- ----------------------------------------------------------------------------
PROSPECTUS APRIL 1, 1996
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
- ----------------------------------------------------------------------------
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND (THE "FUND") IS AN
OPEN-END, DIVERSIFIED, MANAGEMENT INVESTMENT COMPANY, KNOWN AS A MUTUAL FUND.
THE FUND'S INVESTMENT OBJECTIVE 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 COMPANY 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.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED APRIL 1, 1996, 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 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS 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.
- ----------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
Annual Fund Operating Expenses.................... 3
Condensed Financial Information................... 4
Description of the Fund........................... 4
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
Appendix.......................................... 14
Page 2
<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:
CLASS A CLASS B
SHARES SHARES
---------- ----------
1 YEAR $ 2 $ 5
3 YEARS $ 6 $14
5 YEARS $11 $25
10 YEARS $26 $57
</TABLE>
- ----------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED
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%.
- ----------------------------------------------------------------------------
The purpose of the foregoing table is to assist investors in
understanding the costs and expenses borne by the Fund, the payment of which
will reduce investors' annual return. 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 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 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 and certain Service Agents (as defined below) 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 3
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 each year indicated. This
information has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
------------------------ ------------------------
YEAR ENDED SEPTEMBER 30 YEAR ENDED SEPTEMBER 30,
--------------------------- ---------------------------
PER SHARE DATA: 1994(1) 1995 1994(1) 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net asset value, beginning of year................... $2.00 $1.96 $2.00 $1.97
------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income--net............................... .10 .13 .09 .13
Net realized and unrealized gain (loss) on investments (.04) .03 (.03) .03
------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS..................... .06 .16 .06 .16
------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income --net............... (.10) (.13) (.09) (.13)
------ ------ ------ ------
Net asset value, end of year......................... $1.96 $1.99 $1.97 $2.00
======= ====== ====== ======
TOTAL INVESTMENT RETURN ............................. 3.08%(2) 8.45% 3.39%(2) 8.17%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.............. .20%(2) .20% .45%(2) .45%
Ratio of net investment income to average net assets. 5.41%(2) 6.48% 5.01%(2) 6.35%
Portfolio Turnover Rate.............................. 4,125.54%(3)(4) 1,926.32%(4) 4,125.54%(3)(4) 1,926.32%(4)
Net Assets, end of year (000's omitted).............. $90,421 $160,748 $23,147 $5,964
- ----------------
(1) From October 29, 1993 (commencement of operations) to September 30, 1994.
(2) Annualized.
(3) Not annualized.
(4) The high portfolio turnover rate resulted from selling then repurchasing
certain portfolio securities to take advantage of interest rate fluctuations.
</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 -- 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 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, as amended (the "1940 Act"). 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.
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.
Page 4
INVESTMENT OBJECTIVE -- The Fund's investment objective is to provide
investors with a high level of current income with minimum fluctuation of
principal value. It cannot be changed without approval by the holders of a
majority (as defined in the 1940 Act) 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 purchases only U.S. Treasury securities, and
may enter into 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; 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. See "Appendix _ Investment Techniques."
INVESTMENT CONSIDERATIONS AND RISKS -- 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 state personal income tax. However, dividends and distributions
attributable to interest from repurchase agreements may be subject to state
tax.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER -- 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 January 31, 1996, The Dreyfus Corporation
managed or administered approximately $82 billion in assets for more than 1.7
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 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 employed by
The Dreyfus Corporation since May 1989. The Fund's other portfolio managers
are identified in the Statement of Additional Information. The Dreyfus Corpor
ation 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., AFCOCredit Corporation and a
number of companies known as Mellon Financial Services Corporations. Through
its subsidiaries, including The Dreyfus Corporation, Mellon managed more than
$233 billion in assets as of December 31, 1995, including approximately $81
billion in proprietary mutual fund assets. As of December 31, 1995, Mellon,
through
Page 5
various subsidiaries, provided noninvestment services, such as custodial or
administration services, for more than $786 billion in assets including
approximately $60 billion in mutual fund assets.
