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 | 811-2946 |
| |
| Dreyfus Municipal Money Market Fund, Inc. | |
| (Exact name of Registrant as specified in charter) | |
| | |
| c/o The Dreyfus Corporation 200 Park Avenue New York, New York 10166 | |
| (Address of principal executive offices) (Zip code) | |
| | |
| Janette E. Farragher, Esq. 200 Park Avenue New York, New York 10166 | |
| (Name and address of agent for service) | |
|
Registrant's telephone number, including area code: | (212) 922-6000 |
| |
Date of fiscal year end: | 5/31 | |
Date of reporting period: | 11/30/2011 | |
| | | | | | | |
FORM N-CSR
Item 1. Reports to Stockholders.
|
| Dreyfus |
| Municipal Money |
| Market Fund, Inc. |
SEMIANNUAL REPORT November 30, 2011
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The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value
| | Contents |
| | THE FUND |
| 2 | A Letter from the Chairman and CEO |
| 3 | Discussion of Fund Performance |
| 6 | Understanding Your Fund’s Expenses |
| 6 | Comparing Your Fund’s Expenses With Those of Other Funds |
| 7 | Statement of Investments |
| 19 | Statement of Assets and Liabilities |
| 20 | Statement of Operations |
| 21 | Statement of Changes in Net Assets |
| 22 | Financial Highlights |
| 23 | Notes to Financial Statements |
| 30 | Information About the Renewal of the Fund’s Management Agreement |
| | FOR MORE INFORMATION |
| | Back Cover |
Dreyfus Municipal
Money Market Fund, Inc.
The Fund
A LETTER FROM THE CHAIRMAN AND CEO
Dear Shareholder:
We present to you this semiannual report for Dreyfus Municipal Money Market Fund, Inc., covering the six-month period from June 1, 2011, through November 30, 2011. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
The financial markets proved volatile during the reporting period as investors struggled with persistently sluggish global economic growth and persistent sovereign debt concerns. Consequently, the broad international stock market generally lost value in 2011, while U.S. equities fared far better.Among fixed income assets, the escalating European debt crisis sparked a “flight to quality,” in which investors flocked to traditional safe haven assets, such as U.S. government securities. These developments, along with moderate near-term inflation risks, drove longer-term U.S. government securities sharply higher. Shorter-term U.S. government bonds, however, also advanced, but to a much lesser degree. In addition, municipal bonds also performed well, as robust demand from investors seeking higher relative after-tax yields supported bond prices in a limited supply environment.
The global economic outlook currently remains clouded by uncertainty regarding the ability of European policymakers to contain the region’s debt crisis. Meanwhile, conditions in other parts of the world seem to be improving as inflationary pressures have receded in the emerging markets and consumer confidence has strengthened in the United States.To assess the potential impact of these and other developments on your investments, we encourage you, as always, to speak with your financial advisor.
Thank you for your continued confidence and support.
Jonathan R. Baum
Chairman and Chief Executive Officer
The Dreyfus Corporation
December 15, 2011
2
DISCUSSION OF FUND PERFORMANCE
For the period of June 1, 2011, through November 30, 2011, as provided by Colleen Meehan, Senior Portfolio Manager
Fund and Market Performance Overview
For the six-month period ended November 30, 2011, Dreyfus Municipal Money Market Fund produced an annualized yield of 0.05%. Taking into account the effects of compounding, the fund produced an annualized effective yield of 0.05%.1
Tax-exempt money market yields remained stable at historically low levels during the reporting period as short-term interest rates were unchanged in a faltering U.S. economy.
The Fund’s Investment Approach
The fund seeks as high a level of current income exempt from federal income tax as is consistent with the preservation of capital and the maintenance of liquidity.
In pursuing this objective, we employ two primary strategies. First, we normally attempt to add value by investing substantially all of the fund’s net assets in high-quality short-term municipal obligations throughout the United States and its territories that provide income exempt from federal personal income tax. Second, we actively manage the fund’s average maturity based on our anticipation of supply-and-demand changes in the short-term municipal marketplace and interest-rate cycles while anticipating liquidity needs.
For example, if we expect an increase in short-term supply, we may decrease the average maturity of the fund, which could enable us to take advantage of opportunities when short-term supply increases. Generally, yields tend to rise when there is an increase in new-issue supply competing for investor interest. New securities are generally issued with maturities in the one-year range, which in turn may lengthen the fund’s average maturity if purchased. If we anticipate limited new-issue supply, we may then look to extend the fund’s average maturity to maintain
DISCUSSION OF FUND PERFORMANCE (continued)
then-current yields for as long as we believe practical.At other times, we try to maintain an average maturity that reflects our view of short-term interest-rate trends and future supply-and-demand considerations.
Yields Stay Steady Despite Shifting Economic Sentiment
In contrast to economic optimism at the beginning of 2011, investor sentiment already had begun to deteriorate by the start of the reporting period. Investors grew increasingly concerned as Greece teetered on the brink of default on its sovereign debt and fiscal pressures intensified for other members of the European Union. In the United States, high unemployment and weak housing markets threatened the economic recovery, and a contentious political debate regarding U.S. government spending and borrowing intensified.
These developments led to heightened volatility in stock and bond markets, which proved especially severe in August and September after Standard & Poor’s downgraded its credit rating on long-term U.S. debt securities. Ironically, U.S. government securities rallied strongly during a “flight to quality” in the wake of the downgrade. October and November saw a partial reversal of this trend when some macroeconomic concerns seemed to ease, as riskier securities that were punished in late summer rebounded and traditional safe havens gave back some of their previous gains.
Throughout the reporting period, and as it has since December 2008, the Federal Reserve Board (the “Fed”) maintained an aggressively accommodative policy stance, leaving the overnight federal funds rate in a historically low range between 0% and 0.25%. Consequently, municipal money market yields remained near zero percent.
The supply of newly issued municipal money market instruments trended downward during the reporting period, in part due to political pressure to reduce government spending and borrowing. Meanwhile, demand remained steady from individuals seeking to shelter income from rising state taxes and institutional investors searching for alternatives to low yielding taxable money market instruments.
4
From a credit-quality perspective, many states and municipalities have reduced spending and tax receipts have trended up, helping to relieve budget pressures for many state governments.
A Credit-Conscious Investment Posture
As we have for some time, we maintained a conservative investment posture during the reporting period, emphasizing direct, high-quality municipal obligations and commercial paper deemed creditworthy by our analysts.We favored instruments backed by pledged tax appropriations or dedicated revenues, but we generally shied away from general obligation debt and instruments issued by localities that depend heavily on state aid.We maintained the fund’s weighted average maturity in a range that is roughly in line with industry averages.
