UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number | 811-22169 | |||||
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| Dreyfus Institutional Reserves Funds |
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| (Exact name of Registrant as specified in charter) |
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c/o BNY Mellon Investment Adviser, Inc. 240 Greenwich Street New York, New York 10286 |
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| (Address of principal executive offices) (Zip code) |
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| Bennett A. MacDougall, Esq. 240 Greenwich Street New York, New York 10286 |
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| (Name and address of agent for service) |
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Registrant's telephone number, including area code: | (212) 922-6400 | |||||
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Date of fiscal year end:
| 03/31 |
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Date of reporting period: | 09/30/19
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The following N-CSR relates only to the Registrant's series listed below and does not relate to any series of the Registrant with a different fiscal year end and, therefore, different N-CSR reporting requirements. A separate N-CSR will be filed for any series with a different fiscal year end, as appropriate.
Dreyfus Institutional Preferred Government Money Market Fund
FORM N-CSR
Item 1. Reports to Stockholders.
Dreyfus Institutional Preferred Government Money Market Fund
SEMIANNUAL REPORT
September 30, 2019
The views expressed in this report reflect those of the portfolio manager(s) only through the end of the period covered and do not necessarily represent the views of BNY Mellon Investment Adviser, Inc. or any other person in the BNY Mellon Investment Adviser, Inc. organization. Any such views are subject to change at any time based upon market or other conditions and BNY Mellon Investment Adviser, Inc. disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a fund in the BNY Mellon Family of Funds are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any fund in the BNY Mellon Family of Funds. |
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value |
Contents
THE FUND
With Those of Other Funds | |
the Fund’s Management Agreement |
FOR MORE INFORMATION
Back Cover
| The Fund |
LETTER TO SHAREHOLDERS
Dear Shareholder:
This semiannual report for Dreyfus Institutional Preferred Government Money Market Fund covers the six-month period ended September 30, 2019. During the reporting period, the fund’s Hamilton shares produced an annualized yield of 2.21%, its Institutional shares produced an annualized yield of 2.26%, and its Premier shares produced an annualized yield of 1.96%. Taking into account the effects of compounding, the fund’s Hamilton, Institutional and Premier shares also produced annualized effective yields of 2.23%, 2.28% and 1.97%, respectively, for the same period.1
Yields of money market instruments declined over the reporting period, and the Federal Reserve (the “Fed”) implemented two cuts in short-term interest rates due to concerns about the strength of the economy.
The Fed Cuts Rates Amid Concerns About Economic Growth
In December 2018, prior to the reporting period, the Fed raised the federal funds target rate to 2.25%–2.50% and indicated it would take a “wait-and-see” approach to additional increases. But despite the March 2019 yield curve inversion—a widely trusted indicator of recession in which long-term Treasury yields fall below short-term Treasury yields—the Fed did not become accommodative until later in 2019.
A number of factors eventually led the Fed to reduce interest rates. Trade tensions between the U.S. and China continued to flare up during the reporting period, giving rise to economic uncertainty and appearing to hinder U.S. growth somewhat. Economic growth also continued to slow in Europe and Asia, raising the possibility that this would have an impact on the U.S. economy. In addition, the persistent flatness and inversion of the yield curve increased concerns about the possibility of an economic recession. In an attempt to forestall further economic weakness, in July 2019 the Fed announced a reduction of the federal funds rate by a quarter-point cut, effective August 1, 2019, and cut the rate again at its September 2019 meeting, bringing the federal funds target rate to 1.75%–2.00%.
Late in the reporting period, money market rates rose in response to a supply-and-demand imbalance in the market for repurchase agreements. The Fed responded by increasing its purchases in this market, which restored stability to rates.
Although U.S. economic data was somewhat mixed during the reporting period, the labor market remained strong. Inflation, however, remained subdued. In April 2019, the economy added 216,000 jobs, and the unemployment rate slipped to 3.6%. The economy grew by
2
3.1% during the first quarter of 2019, beating expectations, while the core inflation rate as measured by the personal consumption expenditures (PCE) index, fell to 1.1%, well below the Fed’s 2% target.
In May 2019, job creation plummeted to just 62,000 positions, while the unemployment rate remained unchanged, at 3.6%. In June 2019, the economy added 178,000 jobs, and the jobless rate edged up to 3.7%. July 2019 saw 166,000 new jobs added, and unemployment remained steady. Economic growth in the second quarter of 2019 slipped to just 2.0%, but the PCE index jumped to 1.9%. In August 2019, the economy added 219,000 jobs, and the unemployment rate stayed steady. In September 2019, unemployment fell to 3.5%, and an estimated 180,000 new jobs were added.
Another Rate Cut Expected in 2019
At the end of the reporting period, investors continued to anticipate more accommodation by the Fed, with at least one more interest-rate cut expected in 2019. The Fed reduced the federal funds rate twice during the reporting period, and yields on money market funds declined. We maintained the fund’s weighted-average maturity in a range that was modestly shorter than industry averages. As rates have fallen, we managed the fund with the expectation that the Fed would cut the federal funds rate by a quarter point at its October 2019 meeting. As always, we have retained our long-standing focus on quality and liquidity.
1 Annualized effective yield is based upon dividends declared daily and reinvested monthly. Past performance is no guarantee of future results. Yields fluctuate. Yields provided for the fund reflect the absorption of certain fund expenses by BNY Mellon Investment Adviser, Inc. pursuant to an undertaking in effect that may be extended, terminated or modified at any time. Had these expenses not been absorbed, fund yields would have been lower.