For the fiscal year ended September 30, 1995, the Fund paid The
Dreyfus Corporation a monthly 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 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." 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.
DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at One Exchange Place, Boston, Massachusetts
02109. The Distributor's ultimate parent is Boston Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus Transfer,
Inc., a wholly-owned subsidiary of The Dreyfus Corporation, is located at One
American Express Plaza, Providence, Rhode Island 02903, and serves as the
Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent"). The
Bank of New York, 90 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 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 Dreyfus Institutional Services Divi
sion, 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. Investors should consult their
Service Agents in this regard. Share
Page 6
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."
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 Fund's Board. Each pricing
service's procedures are reviewed under the general supervision of the Fund's
Board. For further information regarding the methods employed in valuing the
Fund's investments, see "Determination of Net Asset Value" in the 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.
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. See "Dividends, Distributions and Taxes." No fees
currently are charged investors directly in connection with
Page 7
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 modify or cancel the exercise of this
Privilege at any time by writing to 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. See "Dividends, Distributions and
Taxes." 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 their 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.
If an investor selects a telephone redemption privilege or telephone
exchange privilege (which is granted automatically 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. Neither the Fund nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.
Page 8
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 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" 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 1940 Act. Under the Service Plan, the Fund (a) reimburses the
Distributor for distributing 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 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 rate 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. An omnibus accountholder may indicate in a partial redemption
request that a portion of any accrued dividends to which such account is
entitled belongs to an underlying accountholder who has redeemed all shares
in his or her account, and such portion of the accrued dividends will be paid
to the accountholder 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 Internal
Revenue Code of 1986, as amended (the "Code"), in all events in a manner
consistent with the provisions of the 1940 Act. 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 in 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
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 or 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 paid by the Fund 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 discount 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
Page 10
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.
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.
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.
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 wi
thholding 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, 1995 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. The Fund is subject to a nondeductible 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
Page 11
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.
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 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 ReportRegistration Mark,
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 submitted 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
Fund intends to conduct its operations in such a way so as to avoid, 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.
Page 12
The Transfer Agent maintains a record of each investor's ownership
and sends 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 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 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.
Page 13
APPENDIX
INVESTMENT TECHNIQUES
BORROWING MONEY AND REVERSE REPURCHASE AGREEMENTS -- The Fund is permitted to
borrow to the extent permitted under the 1940 Act, which permits an
investment company to borrow in an amount up to 331/3% of the value of such
company's total assets. The Fund currently intends to borrow only 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.
LENDING PORTFOLIO SECURITIES -- The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. In connection with such
loans, the Fund continues to be entitled to payments in amounts equal to the
interest, dividends or other distributions payable on the loaned securities.
Loans of portfolio securities afford the Fund an opportunity to earn interest
on the amount of the loan and at the same time to earn income on the loaned
securities' collateral. Loans of portfolio securities may not exceed 331/3%
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. Such loans are terminable
by the Fund 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.
WHEN-ISSUED SECURITIES -- U.S. Treasury securities purchased by the Fund
frequently are offered 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 commitment to purchase. The Fund
will commit to purchase 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.
U.S. Treasury securities purchased on a when-issued basis and other
U.S. Treasury 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. U.S. Treasury 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 U.S.
Treasury 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. Treasury 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 U.S.
Treasury 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
such Fund's net assets and its net asset value per share.
CERTAIN PORTFOLIO SECURITIES
U.S. TREASURY 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 greater
than ten years.
