Dreyfus
U.S. Treasury
Long Term Fund
ANNUAL REPORT December 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by 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.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
7 Statement of Investments
8 Statement of Financial Futures
9 Statement of Assets and Liabilities
10 Statement of Operations
11 Statement of Changes in Net Assets
12 Financial Highlights
13 Notes to Financial Statements
18 Report of Independent Auditors
19 Important Tax Information
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus U.S. Treasury
Long Term Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus U.S. Treasury Long Term
Fund, covering the 12-month period from January 1, 1999 through December 31,
1999. Inside, you' ll find valuable information about how the fund was managed
during the reporting period, including a discussion with Gerald Thunelius,
portfolio manager and a member of the Dreyfus Taxable Fixed Income Team.
The past year was challenging for most fixed-income investors. Faster than
expected economic growth in the U.S. and overseas fueled concerns that
long-dormant inflationary pressures might re-emerge, potentially reducing the
future value of bonds' interest and principal payments. These concerns prompted
the Federal Reserve Board to raise key short-term interest rates three times
during the summer and fall of 1999 in an attempt to prevent a reacceleration of
inflation.
While U.S. Treasury and agency securities declined sharply in this environment
during 1999, prices of higher yielding securities -- such as corporate bonds and
mortgage-backed securities -- fell less severely. In an environment of robust
economic growth, investors appeared more comfortable owning bonds that are
influenced primarily by credit risk, and they avoided securities that are most
affected by interest-rate risk.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus U.S. Treasury Long Term Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF FUND PERFORMANCE
Gerald Thunelius, Portfolio Manager Dreyfus Taxable Fixed Income Team
How did Dreyfus U.S. Treasury Long Term Fund perform relative to its benchmark
For the 12-month period ended December 31, 1999, Dreyfus U.S. Treasury Long Term
Fund produced a total return of -8.14%.(1) In contrast, the fund's benchmark,
the Merrill Lynch Governments, U.S. Treasury, Long-Term (10 Years and Over)
Index, provided a -8.61% total return.(2) The fund's income dividends paid from
net investment income during the period amounted to approximately $0.817 per
share, representing a distribution rate per share of 5.83%.(3)
We attribute the fund' s performance to rising interest rates and a highly
volatile bond market. Long-term bonds are particularly vulnerable to the eroding
effects of higher interest rates. The U.S. Treasury sector of the bond market
was particularly hard-hit in 1999 because of a dramatic fall-off in demand as
investors sold U.S. Treasuries in favor of higher yielding bonds. To a large
extent, these sales represented the "unwinding" of large U.S. Treasury funds
that were amassed by foreign and domestic investors during 1998's global
financial crisis.
What is the fund's investment approach?
As a U.S. Treasury fund, our goal is to provide shareholders with current income
through an investment vehicle that is composed primarily of U.S. Treasury bills,
notes and other securities that are issued or guaranteed by the United States
government, its agencies or instrumentalities. The fund may also invest in
options and futures and enter into repurchase agreements with securities dealers
that are backed by U.S. Treasuries.
Because U.S. Treasury bills and notes are backed by the full faith and credit of
the U.S. government, they are generally considered to rank among the highest
credit quality investments available. By investing in these obligations, the
fund seeks to maintain a high degree of credit
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
safety. Of course, the market value of the fund's securities and the value of
fund shares are not insured or guaranteed by the U.S. government. The fund
generally maintains an average dollar-weighted portfolio that exceeds 10 years.
What other factors influenced the fund's performance?
Like virtually all fixed-income investments, long-term U.S. Treasury securities
were adversely affected by rising interest rates throughout the year.
Soon after the reporting period began, it became apparent that overseas
economies were beginning to recover from 1998's global financial crisis, and
that the growth of the U.S. economy was stronger than most analysts expected. In
this environment, investors began to move away from U.S. Treasury securities to
which they had previously fled during the worst of the global financial crisis.
They moved instead into higher yielding, riskier assets. This caused the prices
of U.S. Treasury securities to fall from relatively high levels, while the
prices of corporate bonds, mortgage-backed securities and asset-backed
securities rallied.
In the second through fourth quarters of 1999, economic strength in domestic and
overseas markets raised concerns among U.S. fixed-income investors that
inflationary pressures might re-emerge. In response, the Federal Reserve Board
increased short-term interest rates three times during the summer and fall of
1999 in an attempt to forestall a reacceleration of inflation. These changes in
monetary policy caused the prices of most bonds, including U.S. Treasury
securities, to fall.
U.S. Treasury securities generally fell more severely than prices of corporate
bonds and other higher yielding fixed-income investments during the second half
of the year. That's primarily because corporate bonds tend to be more sensitive
to the credit quality of their issuers, which generally improves in a strong
economy, and are less sensitive to interest-rate trends; U.S. Treasury
securities are more sensitive to interest-rate changes.
