Dreyfus
Institutional Short
Term Treasury Fund
ANNUAL REPORT
September 30, 2000
(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
Contents
THE FUND
--------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
8 Statement of Investments
9 Statement of Assets and Liabilities
10 Statement of Operations
11 Statement of Changes in Net Assets
13 Financial Highlights
15 Notes to Financial Statements
20 Report of Independent Auditors
21 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, 1999 through
September 30, 2000. Inside, you'll find valuable information about how the fund
was managed during the reporting period, including a discussion with Gerald E.
Thunelius, portfolio manager and member of the Dreyfus Taxable Fixed Income Team
that manages the fund.
Bond prices have been mixed over the past 12 months with prices of U.S. Treasury
securities generally ending the period higher while investment-grade corporate
bond prices ended the period at modestly lower levels than where they began.
More recently, most sectors of the U.S. bond market have been affected by
slowing economic growth. Additionally, the moderating effects of the Federal
Reserve Board's (the "Fed") interest-rate hikes during the first half of 2000
helped the Fed to achieve its goal of slowing the U.S. economy. Other factors
such as higher energy prices and a weak euro also served to slow economic
growth.
In general, the overall investment environment that prevailed in the second half
of the 1990s had provided returns well above their long-term averages,
establishing unrealistic expectations for some investors. We believe that as the
risks of the stock market have become more apparent, the relative stability and
income potential of municipal bonds can make them an attractive investment as
part of a well-balanced portfolio.
For more information about the economy and financial markets, we encourage you
to visit the Market Commentary section of our website at www.dreyfus.com. Or, to
speak with a Dreyfus customer service representative, call us at 1-800-782-6620
Thank you for investing in Dreyfus Institutional Short Term Treasury Fund.
Sincerely,
/s/Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
October 16, 2000
DISCUSSION OF FUND PERFORMANCE
Gerald E. Thunelius, Portfolio Manager Dreyfus Taxable Fixed Income Team
How did Dreyfus Institutional Short Term Treasury Fund perform during the
period?
For the 12-month period ended September 30, 2000, the fund's Institutional
shares produced a total return of 5.68% and income dividends of $0.1078 per
share. The fund's Investor shares produced a total return of 5.42% and income
dividends of $0.1036 per share.(1) This compares with the total return of 5.79%
provided by the fund's benchmark, the Merrill Lynch Governments, U.S. Treasury,
Short-Term (1-3 Years) Index, for the same period.(2)
We attribute the fund's competitive absolute performance to favorable
supply-and-demand factors within the U.S. Treasury securities marketplace.
Because of the federal budget surplus, the government is issuing fewer
short-term securities, resulting in a reduction in available supply. At the same
time, demand has remained robust from domestic and foreign investors seeking a
safe haven amid volatility in the longer term financial markets.
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 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 does not exceed two years.
What other factors influenced the fund's performance?
When the reporting period began on October 1, 1999, the U.S. economy continued
to grow strongly, raising concerns that long-dormant
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
inflationary pressures might reemerge. In response, the Federal Reserve Board
(the "Fed") raised short-term interest rates once in late 1999 and three times
during the first half of 2000 for a total increase of 1.25 percentage points
during the reporting period. Soon thereafter, however, signs emerged that the
Fed's previous rate hikes were having the desired effect of slowing the economy,
suggesting that the Fed's restrictive monetary policies could be near an end.
Throughout most of the reporting period, short-term U.S. Treasury bills provided
higher yields than long-term U.S. Treasury bonds, a reversal of more typical
yield relationships commonly known as an inverted yield curve. This was a result
of a supply-and-demand imbalance that was unique to the U.S. Treasury securities
market. Investors were faced with a decline in the volume of new issuance,
resulting in a smaller available supply of U.S. Treasury securities. At the same
time, demand for U.S. Treasury securities rose as the world's stock markets
became more volatile and investors sought the relative safety of
government-backed bonds. This unusual environment benefited the fund's holdings
of short-term U.S. Treasury securities.
