UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-8211
Dreyfus Institutional Preferred Money Market Funds
- Dreyfus Institutional Preferred Money Market Fund
- Dreyfus Institutional Preferred Plus Money Market Fund
(Exact name of Registrant as specified in charter)
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
(Address of principal executive offices) (Zip code)
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 922-6000
Date of fiscal year end: 3/31
Date of reporting period: 9/30/03
FORM N-CSR
ITEM 1. REPORTS TO STOCKHOLDERS.
Dreyfus
Institutional Preferred
Money Market Fund
SEMIANNUAL REPORT September 30, 2003
YOU, YOUR ADVISOR AND
DREYFUS
A MELLON FINANCIAL COMPANY(SM)
The views expressed in this report reflect those of the portfolio manager only
through the end of the period covered and do not necessarily represent the views
of Dreyfus or any other person in the Dreyfus organization. Any such views are
subject to change at any time based upon market or other conditions and Dreyfus
disclaims any responsibility to update such views. These views may not be relied
on as investment advice and, because investment decisions for a Dreyfus fund are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any Dreyfus fund.
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Contents
THE FUND
- --------------------------------------------------
2 Letter to Shareholders
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
- ---------------------------------------------------------------------------
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 for the six-month period ended September 30, 2003.
During the reporting period, the fund produced an annualized yield of 1.10%
which, taking into account the effects of compounding, also created an
annualized effective yield of 1.10% .(1)
THE ECONOMY
The U.S. economy continued to struggle when the reporting period began, as
evidenced by the first quarter of 2003's annualized GDP growth rate of just
1.4%. Previous hopes of a more robust economic rebound faded as mounting war
fears caused consumer confidence to fall to new lows. In fact, at its March
meeting just before the start of the reporting period, the Federal Reserve Board
(the "Fed") indicated that uncertainty regarding the war with Iraq was so great
that it could not adequately assess prevailing economic risks.
Investors soon became more optimistic when it became clear in early April that
major combat in Iraq would be over quickly. Yields on money market securities
began to rise at the longer end of the curve as investors' attention returned to
the prospects for the U.S. economy. In May, the economy began to show signs of
sustainable improvement. A key purchasing index rose significantly, suggesting
better conditions in the manufacturing sector, and consumer confidence
rebounded. These encouraging signs were supported by gains in the stock market,
low inflation, moderating oil prices, rising productivity and legislation
enacting new tax cuts. However, at its meeting in early May, the Fed adopted a
relatively cautious stance, saying economic risks were "weighted toward weakness
over the foreseeable future."
Economic indicators continued to improve in June, including stronger consumer
confidence and robust home sales. It was later estimated that U.S. GDP expanded
at a higher than expected 3.3% annualized rate for the second quarter of 2003.
Unfortunately, the unemployment rate climbed to 6.4%, its highest level in nine
years, suggesting the impending recovery might be slow in creating jobs.
Because of the remote possibility that deflationary forces might derail a
potential economic recovery, most investors expected the Fed to reduce interest
rates further at its meeting in late June. The Fed did not disappoint them,
lowering the federal funds rate another 25 basis points to 1%. However, because
the Fed did not cut rates by 50 basis points as some investors had expected,
yields rose in the wake of the Fed's announcement.
The ISM Manufacturing Index expanded in July, rising to a point that most
analysts consider to be an indicator of economic expansion. In fact, signs of
impending economic strength created a sudden shift in investor sentiment amid
concerns that higher mortgage rates might constrain consumer spending and stall
the economic recovery. As a result, prices of longer-term bonds plunged in July
and early August, producing one of the most severe six-week declines in the
history of the bond market. A rising supply of U.S. Treasury securities issued
to fund the widening federal budget deficit also put downward pressure on
prices. Although heightened volatility roiled the longer-term bond markets,
short-term yields remained steady, anchored by the 1% federal funds rate.
The economy continued to send mixed signals in August and September. On one
hand, it became clearer that business investment and consumer spending was
rebounding, even as inflation remained well under control. Jobless claims
dropped in September to their
The Fund
LETTER TO SHAREHOLDERS (CONTINUED)
lowest level in eight months, and sales at department stores rose more than
expected as consumers spent their tax refunds. On the other hand, consumer
sentiment declined toward the end of the reporting period, and new data
suggested that businesses still were not confident that the economic recovery is
sustainable.