REPURCHASE AGREEMENTS -- In a repurchase agreement, the Fund buys, and the
seller agrees to repurchase, a security at a mutually agreed upon time and
price. The repurchase agreement thereby determines the yield during the
purchaser's holding period, while the seller's obligation to repurchase is
secured by the value of the underlying security. The Fund intends to enter
into only repurchase agree-
Page 14
ments with maturities not exceeding the next business day. Repurchase
agreements could involve risks in the event of a default or insolvency of
the other party to the agreement, including possible delays or restrictions
upon the Fund's ability to dispose of the underlying securities. The Fund
may enter into repurchase agreements with certain banks or non-bank dealers.
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 15
PROSPECTUS
(LION LOGO)
DREYFUS
INSTITUTIONAL
SHORT TERM
TREASURY
FUND
copyright logo Dreyfus Service Corporation 721/680p040196
__________________________________________________________________________
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
CLASS A AND CLASS B SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
APRIL 1, 1996
__________________________________________________________________________
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
April 1, 1996, 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:
In New York State -- Call 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 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-8
Purchase of Fund Shares. . . . . . . . . . . . . . . . . B-10
Service Plan (Class B) . . . . . . . . . . . . . . . . . B-10
Shareholder Services Plan (Class A). . . . . . . . . . . B-11
Redemption of Fund Shares. . . . . . . . . . . . . . . . B-12
Determination of Net Asset Value . . . . . . . . . . . . B-13
Dividends, Distributions and Taxes . . . . . . . . . . . B-13
Portfolio Transactions . . . . . . . . . . . . . . . . . B-14
Investor Services. . . . . . . . . . . . . . . . . . . . B-15
Performance Information. . . . . . . . . . . . . . . . . B-15
Information About the Fund . . . . . . . . . . . . . . . B-16
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors . . . . . . . . . . . B-17
Financial Statements . . . . . . . . . . . . . . . . . . B-18
Report of Independent Auditors . . . . . . . . . . . . . B-25
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the sections in the Fund's Prospectus entitled
"Description of the Fund" and "Appendix."
Management Policies
Repurchase Agreements. The Fund's custodian or sub-custodian will
have custody of, and will hold in a segregated account, securities
acquired by the Fund under a repurchase agreement. Repurchase agreements
are considered by the staff of the Securities and Exchange Commission to
be loans by the Fund. In an attempt to reduce the risk of incurring a
loss on a repurchase agreement, the Fund will enter into repurchase
agreements only with domestic banks with total assets in excess of $1
billion, or primary government securities dealers reporting to the Federal
Reserve Bank of New York, with respect to securities of the type in which
the Fund may invest, and will require that additional securities be
deposited with it if the value of the securities purchased should decrease
below the resale price.
Lending Portfolio Securities. In connection with its securities
lending transactions, 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, which cannot be changed without approval by the
holders of a majority (as defined in the Investment Company Act of 1940,
as amended (the "1940 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 Fund's Board members 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
indices, and options on futures contracts or indices.
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 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Fund's total assets). For purposes of this investment restriction,
the entry into options, forward contracts, futures contracts, including
those relating to indices, and options on futures contracts or indices
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.
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 1940 Act), except to the extent the activities permitted in
Investment Restrictions 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 indices, and options on
futures contracts or indices.
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 indices, and options on futures contracts or indices.
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 1940 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 of 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
Board members 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 Board member who is deemed to be an
"interested person" of the Fund, as defined in the 1940 Act, is indicated
by an asterisk.
Board Members of the Fund
LUCY WILSON BENSON, Board Member. President of Benson and Associates,
consultants to business and government. Mrs. Benson is a director of
Communications Satellite Corporation, General RE 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. From 1980
to 1994, Mrs. Benson was a director of the Grumman Corporation. 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. She is 68 years old and her address is 46 Sunset Avenue,
Amherst, Massachusetts 01002.