You could lose money by investing in a money market fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
Sincerely,
Patricia A. Larkin
Chief Investment Officer
Dreyfus Cash Investment Strategies
October 15, 2019
3
UNDERSTANDING YOUR FUND’S EXPENSES(Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Institutional Preferred Government Money Market Fund from April 1, 2019 to September 30, 2019. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Expenses and Value of a $1,000 Investment |
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Assume actual returns for the six months ended September 30, 2019 |
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| Institutional Shares | Hamilton Shares | Premier Shares |
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Expense paid per $1,000† | $.50 | $.75 | $2.01 |
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Ending value (after expenses) | $1,011.40 | $1,011.10 | $1,009.90 |
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COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS(Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (“SEC”) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Expenses and Value of a $1,000 Investment |
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Assuming a hypothetical 5% annualized return for the six months ended September 30, 2019 |
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| Institutional Shares | Hamilton Shares | Premier Shares |
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Expense paid per $1,000† | $.51 | $.76 | $2.02 |
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Ending value (after expenses) | $1,024.50 | $1,024.25 | $1,023.00 |
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†Expenses are equal to the fund‘s annualized expense ratio of .10% for Institutional Shares, .15% for Hamilton Shares, .40% for Premier Shares, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period). |
4
STATEMENT OF INVESTMENTS
September 30, 2019 (Unaudited)
U.S. Government Agencies - 38.1% | Annualized | Principal | Value ($) | |||
Federal Farm Credit Banks: | ||||||
10/29/19 | 2.17 | 100,000,000 | a | 99,833,555 | ||
10/20/19, 1 Month LIBOR -.03% | 2.01 | 25,000,000 | b | 24,999,931 | ||
10/29/19, 1 Month LIBOR -.05% | 1.99 | 18,000,000 | b | 17,997,087 | ||
10/16/19, 1 Month LIBOR -.03% | 2.00 | 160,000,000 | b | 159,993,648 | ||
10/13/19, 1 Month LIBOR FLAT | 2.04 | 100,000,000 | b | 100,000,000 | ||
10/15/19, 1 Month LIBOR +.06% | 2.09 | 50,000,000 | b | 49,995,475 | ||
10/1/19, PRIME -3.08% | 1.93 | 100,000,000 | b | 99,979,668 | ||
10/11/19, 1 Month LIBOR +.04% | 2.08 | 100,000,000 | b | 100,000,000 | ||
Federal Home Loan Banks: | ||||||
10/4/19, 1 Month LIBOR -.07% | 2.02 | 25,000,000 | b | 25,000,000 | ||
10/31/19 | 1.98 | 100,000,000 | a | 99,837,500 | ||
10/5/19, 1 Month LIBOR -.05% | 2.02 | 25,000,000 | b | 25,000,000 | ||
12/6/19 | 1.97 | 200,000,000 | a | 199,288,667 | ||
12/13/19 | 1.97 | 350,000,000 | a | 348,626,687 | ||
1/2/20 | 2.11 | 49,750,000 | a | 49,483,962 | ||
1/8/20 | 2.11 | 50,000,000 | a | 49,715,375 | ||
10/10/19, 1 Month LIBOR -.07% | 1.98 | 100,000,000 | b | 100,000,000 | ||
10/1/19, 3 Month SOFR +.05% | 1.87 | 75,000,000 | b | 75,000,000 | ||
1/24/20 | 2.06 | 100,000,000 | 100,022,682 | |||
10/27/19, 1 Month LIBOR -.07% | 1.99 | 100,000,000 | b | 100,000,000 | ||
10/3/19, 1 Month LIBOR -.07% | 2.04 | 100,000,000 | b | 100,000,000 | ||
10/3/19, 1 Month LIBOR -.01% | 2.10 | 125,000,000 | b | 125,000,000 | ||
10/1/19, 3 Month SOFR +.03% | 1.85 | 70,000,000 | b | 70,000,000 | ||
3/18/20 | 1.93 | 90,000,000 | a | 89,202,320 | ||
10/17/19, 1 Month LIBOR -.04% | 1.99 | 100,000,000 | b | 100,000,000 | ||
10/27/19, 1 Month LIBOR -.04% | 2.01 | 100,000,000 | b | 100,000,000 | ||
10/1/19, 3 Month SOFR +.04% | 1.86 | 50,000,000 | b | 50,000,000 | ||
10/6/19, 3 Month LIBOR -.21% | 2.08 | 100,000,000 | b | 100,000,000 | ||
11/24/19, 3 Month LIBOR -.18% | 1.95 | 50,000,000 | b | 50,000,000 | ||
10/23/19, 1 Month LIBOR -.03% | 2.02 | 100,000,000 | b | 100,000,000 | ||
12/21/19, 3 Month LIBOR -.13% | 2.03 | 100,000,000 | b | 100,000,000 | ||
10/1/19, 3 Month SOFR +.10% | 1.92 | 100,000,000 | b | 100,000,000 | ||
10/1/19, 3 Month SOFR +.09% | 1.91 | 150,000,000 | b | 150,000,000 | ||
Total U.S. Government Agencies (cost $3,058,976,557) | 3,058,976,557 | |||||
U.S. Treasury Bills - 4.0% | ||||||
2/20/20 | 1.87 | 200,000,000 | a | 198,552,389 | ||
2/27/20 | 1.86 | 125,000,000 | a | 124,058,403 | ||
Total U.S. Treasury Bills (cost $322,610,792) | 322,610,792 |
5
STATEMENT OF INVESTMENTS (Unaudited) (continued)
U.S. Treasury Floating Rate Notes - .8% | Annualized | Principal | Value ($) | |||
10/8/19, 3 Month U.S. T-BILL +.12% | 2.03 | 50,000,000 | b | 49,978,334 | ||
10/8/19, 3 Month U.S. T-BILL +.22% | 2.13 | 10,000,000 | b | 10,000,902 | ||
Total U.S. Treasury Floating Rate Notes (cost $59,979,236) | 59,979,236 | |||||
Repurchase Agreements - 57.2% | ||||||
ABN Amro Bank, Tri-Party Agreement thru BNY Mellon, dated 9/30/19, due at 10/1/19 in the amount of $347,023,326 (fully collateralized by original par $613,884,014 Government National Mortgage Association Agency Mortgage-Backed Securities 2.50%-4.13% due 10/15/40-4/20/49 value $328,849,096 original par $23,968,331 U.S. Treasuries (including strips) 2.75% due 8/31/23 value $25,090,923) | 2.42 | 347,000,000 | 347,000,000 | |||
Bank of America Securities, Tri-Party Agreement thru BNY Mellon, dated 9/30/19, due at 10/1/19 in the amount of $850,054,778 (fully collateralized by original par $453,418,200 Federal Home Loan Mortgage Corp Agency Mortgage-Backed Securities 3.50%-4.00% due 1/1/49-8/1/49 value $436,676,248 original par $447,866,553 Federal National Mortgage Association Agency Mortgage-Backed Securities 3.00%-3.50% due 12/1/47-10/1/56 value $430,323,752) | 2.32 | 850,000,000 | 850,000,000 | |||
Bank of Nova Scotia, Tri-Party Agreement thru BNY Mellon, dated 9/30/19, due at 10/1/19 in the amount of $100,006,556 (fully collateralized by original par $260,351,761 Government National Mortgage Association Agency Mortgage-Backed Securities 3.00%-4.13% due 11/20/39-1/20/49 value $102,000,000) | 2.36 | 100,000,000 | 100,000,000 | |||
