<PAGE>
Dreyfus
100% U.S. Treasury
Intermediate
Term Fund
Annual Report
December 31, 1996
<PAGE>
Dreyfus 100% U.S. Treasury Intermediate Term Fund
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Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus 100% U.S.
Treasury Intermediate Term Fund. For its annual reporting period ended December
31, 1996, your Fund paid income dividends of approximately $.821 per share,
which is equivalent to an annualized distribution rate per share of 6.42%.*
Total return for the year, which includes price fluctuations, was 3.08%.**
THE ECONOMY
Over the reporting period, the economy grew moderately, showing little
evidence of accelerating inflation despite the robust pace of new job creation
and the low unemployment rate. It was fear of accelerating inflation that
prompted a sharp rise in long-term interest rates earlier in the year; however,
by year-end, long-term rates had fallen by one half of one percent (50 basis
points) from last summer's peak. Contributing to the drop in rates was the
decision of the Open Market Committee of the Federal Reserve Board (the "Fed")
to leave short-term interest rates unchanged.
Inflation at the consumer level of the economy remained in the 3% range,
which was accompanied by a comparably benign inflation picture at the production
level of the economy as well. The so-called "core" Producer Price Index (it
excludes the energy and food components because of their volatility) rose just
.1% in November and a mere .6% for the previous 12 months. Producers appeared to
have little ability to pass on price increases to their customers, a reason
cited by the Fed as evidence of the lack of rising price inflation.
Despite the sanguine price environment, consumers remained wary spenders and
modest borrowers, and retail sales growth was moderate. Nevertheless, the
renewed decline in mortgage rates spurred the housing market: existing home
sales in November increased for the first time in six months. New housing starts
also rose sharply, with the November increase the largest monthly rise since
July 1995. Job growth still appears to have underlying strength: monthly
increases in workers added to payrolls could also move higher. The recent
unemployment rate rose slightly, but still remained near a seven-year low.
Lending optimism to the prospect for continued economic growth was the report
from The Conference Board--a private research group--that its Index of Leading
Economic Indicators rose for the tenth consecutive month in November.
Historically, an increase in this index has generally correlated with economic
expansion over the next three to twelve months. Manufacturing remained firm all
year: both factory orders and industrial production rose moderately. Despite
this overall strength in production, there were some signs of moderation at
year-end. Inventories have built up and orders for durable goods--those items
intended to last three or more years--declined.
Last year, high employment, low inflation and moderate economic growth stayed
the Fed's hand from raising interest rates. The economy is now in the sixth year
of this business cycle and we remain alert to signs of the potential rekindling
of inflationary pressures.
MARKET ENVIRONMENT
At year end, the 2-year note had a 50+ basis point spread to the Fed Funds
rate. Mr. Greenspan recently spoke about what he believed to be speculative
bubbles, in an apparent attempt to have the market address them. The Fed has
been helped by foreign demand for Treasuries. As foreigners continued to buy
Treasuries in record amounts, the
<PAGE>
Fed kept its policy stable. If the supply/demand ratio were to change, with
foreigners buying less, the Fed might move to counteract that, or at least
consider that risk in their policy decisions.
THE PORTFOLIO
The Fund was positioned defensively through most of 1996, and was at its most
defensive in June when its dollar-weighted average portfolio maturity was
approximately 3.2 years for the end of the month. (Under normal market
conditions, the Fund's maturity ranges from 3-7 years.) We extended the Fund's
maturity in the late part of the summer and, by the beginning of September, its
maturity was at the maximum 7 years. This strategy benefitted our shareholders
as interest rates moved higher from February to August 1996, and then declined
afterwards. By the end of the fiscal year, the maturity stood at 6.40 years.
The Fund underperformed its benchmark index, the Merrill Lynch Governments,
U.S. Treasury, Intermediate-Term Index, by 80.4 basis points. This was because
the Fund's average maturity was longer than the average maturity of the index
while interest rates were rising during much of the year.
