PROSPECTUS
Dreyfus Institutional
Preferred Money
Market Fund
Investing in high quality, short-term
securities for current income,
safety of principal and liquidity
PROSPECTUS August 1, 1999
As revised, September 30, 1999
Lion
This prospectus is to be used only by clients of
HAMBRECHT & QUIST LLC
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
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The Fund
Dreyfus Institutional Preferred Money Market Fund
Contents
The Fund
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Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 1
Expenses 2
Management 2
Financial Highlights 3
Your Investment
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Account Policies 4
Distributions and Taxes 5
For More Information
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INFORMATION ON THE FUND'S RECENT PERFORMANCE AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
THE FUND IS DESIGNED FOR INSTITUTIONAL INVESTORS. FUND SHARES MAY NOT BE
PURCHASED DIRECTLY BY INDIVIDUALS. SEE "ACCOUNT POLICIES" FOR MORE INFORMATION.
GOAL/APPROACH
The fund seeks as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity. As a money market
fund, the fund is subject to maturity, quality and diversification requirements
designed to help it maintain a stable share price of $1.00.
The fund invests in a diversified portfolio of high quality, short-term debt
securities, including:
(pound) securities issued or guaranteed by the U.S. government or its agencies
or instrumentalities
(pound) certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by domestic or foreign banks or their
subsidiaries or branches
(pound) repurchase agreements
(pound) domestic and dollar-denominated foreign commercial paper and other
short-term corporate obligations, including those with floating or
variable rates of interest
(pound) asset-backed securities
Normally, the fund invests at least 25% of its total assets in bank obligations
Concepts to understand
MONEY MARKET FUND: a specific type of mutual fund that seeks to maintain a $1.00
price per share. Money market funds are subject to strict federal requirements
and must:
(pound) maintain an average dollar-weighted portfolio maturity of 90 days or
less
(pound) buy individual securities that have remaining maturities of 13 months or
less
(pound) invest only in high quality, dollar-denominated obligations
REPURCHASE AGREEMENT: a U.S. commercial bank or securities dealer sells
typically U.S. government securities to the fund and agrees to repurchase them
at an agreed-upon date (usually the next day) and price. These agreements offer
the fund a means of investing money for a short period of time.
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MAIN RISKS
The fund's yield will vary as the short-term securities in its portfolio mature
and the proceeds are reinvested in securities with different interest rates.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of an investment at $1.00 per share, it is possible to lose
money by investing in the fund.
While the fund has maintained a constant share price since inception, and will
continue to try to do so, the following factors could reduce the fund's income
level and/or share price:
(pound) interest rates could rise sharply, causing the value of the fund's
securities, and share price, to drop
(pound) any of the fund's holdings could have its credit rating downgraded or
could default
(pound) the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and
regulatory developments relating to the banking industry
(pound) the risks generally associated with dollar-denominated foreign
investments, such as economic and political developments, seizure or
nationalization of deposits, imposition of taxes or other restrictions
on the payment of principal and interest
Concepts to understand
CREDIT RATING: a measure of the issuer's expected ability to make all required
interest and principal payments in a timely manner.
An issuer with the highest credit rating has a very strong degree of certainty
(or safety) with respect to making all payments. An issuer with the
second-highest credit rating has a strong capacity to make all payments, but the
degree of safety is somewhat less.
Generally, the fund is required to invest at least 95% of its assets in the
securities of issuers with the highest credit rating, with the remainder
invested in securities with the second-highest credit rating, or the unrated
equivalent as determined by Dreyfus. The fund intends to purchase securities
with the highest credit rating only, or the unrated equivalent.
PAST PERFORMANCE
The tables below show some of the risks of investing in the fund. The first
table shows the fund's performance for its first full calendar year of
operations. The second table averages the fund's performance over time. Both
tables assume reinvestment of dividends and distributions. Of course, past
performance is no guarantee of future results.
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Year-by-year total return AS OF 12/31 EACH YEAR (%)
5.64
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
BEST QUARTER: Q3 '98 +1.41%
WORST QUARTER: Q4 '98 +1.33%
THE FUND'S YEAR-TO-DATE TOTAL RETURN AS OF 6/30/99 WAS 2.47%.