*DAVID W. BURKE, Board Member. 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. He is 59 years old and his address is 200
Park Avenue, New York, New York 10166.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of various funds in the Dreyfus Family of Funds. For
more than five years prior thereto, he was President, a director and,
until August 1994, Chief Operating Officer of the Manager and
Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager and, until
August 24, 1994, the Fund's distributor. From August 1994 to
December 31, 1994, he was a director of Mellon Bank Corporation. He
is Chairman of the Board of Directors of the Noel Group, Inc., a
venture capital company; a trustee of Bucknell University; and a
director of the Muscular Dystrophy Association, HealthPlan Services
Corporation, Belding Heminway Company, Inc., a manufacturer and
marketer of industrial threads, specialty yarns, home furnishings and
fabrics, Curtis Industries Inc., a national distributor of security
products, chemicals and automotive and other hardware, Simmons
Outdoor Corporation and Staffing Resources, Inc. He is 52 years old
and his address is 200 Park Avenue, New York, New York 10166.
MARTIN D. FIFE, Board Member. Chairman of the Board of Magar, Inc., a
company specializing in financial products and developing early stage
companies. In addition, Mr. Fife is Chairman of the Board and Chief
Executive Officer of Skysat Communications Network Corporation, a
company developing telecommunications systems. Mr. Fife also serves
on the boards of various other companies. He is 68 years old and his
address is The Chrysler Building, 405 Lexington Avenue, New York, New
York 10174.
WHITNEY I. GERARD, Board Member. Partner of the New York City law firm of
Chadbourne & Parke. He is 61 years old and his address is 30
Rockefeller Plaza, New York, New York 10112.
ROBERT R. GLAUBER, Board Member. 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. He is a director of Mid Ocean
Reinsurance Co. Ltd. and Cooke and Bieler, Inc., Investment
Counselors. He is 56 years old and his address is 79 John F. Kennedy
Street, Cambridge, Massachusetts 02138.
ARTHUR A. HARTMAN, Board Member. 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 ITT Hartford Insurance
Group, Ford Meter Box Corporation and Lawter International and a
member of the advisory councils of several other companies, research
institutes and foundations. Ambassador Hartman is Chairman of First
NIS Regional Fund (ING Barings Management). He is a former President
of the Harvard Board of Overseers. He is 69 years old and his
address is 2738 McKinley Street, N.W., Washington, D.C. 20015.
GEORGE L. PERRY, Board Member. 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. He is 61 years
old and his address is 1775 Massachusetts Avenue, N.W., Washington,
D.C. 10036.
PAUL D. WOLFOWITZ, Board Member. Dean of The Paul H. Nitze School of
Advanced International Studies at Johns Hopkins University. He is a
director of Hasbro Inc., a toy concern. 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. He is 51 years old and his address is 1740
Massachusetts Avenue, N.W., Washington, D.C. 20036.
For so long as the Fund's plans described in the sections captioned
"Service Plan" and "Shareholder Services Plan" remain in effect, the Board
members of the Fund who are not "interested persons" of the Fund, as
defined in the 1940 Act, will be selected and nominated by the Board
members who are not "interested persons" of the Fund.
Ordinarily, there will be no meetings of shareholders for the purpose
of electing Board members unless and until such time as less than a
majority of the Board members holding office have been elected by
shareholders, at which time the Board members then in office will call a
shareholders' meeting for the election of Board members. Under the 1940
Act, shareholders of record of not less than two-thirds of the outstanding
shares of the Fund may remove a Board member through a declaration in
writing or by vote cast in person or by proxy at a meeting called for that
purpose. The Board is required to call a meeting of shareholders for the
purpose of voting upon the question of removal of any Board member when
requested in writing to do so by the shareholders of record of not less
than 10% of the Fund's outstanding shares.