The high level of volatility exhibited by the market in recent years
underscores the need to maintain a disciplined and long-term focus in managing
your Fund. Our primary task--to earn as high a level of current income as is
consistent with preservation of capital--continues to guide our portfolio
management decisions. It should also be noted that this Fund is unique in that
it is a pure U.S.Treasury fund. We do not purchase any other securities. Other
government funds can use a broad basket of government investments. Also, this
Fund does not engage in any speculative trading techniques such as options and
futures.
Included in this report is a series of detailed statements about your Fund's
holdings and its financial condition. We hope they are informative. Please know
that we greatly appreciate your continued confidence in the Fund and in The
Dreyfus Corporation.
Very truly yours,
Gerald E. Thunelius
Portfolio Manager
January 15, 1997 New York, N.Y.
*Distribution rate per share is based upon dividends per share paid from net
investment income during the period (annualized), divided by the net asset
value per share at the end of the period.
**Total return includes reinvestment of dividends and any capital gains paid.
<PAGE>
Dreyfus 100% U.S. Treasury Intermediate Term Fund
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<TABLE>
<CAPTION>
Statement of Investments December 31, 1996
Principal
Bonds and Notes--108.6% Amount Value
- ---------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
13 3/4%, 8/15/2004........................................................ $12,200,000 $ 17,562,282
11 5/8%, 11/15/2004....................................................... 5,400,000 7,130,531
12%, 5/15/2005............................................................ 5,000,000 6,789,844
10 3/4%, 8/15/2005........................................................ 10,000,000 12,831,250
6 1/2%, 10/15/2006........................................................ 29,750,000 29,917,344
12%, 8/15/2013............................................................ 8,800,000 12,590,875
-------------
86,822,126
-------------
U.S. Treasury Notes--63.4%
6%, 9/30/1998............................................................. 9,500,000 9,525,977
6 3/4%, 5/31/1999......................................................... 4,650,000 4,730,649
7 1/8%, 9/30/1999......................................................... 10,000,000 10,279,688
8 3/4%, 8/15/2000......................................................... 9,000,000 9,756,563
6 1/8%, 9/30/2000......................................................... 10,000,000 9,996,875
5 3/4%, 10/31/2000........................................................ 3,000,000 2,961,094
5 1/2%, 12/31/2000........................................................ 18,000,000 17,589,375
7 3/4%, 2/15/2001......................................................... 10,000,000 10,570,313
6 3/8%, 3/31/2001......................................................... 11,000,000 11,077,344
6 3/8%, 9/30/2001......................................................... 10,500,000 10,565,625
6 1/8%, 12/31/2001........................................................ 25,000,000 24,910,157
-------------
121,963,660
-------------
TOTAL INVESTMENTS
(cost $210,069,000)...................................................... 108.6% $208,785,786
======= =============
LIABILITIES, LESS CASH AND RECEIVABLES....................................... (8.6%) $(16,489,437)
======= =============
NET ASSETS................................................................... 100.0% $192,296,349
======= =============
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus 100% U.S. Treasury Intermediate Term Fund
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<TABLE>
<CAPTION>
Statement of Assets and Liabilities December 31, 1996
Cost Value
------------- -------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $210,069,000 $208,785,786
Receivable for investment securities sold........ 16,998,701
Interest receivable.............................. 3,572,379
Prepaid expenses and other assets................ 6,420
-------------
229,363,286
-------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 74,131
Cash overdraft due to Custodian.................. 16,269,375
Payable for investment securities purchased...... 20,478,125
Payable for shares of Beneficial Interest redeemed 192,629
Accrued expenses................................. 52,677
-------------
37,066,937
-------------
NET ASSETS..................................................................... $192,296,349
=============
REPRESENTED BY: Paid-in capital.................................. $211,329,742
Accumulated net realized gain (loss) on investments (17,750,179)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4.......................... (1,283,214)
-------------
NET ASSETS..................................................................... $192,296,349
=============
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized). 15,156,839
NET ASSET VALUE, offering and redemption price per share....................... $12.69
======
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus 100% U.S. Treasury Intermediate Term Fund
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<TABLE>
Statement of Operations Year Ended December 31, 1996
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income................................. $14,254,946
EXPENSES: Management fee--Note 3(a)......................... $ 1,185,588