In our view, the lack of convincing evidence of a sustainable surge in economic
activity makes it likely that the Fed will keep short-term interest rates at
current levels for the foreseeable future. Indeed, although it recently
acknowledged the upturn in the economy, the Fed has repeatedly reaffirmed its
commitment to keeping short-term interest rates at the benchmark rate of 1%
MARKET ENVIRONMENT/PORTFOLIO FOCUS
The recent economic improvement has led to a steepening of the yield curve and,
as has been the case for some time now, we generally have maintained the fund's
weighted average maturity toward the long end of its range. This strategy is
designed to capture higher yields at the longer end of the curve. We are
prepared to adjust our strategies as economic and market conditions evolve.
/s/PATRICIA A. LARKIN
Patricia A. Larkin
Senior Portfolio Manager
October 15, 2003
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 $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY
BY INVESTING IN THE FUND.
STATEMENT OF INVESTMENTS
September 30, 2003 (Unaudited)
Principal
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--27.2% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
BNP Paribas (London)
1.04%, 12/15/2003 75,000,000 74,998,426
BNP Paribas (Yankee)
1.05%--1.06%, 3/10/2004--6/7/2004 350,000,000 (a) 349,975,065
Barclays Bank PLC (Yankee)
1.04%, 12/22/2003 150,000,000 150,000,000
Credit Agricole Indosuez S.A. (Yankee)
1.05%, 10/22/2003 200,000,000 (a) 200,000,000
HBOS Treasury Services PLC (London)
1.04%, 1/16/2004 175,000,000 175,005,172
ING Bank N.V. (London)
1.05%, 1/7/2004 155,000,000 155,000,000
KBC Bank N.V. (Yankee)
1.05%, 1/5/2004 100,000,000 100,000,000
Landesbank Hessen-Thuringen
Girozentrale (London)
1.04%, 1/5/2004 250,000,000 250,000,000
Natexis Banques Populares (Yankee)
1.08%, 12/12/2003 300,000,000 299,997,008
Nordea Bank Finland PLC (Yankee)
1.06%, 1/14/2004 200,000,000 (a) 200,000,000
Swedbank (Yankee)
1.09%, 1/21/2004--1/22/2004 240,000,000 (a) 239,996,253
UniCredito Italiano SpA (London)
1.04%, 10/14/2003 150,000,000 150,000,270
Wells Fargo Bank N.A.
1.06%, 10/16/2003 243,000,000 243,000,000
Westdeutsche Landesbank Girozentrale (Yankee)
1.07%--1.08%, 3/8/2004--10/4/2004 450,000,000 (a) 449,954,310
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $3,037,926,504) 3,037,926,504
COMMERCIAL PAPER--22.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Citigroup Global Markets Holdings Inc.
1.06%, 11/7/2003 200,000,000 199,782,110
Depfa Bank PLC
1.04%, 10/3/2003 97,000,000 96,994,423
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
COMMERCIAL PAPER (CONTINUED) Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Deutsche Bank Financial Inc.
1.15%, 10/1/2003 200,000,000 200,000,000
FCAR Owner Trust
1.01%--1.03%, 10/7/2003--12/9/2003 233,258,000 233,043,457
General Electric Capital Corp.
1.04%--1.12%, 10/7/2003--12/12/2003 550,000,000 549,341,111
General Electric Capital Services Inc.
1.04%--1.06%, 11/12/2003--12/12/2003 100,000,000 99,834,167
Hamburgische Landesbank Girozentrale
1.26%, 10/31/2003 200,000,000 199,791,667
J.P. Morgan Chase & Co.
1.10%, 1/22/2004 300,000,000 298,964,167
Natexis Banques Populaires
1.03%, 10/17/2003 100,000,000 99,954,222
Svenska Handelsbanken Inc.
1.03%, 10/1/2003 290,000,000 290,000,000
UBS Finance Delaware LLC
1.11%, 10/1/2003 200,000,000 200,000,000
TOTAL COMMERCIAL PAPER
(cost $2,467,705,324) 2,467,705,324
PROMISSORY NOTES--1.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Group Inc.
1.82%--1.95%, 10/10/2003--10/15/2003
(cost $150,000,000) 150,000,000 (b) 150,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM BANK NOTES--7.6%
- ------------------------------------------------------------------------------------------------------------------------------------
BNP Paribas
1.06%, 6/16/2004 50,000,000 (a) 49,992,867
Bank One N.A.
