Dreyfus
Institutional Preferred Money Market Fund
ANNUAL REPORT March 31, 2000
(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
Contents
THE FUND
--------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Financial Highlights
14 Notes to Financial Statements
16 Report of Independent Auditors
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus Institutional
Preferred Money Market Fund
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Institutional Preferred
Money Market Fund. During the 12-month reporting period that ended March 31,
2000, the fund produced an annualized yield of 5.34%. Taking into account the
effect of compounding, the fund's annualized effective yield was 5.47%.(1)
The Economy
The 12-month reporting period was characterized by rising interest rates, which
were primarily the result of robust U.S. economic growth and actions taken by
the Federal Reserve Board' s Open Market Committee toward a more restrictive
monetary policy.
When the reporting period began on April 1, 1999, the performance of the U.S.
economy was showing signs of renewed strength in the wake of 1998's global
financial crisis. Gross Domestic Product (GDP) had grown at a rate of 4.3%
during the first quarter of 1999, yet inflation remained benign. Despite
concerns that faster growth might rekindle long-dormant inflationary pressures,
the Federal Reserve Board (the "Fed") held steady on rates.
In May, however, a surprisingly large jump in the Consumer Price Index pushed
policymakers to adopt a bias towards tightening monetary policy, which caused a
shift in market psychology. As a result, market participants began to anticipate
higher rates.
In late June, the Fed implemented its first 25 basis point increase in the
federal funds rate. At the same time, the Fed announced that it was shifting its
bias back to neutral, indicating no intention of further rate increases in the
immediate future. As the summer progressed, strong economic growth with rising
wages reinforced the Fed's inflation concerns. At its August meeting, the Fed
raised the federal funds rate by another 25 basis points, and signaled added
resolve by also raising the discount rate.
In the third quarter of 1999, GDP growth accelerated to a rapid 4.8%, yet key
indicators of employment costs and inflation remained relatively low.
Nonetheless, the Fed implemented a third 25 basis point rate hike in November.
The Fed took no action at its December meeting in an apparent attempt to quiet
markets concerned with potential Y2K-related disruptions. In addition, the Fed
added liquidity to the banking system over year-end, leading to temporary
fluctuations of short-term interest rates. Despite this short-lived market
volatility, few significant Y2K problems were reported when the new year began.
During the fourth quarter of 1999, GDP growth continued to accelerate,
increasing by a robust 7.3%. Concerned by this evidence that the economy was
gaining momentum, the Fed raised interest rates for a fourth time in early
February and a fifth time in March, for a total rate increase of 125 basis
points during the 12-month reporting period. Furthermore, while the Fed
maintained an officially neutral bias after its March rate hike, Fed Chairman
Alan Greenspan has indicated that the Fed's inflation-fighting resolve remains
undiminished.
As of March 31, statistical data such as the Chicago Purchasing Managers Report
indicated that U.S. economic growth remained strong. In addition, evidence has
begun to emerge that prices are edging higher. Personal consumption has
continued to advance while the savings rate dropped to its lowest level on
record, indicating that consumer spending remains strong.
Accordingly, we currently believe that fixed-income investors widely expect
further short-term interest-rate increases at subsequent Fed meetings. The
question appears to be not whether the Fed will raise interest rates further,
but by how much. It is currently unclear whether the Fed will implement another
25 basis point increase, or if they will attempt to slow the economy more
dramatically with a 50 basis point rate hike.
The Fund
LETTER TO SHAREHOLDERS (CONTINUED)
Market Environment/Portfolio Focus
In anticipation of rising interest rates early in the 12-month reporting period,
the fund adopted a somewhat defensive strategy. Most significantly, we reduced
the fund' s average maturity in order to increase our flexibility. We believe
that holding shorter maturities at this time should enhance the fund's ability
to take advantage of any additional interest-rate increases.
As of March 31, 2000, the fund's average maturity remained relatively short;
however, we are prepared to extend the fund's average maturity if and when
evidence appears that the economy is slowing in response to the Fed's previous
moves. In the event that we look to extend the fund's average maturity when we
believe that the Fed is near the end of the current series of rate hikes, we
would seek to take advantage of the then current interest-rate environment
Sincerely,
Patricia A. Larkin
Senior Portfolio Manager
April 12, 2000
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 THE 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 $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN
THE FUND.
STATEMENT OF INVESTMENTS
March 31, 2000
<TABLE>
<CAPTION>
Principal
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--32.1% Amount ($) Value ($)
--------------------------------------------------------------------------------
<S> <C> <C>
ABN-AMRO Bank N.V. (London)
6.00%, 5/8/2000 28,000,000 28,000,282
Bank Austria AG (Yankee)
5.42%-6.00%,5/4/2000- 5/22/2000 20,000,000 19,994,128
Bayerische Landesbank Girozentrale (Yankee)
6.13%, 5/30/2000 200,000,000 200,000,000
CARIPLO (London)
5.90%, 4/7/2000 97,000,000 97,000,161
Commerzbank AG (Yankee)
5.16%, 4/7/2000 25,000,000 24,999,842
Commerzbank AG (London)
6.10%, 6/16/2000 50,000,000 49,996,618
Credit Agricole Indosuez S.A. (London)
6.14%, 6/5/2000 160,000,000 160,002,727
Deutsche Bank AG (Yankee)
6.20%, 4/10/2000 25,000,000 24,999,729
Deutsche Bank AG (London)
6.10%, 6/13/2000 140,000,000 139,996,618
First Tennessee Bank N.A.
