Dreyfus Institutional
Short Term
Treasury Fund
Investing for current income with minimum fluctuation of principal
PROSPECTUS February 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
The Fund
Dreyfus Institutional Short Term Treasury Fund
---------------------------------------------
Ticker Symbols INSTITUTIONAL SHARES: DRIAX
INVESTOR SHARES: DRIBX
Contents
The Fund
- --------------------------------------------------------------------------------
Goal/Approach INSIDE COVER
Main Risks 1
Past Performance 1
Expenses 2
Management 3
Financial Highlights 4
Your Investment
- --------------------------------------------------------------------------------
Account Policies 5
Distributions and Taxes 6
Services for Fund Investors 7
Instructions for Accounts 8
For More Information
- --------------------------------------------------------------------------------
INFORMATION ON THE FUND'S RECENT STRATEGIES AND HOLDINGS CAN BE FOUND IN THE
CURRENT ANNUAL/SEMIANNUAL REPORT. SEE BACK COVER.
THE FUND IS DESIGNED FOR INSTITUTIONAL INVESTORS. FUND SHARES MAY NOT BE
PURCHASED DIRECTLY BY INDIVIDUALS, ALTHOUGH INSTITUTIONS MAY PURCHASE SHARES FOR
ACCOUNTS MAINTAINED BY INDIVIDUALS. SEE "ACCOUNT POLICIES" FOR MORE INFORMATION
GOAL/APPROACH
The fund seeks 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 Treasury securities it purchases to three years or
less and its repurchase agreements to those that mature the next business day;
the dollar-weighted average maturity of its portfolio is not expected to exceed
two years.
The fund is intended for investors who are seeking a high level of current
income from their investments. Because of potential fluctuations in the fund's
share price, the fund may be inappropriate for short-term investors who require
maximum stability of principal.
Concepts to understand
U.S. TREASURY SECURITIES: negotiable debt obligations of the U.S. government,
secured by its full faith and credit and issued at various interest rates and
maturities. The income from U.S. Treasury securities is exempt from state and
local, but not federal, taxes.
REPURCHASE AGREEMENT: agreement between a seller and the fund as buyer whereby
the seller agrees to repurchase a security at an agreed upon time and price.
Dividends and distributions attributable to interest from repurchase agreements
may be subject to state and local taxes.
AVERAGE WEIGHTED MATURITY: the length of time, in days or years, until the
securities held by the fund, on average, will mature, or be redeemed by the
issuer. The average maturity is weighted according to the dollar amounts
invested by the fund in the various securities. In general, the longer a fund's
average weighted maturity, the more its share price will fluctuate in response
to changing interest rates.
MAIN RISKS
Prices of bonds tend to move inversely with changes in interest rates. While a
rise in rates may allow the fund to invest for higher yields, the most immediate
effect is usually a drop in bond prices, and therefore in the fund's share
price. A security backed by the U.S. Treasury or the full faith and credit of
the United States is guaranteed only as to the timely payment of interest and
principal when held to maturity. Neither the market value of such securities nor
the fund's share price is guaranteed. Although the fund seeks to maintain
minimum fluctuation of principal value, it is possible to lose money by
investing in the fund.
Other potential risks
Repurchase agreements involve the risk of a default or insolvency of the other
party to the agreement, including possible delays or restrictions upon the
fund's ability to dispose of the underlying securities.
The fund also may enter into reverse repurchase agreements that are subject to
interest costs which may not be recovered by appreciation of the securities
purchased.
The fund may lend its portfolio securities to brokers, dealers and other
financial institutions, which could subject the fund to risk of loss if the
institution breaches its agreement with the fund.
PAST PERFORMANCE
The tables below show some of the risks of investing in the fund. The first
table shows the changes in the performance of the fund's Institutional shares
from year to year. The second table compares the performance of each of the
fund's share classes over time to that of the Merrill Lynch Governments, U.S.
Treasury, Short-Term Index, an unmanaged performance benchmark for Treasury
securities with maturities of 1-3 years and par amounts outstanding of $1
billion or more. Both tables assume reinvestment of dividends and distributions.
Of course, past performance is no guarantee of future results.