BNP Paribas, Tri-Party Agreement thru BNY Mellon, dated 9/9/19, due at 10/9/19 in the amount of $200,341,667 (fully collateralized by original par $184,765,191 U.S. Treasuries (including strips) 0.00%-4.50% due 11/30/19-5/15/49 value $204,000,000) | 2.05 | 200,000,000 | c | 200,000,000 |
6
Repurchase Agreements - 57.2% (continued) | Annualized | Principal | Value ($) | |||
Credit Agricole CIB, Tri-Party Agreement thru BNY Mellon, dated 9/30/19, due at 10/1/19 in the amount of $132,008,617 (fully collateralized by original par $129,653,527 U.S. Treasuries (including strips) 0.00%-4.38% due 2/15/20-8/15/47 value $134,640,005) | 2.35 | 132,000,000 | 132,000,000 | |||
Deutsche Bank Securities, Tri-Party Agreement thru BNY Mellon, dated 9/30/19, due at 10/1/19 in the amount of $300,019,583 (fully collateralized by original par $252,587,709 U.S. Treasuries (including strips) 0.13%-3.63% due 1/15/20-2/15/49 value $306,000,020) | 2.35 | 300,000,000 | 300,000,000 | |||
Fixed Income Clearing, Tri-Party Agreement thru State Street, dated 9/30/19, due at 10/1/19 in the amount of $900,059,000 (fully collateralized by original par $721,220,000 U.S. Treasuries (including strips) 2.75%-6.25% due 5/15/30-8/15/43 value $918,005,235) | 2.36 | 900,000,000 | 900,000,000 | |||
HSBC Securities USA, Tri-Party Agreement thru BNY Mellon, dated 9/25/19, due at 10/2/19 in the amount of $420,173,133 (fully collateralized by original par $621,233,552 U.S. Treasuries (including strips) 0.00%-2.88% due 10/15/19-11/15/48 value $428,400,009) | 2.12 | 420,000,000 | 420,000,000 |
7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Repurchase Agreements - 57.2% (continued) | Annualized | Principal | Value ($) | |||
JP Morgan Securities, Tri-Party Agreement thru BNY Mellon, dated 9/30/19, due at 10/1/19 in the amount of $200,013,167 (fully collateralized by original par $739,096,007 Federal Home Loan Mortgage Corp Agency Debentures and Agency Strips 0.00%-6.00% due 2/1/32-6/15/49 value $18,513,453 original par $263,768,985 Federal Home Loan Mortgage Corp Agency Mortgage-Backed Securities 2.50%-6.50% due 3/1/25-9/1/49 value $125,127,094 original par $857,924,288 Federal National Mortgage Association Agency Debentures and Agency Strips 0.00%-5.50% due 4/1/32-8/1/43 value $17,617,055 original par $89,919,416 Federal National Mortgage Association Agency Mortgage-Backed Securities 2.50%-6.00% due 5/1/30-10/1/49 value $42,617,872 original par $792,281 Government National Mortgage Association Agency Mortgage-Backed Securities 5.50% due 7/20/34 value $124,526) | 2.37 | 200,000,000 | 200,000,000 | |||
JP Morgan Securities, 1 Month SOFR +.05%, dated 9/3/19, due at 10/1/19 in the amount of $100,174,694 (fully collateralized by original par $52,197,946 Federal Home Loan Mortgage Corp Agency Mortgage-Backed Securities 2.50%-6.00% due 5/1/25-1/1/49 value $17,402,109 original par $886,195,798 Federal National Mortgage Association Agency Mortgage-Backed Securities 2.50%-7.00% due 7/1/32-8/1/49 value $84,597,891) | 2.40 | 100,000,000 | c | 100,000,000 | ||
Merrill Lynch Pierce Fenner & Smith, OBFR +.08%, dated 9/30/19, due at 10/1/19 in the amount of $50,002,639 (fully collateralized by original par $53,222,821 Federal National Mortgage Association Agency Collateralized Mortgage Obligation 3.50% due 10/25/48 value $54,000,000) | 1.90 | 50,000,000 | c | 50,000,000 |
8
Repurchase Agreements - 57.2% (continued) | Annualized | Principal | Value ($) | |||
Nomura Securities International, Tri-Party Agreement thru BNY Mellon, dated 9/30/19, due at 10/1/19 in the amount of $300,020,000 (fully collateralized by original par $87,945,000 Federal Home Loan Mortgage Corp Agency Debentures and Agency Strips 0.00% due 12/15/36 value $58,297,861 original par $79,077,624 Federal Home Loan Mortgage Corp Agency Mortgage-Backed Securities 3.00%-6.50% due 10/1/26-8/1/49 value $77,079,535 original par $148,429,389 Federal National Mortgage Association Agency Mortgage-Backed Securities 2.00%-8.00% due 9/1/21-2/1/51 value $87,645,828 original par $74,791,521 Government National Mortgage Association Agency Mortgage-Backed Securities 3.00%-5.50% due 2/20/43-8/20/49 value $66,709,423 original par $1,512,000 Tennessee Valley Authority Agency Debentures and Agency Strips 3.50% due 12/15/42 value $1,769,793 original par $12,666,500 U.S. Treasuries (including strips) 0.63% due 7/15/21 value $14,497,559) | 2.40 | 300,000,000 | 300,000,000 |
9
STATEMENT OF INVESTMENTS (Unaudited) (continued)
Repurchase Agreements - 57.2% (continued) | Annualized | Principal | Value ($) | |||
Royal Bank of Canada, Tri-Party Agreement thru BNY Mellon, dated 9/30/19, due at 10/1/19 in the amount of $700,045,694 (fully collateralized by original par $515,000 Federal Home Loan Banks Agency Debentures and Agency Strips 3.00% due 3/12/27 value $552,909 original par $655,151,054 Federal Home Loan Mortgage Corp Agency Collateralized Mortgage Obligation 2.58%-4.17% due 6/15/29-8/15/56 value $75,732,926 original par $240,254,052 Federal Home Loan Mortgage Corp Agency Mortgage-Backed Securities 2.34%-6.50% due 12/1/28-3/1/49 value $109,510,275 original par $1,163,808,113 Federal National Mortgage Association Agency Collateralized Mortgage Obligation 0.00%-6.00% due 1/25/42-10/25/58 value $138,972,286 original par $586,264,779 Federal National Mortgage Association Agency Mortgage-Backed Securities 2.76%-6.00% due 6/1/30-10/1/49 value $93,896,818 original par $357,103,355 Government National Mortgage Association Agency Collateralized Mortgage Obligation 4.01%-4.21% due 12/20/39-3/20/49 value $28,314,121 original par $912,607,375 Government National Mortgage Association Agency Mortgage-Backed Securities 3.00%-4.00% due 4/20/44-11/20/46 value $280,521,739) | 2.35 | 700,000,000 | 700,000,000 | |||
Total Repurchase Agreements (cost $4,599,000,000) | 4,599,000,000 | |||||
Total Investments(cost $8,040,566,585) | 100.1% | 8,040,566,585 | ||||
Liabilities, Less Cash and Receivables | (.1%) | (4,964,929) | ||||
Net Assets | 100.0% | 8,035,601,656 |
LIBOR—London Interbank Offered Rate
OBFR—Overnight Bank Funding Rate
SOFR—Secured Overnight Financing Rate
a Security is a discount security. Income is recognized through the accretion of discount.
