DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report the performance for Dreyfus Institutional Short
Term Treasury Fund for its six-month reporting period ended March 31, 1997 as
shown in the following table:
Income Dividends
Per Share Distribution Rate**
Total Return* (Approximately) Per Share
________________ __________________ ________________
Class A shares 2.45% $.058 5.92%
Class B shares 2.33% $.056 5.67%
THE ECONOMY
Reacting to an economy which reflects strong growth, low unemployment and
stable prices, the Federal Open Market Committee (FOMC) of the Federal
Reserve Board (the "Fed") raised interest rates at the end of March for the
first time in over two years. Concerned that persistently strong demand would
increase the risk of a resurgence of inflation, the FOMC, which is the
policy-making arm of the Fed, voted to lift the Federal Funds rate by a
quarter of a percentage point to 5.5%. (The Federal Funds rate is the rate
that banks charge each other for overnight loans.) The move to raise interest
rates had been discussed since early last year when the Fed first became
concerned about the inflationary potential of rising wage demands resulting
from the strong rate of growth in new jobs. Yet over that time there has been
little evidence of inflation despite robust job growth and an unemployment
rate of less than 5.5%, a level that in the 1970s and 1980s contributed to an
escalation in wages and prices. Instead, prices in virtually all sectors of
the economy have remained quiescent. The Consumer Price Index has risen a
modest 2.8% over the past 12 months, while increases in producer prices have
been equally modest and, of late, many prices have actually fallen.
Not surprisingly, the consumer confidence index of the Conference Board,
a private research group, remains near all-time high territory. A closely
followed component of the index measures consumer sentiment about the job
market. The percentage of people reporting that jobs are plentiful has
recently reached an eight-year high, while the portion reporting that jobs
are hard to get was the lowest ever recorded. That positive attitude
regarding job security has been cited by Federal Reserve Board Chairman
Greenspan as a possible harbinger of higher wage pressures, which could
result in an acceleration in the rate of inflation.
Looking at the economy more generally, factory production _ particularly
the durable goods sector _ has picked up lately after slumping over the last
two months of last year. Also suggesting renewed vigor in the economy was the
brisk pickup in retail sales from their relatively sluggish pace over the
last quarter of 1996. As a corollary to the surge in retail sales, late
payments on credit card debt have risen to the highest proportion of accounts
since 1980, the year the American Bankers Association first monitored credit
card delinquencies.
Effective monetary policy is formulated less on how conditions are today
than on how things may be in the future; hence the Fed's preemptive move to
tighten credit without significant direct evidence that inflation is already
on the rise is understandable. In recent testimony to Congress made before
the Fed's decision to raise the Federal Funds rate, Fed Chairman Alan
Greenspan said that the question "is not so much . . . where prices are or
have been, but rather what the state of the economy will be later this year
and into 1998 when any actions we may or may not have taken would become
effective." We continue to remain alert to any economic developments that
might indicate a further tightening by the Fed.
THE MARKET
With two-year notes trading at a yield of 6.50%, the market has priced in
another preemptive strike by the Fed. Domestic participants, if polled, would
probably say that this represents fair value, but is not cheap considering
that the
Fed is entering a new credit-tightening cycle. In our last letter we wrote
about the attractiveness of U.S. rates compared to foreign rates. Following
are the recent levels: Canadian two-year notes are yielding 4.70%, the French
two-year yield is 3.68% and the German two-year yield is 3.60%. In fact the
U.S. is still one of the higher-yielding developed countries.
If European economies start to improve, then we could see the
attractiveness of U.S. rates start to dissipate. The amount of fiscal drag
placed on European economies in preparation for the European Monetary Union
should not be underestimated. Also, the absorption of East Germany by West
Germany continues to be a tremendous burden on the German economy.
THE PORTFOLIO
The portfolio is currently positioned defensively. This is partly due to
a belief that we are in a runaway growth economy, but more in light of the
Fed's recent decision to raise rates. The old adage, "Don't fight the Fed,"
applies here. Until the Fed has completed its tightening cycle, it is prudent
to remain defensive.
Since we wrote to you last we have moved the Fund from an average life of
two years _close to its maximum _ to a more defensive posture of 1.2 years.