- --------------------------------------------------------------------------------
Year-by-year total return AS OF 12/31 EACH YEAR (%)
INSTITUTIONAL SHARES
3.57 10.00 4.94 6.28 6.90 2.88
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
BEST QUARTER: Q2 '95 +3.31%
WORST QUARTER: Q1 '94 +0.25%
- --------------------------------------------------------------------------------
Average annual total return AS OF 12/31/99
<TABLE>
Since
inception
1 Year 5 Years (10/29/93)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INSTITUTIONAL SHARES 2.88% 6.17% 5.64%
INVESTOR SHARES 2.64% 6.02% 5.46%
MERRILL LYNCH
GOVERNMENTS,
U.S. TREASURY,
SHORT-TERM INDEX 3.06% 6.50% 5.41%*
* FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 10/31/93 IS USED AS THE
BEGINNING VALUE ON 10/29/93.
</TABLE>
What this fund is -- and isn't
This fund is a mutual fund: a pooled investment that is professionally managed
and gives you the opportunity to participate in financial markets. It strives to
reach its stated goal, although as with all mutual funds, it cannot offer
guaranteed results.
An investment in this fund is not a bank deposit. It is not insured or
guaranteed by the FDIC or any other government agency. It is not a complete
investment program. You could lose money in this fund, but you also have the
potential to make money.
The Fund 1
<PAGE 1>
EXPENSES
Fund investors pay certain fees and expenses in connection with the fund, which
are described in the table below. Annual fund operating expenses are paid out of
fund assets, so their effect is included in the fund's share price.
Fee table
Institutional Investor
shares shares
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
% OF AVERAGE DAILY NET ASSETS
Management fees 0.20 0.20
Rule 12b-1 fee (distribution and service) NONE 0.25
Other expenses NONE NONE
- --------------------------------------------------------------------------------
TOTAL 0.20 0.45
Expense example
Institutional Investor
shares shares
- --------------------------------------------------------------------------------
1 Year $20 $46
3 Years $64 $144
5 Years $113 $252
10 Years $255 $567
This example shows what an investor could pay in expenses over time. It uses the
same hypothetical conditions other funds use in their prospectuses: $10,000
initial investment, 5% total return each year and no changes in expenses. The
figures shown would be the same whether the investors sold their shares at the
end of the period or kept them. Because actual returns and expenses will be
different, the example is for comparison only.
Concepts to understand
MANAGEMENT FEE: the fee paid to Dreyfus for managing the fund's portfolio and
assisting in all aspects of the fund's operations.
RULE 12B-1 FEE: a fee paid to the fund's distributor for distributing Investor
shares, and to Dreyfus and its affiliates for advertising and marketing related
to Investor shares and for providing services related to the maintenance of
shareholder accounts. Because this fee is paid out of the fund's assets on an
ongoing basis, over time it will increase the cost of your investment and may
cost you more than paying other types of sales charges.
OTHER EXPENSES: Dreyfus has agreed to pay certain expenses other than the
management fee and, with respect to Investor shares, Rule 12b-1 fees. This
understanding is voluntary and may be terminated at any time upon at least 90
days' prior notice to investors (but Dreyfus has committed not to do so at least
through September 30, 2000).
2
<PAGE 2>
MANAGEMENT
The fund's investment adviser is The Dreyfus Corporation, 200 Park Avenue, New
York, New York 10166. Founded in 1947, Dreyfus manages more than $120 billion in
over 160 mutual fund portfolios. Dreyfus is the primary mutual fund business of
Mellon Financial Corporation, a global financial services company with
approximately $2.5 trillion of assets under management, administration or
custody, including approximately $450 billion under management. Mellon provides
wealth management, global investment services and a comprehensive array of
banking services for individuals, businesses and institutions. Mellon is
headquartered in Pittsburgh, Pennsylvania.
The Dreyfus asset management philosophy is based on the belief that discipline
and consistency are important to investment success. For each fund, Dreyfus
seeks to establish clear guidelines for portfolio management and to be
systematic in making decisions. This approach is designed to provide each fund
with a distinct, stable identity.
The fund's primary portfolio manager is Gerald E. Thunelius. He has held that
position since June 1994 and has been employed by Dreyfus since May 1989.
Dreyfus has a personal securities trading policy (the "Policy") which restricts
the personal securities transactions of its employees. Its primary purpose is to
ensure that personal trading by Dreyfus employees does not disadvantage any
Dreyfus-managed fund. Dreyfus portfolio managers and other investment personnel
who comply with the Policy's preclearance and disclosure procedures may be
permitted to purchase, sell or hold certain types of securities which also may
be or are held in the fund(s) they advise.