Changes to the portfolio during the reporting period included an increase in our
holdings of inflation-indexed U.S. Treasury securities, which are more likely to
potentially increase in price when inflationary pressures threaten, as they did
during much of the reporting period. This strategy helped boost the fund's
returns incrementally. In addition, we generally maintained the fund's average
effective duration -- a measure of sensitivity to changing interest rates -- at
less than two years. This enabled us to capture higher yields for as long as
practical while leaving us enough flexibility to take advantage of even higher
yields as they became available.
What is the fund's current strategy?
Because the economy has slowed recently, suggesting that the Fed is probably
finished with the current cycle of interest-rate hikes, the differences in
yields between long-term U.S. Treasury bonds and short-term U.S. Treasury bills
have moderated. Nonetheless, as of September 30, 2000, U.S. Treasury bills with
maturities of less than two years continued to provide higher yields than
30-year U.S. Treasury bonds.
If the economy continues to slow, we expect these yield differences to moderate
further. We also expect to reduce our holdings of inflation-indexed U.S.
Treasury securities if the economic slowdown continues or intensifies.
October 16, 2000
(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: LIPPER INC. -- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE MERRILL LYNCH GOVERNMENTS, U.S.
TREASURY, SHORT-TERM (1-3 YEARS) INDEX IS AN UNMANAGED PERFORMANCE
BENCHMARK FOR TREASURY SECURITIES WITH MATURITIES OF ONE TO THREE YEARS;
ISSUES IN THE INDEX MUST HAVE PAR AMOUNTS OUTSTANDING GREATER THAN OR EQUAL
TO $1 BILLION.
The Fund
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
((+)) SOURCE: LIPPER INC.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000,000 INVESTMENT MADE IN EACH OF THE
INSTITUTIONAL SHARES AND INVESTOR SHARES OF DREYFUS INSTITUTIONAL SHORT TERM
TREASURY FUND ON 10/29/93 (INCEPTION DATE) TO A $10,000,000 INVESTMENT MADE IN
THE MERRILL LYNCH GOVERNMENTS, U.S. TREASURY, SHORT-TERM (1-3 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
$1 BILLION. THE INDEX DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER
EXPENSES. FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE
REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION
OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
<TABLE>
<CAPTION>
Average Annual Total Returns AS OF 9/30/00
Inception From
Date 1 Year 5 Years Inception
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INSTITUTIONAL SHARES 10/29/93 5.68% 5.67% 5.72%
INVESTOR SHARES 10/29/93 5.42% 5.41% 5.54%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Fund
STATEMENT OF INVESTMENTS
September 30, 2000
Principal
BONDS AND NOTES--89.8% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY INFLATION PROTECTION SECURITIES--6.6%
3.625%, 7/15/2002 1,251,000 (a) 1,346,766
U.S. TREASURY NOTES--61.2%
5.375%, 6/30/2003 1,000,000 985,930
5.75%, 11/30/2002 2,000,000 1,990,620
6.25%, 7/31/2002 2,000,000 2,007,500
6.25%, 8/31/2002 2,600,000 2,604,862
6.375%, 4/30/2002 4,000,000 4,017,480
6.5%, 5/31/2002 1,000,000 1,006,870
12,613,262
U.S. TREASURY PRINCIPAL STRIPS--22.0%
Zero Coupon, 5/15/2002 5,000,000 4,537,750
TOTAL BONDS AND NOTES
(cost $18,447,833) 18,497,778
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SHORT-TERM INVESTMENTS--9.8%
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REPURCHASE AGREEMENTS;
Greenwich Capital Acceptance, 6.48%
dated 9/29/2000, due 10/2/2000 in the amount of $2,016,088
(fully collateralized by $2,172,000 U.S. Treasury Bills,
8/30/2001, value $2,056,884)
(cost $2,015,000) 2,015,000 2,015,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $20,462,833) 99.6% 20,512,778
CASH AND RECEIVABLES (NET) .4% 90,260
NET ASSETS 100.0% 20,603,038
(a) PRINCIPAL AMOUNT FOR ACCRUAL PURPOSES IS PERIODICALLY ADJUSTED BASED ON
CHANGES TO THE CONSUMER PRICE INDEX.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2000
Cost Value
--------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments--Note 1(b) 20,462,833 20,512,778
Interest receivable 222,011
20,734,789
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 4,311
Cash overdraft due to Custodian 51,225
Payable for shares of Beneficial Interest redeemed 76,215
131,751
--------------------------------------------------------------------------------
NET ASSETS ($) 20,603,038
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 24,401,130
Accumulated undistributed investment income-net 3,210
