DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
In this, our first report to you on Dreyfus Institutional Preferred Money
Market Fund, we are pleased to provide the performance results for the Fund's
first semi-annual reporting period ended September 30, 1997.
As you are aware, the Fund began operations on June 11, 1997.
Your Fund produced an annualized yield of 5.65%, or an
annualized effective yield of 5.80%, after compounding.*
Economic Review
A major surprise this year has been that the rate of inflation has
continued to moderate. This has occurred despite a tightening labor market
and consecutive quarters of strong economic growth. Moreover, overall
corporate profits have continued to be surprisingly strong. A lack of visible
inflation pressure has kept short-term interest rates steady and has pulled
long-term interest rates lower in recent months. Despite a continued
tightening bias, low inflation has kept the Federal Reserve Board (the "Fed")
in a "wait and see" mode since it last raised short-term rates in March.
Virtually all measures of price inflation-consumer prices, producer
prices and industrial commodity prices-have been subdued this year. Factors
suppressing inflation have been the strong dollar that has reduced prices in
import-competing industries, lower oil prices and increased productivity.
Additionally, the disinflation in health care has continued to help pull core
inflation lower. Yet the labor market remains quite tight; the unemployment
rate has held below 5% since the spring and wage inflation in some sectors
has been steadily accelerating.
The economy has grown by almost 4% since the summer of 1996. Consumer
spending has been strong, fueled by rising real incomes and waning job
insecurity. A broad-based rebound in capital spending has developed this year
following a brief slowdown over the winter. Exports have been rising at
double-digit rates. Even housing activity has remained at high levels,
although this sector has not strengthened significantly further. The strength
in domestic demand has fueled rapid import growth that, in turn, should help
mitigate some of the economic weakness overseas.
In effect, lower inflation with no change in the Federal Funds rate
policy implies a higher real Fed Funds rate, after adjusting for price
changes. That acts as a light brake on inflation. Whether stronger brake
pressure will be required has not yet been determined by the monetary
authorities.
Money Market Overview
When the Fund began operations, money market rates had moved higher in
response to a March quarter-point move by the Fed. Since that time, the
economic environment has been one of moderate economic growth with subdued
inflation. Citing technological advancements and job security issues which
were keeping a lid on inflation, the Fed has determined to keep economic
policy steady. As a result, interest rates have declined from their highs and
settled into a defined trading range.
Recent cautionary comments by Fed Chairman Alan Greenspan that "the
performance of the labor markets suggests that the economy has been on an
unsustainable track" have heightened market volatility and vulnerability.
Going forward, the market will continue to look for any evidence influencing
the future course of economic policy.
Portfolio Strategy
Our strategy for dealing with these conditions has been to keep the
average maturity of the portfolio slightly longer than the relevant industry
average. With the economy in a moderate scenario of growth with subdued
inflation-at least through September 30-and the Fed having taken no further
anti-inflation actions (other than jawboning by the
Chairman), the strategy of keeping a longer portfolio maturity has benefited
the Fund. Of course, should market dynamics change, we will adjust the
portfolio strategy accordingly.
It is a pleasure and a privilege to manage money on your behalf.
Sincerely,
[PATRICIA A LARKIN SIGNATURE]
Patricia A. Larkin
Senior Portfolio Manager
October 20, 1997
New York, N.Y.
* Annualized effective yield takes into account the effect of compounding
and is based upon dividends declared daily and reinvested monthly.
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DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
Principal
Negotiable Bank Certificates of Deposit-29.8% Amount Value
-------- --------
<S> <C> <C>
Bankers Trust Co.
6.01%, 8/28/98............................................................ $ 5,000,000 $ 4,998,267
Bank of Tokyo-Mitsubishi Ltd. (London)
5.85%, 12/19/97........................................................... 5,000,000 5,000,107
Bank of Tokyo-Mitsubishi Ltd. (Yankee)
5.85%-5.99%, 3/20/98-4/27/98.............................................. 18,000,000 18,000,000
Dai-Ichi Kangyo Bank Ltd. (Yankee)
5.68%-5.90%, 11/26/97-1/26/98............................................. 43,000,000 43,004,616
Fuji Bank Ltd. (Yankee)
5.68%-5.75%, 10/2/97-10/24/97............................................. 28,000,000 28,000,000
Industrial Bank of Japan Ltd. (Yankee)
5.72%-5.81%, 10/23/97-4/27/98............................................. 36,000,000 36,000,000
National Westminster Bank PLC
6%, 6/26/98............................................................... 20,000,000 19,991,579
Sanwa Bank Ltd. (London)
5.86%, 12/18/97........................................................... 5,000,000 5,000,105
Sanwa Bank Ltd. (Yankee)
5.77%-5.84%, 12/24/97-1/26/98............................................. 18,000,000 18,000,480
Societe Generale (Yankee)
5.61%-6%, 12/3/97-6/16/98................................................. 45,000,000 44,992,771
Sumitomo Bank Ltd. (Yankee)
5.65%-5.90%, 10/8/97-12/19/97............................................. 31,000,000 31,000,000
SwedBank (Yankee)
5.57%-5.60%, 10/27/97-11/21/97............................................ 40,000,000 40,000,000
Westdeutsche Landesbank (London)
5.82%-5.84%, 8/3/98-8/18/98............................................... 20,000,000 20,006,976
--------
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $313,994,901)....................................................... $ 313,994,901
========
Commercial Paper-36.1%
American Honda Finance Corp.
