Dreyfus
Institutional Preferred Money Market Fund
SEMIANNUAL REPORT September 30, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation 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.
Contents
THE FUND
- --------------------------------------------------
2 Letter to Shareholders
5 Statement of Investments
8 Statement of Assets and Liabilities
9 Statement of Operations
10 Statement of Changes in Net Assets
11 Financial Highlights
12 Notes to Financial Statements
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Institutional
Preferred Money Market Fund
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report for the Dreyfus Institutional
Preferred Money Market Fund for the six-month period ended September 30, 1999.
During the reporting period, your fund produced an annualized yield of 5.00%
and, after taking into account the effect of compounding, an annualized
effective yield of 5.12%.(1)
The Economy
After a period of moderate economic growth and subdued inflation in 1998, a
result of the U.S. benefiting from the Asian financial crisis, the Federal
Reserve Board began to voice its concern about future inflationary pressures
affecting the economy. Although difficulties were still occurring at the time in
global markets, such as in the area of Japanese financial reform and in the
devaluation of the Russian ruble, the general atmosphere of crisis in the
overseas environment was waning. This had shifted the focus back to the
performance of the domestic economy.
The performance of the U.S. economy in the first quarter of 1999 has been much
stronger than expected. The growth rate of 4.3% was high, inflation was benign,
and there has been no evidence of advancing wage pressure despite a tight labor
market. Rapid advances in technology were contributing to the economic expansion
by providing structural benefits in the form of lower costs and prices. However,
there were concerns that imbalances in the economy would eventually derail the
nine-year economic expansion.
A surprise jump in the Consumer Price Index in May was instrumental in raising
the odds of a Federal Reserve rate hike. Although the Fed did not immediately
raise interest rates, it did shift to an asymmetric directive toward tightening.
As a result, there was a fundamental change in market psychology toward higher
interest rates, which poised the market for a move by the Federal Reserve
At the June Federal Open Market Committee (FOMC) meeting, the Fed voted to raise
interest rates by 25 basis points and shifted its policy directive back to a
neutral bias. Spurred by this move, as a preemptive strike to head off the
threat of inflation, the market hoped that the Fed would be done tightening.
Although inflation appeared under control, evidence began to emerge showing
rising wages and benefits. Against a backdrop of strong economic growth, the
threat of higher inflationary activity was hard to ignore.
At the August FOMC meeting and for a second time during the year, the Fed raised
the fed funds target by 25 basis points. The Fed also raised the discount rate
by 25 basis points. Although second quarter Gross Domestic Product (GDP) growth
dropped to a rate of 1.6%, the effects of two interest rate hikes have yet to
fully impact the performance of the economy. Tight labor markets, an improved
manufacturing sector, a strong housing sector and high consumer demand continue
to reinforce the underlying strength of the economy. Going forward, statistical
evidence continues to remain the driving force regarding the future of monetary
policy.
Market Environment/Portfolio Focus
The shift in market psychology towards a rising interest rate environment
heightened the frequency of declining trading sessions in the equity, treasury
and money markets. The yield curve became steeper and there was a pick up in
corporate, bank and treasury issuance. The decline in the valuation of the U.S.
dollar also hampered the performance of the U.S. markets. Declines in overseas
markets, however, would often spark flight to quality trading back into the U.S.
markets. During the reporting period, technical factors as well as the change in
fundamental factors raised the volatility level in the market.
The sustainability of strong economic growth in a current low inflationary
environment remains in question. The emergence of pipeline inflation is of
concern. At present, the Fed is in a wait-and-see stance and the market
continues to evaluate emerging economic data.
The Fund
LETTER TO SHAREHOLDERS (CONTINUED)
We are closely monitoring market factors to seek high current income for our
investors. We look forward to continuing to serve your needs for income on cash
assets.
Sincerely,
Patricia A. Larkin
Senior Portfolio Manager
October 15, 1999
New York, N.Y.
(1) ANNUALIZED EFFECTIVE YIELD IS BASED UPON DIVIDENDS DECLARED DAILY AND
REINVESTED MONTHLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. YIELDS
FLUCTUATE. AN INVESTMENT IN THIS FUND IS NOT INSURED OR GUARANTEED BY THE FDIC
OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF
YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN
THE FUND, BUT ALSO HAS THE POTENTIAL TO MAKE MONEY.