Accumulated net realized gain (loss) on investments (3,851,247)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 49,945
--------------------------------------------------------------------------------
NET ASSETS ($) 20,603,038
NET ASSET VALUE PER SHARE
Institutional Investor
Shares Shares
--------------------------------------------------------------------------------
Net Assets ($) 15,881,354 4,721,684
Shares Outstanding 8,097,538 2,392,444
--------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 1.96 1.97
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended September 30, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 2,089,613
EXPENSES:
Management fee--Note 3(a) 72,636
Distribution fees (Investor Shares)--Note 3(b) 22,699
Loan commitment fees--Note 2 393
TOTAL EXPENSES 95,728
INVESTMENT INCOME--NET 1,993,885
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (434,806)
Net unrealized appreciation (depreciation) on investments 182,985
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (251,821)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,742,064
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended September 30,
---------------------------------
2000 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 1,993,885 3,461,211
Net realized gain (loss) on investments (434,806) (605,246)
Net unrealized appreciation (depreciation)
on investments 182,985 (1,016,374)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,742,064 1,839,591
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Institutional Shares (1,510,160) (2,848,674)
Investor Shares (480,515) (612,537)
TOTAL DIVIDENDS (1,990,675) (3,461,211)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold:
Institutional Shares 6,386,776 11,174,934
Investor Shares 2,817,680 10,873,127
Dividends reinvested:
Institutional Shares 880,460 1,537,269
Investor Shares 415,810 474,861
Cost of shares redeemed:
Institutional Shares (23,101,762) (44,681,614)
Investor Shares (13,050,319) (6,713,129)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (25,651,355) (27,334,552)
TOTAL INCREASE (DECREASE) IN NET ASSETS (25,899,966) (28,956,172)
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 46,503,004 75,459,176
END OF PERIOD 20,603,038 46,503,004
Undistributed investment income--net 3,210 --
The Fund
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Year Ended September 30,
---------------------------------
2000 1999
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
INSTITUTIONAL SHARES
Shares sold 3,278,387 5,642,770
Shares issued for dividends reinvested 452,514 775,200
Shares redeemed (11,858,649) (22,600,748)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (8,127,748) (16,182,778)
INVESTOR SHARES
Shares sold 1,438,812 5,446,533
Shares issued for dividends reinvested 212,481 238,378
Shares redeemed (6,673,571) (3,357,193)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (5,022,278) 2,327,718
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
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 2000 1999 1998 1997(a) 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 1.96 2.01 1.98 1.98 1.99
Investment Operations:
Investment income--net .11 .11 .12 .12 .13
Net realized and unrealized gain (loss)
on investments -- (.05) .03 - (.01)
Total from Investment Operations .11 .06 .15 .12 .12
Distributions:
Dividends from investment income--net (.11) (.11) (.12) (.12) (.13)
Net asset value, end of period 1.96 1.96 2.01 1.98 1.98
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.68 2.92 7.56 6.23 6.03
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .20 .20 .20 .20 .20
Ratio of net investment income
to average net assets 5.55 5.39 5.81 6.04 6.40
Portfolio Turnover Rate 871.42 823.06 756.50 952.81 694.24
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($x1,000) 15,881 31,860 65,163 118,102 170,290
(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 2000 1999 1998 1997(a) 1996
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value, beginning of period 1.97 2.02 1.99 1.99 2.00
Investment Operations:
Investment income--net .10 .10 .11 .12 .12
Net realized and unrealized gain (loss)
on investments -- (.05) .03 -- (.01)
Total from Investment Operations .10 .05 .14 .12 .11
Distributions:
Dividends from investment income--net (.10) (.10) (.11) (.12) (.12)
Net asset value, end of period 1.97 1.97 2.02 1.99 1.99
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.42 2.68 7.30 5.97 5.76
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .45 .45 .45 .45 .45
Ratio of net investment income
to average net assets 5.30 5.16 5.57 5.83 6.13
Portfolio Turnover Rate 871.42 823.06 756.50 952.81 694.24