b Variable rate security—rate shown is the interest rate in effect at period end. Date shown represents the earlier of the next interest reset date or ultimate maturity date.
c Illiquid security; investment has a put feature and a variable or floating rate. The interest rate shown is the current rate as of September 30, 2019 and changes periodically. The due date shown reflects early termination date and the amount due represents the receivable of the fund as of the next interest payment date. At September 30, 2019, these securities amounted to $350,000,000 or 4.36% of net assets.
10
Portfolio Summary (Unaudited)† | Value (%) |
Repurchase Agreements | 57.2 |
U.S. Government Agencies | 38.1 |
U.S. Treasury Securities | 4.8 |
100.1 |
† Based on net assets.
See notes to financial statements.
11
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2019 (Unaudited)
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| Cost |
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Assets ($): |
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Investments in securities—See Statement of Investments | 8,040,566,585 |
| 8,040,566,585 |
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Interest receivable |
| 4,120,779 |
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Receivable for shares of Beneficial Interest subscribed |
| 603,281 |
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| 8,045,290,645 |
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Liabilities ($): |
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Due to BNY Mellon Investment Adviser, Inc. and affiliates—Note 2(c) |
| 697,046 |
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Cash overdraft due to Custodian |
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| 8,935,730 |
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Payable for shares of Beneficial Interest redeemed |
| 56,213 |
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| 9,688,989 |
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Net Assets ($) |
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| 8,035,601,656 |
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Composition of Net Assets ($): |
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Paid-in capital |
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| 8,035,792,919 |
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Total distributable earnings (loss) |
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| (191,263) |
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Net Assets ($) |
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| 8,035,601,656 |
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Net Asset Value Per Share | Institutional Shares | Hamilton Shares | Premier Shares |
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Net Assets ($) | 6,243,692,564 | 1,719,578,727 | 72,330,365 |
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Shares Outstanding | 6,242,321,181 | 1,719,273,524 | 72,311,069 |
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Net Asset Value Per Share ($) | 1.00 | 1.00 | 1.00 |
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See notes to financial statements. |
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12
STATEMENT OF OPERATIONS
Six Months Ended September 30, 2019 (Unaudited)
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Investment Income ($): |
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Interest Income |
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| 86,833,063 |
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Expenses: |
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Management fee—Note 2(a) |
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| 5,158,678 |
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Shareholder servicing costs—Note 2(b) |
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| 382,034 |
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Trustees’ fees—Note 2(a,c) |
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| 360,900 |
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Service Plan fees—Note 2(b) |
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| 184,873 |
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Administrative service fees—Note 2(b) |
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| 13,168 |
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Total Expenses |
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| 6,099,653 |
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Less—reduction in expenses due to undertaking—Note 2(a) |
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| (1,477,712) |
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Less—Trustees’ fees reimbursed by |
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| (360,900) |
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Net Expenses |
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| 4,261,041 |
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Investment Income—Net |
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| 82,572,022 |
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Net Realized Gain (Loss) on Investments—Note 1(b) ($) | 861 |
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Net Increase in Net Assets Resulting from Operations |
| 82,572,883 |
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See notes to financial statements. |
13
STATEMENT OF CHANGES IN NET ASSETS
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| Six Months Ended |
| Year Ended |
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Operations ($): |
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Investment income—net |
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| 82,572,022 |
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| 151,633,802 |
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Net realized gain (loss) on investments |
| 861 |
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| 10,173 |
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Net Increase (Decrease) in Net Assets | 82,572,883 |
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| 151,643,975 |
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Distributions ($): |
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Distributions to shareholders: |
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Institutional Shares |
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| (61,504,868) |
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| (117,125,970) |
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Hamilton Shares |
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| (20,277,021) |
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| (32,879,220) |
| |
Premier Shares |
|
| (790,133) |
|
|
| (1,628,612) |
| |
Total Distributions |
|
| (82,572,022) |
|
|
| (151,633,802) |
| |
Beneficial Interest Transactions ($1.00 per share): |
| ||||||||
Net proceeds from shares sold: |
|
|
|
|
|
|
|
| |
Institutional Shares |
|
| 28,676,653,261 |
|
|
| 54,319,547,426 |
| |
Hamilton Shares |
|
| 2,978,345,507 |
|
|
| 9,357,884,114 |
| |
Premier Shares |
|
| 114,976,542 |
|
|
| 288,623,576 |
| |
Distributions reinvested: |
|
|
|
|
|
|
|
| |
Institutional Shares |
|
| 11,660,633 |
|
|
| 36,840,960 |
| |
Hamilton Shares |
|
| 21,792 |
|
|
| 743,427 |
| |
Premier Shares |
|
| 45,874 |
|
|
| 96,184 |
| |
Cost of shares redeemed: |
|
|
|
|
|
|
|
| |
Institutional Shares |
|
| (27,774,424,302) |
|
|
| (53,323,673,554) |
| |
Hamilton Shares |
|
| (2,791,098,703) |
|
|
| (9,285,048,718) |
| |
Premier Shares |
|
| (113,514,001) |
|
|
| (354,613,691) |
| |
Increase (Decrease) in Net Assets | 1,102,666,603 |
|
|
| 1,040,399,724 |
| |||
Total Increase (Decrease) in Net Assets | 1,102,667,464 |
|
|
| 1,040,409,897 |
| |||
Net Assets ($): |
| ||||||||
Beginning of Period |
|
| 6,932,934,192 |
|
|
| 5,892,524,295 |
| |
End of Period |
|
| 8,035,601,656 |
|
|
| 6,932,934,192 |
| |
|
|
|
|
|
|
|
|
|
|
See notes to financial statements. |
14
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated. All information reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund’s financial statements.