6.13%, 5/30/2000 200,000,000 200,000,000
Halifax PLC (London)
6.01%, 11/16/2000 25,000,000 25,001,499
Harris Trust & Savings Bank
5.83%, 4/4/2000 50,000,000 50,000,079
Istituto Bancario San Paolo DiTorino (Yankee)
5.15%, 5/16/2000 40,000,000 39,998,570
Merita Bank PLC (Yankee)
6.13%, 5/30/2000 100,000,000 100,000,000
Societe Generale (Yankee)
6.60%, 1/16/2001 75,000,000 74,974,530
Svenska Handelsbanken (London)
6.15%, 6/16/2000 89,000,000 88,996,106
Toronto-Dominion Bank (Yankee)
6.19%, 4/10/2000 25,000,000 24,999,684
U.S. Bank National Association, MN
6.25%, 3/19/2001 73,000,000 73,000,000
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $1,421,960,573) 1,421,960,573
--------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--46.3%
--------------------------------------------------------------------------------
Abbey National North America
5.93%, 4/18/2000 75,000,000 74,793,167
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
COMMERCIAL PAPER (CONTINUED) Amount ($) Value ($)
--------------------------------------------------------------------------------
Associates First Capital Corp.
6.25%, 4/3/2000 150,000,000 149,947,917
Bear Stearns Cos. Inc.
6.11%, 5/25/2000 75,000,000 74,319,375
Canadian Imperial Holdings Inc.
6.06%-6.12%, 5/16/2000-5/30/2000 200,000,000 198,136,113
Chase Manhattan Corp.
6.03%, 5/1/2000 40,000,000 39,805,000
DaimlerChrysler North America Holding Corp.
6.17%, 6/19/2000 100,000,000 98,665,778
General Electric Capital Corp.
6.00%-6.17%, 5/19/2000-8/14/2000 190,000,000 187,589,624
General Electric Capital Services Inc.
6.11%, 5/19/2000 50,000,000 49,596,667
HSBC USA Inc.
5.99%, 8/15/2000 25,000,000 24,458,833
Hertz Corp.
6.10%, 5/30/2000 42,000,000 41,584,935
Merita North America Inc.
6.13%, 7/24/2000 20,000,000 19,623,167
Morgan (J.P.) & Co. Inc.
5.94%, 4/10/2000 100,000,000 99,853,750
Morgan Stanley Dean Witter & Co.
6.04%-6.20%, 6/6/2000-6/23/2000 180,000,000 177,918,209
National Australia Funding (DE) Inc.
6.23%, 4/3/2000 175,000,000 174,939,431
Salomon Smith Barney Holdings Inc.
6.11%, 5/25/2000 125,000,000 123,865,625
Societe Generale N.A. Inc.
5.86%-6.33%, 4/4/2000-10/16/2000 125,000,000 124,012,041
Spintab AB
5.94%-6.07%, 4/26/2000-6/19/2000 140,000,000 139,071,911
Swedbank Inc.
5.99%-6.36%, 5/3/2000-10/13/2000 80,000,000 78,752,736
UBS Finance Delaware LLC
6.25%, 4/3/2000 175,000,000 174,939,236
TOTAL COMMERCIAL PAPER
(cost $2,051,873,515) 2,051,873,515
---------------------------------------------------------------------------------------------------------------------------------
CORPORATE NOTES--3.4%
--------------------------------------------------------------------------------
Bear Stearns Companies Inc.
6.38%, 9/1/2000 100,000,000 (a) 100,000,000
Principal
CORPORATE NOTES (CONTINUED) Amount ($) Value ($)
--------------------------------------------------------------------------------
Morgan (J.P.) & Co. Inc.
6.17%, 3/6/2001 50,000,000 (a) 49,995,356
TOTAL CORPORATE NOTES
(cost $149,995,356) 149,995,356
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PROMISSORY NOTES--4.5%
--------------------------------------------------------------------------------
Goldman Sachs Group L.P.
5.93%-6.27%, 4/3/2000-6/28/2000
(cost $200,000,000) 200,000,000 (b) 200,000,000
---------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM BANK NOTES--7.6%
--------------------------------------------------------------------------------
Bank of America NA
6.03%-6.25%, 6/8/2000-7/20/2000 150,000,000 150,000,000
Bank of America NA
6.17%, 3/22/2001 50,000,000 (a) 50,000,000
Harris Trust & Savings Bank
6.19%, 4/19/2000 25,000,000 (a) 24,999,517
Key Bank N.A.
6.20%, 4/14/2000 25,000,000 (a) 24,999,564
Lasalle Bank N.A.
6.13%, 7/24/2000 25,000,000 25,000,000
SouthTrust Bank N.A.