Outlook Clouded by Economic Uncertainty
The U.S. economy has continued to grow despite investors’ concerns about a potential return to recession, but the outlook for 2012 remains cloudy due to the unknown ramifications of the European debt crisis and uncertainty regarding U.S. fiscal policy. However, the Fed has signaled that it is prepared to maintain short-term interest rates near current levels “at least through mid-2013.” With money market yields likely to remain near historical lows, we believe that the prudent course continues to be an emphasis on preservation of capital and liquidity.
December 15, 2011
| |
| | An investment in the fund is not insured or guaranteed by the 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. |
| | Short-term municipal securities holdings involve credit and liquidity risks and risk of principal loss. |
| 1 | Annualized effective yield is based upon dividends declared daily and reinvested monthly. Past |
| | performance is no guarantee of future results. Yields fluctuate. Income may be subject to state and |
| | local taxes, and some income may be subject to the federal alternative minimum tax (AMT) for |
| | certain investors. Yields provided for the fund reflect the absorption of certain fund expenses by |
| | The Dreyfus Corporation pursuant to a voluntary undertaking that may be extended, |
| | terminated or modified at any time. Had these expenses not been absorbed, the fund yields |
| | would have been lower. |
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 Municipal Money Market Fund, Inc. from June 1, 2011 to November 30, 2011. 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
assuming actual returns for the six months ended November 30, 2011
| | |
| Expenses paid per $1,000† | $ | 0.80 |
| Ending value (after expenses) | $ | 1,000.20 |
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
assuming a hypothetical 5% annualized return for the six months ended November 30, 2011
| | |
| Expenses paid per $1,000† | $ | 0.81 |
| Ending value (after expenses) | $ | 1,024.20 |
|
| † Expenses are equal to the fund’s annualized expense ratio of .16%, multiplied by the average account value over the |
| period, multiplied by 183/366 (to reflect the one-half year period). |
6
|
| STATEMENT OF INVESTMENTS |
| November 30, 2011 (Unaudited) |
| | | | | |
| Short-Term | Coupon | Maturity | Principal | | |
| Investments—99.9% | Rate (%) | Date | Amount ($) | | Value ($) |
| Alabama—.8% | | | | | |
| Columbia Industrial Development | | | | | |
| Board, PCR, Refunding (Alabama | | | | | |
| Power Company Project) | 0.09 | 12/1/11 | 3,300,000 | a | 3,300,000 |
| California—4.1% | | | | | |
| Alameda County Industrial | | | | | |
| Development Authority, Revenue | | | | | |
| (Golden West Paper Converting | | | | | |
| Corporation Project) (LOC; | | | | | |
| Comerica Bank) | 0.21 | 12/7/11 | 3,315,000 | a | 3,315,000 |
| California Pollution Control | | | | | |
| Financing Authority, SWDR | | | | | |
| (GreenWaste Recovery, Inc. | | | | | |
| Project) (LOC; Comerica Bank) | 0.20 | 12/7/11 | 5,730,000 | a | 5,730,000 |
| California Pollution Control | | | | | |
| Financing Authority, SWDR | | | | | |
| (Sunset Waste Paper, Inc. | | | | | |
| Project) (LOC; Comerica Bank) | 0.20 | 12/7/11 | 2,600,000 | a | 2,600,000 |
| California Statewide Communities | | | | | |
| Development Authority, | | | | | |
| Revenue, CP (Kaiser Permanente) | 0.23 | 3/27/12 | 3,500,000 | | 3,500,000 |
| California Statewide Communities | | | | | |
| Development Authority, | | | | | |
| Revenue, CP (Kaiser Permanente) | 0.25 | 5/24/12 | 3,000,000 | | 3,000,000 |
| Colorado—2.2% | | | | | |
| Colorado Housing and Finance | | | | | |
| Authority, SFMR (Liquidity | | | | | |
| Facility; Royal Bank of Canada) | 0.15 | 12/7/11 | 4,500,000 | a | 4,500,000 |
| RBC Municipal Products Inc. Trust | | | | | |
| (Denver City and County, | | | | | |
| Aviation Airport System | | | | | |
| Revenue) (Liquidity Facility; | | | | | |
| Royal Bank of Canada and LOC; | | | | | |
| Royal Bank of Canada) | 0.17 | 12/7/11 | 5,000,000 | a,b,c | 5,000,000 |
| District of Columbia—1.8% | | | | | |
| District of Columbia, | | | | | |
| Enterprise Zone Revenue | | | | | |
| (Trigen-Pepco Energy Services, | | | | | |
| LLC Issue) (LOC; M&T Trust) | 0.24 | 12/7/11 | 7,815,000 | a | 7,815,000 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | | | | |
| Short-Term | Coupon | Maturity | Principal | | |
| Investments (continued) | Rate (%) | Date | Amount ($) | | Value ($) |
| Florida—10.0% | | | | | |
| Alachua Housing Finance Authority, | | | | | |
| MFHR (Edenwood Park Project) | | | | | |
| (Liquidity Facility; FHLMC and | | | | | |
| LOC; FHLMC) | 0.38 | 12/7/11 | 3,145,000 | a,b,c | 3,145,000 |
| Broward County Housing Finance | | | | | |
| Authority, MFHR (Cypress Grove | | | | | |
| Apartments Project) (LOC; FNMA) | 0.19 | 12/7/11 | 20,000,000 | a | 20,000,000 |
| Highlands County Health Facilities | | | | | |
| Authority, HR (Adventist | | | | | |
| Health System/Sunbelt | | | | | |
| Obligated Group) | 0.11 | 12/7/11 | 12,000,000 | a | 12,000,000 |
| Hillsborough County Industrial | | | | | |
| Development Authority, IDR | | | | | |
| (Seaboard Tampa Terminals | | | | | |
| Venture Project) (LOC; | | | | | |
| Northern Trust Company) | 0.45 | 12/7/11 | 4,000,000 | a | 4,000,000 |
| Orange County Health Facilities | | | | | |
| Authority, HR (Orlando Regional | | | | | |
| Healthcare System) (LOC; Branch | | | | | |
| Banking and Trust Co.) | 0.11 | 12/7/11 | 2,500,000 | a | 2,500,000 |
| Polk County Industrial Development | | | | | |
| Authority, IDR (Florida | | | | | |
| Treatt, Inc. Project) (LOC; | | | | | |
| Bank of America) | 0.48 | 12/7/11 | 2,580,000 | a | 2,580,000 |
| Georgia—4.3% | | | | | |
| Atlanta, | | | | | |
| Airport Revenue, CP (LOC; | | | | | |
| Wells Fargo Bank) | 0.23 | 12/6/11 | 6,000,000 | | 6,000,000 |
| Floyd County Development | | | | | |
| Authority, Revenue (Berry | | | | | |
