DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this annual report on the Dreyfus
Institutional Preferred Money Market Fund for the period since inception,
June 11, 1997 through March 31, 1998. Your Fund produced an annualized yield
of 5.65% and, after taking into account the effect of compounding, the
annualized effective yield was 5.79%.*
We would like to point out that as a precautionary measure, we reduced
sharply the Fund's Japanese holdings, in view of the problems affecting the
Japanese economy. Recognizing that the ultimate goal of the Fund is principal
preservation, we aggressively monitor the credit quality of each security in
order that we can provide for liquidity as is needed in a money market fund.
Economic Review
Prompted by the ongoing Asian crisis, a shift to a moderate economy may
have started this spring, ending nearly two years of above-trend growth.
Accompanying this potential slowdown, however, has been the continued
tightness in the labor market, raising concerns that some wage inflation will
inevitably follow. This mix in the economy has kept Federal Reserve Board
(the "Fed") policy in a neutral stance in recent months, with equal concern
expressed between rising wage inflation and slowing growth. In turn, stable
short-term rates have thwarted the market's attempts to reduce long-term
rates. Meanwhile, a moderate economy without pricing power has threatened to
curb corporate revenue growth this year. Rising costs already have begun to
squeeze corporate profit margins in some sectors.
The industrial sector appears to be leading the economic slowdown, as
evidenced by weak orders for exports and capital goods, and cutbacks in
automobile production. Manufacturers are bearing the brunt of Asia's economic
turmoil, the strong dollar, and pricing constraints due to import
competition. The household sector, which benefits from these factors, has
enjoyed strong purchasing power that has fueled a boom in housing demand and
consumer spending. This mix has kept the labor market quite tight, exerting
upward pressure on wages, especially in the service sector.
The Fed abandoned its bias towards tighter monetary policy earlier this
year. However, by keeping short-term interest rates stable, the Fed has
effectively created a floor for longer-term rates. Demand for U.S. Treasury
bonds has periodically increased this year as investors sought refuge in
higher quality instruments while the Treasury Department's decreased
borrowing needs due to a Federal budget surplus has curtailed the new supply
of bonds. The Fed's neutral stance has had the effect of keeping interest
rates within a narrow trading range.
As for corporate profits, a very mixed picture has begun to emerge. The
risk to this year's overall profit growth, and consequently to the total
economy, is that slower economic growth may coexist for some time with rising
cost pressures.
Market Environment
Money market rates have remained within a narrow trading range. With
the Fed apparently content to leave the Federal Funds rate unchanged, market
participants have watched two opposing economic forces -- an Asian
crisis-spurred slowdown versus wage inflation caused by tight labor markets
- -- for clues as to future policy directives. To date, neither the
trade-related slowdown due to the financial problems in Asia nor the
traditional late business-cycle inflation upturn has occurred. Until the
effects of the competing economic currents become clear, we expect short-term
rates to remain in their narrow range.
In March 1997, when the Fed raised short-term rates by a quarter point,
the market began to expect a series of tightenings, and rates reflected those
expectations. As the year progressed, the chief influences on rates continued
to be labor market tightness and corporate productivity. As economic growth
continued without rising inflation, the market began to speak of a "new
paradigm" of growth without inflation due to technological advances.
In one speech, Fed Chairman Alan Greenspan appeared to support the
validity of the new paradigm, only to clarify his position at a later date,
saying that he was not an adherent to this new school of thought. As a
result, interest rates at first fell, then rose as the Fed Chairman's
position was clarified.
Indeed, until the economic fallout in Asia, the money market was
expecting a move by the Fed to raise interest rates. Given the current market
environment, it is unclear what the next move by the Fed might be.
Portfolio Focus
With so many cross-currents at work in the money market, we have
generally tried to maintain longer maturities, a strategy which we feel has
been beneficial to the Fund. Our focus is to maintain that posture as long as
it corresponds with market conditions, while bearing in mind that a change in
Fed policy or external conditions affecting the market could require a
different approach. Of course, we will continue to monitor these market
forces on a constant basis, alert for any changes in the prevailing
environment.