Six Months | Year Ended March 31, | Three Months Ended | Year Ended | ||||||||
Institutional Shares | (Unaudited) | 2019 | 2018 | 2017 | 2016 a | 2015 | 2014 | ||||
Per Share Data ($): | |||||||||||
Net asset value, | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||
Investment Operations: | |||||||||||
Investment income—net | .011 | .020 | .010 | .004 | .001 | .001 | .000b | ||||
Distributions: | |||||||||||
Dividends from | (.011) | (.020) | (.010) | (.004) | (.001) | (.001) | (.000)b | ||||
Net asset value, | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||
Total Return (%) | 1.14c | 2.04 | 1.04 | .37 | .06c | .07 | .03 | ||||
Ratios/Supplemental Data (%): | |||||||||||
Ratio of total expenses | .15d | .15 | .14 | .14 | .14d | .14 | .14 | ||||
Ratio of net expenses | .10d | .10 | .10 | .10 | .10d | .13 | .14 | ||||
Ratio of net investment | 2.26d | 2.05 | 1.05 | .39 | .23d | .07 | .03 | ||||
Net Assets, | 6,243,693 | 5,329,802 | 4,296,966 | 3,522,447 | 989,155 | 984,688 | 1,222,787 |
a The fund has changed its fiscal year end from December 31 to March 31.
b Amount represents less than $.001 per share.
c Not annualized.
d Annualized.
See notes to financial statements.
15
FINANCIAL HIGHLIGHTS (continued)
Hamilton Shares | Six Months | Year Ended March 31, | Three | Year Ended | |||||||
(Unaudited) | 2019 | 2018 | 2017 | 2016a | 2015 | 2014 | |||||
Per Share Data ($): | |||||||||||
Net asset value, | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||
Investment Operations: | |||||||||||
Investment income—net | .011 | .020 | .010 | .003 | .001 | .000b | .000b | ||||
Distributions: | |||||||||||
Dividends from | (.011) | (.020) | (.010) | (.003) | (.001) | (.000)b | (.000)b | ||||
Net asset value, | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||||
Total Return (%) | 1.11c | 1.99 | .99 | .31 | .05c | .02 | .00d | ||||
Ratios/Supplemental Data (%): | |||||||||||
Ratio of total expenses | .20e | .20 | .19 | .19 | .19e | .19 | .19 | ||||
Ratio of net expenses | .15e | .15 | .15 | .15 | .15e | .18 | .17 | ||||
Ratio of net investment | 2.21e | 1.98 | .97 | .32 | .18e | .02 | .00d | ||||
Net Assets, | 1,719,579 | 1,532,310 | 1,458,823 | 1,506,461 | 1,058,340 | 1,093,087 | 1,191,569 |
a The fund has changed its fiscal year end from December 31 to March 31.
b Amount represents less than $.001 per share.
c Not annualized.
d Amount represents less than .01%.
e Annualized.
See notes to financial statements.
16
Six Months | Year Ended March 31, | Three Months | Year Ended | ||||||
Premier Shares | (Unaudited) | 2019 | 2018 | 2017 | 2016a | 2015 | 2014 | ||
Per Share Data ($): | |||||||||
Net asset value, | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||
Investment Operations: | |||||||||
Investment income—net | .010 | .017 | .007 | .001 | .000b | .000b | .000b | ||
Distributions: | |||||||||
Dividends from | (.010) | (.017) | (.007) | (.001) | (.000)b | (.000)b | (.000)b | ||
Net asset value, | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | ||
Total Return (%) | .99c | 1.74 | .74 | .07 | .00c,d | .00d | .00d | ||
Ratios/Supplemental Data (%): | |||||||||
Ratio of total expenses | .45e | .45 | .44 | .44 | .44e | .44 | .44 | ||
Ratio of net expenses | .40e | .40 | .40 | .39 | .33e | .20 | .17 | ||
Ratio of net investment | 1.96e | 1.69 | .73 | .07 | .01e | .00d | .00d | ||
Net Assets, | 72,330 | 70,822 | 136,735 | 124,136 | 391,072 | 168,074 | 238,608 |
a The fund has changed its fiscal year end from December 31 to March 31.
b Amount represents less than $.001 per share.
c Not annualized.
d Amount represents less than .01%.
e Annualized.
See notes to financial statements.
17
NOTES TO FINANCIAL STATEMENTS(Unaudited)
NOTE 1—Significant Accounting Policies:
Dreyfus Institutional Preferred Government Money Market Fund (the “fund”) is a separate diversified series of Dreyfus Institutional Reserves Funds (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering three series, including the fund. The fund’s investment objective is to seek as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity. BNY Mellon Investment Adviser, Inc. (the “Adviser”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser.
Effective June 3, 2019, The Dreyfus Corporation, the fund’s investment adviser, changed its name to “BNY Mellon Investment Adviser, Inc.”, MBSC Securities Corporation, the fund’s distributor, changed its name to “BNY Mellon Securities Corporation” and Dreyfus Transfer, Inc., the fund’s transfer agent, changed its name to “BNY Mellon Transfer, Inc.”
