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.
DREYFUS U.S. TREASURY LONG TERM FUND
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report on the performance for Dreyfus U.S. Treasury Long
Term Fund. For the 12-month period ended December 31, 1998, your Fund produced a
total return, including share price changes and dividend income generated, of
10.77% .* Income dividends paid from net investment income during the period
amounted to approximately $0.799 per share, representing a distribution rate per
share of 4.96%.**
ECONOMIC REVIEW
During 1998, the main regions of the world had very different economic
fundamentals. The U.S. entered the year with a strong economy near full
employment, with unemployment only slightly above 4%. The tight labor market led
the Federal Reserve Board to contemplate a rise in interest rates early in the
year, but world economic weakness generated powerful enough disinflationary
forces that the Fed acted instead to ease credit beginning in September. After
many years of subpar economic growth, continental Europe moved into a sustained
economic expansion. The overall European economy benefited as interest rates in
peripheral countries such as Spain and Italy fell, approaching the lower levels
established by Germany, on the eve of currency unification. Unlike the U.S.,
Europe has substantial excess capacity of productive plant and labor. In Asia,
weak economies were pervasive as a result of a financial crisis. The Latin
American economies weakened in turn as the financial stresses spread throughout
that region. On balance, there was a substantial weakening of the world economy
over the course of 1998, moderated mainly by the American consumer's role as
"spender of last resort."
A main influence on the U.S. economy during the year was the foreign financial
crisis and consequent cooling of the world economy. The positive effects hit
first. Actual inflation and expected inflation dropped, causing a decline in
long-term Treasury bond yields and mortgage rates. This caused a boom in
housing. The fall in inflation left more of the growth in consumer income with
which to buy goods and services. Thus, consumers benefited from a combination of
good growth in income after inflation, a strong labor market and increases in
the prices of assets they owned, including bonds, stocks and real estate. In a
sense, 1998 was a year of disinflationary boom in the U.S., as above-trend
economic growth coincided with negligible inflation.
The negative effect of Asian weakness was felt in the industrial sector more
than in the consumer sector. Corporate profits weakened, especially in sectors
affected by the Asian crisis, such as world-traded commodities (oil, metals and
paper) and exports.
Evidence of a weaker world economy accumulated during 1998 as the financial
stresses continued. A worsened financial crisis occurred between the Russian
default in mid-August and the fallout from the Long Term Capital Management
hedge fund crisis through early October. However, energetic steps were taken to
stabilize the Japanese banks, design a support package for Brazil, ease monetary
policy and help overinvested financial institutions rebuild their cash reserves.
Indications of a calming of financial fears were evident in the final months of
the year. In any case, there appears to have been a shift in the priorities of
key policymakers from fighting potential inflation to restimulating future world
economic growth.
The global economy survived a triple financial crisis in 1998 from Japan,
emerging market countries and overextended financial institutions. Excess
capacity persists in many worldwide industries after years of high capital
spending followed by the onset of a worldwide weakening in demand. Fortunately,
the U.S. has led the world in making the transition away from the old
manufacturing industries to the new growth industries, such as biotechnology,
software, computer hardware and the Internet. This contributed to the favorable
combination of low unemployment and low inflation in the U.S., and may yet lead
toward more efficient allocation of capital elsewhere in the world.
As 1998 ended, interest rates set by central banks remained in a downtrend in
most parts of the world, including Europe and the U.S. A similar trend had even
begun in many emerging countries, as the stresses of financial crisis relax.
MARKET ENVIRONMENT
The flight to quality as investors scrambled for a safe haven in 1998 meant
that yields were propelled significantly lower. The 30-year Treasury bond began
the year yielding 5.925% and ended the year yielding 5.096%. At one point,
yields on the same issue reached 4.72%, which was at the peak of fear. Investors
apparently were inclined to accept these significantly lower yields for
Treasuries in order to lessen quality risk.
To put the level of fear at that time in perspective, one can look at quality
spreads. Quality spreads are the difference in yield between Treasury yields and
other investment- grade securities like corporate bonds, mortgage-backed and
government agency securities. In October, these quality spreads became as wide
as those last seen in the early 1990s during a recession. They have since
recovered somewhat.
PORTFOLIO OVERVIEW
Given the market environment, we kept the Fund with a longer than neutral
average maturity. While we normally maintain a 10.5-year average portfolio
maturity, during the year the Fund was as high as a 13-year average portfolio
maturity. This worked out well for the Fund, as rates did decline, which
increased the value of our portfolio.
Our allocation to government agencies at the end of the reporting period was
approximately 34% . Agencies were also hurt when spreads were widening last
October. At the end of the Fund's fiscal year, we believed agency yields were
attractive compared to Treasuries.