Board members are entitled to receive an annual retainer and a per
meeting fee and reimbursement for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee
of one-half the amount paid to them as Board members. The aggregate
amount of compensation paid to each Board member by the Fund for the
fiscal year ended September 30, 1995, and by all other funds in the
Dreyfus Family of Funds for which such person is a Board member (the
number of which is set forth in parenthesis next to each Board member's
total compensation) for the year ended December 31, 1994, were as follows:
<TABLE>
<CAPTION>
(3) (5)
(2) Pension or (4) Total Compensation
(1) Aggregate Retirement Benefits Estimated Annual from Fund(2) and Fund
Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to
Member Fund(1)(2) Fund's Expenses Retirement Board Members
- ------------------ ------------------ -------------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
Lucy Wilson Benson $2,000 none none $64,459(14)
David W. Burke $2,000 none none $ 27,898 (52)
Joseph S. DiMartino $1,763* none none $445,000** (93)
Martin D. Fife $2,000 none none $ 51,750 (12)
Whitney I. Gerard $2,000 none none $ 52,000 (12)
Robert R. Glauber $2,000 none none $ 79,696 (10)
Arthur A. Hartman $2,000 none none $ 52,000 (12)
George L. Perry $2,000 none none $ 52,000 (12)
Paul D. Wolfowitz $2,000 none none $ 32,631 (11)
______________________________
(1) Amount does not include reimbursed expenses for attending Board meetings, which amounted to $1,041 for all Board members as a
group.
(2) The aggregate compensation payable to each Board member by the Fund was paid by the Manager and not the Fund.
* Named Chairman of the Board at February 2, 1995 Board meeting. Receives additional 25% of attendance and meeting fees.
** Estimated amount for the year ended December 31, 1995.
</TABLE>
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Executive
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., the ultimate parent company of which is Boston
Institutional Group, Inc. Prior to December 1991, she served as Vice
President and Controller, and later as Senior Vice President, of The
Boston Company Advisors, Inc. She is 38 years old.
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. He is 31 years old.
ELIZABETH A. BACHMAN, Vice President and Assistant Secretary. Assistant
Vice President of the Distributor and an officer of other investment
companies advised or administered by the Manager. She is 26 years
old.
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. He is 34 years old.
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. He is 31 years old.
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. He is 33 years old.
JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer 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. He is 60 years old.
MARGARET M. PARDO, Assistant Secretary. Legal Assistant with the
Distributor and an officer of other investment companies advised or
administered by the Manager. From June 1992 to April 1995, she was a
Medical Coordination Officer at ORBIS International. Prior to June
1992, she worked as Program Coordinator at Physicians World
Communications Group. She is 27 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York, 10166.
Board members and officers of the Fund, as a group, owned less than
1% of the Fund's shares of beneficial interest outstanding on October 25,
1995.
The following persons are known by the Fund to own of record 5% or
more of the Fund's outstanding voting securities as of October 25, 1995:
Class A - General Invested Fund/City of Detroit, Finance Department/Debt
Management, 1210 City County Bldg., Detroit, MI 48226 - 28.50%; Swiss
American Securities Inc./Sub A/C # 11657110, 100 Wall St., New York, NY
10005-3701 - 9.14%; C F Industries Inc., 1 Salem Lake Dr., Long Grove, IL
60047-8401 - 9.05%; Sun Bank TTEE/FBO Highland Health Facilities Auth.,
Attn. Linda Schuchman, 225 E. Robinson St., Suite 250, Orlando, FL 32801-
4322 - 9.05%; City of Detroit/ G O Bond Fund Series 1991, Finance
Department/Debt Management, 1210 City County Bldg., Detroit, MI 48226 -
7.65%; City of Detroit/G O Bond Fund Series 1933, Finance Department/Debt
Management, 1210 City County Bldg. Detroit, MI 48226 - 7.20%; Hawkeye
Bank, Attn. Trust Dept., 431 E. Locust St., Des Moines, IA 50309-1999 -
6.69%. Class B - Capital Network Services, Attn. Donna Howell, 1 Bush St.
Suite 11, San Francisco, CA 94104-4406 - 50.53%; City of Naples, Attn.
