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 fiscal year ended September 30, 1997 as shown in
the following table:
<TABLE>
Income Dividends Distribution Rate**
Total Return* Per Share (Approximately) Per Share
___________ _______________________ _________________
<S> <C> <C> <C>
Institutional Shares 6.23% $ .119 6.06%
Investor Shares 5.97% $ .115 5.81%
</TABLE>
THE ECONOMY
Virtually ideal economic conditions have prevailed over the reporting
period. Robust growth in the first half of 1997, the lowest unemployment rate
since the early 1970s and measures of inflation at 30-year lows have combined
to spur consumer confidence to record high ground. Businesses are similarly
optimistic: government reports show that business investment in new equipment
during the reporting period was at its fastest pace in 14 years. The question
is, how long can this economic nirvana continue? Traditionally, the Federal
Reserve Board (the "Fed") has acted to contain inflation long before it could
spread throughout the economy, and Fed Chairman Alan Greenspan is a staunch
inflation-fighter. Yet there are few traditional signs of potential inflationa
ry excess to battle against. In fact, when the Asian economies are taken into
account, you could question if the problem won't be disinflation rather than
inflation. Conventional thinking views the low unemployment rate as a concern
that employers will eventually raise wages to attract workers, resulting in
higher prices as increased labor costs are passed along to consumers. So far,
there has been a remarkable absence of wage and price pressures.
There are few signs that broader measures of inflation are accelerating.
The economy grew at a 4.1% rate over the first six months of this year, a
pace that in other times would have resulted in rumblings of inflationary
pressures. Until its modest rise in September, the Producer Price Index had
an unprecedented series of seven straight monthly declines. The Consumer
Price Index rose at a 1.6% annual rate for the first eight months of the
year, a rate less than half the 3.3% rise for the comparable period in 1996.
Because of the lack of inflation, the Fed has been willing to tolerate
strong economic growth without tightening monetary policy. The Federal Open
Market Committee (FOMC), the policy-making arm of the Fed, has raised
interest rates just once in more than two years, a period roughly coinciding
with the surge of growth in the economy. The last increase in short-term
interest rates came on March 25, 1997 when the FOMC increased the Federal
Funds target rate by a modest one quarter of a percentage point to 5.50%.
(The Federal Funds rate is the rate of interest that banks charge one another
for overnight loans.)
The benign inflationary environment, coupled with weaker foreign
economies (particularly Asia), has allowed the Fed to tolerate stronger
domestic growth. The Fed has consistently telegraphed its strong stance
against inflation to the market. We question if that strong stance will
really be needed. The Asian crisis is significant enough to global GDP that a
Fed tightening becomes more improbable as the crisis continues to unfold. It
is not unrealistic to assume that world growth, pricing power, and inflation
will all turn downward.
Countries in crisis tend to put money into solving problems in ways that
exacerbate the very problems that cause crises. In viewing Asia, the first
problem is overcapacity. The usual answer has been to ease monetary policy to
stimulate growth. But this only stimulates more capacity. Japan is a perfect
example of this strategy. Japanese short-term rates are less than one half of
a percent. The Japanese economy looks no better now than it did six months
ago. In fact, given that a large percentage of Japanese exports go to the
other Asian countries embroiled in problems, the prognosis looks dire.
MARKET ENVIRONMENT
The most underallocated sector in fixed income is the Treasury market.
Investors in domestic bonds have favored spread products over Treasuries. Our
belief is that people will shift their credit risk exposure back to
Treasuries. Some of the other technicals that on previous occasions we have
mentioned as favoring Treasuries continue to favor them more and more. To
list a few: a lower budget deficit, reduced supply, higher yields than most
other developed countries, and a strong dollar. As to higher yields, for
example, the U.S. is yielding up to 4% more than Japan.
PORTFOLIO OVERVIEW
We continue to be optimistic about the direction of interest rates here
in the U.S. We also believe the chances that the Fed will become less
restrictive in 1998 are greater than that it will become more restrictive.
Our portfolio structure reflects our optimism: We will continue to keep the
Fund close to or at its maximum average maturity of two years. We kept the
Fund, on average, extended to its maximum average maturity for most of the
year. Shareholders have benefitted by the Fund maintaining a higher yield,
higher than what would have been earned in money market funds. We also
maintained a relatively stable NAV through the rapid market volatility we
have experienced. Of course, we will continue to monitor events domestically
and globally, and adjust our positions accordingly.
We want to thank you for choosing Dreyfus as an investment provider, and
for choosing the Dreyfus Institutional Short Term Treasury Fund. We want to
assure you that we will continue to strive to provide you an attractive
investment vehicle.
