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PROSPECTUS JANUARY 27, 1995
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
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DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND (THE "FUND") IS AN
OPEN-END, DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN AS A MUTUAL FUND.
ITS GOAL IS TO PROVIDE INVESTORS WITH A HIGH LEVEL OF CURRENT INCOME WITH
MINIMUM FLUCTUATION OF PRINCIPAL VALUE. THE FUND INVESTS ONLY IN U.S.
TREASURY SECURITIES AND REPURCHASE AGREEMENTS IN RESPECT THEREOF. UNDER
NORMAL CIRCUMSTANCES, THE FUND WILL ENTER INTO REPURCHASE AGREEMENTS WITH
MATURITIES NOT EXCEEDING THE NEXT BUSINESS DAY AND WILL INVEST IN SECURITIES
WITH REMAINING MATURITIES OF THREE YEARS OR LESS AND THE DOLLAR-WEIGHTED
AVERAGE MATURITY OF THE FUND'S PORTFOLIO IS NOT EXPECTED TO EXCEED TWO YEARS.
THE FUND IS DESIGNED FOR INSTITUTIONAL INVESTORS, PARTICULARLY BANKS,
ACTING FOR THEMSELVES OR IN A FIDUCIARY, ADVISORY, AGENCY, CUSTODIAL OR
SIMILAR CAPACITY. FUND SHARES MAY NOT BE PURCHASED DIRECTLY BY INDIVIDUALS,
ALTHOUGH INSTITUTIONS MAY PURCHASE SHARES FOR ACCOUNTS MAINTAINED BY
INDIVIDUALS. SUCH INSTITUTIONS HAVE AGREED TO TRANSMIT COPIES OF THIS
PROSPECTUS TO EACH INDIVIDUAL OR ENTITY FOR WHOSE ACCOUNT THE INSTITUTION
PURCHASES FUND SHARES, TO THE EXTENT REQUIRED BY LAW.
BY THIS PROSPECTUS, THE FUND IS OFFERING CLASS A SHARES AND CLASS B
SHARES. CLASS A SHARES AND CLASS B SHARES ARE IDENTICAL, EXCEPT AS TO THE
SERVICES OFFERED TO AND THE EXPENSES BORNE BY EACH CLASS. CLASS B SHARES BEAR
CERTAIN COSTS PURSUANT TO A SERVICE PLAN ADOPTED IN ACCORDANCE WITH RULE
12B-1 UNDER THE INVESTMENT ACT OF 1940.
INVESTORS CAN INVEST, REINVEST OR REDEEM SHARES AT ANY TIME WITHOUT
CHARGE OR PENALTY IMPOSED BY THE FUND.
THE DREYFUS CORPORATION PROFESSIONALLY MANAGES THE FUND'S PORTFOLIO.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND
THAT AN INVESTOR SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED
FOR FUTURE REFERENCE.
PART B (ALSO KNOWN AS THE STATEMENT OF ADDITIONAL INFORMATION),
DATED JANUARY 27, 1995, WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A
FURTHER DISCUSSION OF CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS
WHICH MAY BE OF INTEREST TO SOME INVESTORS. IT HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION AND IS INCORPORATED HEREIN BY REFERENCE.
FOR A FREE COPY, WRITE TO THE FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE,
NEW YORK 11556-0144, OR CALL 1-800-554-4611. WHEN TELEPHONING, ASK FOR
OPERATOR 666.
MUTUAL FUND SHARES ARE NOT DEPOSITS OF OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY. ALL MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
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TABLE OF CONTENTS
PAGE
ANNUAL FUND OPERATING EXPENSES.................... 2
CONDENSED FINANCIAL INFORMATION................... 3
DESCRIPTION OF THE FUND........................... 3
MANAGEMENT OF THE FUND............................ 5
HOW TO BUY FUND SHARES............................ 6
INVESTOR SERVICES................................. 7
HOW TO REDEEM FUND SHARES......................... 8
SERVICE PLAN...................................... 9
SHAREHOLDER SERVICES PLAN......................... 9
DIVIDENDS, DISTRIBUTIONS AND TAXES................ 10
PERFORMANCE INFORMATION........................... 11
GENERAL INFORMATION............................... 12
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
CLASS A CLASS B
SHARES SHARES
-------- --------
<S> <C> <C>
Management Fees ................................................................ .20% .20%
12b-1 Fees (distribution and servicing)......................................... -_ .25%
Total Fund Operating Expenses................................................... .20% .45%
Example:
An investor would pay the following expenses on
a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the
end of each time period:
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
-------- --------
<S> <C> <C>
1 YEAR $ 2 $ 5
3 YEARS $ 6 $14
5 YEARS $11 $25
10 YEARS $26 $57
</TABLE>
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THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES
A 5% ANNUAL RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT
IN AN ACTUAL RETURN GREATER OR LESS THAN 5%.
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The purpose of the foregoing table is to assist investors in
understanding the various costs and expenses borne by the Fund, and therefore
indirectly by investors, the payment of which will reduce investors' return
on an annual basis. Unless The Dreyfus Corporation gives the Fund's investors
at least 90 days' notice to the contrary, The Dreyfus Corporation, and not
the Fund, will be liable for all expenses of the Fund (exclusive of taxes,
brokerage, interest on borrowings and (with the prior written consent of the
necessary state securities commissions) extraordinary expenses) other than
the following expenses, which will be Fund expenses: (i) the management fee
payable by the Fund to The Dreyfus Corporation monthly at the annual rate of
.20 of 1% of the value of the Fund's average daily net assets; and (ii) as to
Class B shares only, payments made pursuant to the Fund's Service Plan at the
annual rate of .25 of 1% of the value of the average daily net assets of
Class B. Institutions effecting transactions in Fund shares for the accounts
of their clients may charge their clients direct fees in connection with such
transactions; such fees are not reflected in the foregoing table. See
"Management of the Fund," "How to Buy Fund Shares," "Service Plan" and
"Shareholder Services Plan."
Page 2
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited by Ernst &
Young LLP, the Fund's independent auditors, whose report thereon appears in
the Statement of Additional Information. Further financial data and related
notes are included in the Statement of Additional Information, available upon
request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share
of beneficial interest outstanding, total investment return, ratios to
average net assets and other supplemental data for the period from October
29, 1993 (commencement of operations) to September 30, 1994. This information
has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
PER SHARE DATA: CLASS A SHARES CLASS B SHARES
------------- ---------------
<S> <C> <C>
Net asset value, beginning of period.......... $2.00 $2.00
------ ------
INVESTMENT OPERATIONS:
Investment income_net.......................... .10 .09
Net realized and unrealized
(loss) on investments....................... (.04) (.03)
------ ------
TOTAL FROM INVESTMENT OPERATIONS.............. .06 .06
------ ------
DISTRIBUTIONS:
Dividends from investment income _net......... (.10) (.09)
------ ------
Net asset value, end of period................ $1.96 $1.97
====== =====
TOTAL INVESTMENT RETURN (1)................... 3.08% 3.39%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(1)........ .20% .45%
Ratio of net investment income
to average net assets(1)......................... 5.41% 5.01%
Portfolio Turnover Rate (2)....................... 41.26% 41.26%
Net Assets, end of period (000's omitted)......... $90,421 $23,147
- -----------------
(1) Annualized.
(2) Not annualized.
</TABLE>
Further information about the Fund's performance is contained in the
Fund's annual report, which may be obtained without charge by writing to the
address or calling the number set forth on the cover page of this Prospectus.
DESCRIPTION OF THE FUND
GENERAL _ When used in this Prospectus and the Statement of Additional
Information, the terms "investor" and "shareholder" refer to the institution
purchasing Fund shares and do not refer to any individual or entity for whose
account the institution may purchase Fund shares. Such institutions have
agreed to transmit copies of this Prospectus and all relevant Fund materials,
including proxy materials, to each individual or entity for whose account the
institution purchases Fund shares, to the extent required by law.
By this Prospectus, two classes of shares of the Fund are being
offered _ Class A shares and Class B shares (each such class being referred
to as a "Class"). The Classes are identical, except that Class B shares are
subject to an annual distribution and service fee at the rate of .25% of the
value of the average daily net assets of the Fund's Class B. The fee is
payable for advertising, marketing and distributing Class B shares and for
ongoing personal services relating to Class B shareholder accounts and
services related to the maintenance of such shareholder accounts pursuant to
a Service Plan adopted in accordance with Rule 12b-1 under the Investment
Company Act of 1940. See "Service Plan." The distribution and service fee
paid by Class B will cause Class B to have a higher expense ratio and to pay
lower dividends than Class A.
INVESTMENT OBJECTIVE _ The Fund's goal is to provide investors with a high
level of current income with minimum fluctuation of principal value. The
Fund's investment objective cannot be changed without approval by the holders
of a majority (as defined in the Investment Company Act of 1940) of the
Fund's outstanding voting shares. There can be no assurance that the Fund's
investment objective will be achieved.
MANAGEMENT POLICIES _ The Fund will purchase only U.S. Treasury securities,
and may enter into repurchase agreements in respect thereof. Under normal
circumstances, the Fund will enter into repurchase agree-
Page 3
ments with maturities not exceeding the next business day and will invest in
securities with remaining maturities of three years or less; the
dollar-weighted average maturity of the Fund's portfolio is not expected to
exceed two years. The Fund also may lend securities from its portfolio and
enter into reverse repurchase agreements as described below.
PORTFOLIO SECURITIES _ U.S. Treasury securities differ in their interest
rates, maturities and times of issuance. Treasury Bills have initial
maturities of one year or less; Treasury Notes have initial maturities of one
to ten years; and Treasury Bonds generally have initial maturities of greater
than ten years.
Repurchase agreements involve the acquisition by the Fund of an
underlying debt instrument, subject to an obligation of the seller to
repurchase, and the Fund to resell, the instrument at a fixed price usually
not more than one week after its purchase. The Fund, however, intends to
enter into only repurchase agreements with maturities not exceeding the next
business day. Certain costs may be incurred by the Fund in connection with
the sale of the securities if the seller does not repurchase them in
accordance with the repurchase agreement. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the securities,
realization on the securities by the Fund may be delayed or limited.
INVESTMENT TECHNIQUES
LENDING PORTFOLIO SECURITIES _ From time to time, the Fund may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions.