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Average annual total return AS OF 12/31/98
Since
inception
1 Year (6/11/97)
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5.64% 5.70%
The fund's 7-day yield on 12/31/98 was 5.14%. For the fund's current yield, call
toll-free 1-800-346-3621.
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives an investor the opportunity to participate in financial markets. It
strives to reach its stated goal, although as with all mutual funds, it cannot
offer guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. An investor could lose money in this fund, but also has the
potential to make money.
The Fund
PAGE 1
EXPENSES
Fund investors pay certain fees and expenses in connection with the fund, which
are described in the table below. Annual fund operating expenses are paid out of
fund assets, so their effect is included in the share price. The fund has no
sales charge (load) or Rule 12b-1 distribution fees.
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Fee table
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.10%
Other expenses 0.00%
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TOTAL 0.10%
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Expense example
<TABLE>
1 Year 3 Years 5 Years 10 Years
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<S> <C> <C> <C>
$10 $32 $56 $128
</TABLE>
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether the investor sold their shares at the
end of a period or kept them. Because actual return and expenses will be
different, the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to The Dreyfus Corporation for managing the fund.
Unlike the arrangements between most investment advisers and their funds,
Dreyfus pays all fund expenses except for brokerage fees, taxes, interest, fees
and expenses of the independent board members, fees and expenses of independent
counsel to the fund and to the independent board members, and extraordinary
expenses.
MANAGEMENT
The investment adviser for the fund is The Dreyfus Corporation, 200 Park Avenue,
New York, New York 10166. Founded in 1947, Dreyfus manages more than $120
billion in over 160 mutual fund portfolios. For the past fiscal year, the fund
paid Dreyfus a management fee at the annual rate of 0.10% of the fund's average
daily net assets. Dreyfus is the primary mutual fund business of Mellon Bank
Corporation, a broad-based financial services company with a bank at its core.
With more than $426 billion of assets under management and $2.0 trillion of
assets under administration and custody, Mellon provides a full range of
banking, investment and trust products and services to individuals, businesses
and institutions. Mellon is headquartered in Pittsburgh, Pennsylvania.
Dreyfus has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Dreyfus employees does not disadvantage any
Dreyfus-managed fund. Dreyfus portfolio managers and other investment personnel
who comply with the Policy's preclearance and disclosure procedures may be
permitted to purchase, sell or hold certain types of securities which also may
be or are held in the fund(s) they advise.
Concepts to understand
YEAR 2000 ISSUES: the fund could be adversely affected if the computer systems
used by Dreyfus and the fund's other service providers do not properly process
and calculate date-related information from and after January 1, 2000.
Dreyfus is working to avoid year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
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FINANCIAL HIGHLIGHTS
The following table describes the fund's performance for the fiscal periods
indicated. "Total return" shows how much an investment in the fund would have
increased (or decreased) during each period, assuming reinvestment of all
dividends and distributions. These figures have been independently audited by
Ernst & Young LLP, whose report, along with the fund's financial statements, is
included in the fund's annual report.
<TABLE>
YEAR ENDED MARCH 31,
1999 1998(1)
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<S> <C> <C>
PER-SHARE DATA ($)
Net asset value, beginning of period 1.00 1.00
Investment operations: Investment income -- net .053 .046
Distributions: Dividends from investment income -- net (.053) (.046)
Net asset value, end of period 1.00 1.00
Total return (%) 5.48 5.76(2)
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RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .10 .10(2)
Ratio of net investment income to average net assets (%) 5.31 5.64(2)
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Net assets, end of period ($ x 1,000) 1,999,406 1,496,626
(1) FROM JUNE 11, 1997 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1998.
(2) ANNUALIZED.
</TABLE>
The Fund
PAGE 3
Your Investment
ACCOUNT POLICIES
THE FUND IS DESIGNED for institutional investors, particularly colleges and
universities, for the investment of endowment and other funds. Fund shares will
not be sold to institutions which desire to use the fund as a commercial sweep
account, or to individuals.
Buying shares
TO PURCHASE FUND SHARES, contact your financial representative. You pay no sales
charges to invest in this fund. The price for fund shares is the fund's net
asset value per share (NAV), which is generally calculated at 5:00 p.m. every
day the New York Stock Exchange or the fund's transfer agent is open. Orders in
proper form will be priced at the NAV next calculated after the orders and
Federal Funds are received by the fund's custodian or other authorized entity.