| College Project) (LOC; FHLB) | 0.12 | 12/7/11 | 6,000,000 | a | 6,000,000 |
| Georgia Municipal Gas Authority, | | | | | |
| Gas Revenue (Gas | | | | | |
| Portfolio III Project) | 2.00 | 11/13/12 | 2,000,000 | | 2,029,918 |
| Gwinnett County School District, | | | | | |
| GO Notes | 5.00 | 2/1/12 | 2,000,000 | | 2,016,138 |
| Gwinnett County School District, | | | | | |
| GO Notes | 6.40 | 2/1/12 | 1,000,000 | | 1,010,305 |
8
| | | | | |
| Short-Term | Coupon | Maturity | Principal | | |
| Investments (continued) | Rate (%) | Date | Amount ($) | | Value ($) |
| Georgia (continued) | | | | | |
| Macon County Development | | | | | |
| Authority, IDR (Swartz Ag, LLC | | | | | |
| Project) (LOC; Branch Banking | | | | | |
| and Trust Co.) | 0.22 | 12/7/11 | 1,840,000 | a | 1,840,000 |
| Illinois—3.3% | | | | | |
| Chicago, | | | | | |
| GO Notes (Project and | | | | | |
| Refunding Series) | | | | | |
| (Liquidity Facility; | | | | | |
| JPMorgan Chase Bank) | 0.11 | 12/1/11 | 3,000,000 | a | 3,000,000 |
| Illinois Development Finance | | | | | |
| Authority, Revenue (Evanston | | | | | |
| Northwestern Healthcare | | | | | |
| Corporation) (Liquidity | | | | | |
| Facility; Wells Fargo Bank) | 0.09 | 12/1/11 | 4,300,000 | a | 4,300,000 |
| Southwestern Illinois Development | | | | | |
| Authority, Solid Waste | | | | | |
| Disposal Facilities Revenue | | | | | |
| (Center Ethanol Company, LLC | | | | | |
| Project) (LOC; FHLB) | 0.50 | 12/7/11 | 7,370,000 | a | 7,370,000 |
| Indiana—.8% | | | | | |
| Puttable Floating Option Tax | | | | | |
| Exempt Receipts (Indiana | | | | | |
| Health Facility Financing | | | | | |
| Authority, Hospital | | | | | |
| Improvement Revenue, | | | | | |
| Refunding (Community | | | | | |
| Hospitals Projects)) (Liquidity | | | | | |
| Facility; Bank of America and | | | | | |
| LOC; Bank of America) | 0.45 | 12/7/11 | 3,380,000 | a,b,c | 3,380,000 |
| Iowa—1.4% | | | | | |
| Iowa Finance Authority, | | | | | |
| SWDR (MidAmerican | | | | | |
| Energy Project) | 0.19 | 12/7/11 | 6,000,000 | a | 6,000,000 |
| Kentucky—.7% | | | | | |
| Kentucky Rural Water Finance | | | | | |
| Corporation, Public Projects | | | | | |
| Construction Notes | 1.50 | 12/1/11 | 3,000,000 | | 3,000,000 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | | | | |
| Short-Term | Coupon | Maturity | Principal | | |
| Investments (continued) | Rate (%) | Date | Amount ($) | | Value ($) |
| Louisiana—4.8% | | | | | |
| Ascension Parish Industrial | | | | | |
| Development Board, Revenue | | | | | |
| (International Matex Tank | | | | | |
| Terminals—Geismar Project) | | | | | |
| (LOC; FHLB) | 0.12 | 12/7/11 | 9,000,000 | a | 9,000,000 |
| Louisiana Public Facilities | | | | | |
| Authority, Revenue (Air | | | | | |
| Products and Chemicals Project) | 0.08 | 12/1/11 | 12,000,000 | a | 12,000,000 |
| Maryland—.3% | | | | | |
| Baltimore County, | | | | | |
| Revenue, Refunding (Shade Tree | | | | | |
| Trace Apartments Facility) | | | | | |
| (LOC; M&T Trust) | 0.19 | 12/7/11 | 1,100,000 | a | 1,100,000 |
| Massachusetts—5.3% | | | | | |
| Beverly, | | | | | |
| GO Notes, BAN | 1.00 | 2/22/12 | 4,000,000 | | 4,006,720 |
| Massachusetts Development Finance | | | | | |
| Agency, Revenue, Refunding | | | | | |
| (Wentworth Institute of | | | | | |
| Technology Issue) (LOC; | | | | | |
| JPMorgan Chase Bank) | 0.13 | 12/7/11 | 16,300,000 | a | 16,300,000 |
| Northampton, | | | | | |
| GO Notes, BAN | 1.50 | 2/10/12 | 3,000,000 | | 3,004,893 |
| Michigan—1.6% | | | | | |
| University of Michigan, | | | | | |
| CP | 0.16 | 12/7/11 | 7,000,000 | | 7,000,000 |
| Minnesota—.6% | | | | | |
| University of Minnesota, | | | | | |
| CP | 0.15 | 1/18/12 | 2,500,000 | | 2,500,000 |
| Missouri—.9% | | | | | |
| Missouri Development Finance | | | | | |
| Board, LR, CP (LOC; | | | | | |
| U.S. Bank NA) | 0.18 | 12/20/11 | 4,001,000 | | 4,001,000 |
| Nevada—2.5% | | | | | |
| Las Vegas Valley Water District, | | | | | |
| CP (Liquidity Facility; | | | | | |
| JPMorgan Chase Bank) | 0.14 | 12/12/11 | 5,890,000 | | 5,890,000 |
10
| | | | | |
| Short-Term | Coupon | Maturity | Principal | | |
| Investments (continued) | Rate (%) | Date | Amount ($) | | Value ($) |
| Nevada (continued) | | | | | |
| Las Vegas Valley Water District, | | | | | |
| CP (LOC; Wells Fargo Bank) | 0.18 | 2/9/12 | 5,000,000 | | 5,000,000 |
| New Hampshire—1.9% | | | | | |
| New Hampshire Health and Education | | | | | |
| Facilities Authority, HR | | | | | |
| (Catholic Medical Center | | | | | |
| Issue) (LOC; FHLB) | 0.13 | 12/7/11 | 8,235,000 | a | 8,235,000 |
| New Jersey—.9% | | | | | |
| Essex County Improvement | | | | | |
| Authority, Pooled Governmental | | | | | |
| Loan Program Revenue | | | | | |
| (LOC; Wells Fargo Bank) | 0.07 | 12/7/11 | 1,800,000 | a | 1,800,000 |
| Montclair Township, | | | | | |
| Temporary Notes | 1.50 | 3/9/12 | 2,100,000 | | 2,102,808 |
| New York—5.1% | | | | | |
| Metropolitan Transportation | | | | | |
| Authority, Transportation | | | | | |
| Revenue, CP (LOC; Citibank NA) | 0.17 | 1/17/12 | 5,000,000 | | 5,000,000 |
| New York City, | | | | | |
| GO Notes (Liquidity Facility; | | | | | |
| Wells Fargo Bank) | 0.07 | 12/1/11 | 3,900,000 | a | 3,900,000 |
| New York City Municipal Water | | | | | |
| Finance Authority, Water and | | | | | |
| Sewer System Revenue | | | | | |
| (Liquidity Facility; Mizuho | | | | | |
| Corporate Bank Ltd.) | 0.06 | 12/1/11 | 6,100,000 | a | 6,100,000 |
| New York City Municipal Water | | | | | |
| Finance Authority, Water and | | | | | |
| Sewer System Second General | | | | | |
| Resolution Revenue (Liquidity | | | | | |
| Facility; California State | | | | | |
| Teachers Retirement System) | 0.09 | 12/1/11 | 3,300,000 | a | 3,300,000 |
| New York City Municipal Water | | | | | |
| Finance Authority, Water and | | | | | |
| Sewer System Second General | | | | | |
| Resolution Revenue (Liquidity | | | | | |