Such loans may not exceed 33-1/3% of the value of the Fund's total assets. In
connection with such loans, the Fund will receive collateral consisting of
cash or U.S. Government securities which will be maintained at all times in
an amount equal to at least 100% of the current market value of the loaned
securities. The Fund can increase its income through the investment of such
collateral. The Fund continues to be entitled to payments in amounts equal to
the interest or other distributions payable on the loaned security and
receives interest on the amount of the loan. Such loans will be terminable at
any time upon specified notice. The Fund might experience risk of loss if the
institution with which it has engaged in a portfolio loan transaction
breaches its agreement with the Fund.
LEVERAGE THROUGH BORROWING _ The Fund may borrow for temporary or emergency
purposes and for investment purposes, on a secured basis through entering
into reverse repurchase agreements with banks, brokers or dealers. Reverse
repurchase agreements involve the transfer by the Fund of an underlying debt
instrument in return for cash proceeds based on a percentage of the value of
the security. The Fund retains the right to receive interest and principal
payments on the security. At an agreed upon future date, the Fund repurchases
the security, at principal, plus accrued interest. In certain types of
agreements, there is no agreed upon repurchase date and interest payments are
calculated daily, often based on the prevailing overnight repurchase rate.
The Fund will maintain in a segregated custodial account cash or U.S.
Government securities equal to the aggregate amount of its reverse repurchase
obligations, plus accrued interest, in certain cases, in accordance with
releases promulgated by the Securities and Exchange Commission. The
Securities and Exchange Commission views reverse repurchase agreement
transactions as collateralized borrowings by the Fund, and, pursuant to the
Investment Company Act of 1940, the Fund must maintain continuous asset
coverage (that is, total assets including borrowings, less liabilities
exclusive of borrowings) of 300% of the amount borrowed. If the 300% asset
coverage should decline as a result of market fluctuations or other reasons,
the Fund may be required to sell some of its portfolio holdings within three
days to reduce the debt and restore 300% asset coverage, even though it may
be disadvantageous from an investment standpoint to sell securities at that
time. As a result of these transactions, the Fund is exposed to greater
potential fluctuations in the value of its assets and its net asset value per
share. Interest costs on the money borrowed may exceed the return received on
the securities purchased.
WHEN-ISSUED SECURITIES _ The Fund may purchase U.S. Government securities on
a when-issued basis, which means that the price is fixed at the time of
commitment, but delivery and payment ordinarily take place a number of days
after the date of the commitment to purchase. The Fund will make commitments
to pur-
Page 4
chase such securities only with the intention of actually acquiring the
securities, but the Fund may sell these securities before the settlement date
if it is deemed advisable. The Fund will not accrue income in respect of a
security purchased on a when-issued basis prior to its stated delivery date.
Securities purchased on a when-issued basis and certain other
securities held by the Fund are subject to changes in value (both generally
changing in the same way, i.e., appreciating when interest rates decline and
depreciating when interest rates rise) based upon changes, real or
anticipated, in the level of interest rates. Securities purchased on a
when-issued basis may expose the Fund to risk because they may experience
such fluctuations prior to their actual delivery. Purchasing securities on a
when-issued basis can involve the additional risk that the yield available in
the market when the delivery takes place actually may be higher than that
obtained in the transaction itself. A segregated account of the Fund
consisting of cash or U.S. Government securities at least equal at all times
to the amount of the when-issued commitments will be established and
maintained at the Fund's custodian bank. Purchasing securities on a
when-issued basis when the Fund is fully or almost fully invested may result
in greater potential fluctuation in the value of the Fund's net assets and
its net asset value per share.
CERTAIN FUNDAMENTAL POLICY _ The Fund may borrow money to the extent
permitted under the Investment Company Act of 1940. This is a fundamental
policy of the Fund that cannot be changed without approval by the holders of
a majority (as defined in the Investment Company Act of 1940) of the Fund's
outstanding voting shares. See "Investment Objective and Management Policies
_ Investment Restrictions" in the Fund's Statement of Additional Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES _ The Fund may (i) pledge,
hypothecate, mortgage or otherwise encumber its assets, but only to secure
permitted borrowings; and (ii) invest up to 15% of the value of its net
assets in repurchase agreements providing for settlement in more than seven
days after notice and in other illiquid securities. See "Investment Objective
and Management Policies _ Investment Restrictions" in the Fund's Statement of
Additional Information.
RISK FACTORS _ The Fund is not a money market fund and, although it seeks to
maintain minimum fluctuation of principal value, no assurance can be given
that, when an investor desires to redeem Fund shares, the then-current net
asset value per share will be at or greater than the net asset value per
share at the time of purchase.
The value of the portfolio securities held by the Fund will vary
inversely to changes in prevailing interest rates. Thus, if interest rates
have increased from the time a security was purchased, such security, if
sold, might be sold at a price less than its cost. Similarly, if interest
rates have declined from the time a security was purchased, such security, if
sold, might be sold at a price greater than its purchase cost. In either
instance, if the security was purchased at face value and held to maturity,
no gain or loss would be realized.
Dividends and distributions paid by the Fund that are attributable to
interest from direct obligations of the United States currently are not
subject to personal income tax in most states. However, dividends and
distributions attributable to interest from repurchase agreements may be
subject to state tax.
MANAGEMENT OF THE FUND
The Dreyfus Corporation, located at 200 Park Avenue, New York, New
York 10166, was formed in 1947 and serves as the Fund's investment adviser.
The Dreyfus Corporation is a wholly-owned subsidiary of Mellon Bank, N.A.,
which is a wholly-owned subsidiary of Mellon Bank Corporation ("Mellon"). As
of December 31, 1994, The Dreyfus Corporation managed or administered
approximately $70 billion in assets for more than 1.9 million investor
accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the Fund,
subject to the overall authority of the Fund's Board of Trustees in
accordance with Massachusetts law. The Fund's primary portfolio manager is
Gerald E. Thunelius; he has held that position since June 1994 and has been
an employee of The Dreyfus Corporation since May 1989. The Fund's other
portfolio managers are identified under "Management of the Fund" in the Fund's
Page 5
Statement of Additional Information. The Dreyfus Corporation also provides
research services for the Fund as well as for other funds advised by The
Dreyfus Corporation through a professional staff of portfolio managers and
securities analysts.
Mellon is a publicly owned multibank holding company incorporated
under Pennsylvania law in 1971 and registered under the Federal Bank Holding
Company Act of 1956, as amended. Mellon provides a comprehensive range of
financial products and services in domestic and selected international
markets. Mellon is among the twenty-five largest bank holding companies in
the United States based on total assets. Mellon's principal wholly-owned
subsidiaries are Mellon Bank, N.A., Mellon Bank (DE) National Association,
Mellon Bank (MD), The Boston Company, Inc., AFCO Credit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, Mellon managed more than $130 billion in assets as of July
31, 1994, including approximately $6 billion in mutual fund assets. As of
June 30, 1994, various subsidiaries of Mellon provided non-investment
services, such as custodial or administration services, for approximately
$747 billion in assets including approximately $97 billion in mutual fund
assets.
For the period October 29, 1993 (commencement of operations) through
September 30, 1994, the Fund paid The Dreyfus Corporation a management fee at
the annual rate of .20 of 1% of the value of the Fund's average daily net
assets.
Unless The Dreyfus Corporation gives the Fund's investors at least 90
days' notice to the contrary, The Dreyfus Corporation, and not the Fund, will
be liable for all expenses of the Fund (exclusive of taxes, brokerage,
interest on borrowings and (with the prior written consent of the necessary
state securities commissions) extraordinary expenses) other than the
following expenses which will be Fund expenses: (i) the management fee
payable by the Fund to The Dreyfus Corporation monthly at the annual rate of
.20 of 1% of the Fund's average daily net assets; and (ii) as to Class B
shares only, payments made pursuant to the Fund's Service Plan at the annual
rate of .25 of 1% of the value of the average daily net assets of Class B.
See "Service Plan." The Fund will not reimburse The Dreyfus Corporation for
any amounts The Dreyfus Corporation may bear.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay Service Agents
in respect of these services.
The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"), located at One Exchange Place, Boston, Massachusetts 02109.
The Distributor is a wholly-owned subsidiary of Institutional Administration
Services, Inc. a provider of mutual fund administration services, the parent
company of which is Boston Institutional Group, Inc.
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671, is the
Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent"). The
Bank of New York, 110 Washington Street, New York, New York 10286, is the
Fund's Custodian.
HOW TO BUY FUND SHARES
The Fund is designed for institutional investors, particularly banks,
acting for themselves or in a fiduciary, advisory, agency, custodial or
similar capacity. Fund shares may not be purchased directly by individuals,
although institutions may purchase shares for accounts maintained by
individuals. Generally, each investor will be required to open a single
master account with the Fund for all purposes. In certain cases, the Fund may
request investors to maintain separate master accounts for shares held by the
investor (i) for its own account, for the account of other institutions and
for accounts for which the institution acts as a fiduciary, and (ii) for
accounts for which the investor acts in some other capacity. An institution
may arrange with the Transfer Agent for sub-accounting services and will be
charged directly for the cost of such services.
The minimum initial investment is $10,000,000, unless: (a) the
investor has invested at least $10,000,000 in the aggregate among the Fund,
Dreyfus Cash Management, Dreyfus Cash Management Plus, Inc., Dreyfus
Government Cash Management, Dreyfus Municipal Cash Management Plus, Dreyfus
New York
Page 6
Municipal Cash Management, Dreyfus Tax Exempt Cash Management,
Dreyfus Treasury Cash Management and Dreyfus Treasury Prime Cash Management;
or (b) the investor has, in the opinion of the Distributor, adequate intent
and availability of funds to reach a future level of investment of
$10,000,000 among the funds identified above. There is no minimum for
subsequent purchases. The initial investment must be accompanied by the
Fund's Account Application. Management understands that some financial
institutions, securities dealers and other industry professionals
(collectively, "Service Agents") and other institutions may charge their
clients fees in connection with purchases for the accounts of their clients.
These fees would be in addition to any amounts which might be received under
the Service Plan. Service Agents may receive different levels of compensation
for selling different classes of shares. Each Service Agent has agreed to
transmit to its clients a schedule of such fees. Share certificates are
issued only upon the investor's written request. No certificates are issued
for fractional shares. The Fund reserves the right to reject any purchase
order.