What is the fund's current strategy?
Our current strategy is an extension of the strategy we have attempted to follow
for much of 1999, which is intended to earn as much yield as possible from our
holdings, while positioning the fund to respond favorably when more favorable
economic and market conditions arrive. Toward that end, we have increased the
fund' s exposure to off-the-run (" OTR") Treasuries, which are U.S. Treasury
securities that were issued prior to the most recent auction process. The
benefit of owning OTR Treasuries is that they tend to produce higher yields
because they are often considered less liquid than recent issues. Although these
holdings hindered the fund' s returns as interest rates rose in 1999, we are
hopeful that they will rally more strongly than other types of U.S. Treasury
securities if and when the bond market experiences a positive recovery.
While in our view no one can predict the timing for a bond market recovery or
lower interest rates, we believe that current financial conditions may be ripe
for such a recovery. Most important, we believe that the federal budget surplus
may cause the U.S. Treasury to buy back some of its outstanding debt. If the
government buys back older, higher yielding securities first, as we would like,
the fund's OTR Treasury holdings should benefit accordingly.
January 14, 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. PERFORMANCE FIGURES PROVIDED REFLECT THE
ABSORPTION OF FUND EXPENSES BY THE DREYFUS CORPORATION PURSUANT TO AN
UNDERTAKING IN EFFECT THAT MAY BE EXTENDED, TERMINATED OR MODIFIED AT ANY TIME.
HAD THESE EXPENSES NOT BEEN ABSORBED, THE FUND'S PERFORMANCE WOULD HAVE BEEN
LOWER.
(2) SOURCE: BLOOMBERG L.P. -- 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.
(3) 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.
The Fund
FUND PERFORMANCE
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
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Average Annual Total Returns AS OF 12/31/99
<TABLE>
1 Year 5 Years 10 Years
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<S> <C> <C> <C>
FUND (8.14)% 7.44% 7.52%
</TABLE>
(+) SOURCE: BLOOMBERG L.P.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN DREYFUS U.S. TREASURY LONG
TERM FUND ON 12/31/89 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 $1 BILLION. THE INDEX DOES NOT TAKE INTO ACCOUNT CHARGES, FEES
AND OTHER EXPENSES. FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING
EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS
SECTION OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
STATEMENT OF INVESTMENTS
<TABLE>
December 31, 1999
Principal
BONDS AND NOTES--96.3% Amount ($) Value ($)
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<S> <C> <C>
U.S. GOVERNMENT AGENCIES--25.2%
Federal Home Loan Banks,
Medium-Term Notes, 6.005%, 7/28/2028 24,000,000 20,646,000
Tennessee Valley Authority,
Valley Indexed Principal Securities,
3.375%, 1/15/2007 5,000,000 (a) 4,842,210
U.S. Government Gtd. Development,
Participation Ctfs.
(Gtd. By U.S. Small Business Administration):
Ser. 1998-20, Cl. E, 6.3%, 5/1/2018 938,368 881,071
Ser. 1998-20, Cl. J, 5.5%, 10/1/2018 1,729,467 1,538,607
Ser. 1998-20, Cl. L, 5.8%, 12/1/2018 2,869,955 2,600,408
30,508,296
U.S. TREASURY BONDS--40.1%
8.5%, 2/15/2020 28,300,000 33,458,524
8.75%, 5/15/2017 2,750,000 3,284,958
9.125%, 5/15/2018 3,000,000 3,717,570
10.625%, 8/15/2015 6,000,000 8,171,940
48,632,992
U.S. TREASURY INFLATION PROTECTION SECURITIES--9.7%
3.625%, 1/15/2008 10,000,000 (a) 9,920,400
3.875%, 4/15/2029 2,000,000 (a) 1,868,560
11,788,960
U.S. TREASURY NOTES--10.9%
4.75%, 11/15/2008 15,000,000 13,241,550
U.S. TREASURY PRINCIPAL STRIPS--10.4%
Zero Coupon, 11/15/2009 25,000,000 12,643,500
TOTAL BONDS AND NOTES
(cost $120,807,404) 116,815,298
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SHORT-TERM INVESTMENTS--2.4%
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U.S. TREASURY BILLS:
5.19%, 1/13/2000 2,055,000 (b) 2,052,349
4.96%, 3/30/2000 925,000 913,465
TOTAL SHORT-TERM INVESTMENTS
(cost $2,965,102) 2,965,814
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TOTAL INVESTMENTS (cost $123,772,506) 98.7% 119,781,112
CASH AND RECEIVABLES (NET) 1.3% 1,516,756
NET ASSETS 100.0% 121,297,868
(A) PRINCIPAL AMOUNT FOR ACCRUAL PURPOSES IS PERIODICALLY ADJUSTED BASED ON
CHANGES TO THE CONSUMER PRICE INDEX.