Very truly yours,
[Patricia A. Larkin signature logo]
Patricia A. Larkin
Senior Portfolio Manager
April 17, 1998
New York, N.Y.
*Annualized effective yield is based on dividends declared daily and
reinvested monthly.
<TABLE>
DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
STATEMENT OF INVESTMENTS MARCH 31, 1998
Principal
Negotiable Bank Certificates of Deposit-25.0% Amount Value
__________ __________
<S> <C> <C>
Abbey National Treasury Service (Yankee)
5.72%,1/27/99............................................................. $ 25,000,000 $ 25,000,000
Bankers Trust Co.
5.70%, 7/21/98 (a)........................................................ 25,000,000 24,997,035
6.01%, 8/28/98............................................................ 5,000,000 4,999,220
Bank of Tokyo-Mitsubishi Ltd. (Yankee)
5.85%, 4/27/98............................................................ 8,000,000 8,000,000
Canadian Imperial Bank of Commerce (Yankee)
5.52%, 4/9/98............................................................. 15,000,000 14,999,983
Credit Agricole Indosuez S.A. (Yankee)
5.50%, 1/14/99............................................................ 10,000,000 10,000,000
Deutsche Bank AG (Yankee)
5.70%, 3/22/99............................................................ 30,000,000 29,984,622
Industrial Bank of Japan, Ltd. (Yankee)
5.81%, 4/27/98............................................................ 5,000,000 5,000,000
Morgan Guaranty Trust Co.
5.52%, 6/16/98............................................................ 16,500,000 16,507,635
Morgan Guaranty Trust Co. (London)
5.70%, 6/17/98............................................................ 10,000,000 10,001,778
National Westminster Bank PLC (Yankee)
6.00%, 6/26/98............................................................ 20,000,000 19,997,298
Royal Bank of Canada
5.61%, 2/23/99............................................................ 50,000,000 49,971,648
Societe Generale (Yankee)
5.56%-6.00%, 4/15/98-1/7/99............................................... 54,500,000 54,508,146
SwedBank (Yankee)
5.57%-5.79%, 4/10/98-10/5/98.............................................. 55,000,000 55,000,000
Westdeutsche Landesbank (London)
5.82%-5.84%, 8/3/98-8/18/98............................................... 20,000,000 20,003,010
Westdeutsche Landesbank (Yankee)
5.53%, 4/13/98............................................................ 25,000,000 25,000,000
___________
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $373,970,375)....................................................... $ 373,970,375
===========
Commercial Paper-41.6%
Abbey National North America
5.68%, 4/27/98............................................................ $ 10,000,000 $ 9,960,134
Bankers Trust N.Y. Corp.
5.57%, 10/23/98........................................................... 30,000,000 29,086,042
Den Norske Bank ASA
5.53%, 8/10/98............................................................ 25,000,000 24,510,570
DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1998
Principal
Commercial Paper (continued) Amount Value
____________ ___________
Donaldson Lufkin & Jenrette Inc.
5.60%, 5/4/98............................................................. $ 25,000,000 $ 24,873,500
Dupont (E.I.) De Nemours & Co.
5.53%, 4/9/98............................................................. 25,000,000 24,969,722
General Electric Capital Corp.
5.57%-5.60%, 4/24/98-9/4/98............................................... 65,000,000 64,472,028
General Electric Capital Services Inc.
5.60%, 9/4/98............................................................. 15,000,000 14,649,000
General Motors Acceptance Corp.
5.51%-5.74%, 4/30/98-5/20/98.............................................. 70,000,000 69,547,683
Hertz Corp.
5.57%, 4/24/98............................................................ 9,280,000 9,247,154
Internationale Nederlanden (U.S.) Funding Corp.
5.56%-5.69%, 4/14/98-4/24/98.............................................. 59,050,000 58,855,242
Lehman Brothers Holdings, Inc.
5.92%, 8/14/98............................................................ 45,000,000 44,043,188
Merrill Lynch & Co. Inc.
5.52%-5.79%, 6/12/98-7/28/98.............................................. 40,000,000 39,361,933
Nordbanken N.A. Inc.
5.49%, 5/14/98............................................................ 50,000,000 49,678,097
Paine Webber Group Inc.