------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($x1,000) 4,722 14,643 10,296 35,296 24,490
(a) EFFECTIVE FEBRUARY 2, 1997, CLASS B SHARES WERE REDESIGNATED AS INVESTOR SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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"), which is a wholly-owned subsidiary of Mellon Financial Corporation.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), became the
distributor of the fund's shares, which are sold without a sales charge. Prior
to March 22, 2000, Premier Mutual Fund Services, Inc., was the distributor of
the fund's shares. The fund is authorized to issue an unlimited number of $.001
par value shares in the following classes of shares: Institutional Shares and
Investor Shares. Investor Shares are subject to a Service Plan adopted pursuant
to Rule 12b-1 under the Act. Other differences between the classes include the
services offered to and the expenses borne by each class and certain voting
rights.
The fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 fund
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 $3,593,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to September 30, 2000. 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, $2,055,000 expires in fiscal 2005 and $1,223,000
expires in fiscal 2008.
NOTE 2--Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $500 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, 2000, 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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
expenses, exclusive of taxes, brokerage fees, 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 pays the distributor for distributing the fund's
Investor Shares, for servicing shareholder accounts ("Servicing") and for
advertising and marketing relating to the fund's Investor Shares. The Plan
provides for payments to be made at an annual rate of .25 of 1% of the value of
the average daily net assets of Investor Shares. Prior to March 22, 2000,
Premier Mutual Fund Services, Inc. and not DSC, received payments under the Plan
for distributing the fund's Investor Shares. The distributor determines the
amounts, if any, to be paid to Service Agents (a securities dealer, financial
institutional or other industry professional) 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, 2000, the fund was charged $22,699 for Investor Shares pursuant to the Plan,
of which $8,403 was paid to DSC.
(c) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Effective August 3, 2000, each
Board member who is not an "affiliated person" as defined in the Act receives an
annual fee of $45,000 and an attendance fee of $5,000 for each in person meeting
and $500 for telephone meetings. These fees are allocated among the funds in the
Fund Group. The chairman of the Board receives an additional 25% of such
compensation. Prior to August 3, 2000, each Board member who was not an
"affiliated person" as defined in the Act received from the fund an annual fee
of $1,000 and an attendance fee of $250 per meeting. The Chairman of the Board
received an additional 25% of such compensation. Subject to the fund's Emeritus
Program Guidelines, Emeritus Board Members, if any, receive 50% of the fund's
annual retainer fee and per meeting fee paid at the time the Board member
achieves emeritus status.
NOTE 4--Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding
short-term securities, during the period ended September 30, 2000, amounted to
$296,680,894 and $316,947,185, respectively.
At September 30, 2000, accumulated net unrealized appreciation on investments
was $49,945, consisting of $87,697 gross unrealized appreciation and $37,752
gross unrealized depreciation.
At September 30, 2000, 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, 2000, 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 auditing standards generally accepted
in the United States. 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, 2000 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, 2000, 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 accounting principles
generally accepted in the United States.
Ernst & Young LLP
New York, New York
November 1, 2000
IMPORTANT TAX INFORMATION (Unaudited)
For State individual income tax purposes, the fund hereby designates 93.43% of
the ordinary income dividends paid during its fiscal year ended September 30,
2000 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
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
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) 2000 Dreyfus Service Corporation 721AR009