BNY Mellon Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Adviser, is the distributor of the fund’s shares, which are sold to the public without a sales charge. The fund is authorized to issue an unlimited number of $.001 par value shares of Beneficial Interest in each of the following classes of shares: Institutional shares, Hamilton shares and Premier shares. Effective May 31, 2019, each share class of the funds, except Institutional shares, became subject to a Shareholder Services Plan, and the Premier shares of the funds became subject to an Administrative Services Plan (the “Plans”). The Plans replaced the Service Plan adopted pursuant to Rule 12b-1 under the Act which had been in place for each share class of the funds, except Institutional Shares, prior to May 31, 2019. The aggregate fees paid by each fund pursuant to the Plans will continue to be the same as the fees that were payable under the prior Service Plan. Other differences between the classes include the services offered to and the expenses borne by each class, and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
The fund operates as a “government money market fund” as that term is defined in Rule 2a-7 under the Act. It is the fund’s policy to maintain a constant net asset value (“NAV”) per share of $1.00 and the fund has adopted certain investment, portfolio valuation and dividend and
18
distribution policies to enable it to do so. There is no assurance, however, that the fund will be able to maintain a constant NAV per share of $1.00.
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund is an investment company and applies the accounting and reporting guidance of the FASB ASC Topic 946 Financial Services-Investment Companies. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
The Companyenters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown. The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation:Investments in securities are valued at amortized cost in accordance with Rule 2a-7 under the Act. If amortized cost is determined not to approximate fair market value, the fair value of the portfolio securities will be determined by procedures established by and under the general oversight of the Company’s Board of Trustees (the “Board”).
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value. This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly.
19
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements. These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, money market securities are valued using amortized cost, in accordance with rules under the Act. Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected within Level 2 of the fair value hierarchy.
The following is a summary of the inputs used as of September 30, 2019in valuing the fund’s investments:
Valuation Inputs | Short-Term Investments ($)† |
Level 1 - Unadjusted Quoted Prices | - |
Level 2 - Other Significant Observable Inputs | 8,040,566,585 |
Level 3 - Significant Unobservable Inputs | - |
Total | 8,040,566,585 |
† See Statement of Investments for additional detailed categorizations, if any.
(b) Securities transactions and investment income:Securities transactions are recorded on a trade date basis. Interest income, adjusted for accretion of discount and amortization of premium on investments, is earned from settlement date and is recognized on the accrual basis. Realized gains and losses from securities transactions are recorded on the identified cost basis.
The fund may enter into repurchase agreements with financial institutions, deemed to be creditworthy by the Adviser, subject to the seller’s agreement to repurchase and the fund’s agreement to resell such securities at a mutually agreed upon price. Pursuant to the terms of the repurchase agreement, such securities must have an aggregate market value greater
20
than or equal to the terms of 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 its right to sell the underlying securities at market value and may claim any resulting loss against the seller. The collateral is held on behalf of the fund by the tri-party administrator with respect to any tri-party agreement. The fund may also jointly enter into one or more repurchase agreements with other funds managed by the Adviser in accordance with an exemptive order granted by the SEC pursuant to section 17(d) and Rule 17d-1 under the Act. Any joint repurchase agreements must be collateralized fully by U.S. Government securities.
(c) Dividends and distributions to shareholders:It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gains, if any, are normally declared and paid annually, 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”). To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains.
(d) Federal income taxes: It is the policy of the fund 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 Code, and to make distributions of taxable income and net realized capital gain sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended September 30, 2019, the fund did not have any liabilities for any uncertain tax positions. The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period ended September 30, 2019, the fund did not incur any interest or penalties.
Each tax year in the three-year period ended March 31, 2019 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The fund is permitted to carry forward capital losses for an unlimited period. Furthermore, capital loss carryovers retain their character as either short-term or long-term capital losses.
21
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
The fund has an unused capital loss carryover of $192,124 available for federal income tax purposes to be applied against future net realized capital gains, if any, realized subsequent to March 31, 2019. These short-term capital losses can be carried forward for an unlimited period.
The tax character of distributions paid to shareholders during the fiscal year ended March 31, 2019 was all ordinary income. The tax character of current year distributions will be determined at the end of the current fiscal year.
At September 30, 2019, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
(e) New Accounting Pronouncements: Effective June 1, 2019, the fund adopted Accounting Standards Update 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization On Purchased Callable Debt Securities (“ASU 2017-08”). The update shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date.
Also effective June 1, 2019, the fund adopted Accounting Standards Update 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The update provides guidance that modifies certain disclosure requirements for fair value measurements. The adoption of ASU 2017-08 and ASU 2018-13 had no impact on the operations of the fund for the period ended September 30, 2019.
NOTE 2—Management Fee and Other Transactions with Affiliates:
(a)Pursuant to a management agreement with the Adviser, the management fee is computed at the annual rate of .14% of the value of the fund’s average daily net assets and is payable monthly. Out of its fee, the Adviser pays all of the expenses of the fund except management fees, Rule 12b-1 Service Plan fees, Shareholder Services Plan fees, Administrative Services Plan fees, brokerage fees, taxes, and expenses, fees and expenses of non-interested Trustees (including counsel fees) and extraordinary expenses. In addition, the Adviser is required to reduce its fee in an amount equal to the fund’s allocable portion of fees and expenses of the non-interested Trustees (including counsel fees). During the period ended September 30, 2019, fees reimbursed by the Adviser amounted to $360,900.
22
The Adviser has also agreed, from April 1, 2019 through September 30, 2019 to waive receipt of its fees and/or assume the expenses of the fund so that annual fund operating expenses (excluding Rule 12b-1 fees and certain other expenses) do not exceed .10% of the value of the fund’s average daily net assets. These expense limitations and waivers are voluntary, not contractual, and may be terminated at any time. The reduction in expenses, pursuant to the undertaking, amounted to $1,477,712 during the period ended September 30, 2019.
