Dreyfus
Institutional Preferred Money Market Fund
SEMIANNUAL REPORT September 30, 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
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2 Letter from the President
5 Statement of Investments
9 Statement of Assets and Liabilities
10 Statement of Operations
11 Statement of Changes in Net Assets
12 Financial Highlights
13 Notes to Financial Statements
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 semiannual report for Dreyfus Institutional
Preferred Money Market Fund. During the six-month period ended September 30,
2000, the fund produced an annualized yield of 6.44% and an annualized effective
yield of 6.63%.(1)
The Economy
When the reporting period began on April 1, 2000, the U.S. economy was growing
at a robust rate, fueling continued concerns about a potential reacceleration of
inflation. The Federal Reserve Board (the "Fed") had already taken steps to
relieve inflationary pressures by increasing short-term interest rates five
times over a nine-month period by 125 basis points. Each of these interest-rate
hikes brought renewed debate as to whether rates were sufficiently high to head
off inflation, or whether further tightening would be necessary.
When U.S. Government statistics released in May revealed that first quarter
gross domestic product (" GDP" ) growth had grown at a less torrid, but still
strong 4.8% (revised downward from an initial estimate of 5.4%), concern mounted
that economic growth remained above a level that could trigger destructive
levels of inflation. In addition, rising energy prices began to add to inflation
concerns. Strong domestic demand for goods and services continued, and overseas
demand for raw materials accelerated as well.
As the second quarter progressed, consumer confidence and consumer spending
showed few signs of abating, despite sharp declines in the technology sector of
the stock market. Home and auto sales continued at record paces. The tightest
U.S. labor market in the past 30 years added the threat of wage-driven inflation
while economic growth accelerated to a robust 5.6% in the second quarter. These
factors led the Fed to its largest and only rate hike for the six-month
reporting period: a 50 basis point increase at its May meeting.
During the summer, we saw the first signs that the Fed's interest-rate hikes may
have begun to have the desired effect of slowing the economy. Retail sales
declined, housing starts slowed dramatically, and inflation figures continued to
be relatively benign. As a result, the Fed chose not to raise rates further at
its June or August meetings. In addition, Fed Chairman Alan Greenspan commented
that economic growth was slowing and that technology-related productivity
improvements may have allowed the economy to grow at a relatively high rate
without triggering an acceleration of inflation. Indeed, declining momentum in
consumer prices, manufacturing activity, labor hiring and other data supported
the Fed's observations, and third quarter GDP is currently expected to slow to a
more sustainable growth rate of approximately 3%. What's more, the correction in
the Nasdaq market may have had a "reverse wealth effect," causing consumer
spending to moderate as investors became less confident of the economy's
prospects.
Market Environment/Portfolio Focus
As might be expected, the short-term market reacted to the Fed' s May
interest-rate hike in the form of higher yields. However, when it later became
apparent that the economy was slowing and that the current cycle of tightening
might be at or near an end, money market rates began to trend lower.
Throughout the reporting period, we closely monitored the outlook for economic
growth and inflation, followed overseas developments and considered the posture
of the Fed in our decisions as to how to structure the fund. Based upon our
economic outlook at the start of the six-month reporting period, the fund had
adopted a defensive strategy in anticipation of rising interest rates. More
recently, however, when it appeared that Fed policy was having the desired
effect, we extended the fund's average maturity. This extension was intended to
lock in then current higher yields for as long as possible.
The Fund
LETTER TO SHAREHOLDERS (CONTINUED)
As of September 30, 2000, the fund's average maturity remained longer than many
in our peer group. This position reflects our current view that the Fed will
keep monetary policy unchanged until more evidence dictates the need for an
adjustment in short-term interest rates. Current economic data indicates that
growth has continued to slow, and we believe that the possibility exists that
the rise in oil prices to over $30 per barrel may act as a further brake on
consumer spending. Based on the current data, we currently believe that a
reacceleration of inflation is unlikely in the near term.