5.66%, 6/8/98............................................................. 20,000,000 19,790,333
Prudential Funding Corp.
6.05%, 4/1/98............................................................. 25,000,000 25,000,000
Salomon Smith Barney Holdings Inc.
5.52%, 8/3/98............................................................. 25,000,000 24,537,583
Spintab AB
5.55%-5.87%, 4/14/98-6/11/98.............................................. 75,000,000 74,509,315
Svenska Handelsbanken Inc.
5.71%, 4/27/98............................................................ 15,000,000 14,939,875
_______________
TOTAL COMMERCIAL PAPER
(cost $622,031,399)....................................................... $ 622,031,399
===============
Corporate Notes-18.7%
Bankers Trust Co.
5.70%, 1/8/99 (a)......................................................... $ 10,000,000 $ 9,998,493
BankBoston N.A.
5.66%, 1/11/99 (a)........................................................ 40,000,000 39,988,000
Bear Stearns Companies Inc.
5.68%, 6/24/98 (a)........................................................ 15,000,000 15,000,000
CIT Group Holdings, Inc.
5.67%, 1/12/99 (a)........................................................ 50,000,000 49,988,650
DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) MARCH 31, 1998
Principal
Corporate Notes (continued) Amount Value
__________ __________
Lehman Brothers Holdings, Inc.
5.71%, 3/22/99 (a)........................................................ $ 25,000,000 $ 25,000,000
Merrill Lynch & Co. Inc.
5.68%, 6/26/98 (a)........................................................ 20,000,000 20,000,000
PHH Corp.
5.68%-5.69%, 5/26/98-8/4/98 (a)........................................... 40,000,000 40,000,000
Paine Webber Group Inc.
5.63%, 6/15/98............................................................ 5,000,000 5,004,955
5.77%-5.79%, 7/20/98-1/4/99 (a)........................................... 35,000,000 35,000,000
Salomon Smith Barney Holdings Inc.
5.84%-5.85%, 7/20/98-8/4/98 (a)........................................... 40,000,000 40,000,000
_______________
TOTAL CORPORATE NOTES
(cost $279,980,098)....................................................... $ 279,980,098
===============
Promissory Notes-4.5%
Goldman Sachs Group L.P.
5.60%-5.87%, 4/24/98-10/19/98 (b,c)
(cost $67,000,000)........................................................ $ 67,000,000 $ 67,000,000
===========
Short-Term Bank Notes-4.0%
BankBoston N.A.
5.68%, 7/23/98 (a)........................................................ $ 20,000,000 $ 19,996,995
Comerica Bank
6%, 6/24/98............................................................... 15,000,000 14,997,690
Morgan Guaranty Trust Co.
5.84%, 8/31/98............................................................ 15,000,000 15,003,604
PNC Bank NA
5.67%, 9/2/98 (a)......................................................... 10,000,000 9,997,141
_______________
TOTAL SHORT-TERM BANK NOTES
(cost $59,995,430)........................................................ $ 59,995,430
===============
Time Deposits-5.4%
Berliner Handels-und Frankforter Bank (Grand Cayman)
5.95%, 4/1/98............................................................. $ 46,095,000 $ 46,095,000
Republic National Bank of New York (London)
5.38%, 4/1/98............................................................. 35,400,000 35,400,000
_______________
TOTAL TIME DEPOSITS
(cost $81,495,000)........................................................ $ 81,495,000
===============
TOTAL INVESTMENTS
(cost $1,484,472,302)............................................. 99.2% $1,484,472,302
======= ===============
CASH AND RECEIVABLES (NET).......................................... .8% $ 12,154,021
======= ===============
NET ASSETS.......................................................... 100.0% $1,496,626,323
======= ===============
</TABLE>
DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
Notes to Statement of Investments:
(a) Variable interest rate-subject to periodic change.
(b) These notes were acquired for investment, and not with the intent to
distribute or sell.