5.58%-5.60%, 11/7/97-11/21/97............................................. $ 35,000,000 $34,737,781
Commercial Credit Co.
5.57%, 10/16/97........................................................... 25,000,000 24,942,604
Fina Oil & Chemical Co.
5.61%, 10/22/97........................................................... 15,000,000 14,951,612
Finova Capital Corp.
5.59%-5.61%, 11/7/97-11/14/97............................................. 40,000,000 39,739,458
General Electric Capital Corp.
5.71%, 3/3/98............................................................. 10,000,000 9,764,125
General Motors Acceptance Corp.
5.69%-5.74%, 1/12/98-4/30/98.............................................. 40,000,000 39,199,547
DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1997 (UNAUDITED)
Principal
Commercial Paper (continued) Amount Value
-------- --------
Merrill Lynch & Co. Inc.
5.62%-5.79%, 12/12/97-6/12/98............................................. $ 25,000,000 $24,443,417
Paine Webber Group Inc.
5.63%, 11/24/97........................................................... 10,000,000 9,916,750
Sanwa Business Credit Corp.
5.62%, 10/22/97........................................................... 10,000,000 9,967,683
Sears Roebuck Acceptance Corp.
5.61%, 11/24/97........................................................... 40,000,000 39,668,200
Spintab AB
5.57%-5.71%, 10/8/97-2/13/98.............................................. 40,000,000 39,660,980
Sumitomo Corp. of America
5.63%-5.76%, 10/21/97-3/17/98............................................. 45,700,000 45,390,327
Svenska Handelsbanken Inc.
5.69%, 3/27/98............................................................ 25,000,000 24,320,271
Woolwich PLC
5.72%, 3/10/98............................................................ 25,000,000 24,382,222
--------
TOTAL COMMERCIAL PAPER
(cost $381,084,977)....................................................... $381,084,977
========
Corporate Notes-13.6%
Bear Stearns Companies Inc.
5.70%, 7/21/98 (a)........................................................ $ 15,000,000 $15,000,000
Ford Motor Credit Co.
5.76%, 2/26/98............................................................ 11,000,000 11,015,062
Merrill Lynch & Co. Inc.
5.68%, 6/26/98 (a)........................................................ 20,000,000 20,000,000
PHH Corp.
5.65%-5.69%, 5/26/98-8/4/98 (a)........................................... 40,000,000 40,000,000
Paine Webber Group Inc.
5.77%, 7/20/98 (a)........................................................ 15,000,000 15,000,000
Salomon Inc.
5.79%, 2/16/98............................................................ 2,300,000 2,325,075
5.84%-5.85%, 7/20/98-8/4/98 (a)........................................... 40,000,000 40,000,000
--------
TOTAL CORPORATE NOTES
(cost $143,340,137)....................................................... $143,340,137
========
Promissory Notes-3.8%
Goldman Sachs Group L.P.
5.70%-5.86%, 10/14/97-6/12/98 (b,c)
(cost $40,000,000)........................................................ $ 40,000,000 $40,000,000
========
DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1997 (UNAUDITED)
Principal
Short-Term Bank Notes-8.1% Amount Value
-------- --------
Bankers Trust Co.
5.70%, 7/21/98 (a)........................................................ $ 25,000,000 $24,992,173
Bank of Boston
5.68%, 7/23/98 (a)........................................................ 20,000,000 19,992,155
Comerica Bank
6%, 6/24/98............................................................... 15,000,000 14,992,686
Morgan Guaranty Trust Co.
5.84%, 8/31/98............................................................ 15,000,000 15,007,919
PNC Bank NA
5.67%, 9/2/98 (a)......................................................... 10,000,000 9,993,761
--------
TOTAL SHORT-TERM BANK NOTES
(cost $84,978,694)........................................................ $84,978,694
========
Time Deposits-8.0%
Berliner Handels-und Frankforter Bank (Grand Cayman)
6.41%, 10/1/97............................................................ $ 33,000,000 $33,000,000
Canadian Imperial Bank of Commerce (Grand Cayman)
6.50%, 10/1/97............................................................ 25,000,000 25,000,000
Huntington National Bank (Grand Cayman)
5.50%, 10/1/97............................................................ 10,000,000 10,000,000
Westdeutshe Landesbank (Grand Cayman)
6.12%, 10/1/97............................................................ 16,000,000 16,000,000
--------
TOTAL TIME DEPOSITS
(cost $84,000,000)........................................................ $ 84,000,000
========
TOTAL INVESTMENTS
(cost $1,047,398,709)............................................. 99.4% $1,047,398,709
======= ==============
CASH AND RECEIVABLES (NET).......................................... .6% $ 6,660,093
======= ==============
NET ASSETS.......................................................... 100.0% $1,054,058,802
======= ==============
Notes to Statement of Investments:
(a) Variable interest rate-subject to periodic change.