1.05%, 1/12/2004 300,000,000 (a) 299,995,765
National City Bank
1.45%, 11/10/2003 100,000,000 100,001,095
National City Bank
1.06%, 1/20/2004 300,000,000 (a) 300,003,083
Principal
SHORT-TERM BANK NOTES (CONTINUED) Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Rabobank Nederland
1.05%, 1/23/2004 100,000,000 (a) 99,996,087
TOTAL SHORT-TERM BANK NOTES
(cost $849,988,897) 849,988,897
U.S. GOVERNMENT AGENCIES--13.4%
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corporation,
Discount Notes
1.06%--1.14%, 11/14/2003--3/1/2004 300,000,000 299,011,000
Federal National Mortgage Association,
Discount Notes
1.05%--1.08%, 12/17/2003--12/31/2003 400,000,000 398,992,625
Federal National Mortgage Association,
Floating Rate Notes
1.01%, 6/17/2004 100,000,000 (a) 99,978,488
Federal National Mortgage Association, Notes
1.15%--1.42%, 7/27/2004--9/3/2004 700,000,000 700,000,000
TOTAL U.S. GOVERNMENT AGENCIES
(cost $1,497,982,113) 1,497,982,113
TIME DEPOSITS--31.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Branch Banking & Trust Co. (Grand Cayman)
1.09%, 10/1/2003 300,000,000 300,000,000
Dexia Bank Belgium (Grand Cayman)
1.09%, 10/1/2003 250,000,000 250,000,000
Fifth Third Bank (Grand Cayman)
1.09%, 10/1/2003 400,000,000 400,000,000
Fortis Bank (Grand Cayman)
1.15%, 10/1/2003 400,000,000 400,000,000
HSBC Bank USA (Grand Cayman)
1.13%, 10/1/2003 200,000,000 200,000,000
M&T Bank (Grand Cayman)
1.09%, 10/1/2003 200,000,000 200,000,000
Rabobank Nederland (Grand Cayman)
1.13%, 10/1/2003 350,000,000 350,000,000
The Fund
STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED)
Principal
TIME DEPOSITS (CONTINUED) Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Regions Bank (Grand Cayman)
1.06%, 10/1/2003 450,000,000 450,000,000
Societe Generale (Grand Cayman)
1.13%, 10/1/2003 450,000,000 450,000,000
South Trust Bank (Grand Cayman)
1.06%, 10/1/2003 200,000,000 200,000,000
Sun Trust Bank (Grand Cayman)
1.13%, 10/1/2003 285,000,000 285,000,000
TOTAL TIME DEPOSITS
(cost $3,485,000,000) 3,485,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $11,488,602,838) 102.6% 11,488,602,838
LIABILITIES, LESS CASH AND RECEIVABLES (2.6%) (291,120,010)
NET ASSETS 100.0% 11,197,482,828
(A) VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE.
(B) THESE NOTES WERE ACQUIRED FOR INVESTMENT, NOT WITH THE INTENT TO DISTRIBUTE
OR SELL. SECURITIES RESTRICTED AS TO PUBLIC RESALE. THESE SECURITIES WERE
ACQUIRED BETWEEN 10/15/2002 AND 10/16/2002 AT A COST OF $150,000,000. AT
SEPTEMBER 30, 2003, THE AGGREGATE VALUE OF THESE SECURITIES WERE
$150,000,000 REPRESENTING 1.3% OF NET ASSETS AND IS VALUED AT AMORTIZED
COST.