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF INVESTMENTS
September 30, 1999 (Unaudited)
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--30.7% Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
Abbey National Treasury Services (Yankee)
5.20%, 12/9/1999 25,000,000 25,000,000
ABN-AMRO Bank N.V. (London)
5.39%, 11/24/1999 75,000,000 75,001,110
Bank Austria AG (Yankee)
5.42%, 5/22/2000 15,000,000 14,994,918
Caisse National De Credit Agricole (London)
5.43%, 12/22/1999 50,000,000 50,002,155
Commerzbank AG (Yankee)
5.02%-5.16%, 1/10/2000-4/7/2000 38,000,000 37,994,056
Crestar Bank (Yankee)
5.50%, 1/19/2000 50,000,000 50,000,000
Den Danske Bank A/S (Yankee)
5.02%, 1/10/2000 25,000,000 25,000,000
Den Norske Bank ASA (London)
5.41%, 11/24/1999 50,000,000 50,000,740
Deutsche Bank AG (Yankee)
5.02%-5.45%, 11/3/1999-4/10/2000 100,000,000 99,992,176
Dresdner Bank AG (London)
5.39%, 11/19/1999 47,000,000 47,000,905
First Union National Bank
5.82%, 2/22/2000 50,000,000 50,000,000
Harris Trust & Savings Bank
5.35%, 11/1/1999 100,000,000 100,000,000
Istituto Bancario San Paolo DiTorino (Yankee)
5.15%, 5/16/2000 40,000,000 39,992,753
Marine Midland Bank NA
5.05%, 2/14/2000 25,000,000 24,996,407
Merita Bank PLC (Yankee)
5.38%, 11/1/1999 120,000,000 120,000,000
Norddeutsche Landesbank Girozentrale (London)
5.41%, 11/9/1999 40,000,000 39,995,666
Societe Generale (Yankee)
5.10%, 1/14/2000 25,000,000 24,994,356
Toronto-Dominion Bank (Yankee)
5.44%, 4/10/2000 25,000,000 24,993,262
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $899,958,504) 899,958,504
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
COMMERCIAL PAPER--44.7% Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
Associates Corp. of North America
5.55%, 10/1/1999 100,000,000 100,000,000
Atlantis One Funding Corp.
5.32%, 10/4/1999 50,000,000 49,977,917
BCI Funding Corp.
5.45%, 12/15/1999 100,000,000 98,879,166
Canadian Imperial Holdings Inc.
5.41%, 12/21/1999 100,000,000 98,799,400
Daimlerchrysler North America Holding Corp.
5.25%-5.38%, 10/4/1999-11/1/1999 75,000,000 74,822,093
General Electric Capital Corp.
5.36%-5.58%, 11/1/1999-2/3/2000 85,000,000 83,900,727
General Electric Capital Services Inc.
4.96%-5.32%, 10/12/1999-10/22/1999 75,000,000 74,808,521
Lehman Brothers Holdings, Inc.
5.40%, 10/5/1999 75,000,000 74,955,417
Morgan (J.P.) & Co.
5.05%-5.37%, 11/22/1999-11/24/1999 130,000,000 129,016,245
National Australia Funding (DE) Inc.
5.50%, 10/1/1999 50,000,000 50,000,000
Prudential Funding Corp.
5.52%, 10/1/1999 100,000,000 100,000,000
Santander Finance (DE) Inc.
5.28%-5.36%, 10/6/1999-11/1/1999 125,000,000 124,620,744
Spintab AB
5.46%, 12/8/1999 100,000,000 98,981,888
Swedbank Inc.
5.27%, 11/5/1999 50,000,000 49,748,194
UBS Finance (DE) Inc.
5.50%, 10/1/1999 100,000,000 100,000,000
TOTAL COMMERCIAL PAPER
(cost $1,308,510,312) 1,308,510,312
- ----------------------------------------------------------------------------------------------------------------------------------
CORPORATE NOTES--7.3%
- ----------------------------------------------------------------------------------------------------------------------------------
Bear Stearns Companies Inc.
5.44%-5.63%, 3/2/2000-9/1/2000 124,000,000 (a) 124,005,432
CIT Group Holdings, Inc.
5.47%-5.50%, 11/2/1999-2/24/2000 64,000,000 (a) 63,987,983
Merrill Lynch & Co. Inc.
5.42%, 10/13/1999 25,000,000 (a) 25,000,000
TOTAL CORPORATE NOTES
(cost $ 212,993,415) 212,993,415
Principal
PROMISSORY NOTES--4.3% Amount ($) Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Group L.P.
5.39%-6.00%, 10/29/1999-2/18/2000
(cost $125,000,000) 125,000,000 (b,c) 125,000,000
- ----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM BANK NOTES--8.5%
- ----------------------------------------------------------------------------------------------------------------------------------
Bank of America NT & SA
5.37%, 11/23/1999 80,000,000 80,000,000
Comercia Bank
5.44%, 3/22/2000 50,000,000 (a) 49,991,076
Harris Trust & Savings Bank
5.44%, 4/19/2000 25,000,000 (a) 24,994,602
Key Bank N.A.