Fund shares may be purchased by wire, by telephone or through
compatible computer facilities. All payments should be made in U.S. dollars
and, to avoid fees and delays, should be drawn only on U.S. banks. For
instructions concerning purchases and to determine whether their computer
facilities are compatible with the Fund's, investors should call one of the
telephone numbers listed under "General Information" in this Prospectus.
Fund shares are sold on a continuous basis at the net asset value per
share next determined after an order in proper form and Federal Funds (monies
of member banks in the Federal Reserve System which are held on deposit at a
Federal Reserve Bank) are received by the Transfer Agent or other agent. If
an investor does not remit Federal Funds, its payment must be converted into
Federal Funds. This usually occurs within one business day of receipt of a
bank wire and within two business days of receipt of a check drawn on a
member bank of the Federal Reserve System. Checks drawn on banks which are
not members of the Federal Reserve System may take considerably longer to
convert into Federal Funds. Prior to receipt of Federal Funds, the investor's
money will not be invested.
The Fund's net asset value per share is determined as of the close of
trading on the floor of the New York Stock Exchange (currently 4:00 p.m., New
York time), on each day that the New York Stock Exchange is open for
business. Net asset value per share of each Class is computed by dividing the
value of the Fund's net assets represented by such Class (i.e., the value of
its assets less liabilities) by the total number of shares of such Class
outstanding. The Fund's investments are valued each business day generally by
using available market quotations or at fair value which may be determined by
one or more pricing services approved by the Board of Trustees. Each pricing
service's procedures are reviewed under the general supervision of the Board
of Trustees. For further information regarding the methods employed in
valuing the Fund's investments, see "Determination of Net Asset Value" in the
Fund's Statement of Additional Information.
Federal Regulations require that an investor provide a certified
Taxpayer Identification Number ("TIN") upon opening or reopening an account.
See "Dividends, Distributions and Taxes" and the Fund's Account Application
for further information concerning this requirement. Failure to furnish a
certified TIN to the Fund could subject an investor to a $50 penalty imposed
by the Internal Revenue Service (the "IRS").
INVESTOR SERVICES
FUND EXCHANGES _ An investor may purchase, in exchange for Class A or Class
B shares of the Fund, shares of Dreyfus Cash Management, Dreyfus Cash
Management Plus, Inc., Dreyfus Government Cash Management, Dreyfus New York
Municipal Cash Management, Dreyfus Municipal Cash Management Plus, Dreyfus
Tax Exempt Cash Management, Dreyfus Treasury Cash Management and Dreyfus
Treasury Prime Cash Management, which have different investment objectives
that may be of interest to investors. Upon an exchange into a new account, the
following shareholder services and privileges, as applicable and where
available, will be automatically carried over to the fund into which the
exchange is being made: Telephone Exchange Privilege, Redemption by Wire or
Telephone, Redemption Through Compatible Computer Facilities and the
dividend/capital gain distribution option selected by the investor.
Page 7
To request an exchange, instructions must be given to the Distributor
in writing or by telephone. See "How to Redeem Fund Shares _ Procedures."
Before any exchange, the investor must obtain and should review a copy of the
current prospectus of the fund into which the exchange is being made.
Prospectuses may be obtained by calling 1-800-645-6561. Shares will be
exchanged at the net asset value next determined after receipt of an exchange
request in proper form. The exchange of shares of one fund for shares of
another fund is treated for Federal income tax purposes as a sale of the
shares given in exchange by the investor and, therefore, an exchanging
investor may realize a taxable gain or loss. No fees currently are charged
investors directly in connection with exchanges, although the Fund reserves
the right, upon not less than 60 days' written notice, to charge investors a
nominal fee in accordance with rules promulgated by the Securities and
Exchange Commission. The Fund reserves the right to reject any exchange
request in whole or in part. The availability of Fund exchanges may be
modified or terminated at any time upon notice to investors.
DREYFUS AUTO-EXCHANGE PRIVILEGE _ Dreyfus Auto-Exchange Privilege enables an
investor to invest regularly (on a semi-monthly, quarterly or annual basis),
in exchange for Class A or Class B shares of the Fund, in shares of Dreyfus
Cash Management, Dreyfus Cash Management Plus, Inc., Dreyfus Government Cash
Management, Dreyfus New York Municipal Cash Management, Dreyfus Municipal
Cash Management Plus, Dreyfus Tax Exempt Cash Management, Dreyfus Treasury
Cash Management or Dreyfus Treasury Prime Cash Management, if the investor is
currently an investor in one of these funds. The amount an investor
designates, which can be expressed either in terms of a specific dollar or
share amount, will be exchanged automatically on the first and/or fifteenth
day of the month according to the schedule that the investor has selected.
Shares will be exchanged at the then-current net asset value. The right to
exercise this Privilege may be modified or cancelled by the Fund or the
Transfer Agent. An investor may cancel the exercise of this Privilege at any
time by writing to The Dreyfus Institutional Services Division, EAB Plaza,
144 Glenn Curtiss Boulevard, 8th Floor, Uniondale, New York 11556-0144. The
Fund may charge a service fee for the use of this Privilege. No such fee
currently is contemplated. The exchange of shares of one fund for shares of
another is treated for Federal income tax purposes as a sale of the shares
given in exchange by the investor and, therefore, an exchanging investor may
realize a taxable gain or loss. For more information concerning this
Privilege and the funds eligible to participate in this Privilege, or to
obtain a Dreyfus Auto-Exchange Authorization Form, please call toll free
1-800-346-3621.
HOW TO REDEEM FUND SHARES
GENERAL _ Investors may request redemption of shares at any time and the
shares will be redeemed at the next determined net asset value.
The Fund imposes no charges when shares are redeemed. Service Agents
or other institutions may charge their clients a nominal fee for effecting
redemptions of Fund shares. Any share certificates representing Fund shares
being redeemed must be submitted with the redemption request. The value of
the shares redeemed may be more or less than their original cost, depending
upon the Fund's then-current net asset value.
If a request for redemption is received in proper form by the
Distributor by 4:00 p.m., New York time, the shares will receive the dividend
on the Fund's shares declared on that day and the proceeds of redemption
ordinarily will be transmitted in Federal Funds on the next business day.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission.
PROCEDURES _ Investors may redeem shares by wire or telephone, or through
compatible computer facilities as described below.
An investor may redeem Fund shares by telephone if he or she has
checked the appropriate box on the Fund's Account Application or has filed a
Shareholder Services Form with the Transfer Agent. If an investor selects a
telephone redemption privilege or telephone exchange privilege (which is
granted automatically
Page 8
unless the investor refuses it), the investor authorizes the Transfer Agent
or its agents to act on telephone instructions from any person representing
himself or herself to be an authorized representative of the investor, and
reasonably believed by the Transfer Agent or its agents to be genuine. The
Fund will require the Transfer Agent or its agents to employ reasonable
procedures, such as requiring a form of personal identification, to confirm
that instructions are genuine and, if they do not follow such procedures, the
Fund or the Transfer Agent may be liable for any losses due to unauthorized
or fraudulent instructions. The Fund or the Transfer Agent will not be liable
for following telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, investors may
experience difficulty in contacting the Transfer Agent or its agents by
telephone to request a redemption or exchange of Fund shares. In such cases,
investors should consider using the other redemption procedures described
herein.
REDEMPTION BY WIRE OR TELEPHONE _ Investors may redeem Fund shares by wire
or telephone. The redemption proceeds will be paid by wire transfer.
Investors can redeem shares by telephone by calling one of the telephone
numbers listed under "General Information" in this Prospectus. The Fund
reserves the right to refuse any request made by wire or telephone and may
limit the amount involved or the number of telephone redemptions. This
procedure may be modified or terminated at any time by the Transfer Agent or
the Fund. The Fund's Statement of Additional Information sets forth
instructions for redeeming shares by wire. Shares for which certificates have
been issued may not be redeemed by wire or telephone.
REDEMPTION THROUGH COMPATIBLE COMPUTER FACILITIES _ The Fund makes available
to institutions the ability to redeem shares through compatible computer
facilities. Investors desiring to redeem shares in this manner should call
one of the telephone numbers listed under "General Information" in this
Prospectus to determine whether their computer facilities are compatible and
to receive instructions for redeeming shares in this manner.
SERVICE PLAN
(CLASS B ONLY)
Class B shares are subject to a Service Plan adopted pursuant to Rule
12b-1 under the Investment Company Act of 1940. Under the Service Plan, the
Fund (a) reimburses the Distributor for distributing the Fund's Class B
shares and (b) pays The Dreyfus Corporation, Dreyfus Service Corporation, a
wholly-owned subsidiary of The Dreyfus Corporation, and any affiliate of
either of them (collectively, "Dreyfus") for advertising and marketing
relating to the Fund's Class B shares and for providing certain services
relating to Class B shareholder accounts, such as answering shareholder
inquiries regarding the Fund and providing reports and other information, and
services related to the maintenance of such shareholder accounts
("Servicing"), at an aggregate annual fee of .25 of 1% of the value of the
average daily net assets of Class B. Each of the Distributor and Dreyfus may
pay one or more Service Agents a fee in respect of the Fund's Class B shares
owned by shareholders with whom the Service Agent has a Servicing
relationship or for whom the Service Agent is the dealer or holder of record.
Each of the Distributor and Dreyfus determines the amounts, if any, to be
paid to Service Agents under the Service Plan and the basis on which such
payments are made. The fee payable for Servicing is intended to be a "service
fee" as defined in Article III, Section 26 of the NASD Rules of Fair
Practice. The fees payable under the Service Plan are payable without regard
to actual expenses incurred.
SHAREHOLDER SERVICES PLAN
(CLASS A ONLY)
Class A shares are subject to a Shareholder Services Plan pursuant to
which the Fund has agreed to reimburse Dreyfus Service Corporation an amount
not to exceed an annual rate of .25 of 1% of the value of the average daily
net assets of Class A for certain allocated expenses of providing personal
services to, and/or maintaining accounts of, Class A shareholders. The
services provided may include personal services relating to Class A
shareholder accounts, such as answering shareholder inquiries regarding the
Fund and providing reports and other information, and services related to the
maintenance of such shareholder accounts. Pursuant to an undertaking by The
Dreyfus Corporation described under "Management of the Fund," The Dreyfus
Corporation, and not the Fund, currently reimburses Dreyfus Service
Corporation for any such allocated expenses.
