DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
<TABLE>
<CAPTION>
We are pleased to report the performance for Dreyfus Institutional Short Term
Treasury Fund for the 12-month period ended September 30, 1998 as shown in the
following table:
Income Dividends
Per Share Distribution Rate
Total Return* (Approximate) Per Share **
___________ _____________________ _________________
<S> <C> <C> <C>
Institutional Shares 7.56% $0.115 5.72%
Investor Shares 7.30% $0.111 5.49%
</TABLE>
THE ECONOMY
The risk of global recession loomed large by the end of the reporting period.
Since last summer, the international economic crisis has spread from Asia and
Russia into Latin America and its effects are evident in the U.S., as witnessed
by early signs of a slowing in our domestic economy. Second-quarter gross
domestic product grew at an annual rate of 1.8%, well below the 5.5% rate in the
first quarter, while the trade deficit has continued to widen, affected by
weakening foreign demand and low-priced imports. These developments have
heightened a sense of global economic interdependence and have resulted in a
shift in emphasis by the Federal Reserve Board (the "Fed") whereby fighting
inflation has taken a subordinate role to that of maintaining stable U.S.
economic growth. As Fed Chairman Alan Greenspan noted in early September: "It is
just not credible that the United States can remain an oasis of prosperity
unaffected by a world that is experiencing greatly increased stress." On
September 29, the Federal Open Market Committee cut interest rates for the first
time since January 1996. That quarter-point reduction in the Federal Funds
target rate to 5.25% was designed to cushion the adverse effects of the overseas
economic crisis on the domestic economy. (The Federal Funds rate is the interest
rate that banks charge each other for overnight loans.)
So far, shock waves from the overseas economic turmoil have been dampened by
the continued propensity of U.S. consumers to spend. In the first half of the
year, their spending outpaced earned income, an unsustainable phenomenon, yet a
telling indicator of the level of consumer optimism. The reasons for such
optimism are no surprise. Inflation remains tame, running at an annual rate
comfortably below 2%. After-tax income is growing: by the end of the reporting
period, wages had increased year-to-year at a 4% annual rate resulting in strong
gains in real income for workers. Finally, and of great economic and
psychological importance to consumers, jobs are plentiful; the unemployment rate
has been at or near 30-year lows throughout the reporting period and new jobs
have been created at a robust pace.
While the corporate sector wrestles with the economic implications of global
developments, consumers have powered the economy. The consumer sector comprises
two-thirds of the activity in the $8-trillion U.S. economy and, with the
business sector slowing (corporate profits declined in the second quarter for
the first time in nearly a decade) , any significant pullback in household
spending could trigger a recession. Up to now, the spillover effect from
developments abroad has been largely confined to the manufacturing sector, whose
activity has contracted of late due to the falloff in export demand. Aside from
this "erosion at the edges" as Chairman Greenspan describes it, layoffs on a
broader scale -- a factor that could weaken consumer resolve to spend -- so far
have not occurred. It is clear that the Fed is concerned about the possibility
of worldwide recession. The recent interest rate reduction was an initial step
toward mitigating the domestic effects of international financial turmoil and a
gesture meant to serve notice to the world of the seriousness of its purpose.
MARKET ENVIRONMENT
Shorter maturity Treasuries rallied in yield and fell below the Fed Funds
rate over the summer. Since that time they have continually yielded less than
the Fed Funds rate. In essence this is the bond market prediction that the
economy will slow and the Fed will need to ease interests rates more
In fact, the way in which the last rate cut happened almost assures that more
will follow; the rate cut came at 3:15 pm, exactly one hour after a Fed governor
was quoted saying rate cuts might not be needed. So apparently Chairman
Greenspan decided to act on his own and cut rates. Whatever was urgent enough to
cause the chairman to act surely could not be corrected with one rate cut.
PORTFOLIO FOCUS
Over the reporting period the Fund was positioned with a bullish outlook for
a lower interest rate environment. We kept the Fund extended towards its maximum
average maturity of two years. As you know, the Fund only invests in Treasury
securities and repurchase agreements with respect to those securities, and does
not invest in any form of derivatives. With that in mind, we try to take
advantage of anomalies that exist from one- to three-year maturity Treasury
securities.