5.45%, 4/14/2000 25,000,000 (a) 24,993,424
Nationsbank N.A.
5.00%, 1/5/2000 10,000,000 10,000,000
SouthTrust Bank N.A.
5.43%, 4/12/2000 60,000,000 (a) 59,987,030
TOTAL SHORT-TERM BANK NOTES
(cost $249,966,132) 249,966,132
- ----------------------------------------------------------------------------------------------------------------------------------
TIME DEPOSITS--4.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Banco Bilbao Vizcaya S.A. (Nassau)
5.63%, 10/1/1999 100,000,000 100,000,000
Dresdner Bank AG (Grand Cayman)
5.38%, 10/1/1999 17,517,000 17,517,000
TOTAL TIME DEPOSITS
(cost $117,517,000) 117,517,000
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $2,913,945,363) 99.5% 2,913,945,363
CASH AND RECEIVABLES (NET) .5% 13,210,362
NET ASSETS 100% 2,927,155,725
(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) SECURITIES RESTRICTED AS TO PUBLIC RESALE. THESE SECURITIES WERE ACQUIRED
BETWEEN 8/23/1999 AND 9/21/1999 AT A COST OF PAR VALUE. AT SEPTEMBER 30,1999,
THE AGGREGATE VALUE OF THESE SECURITIES WAS $125,000,000, REPRESENTING
APPROXIMATELY 4.3% OF NET ASSETS; THEY ARE VALUED AT AMORTIZED COST.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999 (Unaudited)
Cost Value
- ------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 2,913,945,363 2,913,945,363
Interest receivable 16,123,668
2,930,069,031
- ------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation 301,552
Cash overdraft due to Custodian 2,611,754
2,913,306
- ------------------------------------------------------------------------------
NET ASSETS ($) 2,927,155,725
- ------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 2,927,172,944
Accumulated net realized gain (loss) on investments (17,219)
- ------------------------------------------------------------------------------
NET ASSETS ($) 2,927,155,725
- ------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
2,927,172,944
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended September 30, 1999 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 54,885,715
EXPENSES:
MANAGEMENT FEE--NOTE 2(A) 1,068,587
INVESTMENT INCOME--NET 53,817,128
- ------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B)($): (15,130)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 53,801,998
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
September 30, 1999 Year Ended
(Unaudited) March 31, 1999
- ------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 53,817,128 91,388,895
Net realized gain (loss) from investments (15,130) 37,644
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 53,801,998 91,426,539
- ------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (53,817,128) (91,388,895)
Net realized gain on investments -- (36,942)
TOTAL DIVIDENDS (53,817,128) (91,425,837)
- ------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold 7,340,651,231 9,462,363,499
Dividends reinvested 45,419,837 81,867,044
Cost of shares redeemed (6,458,305,737) (9,041,452,044)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS 927,765,331 502,778,499
TOTAL INCREASE (DECREASE) IN NET ASSETS 927,750,201 502,779,201
- ------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of period 1,999,405,524 1,496,626,323
END OF PERIOD 2,927,155,725 1,999,405,524
SEE NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
Six Months Ended
September 30, 1999 Year Ended
(Unaudited) March 31, 1999
- ------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 1.00 1.00
Investment Operations:
Investment income--net .025 .053
Distributions:
Dividends from investment income--net (.025) (.053)
Net asset value, end of period 1.00 1.00
- -------------------------------------------------------------------------------
TOTAL RETURN (%) 5.07(a) 5.48
- ------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .10(a) .10
Ratio of net investment income
to average net assets 5.02(a) 5.31
- ------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 2,927,156 1,999,406
(A) ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The 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, as amended (the "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 (the "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.
Under the terms of the custody agreement, the fund receives net earnings credits
based on available cash balances left on deposit.
(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 of 1986, as amended (the
"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 continue 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 Code,
and to make distributions of taxable income sufficient to relieve it from
substantially all Federal income and excise taxes.
At September 30, 1999, 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.
The Fund
For More Information
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
100 Church Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-346-3621
BY E-MAIL Access Dreyfus Institutional Services Division at www.LIONSALES.com.
You can obtain product information and E-mail requests for information or
literature.
BY MAIL Write to: The Dreyfus Family of Funds Attn: Institutional Services 144
Glenn Curtiss Boulevard Uniondale, NY 11556-0144
(c) 1999 Dreyfus Service Corporation 194SA999