(b) These notes were acquired for investment, not with the intent to
distribute or sell.
(c) Securities restricted as to public resale. These securities were
acquired from 6/16/97-9/17/97 at a cost of par value. At September 30,
1997, the aggregate value of these securities was $40,000,000 representing
approximately 3.8% of net assets and are valued at amortized cost.
SEE NOTES TO FINANCIAL STATEMENTS.
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DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1997 (UNAUDITED)
Cost Value
-------- --------
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $1,047,398,709 $1,047,398,709
Cash....................................... 1,208,384
Interest receivable........................ 5,503,526
--------
1,054,110,619
LIABILITIES: Due to The Dreyfus Corporation and affiliates 51,817
--------
NET ASSETS.................................................................. $1,054,058,802
========
REPRESENTED BY: Paid-in capital............................ $1,054,057,835
Accumulated net realized gain (loss) on investments 967
--------
NET ASSETS.................................................................. $1,054,058,802
========
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest
authorized) ........................................... 1,054,057,835
NET ASSET VALUE, offering and redemption price per share.................... $1.00
====
SEE NOTES TO FINANCIAL STATEMENTS.
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DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
STATEMENT OF OPERATIONS
FROM JUNE 11, 1997 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1997
(UNAUDITED)
INVESTMENT INCOME
<S> <C> <C>
INCOME Interest Income............................ $14,734,943
EXPENSES Management fee-Note 2(a)................... 255,499
--------
INVESTMENT INCOME-NET....................................................... 14,479,444
NET REALIZED GAIN (LOSS) ON INVESTMENTS-Note 1(b)........................... 967
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $14,480,411
========
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
FROM JUNE 11, 1997 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1997
(UNAUDITED)
OPERATIONS:
Investment income-net..................................................................... $14,479,444
Net realized gain (loss) on investments................................................... 967
--------
Net Increase (Decrease) in Net Assets Resulting from Operations......................... 14,480,411
--------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net..................................................................... (14,479,444)
--------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold............................................................. 2,394,978,238
Dividends reinvested...................................................................... 14,272,852
Cost of shares redeemed................................................................... (1,355,293,255)
========
Increase (Decrease) in Net Assets from Beneficial Interest Transactions................. 1,053,957,835
--------
Total Increase (Decrease) in Net Assets............................................... 1,053,958,802
NET ASSETS:
Beginning of Period....................................................................... 100,000
--------
End of Period............................................................................. $ 1,054,058,802
========
SEE NOTES TO FINANCIAL STATEMENTS.
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DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for the period from June 11, 1997
(commencement of operations) to September 30, 1997. This information has been
derived from the Fund's financial statements.
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period.................................................. $ 1.00
---
Investment Operations:
Investment income-net................................................................. .017
---
Distributions:
Dividends from investment income-net.................................................. (.017)
---
Net asset value, end of period........................................................ $ 1.00
====
TOTAL INVESTMENT RETURN................................................................... 5.70%*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................................... .10%*
Ratio of net investment income
to average net assets............................................................... 5.67%*
Net Assets, end of period (000's Omitted)............................................. $1,054,059
* Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
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DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Institutional Preferred Money Market Fund (the "Fund") is
registered under the Investment Company Act of 1940 ("Act") as a diversified
open-end management investment company. The Fund's investment objective is to
provide investors with as high a level of current income as is consistent
with the preservation of capital and the maintenance of liquidity. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A. Premier Mutual Fund
Services, Inc. is the distributor of the Fund's shares, which are sold to the
public 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 Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities are valued at
amortized cost, which has been determined by the Fund's Board of Trustees to
represent the fair value of the Fund's investments.
(b) Securities transactions and investment income: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income is recognized on the accrual 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 gain 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. To
the extent that a net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Fund not to distribute such gain.
(d) Federal income taxes: It is the policy of the Fund 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
Internal Revenue Code, and to make distributions of taxable income sufficient
to relieve it from substantially all Federal income and excise taxes.
At September 30, 1997, 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 .10 of 1% of the value of the Fund's
average daily net assets and is payable monthly.
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.
(b) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
Registration Mark
[Dreyfus lion "d" logo]
DREYFUS INSITUTIONAL
PREFERRED MONEY MARKET FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 194SA979
Registration Mark
[Dreyfus logo]
Institutional
Preferred Money
Market Fund
Semi-Annual
Report
September 30, 1997