Looking forward, we intend to continue to monitor the situation -- including the
economy and changes in the Fed's monetary policy -- and we will look to respond
appropriately with respect to the fund' s holdings and maturity stance
Sincerely,
Patricia A. Larkin
Senior Portfolio Manager
October 16, 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
THE U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS
September 30, 2000 (Unaudited)
Principal
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--38.7% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
Bank Austria AG (London)
<S> <C> <C>
6.60%, 11/17/2000 130,000,000 130,000,254
Bank of Scotland (London)
6.60%, 12/14/2000 150,000,000 150,005,392
Barclays Bank PLC (London)
6.56%-6.57%, 11/1/2000-12/13/2000 112,000,000 111,999,872
Bayerische Hypo-und Vereinsbank AG (London)
7.01%, 11/20/2000 50,000,000 50,000,000
Comercia Bank
6.65%-6.66%, 8/14/2001-9/21/2001 230,000,000 229,962,175
Commerzbank AG (London)
7.02%, 11/20/2000 100,000,000 100,001,341
Commerzbank AG (Yankee)
6.62%, 7/5/2001 75,000,000 74,980,187
Deutsche Bank AG (Yankee)
6.56%, 10/10/2000 200,000,000 200,000,000
First Tennessee Bank
6.57%-6.64%, 10/10/2000-12/19/2000 140,000,000 140,000,000
First Union National Bank
7.02%, 11/21/2000 150,000,000 150,000,000
Halifax PLC (London)
6.01%, 11/16/2000 25,000,000 25,000,301
Landesbank Baden-Wuerttemberg (London)
6.72%-7.02%, 11/27/2000-2/28/2001 70,000,000 70,000,911
Landesbank Hessen-Thueringen Girozentrale (London)
7.02%, 11/20/2000 150,000,000 149,994,955
Michigan National Bank
6.70%-6.78%, 10/13/2000-2/26/2001 85,000,000 85,002,803
Norddeutsche Landesbank Girozentrale (London)
6.93%, 3/19/2001 20,000,000 20,006,871
Royal Bank of Canada (Yankee)
6.67%, 6/7/2001 50,000,000 49,982,945
Skandinaviska Enskilda Banken AB (Yankee)
7.11%, 7/24/2001 50,000,000 49,994,248
Societe Generale (Yankee)
6.60%-6.63%, 10/10/2000-1/16/2001 175,000,000 174,990,602
U.S. Bank NA Minneapolis
6.75%, 3/19/2001 73,000,000 73,000,000
Westdeutsche Landesbank Girozentrale (London)
6.74%, 2/28/2001-3/1/2001 101,000,000 101,002,682
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
Westdeutsche Landesbank Girozentrale (Yankee)
6.62%, 10/11/2000 100,000,000 100,000,000
Wilmington Trust Co.
6.62%-6.82%, 11/30/2000-12/1/2000 46,000,000 46,008,500
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $2,281,934,039) 2,281,934,039
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COMMERCIAL PAPER--36.0%
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Associates Corp. of North America
6.69%, 10/2/2000 200,000,000 199,962,833
BCI Funding Corp.
6.69%-6.81%, 1/8/2001-3/14/2001 200,000,000 195,243,056
DaimlerChrysler North America Holding Corp.
6.70%, 3/1/2001 50,000,000 48,638,903
Deutsche Bank Financial Inc.
6.58%, 12/18/2000 65,000,000 64,090,217
General Electric Capital Corp.
6.63%-6.72%, 10/26/2000-3/21/2001 250,000,000 245,254,931
General Electric Capital Services Inc.
6.66%, 1/25/2001 100,000,000 97,902,334
Merrill Lynch & Co. Inc.
6.61%, 10/16/2000 70,000,000 69,810,125
National Australia Funding (DE) Inc.
6.67%, 10/2/2000 125,000,000 124,976,840
National Rural Utilities Corp.
6.65%, 3/27/2001 100,000,000 96,838,583
Prudential Funding Corp.
6.65%, 10/2/2000 200,000,000 199,963,056
Salomon Smith Barney Holdings Inc.
6.56%, 11/6/2000 50,000,000 49,675,500
Santander Central Hispano Finance (DE) Inc.
6.57%, 11/7/2000 98,800,000 98,139,961
Sigma Finance Inc.
6.65%, 10/24/2000 50,000,000 49,791,083
Societe Generale N.A. Inc.
6.33%-6.72%, 10/16/2000-12/21/2000 55,000,000 54,373,650
Spintab AB
6.80%, 1/16/2001 120,000,000 117,656,700
Swedbank Inc.
6.36%, 10/13/2000 30,000,000 29,939,300
Principal
COMMERCIAL PAPER (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
UBS Finance (DE) LLC
6.66%, 10/2/2000 200,000,000 199,963,000
Wells Fargo & Co.
6.72%, 10/2/2000 100,000,000 99,981,337
Woolwich PLC
6.88%, 1/18/2001 75,000,000 73,489,896
TOTAL COMMERCIAL PAPER
(cost $2,115,691,305) 2,115,691,305
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CORPORATE NOTES--1.4%
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Merrill Lynch & Co. Inc.
6.59%, 4/11/2001 30,000,000 (a) 30,000,000
Morgan (J.P.) & Co.
6.67%, 3/6/2001 50,000,000 (a) 49,997,861
TOTAL CORPORATE NOTES
(cost $79,997,861) 79,997,861
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PROMISSORY NOTES--4.8%
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Goldman Sachs Group LP.