Very truly yours,
[Gerald E. Thunelius signature logo]
Gerald E. Thunelius
Portfolio Manager
October 20, 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, divided by the net asset value per share
at the end of the period.
<TABLE>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND SEPTEMBER 30, 1997
COMPARISON OF CHANGE IN VALUE OF $10,000,000 INVESTMENT IN DREYFUS
INSTITUTIONAL SHORT TERM TREASURY FUND INSTITUTIONAL SHARES AND INVESTOR
SHARES AND THE MERRILL LYNCH GOVERNMENTS,
U.S. TREASURY, SHORT-TERM (1-2.99 YEARS) INDEX
[Exhibit A:
$12,562,145
Dreyfus Institutional
Short Term Treasury Fund
(Institutional Shares)
Dollars
$12,502,518
Dreyfus Institutional
Short Term Treasury Fund
(Investor Shares)
$12,341,095
Merrill Lynch
Governments,
U.S.Treasury, Short-Term
(1-2.99 Years) Index*
*Source: Merrill Lynch, Pierce, Fenner and Smith Inc.]
Average Annual Total Returns
Institutional Shares* Investor Shares*
- ----------------------------------------------------------- ---------------------------------------------------------
Period Ended 9/30/97 Period Ended 9/30/97
- ------------------------ ------------------------
<S> <C> <C> <C>
1 Year 6.23% 1 Year 5.97%
From Inception (10/29/93) 5.99 From Inception (10/29/93) 5.86
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000,000 investment made in each of the
Institutional shares and Investor shares of Dreyfus Institutional Short Term
Treasury Fund on 10/29/93 (Inception Date) to a $10,000,000 investment made
in the Merrill Lynch Governments, U.S. Treasury, Short-Term (1-2.99 Years)
Index on that date. For comparative purposes, the value of the Index on
10/31/93 is used as the beginning value on 10/29/93. All dividends and
capital gain distributions are reinvested.
The Fund invests exclusively in U.S. Treasury securities and repurchase
agreements in respect thereof. The Fund's portfolio of U.S. Treasury
securities will, under normal circumstances, generally have a dollar-weighted
average maturity not to exceed two years. The Fund's performance shown in
the line graph takes into account fees and expenses. Unlike the Fund, the
Merrill Lynch Governments, U.S. Treasury, Short-Term (1-2.99 years) Index is
an unmanaged performance benchmark for Treasury securities with maturities of
1-2.99 years; issues in the Index must have par amounts outstanding greater
than or equal to $25 million. The Index does not take into account charges,
fees and other expenses. Further information relating to Fund performance,
including expense reimbursements, if applicable, is contained in the
Financial Highlights section of the Prospectus and elsewhere in this report.
*Effective February 2, 1997, the Fund's Class A shares were redesignated as
Institutional shares and Class B shares were redesignated as Investor shares.
<TABLE>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1997
Principal
U.S. Treasury Notes-97.3% Amount Value
------- -------
<S> <C> <C>
6 3/8%, 4/30/1999......................................................... $ 15,100,000 $15,239,204
6 3/8%, 5/15/1999......................................................... 11,900,000 12,007,844
9 1/8%, 5/15/1999......................................................... 9,000,000 9,459,844
6 3/4%, 5/31/1999......................................................... 3,300,000 3,349,500
6%, 6/30/1999............................................................. 27,800,000 27,904,250
5 7/8%, 7/31/1999......................................................... 1,000,000 (a) 1,001,094
5 7/8%, 8/31/1999......................................................... 23,000,000 23,025,157
7 3/4%, 11/30/1999........................................................ 45,000,000 46,729,688
8 1/2%, 2/15/2000......................................................... 10,000,000 10,576,563
-------
TOTAL U.S. TREASURY NOTES
(cost $149,150,262)....................................................... $149,293,144
=======
Short-Term Investments-.4%
Repurchase Agreements;
Aubrey G. Lanston & Co., 6%
dated 9/30/1997, due 10/1/1997 in the amount of $643,107
(fully collateralized by $638,000 U.S. Treasury Notes,
6 1/4%, 6/30/1998, value $650,760)
(cost $643,000)........................................................... . $ 643,000 $ 643,000
=======
TOTAL INVESTMENTS
(cost $149,793,262)....................................................... 97.7% $149,936,144
==== =======
CASH AND RECEIVABLES (NET).................................................. 2.3% $ 3,461,823
==== =======
NET ASSETS.................................................................. 100.0% $153,397,967
==== =======
Notes to Statement of Investments:
(a) Purchased on a forward commitment basis.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1997
Cost Value
-------- --------
<S> <C> <C>
ASSETS: Investments in securities-See Statement of
....................... Investments-Note 1(b) $149,793,262 $149,936,144
Cash....................................... 706,678
Interest receivable........................ 2,894,968
--------
153,537,790
--------
LIABILITIES: Due to The Dreyfus Corporation and affiliates 26,696
Due to Distributor......................... 4,761
Payable for shares of Beneficial Interest redeemed 108,366
--------
139,823
--------
NET ASSETS.................................................................. $153,397,967
========
REPRESENTED BY: Paid-in capital............................ $156,801,706
Accumulated net realized gain (loss) on investments (3,546,621)