| Facility; TD Bank) | 0.08 | 12/1/11 | 4,000,000 | a | 4,000,000 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | | | | |
| Short-Term | Coupon | Maturity | Principal | | |
| Investments (continued) | Rate (%) | Date | Amount ($) | | Value ($) |
| North Carolina—.5% | | | | | |
| North Carolina Medical Care | | | | | |
| Commission, Health Care | | | | | |
| Facility Revenue (Merlots | | | | | |
| Program) (Providence Place | | | | | |
| Retirement Community Nursing | | | | | |
| Home Project) (Liquidity | | | | | |
| Facility; Wells Fargo Bank | | | | | |
| and LOC; GNMA) | 0.14 | 12/7/11 | 2,120,000 | a,b,c | 2,120,000 |
| Ohio—2.5% | | | | | |
| Columbus, | | | | | |
| Sewerage System Revenue | | | | | |
| (Putters Program) (Liquidity | | | | | |
| Facility; JPMorgan Chase Bank) | 0.14 | 12/7/11 | 1,400,000 | a,b,c | 1,400,000 |
| Cuyahoga County, | | | | | |
| IDR (King Nut Project) | | | | | |
| (LOC; National City Bank) | 0.20 | 12/7/11 | 2,285,000 | a | 2,285,000 |
| Cuyahoga County, | | | | | |
| IDR (King Nut Project) | | | | | |
| (LOC; National City Bank) | 0.20 | 12/7/11 | 2,220,000 | a | 2,220,000 |
| Montgomery County, | | | | | |
| Revenue (Catholic Health | | | | | |
| Initiatives) (Liquidity | | | | | |
| Facility; U.S. Bank NA) | 0.12 | 12/7/11 | 3,000,000 | a | 3,000,000 |
| Union Township, | | | | | |
| GO Notes, BAN | | | | | |
| (Various Purpose) | 1.13 | 9/12/12 | 2,000,000 | | 2,007,366 |
| Oregon—1.1% | | | | | |
| Oregon, | | | | | |
| GO Notes (Veterans’ Welfare | | | | | |
| Bonds) (Liquidity Facility; | | | | | |
| Bank of Tokyo-Mitsubishi UFJ) | 0.10 | 12/7/11 | 5,000,000 | a | 5,000,000 |
| Pennsylvania—12.7% | | | | | |
| Berks County Municipal Authority, | | | | | |
| Revenue (The Reading Hospital | | | | | |
| and Medical Center Project) | 0.31 | 1/19/12 | 4,600,000 | | 4,600,000 |
| Emmaus General Authority, | | | | | |
| Local Government Revenue (Bond | | | | | |
| Pool Program) (LOC; U.S. Bank NA) | 0.12 | 12/7/11 | 10,500,000 | a | 10,500,000 |
| Emmaus General Authority, | | | | | |
| Local Government Revenue (Bond | | | | | |
| Pool Program) (LOC; U.S. Bank NA) | 0.12 | 12/7/11 | 13,500,000 | a | 13,500,000 |
12
| | | | | |
| Short-Term | Coupon | Maturity | Principal | | |
| Investments (continued) | Rate (%) | Date | Amount ($) | | Value ($) |
| Pennsylvania (continued) | | | | | |
| Franklin County Industrial | | | | | |
| Development Authority, Revenue | | | | | |
| (James and Donna Martin | | | | | |
| Project) (LOC; Wells Fargo Bank) | 0.35 | 12/7/11 | 1,000,000 | a | 1,000,000 |
| Horizon Hospital System Authority, | | | | | |
| Senior Health and Housing | | | | | |
| Facilities Revenue (Saint Paul | | | | | |
| Homes Project) (LOC; M&T Trust) | 0.19 | 12/7/11 | 1,500,000 | a | 1,500,000 |
| Montgomery County Higher Education | | | | | |
| and Health Authority, Revenue | | | | | |
| (Pennsylvania Higher Education | | | | | |
| and Health Loan Program) | | | | | |
| (LOC; M&T Trust) | 0.19 | 12/7/11 | 4,720,000 | a | 4,720,000 |
| Pennsylvania Economic Development | | | | | |
| Financing Authority, Revenue | | | | | |
| (Evergreen Community Power | | | | | |
| Facility) (LOC; M&T Trust) | 0.29 | 12/7/11 | 15,000,000 | a | 15,000,000 |
| RBC Municipal Products Inc. Trust | | | | | |
| (Allegheny County Hospital | | | | | |
| Development Authority, Revenue | | | | | |
| (University of Pittsburgh | | | | | |
| Medical Center)) (Liquidity | | | | | |
| Facility; Royal Bank of Canada | | | | | |
| and LOC; Royal Bank of Canada) | 0.14 | 12/7/11 | 5,500,000 | a,b,c | 5,500,000 |
| South Carolina—1.7% | | | | | |
| Darlington County School District, | | | | | |
| GO Notes | 1.25 | 5/1/12 | 2,000,000 | | 2,007,640 |
| South Carolina Association of | | | | | |
| Governmental Organizations, COP | 1.50 | 4/13/12 | 5,500,000 | | 5,525,450 |
| Tennessee—6.1% | | | | | |
| Blount County Public Building | | | | | |
| Authority, Local Government | | | | | |
| Public Improvement Revenue | | | | | |
| (Liquidity Facility; Branch | | | | | |
| Banking and Trust Co.) | 0.15 | 12/7/11 | 15,000,000 | a | 15,000,000 |
| Metropolitan Government of | | | | | |
| Nashville and Davidson County | | | | | |
| Health and Educational | | | | | |
| Facilities Board, Revenue, | | | | | |
| Refunding (Belmont University | | | | | |
| Project) (LOC; FHLB) | 0.12 | 12/7/11 | 6,000,000 | a | 6,000,000 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | | | | |
| Short-Term | Coupon | Maturity | Principal | | |
| Investments (continued) | Rate (%) | Date | Amount ($) | | Value ($) |
| Tennessee (continued) | | | | | |
| Tennessee, | | | | | |
| CP (Tennessee Consolidated | | | | | |
| Retirement System) | 0.15 | 12/1/11 | 6,000,000 | | 6,000,000 |
| Texas—16.2% | | | | | |
| Harris County, | | | | | |
| GO Notes, TAN | 1.50 | 2/29/12 | 8,000,000 | | 8,026,378 |
| Jefferson County Industrial | | | | | |
| Development Corporation, | | | | | |
| Hurricane Ike Disaster Area | | | | | |
| Revenue (Jefferson Refinery, | | | | | |
| L.L.C. Project) (LOC; Branch | | | | | |
| Banking and Trust Co.) | 0.32 | 12/29/11 | 1,100,000 | | 1,100,000 |
| Jefferson County Industrial | | | | | |
| Development Corporation, | | | | | |
| Hurricane Ike Disaster Area | | | | | |
| Revenue (Jefferson Refinery, | | | | | |
| L.L.C. Project) (LOC; Branch | | | | | |
| Banking and Trust Co.) | 0.50 | 12/29/11 | 9,000,000 | | 9,000,000 |
| JPMorgan Chase Putters/Drivers | | | | | |
| Trust (Texas, GO Notes, TRAN) | | | | | |
| (Liquidity Facility; JPMorgan | | | | | |
| Chase Bank) | 0.11 | 12/1/11 | 6,700,000 | a,b,c | 6,700,000 |
| Lubbock, | | | | | |
| GO Notes, Refunding | 5.00 | 2/15/12 | 2,045,000 | | 2,064,925 |
| Port of Port Arthur Navigation | | | | | |
| District, Revenue, CP (BASF SE) | 0.36 | 2/10/12 | 5,000,000 | | 5,000,000 |
| Puttable Floating Option Tax | | | | | |
| Exempt Receipts (Birdville | | | | | |
| Independent School District, | | | | | |
| Unlimited Tax School Building | | | | | |
| Bonds) (LOC; Permanent School | | | | | |