Anne Middleton, 735 8th St. S, Naples, FL 33940-6703 - 9.53%; Hart County
Telephone, PO Box 388, Hartwell, GA 30643 - 8.57%. 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 1940
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 or (ii) vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities
of the Fund, provided that in either event the continuance also is
approved by a majority of the Board members who are not "interested
persons" (as defined in the 1940 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 on August 4, 1994,
and was last approved by the Fund's Board, including a majority of the
Board members who are not "interested persons" of any party to the
Agreement, at a meeting held on November 9, 1995. The Agreement is
terminable without penalty, on 60 days' notice, by the Fund's Board 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 1940 Act).
The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Christopher M. Condron, President,
Chief Operating Officer and a director; Stephen E. Canter, Vice Chairman,
Chief Investment Officer and a director; Lawrence S. Kash, Vice Chairman--
Distribution and a director; Philip L. Toia, Vice Chairman--Operations and
Administration and a director; William T. Sandalls, Jr., Senior Vice
President and Chief Financial Officer; Barbara E. Casey, Vice President--
Dreyfus Retirement Services; Diane M. Coffey, Vice President--Corporate
Communications; Elie M. Genadry, Vice President--Institutional Sales;
William F. Glavin, Jr., Vice President--Corporate Development; Mark N.
Jacobs, Vice President, General Counsel and Secretary; Mary Beth Leibig,
Vice President--Human Resources; Jeffrey N. Nachman, Vice President--
Mutual Fund Accounting; Andrew S. Wasser, Vice President--Information
Services; Maurice Bendrihem, Controller; Elvira Oslapas, Assistant
Secretary; and Mandell L. Berman, Frank V. Cahouet, Alvin E. Friedman,
Lawrence M. Greene and Julian M. Smerling, 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. The Manager is responsible for investment decisions, and
provides the Fund with portfolio managers who are authorized by the Board
to execute purchases and sales of securities. The Fund's portfolio
managers are Robert P. Fort, 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 Board members' 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, and for
the fiscal year ended September 30, 1995, the management fees paid by the
Fund were $119,741 and $186,965, respectively.
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 on
a best efforts basis 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. In
some states, banks or other financial institutions effecting transactions
in Fund shares may be required to register as dealers pursuant to state
law.
Using Federal Funds. Dreyfus Transfer, 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.
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 1940 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
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 (collectively, "Dreyfus") 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") with respect to these services. The Fund's Board 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 Board members 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, and by the
Board members who are not "interested persons" (as defined in the 1940
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 Board members cast in
person at a meeting called for the purpose of voting on the Service Plan.
The Service Plan was so approved by the Board members at a meeting held on
November 9, 1995. The Service Plan may be terminated at any time by vote
of a majority of the Board members 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 fiscal year ended September 30, 1995, the Fund paid $320 to
Dreyfus and $34,586 (none of which was paid for printing prospectuses) to
the Distributor, 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
Board members for their review. In addition, the Plan provides that
material amendments of the Plan must be approved by the Board, and by the
Board members who are not "interested persons" (as defined in the 1940
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 Board members 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 Board members
who are not "interested persons" (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of the Plan.
For the fiscal year ended September 30, 1995, no fee was paid by the
Fund under the Plan 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 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 or 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. 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. Expenses
and fees, including the management fee, accrue 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, 1995. 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 shareholder 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) at 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 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.
The Fund Exchanges service 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 the 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, 1995, the Fund's
current yield was 5.65% for Class A and 5.40% for Class B. 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 requirements) 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.
For the 1 and 1.92 year periods, the Fund's average annual total
return for Class A was 8.45% and 5.84%, respectively. The Fund's average
annual total return for Class B for the same periods was 8.17% and 5.85%,
respectively. 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 the period October 29, 1993 (commencement
of operations) through September 30, 1995, was 11.53% for Class A and
11.55% for Class B. 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.
From time to time, advertising material for the Fund may include
biographical information relating to its portfolio manager and may refer
to, or include commentary by the portfolio manager relating to investment
strategy, asset growth, current or past business, political, economic or
financial conditions and other matters of general interest to investors.