Shareholder servicing costs--Note 3(b)............ 523,001
Professional fees................................ 44,726
Trustees' fees and expenses--Note 3(c)........... 33,058
Registration fees................................ 20,585
Custodian fees--Note 3(b)......................... 19,467
Prospectus and shareholders' reports............. 16,505
Miscellaneous.................................... 4,119
------------
Total Expenses.............................. 1,847,049
Less--reduction in management fee due to
undertaking--Note 3(a).......................... (266,266)
------------
Net Expenses................................ 1,580,783
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INVESTMENT INCOME--NET.......................................................... 12,674,163
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments............. $(3,220,201)
Net unrealized appreciation (depreciation) on investments (3,682,345)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS........................ (6,902,546)
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................... $ 5,771,617
=============
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus 100% U.S. Treasury Intermediate Term Fund
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Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1996 December 31, 1995
-------------------- --------------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................... $ 12,674,163 $ 12,966,407
Net realized gain (loss) on investments.............................. (3,220,201) 8,404,823
Net unrealized appreciation (depreciation) on investments............ (3,682,345) 5,541,860
--------------- ----------------
Net Increase (Decrease) in Net Assets Resulting from Operations.. 5,771,617 26,913,090
--------------- ----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net................................................ (12,743,881) (12,933,721)
--------------- ----------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................ 52,985,573 47,025,259
Dividends reinvested................................................. 8,428,334 8,800,668
Cost of shares redeemed.............................................. (59,115,390) (58,096,444)
--------------- ----------------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 2,298,517 (2,270,517)
--------------- ----------------
Total Increase (Decrease) in Net Assets........................ (4,673,747) 11,708,852
NET ASSETS:
Beginning of Period.................................................. 196,970,096 185,261,244
--------------- ----------------
End of Period........................................................ $192,296,349 $196,970,096
=============== ================
Undistributed investment income--net.................................... -- $ 69,718
--------------- ----------------
Shares Shares
--------------- ----------------
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 4,149,186 3,690,380
Shares issued for dividends reinvested............................... 663,235 689,567
Shares redeemed...................................................... (4,654,680) (4,614,513)
--------------- ----------------
Net Increase (Decrease) in Shares Outstanding.................... 157,741 (234,566)
=============== ================
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus 100% U.S. Treasury Intermediate Term Fund
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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.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------
PER SHARE DATA: 1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $13.13 $12.16 $13.60 $13.12 $13.22
------ ------ ------ ------ ------
Investment Operations:
Investment income--net.............................. .82 .89 .91 .95 1.00
Net realized and unrealized gain (loss) on investments (.44) .97 (1.44) .48 (.10)
------ ------ ------ ------ ------
Total from Investment Operations................... .38 1.86 (.53) 1.43 .90
------ ------ ------ ------ ------
Distributions:
Dividends from investment income--net............... (.82) (.89) (.91) (.95) (1.00)
------ ------ ------ ------ ------
Net asset value, end of period..................... $12.69 $13.13 $12.16 $13.60 $13.12
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN............................... 3.08% 15.77% (3.97%) 11.05% 7.17%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............ .80% .84% .89% .73% .52%
Ratio of net investment income
to average net assets........................... 6.41% 7.02% 7.15% 6.92% 7.68%
Decrease reflected in above expense ratios
due to undertakings by the Manager.............. .13% .02% -- .13% .38%
Portfolio Turnover Rate............................ 728.01% 492.76% 696.65% 333.76% 115.78%
Net Assets, end of period (000's Omitted).......... $192,296 $196,970 $185,261 $254,278 $231,094
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus 100% U.S. Treasury Intermediate Term Fund
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NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus 100% U.S. Treasury Intermediate Term Fund (the "Fund') is registered
under the Investment Company Act of 1940 ("Act") as a diversified open-end
management investment company. The 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 ("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. acts as 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: The Fund's investments are valued at the mean
between quoted bid and asked prices.