Page 9
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from net investment income on
each day the New York Stock Exchange is open for business. The Fund's
earnings for Saturdays, Sundays and holidays are declared as dividends on the
next business day. Dividends usually are paid on the last business day of
each month, and are automatically reinvested in additional Fund shares at net
asset value or, at the investor's option, paid in cash. If an investor
redeems all shares in its account at any time during the month, all dividends
to which the investor is entitled will be paid along with the proceeds of the
redemption. Distributions from net realized short-term capital gains, if any,
are paid quarterly. Distributions from net realized long-term capital gains,
if any, generally are paid once a year, but the Fund may make such
distributions on a more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent with the
provisions of the Investment Company Act of 1940. The Fund will not make
distributions from net realized securities gains unless capital loss
carryovers, if any, have been utilized or have expired. Investors may choose
whether to receive distributions in cash or to reinvest in additional shares
of the Fund at net asset value. All expenses are accrued daily and deducted
before declaration of dividends to investors. Dividends paid by each Class
will be calculated at the same time and in the same manner and will be of the
same amount, except that the expenses attributable solely to Class A or Class
B will be borne exclusively by such Class. Class B shares will receive lower
price per share dividends than Class A shares because of the higher expenses
borne by Class B. See "Annual Fund Operating Expenses."
Dividends derived from net investment income, together with
distributions from any net realized short-term securities gains and all or a
portion of any gains realized from the sale of other disposition of certain
market discount bonds, paid by the Fund generally are taxable to U.S.
investors as ordinary income, whether or not reinvested in additional Fund
shares. No dividend will qualify for the dividends received deduction
allowable to certain U.S. corporations. Distributions from net realized
long-term securities gains, if any, generally are taxable to U.S. investors
as long-term capital gains for Federal income tax purposes, regardless of how
long shareholders have held their shares and whether such distributions are
received in cash or reinvested in additional Fund shares. The Code provides
that the net capital gains of an individual generally will not be subject to
Federal income tax at a rate in excess of 28%. Dividends and distributions
may be subject to state and local taxes.
Dividends derived from net investment income and distributions
attributable to interest from direct obligations of the United States and
paid by the Fund to a shareholder currently are not subject to state personal
income tax. Dividends and distributions attributable to interest from the
entry into repurchase agreements may be subject to state tax. The Fund will
provide shareholders with a statement which sets forth the percentage of
dividends and distributions paid by the Fund that is attributable to interest
income from direct obligations of the United States.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discounts bonds, paid by the Fund with respect to Fund shares
beneficially owned by a foreign investor generally are subject to U.S.
nonresident withholding taxes at the rate of 30%, unless the foreign investor
claims the benefits of a lower rate specified in a tax treaty. Distributions
from net realized long-term securities gains paid by the Fund with respect to
Fund shares beneficially owned by a foreign investor, as well as the proceeds
of any redemptions from such investor's account, regardless of the extent to
which gain or loss may be realized, will not be subject to U.S. nonresident
withholding tax. However, such distributions may be subject to backup
withholding, as described below, unless the foreign investor certifies his
non-U.S. residency status.
Notice as to the tax status of dividends and distributions will be
mailed to investors annually. Each investor also will receive periodic
summaries of the investor's account which will include information as to
dividends and distributions from securities gains, if any, paid during the
year.
Page 10
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends, distributions
from net realized securities gains and the proceeds of any redemption,
regardless of the extent to which gain or loss may be realized, paid to a
shareholder if such shareholder fails to certify either that the TIN
furnished in connection with opening an account is correct or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may
notify the Fund to institute backup withholding if the IRS determines a
shareholder's TIN is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a credit on the record
owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified for the
fiscal year ended September 30, 1994 as a "regulated investment company"
under the Code. The Fund intends to continue to so qualify if such
qualification is in the best interests of its shareholders. Such
qualification relieves the Fund of any liability for Federal income tax to
the extent its earnings are distributed in accordance with applicable
provisions of the Code. In addition, the Fund is subject to a non-deductible
4% excise tax, measured with respect to certain undistributed amounts of
taxable investment income and capital gains, if any.
Each investor should consult its tax adviser regarding specific
questions as to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance of each Class of shares may
be calculated on several bases, including current yield, average annual total
return and/or total return.
Current yield refers to the Fund's annualized net investment income
per share over a 30-day period, expressed as a percentage of the net asset
value per share at the end of the period. For purposes of calculating current
yield, the amount of net investment income per share during that 30-day
period, computed in accordance with regulatory requirements, is compounded by
assuming that it is reinvested at a constant rate over a six-month period. An
identical result is then assumed to have occurred during a second six-month
period which, when added to the result for the first six months, provides an
"annualized" yield for an entire one-year period. Calculations of the Fund's
current yield may reflect absorbed expenses pursuant to any undertaking that
may be in effect. See "Management of the Fund."
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the Fund was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of
a stated period of time, after giving effect to the reinvestment of dividends
and distributions during the period. The return is expressed as a percentage
rate which, if applied on a compounded annual basis, would result in the
redeemable value of the investment at the end of the period. Advertisements
of the Fund's performance will include the Fund's average annual total return
for one, five and ten year periods, or for shorter time periods depending
upon the length of time the Fund has operated. Computations of average annual
total return for periods of less than one year represent an annualization of
the Fund's actual total return for the applicable period.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value per share at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. Investors should remember that
performance is a function of portfolio management in selecting the
Page 11
type and quality of portfolio securities and is affected by operating
expenses. Performance information, such as that described above, may not
provide a basis for comparison with other investment companies using a
different method of calculating performance.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., Morningstar, Inc., Bank Rate Monitortrademark, N.
Palm Beach, Fla. 33408, IBC/Donoghue's Money Fund Report, Bond Buyer's
20-Bond Index, Moody's Bond Survey Bond Index, Salomon Brothers Broad
Investment Grade Index and other industry publications.
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust under the
laws of the Commonwealth of Massachusetts pursuant to an Agreement and
Declaration of Trust (the "Trust Agreement") dated March 12, 1992, and
commenced operations on October 29, 1993. The Fund is authorized to issue an
unlimited number of shares of beneficial interest, par value $.001 per share.
The Fund's shares are classified into two classes _ Class A and Class B. Each
share has one vote and shareholders will vote in the aggregate and not by
class except as otherwise required by law or with respect to any matter which
affects only one class. Holders of Class B shares only, however, will be
entitled to vote on matters subjected to shareholders pertaining to the
Service Plan.
Under Massachusetts law, shareholders could, under certain
circumstances, be held liable for the obligations of the Fund. However, the
Trust Agreement disclaims shareholder liability for acts or obligations of
the Fund and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Fund or a
Trustee. The Trust Agreement provides for indemnification from the Fund's
property for all losses and expenses of any shareholder held liable for the
obligations of the Fund. Thus, the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its
obligations, a possibility which management believes is remote. Upon payment
of any liability incurred by the Fund, the shareholder paying such liability
will be entitled to reimbursement from the general assets of the Fund. The
Trustees intend to conduct the operations of the Fund in such a way so as to a
void, as far as possible, ultimate liability of the shareholders for
liabilities of the Fund. As described under "Management of the Fund" in the
Statement of Additional Information, the Fund ordinarily will not hold
shareholder meetings; however, shareholders under certain circumstances may
have the right to call a meeting of shareholders for the purpose of voting to
remove Trustees.
The Transfer Agent will maintain a record of each investor's
ownership and will send confirmations and statements of account.
Investor inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or, in the case of
institutional investors, by calling in New York State 1-718-895-1650;
outside New York State call toll free 1-800-346-3621. Individuals or entities
for whom institutions may purchase or redeem Fund shares should call toll
free 1-800-554-4611.
The Glass-Steagall Act and other applicable laws prohibit Federally
chartered or supervised banks from engaging in certain aspects of the
business of issuing, underwriting, selling and/or distributing securities.
Accordingly, banks will perform only administrative and shareholder servicing
functions. While the matter is not free from doubt, the Fund's Board of
Trustees believes that such laws should not preclude a bank from acting on
behalf of clients as contemplated by this Prospectus. However, judicial or
administrative decisions or interpretations of such laws, as well as changes
in either Federal or state statutes or regulations relating to the
permissible activities of banks and their subsidiaries or affiliates, could
prevent a bank from continuing to perform all or part of the activities
contemplated by this Prospectus. If a bank were prohibited from so acting,
its shareholder clients would be permitted to remain Fund shareholders and
alternative means for continuing the servicing of such shareholders would be
sought. In such event, changes in the operation of the Fund
Page 12
might occur and shareholders serviced by such bank might no longer be able
to avail themselves of any automatic investment or other services then being
provided by the bank. The Fund does not expect that shareholders would
suffer any adverse financial consequences as a result of any of these
occurrences.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 13
PROSPECTUS
(LION LOGO)
DREYFUS
INSTITUTIONAL
SHORT TERM
TREASURY
FUND
copyright logo 1995 Dreyfus Service Corporation
__________________________________________________________________________
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
CLASS A AND CLASS B SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
JANUARY 27, 1995
__________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Dreyfus Institutional Short Term Treasury Fund (the "Fund"), dated
January 27, 1995, as it may be revised from time to time. To obtain a
copy of the Fund's Prospectus, please write to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or, in the case of
institutional investors, call the following numbers:
Call Toll Free 1-800-346-3621
In New York State -- Call 1-718-895-1650
Individuals or entities for whom institutions may purchase or redeem
Fund shares may write to the Fund at the above address or call toll free
1-800-554-4611 to obtain a copy of the Fund's Prospectus.