During the year, our biggest miss was the Treasury Inflation Protected
Securities (TIPS) market. While TIPS are theoretically cheap, as we had written,
the marketplace could not focus on inflation protection during a time when it
seemed that a deflationary crisis was looming everywhere.
Included in this report is a series of detailed statements about your Fund's
holdings and its financial condition. We hope that you find them informative.
Please know that we greatly appreciate your continued confidence in the Fund and
in The Dreyfus Corporation.
Very truly yours,
[Gerald E. Thunelius signature]
Gerald E. Thunelius
Portfolio Manager
January 15, 1999
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 U.S. TREASURY LONG TERM FUND DECEMBER 31, 1998
- -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS U.S. TREASURY
LONG TERM FUND AND THE MERRILL LYNCH GOVERNMENTS, U.S. TREASURY, LONG-TERM (10
YEARS AND OVER) INDEX
$29,650
Merrill Lynch Governments, U.S. Treasury, Long-Term (10 Years and Over) Index*
Dollars
$26,115
Dreyfus U.S. Treasury Long Term Fund
*Source: Merrill Lynch, Pierce, Fenner and Smith Inc.
<TABLE>
Average Annual Total Returns
- -----------------------------------------------------------------------------
One Year Ended Five Years Ended Ten Years Ended
December 31, 1998 December 31, 1998 December 31, 1998
___________________ ___________________ ___________________
<S> <C> <C> <C>
10.77% 7.20% 10.08%
- ------------------------
Past performance is not predictive of future performance.
</TABLE>
The above graph compares a $10,000 investment made in Dreyfus U.S. Treasury Long
Term Fund on 12/31/88 to a $10,000 investment made in the Merrill Lynch
Governments, U.S. Treasury, Long-Term (10 Years and Over) Index on that date.
All dividends and capital gain distributions are reinvested.
The Fund invests at least 65% of its net assets in U.S. Treasury securities. The
Fund' s portfolio will, under normal market conditions, have a dollar-weighted
average maturity of greater than 10 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, Long-Term (10 Years and Over) Index is an
unmanaged performance benchmark for Treasury securities with maturities of 10
years and over; 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>
DREYFUS U.S. TREASURY LONG TERM FUND
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1998
Principal
Bonds and Notes--95.7% Amount Value
- ------------------------------------------------------- _____________ _____________
<S> <C> <C>
U.S. Government Agencies--33.6%
Federal Farm Credit Bank,
Notes, 5.85%, 6/10/2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,000,000 $ 4,125,000
Federal Home Loan Banks,
Medium-Term Notes, 6.34%, 6/13/2005 . . . . . . . . . . . . . . . . . . . . . . . . . 4,200,000 4,442,592
Federal Home Loan Mortgage,
Medium-Term Notes,
5.59%, 9/9/2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000,000 15,266,100
Federal National Mortgage Association,
Medium-Term Notes:
5.90%, 7/9/2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 10,118,300
7.125%, 4/30/2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000 5,856,000
U.S. Government Gtd. Development,
Participation Ctfs.
(Gtd. by U.S. Small Business Administration):
Ser. 1997-E, 7.30%, 5/1/2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,873,655 2,012,306
Ser. 1998-E, 6.30%, 5/1/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,035,000
Ser. 1998-J, 5.50%, 10/1/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,800,000 1,778,400
Ser. 1998-L, 5.80%, 12/1/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000 3,008,400
_____________
47,642,098
_____________
U.S. Treasury Bonds--57.1%
10.75%, 2/15/2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,445,140
11.875%, 11/15/2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000 3,264,900
12.50%, 8/15/2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,100,000 14,626,703
8.125%, 8/15/2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,000,000 44,712,030
5.50%, 8/15/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,250,000 15,983,830
_____________
81,032,603
_____________
U.S. Treasury Coupon Strips--2.7%
Zero Coupon, 2/15/2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,100,000 3,821,220
_____________
U.S. Treasury Notes--1.3%
6.875%, 7/31/1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,750,000 1,772,190
_____________
U.S. Treasury Principal Strips--1.0%
Zero Coupon, 5/15/2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 1,479,940
_____________
TOTAL BONDS AND NOTES
(cost $136,371,257) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $135,748,051
_____________
Options--.2% Contracts
- ------------------------------------------------------------------------------------------- _____________
Call Options;
U.S. Treasury Notes, 4.75%, 11/15/2008,
December '99 @$100.375
(cost $365,625) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 $ 365,625
_____________
DREYFUS U.S. TREASURY LONG TERM FUND
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1998
Principal
Short-Term Investments--2.4% Amount Value
- ------------------------------------------------------- _____________ _____________
U.S. Treasury Bills:
4.02%, 1/7/1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,240,000 $ 1,239,278
3.73%, 1/14/1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,020,000 2,017,380
4.40%, 4/1/1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 98,910
_____________
(cost $3,355,345) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,355,568
_____________
TOTAL INVESTMENTS
(cost $140,092,227) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98.3% $139,469,244
_______ _____________
CASH AND RECEIVABLES (NET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7% $ 2,416,095