6.64%-7.04%, 10/10/2000-2/27/2001
(cost $280,000,000) 280,000,000 (b,c) 280,000,000
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM BANK NOTES--6.6%
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American Express Centurion Bank
6.67%, 7/5/2001 50,000,000 (a) 50,000,000
Bank of America NA
6.79%-6.84%, 10/12/2000-2/1/2001 140,000,000 140,000,000
Bank of America NA
6.67%, 3/22/2001 50,000,000 (a) 50,000,000
First Union National Bank
6.64%, 9/12/2001 100,000,000 (a) 100,000,000
LaSalle Bank
7.02%, 11/30/2000 50,000,000 50,000,000
TOTAL SHORT-TERM BANK NOTES
(cost $390,000,000) 390,000,000
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
TIME DEPOSITS--11.7% Amount ($) Value ($)
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Dresdner Bank AG (Grand Cayman)
6.69%, 10/2/2000 200,000,000 200,000,000
National City Bank (Grand Cayman)
6.63%, 10/2/2000 90,000,000 90,000,000
Norddeutsche Landesbank Girozentrale (Grand Cayman)
6.72%, 10/2/2000 200,000,000 200,000,000
SunTrust Bank (Grand Cayman)
6.68%, 10/2/2000 196,000,000 196,000,000
TOTAL TIME DEPOSITS
(cost $686,000,000) 686,000,000
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TOTAL INVESTMENTS (cost $5,833,623,205) 99.2% 5,833,623,205
CASH AND RECEIVABLES (NET) .8% 44,983,019
NET ASSETS 100% 5,878,606,224
(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 5/17/2000 AND 9/30/2000 AT A COST OF PAR VALUE. AT SEPTEMBER 30, 2000,
THE AGGREGATE VALUE OF THESE SECURITIES WAS $280,000,000 REPRESENTING
APPROXIMATELY 4.8% OF NET ASSETS AND THEY ARE VALUED AT AMORTIZED COST.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2000 (Unaudited)
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 5,833,623,205 5,833,623,205
Interest receivable 45,655,491
5,879,278,696
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation 428,555
Cash overdraft due to Custodian 243,917
672,472
--------------------------------------------------------------------------------
NET ASSETS ($) 5,878,606,224
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 5,878,623,445
Accumulated net realized gain (loss) on investments (17,221)
--------------------------------------------------------------------------------
NET ASSETS ($) 5,878,606,224
--------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
5,878,623,445
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Six Months Ended September 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 147,486,055
EXPENSES:
MANAGEMENT FEE--NOTE 2(A) 2,246,988
INVESTMENT INCOME--NET, REPRESENTING NET INCREASE
IN NET ASSETS RESULTING FROM OPERATIONS 145,239,067
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
September 30, 2000 Year Ended
(Unaudited) March 31, 2000
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 145,239,067 139,911,913
Net realized gain (loss) from investments -- (15,131)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 145,239,067 139,896,782
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (145,239,067) (139,911,913)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
($1.00 PER SHARE):
Net proceeds from shares sold 12,374,555,022 17,670,130,251
Dividends reinvested 137,946,733 125,046,172
Cost of shares redeemed (11,064,734,615) (15,363,727,732)
INCREASE (DECREASE) IN NET ASSETS
FROM BENEFICIAL INTEREST TRANSACTIONS 1,447,767,140 2,431,448,691
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,447,767,140 2,431,433,560
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 4,430,839,084 1,999,405,524
END OF PERIOD 5,878,606,224 4,430,839,084
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
<TABLE>
<CAPTION>
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, 2000 Year Ended March 31,
----------------------------------------------
(Unaudited) 2000 1999 1998(a)
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PER SHARE DATA ($):
Net asset value,
<S> <C> <C> <C> <C>
beginning of period 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .032 .054 .053 .046
Distributions:
Dividends from
investment income--net (.032) (.054) (.053) (.046)
Net asset value, end of period 1.00 1.00 1.00 1.00
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TOTAL RETURN (%) 6.56(b) 5.48 5.48 5.76(b)
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to
average net assets .10(b) .10 .10 .10(b)
Ratio of net investment income
to average net assets 6.46(b) 5.43 5.31 5.64(b)
Net Assets, end of period ($ x 1,000) 5,878,606 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 (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., which is a wholly-owned
subsidiary of Mellon Financial Corporation. Dreyfus Service Corporation (the
" Distributor"), a wholly-owned subsidiary of the Manager, 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.
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(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 September 30, 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 Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Effective April 13, 2000, each
Board member who is not an "affiliated person" as defined in the Act receives an
annual fee of $25,000 and an attendance fee of $4,000 for each in person meeting
and $500 for telephone meetings. These fees are allocated among the funds in the
Fund Group. The Chairman of the Board receives an additional 25% of such
compensation. Prior to April 13, 2000, each Board member who was not an
" affiliated person" as defined in the Act received from the fund an annual fee
of $1,000 and an attendance fee of $250 per meeting. The Chairman of the Board
received and additional 25% of such compensation. Subject to the fund's Emeritus
Program Guidelines, Emeritus Board members, if any, receive 50% of the fund's
annual retainer fee and per meeting fee paid at the time the Board member
achieves emeritus status.
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 194SA009
