Dreyfus
Institutional Short
Term Treasury Fund
ANNUAL REPORT
September 30, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by The Dreyfus
Corporation and the fund's other service providers do not properly process and
calculate date-related information from and after January 1, 2000. The Dreyfus
Corporation is working to avoid Year 2000-related problems in its systems and to
obtain assurances from other service providers that they are taking similar
steps. In addition, issuers of securities in which the fund invests may be
adversely affected by Year 2000-related problems. This could have an impact on
the value of the fund's investments and its share price.
Contents
THE FUND
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2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
7 Statement of Investments
8 Statement of Assets and Liabilities
9 Statement of Operations
10 Statement of Changes in Net Assets
11 Financial Highlights
13 Notes to Financial Statements
18 Report of Independent Auditors
19 Important Tax Information
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus Institutional
Short Term Treasury Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Institutional Short
Term Treasury Fund, covering the 12-month period from October 1, 1998 through
September 30, 1999. Inside, you'll find valuable information about how the fund
was managed during the reporting period, including a discussion with Gerald E.
Thunelius, the fund's portfolio manager and a member of the Dreyfus Taxable
Fixed Income Team.
The past 12 months have been highly volatile for most bonds. Although U.S.
Treasury securities began the reporting period in the wake of a rally caused
primarily by a "flight to quality" amid the spread of the global financial
crisis in overseas markets, most higher yielding sectors of the bond market had
declined sharply. The Federal Reserve Board responded to the global financial
crisis last fall by reducing short-term interest rates. Their strategy
apparently was effective, and the U.S. economy remained strong through the
remainder of the reporting period.
Because inflation is more likely to rise in a strong economy, the bond market
overall -- including U.S. Treasury securities -- declined during the first nine
months of 1999. To help forestall a rise of inflation, the Federal Reserve Board
raised short-term interest rates twice during the summer of 1999, effectively
reversing most of last fall's interest-rate cuts. Higher interest rates led to
some erosion of bond prices, especially among the higher yielding market
sectors. In this environment, however, the yields of many higher yielding bonds
- -- including corporate bonds and U.S. government agency securities -- have
recently been quite attractive compared to the yields of U.S. Treasury
securities of comparable maturity.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Institutional Short Term Treasury Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
October 15, 1999
DISCUSSION OF FUND PERFORMANCE
Gerald E. Thunelius, Portfolio Manager
Dreyfus Taxable Fixed Income Team
How did Dreyfus Institutional Short Term Treasury Fund perform relative to its
benchmark?
For the 12-month period ended September 30, 1999, the fund produced a total
return of 2.92% for Institutional shares and 2.68% for Investor shares.(1) This
compares with a 3.23% return provided by the fund's benchmark, the Merrill Lynch
U.S. Treasury 1-3 Years Index, for the same period.(2)
We attribute the fund's performance to the fact that we did not fully
participate in the bond rally that occurred last fall, when the yield on the
two-year Treasury note dropped to 4.15% . In addition, because this is a
conservative fund and we were anticipating adverse interest-rate moves during
much of the 12-month period, we maintained a shorter average duration than the
benchmark for most of the 12 months. However, with two-year Treasury notes
currently yielding close to 5.75% , we have begun extending duration on the
portfolio to take advantage of attractive yields.
What is the fund's investment approach?
The fund seeks to provide a high level of current income with minimum
fluctuation of principal. To pursue this goal, the fund purchases only U.S.
Treasury securities, and may enter into repurchase agreements collateralized by
such securities. To help minimize fluctuations of principal, the fund will limit
the remaining maturities of the U.S. Treasury securities it purchases to three
years or less and its repurchase agreements to those that mature the next
business day. The portfolio's dollar-weighted average maturity will not exceed
two years. Normally the fund targets a 1.5 year duration.
When selecting individual U.S. Treasury securities for the fund, we examine U.S.
and global economic conditions and other market factors to determine the likely
direction of long- and short-term interest rates. We then adjust the portfolio's
average duration -- a measure of sensitivity to changing interest rates -- in an
attempt to lock in prevailing yields if interest rates are falling, or to make
cash available for the purchase of higher yielding securities if interest rates
are rising.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
What other factors influenced the fund's performance?