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies. . . . . . . . . B-2
Management of the Fund. . . . . . . . . . . . . . . . . . . . B-4
Management Agreement. . . . . . . . . . . . . . . . . . . . . B-7
Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . B-9
Service Plan (Class B). . . . . . . . . . . . . . . . . . . . B-10
Shareholder Services Plan (Class A) . . . . . . . . . . . . . B-11
Redemption of Fund Shares . . . . . . . . . . . . . . . . . . B-11
Determination of Net Asset Value. . . . . . . . . . . . . . . B-12
Dividends, Distributions and Taxes. . . . . . . . . . . . . . B-13
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . B-14
Investor Services . . . . . . . . . . . . . . . . . . . . . . B-14
Performance Information . . . . . . . . . . . . . . . . . . . B-15
Information About the Fund. . . . . . . . . . . . . . . . . . B-16
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . . B-16
Financial Statements. . . . . . . . . . . . . . . . . . . . . B-17
Report of Independent Auditors. . . . . . . . . . . . . . . . B-26
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Description of the Fund."
Management Policies
The Fund engages in the following practices in furtherance of its
objective.
Lending Portfolio Securities. To a limited extent, the Fund may lend
its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which at all times is
maintained in an amount equal to at least 100% of the current market value
of the securities loaned. By lending its portfolio securities, the Fund
can increase its income through the investment of the cash collateral.
For purposes of this policy, the Fund considers collateral consisting of
U.S. Government securities to be the equivalent of cash. From time to
time, the Fund may return to the borrower or a third party which is
unaffiliated with the Fund, and which is acting as a "placing broker," a
part of the interest earned from the investment of collateral received for
securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value
of the securities rises above the level of such collateral; (3) the Fund
must be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any interest or other
distributions payable on the loaned securities, and any increase in market
value; and (5) the Fund may pay only reasonable custodian fees in
connection with the loan. These conditions may be subject to future
modification.
Investment Restrictions. The Fund has adopted investment
restrictions numbered 1 through 8 as fundamental policies. These
restrictions cannot be changed without approval by the holders of a
majority (as defined in the Investment Company Act of 1940, as amended
(the "Act")) of the Fund's outstanding voting shares. Investment
restrictions numbered 9 through 12 are not fundamental policies and may be
changed by vote of a majority of the Trustees at any time. The Fund may
not:
1. Invest in commodities, except that the Fund may purchase and sell
options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes.
2. Purchase, hold or deal in real estate, real estate limited
partnership interests, or oil, gas or other mineral leases or exploration
or development programs, but the Fund may purchase and sell securities
that are secured by real estate and may purchase and sell securities
issued by companies that invest or deal in real estate.
3. Borrow money, except to the extent permitted under the Act. For
purposes of this investment restriction, the entry into options, forward
contracts, futures contracts, including those relating to indexes, and
options on futures contracts or indexes shall not constitute borrowing.
4. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, the Fund
may lend its portfolio securities in an amount not to exceed 33-1/3% of
the value of its total assets. Any loans of portfolio securities will be
made according to guidelines established by the Securities and Exchange
Commission and the Fund's Board of Trustees.
5. Act as an underwriter of securities of other issuers, except to
the extent the Fund may be deemed an underwriter under the Securities Act
of 1933, as amended, by virtue of disposing of portfolio securities.
6. Invest more than 25% of its assets in the securities of issuers
in any single industry, provided that there shall be no limitation on the
purchase of obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
7. Issue any senior security (as such term is defined in Section
18(f) of the Act), except to the extent the activities permitted in
Investment Restriction Nos. 1, 3 and 9 may be deemed to give rise to a
senior security.
8. Purchase securities on margin, but the Fund may make margin
deposits in connection with transactions in options, forward contracts,
futures contracts, including those related to indexes, and options on
futures contracts or indexes.
9. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
deposit of assets in escrow in connection with writing covered put and
call options and the purchase of securities on a when-issued or delayed-
delivery basis and collateral and initial or variation margin arrangements
with respect to options, forward contracts, futures contracts, including
those related to indexes, and options on futures contracts or indexes.
10. Purchase, sell or write puts, calls or combinations thereof.
11. Enter into repurchase agreements providing for settlement in
more than seven days after notice or purchase securities which are
illiquid, if, in the aggregate, more than 15% of the value of the Fund's
net assets would be so invested.
12. Purchase securities of other investment companies, except to the
extent permitted under the Act.
If a percentage restriction is adhered to at the time of investment,
a later increase or decrease in percentage resulting from a change in
values or assets will not constitute a violation of such restriction.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interest of the Fund and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of Fund shares in the state
involved.
MANAGEMENT OF THE FUND
Trustees and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Trustee who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Trustees of the Fund
LUCY WILSON BENSON, Trustee. President of Benson and Associates,
consultants to business and government. Mrs. Benson is a director of
Communications Satellite Corporation, General RE Corporation, The
Grumman Corporation and Logistics Management Institute. She is also
a Trustee of the Alfred P. Sloan Foundation, Vice Chairman of the
Board of Trustees of Lafayette College, Vice Chairman of the Citizens
Network for Foreign Affairs and a member of the Council on Foreign
Relations. Mrs. Benson served as a consultant to the U.S. Department
of State and to SRI International from 1980 to 1981. From 1977 to
1980, she was Under Secretary of State of Security Assistance,
Science and Technology. Her address is 46 Sunset Avenue, Amherst,
Massachusetts 01002.
*DAVID W. BURKE, Trustee. Consultant to the Manager since August 1994.
From October 1990 to August 1994, Vice President and Chief
Administrative Officer of the Manager. From 1977 to 1990, Mr. Burke
was involved in the management of national television news, as Vice
President and Executive Vice President of ABC News, and subsequently
as President of CBS News. His address is 200 Park Avenue, New York,
New York 10166.
MARTIN D. FIFE, Trustee. President of Fife Associates, Inc. and other
companies engaged in the chemical and plastics industries. His
address is 405 Lexington Avenue, 33rd Floor, New York, New York 10174.
WHITNEY I. GERARD, Trustee. Partner of the New York City law firm of
Chadbourne & Parke. His address is 30 Rockefeller Plaza, New York,
New York 10112.
ROBERT R. GLAUBER, Trustee. Research Fellow, Center for Business and
Government at the John F. Kennedy School of Government, Harvard
University, since January 1992. Mr. Glauber was Under Secretary of
the Treasury for Finance at the U.S. Treasury Department from May
1989 to January 1992. For more than five years prior thereto, he was
a Professor of Finance at the Graduate School of Business
Administration of Harvard University and, from 1985 to 1989, Chairman
of its Advanced Management Program. His address is 79 John F.
Kennedy Street, Cambridge, Massachusetts 02138.
ARTHUR A. HARTMAN, Trustee. Senior consultant with APCO Associates Inc.
From 1981 to 1987, he was United States Ambassador to the former
Soviet Union. He is a director of the Hartford Insurance Group and a
member of the advisory councils of several other companies, research
institutes and foundations. He is President of the Harvard Board of
Overseers. His address is 2738 McKinley Street, N.W., Washington,
D.C. 20015.
GEORGE L. PERRY, Trustee. An economist and Senior Fellow at the Brookings
Institution since 1969. He is co-director of the Brookings panel on
Economic Activity and editor of its journal, The Brookings Papers.
He is also a director of the State Farm Mutual Automobile Association
and State Farm Life Insurance Company. His address is 1775
Massachusetts Avenue, N.W., Washington, D.C. 10036.
PAUL D. WOLFOWITZ, Trustee. Dean of The Paul H. Nitze School of Advanced
International Studies at Johns Hopkins University. From 1989 to
1993, he was Under Secretary of Defense for Policy. From 1986 to
1989, he was the U.S. Ambassador to the Republic of Indonesia. From
1982 to 1986, he was Assistant Secretary of State of East Asian and
Pacific Affairs of the Department of State. His address is 1740
Massachusetts Avenue, N.W., Washington, D.C. 20036.
The "non-interested" Trustees are also directors of Dreyfus Asset
Allocation Fund, Inc., The Dreyfus Fund Incorporated, Dreyfus California
Municipal Income, Inc., Dreyfus Municipal Income, Inc., Dreyfus New York
Municipal Income, Inc., Dreyfus Short-Term Income Fund, Inc. and The 401
(k) Fund, and trustees of Dreyfus Short-Intermediate Municipal Bond Fund.
The "non-interested" Trustees, except Mr. Glauber, are also directors of
Dreyfus Liquid Assets, Inc. and trustees of Dreyfus Short-Intermediate
Government Fund. The "non-interested" Trustees except Mr. Wolfowitz are
also directors of Dreyfus Worldwide Dollar Money Market Fund, Inc. Mrs.
Benson also is a director of The Dreyfus Third Century Fund, Inc. and The
Dreyfus Socially Responsible Growth Fund, Inc. Mr. Glauber is also a
director of Dreyfus A Bonds Plus, Inc. Dreyfus Balanced Fund, Inc.,
Dreyfus Growth and Income Fund, Inc., Dreyfus Growth Opportunity Fund,
Inc., Dreyfus International Equity Fund, Inc., Dreyfus International
Recovery Fund, Inc. and Dreyfus Money Market Instruments, Inc., and a
trustee of Dreyfus Institutional Money Market Fund and Dreyfus Variable
Investment Fund.
The Fund does not pay any remuneration to its officers and Trustees
other than fees and expenses to the "non-interested" Trustees, which
totaled $11,816 for the period October 29, 1993 (commencement of
operations) through September 30, 1994 for all such Trustees as a group.
The Manager, and not the Fund, currently pays these fees and expenses
pursuant to an undertaking described under "Management Agreement."
For so long as the Fund's plans described in the sections captioned
"Service Plan" and "Shareholder Services Plan" remain in effect, the
Trustees of the Fund who are not "interested persons" of the Fund, as
defined in the Act, will be selected and nominated by the Trustees who are
not "interested persons" of the Fund.
Ordinarily, there will be no meetings of shareholders for the purpose
of electing Trustees unless and until such time as less than a majority of
the Trustees holding office have been elected by shareholders, at which
time the Trustees then in office will call a shareholders' meeting for the
election of Trustees. Under the Act, shareholders of record of not less
than two-thirds of the outstanding shares of the Fund may remove a Trustee
through a declaration in writing or by vote cast in person or by proxy at
a meeting called for that purpose. Under the Fund's Agreement and
Declaration of Trust, the Trustees are required to call a meeting of
shareholders for the purpose of voting upon the question of removal of any
such Trustee when requested in writing to do so by the shareholders of
record of not less than 10% of the Fund's outstanding shares.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment
companies advised or administered by the Manager. From December 1991
to July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., a wholly-owned subsidiary of The Boston Company,
Inc. Prior to December 1991, she served as Vice President and
Controller, and later as Senior Vice President, of The Boston Company
Advisors, Inc.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President
and General Counsel of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
February 1992 to July 1994, he served as Counsel for The Boston
Company Advisors, Inc. From August 1990 to February 1992, he was
employed as an Associate at Ropes & Gray, and prior thereto, he was
employed as an Associate at Sidley & Austin.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1988 to
August 1994, he was Manager of the High Performance Fabric Division
of Springs Industries, Inc.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From September
1992 to August 1994, he was an attorney with the Board of Governors
of the Federal Reserve System.