Concepts to understand
YEAR 2000 ISSUES: the fund could be adversely affected if the computer systems
used by Dreyfus and the fund's other service providers do not properly process
and calculate date-related information from and after January 1, 2000.
Dreyfus has taken steps designed to avoid year 2000-related problems in its
systems and to monitor the readiness of other service providers. 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.
The Fund 3
<PAGE 3>
FINANCIAL HIGHLIGHTS
The following tables describe the performance of each share class for the fiscal
periods indicated. "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
independently audited by Ernst & Young LLP, whose report, along with the fund's
financial statements, is included in the annual report.
<TABLE>
YEAR ENDED SEPTEMBER 30,
INSTITUTIONAL SHARES 1999 1998 1997(1) 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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 ($ x 1,000) 31,860 65,163 118,102 170,290 160,748
(1) EFFECTIVE FEBRUARY 2, 1997, CLASS A SHARES WERE REDESIGNATED AS INSTITUTIONAL SHARES.
YEAR ENDED SEPTEMBER 30,
INVESTOR SHARES 1999 1998 1997(1) 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA ($)
Net asset value, beginning of period 2.02 1.99 1.99 2.00 1.97
Investment operations: Investment income -- net .10 .11 .12 .12 .13
Net realized and unrealized gain (loss)
on investments (.05) .03 -- (.01) .03
Total from investment operations .05 .14 .12 .11 .16
Distributions: Dividends from investment income -- net (.10) (.11) (.12) (.12) (.13)
Net asset value, end of period 1.97 2.02 1.99 1.99 2.00
Total return (%) 2.68 7.30 5.97 5.76 8.17
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets (%) .45 .45 .45 .45 .45
Ratio of net investment income to average net assets (%) 5.16 5.57 5.83 6.13 6.35
Portfolio turnover rate (%) 823.06 756.50 952.81 694.24 1,926.32
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ x 1,000) 14,643 10,296 35,296 24,490 5,964
(1) EFFECTIVE FEBRUARY 2, 1997, CLASS B SHARES WERE REDESIGNATED AS INVESTOR SHARES.
</TABLE>
4
<PAGE 4>
Investor Account Information
ACCOUNT POLICIES
THE FUND OFFERS TWO CLASSES OF SHARES --Institutional shares and Investor
shares.
THE FUND IS DESIGNED for institutional investors, particularly banks, acting for
themselves or in a fiduciary, advisory, agency, custodial or similar capacity.
Fund shares may not be purchased directly by individuals, although institutions
may purchase shares for accounts maintained by individuals. Generally, each
investor will be required to open a single master account with the fund for all
purposes. In certain cases, the fund may request investors to maintain separate
master accounts for shares held by the investor (i) for its own account, for the
account of other institutions and for accounts for which the institution acts as
a fiduciary, and (ii) for accounts for which the investor acts in some other
capacity. An institution may arrange with the fund's transfer agent for
sub-accounting services and will be charged directly for the cost of such
services.
INSTITUTIONAL SHARES AND INVESTOR SHARES are identical, except as to the
services offered to, and the expenses borne by, each class. Holders of Investor
shares, for example, will receive certain account maintenance services pursuant
to a Service Plan adopted under Rule 12b-1 of the 1940 Act that are not provided
to holders of Institutional shares. Generally, these services will include the
provision of a consolidated statement and checkwriting privileges. Under the
Service Plan, the fund pays distribution and service fees at the annual rate of
0.25% of the average daily net assets attributable to Investor shares.
Buying shares
FUND SHARES ARE SOLD AT NET ASSET VALUE per share ("NAV"), which generally is
calculated as of the close of trading on the New York Stock Exchange (usually
4:00 p.m. Eastern time) every day the exchange is open. Purchase orders will be
priced at the next NAV calculated after the order is accepted by the fund's
transfer agent or other authorized entity. The fund's investments are valued
generally by using available market quotations or at fair value which may be
determined by one or more pricing services approved by the fund's board.
INVESTORS WILL NEED TO CHOOSE a share class before making an initial investment.
All investments must be in U.S. dollars. Third-party checks cannot be accepted.