At the beginning of the fund's 12-month reporting period, the global equity
markets were in the midst of a crisis that created a "flight to quality" in
which many investors flocked to the safety provided by U.S. Treasury securities.
In an effort to stimulate global economic growth, the Federal Reserve Board
reduced short-term interest rates by a total of 75 basis points in three
separate moves in October and November, 1998. However, by the end of the year
and into the first quarter of 1999, many analysts were surprised to see signs
that the Asian economies were beginning to recover. As a result, investors
became concerned that the Federal Reserve Board might take back some of last
fall's interest-rate cuts.
Toward the end of the second quarter, many global economies appeared to be
recovering. Commodity prices, particularly oil prices, began to climb,
indicating that many emerging market countries were using raw materials to
revitalize their industrial growth. The rise in commodity prices signaled the
end of the "flight to quality" for U.S. bond market investors, and investors
became more comfortable holding riskier assets. As a result, prices on U.S.
Treasury bonds began to fall.
By the end of the third quarter, commodity prices began to level off and the
U.S. Treasury market stabilized. Because of a stronger global economy and
potential inflationary pressures, the Federal Reserve Board raised short-term
interest rates twice during the summer. An additional rate hike was expected in
November, which would effectively offset all of last fall's rate cuts.
What is the fund's current strategy?
The fund has tried to emphasize a very nimble, liquid strategy. The markets have
gyrated wildly as investors tried to guess the Fed's next moves. Under normal
circumstances, the fund maintains an average duration within 10 percent of its
benchmark. As of October 31, 1999, we are at the upper end of that range.
However, there were times during the past year when the fund's average duration
was much shorter. A shorter duration protected the fund earlier in the year when
the Fed first began to indicate that interest-rate increases might be
forthcoming.
We have continued to remain vigilant, adapting quickly to the changing bond
market environment. We expect this strategy to continue to enable us to provide
investors with a competitive level of income, liquidity and preservation of
capital.
October 15, 1999
(1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND
INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST.
(2) SOURCE: BLOOMBERG L.P. --THE MERRILL LYNCH U.S. TREASURY 1-3 YEARS INDEX IS
AN UNMANAGED PERFORMANCE BENCHMARK INCLUDING ALL U.S. TREASURY NOTES AND BONDS
WITH MATURITIES GREATER THAN OR EQUAL TO ONE YEAR AND LESS THAN THREE YEARS.
BILLS, STRIPS, AND INDEX-LINKED BONDS ARE EXCLUDED.
The Fund
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FUND PERFORMANCE
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 (1-3 Years) Index
- --------------------------------------------------------------------------------
Average Annual Total Returns AS OF 9/30/99
Inception From
Date 1 Year 5 Years Inception
- -----------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL 10/29/93 2.92% 6.22% 5.73%
INVESTOR 10/29/93 2.68% 5.96% 5.56%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
* SOURCE: MERRILL LYNCH, PIERCE, FENNER AND SMITH INC.