Accumulated net unrealized appreciation (depreciation)
....................... on investments-Note 4 142,882
--------
NET ASSETS.................................................................. $153,397,967
========
NET ASSET VALUE PER SHARE
--------------------------------
Institutional Investor
Shares Shares
-------- --------
Net Assets.................................................................. $118,102,275 $35,295,692
Shares Outstanding.......................................................... 59,669,598 17,716,124
NET ASSET VALUE PER SHARE................................................... $1.98 $1.99
=== ===
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1997
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME Interest Income............................ $9,211,212
EXPENSES: Management fee-Note 3(a)................... $ 295,043
Distribution fees (Investor Shares)-Note 3(b) 45,740
Loan commitment fees-Note 2................ 314
------
Total Expenses....................... 341,097
------
INVESTMENT INCOME-NET....................................................... 8,870,115
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments.... $ (311,069)
Net unrealized appreciation (depreciation) on investments 272,387
------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... (38,682)
------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $8,831,433
======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
September 30, 1997* September 30, 1996
----------- ----------
<S> <C> <C>
OPERATIONS:
Investment income-net............................................ $ 8,870,115 $ 14,961,226
Net realized gain (loss) on investments.......................... (311,069) (2,484,085)
Net unrealized appreciation (depreciation) on investments........ 272,387 (14,896)
-------- --------
Net Increase (Decrease) in Net Assets Resulting from Operations 8,831,433 12,462,245
-------- --------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Institutional Shares........................................... (7,804,323) (13,968,029)
Investor Shares................................................ (1,065,792) (1,022,388)
-------- --------
Total Dividends.............................................. (8,870,115) (14,990,417)
-------- --------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Institutional Shares........................................... 60,840,986 257,457,775
Investor Shares................................................ 36,151,101 41,742,937
Dividends reinvested:
Institutional Shares........................................... 5,040,848 10,564,901
Investor Shares................................................ 946,148 872,362
Cost of shares redeemed:
Institutional Shares........................................... (117,988,964) (256,062,818)
Investor Shares................................................ (26,333,284) (23,978,886)
-------- --------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (41,343,165) 30,596,271
-------- --------
Total Increase (Decrease) in Net Assets.................... (41,381,847) 28,068,099
NET ASSETS:
Beginning of Period.............................................. 194,779,814 166,711,715
-------- --------
End of Period.................................................... $ 153,397,967 $ 194,779,814
======== ========
Shares Shares
-------- --------
CAPITAL SHARE TRANSACTIONS:
Institutional Shares
-----------
Shares sold...................................................... 30,764,445 128,426,345
Shares issued for dividends reinvested........................... 2,545,900 5,314,554
Shares redeemed.................................................. (59,534,619) (128,532,027)
-------- --------
Net Increase (Decrease) in Shares Outstanding................ (26,224,274) 5,208,872
======== ========
Investor Shares
---------
Shares sold...................................................... 18,164,991 20,911,548
Shares issued for dividends reinvested........................... 475,461 436,954
Shares redeemed.................................................. (13,222,748) (12,025,940)
-------- --------
Net Increase (Decrease) in Shares Outstanding................ 5,417,704 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>
<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.
Institutional Shares
----------------------------------------------------
Year Ended September 30,
----------------------------------------------------
PER SHARE DATA: 1997(1) 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.................................. .12 .13 .13 .10
Net realized and unrealized gain (loss)
on investments....................................... .- (.01) .03 (.04)
---- ---- ---- ----
Total from Investment Operations....................... .12 .12 .16 .06
---- ---- ---- ----
Distributions:
Dividends from investment income-net................... (.12) (.13) (.13) (.10)
---- ---- ---- ----
Net asset value, end of period......................... $ 1.98 $ 1.98 $ 1.99 $ 1.96
==== ==== ==== ====
TOTAL INVESTMENT RETURN.................................... 6.23% 6.03% 8.45% 3.08%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................ .20% .20% .20% .20%(3)
Ratio of net investment income
to average net assets................................ 6.04% 6.40% 6.48% 5.41%(3)
Portfolio Turnover Rate................................ 952.81% 694.24% 1,926.32% 4,125.54%(4)
Net Assets, end of period (000's Omitted).............. $118,102 $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.
