LETTER TO SHAREHOLDERS
Dear Shareholder:
Fixed-income investments experienced unusually difficult market
conditions in 1994. The sharp rise in interest rates that began in late 1993
continued throughout 1994. The primary cause was investors' fears of
inflation, a threat that prompted the Federal Reserve Board to raise interest
rates six times during the calendar year, and once so far in 1995. A measure
of the effect of this Fed policy can be seen in the yield on the two-year
Treasury note which was 4.32% on January 3, 1994, and by December 30, 1994
was yielding 7.70%.
Since the Fed initiated its series of preemptive strikes against
inflation, price and wage increases have been subdued, as indicated by a
fairly steady pattern for the Consumer Price Index. By acting to control
inflation, the Federal Reserve had made 1995 more attractive for fixed-income
investors.
In this environment, we entered 1995 with a much more optimistic outlook
on the fixed-income markets. For one thing, Treasury securities were at a
historic high level of real rates of return (yield minus inflation). The
seven interest rate hikes undertaken by the Fed were important influences,
especially given the fact that there is usually a lag of six to nine months
before the effects of such steps become apparent. Finally, other developments
that cooled off the economy were the significant difficulties experienced by
our major trading partners, Mexico and Canada, which placed pressure on U.S.
exports.
For the most part, we positioned your Fund defensively through most of
1994, extending maturities during brief periods but still returning to a very
short average life. As we moved forward to the beginning of 1995, the
improved rate of return for Treasury securities and anticipated effects of
the Fed's vigilance caused us to extend the average maturity of your Fund.
This view has proven correct, as the market has rallied significantly. We
are pleased to tell you that for the six-month period ended March 31, 1995
Dreyfus Institutional Short Term Treasury Fund Class A Shares had a total
return of 3.85%* and an annualized distribution rate per share of 6.55%.**
For Class B Shares, the total return was 3.72%, with an annualized
distribution rate per share of 6.30%.
The market has already reached many of the levels that we had
anticipated. At this point, with much of the good news priced into the
market, we are contemplating shortening the Fund's maturity down to 1.5 years
from the 2-year average it maintained for a good part of the beginning of
1995. Until we have more evidence of a slowing economy, we want to move back
to a slightly more neutral position. With 2-year Treasury notes trading at 20
basis points above Federal Funds, we do not see much upside potential. Unless
one believes an easing by the Fed is imminent (which we do not), the short
maturities of the Treasury market may take a pause before continuing to
higher prices.
At this point, we would like to note that we do not invest in mortgages,
derivatives or risky speculative techniques (such as futures, options, and so
forth). We are proud to provide you with a quality Fund that adheres to its
title, namely a short-term Treasury fund.
In closing, we want to thank you for your investment in this Fund, and
you can be assured that we will remain steadfast in our goal to provide you
with an attractive investment vehicle.
Sincerely,
(Gerald E. Thunelius Signature Logo)
Gerald E. Thunelius
Portfolio Manager
May 3, 1995
New York, N.Y.
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
**Annualized distribution rate per share is based upon dividends per share
paid from net investment income during the period, divided by the net asset
value per share at the end of the period.
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF INVESTMENTS MARCH 31, 1995 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
------------ ---------
<S> <C> <C>
U.S. TREASURY NOTES-80.1%
6 7/8%, 2/28/1997....................................................... $10,000,000 $10,017,190
6 1/2%, 5/15/1997....................................................... 10,000,000 9,935,940
8 1/2%, 7/15/1997....................................................... 5,000,000 5,173,440
5 1/2%, 7/31/1997....................................................... 5,000,000 4,856,250
5 5/8%, 1/31/1998....................................................... 15,000,000 14,507,820
-------------
TOTAL U.S. TREASURY NOTES
(cost $44,422,520)...................................................... $44,490,640
=============
SHORT-TERM INVESTMENT-10.6%
REPURCHASE AGREEMENT;
Nikko Securities Co. International, Inc., 6.15%
dated 3/31/1995, due 4/3/1995 in the amount
of $5,904,024 (fully collateralized by $6,055,000 U.S.