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.
TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL, CUSTODIAN,
AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, is
located at One American Express Plaza, Providence, Rhode Island 02903, and
serves as the Fund's transfer and dividend disbursing agent. Under a
transfer agency agreement with the Fund, the Transfer Agent arranges for
the maintenance of shareholder account records for the Fund, the handling
of certain communications between shareholders and the Fund and the
payment of dividends and distributions payable by the Fund. For these
services, the Transfer Agent receives a monthly fee computed on the basis
of the number of shareholder accounts it maintains for the Fund during the
month, and is reimbursed for certain out-of-pocket expenses. The Bank of
New York, 90 Washington Street, New York, New York 10286, acts as
custodian of the Fund's investments. Neither the Transfer Agent nor The
Bank of New York 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, 1995
PRINCIPAL
AMOUNT VALUE
-------------- --------------
<S> <C> <C>
BONDS AND NOTES-70.5%
U.S. TREASURY NOTES-60.1%
7 1/2%, 2/29/1996....................................................... $ 5,000,000 $ 5,038,280
6 1/4%, 8/31/1996....................................................... 5,000,000 5,020,315
8%, 10/15/1996.......................................................... 4,500,000 4,598,437
7 1/4%, 11/30/1996...................................................... 4,200,000 4,266,280
8 1/2%, 4/15/1997....................................................... 7,500,000 7,789,455
5 5/8%, 6/30/1997....................................................... 25,000,000 24,910,150
7 3/8%, 11/15/1997...................................................... 31,000,000 31,905,789
7 7/8%, 1/15/1998....................................................... 10,000,000 10,421,880
5 3/8%, 5/31/1998....................................................... 4,000,000 3,946,876
5 7/8%, 8/15/1998....................................................... 2,200,000 2,198,282
-----------
100,095,744
-----------
U.S. TREASURY PRINCIPAL STRIPS-10.4%
Zero Coupon, 2/15/1996.................................................. 3,000,000 2,939,067
Zero Coupon, 11/15/1996................................................. 9,000,000 8,446,545
Zero Coupon, 11/15/1997................................................. 6,800,000 6,013,376
-----------
17,398,988
-----------
TOTAL BONDS AND NOTES
(cost $117,609,341)..................................................... $117,494,732
===========
SHORT-TERM INVESTMENTS-2.9%
REPURCHASE AGREEMENT;
Aubrey G. Lanston & Co. Inc., 6 1/4%
dated 9/29/1995, due 10/2/1995 in the amount
of $4,808,503 (fully collateralized by $4,760,000 U.S.
Treasury Notes, 8 7/8%, 2/15/1996, value $4,861,150)
(cost $4,806,000)....................................................... $ 4,806,000 $ 4,806,000
===========
TOTAL INVESTMENTS
(cost $122,415,341)..................................................... 73.4% $122,300,732
======== ============
CASH AND RECEIVABLES (NET).................................................. 26.6% $44,410,983
======== ============
NET ASSETS ........................................................ 100.0% $166,711,715
======== ============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $122,415,341)-see statement... $122,300,732
Cash ................................................................... 812,898
Receivable for investment securities sold............................... 43,339,024
Interest receivable..................................................... 2,289,229
-----------
168,741,883
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 28,973
Due to Distributor...................................................... 1,195
Payable for shares of Beneficial Interest redeemed...................... 2,000,000 2,030,168
------------- ----------
NET ASSETS ................................................................ $166,711,715
===========
REPRESENTED BY:
Paid-in capital......................................................... $167,548,600
Accumulated undistributed investment income-net......................... 29,191
Accumulated net realized (loss) on investments.......................... (751,467)
Accumulated net unrealized (depreciation) on investments-Note 3......... (114,609)
------------
NET ASSETS at value......................................................... $166,711,715
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 80,685,000
============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 2,975,858
============
NET ASSET VALUE per share:
Class A Shares
($160,747,986 / 80,685,000 shares).................................... $1.99
======
Class B Shares
($5,963,729 / 2,975,858 shares)....................................... $2.00
======
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $6,262,268
EXPENSES:
Management fee-Note 2(a).............................................. $186,965
Distribution fees (Class B shares)-Note 2(b).......................... 34,906
---------
TOTAL EXPENSES.................................................... 221,871
---------
INVESTMENT INCOME-NET............................................. 6,040,397
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 17,213