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2003 (Unaudited)
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 11,488,602,838 11,488,602,838
Interest receivable 12,145,574
11,500,748,412
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 933,830
Payable for investment securities purchased 299,954,310
Cash overdraft due to Custodian 2,180,808
Payable for shares of Beneficial Interest redeemed 196,636
303,265,584
NET ASSETS ($) 11,197,482,828
COMPOSITION OF NET ASSETS ($):
Paid-in capital 11,197,506,393
Accumulated net realized gain (loss) on investments (23,565)
NET ASSETS ($) 11,197,482,828
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of
Beneficial Interest authorized) 11,197,506,393
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Six Months Ended September 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 65,623,478
EXPENSES:
MANAGEMENT FEE--NOTE 2(A) 5,496,271
INVESTMENT INCOME--NET 60,127,207
NET REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($) (30,702)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 60,096,505
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
September 30, 2003 Year Ended
(Unaudited) March 31, 2003
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 60,127,207 173,999,067
Net realized gain (loss) from investments (30,702) 8,312
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 60,096,505 174,007,379
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (60,127,207) (173,999,067)
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold 25,349,426,783 63,655,207,111
Dividends reinvested 43,807,359 123,402,479
Cost of shares redeemed (23,780,474,093) (63,998,635,536)
INCREASE (DECREASE) IN NET ASSETS
FROM BENEFICIAL INTEREST TRANSACTIONS 1,612,760,049 (220,025,946)
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,612,729,347 (220,017,634)
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 9,584,753,481 9,804,771,115
END OF PERIOD 11,197,482,828 9,584,753,481
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
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 Year Ended March 31,
September 30, 2003 -------------------------------------------------------------------------------
(Unaudited) 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value,
beginning of period 1.00 1.00 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .006 .017 .033 .063 .054 .053
Distributions:
Dividends from
investment
income--net (.006) (.017) (.033) (.063) (.054) (.053)
Net asset value,
end of period 1.00 1.00 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 1.10(a) 1.67 3.30 6.51 5.48 5.48
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/
SUPPLEMENTAL DATA (%):
Ratio of expenses
to average net assets .10(a) .10 .10 .10 .10 .10
Ratio of net
investment income to
average net assets 1.09(a) 1.65 3.23 6.28 5.43 5.31
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets,
end of period
($ x 1,000) 11,197,483 9,584,753 9,804,771 8,854,953 4,430,839 1,999,406
(A) ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Institutional Preferred Money Market Fund (the "fund") is a separate
diversified series of Dreyfus Institutional Preferred Money Market Funds (the
"Company"), which is registered under the Investment Company Act of 1940, as
amended (the "Act"), as an open-end management investment company and operates
as a series company currently offering two series, including the fund. 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 wholly-owned 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.
The Company accounts separately for the assets, liabilities and operations of
each series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
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 accounting
principles generally accepted in the United States, 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
in accordance with Rule 2a-7 of the Act, which has been determined by the fund's
Board of Trustees to represent the fair value of the fund's investments.
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(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,
adjusted for amortization of discount and premium on investments, is earned from
settlement date and recognized on the accrual basis. Cost of investments
represents amortized cost. Under the terms of the custody agreement, the fund
received net earnings credits of $27,887 during the period ended September 30,
2003, based on available cash balances left on deposit. Income earned under this
arrangement is included in interest income.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends
daily from investment income-net on each business day. 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 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.
The tax character of distributions paid to shareholders during the fiscal year
ended March 31, 2003 was all ordinary income. The tax character of current year
distributions will be determined at the end of the current fiscal year.
At September 30, 2003, 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, taxes, interest, brokerage fees
and commissions and extraordinary expenses.
(b) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Each Board member who was not
an "affiliated person" as defined in the Act received an annual fee of $60,000,
an attendance fee of $7,500 for each in-person meeting. The Chairman of the
Board receives an additional 25% of such compensation. Subject to the Company's
Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the
annual retainer fee and per meeting fee paid at the time the Board member
achieves emeritus status. These fees are allocated among the funds in the Fund
Group in proportion to each fund's relative net assets.
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.
200 Park Avenue
New York, NY 10166
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 info@dreyfus.com
ON THE INTERNET Information
can be viewed online or
downloaded from:
http://www.dreyfus.com
(c) 2003 Dreyfus Service Corporation 194SA0903
Dreyfus
Institutional Preferred
Plus Money Market Fund
SEMIANNUAL REPORT September 30, 2003
YOU, YOUR ADVISOR AND
DREYFUS
A MELLON FINANCIAL COMPANY(SM)
The views expressed in this report reflect those of the portfolio manager only
through the end of the period covered and do not necessarily represent the views
of Dreyfus or any other person in the Dreyfus organization. Any such views are
subject to change at any time based upon market or other conditions and Dreyfus
disclaims any responsibility to update such views. These views may not be relied
on as investment advice and, because investment decisions for a Dreyfus fund are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any Dreyfus fund.
Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value
Contents
THE FUND
- --------------------------------------------------
2 Letter to Shareholders
5 Statement of Investments
6 Statement of Assets and Liabilities
7 Statement of Operations
8 Statement of Changes in Net Assets
9 Financial Highlights
10 Notes to Financial Statements
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Institutional
Preferred Plus Money Market Fund
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Institutional
Preferred Plus Money Market Fund for the six-month period ended September 30,
2003. During the reporting period, the fund produced an annualized yield of
1.14% which, taking into account the effects of compounding, created an
annualized effective yield of 1.15% .(1)
THE ECONOMY
The U.S. economy continued to struggle when the reporting period began, as
evidenced by the first quarter of 2003's annualized GDP growth rate of just
1.4%. Previous hopes of a more robust economic rebound faded as mounting war
fears caused consumer confidence to fall to new lows. In fact, at its March
meeting just before the start of the reporting period, the Federal Reserve Board
(the " Fed") indicated that uncertainty regarding the war with Iraq was so great
that it could not adequately assess prevailing economic risks.
Investors soon became more optimistic when it became clear in early April that
major combat in Iraq would be over quickly. Yields on money market securities
began to rise at the longer end of the curve as investors' attention returned to
the prospects for the U.S. economy. In May, the economy began to show signs of
sustainable improvement. A key purchasing index rose significantly, suggesting
better conditions in the manufacturing sector, and consumer confidence
rebounded. These encouraging signs were supported by gains in the stock market,
low inflation, moderating oil prices, rising productivity and legislation
enacting new tax cuts. However, at its meeting in early May, the Fed adopted a
relatively cautious stance, saying economic risks were "weighted toward weakness
over the foreseeable future."
Economic indicators continued to improve in June, including stronger consumer
confidence and robust home sales. It was later estimated that U.S. GDP expanded
at a higher than expected 3.3% annualized rate for the second quarter of 2003.
Unfortunately, the unemployment rate climbed to 6.4%, its highest level in nine
years, suggesting that the impending recovery might be slow in creating jobs.
Because of the remote possibility that deflationary forces might derail a
potential economic recovery, most investors expected the Fed to reduce interest
rates further at its meeting in late June. The Fed did not disappoint them,
lowering the federal funds rate another 25 basis points to 1%. However, because
the Fed did not cut rates by 50 basis points as some investors had expected,
yields rose in the wake of the Fed's announcement.
The ISM Manufacturing Index expanded in July, rising to a point that most
analysts consider to be an indicator of economic expansion. In fact, signs of
impending economic strength created a sudden shift in investor sentiment amid
concerns that higher mortgage rates might constrain consumer spending and stall
the economic recovery. As a result, prices of longer-term bonds plunged in July
and early August, producing one of the most severe six-week declines in the
history of the bond market. A rising supply of U.S. Treasury securities issued
to fund the widening federal budget deficit also put downward pressure on
prices. Although heightened volatility roiled the longer-term bond markets,
short-term yields remained steady, anchored by the 1% federal funds rate.
The economy continued to send mixed signals in August and September. On one
hand, it became clearer that business investment and consumer spending was
rebounding, even as inflation remained well under control. Jobless claims
dropped in September to their lowest level in eight months, and sales at
department stores rose more
The Fund
LETTER TO SHAREHOLDERS (CONTINUED)
than expected as consumers spent their tax refunds. On the other hand, consumer
sentiment declined toward the end of the reporting period, and new data
suggested that businesses still were not confident that the economic recovery is
sustainable.
In our view, the lack of convincing evidence of a sustainable surge in economic
activity makes it likely that the Fed will keep short-term interest rates at
current levels for the foreseeable future. Indeed, although it recently
acknowledged the upturn in the economy, the Fed has repeatedly reaffirmed its
commitment to keeping short-term interest rates at the benchmark rate of 1%
Market Environment/Portfolio Focus
As has been the case for some time now, we generally have maintained the fund's
weighted average maturity toward the shorter end of its range. We are prepared
to adjust our strategies as economic and market conditions evolve.
/S/PATRICIA A. LARKIN
Patricia A. Larkin
Senior Portfolio Manager
October 15, 2003
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 $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY
BY INVESTING IN THE FUND. YIELD PROVIDED REFLECTS THE ABSORPTION OF FUND
EXPENSES BY THE DREYFUS CORPORATION PURSUANT TO AN UNDERTAKING IN EFFECT
THAT MAY BE EXTENDED, TERMINATED OR MODIFIED AT ANY TIME. HAD THESE
EXPENSES NOT BEEN ABSORBED, THE FUND'S YIELD WOULD HAVE BEEN LOWER.