JOSEPH F. TOWER, III, Assistant Treasurer. Senior Vice President,
Treasurer and Chief Financial Officer of the Distributor and an
officer of other investment companies advised or administered by the
Manager. From July 1988 to August 1994, he was employed by The
Boston Company, Inc., where he held various management positions in
the Corporate Finance and Treasury areas.
JOHN J. PYBURN, Assistant Treasurer. Vice President of the Distributor
and an officer of other investment companies advised or administered
by the Manager. From 1984 to July 1994, he was Assistant Vice
President in the Mutual Fund Accounting Department of the Manager.
PAUL FURCINITO, Assistant Secretary. Assistant Vice President of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From January 1994 to July 1994, he was
a Senior Legal Product Manager, and, from January 1990 to January
1992, he was a mutual fund accountant for The Boston Company
Advisors, Inc.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of
Distributor and an officer of other investment companies advised or
administered by the Manager. From March 1992 to July 1994, she was a
Compliance Officer for The Managers Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts and, prior thereto, was
employed as a Research Assistant for the Bureau of National Affairs.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York, 10166.
Trustees and officers of the Fund, as a group, owned less than 1% of
the Fund's shares of beneficial interest outstanding on November 15, 1994.
The following persons are known by the Fund to own of record or
beneficially 5% or more of the Fund's outstanding voting securities as of
November 15, 1994: Class A - Hawkeye Bank, attn. Trust Dept., 431 E.
Locust St., Des Moines, IA 50309 - 22.4%; Banc One Capital Corporation,
1717 Main Street, Dallas, TX 75201 - 22.4%; Comerica Bank, attn. Fixed
Income Dept., 100 Renaissance Center, Detroit, MI 48243 - 18.2% and
Chittendon Trust Co., attn. Alan A. Fay, 2 Burlington Square, Burlington,
VT 05401 - 7.5%. Class B - Compass Bank, attn. Sharon Weaver, P.O. Box
10566, Birmingham, AL 35296 - 31.6%; Healthspring, 11921 Freedom Drive,
Reston, VA. 22090 - 21.4%; Capital Network Services, attn. Donna Howell,
1 Bush Street, San Francisco, CA. 94104 - 13.9%; and Osceola Farms Co.,
316 Royal Poinciana Plaza, Palm Beach, FL 33480 - 8.5%. A shareholder who
beneficially owns, directly or indirectly, more than 25% of the Fund's
voting securities may be deemed a "control person" (as defined in the Act)
of the Fund.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated August 24, 1994 with the Fund, which is
subject to annual approval by (i) the Fund's Board of Trustees or (ii)
vote of a majority (as defined in the Act) of the outstanding voting
securities of the Fund, provided that in either event the continuance also
is approved by a majority of the Trustees who are not "interested persons"
(as defined in the Act) of the Fund or the Manager, by vote cast in person
at a meeting called for the purpose of voting on such approval. The
Agreement was approved by shareholders at a meeting held on August 4,
1994, and was last approved by the Fund's Board of Trustees, including a
majority of the Trustees who are not "interested persons" of any party to
the Agreement, at a meeting held on May 12, 1994. The Agreement is
terminable without penalty, on 60 days' notice, by the Fund's Board of
Trustees or by vote of the holders of a majority of the Fund's shares, or,
on not less than 90 days' notice, by the Manager. The Agreement will
terminate automatically in the event of its assignment (as defined in the
Act).
The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; Robert E.
Riley, President and Chief Operating Officer; W. Keith Smith, director;
Lawrence S. Kash, Vice Chairman--Distribution; Philip L. Toia, Vice
Chairman--Operations and Administration; Paul H. Snyder, Vice President
and Chief Financial Officer; Daniel C. Maclean, Vice President and General
Counsel; Barbara E. Casey, Vice President--Retirement Services; Henry D.
Gottmann, Vice President--Retail; Elie M. Genadry, Vice President--
Wholesale; Mark N. Jacobs, Vice President--Fund Legal and Compliance and
Secretary; Jeffrey N. Nachman, Vice President--Mutual Fund Accounting;
Diane M. Coffey, Vice President--Corporate Communications; Katherine C.
Wickham, Vice President--Human Resources; Maurice Bendrihem, Controller;
and Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M.
Greene and David B. Truman, directors.
The Manager manages the Fund's portfolio of investments in accordance
with the stated policies of the Fund, subject to the approval of the
Fund's Board of Trustees. The Manager is responsible for investment
decisions, and provides the Fund with portfolio managers who are
authorized by the Trustees to execute purchases and sales of securities.
The Fund's portfolio managers are Robert P. Fort, Jr., Garitt Kono and
Gerald E. Thunelius. The Manager also maintains a research department
with a professional staff of portfolio managers and securities analysts
who provide research services for the Fund as well as for other funds
advised by the Manager. All purchases and sales are reported for the
Trustees' review at the meeting subsequent to such transactions.
The Manager maintains office facilities on behalf of the Fund, and
furnishes, among other things, statistical and research data, clerical
help, accounting, data processing, bookkeeping and internal auditing and
certain other required services to the Fund. The Manager also may make
such advertising and promotional expenditures, using its own resources, as
it from time to time deems appropriate.
As compensation for the Manager's services, the Fund has agreed to
pay the Manager a monthly management fee at the annual rate of .20 of 1%
of value of the Fund's average daily net assets. For the period October
29, 1993 (commencement of operations) through September 30, 1994, the
management fee paid by the Fund was $119,741.
Unless the Manager gives the Fund's investors at least 90 days'
notice to the contrary, the manager, and not the Fund, will be liable for
Fund expenses (exclusive of taxes, brokerage, interest on borrowings and
(with the prior written consent of the necessary state securities
commissions) extraordinary expenses) other than the following expenses,
which will be borne by the Fund: (i) the management fee payable by the
Fund monthly at the annual rate of .20 of 1% of the Fund's average daily
net assets and (ii) as to Class B shares only, payments made pursuant to
the Fund's Service Plan at the annual rate of .25 of 1% of the value of
the average daily net assets of Class B. See "Service Plan."
In addition, the Manager has agreed that if in any fiscal year the
aggregate expenses of the Fund, exclusive of taxes, brokerage, interest on
borrowings and (with the prior written consent of the necessary state
securities commissions) extraordinary expenses, but including the
management fee, exceed the expense limitation of any state having
jurisdiction over the Fund, the Fund may deduct from the payment to be
made to the Manager under the Agreement, or the Manager will bear, such
excess expense to the extent required by state law. Such deduction or
payment, if any, will be estimated daily, and reconciled and effected or
paid, as the case may be, on a monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Fund's net assets increases.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor
also acts as distributor for the other funds in the Dreyfus Family of
Funds and for certain other investment companies.
Using Federal Funds. The Shareholder Services Group, Inc., the
Fund's transfer and dividend disbursing agent (the "Transfer Agent"), or
the Fund may attempt to notify the investor upon receipt of checks drawn
on banks that are not members of the Federal Reserve System as to the
possible delay in conversion into Federal Funds and may attempt to arrange
for a better means of transmitting the money. If the investor is a
customer of a securities dealer, bank or other financial institution and
his order to purchase Fund shares is paid for other than in Federal Funds,
the securities dealer, bank or other financial institution, acting on
behalf of its customer, will complete the conversion into, or itself
advance, Federal Funds generally on the business day following receipt of
the customer order. The order is effective only when so converted and
received by the Transfer Agent. An order for the purchase of Fund shares
placed by an investor with a sufficient Federal Funds or cash balance in
his brokerage account with a securities dealer, bank or other financial
institution will become effective on the day that the order, including
Federal Funds, is received by the Transfer Agent. In some states, banks
or other financial institutions effecting transactions in Fund
shares may be required to register as dealers pursuant to state law.
SERVICE PLAN
(CLASS B ONLY)
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Service
Plan."
Rule 12b-1 (the "Rule") adopted by the Securities and Exchange
Commission under the Act provides, among other things, that an investment
company may bear expenses of distributing its shares only pursuant to a
plan adopted in accordance with the Rule. The Fund's Board of Trustees
has adopted such a plan (the "Service Plan") with respect to the Fund's
Class B shares. Pursuant to the Service Plan, the Fund (a) reimburses the
Distributor for distributing Class B shares and (b) pays the Manager,
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, and
any affiliate of either of them for advertising and marketing Class B
shares and providing certain services to the holders of Class B shares.
Under the Service Plan, the Distributor and Dreyfus may make payments to
certain financial institutions, securities dealers and other financial
industry professionals (collectively, "Service Agents") in respect to
these services. The Fund's Board of Trustees believes that there is a
reasonable likelihood that the Service Plan will benefit the Fund and the
holders of Class B shares.
A quarterly report of the amounts expended under the Service Plan,
and the purposes for which such expenditures were incurred, must be made
to the Trustees for their review. In addition, the Service Plan provides
that it may not be amended to increase materially the costs which holders
of Class B shares may bear pursuant to the Service Plan without the
approval of the holders of Class B shares and that other material
amendments of the Service Plan must be approved by the Board of Trustees,
and by the Trustees who are not "interested persons" (as defined in the
Act) of the Fund and have no direct or indirect financial interest in the
operation of the Service Plan or in any agreements entered into in
connection with the Service Plan, by vote cast in person at a meeting
called for the purpose of considering such amendments. The Service Plan
is subject to annual approval by such vote of the Trustees cast in person
at a meeting called for the purpose of voting on the Service Plan. The
Service Plan was so approved by the Trustees at a meeting held on May 12,
1994. The Service Plan may be terminated at any time by vote of a
majority of the Trustees who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Service Plan
or in any agreements entered into in connection with the Service Plan or
by vote of the holders of a majority of Class B shares.