An investor may be charged a fee for any check that does not clear.
- --------------------------------------------------------------------------------
Minimum investments
Initial Additional
- --------------------------------------------------------------------------------
INSTITUTIONAL SHARES $10,000,000* NONE
INVESTOR SHARES $10,000,000* NONE
*The minimum initial investment is $10,000,000, unless: (a) the investor has
invested at least $10,000,000 in the aggregate among the fund and the Dreyfus
Cash Management Funds listed below; or (b) the investor has, in the opinion of
Dreyfus Institutional Services Division, adequate intent and availability of
assets to reach a future level of investment of $10,000,000 among the funds
identified below.
The Dreyfus Cash Management Funds include:
* Dreyfus Cash Management
* Dreyfus Cash Management Plus, Inc.
* Dreyfus Government Cash Management
* Dreyfus Government Prime Cash Management
* Dreyfus New York Municipal Cash Management
* Dreyfus Municipal Cash Management Plus
* Dreyfus Tax Exempt Cash Management
* Dreyfus Treasury Cash Management
* Dreyfus Treasury Prime Cash Management
Investor Account Information 5
<PAGE 5>
ACCOUNT POLICIES (CONTINUED)
Selling shares
INVESTORS MAY SELL (REDEEM) THEIR SHARES at any time. An investor's shares will
be sold at the next NAV calculated after the investor's order is accepted by the
fund's transfer agent or other authorized entity. Any share certificates
representing fund shares being sold must be returned with the redemption
request. An investor's order will be processed promptly and the investor
generally will receive the proceeds within a week.
IF AN INVESTOR'S ORDER IS RECEIVED in proper form by Dreyfus Institutional
Services Division, or other authorized entity, by 4:00 p.m. Eastern time, the
shares will receive the dividend declared on that day, and the proceeds of the
sale ordinarily will be transmitted in federal funds on the next business day.
General policies
UNLESS THE INVESTOR declines telephone privileges, the investor may be
responsible for any fraudulent telephone orders as long as Dreyfus takes
reasonable measures to verify the order.
THE FUND RESERVES THE RIGHT TO:
* change or discontinue its exchange privilege, or temporarily suspend the
privilege during unusual market conditions
* change its minimum investment amounts
* delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions or during unusual market
conditions)
The fund also may make a "redemption in kind" -- payment in portfolio securities
rather than cash -- if the amount the investor is redeeming is large enough to
affect fund operations (for example, if it represents more than 1% of the fund's
assets).
DISTRIBUTIONS AND TAXES
THE FUND GENERALLY PAYS ITS SHAREHOLDERS dividends from its net investment
income once a month, and distributes any net capital gains it has realized once
a year. Distributions will be reinvested in fund shares unless the investor
instructs the fund otherwise. There are no fees or sales charges on
reinvestments.
EACH SHARE CLASS will generate a different dividend because each has different
expenses.
FUND DIVIDENDS AND DISTRIBUTIONS ARE TAXABLE to most investors (unless the fund
shares are held in a tax-deferred account). The tax status of any distribution
is the same regardless of how long an investor has been in the fund and whether
the investor reinvests distributions or takes them in cash. In general,
distributions are federally taxable as follows:
- --------------------------------------------------------------------------------
Taxability of distributions
Type of Tax rate for Tax rate for
distribution 15% bracket 28% bracket or above
- --------------------------------------------------------------------------------
INCOME ORDINARY ORDINARY
DIVIDENDS INCOME RATE INCOME RATE
SHORT-TERM ORDINARY ORDINARY
CAPITAL GAINS INCOME RATE INCOME RATE
LONG-TERM
CAPITAL GAINS 10% 20%
Dividends attributable to interest from direct obligations of the United States
currently are not subject to state personal income tax. Dividends attributable
to interest from the entry into repurchase agreements may be subject to state
tax.
Because each investor's tax situation is unique, each investor should consult
his or her tax professional about federal, state and local tax consequences.
Taxes on transactions
Except between tax-deferred accounts, any sale or exchange of fund shares may
generate a tax liability. Of course, withdrawals or distributions from
tax-deferred accounts are taxable when received.
The table above also may be a guide for potential tax liability when selling or
exchanging fund shares. "Short-term capital gains" applies to fund shares sold
or exchanged up to 12 months after buying them. "Long-term capital gains"
applies to shares sold or exchanged after 12 months.