STATEMENT OF INVESTMENTS
September 30, 2003 (Unaudited)
Principal
NEGOTIABLE BANK CERTIFICATES OF DEPOSIT--14.9% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
ING Bank N.V. (London)
1.04%, 10/15/2003 10,000,000 10,000,000
Natexis Banques Populaires (Yankee)
1.06%, 10/21/2003 5,000,000 5,000,000
Toronto-Dominion Bank (Yankee)
1.11%, 1/20/2004 5,000,000 4,999,999
TOTAL NEGOTIABLE BANK CERTIFICATES OF DEPOSIT
(cost $19,999,999) 19,999,999
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--11.2%
CBA (Delaware) Finance Inc.
1.06%, 10/15/2003 5,000,000 4,997,939
HBOS Treasury Services PLC
1.07%, 11/20/2003 5,000,000 4,992,569
Nordea North America Inc.
1.07%, 10/2/2003 5,000,000 4,999,852
TOTAL COMMERCIAL PAPER
(cost $14,990,360) 14,990,360
- ------------------------------------------------------------------------------------------------------------------------------------
PROMISSORY NOTES--7.4%
Goldman Sachs Group Inc.
1.70%, 11/24/2003
(cost $10,000,000) 10,000,000 (a) 10,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES--66.4%
Federal Home Loan Banks, Discount Notes
1.00%, 10/1/2003 79,161,000 79,161,000
Federal Home Loan Mortgage Corp., Discount Notes
1.08%, 11/20/2003 10,000,000 9,985,070
TOTAL U.S. GOVERNMENT AGENCIES
(cost $89,146,070) 89,146,070
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $134,136,429) 99.9% 134,136,429
CASH AND RECEIVABLES (NET) .1% 81,901
NET ASSETS 100.0% 134,218,330
(A) 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 ON 11/24/2002 AT A COST OF $10,000,000. AT
SEPTEMBER 30, 2003, THE AGGREGATE VALUE OF THESE SECURITIES WERE
$10,000,000 REPRESENTING 7.4% OF NET ASSETS AND ARE VALUED AT AMORTIZED
COST.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2003 (Unaudited)
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 134,136,429 134,136,429
Interest receivable 191,504
134,327,933
- --------------------------------------------------------------------------------
LIABILITIES ($):
Cash overdraft due to Custodian 109,603
- --------------------------------------------------------------------------------
NET ASSETS ($) 134,218,330
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 134,222,740
Accumulated net realized gain (loss) on investments (4,410)
- --------------------------------------------------------------------------------
NET ASSETS ($) 134,218,330
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
134,222,740
NET ASSET VALUE, offering and redemption price per share ($) 1.00
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Six Months Ended September 30, 2003 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 1,400,895
EXPENSES:
MANAGEMENT FEE--NOTE 2(A) 120,326
Less--reduction in management fee due to
undertaking--Note 2(a) (120,326)
NET EXPENSES --
INVESTMENT INCOME--NET 1,400,895
- --------------------------------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 1(B) ($) (627)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,400,268
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
September 30, 2003 Year Ended
(Unaudited) March 31, 2003
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 1,400,895 2,925,670
Net realized gain (loss) from investments (627) (3,783)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,400,268 2,921,887
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (1,400,895) (2,925,670)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($1.00 per share):
Net proceeds from shares sold 2,256,625,333 3,094,866,292
Dividends reinvested 618 1,788
Cost of shares redeemed (2,354,784,336) (2,862,592,881)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (98,158,385) 232,275,199
TOTAL INCREASE (DECREASE) IN NET ASSETS (98,159,012) 232,271,416
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 232,377,342 105,926
END OF PERIOD 134,218,330 232,377,342
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 Year Ended March 31,
September 30, 2003 ----------------------------------------
(Unaudited) 2003 2002 2001(a)
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 1.00 1.00 1.00 1.00
Investment Operations:
Investment income--net .006 .016 .030 .027
Distributions:
Dividends from investment income--net (.006) (.016) (.030) (.027)
Net asset value, end of period 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 1.14(b) 1.59 3.08 6.11(b)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets -- .00(c) .10 .10(b)
Ratio of net investment income
to average net assets 1.16(b) 1.45 2.96 6.04(b)
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation .10(b) .10 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 134,218 232,377 106 103
(A) FROM OCTOBER 16, 2000 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 2001.