For the period October 29, 1993 (commencement of operations) through
September 30, 1994, the Fund paid $49,702, with respect to Class B,
pursuant to the Service Plan.
SHAREHOLDER SERVICES PLAN
(CLASS A ONLY)
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Shareholder Services Plan."
The Fund has adopted a Shareholder Services Plan (the "Plan")
pursuant to which the Fund has agreed to reimburse Dreyfus Service
Corporation for certain allocated expenses of providing personal services
and/or maintaining shareholder accounts with respect to Class A shares
only. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding
the Fund and providing reports and other information, and services related
to the maintenance of shareholder accounts.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Trustees for their review. In addition, the Plan provides that material
amendments of the Plan must be approved by the Board of Trustees, and by
the Trustees who are not "interested persons" (as defined in the Act) of
the Fund or the Manager and have no direct or indirect financial interest
in the operation of the Plan, by vote cast in person at a meeting called
for the purpose of considering such amendments. The Plan is subject to
annual approval by such vote of the Trustees cast in person at a meeting
called for the purpose of voting on the Plan. The Plan is terminable at
any time by vote of a majority of the Trustees who are not "interested
persons" (as defined in the act and have no direct or indirect financial
interest in the operation of the Plan.
For the period October 29, 1993 (commencement of operations) through
September 30, 1994, no shareholder services fee was paid by the Fund
pursuant to an undertaking by the Manager.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Redemption by Wire or Telephone. By using this procedure, the
investor authorizes the Transfer Agent to act on wire or telephone
redemption instructions from any person representing himself or herself to
be an authorized representative of the investor and reasonably believed by
the Transfer Agent to be genuine. Ordinarily, the Fund will initiate
payment for shares redeemed pursuant to this procedure on the next
business day after receipt if the Transfer Agent receives the redemption
request in proper form. Such payment will be made to a bank that is a
member of the Federal Reserve System.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmission:
Transfer Agent's
Transmittal Code Answer Back Sign
________________ ________________
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at 1-800-
654-7171, toll free. Investors should advise the operator that the above
transmittal code must be used and should also inform the operator of the
Transfer Agent's answer back sign.
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the value of
the Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such
amount, the Board of Trustees reserves the right to make payments in whole
or in part in securities or other assets of the Fund in case of an
emergency or at any time a cash distribution would impair the liquidity of
the Fund to the detriment of the existing shareholders. In such event the
securities would be valued in the same manner as the Fund's portfolio is
valued. If the recipient sold such securities, brokerage charges would be
incurred.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than a customary weekend and holiday
closing), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities
and Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
Valuation of Portfolio Securities. The Fund's investments are valued
each business day using available market quotations or at fair value as
determined by one or more independent pricing services (collectively, the
"Service") approved by the Board of Trustees. The Service may use
available market quotations, employ electronic data processing techniques
and/or a matrix system to determine valuations. The Service's procedures
are reviewed by the Fund's officers under the general supervision of the
Board of Trustees. Expenses and fees, including the management fee, are
accrued daily and are taken into account for the purpose of determining
the net asset value of the relevant Class of Fund shares.
New York Stock Exchange Closings. The holidays (as observed) on
which the New York Stock Exchange and Transfer Agent are closed currently
are: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should read in conjunction
with the section in Fund's Prospectus entitled "Dividends, Distributions
and Taxes"
Management believes that the Fund has qualified as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended
(the "Code"), for the fiscal year ended September 30, 1994. The Fund
intends to continue to so qualify if such qualification is in the best
interests of its shareholders. Qualification as a regulated investment
company relieves the Fund from any liability for federal income taxes to
the extent its earnings are distributed in accordance with the applicable
provisions of the code. The term "regulated investment company" does not
imply the supervision of management or investment practices or policies by
any government agency.
Any dividend or distribution paid shortly after an investor's
purchase may have the effect of reducing the aggregate net asset value of
his shares below the cost of his investment. Such a dividend or
distribution would be a return on investment in an economic sense,
although taxable as stated above. In addition, the Code provides that if
a shareholders holds shares of the Fund for six months or less and has
received a capital gain distribution with respect to such shares, any loss
incurred on the sale of such shares will be treated as a long-term capital
loss to the extent of the capital gain distribution received.
Ordinarily, gains and losses realized from portfolio transactions
will be treated as capital gain or loss. However, all or a portion of any
gain realized by the Fund from the sale or other disposition of certain
market discount bonds will be treated as ordinary income under Section
1276 of the Code.
Investment by the Fund in securities issued or acquired at a discount
or providing for deferred interest or for payment of interest in the form
of additional obligations could, under special tax rules, affect the
amount, timing and character of distributions to shareholders. For
example, the Fund may be required to take into account annually a portion
of the discount (or deemed discount) as which such securities were issued
and to distribute such portion in order to maintain its qualification as a
regulated investment company. In such case, the Fund may have to dispose
of securities which it might otherwise have continued to hold in order to
generate cash to satisfy these distribution requirements.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased directly from the
issuer or from an underwriter or a market maker for the securities.
Usually no brokerage commissions are paid by the Fund for such purchases.
Purchases from underwriters of portfolio securities include a concession
paid by the issuer to the underwriter and the purchase price paid to, and
sale price received from, market makers for the securities may reflect the
spread between the bid and asked price. No brokerage commissions have
been paid by the Fund to date.
Transactions are allocated to various dealers by the Fund's portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to
that primary consideration, dealers may be selected for research,
statistical or other services to enable the Manager to supplement its own
research and analysis with the views and information of other securities
firms and may be selected based upon their sales of Fund shares.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses
of its research department.
INVESTOR SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Investor
Services."
Fund Exchanges. Shares will be exchanged at the net asset value next
determined after receipt of an exchange request in proper form. By using
the Telephone Exchange Privilege, the investor authorizes the Transfer
Agent to act on telephonic exchange instructions from any person
representing himself or herself to be an authorized representative of the
investor and reasonably believed by the Transfer Agent to be genuine.
Telephone exchanges may be subject to limitations as to the amount
involved or the number of telephone exchanges permitted. Shares in
certificate form are not eligible for telephone exchange.
Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege
permits an investor to purchase, in exchange for shares of the Fund,
shares of Dreyfus Cash Management, Dreyfus Cash Management Plus, Inc.,
Dreyfus Government Cash Management, Dreyfus Municipal Cash Management
Plus, Dreyfus New York Municipal Cash Management, Dreyfus Tax Exempt Cash
Management, Dreyfus Treasury Cash Management and Dreyfus Treasury Prime
Cash Management. This Privilege is available only for existing accounts.
Shares will be exchanged on the basis of relative net asset value.
Enrollment in or modification or cancellation of the Privilege is
effective three business days following notification by the investor. An
investor will be notified if its account falls below the amount designated
to be exchanged under this Privilege. In this case, an investor's account
will fall to zero unless additional investments are made in excess of the
designated amount prior to the next Auto-Exchange Transaction. Shares
issued in certificate form are not eligible for Auto-Exchange.
Fund exchanges and the Dreyfus Auto-Exchange Privilege are available
to investors resident in any state in which shares of the Fund being
acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
The Fund reserves the right to reject any exchange request in whole
or in part. The Fund Exchanges service or Dreyfus Auto-Exchange Privilege
may be modified or terminated at any time upon notice to investors.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Performance Information."
For the thirty-day period ended September 30, 1994, the Fund's
current yield for Class A was 5.47%. For the thirty-day period ended
September 30, 1994, the Fund's current yield for Class B was 5.22%.
Current yield is computed pursuant to a formula which operates as follows:
The amount of the Fund's expenses accrued for the 30-day period (net of
reimbursements) is subtracted from the amount of the dividends and
interest earned (computed in accordance with regulatory requrements) by
the Fund during the period. That result is then divided by the product
of: (a) the average daily number of shares outstanding during the period
that were entitled to receive dividends, and (b) the net asset value per
share on the last day of the period less any undistributed earned income
per share reasonably expected to be declared as a dividend shortly
thereafter. The quotient is then added to 1, and that sum is raised to
the 6th power, after which 1 is subtracted. The current yield is then
arrived at by multiplying the result by 2.
The Fund's average annual total return for Class A for the period
October 29, 1993 to September 30, 1994 was 3.08%. The Fund's average
annual total return for Class B for the period October 29, 1993 to
September 30, 1994 was 3.40%. Average annual total return is calculated
by determining the ending redeemable value of an investment purchased with
a hypothetical $1,000 payment made at the beginning of the period
(assuming the reinvestment of dividends and distributions), dividing by
the amount of the initial investment, taking the "n"th root of the
quotient (where "n" is the number of years in the period) and subtracting
1 from the result.
The Fund's total return for Class A for the period October 29, 1993
to September 30, 1994, was 2.84%. The Fund's total return for Class B for
the period October 29, 1993 to September 30, 1994 was 3.13%. Total return
is calculated by subtracting the amount of the net asset value per share
at the beginning of a stated period from the net asset value per share at
the end of the period (after giving effect to the reinvestment of
dividends and distributions during the period), and dividing the result by
the net asset value per share at the beginning of the period.
From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic conditions, developments and/or
events, including actual or proposed tax legislation. From time to time,
advertising materials for the Fund may also refer to statistical or other
information concerning trends relating to investment companies, as
compiled by industry associations such as the Investment Company
Institute. From time to time advertising materials for the Fund also may
refer to Morningstar ratings and related analyses supporting the rating.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
nonassessable. Fund shares have no preemptive, subscription or conversion
rights and are freely transferable.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York, New York
10286, acts as custodian of the Fund's investments. The Shareholder
Services Group, Inc., a subsidiary of First Data Corporation, P.O. Box
9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and
dividend disbursing agent. Neither The Bank of New York nor The
Shareholder Services Group, Inc. has any part in determining the
investment policies of the Fund or which securities are to be purchased or
sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to
certain legal matters regarding the due authorization and valid issuance
of the shares of beneficial interest being sold pursuant to the Fund's
Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1994
PRINCIPAL
U.S. TREASURY NOTES-107.7% AMOUNT VALUE
---------- ------------
<S> <C> <C>
4 1/4%, 7/31/1995....................................................... $ 10,000,000 $ 9,870,310
10 1/2%, 8/15/1995...................................................... 2,500,000 2,596,875
4 1/4%, 11/30/1995...................................................... 20,000,000 19,593,760
9 1/4%, 1/15/1996....................................................... 10,000,000 10,365,630
7 5/8%, 4/30/1996....................................................... 5,000,000 5,091,405
4 1/4%, 5/15/1996....................................................... 5,000,000 4,835,940
7 3/8%, 5/15/1996....................................................... 20,000,000 20,290,620
6 1/4%, 8/31/1996....................................................... 10,000,000 9,943,750
6 1/2%, 9/30/1996....................................................... 30,000,000 29,950,770
6 1/2%, 8/15/1997....................................................... 10,000,000 9,757,810
------------
TOTAL U.S. TREASURY NOTES
(cost $122,898,582)..................................................... $122,296,870
============
SHORT-TERM INVESTMENTS-.4%
REPURCHASE AGREEMENT;
Yamaichi International (America), Inc., 4 3/4%
dated 9/30/1994, due 10/3/1994 in the amount
of $436,173 (fully collateralized by $420,000 U.S.