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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 (1-3 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 (1-3 YEARS) INDEX IS AN UNMANAGED
PERFORMANCE BENCHMARK FOR TREASURY SECURITIES WITH MATURITIES OF 1-3 YEARS;
ISSUES IN THE INDEX MUST HAVE PAR AMOUNTS OUTSTANDING GREATER THAN OR EQUAL TO
$1 BILLION. THE INDEX DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER
EXPENSES. FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE
REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION
OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
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STATEMENT OF INVESTMENTS
September 30, 1999
Principal
BONDS AND NOTES--83.3% Amount ($) Value ($)
- --------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--74.0%
5.25%, 5/31/2001 2,000,000 1,988,540
5.5%, 7/31/2001 6,000,000 5,987,100
5.5%, 8/31/2001 13,000,000 12,971,270
6%, 7/31/2002 1,000,000 1,007,640
6.5%, 5/31/2002 2,000,000 2,037,840
7.5%, 5/15/2002 10,000,000 10,429,200
34,421,590
U.S. TREASURY PRINCIPAL STRIPS--9.3%
Zero Coupon, 5/15/2002 5,000,000 4,312,600
TOTAL BONDS AND NOTES
(cost $38,871,295) 38,734,190
SHORT-TERM INVESTMENTS--15.1%
- --------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--2.6%
UBS Securities, 5.22%
dated 9/30/1999, due 10/1/1999
in the amount of $1,200,174
(fully collateralized by $1,199,000 U.S. Treasury Notes,
7.75%, 1/31/2000, value $1,239,882) 1,200,000 1,200,000
U.S. TREASURY BILLS--12.5%
4.92%, 1/27/2000 5,920,000 5,828,595
TOTAL SHORT-TERM INVESTMENTS
(cost $7,024,530) 7,028,595
TOTAL INVESTMENTS (cost $45,895,825) 98.4% 45,762,785
CASH AND RECEIVABLES (NET) 1.6% 740,219
NET ASSETS 100.0% 46,503,004
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
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STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999
Cost Value
- ------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments--Note 1(b) 45,895,825 45,762,785
Cash 237,290
Interest receivable 489,245
Receivable for shares of Beneficial Interest subscribed 33,700
46,523,020
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 7,923
Due to Distributor 2,993
Payable for shares of Beneficial Interest redeemed 9,100
20,016
NET ASSETS ($) 46,503,004
COMPOSITION OF NET ASSETS ($):
Paid-in capital 50,052,485
Accumulated net realized gain (loss) on investments (3,416,441)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 (133,040)
NET ASSETS ($) 46,503,004
==============================================================================
NET ASSET VALUE PER SHARE
Institutional Shares Investor Shares
- --------------------------------------------------------------------------------
Net Assets ($) 31,860,331 14,642,673
Shares Outstanding 16,225,286 7,414,722
NET ASSET VALUE PER SHARE ($) 1.96 1.97
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
Year Ended September 30, 1999
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INVESTMENT INCOME ($):
INTEREST INCOME 3,620,654
EXPENSES:
Management fee--Note 3(a) 129,405
Distribution fees (Investor Shares)--Note 3(b) 29,668
Loan commitment fees--Note 2 370
TOTAL EXPENSES 159,443
INVESTMENT INCOME--NET 3,461,211
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4 ($):
Net realized gain (loss) on investments (605,246)
Net unrealized appreciation (depreciation) on investments (1,016,374)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (1,621,620)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,839,591
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended September 30,
--------------------------------
1999 1998
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OPERATIONS ($):
Investment income--net 3,461,211 7,314,056
Net realized gain (loss) on investments (605,246) 735,426
Net unrealized appreciation (depreciation)
on investments (1,016,374) 740,452
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,839,591 8,789,934
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Institutional Shares (2,848,674) (5,910,338)
Investor Shares (612,537) (1,403,718)
TOTAL DIVIDENDS (3,461,211) (7,314,056)
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold:
Institutional Shares 11,174,934 21,307,797
Investor Shares 10,873,127 25,627,049
Dividends reinvested:
Institutional Shares 1,537,269 3,831,233
Investor Shares 474,861 1,145,340
Cost of shares redeemed:
Institutional Shares (44,681,614) (79,327,433)
Investor Shares (6,713,129) (51,998,655)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (27,334,552) (79,414,669)
TOTAL INCREASE (DECREASE) IN NET ASSETS (28,956,172) (77,938,791)
NET ASSETS ($):
Beginning of Period 75,459,176 153,397,967
END OF PERIOD 46,503,004 75,459,176
CAPITAL SHARE TRANSACTIONS:
INSTITUTIONAL SHARES
Shares sold 5,642,770 10,748,506
Shares issued for dividends reinvested 775,200 1,932,106
Shares redeemed (22,600,748) (39,942,147)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (16,182,778) (27,261,535)
INVESTOR SHARES
Shares sold 5,446,533 12,870,169
Shares issued for dividends reinvested 238,378 574,808
Shares redeemed (3,357,193) (26,074,097)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 2,327,718 (12,629,120)
SEE NOTES TO FINANCIAL STATEMENTS.