Until we have more economic data to show the effect higher rates have had on
the economy, we plan to remain in this maturity range.
Very truly yours,
[Gerald E. Thunelius signature logo]
Gerald E. Thunelius
Portfolio Manager
April 18, 1997
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
**Distribution rate per share is based upon dividends per share paid from net
investment income during the period (annualized), divided by the net asset
value per share at the end of the period.
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF INVESTMENTS MARCH 31, 1997 (UNAUDITED)
Principal
U.S. Treasury Notes_54.2% Amount Value
_______ _______
<S> <C> <C>
5 7/8%, 8/15/1998....................................................... $ 10,000,000 $ 9,945,312
5 7/8%, 1/31/1999....................................................... 40,000,000 39,637,500
8 7/8%, 2/15/1999....................................................... 10,000,000 10,428,125
9 1/8%, 5/15/1999....................................................... 10,000,000 10,517,188
6 3/4%, 5/31/1999....................................................... 3,300,000 3,317,531
_______
TOTAL U.S. TREASURY NOTES
(cost $74,093,158)...................................................... $ 73,845,656
=======
Short-Term Investments_41.4%
Repurchase Agreements;
Aubrey G. Lanston & Co., 6 1/4%
dated 3/31/1997, due 4/1/1997 in the amount of $56,428,795
(fully collateralized by $58,055,000 U.S. Treasury Bills,
7/24/1997, value $57,068,065)
(cost $56,419,000)...................................................... $ 56,419,000 $ 56,419,000
=======
TOTAL INVESTMENTS
(cost $130,512,158)..................................................... 95.6% $130,264,656
==== =======
CASH AND RECEIVABLES (NET).................................................. 4.4% $ 6,012,051
==== =======
NET ASSETS.................................................................. 100.0% $136,276,707
==== =======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1997 (UNAUDITED)
Cost Value
----- -------
ASSETS: Investments in securities_See Statement of Investments
(including Repurchase Agreements of
$56,419,000)_Note 1(b)..................... $130,512,158 $130,264,656
Cash....................................... 79,400
Receivable for investment securities sold.. 5,027,968
Interest receivable........................ 1,012,796
_______
136,384,820
_______
LIABILITIES: Due to The Dreyfus Corporation and affiliates 21,774
Due to Distributor......................... 2,709
Payable for shares of Beneficial Interest redeemed 83,630
_______
108,113
_______
NET ASSETS.................................................................. $136,276,707
========
REPRESENTED BY: Paid-in capital............................ $140,466,134
Accumulated net realized gain (loss) on investments (3,941,925)
Accumulated gross unrealized (depreciation)
on investments............................. (247,502)
_______
NET ASSETS.................................................................. $136,276,707
========
NET ASSET VALUE PER SHARE
________________________________
Institutional Investor
Shares Shares
------------ ------------
Net Assets.................................................................. $122,390,048 $13,886,659
Shares Outstanding.......................................................... 62,181,565 7,019,845
NET ASSET VALUE PER SHARE................................................... $1.97 $1.98
=== ===
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
INVESTMENT INCOME
INCOME Interest Income............................ $4,823,548
EXPENSES: Management fee_Note 3(a)................... $ 158,686
Distribution fees (Investor Shares)_Note 3(b) 21,233
______
Total Expenses......................... 179,919
______
INVESTMENT INCOME_NET....................................................... 4,643,629
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $ (706,373)
Net unrealized appreciation (depreciation) on investments (117,997)
______
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... (824,370)
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $3,819,259
======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
March 31, 1997* Year Ended
(Unaudited) September 30, 1996
________ __________
OPERATIONS:
Investment income_net............................................... $ 4,643,629 $ 14,961,226
Net realized gain (loss) on investments............................. (706,373) (2,484,085)
Net unrealized appreciation (depreciation) on investments........... (117,997) (14,896)
________ _______
Net Increase (Decrease) in Net Assets Resulting from Operations 3,819,259 12,462,245
________ _______
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net:
Institutional Shares.............................................. (4,166,607) (13,968,029)
Investor Shares................................................... (477,022) (1,022,388)
________ _______
Total Dividends............................................... (4,643,629) (14,990,417)
________ _______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Institutional Shares.............................................. 25,450,414 257,457,775
Investor Shares................................................... 4,633,656 41,742,937