As the forced liquidations of numerous leveraged funds took place, the
off-the-run (OTR) Treasuries (any Treasury that is not the most recently
auctioned is considered OTR) underperformed. We believe some of this dislocation
presented a good opportunity for the Fund. In some instances, we could sell one
Treasury and buy another with a shorter maturity and pick up yield, and we
successfully employed this technique during the reporting period. As the
uncertainty of hedge funds dissipates, we believe these OTR Treasuries should
become more competitive. Going forward, we will continue to emphasize securities
around the two-year maturity range, and look to add incremental value as
opportunities present themselves.
Thank you for your continued participation in the Fund.
Very truly yours,
[Gerald E. Thunelius signature logo]
Gerald E. Thunelius
Portfolio Manager
October 16, 1998
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.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND SEPTEMBER 30, 1998
- -----------------------------------------------------------------------------
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
Dollars
$13,511,905
Dreyfus Institutional Short Term Treasury Fund (Institutional Shares)
$13,414,569
Dreyfus Institutional Short Term Treasury Fund (Investor Shares)
$13,324,968
Merrill Lynch Governments, U.S. Treasury, Short-Term (1-2.99 Years) Index*
*Source: Merrill Lynch, Pierce, Fenner and Smith Inc.
<TABLE>
<CAPTION>
Average Annual Total Returns
- -----------------------------------------------------------------------------
Institutional Shares Investor Shares
_______________________________________________________ _________________________________________________________
Period Ended 9/30/98 Period Ended 9/30/98
___________________ ________________
<S> <C> <C> <C>
1 Year 7.56% 1 Year 7.30%
From Inception (10/29/93) 6.31 From Inception (10/29/93) 6.15
- ------------------------
Past performance is not predictive of future performance.
</TABLE>
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
$1 billion. 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.
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1998
Principal
Bonds and Notes--98.5% Amount Value
- ------------------------------------------------------- ____________ ____________
<S> <C> <C>
U.S. Treasury Notes--92.6%
5.625%, 12/31/1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,000,000 $10,128,100
5.375%, 6/30/2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000,000 6,095,880
5.375%, 7/31/2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 10,172,600
6%, 8/15/2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000,000 9,260,370
4.50%, 9/30/2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 10,041,600
8.50%, 11/15/2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000,000 16,238,250
6.625%, 7/31/2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500,000 7,943,175
____________
69,879,975
____________
U.S. Treasury Principal Strips--5.9%
Zero Coupon, 5/15/2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000 4,467,550
____________
TOTAL BONDS AND NOTES
(cost $73,464,191) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $74,347,525
____________
</TABLE>
<TABLE>
<CAPTION>
Short-Term Investments--.3%
- -------------------------------------------------------
<S> <C> <C>
Repurchase Agreements;
SBC Warburg Dillon Reed, Inc., 5.30%
dated 9/30/1998, due 10/1/1998 in the amount of $185,027
(fully collateralized by $198,000 U.S. Treasury Bills,
9/16/1999, value $189,585)
(cost $185,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 185,000 $ 185,000
____________
TOTAL INVESTMENTS
(cost $73,649,191) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98.8% $74,532,525
_______ ____________
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2% $ 926,651
_______ ____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $75,459,176
_______ ____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1998
Cost Value
____________ ____________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of
Investments--Note 1(b) . . . . . . . . . . . . . . . . $73,649,191 $74,532,525
Receivable for investment securities sold . . . . . . . . 9,994,798
Interest receivable . . . . . . . . . . . . . . . . . . . 949,675
Receivable for shares of Beneficial Interest subscribed . . 107
____________
85,477,105
____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . 12,750
Due to Distributor . . . . . . . . . . . . . . . . . . . 2,257
Cash overdraft due to Custodian . . . . . . . . . . . . . 9,988,733
Payable for shares of Beneficial Interest redeemed . . . 14,189
____________
10,017,929
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $75,459,176
____________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $77,387,037
Accumulated net realized gain (loss) on investments . . . (2,811,195)
Accumulated gross unrealized appreciation on investments . 883,334
____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $75,459,176
____________
NET ASSET VALUE PER SHARE
____________________________________________
Institutional Investor
Shares Shares
____________ ___________
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $65,163,261 $10,295,915
Shares Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,408,063 5,087,004