INVESTORS WHOSE ORDERS ARE PLACED and payments are received in or converted into
Federal Funds by the fund's custodian by 12:00 noon, will become effective at
the price determined at 5:00 p.m. and will receive the dividend declared on that
day. Except as described below, investors whose payments are received in or
converted into Federal Funds after 12:00 noon by the fund's custodian, will
begin to accrue dividends on the following business day.
ORDERS IN PROPER FORM RECEIVED by Dreyfus Institutional Services Division after
12:00 noon, but prior to 5:00 p.m., and payments for which are received by the
fund's custodian by 6:00 p.m., will become effective at the price determined at
5:00 p.m., and the shares so purchased will receive the dividend declared on
such day.
All times are Eastern time.
The fund's investments are valued based on amortized cost.
Chart
Selling shares
YOU MAY SELL (REDEEM) SHARES AT ANY TIME through your financial representative.
Your shares will be sold at the next determined NAV. If a request for redemption
is received in proper form, and transmitted to the fund's custodian by 5:00 p.m.
Eastern time, the proceeds of the redemption, if transfer by wire is requested,
ordinarily will be transmitted in Federal Funds on the same day, and the shares
will not receive the dividend declared on that day. If the request is received
later that day, the shares will receive the dividend declared on that day, and
the proceeds of redemption, if wire transfer is requested, ordinarily will be
transmitted in Federal Funds on the next business day. Orders will be processed
promptly and investors generally will receive the proceeds within a week.
Concepts to understand
NET ASSET VALUE (NAV): a mutual fund's share price on a given day. A fund's NAV
is calculated by dividing the value of its net assets by the number of existing
shares.
AMORTIZED COST: a method of valuing a money market fund's portfolio securities,
which does not take into account unrealized gains and losses. As a result,
portfolio securities are valued at their acquisition cost, adjusted over time
based on the discounts or premiums reflected in their purchase price. This
method of valuation is designed to permit a fund to maintain a stable net asset
value.
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General policies
UNLESS YOU DECLINE TELEPHONE PRIVILEGES on the application, you may be
responsible for any fraudulent telephone order as long as Dreyfus takes
reasonable measures to verify that the order is from a representative of your
financial institution.
THE FUND RESERVES THE RIGHT TO:
(pound) refuse any purchase request
(pound) change its minimum investment amounts
(pound) delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or
during unusual market conditions)
The fund also reserves the right to make a "redemption in kind" -- payment in
portfolio securities rather than cash -- if the amount you are redeeming is
large enough to affect fund operations (for example, if it represents more than
1% of the fund's assets).
DISTRIBUTIONS AND TAXES
THE FUND USUALLY DECLARES DIVIDENDS from its net investment income every day the
New York Stock Exchange or the fund's transfer agent is open, and pays such
dividends to its shareholders once a month. The fund distributes any net capital
gains it has realized once a year. Dividends and distributions will be
reinvested in additional shares of the fund unless the investor instructs the
fund otherwise. There are no fees or sales charges on reinvestments.
FUND DIVIDENDS AND DISTRIBUTIONS ARE TAXABLE to most U.S. investors as ordinary
income (unless your investment is in a tax-advantaged account). The tax status
of any distribution is the same regardless of how long the investor has been in
the fund and whether distributions are reinvested or taken in cash. The tax
status of dividends and distributions will be detailed in an annual tax
statement from the fund.
Because everyone's tax situation is unique, always consult your tax professional
about federal, state and local tax consequences.
Your Investment
PAGE 5
For More Information
Dreyfus Institutional Preferred
Money Market Fund
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SEC file number: 811-8211
More information on this fund is available free
upon request, including the following:
Annual/Semiannual Report
Describes the fund's performance and lists its
portfolio holdings.
Statement of Additional Information (SAI)
Provides more details about the fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE
Call your Hambrecht & Quist Representative or
1-800-227-3958.
ON THE INTERNET Text-only versions of fund documents can
be viewed online or downloaded from:
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public
Reference Room in Washington, DC (phone 1-800-SEC-0330)
or by sending your request and a duplicating fee to the SEC's
Public Reference Section, Washington, DC 20549-6009.
(c) 1999 Dreyfus Service Corporation
194P0999-HQ
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