_______ _____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $141,885,339
_______ _____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS U.S. TREASURY LONG TERM FUND
- -----------------------------------------------------------------------------
STATEMENT OF OPTIONS WRITTEN DECEMBER 31, 1998
Call Options
____________
Issuer Contracts Value
_____ ____________ ____________
<S> <C> <C>
U.S. Treasury Notes, 4.75%, 11/15/2008, December '99 @$104.78125
(Premium received $159,375) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 $ 159,375
_____________
Put Options
____________
Issuer
_____
U.S. Treasury Notes, 4.75%, 11/15/2008, December '99 @$95.125
(Premium received $206,250) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 $ 206,250
_____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS U.S. TREASURY LONG TERM FUND
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1998
Cost Value
_____________ _____________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . . $140,092,227 $139,469,244
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 612,889
Receivable for investment securities sold . . . . . . . . 7,911,609
Interest receivable . . . . . . . . . . . . . . . . . . . 2,627,790
Receivable for shares of Beneficial Interest subscribed . . 69,628
Prepaid expenses and other assets . . . . . . . . . . . . 101,105
_____________
150,792,265
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . 69,416
Payable for investments securities purchased . . . . . . 7,842,047
Payable for shares of Beneficial Interest redeemed . . . 587,331
Outstanding options written, at value
(premium received $365,625)--see
Statement of Options Written . . . . . . . . . . . . . 365,625
Accrued expenses . . . . . . . . . . . . . . . . . . . . 42,507
_____________
8,906,926
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $141,885,339
_____________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $146,020,655
Accumulated net realized gain (loss) on investments . . . (3,512,333)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4(b) . . . . . . . . . . . . . . . (622,983)
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $141,885,339
_____________
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST AUTHORIZED) . . . . . . 8,809,016
NET ASSET VALUE, offering and redemption price per share . . . . . . . . . . . . . . . . . $16.11
_______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS U.S. TREASURY LONG TERM FUND
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998
INVESTMENT INCOME
<S> <C> <C>
INCOME Interest Income . . . . . . . . . . . . . . . . . . . . . $ 8,097,580
EXPENSES: Management fee--Note 3(a) . . . . . . . . . . . . . . . . $ 824,019
Shareholder servicing costs--Note 3(b) . . . . . . . . . 404,615
Professional fees . . . . . . . . . . . . . . . . . . . . 50,479
Trustees' fees and expenses--Note 3(c) . . . . . . . . . 41,896
Registration fees . . . . . . . . . . . . . . . . . . . . 29,618
Custodian fees--3(b) . . . . . . . . . . . . . . . . . . 17,293
Prospectus and shareholders' reports . . . . . . . . . . 15,290
Loan commitment fees--Note 2 . . . . . . . . . . . . . . 1,309
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 7,531
____________
Total Expenses . . . . . . . . . . . . . . . . . . 1,392,050
Less--reduction in management fee due to
undertaking--Note 3(a) . . . . . . . . . . . . . . . . (292,049)
____________
Net Expenses . . . . . . . . . . . . . . . . . . . 1,100,001
____________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,997,579
____________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments and options written . . $ 9,497,781
Net realized gain (loss) on financial futures . . . . . . 1,673,589
____________
Net Realized Gain (Loss) . . . . . . . . . . . . . 11,171,370
Net unrealized appreciation (depreciation) on investments . . (4,493,318)
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 6,678,052
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $13,675,631
____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS U.S. TREASURY LONG TERM FUND
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, 1998 December 31, 1997
__________________ __________________
<S> <C> <C>
OPERATIONS:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,997,579 $ 8,338,854
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . 11,171,370 1,154,534
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . (4,493,318) 4,662,613
_____________ _____________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . 13,675,631 14,156,001
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,997,579) (8,338,854)
_____________ _____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . . . . 87,599,125 68,522,044
Dividends reinvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,275,403 5,015,689
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (91,359,590) (80,030,736)
_____________ _____________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions . . 514,938 (6,493,003)
_____________ _____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . . . 7,192,990 (675,856)
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,692,349 135,368,205
_____________ _____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $141,885,339 $134,692,349
_____________ _____________
Shares Shares
_____________ _____________
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,530,831 4,754,904
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . 272,160 347,234
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,799,835) (5,559,241)
_____________ _____________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . . . . 3,156 (457,103)
_____________ _____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS U.S. TREASURY LONG TERM 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.
