).................... $ 2,597,609 $ 754,470
Shareholder servicing costs--Note 3(b)....... 158,049 32,316
Custodian fees............................... 76,411 68,938
Trustees' fees and expenses--Note 3(c)....... 59,854 17,354
Professional fees............................ 46,164 12,695
Registration fees............................ 25,572 30,727
Prospectus and shareholders' reports......... 3,707 4,433
Miscellaneous................................ 5,184 213
----------- ------------
Total Expenses............................. 2,972,550 921,146
----------- ------------
INVESTMENT INCOME--NET..................................................... 26,296,105 7,308,145
NET REALIZED GAIN (LOSS) ON INVESTMENTS--Note 2(b)......................... 5,095 60,691
----------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $26,301,200 $ 7,368,836
=========== ============
</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,
------------------------------- -----------------------------
1997 1996 1997 1996
--------------- --------------- -------------- --------------
OPERATIONS:
<S> <C> <C> <C> <C>
Investment income--net...................... $ 26,296,105 $ 21,697,330 $ 7,308,145 $ 7,215,073
Net realized gain (loss) on investments..... 5,095 80,184 60,691 21,014
-------------- -------------- ------------ ------------
Net Increase (Decrease) in Net Assets
Resulting from Operations............. 26,301,200 21,777,514 7,368,836 7,236,087
-------------- -------------- ------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net...................... (26,296,105) (21,697,330) (7,308,145) (7,215,073)
-------------- -------------- ------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
($1.00 per share):
Net proceeds from shares sold............... 4,633,185,786 5,173,786,531 954,131,576 574,692,866
Dividends reinvested........................ 3,514,763 2,582,594 1,378,967 1,899,711
Cost of shares redeemed..................... (4,588,425,068) (5,095,326,061) (950,602,391) (597,059,331)
-------------- -------------- ------------ ------------
Increase (Decrease) in Net Assets from
Beneficial Interest Transactions...... 48,275,481 81,043,064 4,908,152 (20,466,754)
-------------- -------------- ------------ ------------
Total Increase (Decrease) in Net Assets 48,280,576 81,123,248 4,968,843 (20,445,740)
NET ASSETS:
Beginning of Period......................... 483,155,680 402,032,432 102,725,565 123,171,305
-------------- -------------- ------------ ------------
End of Period............................... $ 531,436,256 $ 483,155,680 $107,694,408 $102,725,565
============== ============== ============ ============
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional Money Market Fund, Money Market Series
- --------------------------------------------------------------------------------
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 period indicated. This information
has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------
PER SHARE DATA: 1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Investment Operations:
Investment income--net............................ .051 .049 .054 .036 .027
----- ----- ----- ----- -----
Distributions:
Dividends from investment income--net............. (.051) (.049) (.054) (.036) (.027)
----- ----- ----- ----- -----
Net asset value, end of period.................... $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
TOTAL INVESTMENT RETURN.............................. 5.17% 5.03% 5.57% 3.65% 2.76%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........... .57% .58% .62% .63% .63%
Ratio of net investment income to average net assets 5.06% 4.91% 5.43% 3.59% 2.72%
Net Assets, end of period (000's Omitted)......... $531,436 $483,156 $402,032 $362,825 $354,177
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Institutional Money Market Fund, Government Securities Series
- --------------------------------------------------------------------------------
Financial Highlights (continued)
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 period indicated. This information
has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
PER SHARE DATA: 1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Investment Operations:
Investment income--net............................ .048 .047 .052 .034 .026
----- ----- ----- ----- -----
Distributions:
Dividends from investment income--net............. (.048) (.047) (.052) (.034) (.026)
----- ----- ----- ----- -----
Net asset value, end of period.................... $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
TOTAL INVESTMENT RETURN.............................. 4.95% 4.84% 5.36% 3.49% 2.63%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........... .61% .63% .65% .69% .65%
Ratio of net investment income to average
net assets...................................... 4.84% 4.74% 5.23% 3.40% 2.61%
Net Assets, end of period (000's Omitted)......... $107,694 $102,726 $123,171 $120,281 $134,574
</TABLE>
See notes to financial statements.
<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. is 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 for each series.
The Funds' financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
NOTE 2--Significant Accounting Policies:
(A) PORTFOLIO VALUATION: Investments in securities are valued at amortized
cost, which has been determined by the Fund's Board of 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 custodian and, pursuant to the terms of
the repurchase agreement, must have an aggregate market value greater than or
equal to the repurchase price plus accrued interest at all times. If the value
of the underlying securities falls below the value of the repurchase price plus
accrued interest, the Fund will require the seller to deposit additional
collateral by the next business day. If the request for additional collateral is
not met, or the seller defaults on its repurchase obligation, the Fund maintains
the right to sell the underlying securities at market value and may claim any
resulting loss against the seller.
(C) EXPENSES: Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to both series are
allocated 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
$6,500 available for Federal income tax purposes to be applied against future
net securities profits, if any, realized subsequent to December 31, 1997. If not
applied, the carryover expires in fiscal 2002.
At December 31, 1997, the cost of investments of each series for Federal
income tax purposes was substantially the same as the cost for financial
reporting purposes (see the Statements of Investments).
NOTE 3--Management Fee and Other Transactions With Affiliates:
(A) Pursuant to a management agreement 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) Under the Shareholder Services Plan, each series reimburses Dreyfus
Service Corporation, a wholly-owned subsidiary of the Manager, an amount not to
exceed an annual rate of .25 of 1% of the value of each series' average daily
net assets for certain allocated expenses of providing personal services and/or
maintaining shareholder accounts. The services provided may include personal
services relating to shareholder accounts, such as answering shareholder
inquiries regarding the Fund and providing reports and other information, and
services related to the maintenance of shareholder accounts. During the period
ended December 31, 1997, the Money Market Series and the Government Securities
Series were charged $65,762 and $48,489, respectively, pursuant to the
Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the
Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. During the period
ended December 31, 1997, the Money Market Series and the Government Securities
Series were charged $67,718 and $4,255, respectively, pursuant to the transfer
agency agreement.
(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, 1997, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and financial highlights for
each of the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1997 by correspondence with the 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 Dreyfus Institutional Money Market Fund at
December 31, 1997, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended,
and the financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
New York, New York
February 5, 1998
<PAGE>
Dreyfus Institutional Money Market Fund
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Important Tax Information (Unaudited)
For State individual income tax purposes, the Government Securities Series
hereby designates 30.04% of the ordinary income dividends paid during its fiscal
year ended December 31, 1997 as attributable to interest income from direct
obligations of the United States. Such dividends are currently exempt from
taxation for individual income tax purposes in most states, including New York,
California and the District of Columbia.
<PAGE>
Dreyfus Institutional
Money Market Fund
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 179/195AR9712