(c) Security restricted as to public resale. This security was acquired
from 9/17/97-3/25/98 at a cost of par value. At March 31, 1998, the
aggregate value of this security was $67,000,000 representing
approximately 4.5% of net assets and is valued at amortized cost.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1998
Cost Value
_______________ _______________
<S> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $1,484,472,302 $1,484,472,302
Cash.................................................. 474,871
Interest receivable................................... 11,791,460
_______________
1,496,738,633
LIABILITIES: Due to The Dreyfus Corporation and affiliates......... 112,310
_______________
NET ASSETS............................................................................. $1,496,626,323
===============
REPRESENTED BY: Paid-in capital....................................... $1,496,629,115
Accumulated net realized gain (loss) on investments... (2,792)
_______________
NET ASSETS............................................................................. $1,496,626,323
===============
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST
AUTHORIZED) ........................................... 1,496,629,115
NET ASSET VALUE, offering and redemption price per share.................... $1.00
=====
STATEMENT OF OPERATIONS
FROM JUNE 11, 1997 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1998
INVESTMENT INCOME
INCOME Interest Income............................ $48,982,587
EXPENSES Management Fee-Note 2(a)................... 853,116
____________
INVESTMENT INCOME-NET....................................................... 48,129,471
NET REALIZED GAIN (LOSS) ON INVESTMENTS-Note 1(b)........................... (2,792)
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $48,126,679
===============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
FROM JUNE 11, 1997 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1998
OPERATIONS: <C> <C>
Investment income-net.................................................... $ 48,129,471
Net realized gain (loss) on investments.................................. (2,792)
_______________
Net Increase (Decrease) in Net Assets Resulting from Operations........ 48,126,679
_______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net.................................................... (48,129,471)
_______________
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold............................................ 5,663,121,791
Dividends reinvested..................................................... 47,609,227
Cost of shares redeemed.................................................. (4,214,201,903)
_______________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 1,496,529,115
_______________
Total Increase (Decrease) in Net Assets.............................. 1,496,526,323
NET ASSETS:
Beginning of period...................................................... 100,000
_______________
End of period............................................................ $ 1,496,626,323
===============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
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 March 31, 1998. This information has been
derived from the Fund's financial statements.
PER SHARE DATA:
<S> <C> <C>
Net asset value, beginning of period........................................................... $ 1.00
______
Investment Operations:
Investment income-net.......................................................................... .046
______
Distributions:
Dividends from investment income-net............................................................ (.046)
______
Net asset value, end of period.................................................................. $ 1.00
======
TOTAL INVESTMENT RETURN........................................................................... 5.76%*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......................................................... .10%*
Ratio of net investment income to average net assets............................................ 5.64%*
Net assets, end of period (000's Omitted)....................................................... $1,496,626
* Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
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, 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. To
the extent that a net realized capital gain can be offset by capital loss
carryovers, 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.
The Fund has an unused capital loss carryover of approximately $57
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to March 31, 1998. The
carryover does not include net realized securities losses from November 1,
1997 through March 31, 1998, which are treated, for Federal income tax
purposes, as arising in fiscal 1999. If not applied, the carryover expires in
fiscal 2006.
At March 31, 1998, 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 Manager has agreed to pay all of the Fund's expenses except the
management fee.
The Manager 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 receives 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.
DREYFUS INSTITUTIONAL PREFERRED MONEY MARKET FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Institutional Preferred Money Market Fund
We have audited the accompanying statement of assets and liabilities of
Dreyfus Institutional Preferred Money Market Fund, including the statement of
investments, as of March 31, 1998, and the related statements of operations
and changes in net assets, and financial highlights for the period from June
11, 1997 (commencement of operations) to March 31, 1998. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of March 31, 1998 by correspondence with
the custodian. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Institutional Preferred Money Market Fund at March 31,
1998, and the results of its operations, the changes in its net assets, and
the financial highlights for the period from June 11, 1997 to March 31, 1998,
in conformity with generally accepted accounting principles.
[ERNST & YOUNG LLP signature logo]
New York, New York
April 30, 1998
Registration Mark
[Dreyfus lion "d" logo]
DREYFUS INSTITUTIONAL 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. 194AR983
Registration Mark
[Dreyfus logo]
Institutional
Preferred Money
Market Fund
Annual Report
March 31, 1998