NET ASSET VALUE PER SHARE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2.01 $2.02
______ ______
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1998
INVESTMENT INCOME
INCOME Interest Income . . . . . . . . . . . . . . . . . . . . . $7,632,727
EXPENSES: Management fee--Note 3(a) . . . . . . . . . . . . . . . . $ 253,710
Distribution fees (Investor Shares)--Note 3(b) . . . . . 63,029
Loan commitment fees--Note 2 . . . . . . . . . . . . . . 1,932
___________
Total Expenses . . . . . . . . . . . . . . . . . . . . 318,671
___________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,314,056
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments . . . . . . . . . 735,426
Net unrealized appreciation (depreciation) on investments . . 740,452
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 1,475,878
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $8,789,934
___________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
September 30, 1998 September 30, 1997*
__________________ __________________
<S> <C> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,314,056 $ 8,870,115
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . 735,426 (311,069)
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . 740,452 272,387
_____________ _____________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . 8,789,934 8,831,433
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Institutional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,910,338) (7,804,323)
Investor Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,403,718) (1,065,792)
_____________ _____________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,314,056) (8,870,115)
_____________ _____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Institutional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,307,797 60,840,986
Investor Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,627,049 36,151,101
Dividends reinvested:
Institutional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,831,233 5,040,848
Investor Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,145,340 946,148
Cost of shares redeemed:
Institutional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . (79,327,433) (117,988,964)
Investor Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (51,998,655) (26,333,284)
_____________ _____________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions . . (79,414,669) (41,343,165)
_____________ _____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . (77,938,791) (41,381,847)
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153,397,967 194,779,814
_____________ _____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75,459,176 $153,397,967
_____________ _____________
Shares Shares
_____________ _____________
CAPITAL SHARE TRANSACTIONS:
Institutional Shares
_________________
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,748,506 30,764,445
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . 1,932,106 2,545,900
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (39,942,147) (59,534,619)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . (27,261,535) (26,224,274)
_____________ _____________
Investor Shares
_____________
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,870,169 18,164,991
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . 574,808 475,461
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26,074,097) (13,222,748)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . (12,629,120) 5,417,704
_____________ _____________
- ------------------------
* 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>
<CAPTION>
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This information
has been derived from the Fund's financial statements.
Institutional Shares
______________________________________________________
Year Ended September 30,
______________________________________________________
PER SHARE DATA: 1998 1997(1) 1996 1995 1994(2)
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . $ 1.98 $ 1.98 $ 1.99 $ 1.96 $ 2.00
______ ______ ______ ______ ______
Investment Operations:
Investment income--net . . . . . . . . . . . . . . . . . .12 .12 .13 .13 .10
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . .03 -- (.01) .03 (.04)
______ ______ ______ ______ ______
Total from Investment Operations . . . . . . . . . . . . .15 .12 .12 .16 .06
______ ______ ______ ______ ______
Distributions:
Dividends from investment income--net . . . . . . . . . . (.12) (.12) (.13) (.13) (.10)
______ ______ ______ ______ ______
Net asset value, end of period . . . . . . . . . . . . . $ 2.01 $ 1.98 $ 1.98 $ 1.99 $ 1.96
______ ______ ______ ______ ______
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . 7.56% 6.23% 6.03% 8.45% 3.08%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . .20% .20% .20% .20% .20%(3)
Ratio of net investment income
to average net assets . . . . . . . . . . . . . . . . 5.81% 6.04% 6.40% 6.48% 5.41%(3)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . 756.50% 952.81% 694.24% 1,926.32% 4,125.54%(4)
Net Assets, end of period (000's Omitted) . . . . . . . . $65,163 $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>
<CAPTION>
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.