Year Ended December 31,
______________________________________________________
PER SHARE DATA: 1998 1997 1996 1995 1994
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . $15.30 $14.61 $15.51 $13.26 $15.68
______ ______ ______ ______ ______
Investment Operations:
Investment income-net . . . . . . . . . . . . . . . . . . .80 .93 .98 .96 1.01
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . .81 .69 (.89) 2.25 (2.42)
______ ______ ______ ______ ______
Total from Investment Operations . . . . . . . . . . . . 1.61 1.62 .09 3.21 (1.41)
______ ______ ______ ______ ______
Distributions:
Dividends from investment income--net . . . . . . . . . . (.80) (.93) (.99) (.96) (1.01)
______ ______ ______ ______ ______
Net asset value, end of period . . . . . . . . . . . . . $16.11 $15.30 $14.61 $15.51 $13.26
______ ______ ______ ______ ______
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . 10.77% 11.69% .87% 24.91% (9.18%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . .80% .80% .80% .87% .98%
Ratio of net investment income
to average net assets . . . . . . . . . . . . . . . . 5.10% 6.48% 6.74% 6.69% 7.08%
Decrease reflected in above expense ratios
due to undertakings by the Manager . . . . . . . . . .21% .24% .19% .05% --
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . 1,181.48% 905.99% 765.13% 634.38% 1,213.04%
Net Assets, end of period (000's Omitted) . . . . . . . . $141,885 $134,692 $135,368 $146,445 $123,403
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS U.S. TREASURY LONG TERM FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus U.S. Treasury Long Term 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 as high a level of current income as is consistent with
the preservation of capital. 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. is the distributor of
the Fund's shares, which are sold to the public without a sales charge.
Effective May 15, 1998, the Fund changed its name from "Dreyfus 100% U.S.
Treasury Long Term Fund" to "Dreyfus U.S. Treasury Long Term Fund".
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
(which constitute a majority of the portfolio securities) 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 fair value.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Interest income,
including, where applicable, amortization of discount on investments, is
recognized on the accrual basis. Under the terms of the custody agreement, the
Fund receives net earnings credits based on available cash balances left on
deposit.
(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 $2,947,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1998. The
carryover does not include net realized securities losses from November 1, 1998
through December 31, 1998, which are treated, for Federal income tax purposes,
as arising in fiscal 1999. If not applied, the carryover expires in fiscal 2004
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 DREYFUS U.S.
TREASURY LONG TERM FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
on prevailing market rates in effect at the time of borrowing. During the period
ended December 31, 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
. 60 of 1% of the value of the Fund's average daily net assets and is payable
monthly. The Manager had undertaken from January 1, 1998 through December 31,
1998 to reduce the management fee paid by the Fund, to the extent that the
Fund' s aggregate annual expenses (exclusive of taxes, brokerage, interest on
borrowings, commitment fees and extraordinary expenses) exceeded an annual rate
of .80 of 1% of the value of the Fund's average daily net assets. The reduction
in management fee, pursuant to the undertaking, amounted to $292,049 during the
period ended December 31, 1998.
(B) Under the Shareholder Services Plan, the Fund reimburses Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager, an amount not to exceed
an annual rate of .25 of 1% of the value of the Fund's average daily net assets
for certain allocated expenses of providing personal services and/or maintaining
shareholder accounts. The services provided may include personal services
relating to 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. During the period ended
December 31, 1998, the Fund was charged $300,896 pursuant to the Shareholder
Services Plan.
The Fund 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. During the period
ended December 31, 1998, the Fund was charged $75,670 pursuant to the transfer
agency agreement.
The Fund compensates Mellon under a custody agreement for providing custodial
services for the Fund. During the period ended December 31, 1998, the Fund was
charged $17,293 pursuant to the custody agreement.
(C) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $2,500 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation and the Trustee Emeritus receives 50% of such compensation.
NOTE 4--SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, options and financial futures, during the
period ended December 31, 1998, amounted to $1,603,534,710 and $1,607,418,308,
respectively.