| Fund Guarantee Program) | 0.20 | 12/7/11 | 4,000,000 | a,b,c | 4,000,000 |
| Puttable Floating Option Tax | | | | | |
| Exempt Receipts (Texas | | | | | |
| Transportation Commission, | | | | | |
| State Highway Fund First Tier | | | | | |
| Revenue) (Liquidity Facility; | | | | | |
| Bank of America) | 0.20 | 12/7/11 | 4,000,000 | a,b,c | 4,000,000 |
14
| | | | | |
| Short-Term | Coupon | Maturity | Principal | | |
| Investments (continued) | Rate (%) | Date | Amount ($) | | Value ($) |
| Texas (continued) | | | | | |
| RBC Municipal Products Inc. Trust | | | | | |
| (Houston, Combined Utility | | | | | |
| System First Lien Revenue, | | | | | |
| Refunding) (Liquidity | | | | | |
| Facility; Royal Bank of Canada | | | | | |
| and LOC; Royal Bank of Canada) | 0.14 | 12/7/11 | 4,000,000 | a,b,c | 4,000,000 |
| San Antonio, | | | | | |
| Water System Revenue, CP | | | | | |
| (Liquidity Facility: Bank of | | | | | |
| America, State Street Bank and | | | | | |
| Trust Co. and U.S. Bank NA) | 0.22 | 12/15/11 | 5,000,000 | | 5,000,000 |
| Tarrant County Cultural Education | | | | | |
| Facilities Finance Corporation, | | | | | |
| Revenue (Texas Health Resources | | | | | |
| System) (Liquidity Facility; | | | | | |
| JPMorgan Chase Bank) | 0.11 | 12/1/11 | 1,000,000 | a | 1,000,000 |
| Texas, | | | | | |
| GO Notes (Veterans’ Housing | | | | | |
| Assistance Program) (Liquidity | | | | | |
| Facility; State Street Bank | | | | | |
| and Trust Co.) | 0.15 | 12/7/11 | 9,000,000 | a | 9,000,000 |
| Texas Department of Housing and | | | | | |
| Community Affairs, SFMR | 0.15 | 12/7/11 | 7,795,000 | a | 7,795,000 |
| Texas Municipal Power Agency, | | | | | |
| Revenue, CP (LOC: Bank of | | | | | |
| America and JPMorgan | | | | | |
| Chase Bank) | 0.22 | 1/18/12 | 5,000,000 | | 5,000,000 |
| Utah—2.4% | | | | | |
| Murray City, | | | | | |
| HR (Intermountain Health Care | | | | | |
| Health Services, Inc.) | 0.07 | 12/1/11 | 3,500,000 | a | 3,500,000 |
| Salt Lake County, | | | | | |
| GO Notes, TRAN | 2.50 | 12/29/11 | 7,000,000 | | 7,012,688 |
| Virginia—2.3% | | | | | |
| Richmond, | | | | | |
| CP (Liquidity Facility; | | | | | |
| Bank of America) | 0.20 | 1/18/12 | 5,000,000 | | 5,000,000 |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | | | | | |
| Short-Term | Coupon | Maturity | Principal | | | |
| Investments (continued) | Rate (%) | Date | Amount ($) | | | Value ($) |
| Virginia (continued) | | | | | | |
| Virginia Commonwealth University | | | | | | |
| Health System Authority, | | | | | | |
| General Revenue (LOC; Wells | | | | | | |
| Fargo Bank) | 0.12 | 12/1/11 | 5,200,000a | | | 5,200,000 |
| Washington—.7% | | | | | | |
| Pierce County Economic Development | | | | | | |
| Corporation, Industrial | | | | | | |
| Revenue (SeaTac Packaging | | | | | | |
| Project) (LOC; HSBC Bank USA) | 0.21 | 12/7/11 | 3,040,000a | | | 3,040,000 |
| Wisconsin—.4% | | | | | | |
| Wisconsin Health and Educational | | | | | | |
| Facilities Authority, Revenue | | | | | | |
| (Bay Area Medical Center, | | | | | | |
| Inc.) (LOC; BMO Harris Bank NA) | 0.15 | 12/1/11 | 1,700,000a | | | 1,700,000 |
| |
| Total Investments (cost $439,196,229) | | | 99.9 | % | | 439,196,229 |
| Cash and Receivables (Net) | | | .1 | % | | 530,651 |
| Net Assets | | | 100.0 | % | | 439,726,880 |
|
| a Variable rate demand note—rate shown is the interest rate in effect at November 30, 2011. Maturity date represents |
| the next demand date, or the ultimate maturity date if earlier. |
| b Securities exempt from registration under Rule 144A of the Securities Act of 1933.These securities may be resold in |
| transactions exempt from registration, normally to qualified institutional buyers.At November 30, 2011, these |
| securities amounted to $39,245,000 or 8.9% of net assets. |
| c The fund does not directly own the municipal security indicated; the fund owns an interest in a special purpose entity |
| that, in turn, owns the underlying municipal security.The special purpose entity permits the fund to own interests in |
| underlying assets, but in a manner structured to provide certain advantages not inherent in the underlying bonds (e.g., |
| enhanced liquidity, yields linked to short-term rates). |
16
| | | |
| Summary of Abbreviations | | |
| |
| ABAG | Association of Bay Area Governments | ACA | American Capital Access |
| AGC | ACE Guaranty Corporation | AGIC | Asset Guaranty Insurance Company |
| AMBAC | American Municipal Bond | ARRN | Adjustable Rate Receipt Notes |
| | Assurance Corporation | | |
| BAN | Bond Anticipation Notes | BPA | Bond Purchase Agreement |
| CIFG | CDC Ixis Financial Guaranty | COP | Certificate of Participation |
| CP | Commercial Paper | EDR | Economic Development Revenue |
| EIR | Environmental Improvement Revenue | FGIC | Financial Guaranty Insurance |
| | | | Company |
| FHA | Federal Housing Administration | FHLB | Federal Home Loan Bank |
| FHLMC | Federal Home Loan Mortgage | FNMA | Federal National |
| | Corporation | | Mortgage Association |
| GAN | Grant Anticipation Notes | GIC | Guaranteed Investment Contract |
| GNMA | Government National | GO | General Obligation |
| | Mortgage Association | | |
| HR | Hospital Revenue | IDB | Industrial Development Board |
| IDC | Industrial Development Corporation | IDR | Industrial Development Revenue |
| LOC | Letter of Credit | LOR | Limited Obligation Revenue |
| LR | Lease Revenue | MFHR | Multi-Family Housing Revenue |
| MFMR | Multi-Family Mortgage Revenue | PCR | Pollution Control Revenue |
| PILOT | Payment in Lieu of Taxes | PUTTERS | Puttable Tax-Exempt Receipts |
| RAC | Revenue Anticipation Certificates | RAN | Revenue Anticipation Notes |
| RAW | Revenue Anticipation Warrants | RRR | Resources Recovery Revenue |
| SAAN | State Aid Anticipation Notes | SBPA | Standby Bond Purchase Agreement |
| SFHR | Single Family Housing Revenue | SFMR | Single Family Mortgage Revenue |
| SONYMA | State of New York Mortgage Agency | SWDR | Solid Waste Disposal Revenue |