.
Institutional Shares
______________________________________________________
Year Ended September 30,
______________________________________________________
PER SHARE DATA: 1998 1997(1) 1996 1995 1994(2)
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . $ 1.99 $ 1.99 $ 2.00 $ 1.97 $ 2.00
______ ______ ______ ______ ______
Investment Operations:
Investment income--net . . . . . . . . . . . . . . . . . .11 .12 .12 .13 .09
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . .03 -- (.01) .03 (.03)
______ ______ ______ ______ ______
Total from Investment Operations . . . . . . . . . . . . .14 .12 .11 .16 .06
______ ______ ______ ______ ______
Distributions:
Dividends from investment income--net . . . . . . . . . . (.11) (.12) (.12) (.13) (.09)
______ ______ ______ ______ ______
Net asset value, end of period . . . . . . . . . . . . . $ 2.02 $ 1.99 $ 1.99 $ 2.00 $ 1.97
______ ______ ______ ______ ______
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . 7.30% 5.97% 5.76% 8.17% 3.39%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . .45% .45% .45% .45% .45%(3)
Ratio of net investment income
to average net assets . . . . . . . . . . . . . . . . 5.57% 5.83% 6.13% 6.35% 5.01%(3)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . 756.50% 952.81% 694.24% 1,926.32% 4,125.54%(4)
Net Assets, end of period (000's Omitted) . . . . . . . . $10,296 $ 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.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Institutional Short Term Treasury Fund (the "Fund") is registered
under the Investment Company Act of 1940, as amended (the "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 (the "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. 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 (excluding short-term
investments) are valued each business day by an independent pricing service
(" Service" ) approved by the Board of Trustees. Investment for which quoted bid
prices are readily available and are representative of the bid side of the
market in the judgment of the Service are valued at the mean between the quoted
bid prices (as obtained by the Service from dealers in such securities) and
asked prices (as calculated by the Service based upon its evaluation of the
market for such securities) . Other investments are carried at fair value as
determined by the Service, based on methods which include consideration of:
yields or prices of securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Short-term
investments, excluding U.S. Treasury Bills, 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. Under the terms of the custody agreement, the Manager
receives net earnings credits based on available cash balances left on deposit.
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 DREYFUS INSTITUTIONAL
SHORT TERM TREASURY FUND
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Code of 1986, as amended (the "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 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 $2,786,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to September 30, 1998. The
carryover does not include net realized securities losses from November 1, 1997
through September 30, 1998 which are treated, for Federal income tax purposes,
as arising in fiscal 1999. If not applied, $682,000 of the carryover expires in
fiscal 2003, $49,000 expires in fiscal 2004 and $2,055,000 expires in fiscal
2005.
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. During the period ended
September 30, 1998, 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 for providing
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 DREYFUS
INSTITUTIONAL SHORT TERM TREASURY FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, 1998, the Fund was charged $63,029 for
Investor Shares pursuant to the Plan.
(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, 1998,
amounted to $902,492,312 and $978,987,029, respectively.
At September 30, 1998, 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
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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, 1998, 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, 1998 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, 1998, 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.
New York, New York
October 28, 1998
DREYFUS INSTITUTIONAL SHORT TERM TREASURY FUND
- -----------------------------------------------------------------------------
IMPORTANT TAX INFORMATION (UNAUDITED)
For State individual income tax purposes, the Fund hereby designates 91.82% of
the ordinary income dividends paid during its fiscal year ended September 30,
1998 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.
Dreyfus lion "d" logo (reg.tm)
Dreyfus logo (reg.tm)
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. 680/721AR989
Institutional
Short Term
Treasury Fund
Annual Report
September 30, 1998
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 INSTITUTIONAL INSTITUTIONAL
LYNCH SHORT SHORT
GOVERNMENTS, TERM TERM
U.S. TREASURY, TREASURY 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
9/30/98 13,324,968 13,511,905 13,414,569
* Source: Merrill Lynch, Pierce, Fenner and Smith Inc.