Dividends reinvested:
Institutional Shares.............................................. 2,657,330 10,564,901
Investor Shares................................................... 421,012 872,362
Cost of shares redeemed:
Institutional Shares.............................................. (75,267,078) (256,062,818)
Investor Shares................................................... (15,574,071) (23,978,886)
________ _______
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (57,678,737) 30,596,271
________ _______
Total Increase (Decrease) in Net Assets..................... (58,503,107) 28,068,099
NET ASSETS:
Beginning of Period................................................. 194,779,814 166,711,715
________ _______
End of Period....................................................... $ 136,276,707 $ 194,779,814
======== =======
Shares Shares
________ _______
CAPITAL SHARE TRANSACTIONS:
Institutional Shares
_________
Shares sold......................................................... 12,853,701 128,426,345
Shares issued for dividends reinvested.............................. 1,340,222 5,314,554
Shares redeemed..................................................... (37,906,230) (128,532,027)
________ _______
Net Increase (Decrease) in Shares Outstanding................. (23,712,307) 5,208,872
======== =======
Investor Shares
_______
Shares sold......................................................... 2,316,026 20,911,548
Shares issued for dividends reinvested.............................. 211,302 436,954
Shares redeemed..................................................... (7,805,903) (12,025,940)
________ _______
Net Increase (Decrease) in Shares Outstanding................. (5,278,575) 9,322,562
======== =======
* Effective February 2, 1997, Class A shares were redesignated as
Institutional Shares and Class B shares were redesignated as Investor Shares.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each period indicated. This
information has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Institutional Shares
______________________________________________________
Six Months Ended
March 31, 1997(1) Year Ended September 30,
--------------------------------
PER SHARE DATA: (Unaudited) 1996 1995 1994(2)
------------ ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 1.98 $ 1.99 $ 1.96 $ 2.00
---- ---- ----- ----
Investment Operations:
Investment income_net............................. .06 .13 .13 .10
Net realized and unrealized gain (loss)
on investments.................................. (.01) (.01) .03 (.04)
---- ---- ----- ----
Total from Investment Operations.................. .05 .12 .16 .06
---- ---- ----- ----
Distributions:
Dividends from investment income_net.............. (.06) (.13) (.13) (.10)
---- ---- ----- ----
Net asset value, end of period.................... $ 1.97 $ 1.98 $ 1.99 $ 1.96
==== ==== ==== ====
TOTAL INVESTMENT RETURN............................... 4.91%(3) 6.03% 8.45% 3.08%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........... .20%(3) .20% .20% .20%(3)
Ratio of net investment income
to average net assets........................... 5.88%(3) 6.40% 6.48% 5.41%(3)
Portfolio Turnover Rate........................... 551.19%(4) 694.24% 1,926.32% 4,125.54%(4)
Net Assets, end of period (000's Omitted)......... $122,390 $170,290 $160,748 $90,421
(1) Effective February 2, 1997, Class A shares were redesignated as Institutional Shares.
(2) From October 29, 1993 (commencement of operations) to September 30, 1994.
(3) Annualized.
(4) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each period indicated. This
information has been derived from the Fund's financial statements.
Investor Shares
__________________________________________________________
Six Months Ended
March 31, 1997(1) Year Ended September 30,
--------------------------------
PER SHARE DATA: (Unaudited) 1996 1995 1994(2)
------------ ---- ---- ----
Net asset value, beginning of period.............. $ 1.99 $ 2.00 $ 1.97 $ 2.00
---- ---- ----- ----
Investment Operations:
Investment income_net............................. .06 .12 .13 .09
Net realized and unrealized gain (loss)
on investments.................................. (.01) (.01) .03 (.03)
---- ---- ----- ----
Total from Investment Operations.................. .05 .11 .16 .06
---- ---- ----- ----
Distributions:
Dividends from investment income_net.............. (.06) (.12) (.13) (.09)
---- ---- ----- ----
Net asset value, end of period.................... $ 1.98 $ 1.99 $ 2.00 $ 1.97
==== ==== ==== ====
TOTAL INVESTMENT RETURN............................... 4.67%(3) 5.76% 8.17% 3.39%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........... .45%(3) .45% .45% .45%(3)
Ratio of net investment income
to average net assets........................... 5.62%(3) 6.13% 6.35% 5.01%(3)
Portfolio Turnover Rate........................... 551.19%(4) 694.24% 1,926.32% 4,125.54%(4)
Net Assets, end of period (000's Omitted)......... $ 13,887 $24,490 $ 5,964 $23,147
(1) Effective February 2, 1997, Class B shares were redesignated as Investor Shares.