| TAN | Tax Anticipation Notes | TAW | Tax Anticipation Warrants |
| TRAN | Tax and Revenue Anticipation Notes | XLCA | XL Capital Assurance |
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | | | | | |
| Summary of Combined Ratings (Unaudited) | |
| |
| Fitch | | or | Moody’s | or | Standard & Poor’s | Value (%)† |
| F1+,F1 | | | VMIG1,MIG1,P1 | | SP1+,SP1,A1+,A1 | 89.5 |
| AAA,AA,Ad | | | Aaa,Aa,Ad | | AAA,AA,Ad | 7.5 |
| Not Ratede | | | Not Ratede | | Not Ratede | 3.0 |
| | | | | | | 100.0 |
|
| † Based on total investments. |
| d Notes which are not F, MIG and SP rated are represented by bond ratings of the issuers. |
| e Securities which, while not rated by Fitch, Moody’s and Standard & Poor’s, have been determined by the Manager to |
| be of comparable quality to those rated securities in which the fund may invest. |
See notes to financial statements.
18
|
| STATEMENT OF ASSETS AND LIABILITIES |
| November 30, 2011 (Unaudited) |
| | |
| | Cost | Value |
| Assets ($): | | |
| Investments in securities—See Statement of Investments | 439,196,229 | 439,196,229 |
| Cash | | 680,410 |
| Interest receivable | | 400,198 |
| Prepaid expenses | | 26,167 |
| | | 440,303,004 |
| Liabilities ($): | | |
| Due to The Dreyfus Corporation and affiliates—Note 2(b) | | 43,034 |
| Payable for shares of Common Stock redeemed | | 471,701 |
| Accrued expenses | | 61,389 |
| | | 576,124 |
| Net Assets ($) | | 439,726,880 |
| Composition of Net Assets ($): | | |
| Paid-in capital | | 439,726,880 |
| Net Assets ($) | | 439,726,880 |
| Shares Outstanding | | |
| (5 billion shares of $.001 par value Common Stock authorized) | | 439,762,346 |
| Net Asset Value, offering and redemption price per share ($) | | 1.00 |
| |
| See notes to financial statements. | | |
|
| STATEMENT OF OPERATIONS |
| Six Months Ended November 30, 2011 (Unaudited) |
| | |
| Investment Income ($): | | |
| Interest Income | 479,456 | |
| Expenses: | | |
| Management fee—Note 2(a) | 1,117,473 | |
| Shareholder servicing costs—Note 2(b) | 186,530 | |
| Professional fees | 37,923 | |
| Registration fees | 27,464 | |
| Prospectus and shareholders’ reports | 21,038 | |
| Custodian fees—Note 2(b) | 20,136 | |
| Directors’ fees and expenses—Note 2(c) | 16,554 | |
| Miscellaneous | 15,827 | |
| Total Expenses | 1,442,945 | |
| Less—reduction in expenses due to undertaking—Note 2(a) | (1,075,330 | ) |
| Less—reduction in fees due to earnings credits—Note 2(b) | (67 | ) |
| Net Expenses | 367,548 | |
| Investment Income—Net, representing net increase | | |
| in net assets resulting from operations | 111,908 | |
| |
| See notes to financial statements. | | |
20
STATEMENT OF CHANGES IN NET ASSETS
| | | | |
| | Six Months Ended | | | |
| | November 30, 2011 | | Year Ended | |
| | (Unaudited) | | May 31, 2011 | |
| Operations ($): | | | | |
| Investment Income-Net, representing | | | | |
| net increase in net assets | | | | |
| resulting from operations | 111,908 | | 246,733 | |
| Dividends to Shareholders from ($): | | | | |
| Investment income—net | (111,908 | ) | (246,733 | ) |
| Capital Stock Transactions ($1.00 per share): | | | | |
| Net proceeds from shares sold | 280,711,430 | | 807,809,576 | |
| Net assets received in connection with | | | | |
| Capital Contribution from affiliate† | — | | 1,727,964 | |
| Dividends reinvested | 97,302 | | 201,761 | |
| Cost of shares redeemed | (317,291,933 | ) | (841,931,097 | ) |
| Increase (Decrease) in Net Assets | | | | |
| from Capital Stock Transactions | (36,483,201 | ) | (32,191,796 | ) |
| Total Increase (Decrease) in Net Assets | (36,483,201 | ) | (32,191,796 | ) |
| Net Assets ($): | | | | |
| Beginning of Period | 476,210,081 | | 508,401,877 | |
| End of Period | 439,726,880 | | 476,210,081 | |
|
| See notes to financial statements. |
| † See Note 2(d). |
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated. 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 Ended | | | | | | | | | | | |
| November 30, 2011 | | | | Year Ended May 31, | | | |
| | (Unaudited) | | 2011 | | 2010 | | 2009 | | 2008 | | 2007 | |
| Per Share Data ($): | | | | | | | | | | | | |
| Net asset value, | | | | | | | | | | | | |
| beginning of period | 1.00 | | 1.00 | | 1.00 | | 1.00 | | 1.00 | | 1.00 | |
| Investment Operations: | | | | | | | | | | | | |
| Investment income—net | .000 | a | .001 | | .001 | | .012 | | .028 | | .031 | |
| Distributions: | | | | | | | | | | | | |
| Dividends from | | | | | | | | | | | | |
| investment income—net | (.000 | )a | (.001 | ) | (.001 | ) | (.012 | ) | (.028 | ) | (.031 | ) |
| Net asset value, end of period | 1.00 | | 1.00 | | 1.00 | | 1.00 | | 1.00 | | 1.00 | |
| Total Return (%) | .04 | b | .05 | | .07 | | 1.23 | | 2.84 | | 3.14 | |
| Ratios/Supplemental Data (%): | | | | | | | | | | | |
| Ratio of total expenses | | | | | | | | | | | | |
| to average net assets | .65 | b | .65 | | .62 | | .61 | | .59 | | .59 | |
| Ratio of net expenses | | | | | | | | | | | | |
| to average net assets | .16 | b | .30 | | .45 | | .61 | | .58 | | .58 | |
| Ratio of net investment income | | | | | | | | | | | | |
| to average net assets | .05 | b | .05 | | .07 | | 1.24 | | 2.74 | | 3.10 | |
| Net Assets, end of period | | | | | | | | | | | | |
| ($ x 1,000) | 439,727 | | 476,210 | | 508,402 | | 972,883 | | 1,025,116 | | 779,746 | |
| |
| a | Amount represents less than $.001 per share. |
| b | Annualized. |
| See notes to financial statements. |
22
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
Dreyfus Municipal Money Market Fund, Inc. (the “fund”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified open-end management investment company. The fund’s investment objective is to seek as high a level of current income exempt from federal income tax as is consistent with the preservation of capital and the maintenance of liquidity.The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser. MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of the Manager, is the distributor of the fund’s shares, which are sold without a sales charge.