</TABLE>
<TABLE>
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
--------------------------------------------------
Year Ended September 30,
----------------------------------------------------
PER SHARE DATA: 1997(1) 1996 1995 1994(2)
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value, beginning of period................... $ 1.99 $ 2.00 $ 1.97 $ 2.00
---- ---- ---- ----
Investment Operations:
Investment income-net.................................. .12 .12 .13 .09
Net realized and unrealized gain (loss)
on investments....................................... .- (.01) .03 (.03)
---- ---- ---- ----
Total from Investment Operations....................... .12 .11 .16 .06
---- ---- ---- ----
Distributions:
Dividends from investment income-net................... (.12) (.12) (.13) (.09)
---- ---- ---- ----
Net asset value, end of period......................... $ 1.99 $ 1.99 $ 2.00 $ 1.97
==== ==== ==== ====
TOTAL INVESTMENT RETURN.................................... 5.97% 5.76% 8.17% 3.39%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................ .45% .45% .45% .45%(3)
Ratio of net investment income
to average net assets................................ 5.83% 6.13% 6.35% 5.01%(3)
Portfolio Turnover Rate................................ 952.81% 694.24% 1,926.32% 4,125.54%(4)
Net Assets, end of period (000's Omitted).............. $35,296 $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
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 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 in securities, 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 $2,832,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to September 30, 1997. The
carryover does not include net realized securities losses from November 1,
1996 through September 30, 1997 which are treated, for Federal income tax
purposes, as arising in fiscal 1998. If not applied, $728,000 of the
carryover expires in fiscal 2003, $49,000 expires in fiscal 2004 and
$2,055,000 expires in fiscal 2005.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
NOTES TO FINANCIAL STATEMENTS (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
September 30, 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, commitment fees 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
of the Manager, 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 determine 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 September 30, 1997, the
Rule 12b-1 service fees borne by the Fund with respect to its Investor Shares
was $45,740.
(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 September 30, 1997,
amounted to $1,267,410,035 and $1,201,392,417, respectively.
At September 30, 1997, accumulated net unrealized appreciation on
investments was $142,882 consisting of $274,557 gross unrealized appreciation
and $131,675 gross unrealized depreciation.
At September 30, 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).
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, 1997, 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 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 and financial highlights. Our procedures included
verification by examination of securities held by the custodian as of
September 30, 1997 and confirmation of securities not held by the custodian
by correspondence with others. 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,
1997, 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 & YOUNG LLP signature logo]
New York, New York
November 4, 1997
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
IMPORTANT TAX INFORMATION (UNAUDITED)
For State individual income tax purposes, the Fund hereby designates
89.53% of the ordinary income dividends paid during its fiscal year ended
September 30, 1997 as attributable to interest income from direct obligations
of the United States. Such dividends are currently exempt from taxation for
individual income tax purposes in most states, including New York, California
and the District of Columbia.
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. 721/680AR979
Registration Mark
[Dreyfus logo]
Institutional
Short Term
Treasury Fund
Annual Report
September 30, 1997
COMPARISON OF CHANGE IN VALUE OF $10,000,000 INVESTMENT IN
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND INSTITUTIONAL
SHARES AND INVESTOR SHARES AND THE MERRILL LYNCH GOVERNMENTS,
U.S. TREASURY, SHORT-TERM (1-2.99 YEARS) INDEX
EXHIBIT A: DREYFUS DREYFUS
MERRILL LYNCH INSTITUTIONAL INSTITUTIONAL
GOVERNMENTS, SHORT SHORT
U.S. TREASURY, TERM TREASURY TERM TREASURY
SHORT-TERM FUND FUND
(1-2.99 YEARS) (INSTITUTIONAL (INVESTOR
PERIOD INDEX* SHARES) SHARES)
10/29/93 10,000,000 10,000,000 10,000,000
9/30/94 10,096,045 10,284,036 10,312,543
9/30/95 10,931,865 11,152,591 11,155,305
9/30/96 11,545,505 11,825,104 11,797,886
9/30/97 12,341,095 12,562,145 12,502,518
* Source: Merrill Lynch, Pierce, Fenner and Smith Inc.