6
<PAGE 6>
SERVICES FOR FUND INVESTORS
Exchange privilege
INVESTORS MAY PURCHASE, IN EXCHANGE for Institutional shares or Investor shares
of the fund, shares of the same class of the Dreyfus Cash Management Funds
designated herein, which have different investment objectives that may be of
interest to investors. Investors should read the current prospectus for any fund
into which they are exchanging before investing. Any new account established
through an exchange will have the same privileges as the original account (as
long as they are available). There is currently no fee for exchanges.
Dreyfus Auto-Exchange privilege
DREYFUS AUTO-EXCHANGE PRIVILEGE ENABLES an investor to invest regularly (on a
semi-monthly, quarterly or annual basis), in exchange for Institutional shares
or Investor shares of the fund, in shares of the same class of the Dreyfus Cash
Management Funds designated herein, if the investor is a shareholder in such
fund. There is currently no fee for this privilege.
Account statements
EVERY FUND INVESTOR AUTOMATICALLY RECEIVES regular account statements. Each
investor also will be sent a yearly statement detailing the tax characteristics
of any dividends and distributions the investor has received.
Investor Account Information 7
<PAGE 7>
INSTRUCTIONS FOR ACCOUNTS
TO OPEN AN ACCOUNT
By Telephone
WIRE Transmit your investment to The
Bank of New York, with these instructions:
* ABA# 021000018
* DDA# 8900118458
* the fund name
* fund number:
Institutional shares: 721
Investor shares: 680
* the investor's tax ID or
Social Security number
* account registration
* dealer code (if applicable)
Attn: Lion System
Call us to obtain an account number.
Return a completed application.
Via Computer Facilities
Access Lion Remote System, input new
account data and retrieve account
number for your records.
TO ADD TO AN ACCOUNT
WIRE Transmit your investment to The
Bank of New York, with these instructions
* ABA# 021000018
* DDA# 8900118458
* fund number:
Institutional shares: 721
Investor shares: 680
* the fund name
* account number
* account registration
* dealer code (if applicable)
Attn: Lion System
Access Lion Remote System.
Enter:
* account number
* fund number:
Institutional shares: 721
Investor shares: 680
* amount to buy
Print a report of transactions
for your records.
TO SELL SHARES
WIRE Be sure the fund has your bank account
information on file. Call us to request your
transaction. Proceeds will be wired to
your bank.
Access Lion Remote System, confirm bank
account information or select from
multiple wire instructions. Enter:
* account number
* fund number:
Institutional shares: 721
Investor shares: 680
* amount to sell
Print a report of transactions for
your records.
To open an account, make subsequent investments or to sell shares, please
contact your Dreyfus Sales Representative or 1-800-346-3621. In New York, call
1-718-895-1650. Make checks payable to: THE DREYFUS FAMILY OF FUNDS.
THE DREYFUS LION REMOTE SYSTEM provides institutional investment managers with
the ability to monitor, control and service their Dreyfus mutual fund accounts
through their personal computer. Investment managers use their modem with a
local access dial up network or use their Internet access with a digital
certificate for 128-bit encryption security.
PLEASE CALL A DREYFUS REPRESENTATIVE AT 1-800-221-1295
or access our Internet site at WWW.LIONSALES.COM for more information.
Concepts to understand
WIRE TRANSFER: for transferring money from one financial institution to another.
Wiring is the fastest way to move money, although your bank may charge a fee to
send or receive wire transfers.
8
<PAGE 8>
[This page intentionally left blank.]
For More Information
Dreyfus Institutional
Short Term Treasury Fund
- --------------------------------------
SEC file number: 811-7097
More information on this fund is available free upon request, including the
following:
Annual/Semiannual Report
Describes the fund's performance, lists portfolio holdings and contains a letter
from the fund's manager discussing recent market conditions, economic trends
and fund strategies that significantly affected the fund's performance during
the last fiscal year.
Statement of Additional Information (SAI)
Provides more details about the fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
BY TELEPHONE
Call your financial representative or 1-888-454-6642
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
ON THE INTERNET Text-only versions of fund documents
can be viewed online or downloaded from:
http://www.sec.gov
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009.
(c) 2000 Dreyfus Service Corporation
721P0200