It is the fund’s policy to maintain a continuous net asset value per share of $1.00; the fund has adopted certain investment, portfolio valuation, and dividend and distribution policies to enable it to do so. There is no, assurance, however, that the fund will be able to maintain a stable net asset value per share of $1.00.
The 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’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 fund enters 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.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(a) Portfolio valuation: Investments in securities are valued at amortized cost in accordance with Rule 2a-7 of the Act, which has been determined by the Board of Directors to represent the fair value of the fund’s investments.
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. 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
24
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 November 30, 2011 in valuing the fund’s investments:
| |
| | Short-Term |
| Valuation Inputs | Investments ($)† |
| Level 1—Unadjusted Quoted Prices | — |
| Level 2—Other Significant Observable Inputs | 439,196,229 |
| Level 3—Significant Unobservable Inputs | — |
| Total | 439,196,229 |
| |
| † | See Statement of Investments for additional detailed categorizations. |
In May 2011, FASB issued Accounting Standards Update (“ASU”) No. 2011-04 “Amendments to Achieve Common FairValue Measurement and Disclosure Requirements in GAAP and International Financial Reporting Standards (“IFRS”)” (“ASU 2011-04”). ASU 2011-04 includes common requirements for measurement of and disclosure about fair value between GAAP and IFRS. ASU 2011-04 will require reporting entities to disclose the following information for fair value measurements categorized within Level 3 of the fair value hierarchy: quantitative information about the unobservable inputs used in the fair value measurement, the valuation processes used by the reporting entity and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, ASU 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements.The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. At this time, management is evaluating the implications of ASU 2011-04 and its impact on the financial statements.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
(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 recognized on the accrual basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Cost of investments represents amortized cost.
(c) Dividends 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, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of 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 November 30, 2011, 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, the fund did not incur any interest or penalties.
Each of the tax years in the three-year period ended May 31, 2011 remains subject to examination by the Internal Revenue Service and state taxing authorities.
The tax character of distributions paid to shareholders during the fiscal year ended May 31, 2011 was all tax exempt income. The tax character of current year distributions will be determined at the end of current fiscal year.
26
At November 30, 2011, 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).
NOTE 2—Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .50% of the value of the fund’s average daily net assets and is payable monthly.
The Manager has undertaken to waive receipt of the management fee and/or reimburse operating expenses in order to facilitate a daily yield at or above a certain level which may change from time to time.This undertaking is voluntary and not contractual, and may be terminated at any time. The reduction in expenses, pursuant to the undertaking, amounted to $1,075,330 during the period ended November 30, 2011.
(b) Under the Shareholder Services Plan, the fund reimburses the Distributor an amount not to exceed an annual rate of .25% of the value of the fund’s 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 November 30, 2011, the fund was charged $119,585 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 November 30, 2011, the fund was charged $43,462 pursuant to the transfer agency agreement, which is included in Shareholder servicing costs in the Statement of Operations.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
The fund has arrangements with the custodian and cash management bank whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset custody and cash management fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.
The fund compensates The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus, under a cash management agreement for performing cash management services related to fund subscriptions and redemptions. During the period ended November 30, 2011, the fund was charged $4,512 pursuant to the cash management agreement, which is included in Shareholder servicing costs in the Statement of Operations. These fees were partially offset by earnings credits of $67.
The fund also compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. During the period ended November 30, 2011, the fund was charged $20,136 pursuant to the custody agreement.
During the period ended November 30, 2011, the fund was charged $2,981 for services performed by the Chief Compliance Officer.
The components of “Due toThe Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $178,927, custodian fees $13,384, chief compliance officer fees $4,743 and transfer agency per account fees $21,536, which are offset against an expense reimbursement currently in effect in the amount of $175,556.
(c) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
28
(d) During the period ended May 31, 2011, BNY Mellon had made voluntary capital contributions of $1,727,964 to the fund.These contributions had been made to reimburse the fund for previous realized losses experienced by the fund.
