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Fund Goal and Approach
The fund seeks as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity. As a money market fund, the fund is subject to maturity, quality and diversification requirements designed to help it maintain a stable share price of $1.00.
To pursue its goal, the fund invests in securities issued or guaranteed as to principal and interest by the U.S. government or its agencies or instrumentalities, and repurchase agreements (including tri-party repurchase agreements). The securities in which the fund invests include those backed by the full faith and credit of the U.S. government and those that are neither insured nor guaranteed by the U.S. government.
U.S. government securities are generally considered to be among the highest-quality investments available. By investing in these securities, the fund seeks greater credit safety for investors. In exchange for the level of credit safety offered by U.S. government securities, the fund's yields may be lower than the yield of money market funds that do not limit their investments to U.S. government securities.
The fund is required to maintain an average dollar-weighted portfolio maturity of 90 days or less and buy individual securities that have remaining maturities of 13 months or less.
Main Risks
An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.
The fund's yield will fluctuate as the short-term securities in its portfolio mature and the proceeds are reinvested in securities with different interest rates. Additionally, while the fund has maintained a constant share price since inception, and will continue to try to do so, neither Dreyfus nor its affiliates are required to make a capital infusion, enter into a capital support agreement or take other actions to prevent the fund's share price from falling below $1.00. The following are the principal risks that could reduce the fund's income level and/or share price:
*Interest rate risk. This risk refers to the decline in the prices of fixed-income securities that may accompany a rise in the overall level of interest rates. The fund's yield will vary; it is not fixed for a specific period like the yield on a bank certificate of deposit. A sharp and unexpected rise in interest rates could cause a money market fund's share price to drop below a dollar. However, the extremely short maturities of the securities held in money market portfolios - a means of achieving an overall fund objective of principal safety - reduces their potential for price fluctuation.
*U.S. Treasury securities risk. A security backed by the U.S. Treasury or the full faith and credit of the United States is guaranteed only as to the timely payment of interest and principal when held to maturity, but the market prices for such securities are not guaranteed and will fluctuate. Because U.S. Treasury securities trade actively outside the United States, their prices may rise and fall as changes in global economic conditions affect the demand for these securities.
*Government securities risk. Not all obligations of the U.S. government, its agencies and instrumentalities are backed by the full faith and credit of the U.S. Treasury. Some obligations are backed only by the credit of the issuing agency or instrumentality, and in some cases there may be some risk of default by the issuer. Any guarantee by the U.S. government or its agencies or instrumentalities of a security held by the fund does not apply to the market value of such security or to shares of the fund itself. A security backed by the U.S. Treasury or the full faith and credit of the United States is guaranteed only as to the timely payment of interest and principal when held to maturity. In addition, because many types of U.S. government securities trade actively outside the United States, their prices may rise and fall as changes in global economic conditions affect the demand for these securities.
*Liquidity risk. When there is little or no active trading market for specific types of securities, it can become more difficult to sell the securities at or near their perceived value. In such a market, the value of such securities and the fund's share price may fall dramatically, even during periods of declining interest rates. Also, during such periods, redemptions by a few large investors in the fund may have a significant adverse effect on the fund's net asset value and remaining fund shareholders.
*Counterparty risk. The fund is subject to the risk that a counterparty in a repurchase agreement could fail to honor the terms of its agreement.
Portfolio Manager
The Dreyfus Corporation has been manager since 3/25/1996.
Dreyfus, established in 1951 and headquartered in New York City, is one of the nation's leading asset management and distribution companies. As of June 30, 2010, Dreyfus manages over $384 billion in mutual funds, separately managed accounts, and institutional portfolios*.
Dreyfus is part of The Bank of New York Mellon ("BNY Mellon") Asset Management, a leading global provider of investment management products and services that offers a broad range of equity, fixed-income, hedge and liquidity management products through individual asset management companies and multiple distribution channels.
*Dreyfus assets under management include separately managed accounts and CIS non-money market assets that are as of May 31, 2010.
Other Funds Managed
Dreyfus Money Market Instruments, Inc.: Government Securities Series
Dreyfus New Jersey Municipal Money Market Fund, Inc.
Dreyfus Liquid Assets, Inc. - Class 1 Shares
Dreyfus Money Market Instruments, Inc.: Money Market Series
Dreyfus BASIC Money Market Fund, Inc.
Dreyfus Worldwide Dollar Money Market Fund, Inc.
Dreyfus BASIC U.S. Government Money Market Fund
General California Municipal Money Market Fund
General Municipal Money Market Fund
General New York Municipal Money Market Fund
Dreyfus Connecticut Municipal Money Market Fund, Inc.
Dreyfus Pennsylvania Municipal Money Market Fund
Dreyfus BASIC New Jersey Municipal Money Market Fund
Dreyfus BASIC Municipal Money Market Fund
Dreyfus Municipal Money Market Fund, Inc.
Dreyfus New York AMT-Free Municipal Money Market Fund
General Money Market Fund, Inc.
General Treasury Prime Money Market Fund
Dreyfus 100% U.S. Treasury Money Market Fund
Dreyfus BASIC S&P 500 Stock Index Fund
Dreyfus Midcap Index Fund, Inc.
Dreyfus BASIC California Municipal Money Market Fund
Dreyfus BASIC Massachusetts Municipal Money Market Fund
Dreyfus BASIC New York Municipal Money Market Fund
Dreyfus AMT-Free Municipal Reserves - BASIC Shares
Dreyfus AMT-Free Municipal Reserves - Class B
Dreyfus AMT-Free Municipal Reserves - Class R
Dreyfus AMT-Free Municipal Reserves - Investor Shares
Dreyfus Money Market Reserves - Class R
Dreyfus Money Market Reserves - Investor Shares
Dreyfus U.S. Treasury Reserves - Class R
Dreyfus U.S. Treasury Reserves - Investor Shares
Dreyfus S&P 500 Index Fund
Dreyfus International Stock Index Fund
Dreyfus Bond Market Index Fund - BASIC Shares
Dreyfus Bond Market Index Fund - Investor Shares
Dreyfus Smallcap Stock Index Fund
Dreyfus Massachusetts Municipal Money Market Fund
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