In addition, the following table summarizes the Fund's call/put options
written during the period ended December 31, 1998:
<TABLE>
Options Terminated
_____________________
Net
Number of Premiums Realized
Contracts Received Cost Gain (Loss)
__________ __________ __________ __________
<S> <C> <C> <C> <C>
OPTIONS WRITTEN:
Contracts outstanding December 31, 1997 . . . . . . . . -- $ --
Contracts written . . . . . . . . . . . . . . . . . . . 1,260 884,375
__________ __________
Contracts terminated:
Closed . . . . . . . . . . . . . . . . . . . . . . 960 518,750 $ 280,328 $ 238,422
Expired . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
__________ __________ ___________ ___________
Total contracts terminated . . . . . . . . . . . 960 518,750 $ 280,328 $ 238,422
__________ __________ ___________ ___________
___________ ___________
Contracts outstanding December 31, 1998 . . . . . . . . 300 $ 365,625
__________ __________
</TABLE>
DREYFUS U.S. TREASURY LONG TERM FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund may purchase and write (sell) call/put options in order to gain
exposure to or protect against changes in the market.
As writer of call options, the Fund receives a premium at the outset and then
bears the market risk of unfavorable changes in the price of the financial
instruments underlying the options. Generally, the Fund would incur a gain, to
the extent of the premium, if the price of the underlying financial instrument
decreases between the date the option is written and the date on which the
option is terminated. Generally, the Fund would realize a loss, if the price of
the financial instrument increases between those dates. Contracts open at
December 31, 1998 are set forth in the Statement of Options Written.
As a writer of put options, the Fund receives a premium at the outset and
then bears the market risk of unfavorable changes in the price of the financial
instruments underlying the options. Generally, the Fund would incur a gain, to
the extent of the premium, if the price of the underlying financial instrument
increases between the date the option is written and the date on which the
option is terminated. Generally, the Fund would realize a loss, if the price of
the financial instrument decreases between those dates. Contracts open at
December 31, 1998 are set forth in the Statement of Options Written.
The Fund may invest in financial futures contracts in order to gain exposure
to or protect against changes in the market. The Fund is exposed to market risk
as a result of changes in the value of the underlying financial instruments.
Investments in financial futures require the Fund to "mark to market" on a daily
basis, which reflects the change in the market value of the contracts at the
close of each day's trading. Typically, variation margin payments are received
or made to reflect daily unrealized gains or losses. When the contracts are
closed, the Fund recognizes a realized gain or loss. These investments require
initial margin deposits with a custodian, which consist of cash or cash
equivalents, up to approximately 10% of the contract amount. The amount of these
deposits is determined by the exchange or Board of Trade on which the contract
is traded and is subject to change. At December 31, 1998, there were no
financial futures contracts outstanding.
(B) At December 31,1998, accumulated net unrealized depreciation on
investments was $622,983, consisting of $452,376 gross unrealized appreciation
and $1,075,359 gross unrealized depreciation.
At December 31, 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 U.S. TREASURY LONG TERM FUND
- -----------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS U.S. TREASURY LONG TERM FUND
We have audited the accompanying statement of assets and liabilities of
Dreyfus U.S. Treasury Long Term Fund (formerly known as Dreyfus 100% U.S.
Treasury Long Term Fund), including the statements of investments and options
written, as of December 31, 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 December 31, 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 U.S. Treasury Long Term Fund at December 31, 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
February 11, 1999
IMPORTANT TAX INFORMATION (UNAUDITED)
For State individual income tax purposes, the Fund hereby designates 95.10%
of the ordinary income dividends paid during the fiscal year ended December 31,
1998 as attributable to interest income from direct obligations of the United
States. Such dividend are currently exempt from taxation for individual income
tax purposes in most states, including New York, California and the District of
Columbia.
[reg.tm logo]
(reg.tm)
DREYFUS U.S. TREASURY
LONG TERM 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. 073AR9812
U.S. Treasury
Long Term Fund
Annual Report
December 31, 1998
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS U.S. TREASURY LONG TERM FUND AND THE
MERRILL LYNCH GOVERNMENTS, U.S. TREASURY, LONG-TERM
(10 YEARS AND OVER) INDEX
EXHIBIT A:
MERRILL LYNCH
GOVERNMENTS,
U.S. TREASURY, DREYFUS
LONG-TERM U.S. TREASURY
PERIOD (10 YEARS AND LONG TERM
OVER) INDEX* FUND
12/31/88 10,000 10,000
12/31/89 11,890 11,622
12/31/90 12,658 12,438
12/31/91 14,991 14,712
12/31/92 16,181 15,823
12/31/93 18,970 18,447
12/31/94 17,560 16,753
12/31/95 22,945 20,925
12/31/96 22,718 21,106
12/31/97 26,112 23,575
12/31/98 29,650 26,115
*Source: Merrill Lynch, Pierce, Fenner and Smith Inc.