(B) PARTIALLY HELD BY THE CUSTODIAN IN A SEGREGATED ACCOUNT AS COLLATERAL FOR
OPEN FINANCIAL FUTURES POSITIONS.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF FINANCIAL FUTURES
December 31, 1999
<TABLE>
Market Value Unrealized
Covered by (Depreciation)
Contracts Contracts ($) Expiration at 12/31/99 ($)
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<S> <C> <C> <C> <C>
FINANCIAL FUTURES LONG
U.S. Treasury 10 Year Notes 29 2,779,922 March 2000 (39,875)
U.S. Treasury 30 Year Bonds 177 16,095,937 March 2000 (47,813)
(87,688)
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
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ASSETS ($):
Investments in securities--See Statement of
Investments 123,772,506 119,781,112
Receivable for shares of Beneficial Interest subscribed 66,293
Interest receivable 2,242,751
Prepaid expenses and other assets 2,441
122,092,597
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LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 54,856
Cash overdraft due to Custodian 59,323
Payable for shares of Beneficial Interest redeemed 575,024
Payable for futures variation margin--Note 4(a) 68,281
Accrued expenses 37,245
794,729
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NET ASSETS ($) 121,297,868
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COMPOSITION OF NET ASSETS ($):
Paid-in capital 143,666,079
Accumulated net realized gain (loss) on investments and
financial futures (18,289,129)
Accumulated net unrealized appreciation (depreciation)
on investments [including ($87,688) net unrealized
(depreciation) on financial futures]--Note 4(b) (4,079,082)
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NET ASSETS ($) 121,297,868
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SHARES OUTSTANDING
(unlimited number of $.001 par value shares of
Beneficial Interest authorized) 8,655,361
NET ASSET VALUE, offering and redemption price per share ($) 14.01
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
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INVESTMENT INCOME ($):
INTEREST INCOME 8,202,662
EXPENSES:
Management fee--Note 3(a) 787,531
Shareholder servicing costs--Note 3(b) 409,494
Professional fees 41,780
Trustees' fees and expenses--Note 3(c) 34,822
Registration fees 31,585
Custodian fees--Note 3(b) 17,850
Prospectus and shareholders' reports 14,618
Loan commitment fees--Note 2 1,163
Miscellaneous 4,917
TOTAL EXPENSES 1,343,760
Less--reduction in management fee due to
undertaking--Note 3(a) (291,838)
NET EXPENSES 1,051,922
INVESTMENT INCOME--NET 7,150,740
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments and options written (12,002,846)
Net realized gain (loss) on financial futures (2,773,950)
NET REALIZED GAIN (LOSS) (14,776,796)
Net unrealized appreciation (depreciation) on investments
[including ($87,688) net unrealized (depreciation) on financial futures]
(3,456,099)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (18,232,895)
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (11,082,155)
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
----------------------------
1999 1998
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 7,150,740 6,997,579
Net realized gain (loss) on investments (14,776,796) 11,171,370
Net unrealized appreciation (depreciation)
on investments (3,456,099) (4,493,318)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (11,082,155) 13,675,631
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (7,150,740) (6,997,579)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 119,178,620 87,599,125
Dividends reinvested 4,516,859 4,275,403
Cost of shares redeemed (126,050,055) (91,359,590)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (2,354,576) 514,938
TOTAL INCREASE (DECREASE) IN NET ASSETS (20,587,471) 7,192,990
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 141,885,339 134,692,349
END OF PERIOD 121,297,868 141,885,339
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 7,900,927 5,530,831
Shares issued for dividends reinvested 303,591 272,160
Shares redeemed (8,358,173) (5,799,835)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (153,655) 3,156
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS
The following table describes the performance for the fiscal periods indicated.
Total return shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been derived from the fund's financial
statements.
<TABLE>
Year Ended December 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
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<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 16.11 15.30 14.61 15.51 13.26
Investment Operations:
Investment income--net .82 .80 .93 .98 .96
Net realized and unrealized
gain (loss) on investments (2.10) .81 .69 (.89) 2.25
Total from Investment Operations (1.28) 1.61 1.62 .09 3.21
Distributions:
Dividends from investment income--net (.82) (.80) (.93) (.99) (.96)
Net asset value, end of period 14.01 16.11 15.30 14.61 15.51
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TOTAL RETURN (%) (8.14) 10.77 11.69 .87 24.91
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .80 .80 .80 .80 .87
Ratio of net investment income
to average net assets 5.45 5.10 6.48 6.74 6.69
Decrease reflected in above expense ratios
due to undertakings by
The Dreyfus Corporation .22 .21 .24 .19 .05
Portfolio Turnover Rate 495.51 1,181.48 905.99 765.13 634.38
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Net Assets, end of period ($ x 1,000) 121,298 141,885 134,692 135,368 146,445
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
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"), which is a wholly-owned subsidiary of Mellon Financial
Corporation. Premier Mutual Fund Services, Inc. is the distributor of the fund's
shares, which are sold to the public without a sales charge.