Net unrealized appreciation on investments.............................. 487,103
---------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 504,316
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $6,544,713
============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30,
--------------------------------
1994* 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 3,159,507 $ 6,040,397
Net realized gain (loss) on investments................................. (768,680) 17,213
Net unrealized appreciation (depreciation) on investments for the year.. (601,712) 487,103
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 1,789,115 6,544,713
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (2,162,627) (5,125,168)
Class B shares........................................................ (996,880) (886,038)
-------------- --------------
TOTAL DIVIDENDS................................................... (3,159,507) (6,011,206)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 189,416,535 205,025,138
Class B shares........................................................ 54,832,853 9,691,420
Dividends reinvested:
Class A shares........................................................ 1,141,340 2,977,656
Class B shares........................................................ 925,959
735,883
Cost of shares redeemed:
Class A shares........................................................ (99,275,672) (138,068,260)
Class B shares........................................................ (32,202,529) (27,751,723)
-------------- --------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...... 114,838,486 52,610,114
-------------- --------------
TOTAL INCREASE IN NET ASSETS.................................... 113,468,094 53,143,621
NET ASSETS:
Beginning of year....................................................... 100,000 113,568,094
-------------- --------------
End of year (including undistributed investment
income-net; $29,191 in 1995).......................................... $113,568,094 $166,711,715
============ =============
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------------------------------------------------------------------
CLASS A CLASS B
-------------------------------- --------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
-------------------------------- --------------------------------
1994* 1995 1994* 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 95,733,812 103,232,663 27,524,886 4,898,778
Shares issued for dividends reinvested. 579,653 1,502,166 467,409 372,428
Shares redeemed........................ (50,185,737) (70,202,557) (16,264,410) (14,048,233)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING............. 46,127,728 34,532,272 11,727,885 (8,777,027)
============ ============ ============ ===============
* From October 29, 1993 (commencement of operations) to September 30,
1994.
</TABLE>
See notes to financial statements.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated April 1, 1996.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
NOTES TO FINANCIAL STATEMENTS
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 FDI Distribution Services, Inc., a
provider of mutual fund administration services, which in turn is a
wholly-owned subsidiary of FDI Holdings, Inc., 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 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, 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 (CONTINUED)
The Fund has an unused capital loss carryover of approximately $728,000
available for Federal income tax purposes to be
applied against future net securities profits, if any, realized subsequent to
September 30, 1995. If not applied, the carryover expires in fiscal 2003.
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.
Unless the Manager gives the Fund's investors 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:
the management fee, and with respect to the Fund's Class B shares, Rule 12b-1
Service Plan expenses.
(B) Under the Class B Service Plan (the "Plan") adopted pursuant to Rule
12b-1 under the Act, the Fund (a) reimburses the Distributor for distributing
the Fund's Class B shares and (b) pays The Dreyfus Corporation and Dreyfus
Service Corporation, a wholly-owned subsidiary of the Manager, 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 year ended September 30, 1995, $34,906 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 year ended September 30, 1995,
amounted to $1,353,168,374 and $1,357,218,039, respectively.
At September 30, 1995, accumulated net unrealized depreciation on
investments was $114,609, consisting of $87,274 gross unrealized appreciation
and $201,883 gross unrealized depreciation.
At September 30, 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
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
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, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and the financial
highlights for each of the years indicated therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with 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, 1995 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 audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Institutional Short Term Treasury Fund at September 30,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
November 1, 1995
