Today, we excerpt from the latest issue of our Money Fund Intelligence newsletter.... For our May issue, MFI interviews Charles Cardona, Chief Executive Officer of BNY Mellon Cash Investment Strategies (CIS) and President of The Dreyfus Corporation, and Patricia Larkin, CIO of the Dreyfus CIS Money Market Mutual Funds. The two joined Dreyfus in the early 1980's. Dreyfus, which launched its flagship retail fund, Dreyfus Liquid Assets, in early 1974, is approaching its 40th birthday in the money fund business. We discuss the company's history, current events, and a number of money fund related issues below.

MFI: How long have you been running money funds? Cardona: Dreyfus has been involved in the money fund business for a long time. Ironically, given current regulatory debate, when we introduced Dreyfus Liquid Assets in 1974, it was actually a fluctuating share value fund, priced at $10 per share. Amortized cost pricing had not yet been adopted. Eventually, with SEC approval or exemptive relief, the industry migrated to $1 pricing. We created our Dreyfus Cash Management Funds in the mid-80's, which were pioneers of today's lower cost model. We were the first to price the funds at a total expense ratio of 20bps with a higher investment minimum and omnibus account processing only.

MFI: What are you focusing on? Cardona: Our strategy with the brand is to leverage the best of both Dreyfus and BNY Mellon. Dreyfus is a wholly-owned subsidiary of BNY Mellon; CIS, a division of Dreyfus, represents one of 16 different investment boutiques that comprise our asset management business. As an enterprise, BNY Mellon Investment Management is responsible for approximately $1.4 trillion in assets under management. CIS focuses on short-duration fixed-income cash products. The Dreyfus name remains very important to us. It is the name that's on the funds and co-branded on all the fund materials that we use. But we also like to promote the fact that we're part of a much larger and very sound financial organization. So we clearly benefit by combining it with BNY Mellon, hence the name of the CIS division -- BNY Mellon Cash Investment Strategies, with the Dreyfus money market funds being a very important part of that.

MFI: How much cash is the unit managing approximately now? Cardona: We manage in excess of $350 billion in domestic money market funds, offshore money market funds, sub-advised money market portfolios, bank commingled collective funds and cash collateral reinvestment products.

MFI: What's the biggest challenge in managing the funds today? Larkin: The current interest rate environment is certainly a challenge. Rates are at historic lows and it appears they will remain so for a period of time. So, this asset class is challenged to remain competitive. We fully expect that there may be changes to Rule 2a-7 and will address that at the appropriate time. In the meanwhile, we continue to manage our funds with large liquidity positions and try to capitalize on yield opportunities where we can.

MFI: Is there a lot more scrutiny of money funds in general these days? Cardona: There certainly is. We've been an advocate of trying to be as transparent as we can be, because we think that's what clients need and want. So, in 2007, when you were first going through the early stages of what was leading up to the height of the financial crisis in 2008, we actually made a decision to post all of our portfolio holdings daily on the web. That way we were transparent. If the client wanted to see what we owned they could see it. We could talk about what we owned and what we didn't. I believe we were the first to actually proceed with daily portfolio disclosures. We were also one of the first in the industry who, earlier this year, disclosed market NAVs on a daily basis. That's an addition to what 2a-7 has required us to do in reporting them to the regulators.

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