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 and financial futures) 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 value. Financial futures are
valued at the last sales price on the securities exchange on which such
securities are primarily traded or at the last sales price on the national
securities market on each business day.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 received net earnings credits of $6,989 during the period ended December
31, 1999 based on available cash balances left on deposit. Income earned under
this arrangement is included in interest income.
(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 $17,033,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1999. This
amount is calculated based on Federal income tax regulations which may differ
from financial reporting in accordance with generally accepted accounting
prinicples. If not applied, $2,961,000 of the carryover expires in fiscal 2004
and $14,072,000 expires in fiscal 2007.
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 borrowing. During the period
ended December 31, 1999, the fund did not borrow under the Facility.
NOTE 3--Management Fee and Other Transactions With Affiliates:
(A) Pursuant to a management agreement with the Manager, the management fee is
computed at the annual rate of .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, 1999 through December 31, 1999 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 $291,838 during the period ended December 31, 1999.
(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, 1999, the fund was charged $303,347 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, 1999, the fund was charged $75,656 pursuant to the transfer
agency agreement.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The fund compensates Mellon under a custody agreement for providing custodial
services for the fund. During the period ended December 31, 1999, the fund was
charged $17,850 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 (including paydowns) of
investment securities, excluding short-term securities, options and financial
futures, during the period ended December 31, 1999, amounted to $625,756,838 and
$628,470,475, respectively.
In addition, the following table summarizes the fund's call/put options written
during the period ended December 31, 1999:
<TABLE>
Options Terminated
---------------------------------
Number of Premiums Net Realized
Options Written: Contracts Received ($) Cost ($) Gain (Loss) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contracts outstanding
December 31, 1998 300 365,625
Contracts written 1,976 2,122,846
Contracts terminated:
Closed 1,676 1,770,502 1,487,148 283,354
Exercised 450 558,594 558,594 --
Expired 150 159,375 -- 159,375
Total contracts terminated 2,276 2,488,471 2,045,742 442,729
CONTRACTS OUTSTANDING
DECEMBER 31, 1999 -- --
</TABLE>
The fund may purchase and write (sell) call/put options in order to gain
exposure to or protect against changes in the market.
As a 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.
As 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.
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. Contracts open at December 31, 1999, are set
forth in the Statement of Financial Futures.
(B) At December 31, 1999, accumulated net unrealized depreciation on investments
and financial futures was $4,079,082, consisting of $904 gross unrealized
appreciation and $4,079,986 gross unrealized depreciation.
At December 31, 1999, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see the
Statement of Investments).
The Fund
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees Dreyfus U.S. Treasury Long Term Fund
We have audited the accompanying statement of assets and liabilities of Dreyfus
U.S. Treasury Long Term Fund, including the statements of investments and
financial futures, as of December 31, 1999, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and financial highlights for
each of the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with 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 December
31, 1999 and confirmation of securities not held by the custodian by
correspondence with others. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus U.S. Treasury Long Term Fund at December 31, 1999, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the indicated years, in conformity with accounting principles generally accepted
in the United States.
[Ernst And Young LLP signature logo]
New York, New York
February 3, 2000
IMPORTANT TAX INFORMATION (Unaudited)
For State individual income tax purposes, the fund hereby designates 86.06% of
the ordinary income dividends paid during the fiscal year ended December 31,
1999 as attributable to interest income from direct obligations of the United
States. Such dividends are currently exempt from taxation for individual income
tax purposes in most states, including New York, California and the District of
Columbia.
The Fund
NOTES
For More Information
Dreyfus 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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
Boston, MA 02109
To obtain information:
BY TELEPHONE
Call 1-800-645-6561
BY MAIL Write to:
The Dreyfus Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
BY E-MAIL Send your request to
[email protected]
ON THE INTERNET Information can be viewed online or downloaded from:
http://www.dreyfus.com
(c) 2000 Dreyfus Service Corporation 073AR9912
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,
LONG-TERM DREYFUS
(10 YEARS U.S. TREASURY
PERIOD AND OVER) LONG TERM
INDEX* FUND
12/31/89 10,000 10,000
12/31/90 10,646 10,702
12/31/91 12,608 12,658
12/31/92 13,610 13,614
12/31/93 15,955 15,872
12/31/94 14,769 14,415
12/31/95 19,299 18,004
12/31/96 19,107 18,160
12/31/97 21,962 20,284
12/31/98 24,937 22,469
12/31/99 22,789 20,640
*Source: Bloomberg L.P.