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FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. Certain information reflects financial results for a
single fund share. Total return shows how much your investment in the fund would
have increased (or decreased) during each period, assuming you had reinvested
all dividends and distributions. These figures have been derived from the fund's
financial statements.
Year Ended September 30,
---------------------------------------------------------
INSTITUTIONAL SHARES 1999 1998 1997(a) 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 2.01 1.98 1.98 1.99 1.96
Investment Operations:
Investment income--net .11 .12 .12 .13 .13
Net realized and unrealized gain (loss)
on investments (.05) .03 -- (.01) .03
Total from Investment Operations .06 .15 .12 .12 .16
Distributions:
Dividends from investment income--net (.11) (.12) (.12) (.13) (.13)
Net asset value, end of period 1.96 2.01 1.98 1.98 1.99
TOTAL RETURN (%) 2.92 7.56 6.23 6.03 8.45
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .20 .20 .20 .20 .20
Ratio of net investment income
to average net assets 5.39 5.81 6.04 6.40 6.48
Portfolio Turnover Rate 823.06 756.50 952.81 694.24 1,926.32
Net Assets, end of period ($x1,000) 31,860 65,163 118,102 170,290 160,748
(a) EFFECTIVE FEBRUARY 2, 1997, CLASS A SHARES WERE REDESIGNATED AS INSTITUTIONAL SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Year Ended September 30,
-----------------------------------------------------------
INVESTOR SHARES 1999 1998 1997(a) 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 2.02 1.99 1.99 2.00 1.97
Investment Operations:
Investment income--net .10 .11 .12 .12 .13
Net realized and unrealized gain (loss)
on investments (.05) .03 -- (.01) .03
Total from Investment Operations .05 .14 .12 .11 .16
Distributions:
Dividends from investment income--net (.10) (.11) (.12) (.12) (.13)
Net asset value, end of period 1.97 2.02 1.99 1.99 2.00
TOTAL RETURN (%) 2.68 7.30 5.97 5.76 8.17
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .45 .45 .45 .45 .45
Ratio of net investment income
to average net assets 5.16 5.57 5.83 6.13 6.35
Portfolio Turnover Rate 823.06 756.50 952.81 694.24 1,926.32
Net Assets, end of period ($x1,000) 14,643 10,296 35,296 24,490 5,964
(a) EFFECTIVE FEBRUARY 2, 1997, CLASS B SHARES WERE REDESIGNATED AS INVESTOR SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
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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 charge. 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 other than U.S. Treasury Bills) are valued each business day by an
independent pricing service ("Service") approved by the Board of Trustees.
Investments 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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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 $2,370,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to September 30, 1999. This
amount is calculated based on Federal income tax regulations which may differ
from financial reporting in accordance with generally accepted accounting
principles. If not applied, $266,000 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 (the "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, 1999, 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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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, 1999, the fund was charged $29,668 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, 1999, amounted to
$466,248,284 and $500,457,210, respectively.
At September 30, 1999, accumulated net unrealized depreciation on investments
was $133,040, consisting of $10,924 gross unrealized appreciation and $143,964
gross unrealized depreciation.
At September 30, 1999, 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).
The Fund
REPORT OF 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, 1999, 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, 1999 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, 1999, 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 1, 1999
IMPORTANT TAX INFORMATION (Unaudited)
For State individual income tax purposes, the fund hereby designates 94.79% of
the ordinary income dividends paid during its fiscal year ended September 30,
1999 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.
The Fund
NOTES
For More Information
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE Call 1-800-645-6561
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to [email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 1999 Dreyfus Service Corporation 680/721AR999
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 (1-3 YEARS) INDEX
EXHIBIT A:
DREYFUS DREYFUS
MERRILL INSTITUTIONAL INSTITUTIONAL
LYNCH SHORT SHORT
GOVERNMENTS, TERM TERM
U.S. TREASURY, TREASURY TREASURY
SHORT-TERM FUND FUND
(1-3 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
9/30/99 13,754,666 13,906,253 13,773,194
* Source: Merrill Lynch, Pierce, Fenner and Smith Inc.