(B) ANNUALIZED.
(C) AMOUNT REPRESENTS LESS THAN .01%.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Institutional Preferred Plus Money Market Fund (the "fund") is a
separate diversified series of Dreyfus Institutional Preferred Money Market
Funds (the "Company"), which is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management investment company and
operates as a series company currently offering two series, including the fund.
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 fund serves as an investment vehicle for certain
other Dreyfus funds as well as for other institutional investors. At September
30, 2003, 100% of the fund' s outstanding shares were held by other Dreyfus
funds. The Dreyfus Corporation (the "Manager") serves as the fund's investment
adviser. The Manager is a wholly-owned 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.
The Company accounts separately for the assets, liabilities and operations of
each series. Expenses directly attributable to each series are charged to that
series' operations; expenses which are applicable to all series are allocated
among them on a pro rata basis.
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 accounting
principles generally accepted in the United States, 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
in accordance with Rule 2a-7 of the Act, 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,
adjusted for amortization of discount and premium on investments, is earned from
settlement date and recognized on the accrual basis. Cost of investments
represents amortized cost. Under the terms of the custody agreement, the fund
received net earnings credits of $14,189 during the period ended September 30,
2003, based on available cash balances left on deposit. Income earned under this
arrangement is included in interest income.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends
daily from investment income-net on each business day. 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 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.
The fund has an unused capital loss carryover of $3,783 available for federal
income tax purposes to be applied against future net securities profits, if any,
realized subsequent to March 31, 2003. If not applied, the carryover expires in
fiscal 2011.
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
The tax character of distributions paid to shareholders during the fiscal year
ended March 31, 2003 was all ordinary income. The tax character of current year
distributions will be determined at the end of the current fiscal year.
At September 30, 2003, 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, taxes, interest, brokerage fee
and commissions and extraordinary expenses. The Manager had undertaken from
April 1, 2003 through September 30, 2003 to waive its management fee. The
reduction in management fee, pursuant to the undertaking, amounted to $120,326
during the period ended September 30, 2003.
(B) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Each Board member who was not
an "affiliated person" as defined in the Act received an annual fee of $60,000,
an attendance fee of $7,500 for each in-person meeting. The Chairman of the
Board receives an additional 25% of such compensation. Subject to the Company's
Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the
annual retainer fee and per meeting fee paid at the time the Board member
achieves emeritus status. These fees are allocated among the funds in the Fund
Group in proportion to each fund's relative net assets.
For More Information
DREYFUS INSTITUTIONAL PREFERRED
PLUS 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.
200 Park Avenue
New York, NY 10166
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 info@dreyfus.com
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 2003 Dreyfus Service Corporation 286SA0903
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The Registrant's principal executive and principal financial officers
have concluded, based on their evaluation of the Registrant's disclosure
controls and procedures as of a date within 90 days of the filing date of
this report, that the Registrant's disclosure controls and procedures are
reasonably designed to ensure that information required to be disclosed by
the Registrant on Form N-CSR is recorded, processed, summarized and reported
within the required time periods and that information required to be
disclosed by the Registrant in the reports that it files or submits on Form
N-CSR is accumulated and communicated to the Registrant's management,
including its principal executive and principal financial officers, as
appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes to the Registrant's internal control over
financial reporting that occurred during the Registrant's most recently ended
fiscal half-year that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial
reporting.
ITEM 10. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications of principal executive and principal financial
officers as required by Rule 30a-2(a) under the Investment Company Act of
1940.
(b) Certification of principal executive and principal financial officers
as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Dreyfus Institutional Preferred Money Market Funds
- - Dreyfus Institutional Preferred Money Market Fund
- - Dreyfus Institutional Preferred Plus Money Market Fund
By: /s/ Stephen E. Canter
---------------------
Stephen E. Canter
President
Date: November 21, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /s/ Stephen E. Canter
---------------------
Chief Executive Officer
Date: November 21, 2003
By: /s/ James Windels
-----------------
James Windels
Chief Financial Officer
Date: November 21, 2003
EXHIBIT INDEX
(a)(2) Certifications of principal executive and principal
financial officers as required by Rule 30a-2(a) under the Investment
Company Act of 1940. (EX-99.CERT)
(b) Certification of principal executive and principal financial
officers as required by Rule 30a-2(b) under the Investment Company Act
of 1940. (EX-99.906CERT)