6.18%, 4/12/2000 60,000,000 (a) 59,999,263
TOTAL SHORT-TERM BANK NOTES
(cost $334,998,344) 334,998,344
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
TIME DEPOSITS--13.8% Amount ($) Value ($)
--------------------------------------------------------------------------------
Bank One N.A. (Grand Cayman)
6.32%, 4/3/2000 175,000,000 175,000,000
Bayerische Hypo-und Vereinsbank AG (Grand Cayman)
6.25%, 4/3/2000 175,000,000 175,000,000
HSBC Bank USA (London)
5.87%, 4/3/2000 52,385,000 52,385,000
State Street Bank & Trust Co. (Grand Cayman)
6.25%, 4/3/2000 210,000,000 210,000,000
TOTAL TIME DEPOSITS
(cost $612,385,000) 612,385,000
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TOTAL INVESTMENTS (cost $4,771,212,788) 107.7% 4,771,212,788
LIABILITIES, LESS CASH AND RECEIVABLES (7.7)% (340,373,704)
NET ASSETS 100.0% 4,430,839,084
(A) VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE.
(B) THESE NOTES WERE ACQUIRED FOR INVESTMENT, AND NOT WITH THE INTENT TO
DISTRIBUTE OR SELL. SECURITIES RESTRICTED AS TO PUBLIC RESALE. THESE
SECURITIES WERE ACQUIRED BETWEEN 10/29/1999 AND 3/30/2000 AT A COST OF PAR
VALUE. AT MARCH 31, 2000, THE AGGREGATE VALUE OF THESE SECURITIES WAS
$200,000,000 REPRESENTING APPROXIMATELY 4.5% OF NET ASSETS AND ARE VALUED
AT AMORTIZED COST.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2000
<TABLE>
<CAPTION>
Cost Value
--------------------------------------------------------------------------------
<S> <C> <C>
ASSETS ($):
Investments in securities--See Statement of
Investments 4,771,212,788 4,771,212,788
Cash 4,409,694
Interest receivable 15,497,704
4,791,120,186
------------------------------------------------------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation 278,375
Payable for investment securities purchased 360,002,727
360,281,102
-----------------------------------------------------------------------------------------------------------------------------
NET ASSETS ($) 4,430,839,084
-------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 4,430,856,305
Accumulated net realized gain (loss) on investments (17,221)
--------------------------------------------------------------------------------
NET ASSETS ($) 4,430,839,084
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
4,430,856,305
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended March 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 142,488,640
EXPENSES:
MANAGEMENT FEE--NOTE 2(A) 2,576,727
INVESTMENT INCOME--NET 139,911,913
--------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($): (15,131)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 139,896,782
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Year Ended March 31,
----------------------------------
2000 1999
-------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS ($):
Investment income--net 139,911,913 91,388,895
Net realized gain (loss) on investments (15,131) 37,644
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 139,896,782 91,426,539
--------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net (139,911,913) (91,388,895)
Net realized gain on investments -- (36,942)
TOTAL DIVIDENDS (139,911,913) (91,425,837)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold 17,670,130,251 9,462,363,499
Dividends reinvested 125,046,172 81,867,044
Cost of shares redeemed (15,363,727,732) (9,041,452,044)
INCREASE (DECREASE) IN NET ASSETS
FROM BENEFICIAL INTEREST TRANSACTIONS 2,431,448,691 502,778,499
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,431,433,560 502,779,201
---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 1,999,405,524 1,496,626,323
END OF PERIOD 4,430,839,084 1,999,405,524
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
</TABLE>
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.
<TABLE>
<CAPTION>
Year Ended March 31,
-------------------------------
2000 1999 1998(a)
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 1.00 1.00 1.00
Investment Operations:
Investment income--net .054 .053 .046
Distributions:
Dividends from investment income--net (.054) (.053) (.046)
Net asset value, end of period 1.00 1.00 1.00
---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.48 5.48 5.76(b)
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .10 .10 .10(b)
Ratio of net investment income
to average net assets 5.43 5.31 5.64(b)
---------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 4,430,839 1,999,406 1,496,626
(A) FROM JUNE 11, 1997 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1998.
(B) ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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, 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, which is a wholly-owned
subsidiary of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus
Service Corporation (" DSC"), a wholly-owned subsidiary of the Manager, became
the distributor of the fund's shares. Prior to March 22, 2000, Premier Mutual
Fund Services, Inc. was the distributor.
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.
The Fund
(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, 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.
The fund has an unused capital loss carryover of approximately $17,000 available
for Federal income tax purposes to be applied against future net securities
profits, if any, realized subsequent to March 31, 2000. If not applied, the
carryover expires in fiscal 2008.
At March 31, 2000, 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.
REPORT OF 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, 2000, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and financial highlights for each of the years
indicated therein. 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
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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, 2000 by correspondence with the
custodian and others. 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 audits provide 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, 2000, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
each of the indicated years, in conformity with accounting principles generally
accepted in the United States.
New York, New York
May 5, 2000
The Fund
NOTES
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 2000 Dreyfus Service Corporation 194AR003
