Opportunities in Floating Nav MMRs

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Dreyfus’ Money Market Investment Philosophy

Dreyfus’ approach to managing money market funds is to seek high current yields consistent with the preservation of principal and the maintenance of liquidity. Dreyfus money market portfolios are actively managed and continuously monitored by a tenured team of investment professionals who have the investment expertise and the necessary resources to extensively evaluate credit in an evolving global marketplace.

For decades, institutional investors have utilized 2a-7 money market funds to invest cash in a diversified portfolio that seeks to maintain principal and provide daily liquidity with competitive returns. Rules governing the structure of money market funds (MMFs) became effective on October 14, 2016, including provisions requiring the net asset value of institutional prime money market funds to fluctuate along with the market value of the fund’s portfolio. These rules were developed to strengthen the resiliency of money market funds during times of market stress while maintaining their many benefits.

Floating NAV (Net Asset Value) money market funds now require investors to consider a fund’s price movement in addition to income. As a result, prime money market funds may offer the potential for attractive total returns over government funds that could compensate investors for the small fluctuations in a fund’s price over a short nvestment horizon.

Today’s opportunity

Currently, the yield spread between institutional prime MMFs and government MMFs ranges between 18 and 25 basis points through April 2019. As the tables below illustrate, it can take a short period of time for the extra yield generated by a prime MMF to compensate investors for each 0.0001 basis point decline in NAV. Once the breakeven day is achieved, investors have the potential to earn a greater return in a prime MMF versus a government MMF.

Tax Relief for Floating NAV Money Market

Funds – the NAV Method In response to concerns regarding the tax reporting of small gains/losses generated from redemption activity on FNAV money market funds, the IRS created an additional, simplified method, the “NAV Method,” to calculate and report gains/losses incurred on a shareholder’s investment. Under the new NAV Method, shareholders can calculate the gain or loss on their investment by reporting the aggregate change in value of their shares over their tax reporting cycle versus tracking the gain/loss on each transaction or the adjusted cost basis of fund shares.

Additionally, FNAV MMF redemption activity is not required to be reported on IRS Form 1099-B. To help facilitate an investor’s calculation for reporting gains/losses, our account statement includes a section that summarizes the net investment activity for our FNAV MMFs and any liquidity fees that may have been assessed during a calendar year. Investors should consult with their tax advisor for questions or additional information.

Wash Sale Rule

The IRS also provided additional tax reporting relief for FNAV money market funds regarding wash sales. A wash sale typically occurs when shares of a mutual fund are liquidated and then re-purchased in the same fund within 30 days. Whether the investor uses the NAV Method or cost basis accounting for tax reporting on FNAV MMFs, there is no need to track or consider the impact of wash sales. Investors should consult with their tax advisor for questions or additional information.

Investors should consider the investment objectives, risks, charges and expenses of any mutual fund carefully before investing. Visit www.dreyfus.com to download a money market fund prospectus, or a summary prospectus, if available, that contains this and other information about a fund. Read it carefully before investing.

Institutional Prime and Tax-Exempt Money Market Funds: You could lose money by investing in a money market fund. Because the share price of the fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. Effective October 14, 2016, the fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. 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.

Government/Treasury Money Market Funds: 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. Although the fund’s board has no current intention to impose a fee upon the sale of shares or temporarily suspend redemptions if the fund’s liquidity falls below certain levels, the board reserves the ability to do so after providing at least 60 days prior written notice to shareholders.

BNY Mellon is the corporate brand for The Bank of New York Mellon Corporation. Dreyfus Cash Investment Strategies is a division of BNY Mellon Investment Adviser, Inc., Dreyfus Cash Solutions is a division of BNY Mellon Securities Corporation, a registered broker dealer and the Funds’ distributor. BNY Mellon Investment Management is one of the world’s leading asset management organizations and one of the top U.S. wealth managers, encompassing BNY Mellon’s affiliated investment management firms, wealth management services and global distribution companies.

This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular investment. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Please consult a legal, tax or investment advisor in order to determine whether an investment product or service is appropriate for a particular situation. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. © 2019 BNY Mellon Securities Corporation, distributor, 240 Greenwich St., 9th Floor, New York, NY 10286.

CIS-63481-2019-05-30

IST-FNAVHO-0619