Treasury Bills, 6/29/1995, value $5,968,414)
(cost $5,901,000)....................................................... $ 5,901,000 $ 5,901,000
============
TOTAL INVESTMENTS
(cost $50,323,520)...................................................... 90.7% $50,391,640
============ ============
CASH AND RECEIVABLES (NET).................................................. 9.3% $ 5,146,112
============ ============
NET ASSETS ........................................................... 100.0% $55,537,752
============ ============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1995 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $50,323,520)-see statement
(including repurchase agreement of $5,901,000)-Note 1(a,b)............ $50,391,640
Cash.................................................................... 4,612,920
Interest receivable..................................................... 581,403
-------------
55,585,963
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $11,568
Payable for shares of Beneficial Interest redeemed...................... 36,643 48,211
-------- -------------
NET ASSETS ................................................................ $55,537,752
============
REPRESENTED BY:
Paid-in capital......................................................... $56,904,819
Accumulated net realized (loss) on investments.......................... (1,435,187)
Accumulated net unrealized appreciation on investments--Note 3.......... 68,120
-------------
NET ASSETS at value......................................................... $55,537,752
===========
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 22,583,194
============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 5,569,948
===========
NET ASSET VALUE per share:
Class A Shares
($44,506,813 / 22,583,194 shares)..................................... $1.97
=======
Class B Shares
($11,030,939 / 5,569,948 shares)...................................... $1.98
=======
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED MARCH 31, 1995 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $2,461,692
EXPENSES:
Management fee-Note 2(a).............................................. $ 73,767
Distribution fees (Class B shares)-Note 2(b).......................... 24,385
----------
TOTAL EXPENSES.................................................... 98,152
------------
INVESTMENT INCOME--NET............................................ 2,363,540
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $(666,507)
Net unrealized appreciation on investments.............................. 669,832
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 3,325
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $2,366,865
============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31, 1995
1994* (UNAUDITED)
-------------- -------------------
<S> <C> <C>
OPERATIONS:
Investment income--net................................................ $ 3,159,507 $ 2,363,540
Net realized (loss) on investments.................................... (768,680) (666,507)
Net unrealized appreciation (depreciation) on investments for the period (601,712) 669,832
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ 1,789,115 2,366,865
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net:
Class A shares...................................................... (2,162,627) (1,749,574)
Class B shares...................................................... (996,880) (613,966)
-------------- --------------
TOTAL DIVIDENDS................................................. (3,159,507) (2,363,540)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares...................................................... 189,416,535 39,257,229
Class B shares...................................................... 54,832,853 5,822,455
Dividends reinvested:
Class A shares...................................................... 1,141,340 802,328
Class B shares...................................................... 925,959 520,472
Cost of shares redeemed:
Class A shares...................................................... (99,275,672) (85,946,612)
Class B shares...................................................... (32,202,529) (18,489,539)
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS.............................. 114,838,486 (58,033,667)
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS................... 113,468,094 (58,030,342)
NET ASSETS:
Beginning of period................................................... 100,000 113,568,094
-------------- --------------
End of period......................................................... $113,568,094 $ 55,537,752
============ ==============
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------- -------------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31, 1995 SEPTEMBER 30, MARCH 31, 1995
1994* (UNAUDITED) 1994* (UNAUDITED)
--------------- ------------------- --------------- -------------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTION
Shares sold........................ 95,733,812 20,047,494 27,524,886 2,956,487
Shares issued for dividends reinvested 579,653 409,676 467,409 264,777
Shares redeemed.................... (50,185,737) (44,026,704) (16,264,410) (9,404,201)
------------ -------------- -------------- --------------
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING......... 46,127,728 (23,569,534) 11,727,885 (6,182,937)
============ =========== ============= ============
* From October 29, 1993 (commencement of operations) to September 30, 1994.
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
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 each period indicated. This
information has been derived from the Fund's financial statements.
CLASS A SHARES CLASS B SHARES
------------------------------------- -------------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
SEPTEMBER 30, MARCH 31, 1995 SEPTEMBER 30, MARCH 31, 1995
PER SHARE DATA: 1994(1) (UNAUDITED) 1994(1) (UNAUDITED)
--------------- ------------------- --------------- -------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $2.00 $1.96 $2.00 $1.97
------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income--net............. .10 .06 .09 .06
Net realized and unrealized gain (loss)
on investments................... (.04) .01 (.03) .01
------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS. .06 .07 .06 .07
------ ------ ------ ------
DISTRIBUTIONS;
Dividends from investment income--net (.10) (.06) (.09) (.06)
------ ------ ------ ------
Net asset value, end of period..... $1.96 $1.97 $1.97 $1.98
====== ====== ======== ======
TOTAL INVESTMENT RETURN (2)............ 3.08% 7.72% 3.39% 7.46%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets (2) .20% .20% .45% .45%
Ratio of net investment income to
average net assets (2)........... 5.41% 6.45% 5.01% 6.29%
Portfolio Turnover Rate (3)........ 41.26% 1,767.43% 41.26% 1,767.43%
Net Assets, end of period (000's Omitted) $90,421 $44,507 $23,147 $11,031
(1) From October 29, 1993 (commencement of operations) to September 30, 1994.
(2) Annualized.
(3) Not annualized.
See independent accountants' review report and notes to financial statements.
</TABLE>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. Premier Mutual Fund
Services, Inc. (the "Distributor") acts as the distributor of the Fund's
shares. 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 Dreyfus Corporation
("Manager") serves as the Fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A.
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, if any, are normally declared and
paid annually, but the Fund may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. 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.
(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.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 the 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) Class B shares are subject to a Service Plan (the "Plan") pursuant to
Rule 12b-1 under the Act. Under the Plan, 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. During the
six months ended March 31, 1995, $24,385 was charged to the Fund pursuant to
the Plan.
(C) Each trustee who is not an "affiliated person" as defined in the Act
receives an annual fee of $1,000 and an attendance fee of $250 per meeting.
The Chairman of the Board receives an additional 25% of such compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
other than short-term securities, during the six months ended March 31, 1995,
amounted to $940,573,988 and $1,008,782,466, respectively.
At March 31, 1995, accumulated net unrealized appreciation on investments
was $68,120, consisting of $106,201 gross unrealized appreciation and $38,081
gross unrealized depreciation.
At March 31, 1995, 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
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
We have reviewed the accompanying statement of assets and liabilities of
Dreyfus Institutional Short Term Treasury Fund, including the statement of
investments, as of March 31, 1995, and the related statements of operations
and changes in net assets and financial highlights for the six month period
ended March 31, 1995. These financial statements and financial highlights are
the responsibility of the Fund's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements and financial highlights taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets and financial
highlights from October 29, 1993 (commencement of operations) to September
30, 1994 and in our report dated November 1, 1994, we expressed an
unqualified opinion on such statement of changes in net assets and financial
highlights.
(Ernst and Young Signature Logo)
New York, New York
May 2, 1995
(Dreyfus lion "D" Logo)
DREYFUS INSTITUTIONAL
SHORT TERM TREASURY FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 721/680SA953
(Dreyfus Logo)
Institutional
Short Term
Treasury Fund
Semi-Annual
Report
March 31, 1995