NOTE 3—Securities Transactions:
The fund is permitted to purchase or sell securities from or to certain affiliated funds under specified conditions outlined in procedures adopted by the Board of Directors.The procedures have been designed to ensure that any purchase or sale of securities by the fund from or to another fund or portfolio that are, or could be, considered an affiliate by virtue of having a common investment adviser (or affiliated investment adviser), common Directors and/or common officers, complies with Rule 17a-7 of the Act. During the period ended November 30, 2011, the fund engaged in purchases and sales of securities pursuant to Rule 17a-7 of the Act amounting to $131,650,000 and $142,360,000, respectively.
|
| INFORMATION ABOUT THE RENEWAL OF THE |
| FUND’S MANAGEMENT AGREEMENT (Unaudited) |
At a meeting of the fund’s Board of Directors held on November 7-8, 2011, the Board considered the renewal of the fund’s Management Agreement with Dreyfus pursuant to which Dreyfus provides the fund with investment advisory and administrative services (the “Agreement”). The Board members, none of whom are “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 Dreyfus representatives. 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 previously provided to them in a presentation from Dreyfus representatives regarding the nature, extent, and quality of the services provided to funds in the Dreyfus fund complex, and Dreyfus representatives confirmed that there had been no material changes in this information. Dreyfus provided the number of open accounts in the fund, the fund’s asset size and the allocation of fund assets among distribution channels. Dreyfus also had previously provided information regarding the diverse intermediary relationships and distribution channels of funds in the Dreyfus fund complex and Dreyfus’ corresponding need for broad, deep, and diverse resources to be able to provide ongoing shareholder services to each distribution channel, including the distribution channel(s) for the fund.
The Board also considered research support available to, and portfolio management capabilities of, the fund’s portfolio management personnel and that Dreyfus 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 Dreyfus’ extensive administrative, accounting, and compliance infrastructures.
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Comparative Analysis of the Fund’s Performance and Management Fee and Expense Ratio.The Board reviewed reports prepared by Lipper, Inc. (“Lipper”), 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 September 30, 2011, 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 Lipper as of September 30, 2011. Dreyfus previously had furnished the Board with a description of the methodology Lipper used to select the Performance Group and Performance Universe and the Expense Group and Expense Universe.
Dreyfus representatives stated that the usefulness of performance comparisons may be affected by a number of factors, including different investment limitations that may be applicable to the fund and comparison funds. The Board discussed the results of the comparisons and noted that the fund’s total return performance was above the Performance Group and Performance Universe medians. The Board also noted that the fund ranked in the first quartile (the first quartile being the highest quartile ranking) in the Performance Universe for all time periods, except the 10-year period for which the fund achieved a second quartile ranking.
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. They noted that the fund’s contractual management fee was above the Expense Group median, the fund’s actual management fee was below
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| INFORMATION ABOUT THE RENEWAL OF THE FUND’S |
| MANAGEMENT AGREEMENT (Unaudited) (continued) |
the Expense Group median and the Expense Universe median, and the fund’s actual total expenses were below the Expense Group median and the Expense Universe median.
The Board considered the duration and extent of the fee waiver/expense reimbursement undertaking by Dreyfus to support a minimum zero or positive daily yield, as applicable from time to time, in the current, historically low interest rate environment, and the Board noted the extent to which differences among the returns for the Performance Group funds might be attributable to similar undertakings.
Dreyfus representatives reviewed with the Board the management or investment advisory fees paid to Dreyfus or its affiliates by funds in the same Lipper category as the fund (the “Similar Accounts”), and explained the nature of the Similar Accounts. Dreyfus representatives noted that Dreyfus does not advise any separate accounts and/or other types of client portfolios that are considered to have similar investment strategies and policies as the fund.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.The Board considered the relevance of the fee information provided for the Similar Accounts to evaluate the appropriateness and reasonableness of the fund’s management fee.
Analysis of Profitability and Economies of Scale. Dreyfus’ representatives reviewed the expenses allocated and profit received by Dreyfus and the resulting profitability percentage for managing the fund, and the method used to determine the expenses and profit. The Board concluded that the profitability results (without giving effect to a capital support contribution) were not unreasonable given the services rendered and service levels provided by Dreyfus. The Board also noted the expense limitation arrangement and its effect on Dreyfus’ profitability. The Board previously had been provided with information prepared by an independent consulting firm regarding Dreyfus’ approach to allocating costs to, and determining the profitability of, individual funds and the entire Dreyfus fund complex.The consulting firm also had analyzed where any economies of scale might emerge in connection with the management of a fund.
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The Board’s counsel stated that the Board should consider the profitability analysis (1) as part of their evaluation of whether the fees under the Agreement bear a reasonable relationship to the mix of services provided by Dreyfus, including the nature, extent, and quality of such services, 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. Dreyfus representatives noted that a discussion of economies of scale is predicated on a fund having achieved a substantial size with increasing assets and that, if a fund’s assets had been stable or decreasing, the possibility that Dreyfus may have realized any economies of scale would be less. Dreyfus representatives also noted that, as a result of shared and allocated costs among funds in the Dreyfus 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 Dreyfus from acting as investment adviser and noted 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 Dreyfus are adequate and appropriate.
The Board was satisfied with the fund’s performance, in light of the considerations described above.
The Board concluded that the fee paid to Dreyfus was reasonable in light of the considerations described above.
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| INFORMATION ABOUT THE RENEWAL OF THE FUND’S |
| MANAGEMENT AGREEMENT (Unaudited) (continued) |
The Board determined that the economies of scale which may accrue to Dreyfus and its affiliates in connection with the management of the fund had been adequately considered by Dreyfus 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.
The Board considered these conclusions and determinations, along with information received on a routine and regular basis throughout the year. In addition, it should be noted that the Board’s consideration of the contractual fee arrangements for this fund had the benefit of a number of years of reviews of prior or similar agreements during which lengthy discussions took place between the Board and Dreyfus representatives. 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 same or similar arrangements in prior years.The Board determined that renewal of the Agreement was in the best interests of the fund and its shareholders.
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For More Information
Ticker Symbol: DTEXX
Telephone 1-800-DREYFUS
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 E-mail Send your request to info@dreyfus.com Internet Information can be viewed online or downloaded at: http://www.dreyfus.com
The fund will disclose daily, on www.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 until the fund files its Form N-Q or Form N-CSR for the period that includes the date of the posted holdings.
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Information regarding how the fund voted proxies relating to portfolio securities for the most recent 12-month period ended June 30 is available on the SEC’s website at http://www.sec.gov and without charge, upon request, by calling 1-800-DREYFUS.
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. [CLOSED END FUNDS ONLY]
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. 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 Municipal Money Market Fund, Inc.
By: /s/ Bradley J. Skapyak |
Bradley J. Skapyak, President |
Date: | January 17, 2012 |
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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. |
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By: /s/ Bradley J. Skapyak |
Bradley J. Skapyak, President |
Date: | January 17, 2012 |
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By: /s/ James Windels |
James Windels, Treasurer |
Date: | January 17, 2012 |
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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)