(b) Under the fund’s Shareholder Services Plan, with respect to the fund’s applicable Hamilton shares and Premier shares, the fund pays the Distributor for advertising, marketing and for providing certain services relating to shareholders of the respective class of shares. Hamilton shares and Premier shares pay the Distributor at annual rates of .05%. and .25%, respectively, of the value of the applicable share class’ average daily net assets. These services include answering shareholder inquiries regarding the fund and providing reports and other information and services related to the maintenance of shareholder accounts. Under the Shareholder Services Plan, the Distributor may make payments to Service Agents with respect to these services. The amount paid under the Shareholder Services Plan for Servicing is intended to be a “service fee” as defined under the Conduct Rules of the Financial Industry Regulatory Authority (“FINRA”), and at no time will such amount exceed the maximum amount permitted to be paid under the FINRA Conduct Rules as a service fee. The fees payable under the Service Plan are payable without regard to actual expenses occurred. Additionally, with respect to the fund’s applicable Premier shares, the fund will pay the Distributor for the provision of certain types of recordkeeping and other related services pursuant to the Administrative Services Plan. Premier shares pay the Distributor at an annual rate of .05% of the value of the applicable Premier shares class’ average daily net assets. Neither the Shareholder Services Plan nor the Administrative Services Plan provides for payments related to the distribution of fund shares. Under the Plans, as to each class, the Distributor would be able to pay financial intermediaries from the fees it receives from the Plans for the provision of the respective services by the intermediaries to their clients who are beneficial owners of fund shares. During the period ended September 30, 2019, Hamilton shares and Premier shares were charged $316,194 and $65,840, respectively, pursuant to the Shareholder Services Plan and Premier shares were charged $13,168 pursuant to the Administrative Services Plan.
Prior to May 31, 2019, the fund was subject to a Service Plan adopted pursuant to Rule 12b-1 under the Act (the “Service Plan”), with respect to the fund’s applicable Hamilton shares and Premier shares, the fund had
23
NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)
paid the Distributor for distributing such classes of shares, for servicing and/or maintaining shareholder accounts and for advertising and marketing. The Service Plan provides for payments to be made at annual rates of .05% and .30% of the value of such class’ average daily net assets of the Hamilton and Premier shares, respectively. The fees payable under the Service Plan are payable without regard to actual expenses incurred. During the period ended September 30, 2019, Hamilton shares and Premier shares were charged $143,176 and $41,697, respectively, pursuant to the Service Plan.
The components of “Due to BNY Mellon Investment Adviser, Inc. and affiliates” in the Statement of Assets and Liabilities consist of: management fees $911,965, Shareholder Service Plan fees $94,493 and Administrative Service Plan fees $3,192, which are offset against an expense reimbursement currently in effect in the amount of $312,604.
(c) Each Board member also serves as a Board member of other funds in the BNY Mellon Family of Funds complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
24
INFORMATION ABOUT THE RENEWAL OF THE FUND'S MANAGEMENT AGREEMENT (Unaudited)
At a meeting of the fund’s Board of Trustees held on May 1, 2019, the Board considered the renewal of the fund’s Management Agreement pursuant to which the Adviser provides the fund with investment advisory and administrative services (the “Agreement”). The Board members, a majority of whom are not “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the fund, were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of the Adviser. In considering the renewal of the Agreement, the Board considered all factors that it believed to be relevant, including those discussed below. The Board did not identify any one factor as dispositive, and each Board member may have attributed different weights to the factors considered.
Analysis of Nature, Extent, and Quality of Services Provided to the Fund. The Board considered information provided to it at the meeting and in previous presentations from representatives of the Adviser regarding the nature, extent, and quality of the services provided to funds in the BNY Mellon fund complex. The Adviser provided the number of open accounts in the fund, the fund’s asset size and the allocation of fund assets among distribution channels. The Adviser also had previously provided information regarding the diverse intermediary relationships and distribution channels of funds in the BNY Mellon fund complex (such as retail direct or intermediary, in which intermediaries typically are paid by the fund and/or the Adviser) and the Adviser’s corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each intermediary or distribution channel, as applicable to the fund.
The Board also considered research support available to, and portfolio management capabilities of, the fund’s portfolio management personnel and that the Adviser also provides oversight of day-to-day fund operations, including fund accounting and administration and assistance in meeting legal and regulatory requirements. The Board also considered the Adviser’s extensive administrative, accounting and compliance infrastructures.
Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio. The Board reviewed reports prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent provider of investment company data, which included information comparing (1) the fund’s performance with the performance of a group of comparable funds (the “Performance Group”) and with a broader group of funds (the “Performance Universe”), all for various periods ended March 31, 2019, and (2) the fund’s actual and contractual management fees and total expenses with those of a group of comparable funds (the “Expense Group”) and with a broader group of funds (the “Expense Universe”), the information for which was derived in part from fund financial statements available to Broadridge as of the date of its analysis. The Adviser previously had furnished the Board with a description of the methodology Broadridge used to select the Performance Group and Performance Universe and the Expense Group and Expense Universe.
25
INFORMATION ABOUT THE RENEWAL OF THE FUND'S MANAGEMENT AGREEMENT (Unaudited) (continued)
Representatives of the Adviser stated that the usefulness of performance comparisons may be affected by a number of factors, including different investment limitations and policies that may be applicable to the fund and comparison funds. It was noted that there were only three or four funds (depending on the period) in the Performance Group. The Board discussed with representatives of the Adviser and/or its affiliates the results of the comparisons and considered that the fund’s gross total return performance (without including fees and expenses) was above or within one basis point of the Performance Group and Performance Universe medians for all periods. The fund’s net total return performance (including fees and expenses) ranked first among the funds in the Performance Group and was above the Performance Universe medians for all periods (ranking in the first quartile of the Performance Universe for all periods).
The Board also reviewed the range of actual and contractual management fees and total expenses of the Expense Group and Expense Universe funds and discussed the results of the comparisons. Taking into account the fund’s “unitary” fee structure, the Board considered that the fund’s contractual management fee was at the Expense Group median and the fund’s actual management fee and total expenses were below the Expense Group and the Expense Universe medians.
Representatives of the Adviser stated that the Adviser currently has undertaken to waive receipt of its fees and/or assume the direct expenses of the fund so that annual fund operating expenses (other than Other Fund Expenses) do not exceed 0.10% of the fund’s average daily net assets. This expense limitation is voluntary, not contractual, and may be terminated by the Adviser at any time.