(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.
(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. 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 Internal Revenue 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 $17,527,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1996. If not
applied, $14,530,000 of the carryover expires in fiscal 2002 and $2,997,000 of
the carryover expires in fiscal 2004.
NOTE 2--Bank Line of Credit:
The Fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the time
of borrowings. For the period ended December 31, 1996, the Fund did not borrow
under the line of credit.
NOTE 3--Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement ("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 has
undertaken from January 1, 1996 through December 31, 1997 to reduce the
management fee paid by, or reimburse such excess expenses of the Fund, to the
extent that the Fund's aggregate expenses (exclusive of taxes, brokerage,
interest on borrowings and extraordinary expenses) exceed an annual rate of .80
of 1% of the value of the Fund's average daily
<PAGE>
Dreyfus 100% U.S. Treasury Intermediate Term Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
net assets. The reduction in management fee, pursuant to the undertaking,
amounted to $266,266 during the period ended December 31, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(b) Pursuant to the Fund's 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, 1996, the Fund was charged an aggregate of
$358,319 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. Such compensation
amounted to $114,283 during the period ended December 31, 1996.
Effective May 10, 1996, the Fund entered into a custody agreement with Mellon
to provide custodial services for the Fund. During the period ended December 31,
1996, $10,903 was charged by Mellon 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:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended December 31, 1996,
amounted to $1,325,900,197 and $1,286,358,168, respectively.
At December 31, 1996, accumulated net unrealized depreciation on investments
was $1,283,214, consisting of $204,874 gross unrealized appreciation and
$1,488,088 gross unrealized depreciation.
At December 31, 1996, 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).
<PAGE>
Dreyfus 100% U.S. Treasury Intermediate Term Fund
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Report of Ernst & Young LLP, Independent Auditors
Shareholders and Board of Trustees
Dreyfus 100% U.S. Treasury Intermediate Term Fund
We have audited the accompanying statement of assets and liabilities of
Dreyfus 100% U.S. Treasury Intermediate Term Fund, including the statement of
investments, as of December 31, 1996, 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. Our procedures included verification by examination of securities
held by the custodian as of December 31, 1996 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 100% U.S. Treasury Intermediate Term Fund at December 31, 1996, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the indicated years, in conformity with generally accepted
accounting principles.
Ernst & Young
New York, New York
January 29, 1997
Important Tax Information (Unaudited)
For State individual income tax purposes, the Fund hereby designates 100% of
the ordinary income dividends paid during its fiscal year ended December 31,
1996 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.
<PAGE>
Dreyfus 100% U.S. Treasury
Intermediate 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. 072AR9612
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS 100% U.S. TREASURY INTERMEDIATE TERM FUND
AND THE MERRILL LYNCH GOVERNMENTS, U.S. TREASURY,
INTERMEDIATE-TERM (1-9.99 YEARS) INDEX
EXHIBIT A:
MERRILL LYNCH
GOVERNMENTS, DREYFUS 100% U.S.
U.S. TREASURY, TREASURY
PERIOD INTERMEDIATE-TERM INTERMEDIATE
(1-9.99 YEARS) INDEX TERM FUND
3/27/87 10,000 10,000
12/31/87 10,187 10,124
12/31/88 10,832 10,711
12/31/89 12,196 12,090
12/31/90 13,355 13,129
12/31/91 15,223 15,128
12/31/92 16,279 16,213
12/31/93 17,611 18,005
12/31/94 17,311 17,291
12/31/95 19,837 20,019
12/31/96 20,609 20,635
*Source: Merrill Lynch, Pierce, Fenner and Smith Inc.