Treasury Notes, 8 1/2%, 5/15/1995, value $440,668)
(cost $436,000)......................................................... $ 436,000 $ 436,000
============
TOTAL INVESTMENTS
(cost $123,334,582)..................................................... 108.1% $ 122,732,870
====== =============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (8.1%) $ (9,164,776)
====== =============
NET ASSETS ........................................................... 100.0% $ 113,568,094
====== =============
See notes to financial statements.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1994
ASSETS:
Investments in securities, at value
(cost $123,334,582)-see statement..................................... $122,732,870
Cash.................................................................... 183,199
Interest receivable..................................................... 1,536,284
-------------
124,452,353
LIABILITIES:
Due to the Dreyfus Corporation.......................................... $ 25,432
Payable for investment securities purchased............................. 9,992,052
Payable for shares of Beneficial Interest redeemed...................... 866,775 10,884,259
--------------- --------------
NET ASSETS ................................................................ $113,568,094
=============
REPRESENTED BY:
Paid-in capital......................................................... $114,938,486
Accumulated net realized (loss) on investments.......................... (768,680)
Accumulated gross unrealized (depreciation) on investments.............. (601,712)
-------------
NET ASSETS at value......................................................... $113,568,094
=============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 46,152,728
=============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 11,752,885
=============
NET ASSET VALUE per share:
Class A Shares
($90,421,495 / 46,152,728 shares)..................................... $1.96
======
Class B Shares
($23,146,599 / 11,752,885 shares)..................................... $1.97
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF OPERATIONS
FROM OCTOBER 29, 1993 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1994
INVESTMENT INCOME:
<S> <C> <C>
INTEREST INCOME......................................................... $3,328,950
EXPENSES:
Management fee-Note 2(a).............................................. $119,741
Distribution fees (Class B shares)-Note 2(b).......................... 49,702
---------
TOTAL EXPENSES.................................................... 169,443
----------
INVESTMENT INCOME-NET............................................. 3,159,507
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $(768,680)
Net unrealized (depreciation) on investments............................ (601,712)
----------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (1,370,392)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,789,115
==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF CHANGES IN NET ASSETS
FROM OCTOBER 29, 1993 (COMMENCEMENT OF OPERATIONS) TO SEPTEMBER 30, 1994
OPERATIONS:
<S> <C>
Investment income-net.................................................................. $ 3,159,507
Net realized (loss) on investments..................................................... (768,680)
Net unrealized (depreciation) on investments for the period............................ (601,712)
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................. 1,789,115
--------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares....................................................................... (2,162,627)
Class B shares....................................................................... (996,880)
--------------
TOTAL DIVIDENDS.................................................................. (3,159,507)
--------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares....................................................................... 189,416,535
Class B shares....................................................................... 54,832,853
Dividends reinvested:
Class A shares....................................................................... 1,141,340
Class B shares....................................................................... 925,959
Cost of shares redeemed:
Class A shares....................................................................... (99,275,672)
Class B shares....................................................................... (32,202,529)
--------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS..................... 114,838,486
--------------
TOTAL INCREASE IN NET ASSETS................................................... 113,468,094
NET ASSETS:
Beginning of period-Note 1............................................................. 100,000
--------------
End of period.......................................................................... $113,568,094
=============
</TABLE>
<TABLE>
<CAPTION>
SHARES
--------------------------------
PERIOD ENDED SEPTEMBER 30, 1994
----------------------------------
CLASS A CLASS B
--------- ---------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 95,733,812 27,524,886
Shares issued for dividends reinvested............................... 579,653 467,409
Shares redeemed...................................................... (50,185,737) (16,264,410)
------------- -------------
NET INCREASE IN SHARES OUTSTANDING................................. 46,127,728 11,727,885
============= ==============
See notes to financial statements.
</TABLE>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 3 of the Fund's Prospectus dated
January 27, 1995.
See notes to financial statements.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Institutional Short Term Treasury Fund (the "Fund") was organized
as a Massachusetts business trust on March 12, 1992 and had no operations
until October 29, 1993 (commencement of operations) other than matters
relating to its organization and registration as a diversified open-end
management investment company under the Investment Company Act of 1940
("Act") and the Securities Act of 1933 and the sale and issuance of 25,000
Class A shares and 25,000 Class B shares of Beneficial Interest ("Initial
Shares") to The Dreyfus Corporation ("Manager"). Dreyfus Service Corporation
acted as the distributor of the Fund's shares until August 24, 1994. Dreyfus
Service Corporation is a wholly-owned subsidiary of the Manager. Effective
August 24, 1994, the Manager became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
The Fund offers both Class A and Class B shares. Class A shares are
subject to a Shareholder Services Plan and Class B shares are subject to a
Service Plan adopted pursuant to Rule 12b-1 under the Act. Other differences
between the two Classes include the services offered to and the expenses
borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Fund's investments (excluding short-term
investments) are valued at the mean between the quoted bid prices and asked
prices. Short-term investments are carried at amortized cost, which
approximates value.
(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 including, where applicable, amortization of discount on investments,
is recognized on the accrual basis.
The Fund may enter into repurchase agreements with financial
institutions, deemed to be creditworthy by the Fund's Manager, subject to the
seller's agreement to repurchase and the Fund's agreement to resell such
securities at a mutually agreed upon price. Securities purchased subject to
repurchase agreements are deposited with the Fund's custodian and, pursuant
to the terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. If the value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the Fund will require the seller to
deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults on its repurchase
obligation, the Fund maintains the right to sell the underlying securities at
market value and may claim any resulting loss against the seller.
(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. To
the extent that 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.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 interest of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .20 of 1% of the average
daily value of the Fund's net assets and is payable monthly.
The Agreement provides for an expense reimbursement from the Manager
should the Fund's aggregate expenses, exclusive of taxes, brokerage, interest
on borrowings and extraordinary expenses, exceed the expense limitation of
any state having jurisdiction over the Fund for any full fiscal year. The
most stringent state expense limitation applicable to the Fund presently
requires reimbursement of expenses in any full fiscal year that such expenses
(excluding certain expenses as described above) exceed 2 1/2% of the first
$30 million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of the Funds' net assets in accordance with
California "blue sky" regulations. The Manager, and not the Fund, is liable
for those expenses of the Fund (excluding certain expenses as described
above) other than management fee, and with respect to the Fund's Class B
shares, Rule 12b-1 Service Plan expenses.
The Manager may modify the existing undertaking provided that the Fund's
shareholders are given 90 days prior notice.
(B) On August 4, 1994, Fund shareholders approved the adoption of a new
Class B Service Plan (the "Plan") pursuant to Rule 12b-1 under the Act.
Effective August 24, 1994, the Fund reimburses the Distributor for
distributing the Fund's Class B shares. The Fund also pays The Dreyfus
Corporation and Dreyfus Service Corporation, and their affiliates
(collectively "Dreyfus") for advertising and marketing relating to the Fund's
Class B shares and for providing certain services relating to Class B
shareholder accounts, such as answering shareholder inquiries regarding the
Fund and providing reports and other information, and services related to the
maintenance of shareholder accounts ("Servicing"), at an aggregate annual
rate of .25 of 1% of the value of the Fund's Class B average daily net
assets. Both the Distributor and Dreyfus may pay one or more Service Agents a
fee in respect of the Fund's Class B shares owned by the shareholders with
whom the Service Agent has a Servicing relationship or for whom the Service
Agent is the dealer or holder of record. Both the Distributor and Dreyfus
determine the amounts, if any, to be paid to the Service Agents under the
Plan and the basis on which such payments are made. The fees payable under
the Plan are payable without regard to actual expenses incurred.
Prior to August 24, 1994, the Fund's Service Plan ("Prior Class B Service
Plan") provided that the Fund pay Dreyfus Service Corporation at an annual
rate of .25 of 1% of the value to the Fund's Class B shares average daily net
assets, for costs and expenses in connection with advertising, marketing and
distributing Class B shares and for providing certain services to holders of
Class B shares. Dreyfus Service Corporation made payments to one or more
Service Agents based on the value of the Fund's Class B shares owned by
clients of the Service Agent.
During the period ended September 30, 1994, $6,928 was charged to the
Fund pursuant to the Plan and $42,774 was charged to the Fund pursuant to the
Prior Class B Service Plan.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) Prior to August 24, 1994 certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
other than short-term securities, during the period ended September 30, 1994,
amounted to $1,763,026,870 and $1,649,381,346, respectively.
At September 30, 1994, 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).
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
We have audited the accompanying statement of assets and liabilities of
Dreyfus Institutional Short Term Treasury Fund, including the statement of
investments, as of September 30, 1994, and the related statements of
operations and changes in net assets and financial highlights for the period
from October 29, 1993 (commencement of operations) to September 30, 1994.
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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. 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. Our procedures included confirmation of
securities owned as of September 30, 1994 by correspondence with the custodian
and brokers. 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 audit provides
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 Short Term Treasury Fund at September 30,
1994, and the results of its operations, the changes in its net assets and
the financial highlights for the period from October 29, 1993 to September
30, 1994, in conformity with generally accepted accounting principles.
[ERNST AND YOUNG LLP SIGNATURE]
New York, New York
November 1, 1994