(2) From October 29, 1993 (commencement of operations) to September 30, 1994.
(3) Annualized.
(4) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Institutional Short Term Treasury Fund (the "Fund") is registered
under the Investment Company Act of 1940 ("Act") as a diversified open-end
management investment company. The Fund's investment objective is to provide
investors with a high level of current income with minimum fluctuation of
principal value. The Dreyfus Corporation ("Manager") serves as the Fund's
investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
("Mellon").
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares, which are sold without a sales load. Effective February
2, 1997, Class A shares were redesignated as Institutional Shares and Class B
shares were redesignated as Investor Shares. The Fund is authorized to issue
an unlimited number of $.001 par value shares in the following classes of
shares: Institutional Shares and Investor Shares. Investor 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.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments, including U.S. Treasury Bills, are
valued at the mean between the quoted bid prices and asked prices. Other
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. Interest income, including,
where applicable, amortization of discount on investments, is recognized on
the accrual basis. Realized gain and loss from securities transactions are
recorded on the identified cost basis.
The Fund may enter into repurchase agreements with financial
institutions, deemed to be creditworthy by the Fund's Manager, subject to the
seller's agreement to repurchase and the Fund's agreement to resell such
securities at a mutually agreed upon price. Securities purchased subject to
repurchase agreements are deposited with the Fund's custodian and, pursuant
to the terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. If the value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the Fund will require the seller to
deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults on its repurchase
obligation, the Fund maintains the right to sell the underlying securities at
market value and may claim any resulting loss against the seller.
(c) Dividends to shareholders: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Fund may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Fund not to distribute such gain.
(d) Federal income taxes: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $777,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to September 30, 1996. The
carryover does not include net realized securities losses from November 1,
1995 through September 30, 1996 which are treated, for Federal income tax
purposes, as arising in fiscal 1997. If not applied, $728,000 of the
carryover expires in fiscal 2003 and $49,000 expires in fiscal 2004.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 2_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended March
31, 1997, the Fund did not borrow under the Facility.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .20 of 1% of the value of the Fund's
average daily 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 extraordinary
expenses, other than the following expenses, which will be borne by the Fund:
the management fee, and with respect to the Fund's Investor Shares, Rule
12b-1 Service Plan expenses.
The Manager compensates Dreyfus Transfer, Inc., a wholly-owned
subsidiary, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund.
The Manager compensates Mellon under a custody agreement to provide
custodial services for the Fund.
(b) Under the Investor Shares Service Plan (the "Plan") adopted pursuant
to Rule 12b-1 under the Act, the Fund (a) reimburses the Distributor for
distributing the Fund's Investor 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 relating to the Fund's Investor Shares and for providing certain
services relating to Investor Shares 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
average daily net assets of Investor Shares. Both the Distributor and Dreyfus
may pay one or more Service Agents (a securities dealer, financial
institution or other industry professional) a fee in respect of the Fund's
Investor 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. Both the Distributor and Dreyfus determines the amounts, if any,
to be paid to 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 period ended March 31, 1997, the Rule
12b-1 service fees borne by the Fund with respect to its Investor Shares was
$21,233.
(c) Each trustee 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 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended March 31, 1997,
amounted to $707,749,677 and $716,354,127, respectively.
At March 31, 1997, 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).
Registration Mark
Dreyfus lion "d" logo]
DREYFUS INSTITUTIONAL
SHORT TERM TREASURY FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 721/680SA973
[Dreyfus logo]
Registration Mark
Institutional
Short Term
Treasury Fund
Semi-Annual
Report
March 31, 1997