Representatives of the Adviser reviewed with the Board the management or investment advisory fees paid by funds advised or administered by the Adviser that are in the same Lipper category as the fund (the “Similar Funds”), and explained the nature of the Similar Funds. They discussed differences in fees paid and the relationship of the fees paid in light of any differences in the services provided and other relevant factors, noting the fund’s “unitary” fee structure. The Board considered the relevance of the fee information provided for the Similar Funds to evaluate the appropriateness of the fund’s management fee.
Analysis of Profitability and Economies of Scale. Representatives of the Adviser reviewed the expenses allocated and profit received by the Adviser and its affiliates and the resulting profitability percentage for managing the fund and the aggregate profitability percentage to the Adviser and its affiliates for managing the funds in the BNY Mellon fund complex, and the method used to determine the expenses and profit. The Board concluded that the profitability results were not unreasonable, given the services rendered and service levels provided by the Adviser. The Board also considered the fee waiver and expense reimbursement arrangement and its effect on the profitability of the Adviser and its affiliates. The Board also had been provided with information prepared by an independent consulting firm regarding the Adviser’s approach to allocating costs to, and determining the profitability of, individual funds and the entire BNY Mellon fund complex. The consulting firm also had analyzed where any economies of scale might emerge in connection with the management of a fund.
26
The Board considered, on the advice of its counsel, the profitability analysis (1) as part of its evaluation of whether the fees under the Agreement, considered in relation to the mix of services provided by the Adviser, including the nature, extent and quality of such services, supported the renewal of the Agreement and (2) in light of the relevant circumstances for the fund and the extent to which economies of scale would be realized if the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders. Representatives of the Adviser also stated that, as a result of shared and allocated costs among funds in the BNY Mellon fund complex, the extent of economies of scale could depend substantially on the level of assets in the complex as a whole, so that increases and decreases in complex-wide assets can affect potential economies of scale in a manner that is disproportionate to, or even in the opposite direction from, changes in the fund’s asset level. The Board also considered potential benefits to the Adviser from acting as investment adviser and took into consideration that there were no soft dollar arrangements in effect for trading the fund’s investments.
At the conclusion of these discussions, the Board agreed that it had been furnished with sufficient information to make an informed business decision with respect to the renewal of the Agreement. Based on the discussions and considerations as described above, the Board concluded and determined as follows.
· The Board concluded that the nature, extent and quality of the services provided by the Adviser are adequate and appropriate.
· The Board was satisfied with the fund’s performance.
· The Board concluded that the fee paid to the Adviser continued to be appropriate under the circumstances and in light of the factors and the totality of the services provided as discussed above.
· The Board determined that the economies of scale which may accrue to the Adviser and its affiliates in connection with the management of the fund had been adequately considered by the Adviser in connection with the fee rate charged to the fund pursuant to the Agreement and that, to the extent in the future it were determined that material economies of scale had not been shared with the fund, the Board would seek to have those economies of scale shared with the fund.
In evaluating the Agreement, the Board considered these conclusions and determinations and also relied on its previous knowledge, gained through meetings and other interactions with the Adviser and its affiliates, of the Adviser and the services provided to the fund by the Adviser. The Board also relied on information received on a routine and regular basis throughout the year relating to the operations of the fund and the investment management and other services provided under the Agreement, including information on the investment performance of the fund in comparison to similar mutual funds and benchmark performance measures; general market outlook as applicable to the fund; and compliance reports. In addition, the Board’s consideration of the contractual fee arrangements for this fund had the benefit of a number of years of
27
INFORMATION ABOUT THE RENEWAL OF THE FUND'S MANAGEMENT AGREEMENT (Unaudited) (continued)
reviews of the Agreement for the fund, or substantially similar agreements for other BNY Mellon funds that the Board oversees, during which lengthy discussions took place between the Board and representatives of the Adviser. Certain aspects of the arrangements may receive greater scrutiny in some years than in others, and the Board’s conclusions may be based, in part, on their consideration of the fund’s arrangements, or substantially similar arrangements for other BNY Mellon funds that the Board oversees, in prior years. The Board determined to renew the Agreement.
28
NOTES
29
Dreyfus Institutional Preferred Government Money Market Fund
240 Greenwich Street
New York, NY 10286
Adviser
BNY Mellon Investment Adviser, Inc.
240 Greenwich Street
New York, NY 10286
Custodian
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
BNY Mellon Transfer, Inc.
240 Greenwich Street
New York, NY 10286
Distributor
BNY Mellon Securities Corporation
240 Greenwich Street
New York, NY 10286
Ticker Symbols: | Institutional: DSVXX Hamilton: DSHXX Premier: DERXX |
Telephone Call your representative or 1-800-373-9387
Mail BNY Mellon Family of Funds to: BNY Mellon Institutional Services, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144
E-mail Send your request toinstserv@bnymellon.com
Internet Access Dreyfus Money Market Funds atwww.dreyfus.com
The fund will disclose daily, onwww.dreyfus.com, the fund’s complete schedule of holdings as of the end of the previous business day. The schedule of holdings will remain on the website for a period of five months. The fund files a monthly schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-MFP. The fund’s Forms N-MFP are available on the SEC’s website atwww.sec.gov.
Information regarding how the fund voted proxies related to portfolio securities for the most recent 12-month period ended June 30 is available atwww.dreyfus.com and on the SEC’s website atwww.sec.gov and without charge, upon request, by calling 1-800-373-9387.
© 2019 BNY Mellon Securities Corporation |
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures applicable to Item 10.
Item 11. Controls and Procedures.
(a) The Registrant's principal executive and principal financial officers have concluded, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrant's disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrant's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes to the Registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
(a)(1) Not applicable.
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(a)(3) Not applicable.
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dreyfus Institutional Reserves Funds
By: /s/ Renee LaRoche-Morris
Renee LaRoche-Morris
President (Principal Executive Officer)
Date: November 25, 2019
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: /s/ Renee LaRoche-Morris
Renee LaRoche-Morris
President (Principal Executive Officer)
Date: November 25, 2019
By: /s/ James Windels
James Windels
Treasurer (Principal Financial Officer)
Date: November 25, 2019
EXHIBIT INDEX
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940. (EX-99.CERT)
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940. (EX-99.906CERT)