LETTER TO SHAREHOLDERS
Dear Shareholder:
This past year was a very difficult one for all financial markets, but
assuredly it was most difficult for fixed-income investments. The sharp rise
in interest rates that began in late 1993 continued right through 1994.
Investors' fear of inflation was the primary cause, and this same fear of
inflation caused the Federal Reserve Board to tighten credit six times over
the course of the year. The 30-year Treasury bond was yielding 6.42% on
January 3, 1994, and by December 31, 1994 it was yielding 7.88%. Long-term
rates were not the only casualty. On those same respective dates, the 2-year
Treasury note was yielding 4.32%, and ended the year at 7.70%.
As mentioned, the primary reason for the Federal Reserve to raise rates
was fear of an economy moving too fast, which in their view would cause
inflation. To date, inflation as measured by the Consumer Price Index has
remained steady and, after the past rate hikes, we expect it to remain so. We
believe the Federal Reserve, by acting to limit inflation, has made 1995 more
attractive for fixed-income investors. Right now, the yield of Treasury
securities minus the rate of inflation, otherwise known as the "real rate of
return" is at a historic high.
As we mentioned, 1994 was a difficult year, and your Fund was impaired by
these higher rates. The total return for the Dreyfus 100% U.S. Treasury Short
Term Fund for the 12 months ended December 31, 1994 was -.33%.* Of some
consolation is the fact that your Fund provided a steady income even though
the net asset value declined. The annualized distribution rate per share for
the period ended December 31, 1994 was 7.91%.**
We are more optimistic about 1995. In our view, the prospective real rate
of return for Treasury securities makes fixed-income investments attractive.
Additionally, Federal Reserve tightenings generally have a six- to nine-month
lag before the slowing effects of higher rates on the economy are apparent.
The results of the Federal Reserve's vigilance should be evident by the end
of the first quarter of 1995. We further believe that the Federal Reserve is
closer to the end of its tightening for this cycle, with possibly two more
moves in 1995. These final moves, in our opinion, would forestall any
remaining chances of a rise in inflation. Furthermore, signs of a slowdown
have already appeared. Christmas season shopping was lackluster for the most
part. Auto sales, which represent a significant amount of Gross Domestic
Product, are slowing. Finally, exports, while poised to fare better, will
have difficulties since our major trading partners (Mexico, Canada, etc.) are
having currency difficulties.
As you know from our previous letter, we positioned your Fund very
defensively, keeping the portfolio's dollar-weighted average maturity at
around two years. As we move forward, we will look to extend into longer
maturities as conditions and opportunities warrant. It should be noted here
that your Fund is a pure 100% Treasury fund. Unlike other so-called
Government funds, we do not use mortgages, derivatives or risky speculative
techniques (such as futures, options, etc.). Dreyfus is proud to provide you
with a quality fund that adheres to its name.
In closing, we want to thank you for being an investor in this Fund, and
you can be assured that we will remain steadfast in our goal to provide you
with an attractive, quality fund.
Sincerely,
(Logo Signature)
Gerald E. Thunelius
Portfolio Manager
January 30, 1995
New York, N.Y.
* Total return represents the change during the period in a
hypothetical account with dividends reinvested.
** Annualized 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 100% U.S. TREASURY SHORT TERM FUND
DECEMBER 31, 1994
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS 100% U.S.
TREASURY SHORT TERM FUND AND THE MERRILL LYNCH TREASURY MASTER
INDEX-SHORT-TERM
*Source: Merrill Lynch Pierce, Fenner and Smith Inc.
(Exhibit A)
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR ENDED FIVE YEARS ENDED FROM INCEPTION (9/10/87)
DECEMBER 31, 1994 DECEMBER 31, 1994 TO DECEMBER 31, 1994
--------------------- --------------------- ---------------------------
(.33%) 6.49% 8.13%
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Dreyfus 100% U.S.
Treasury Short Term Fund on 9/10/87 (Inception Date) to a $10,000 investment
made in the Merrill Lynch Treasury Master Index-Short-Term on that date. All
dividends and capital gain distributions are reinvested.
The Fund invests exclusively in U.S. Treasury securities. The Fund's
portfolio of U.S. Treasury securities will, under normal market conditions,
have a dollar-weighted average maturity ranging between two and three years.
The Fund's performance takes into account fees and expenses. Unlike the Fund,
the Merrill Lynch Treasury Master Index-Short-Term is an unmanaged
performance benchmark for Treasury securities with maturities of 1-2.99
years. The Index does not take into account charges, fees and other expenses.
Further information relating to Fund performance including any expense
reimbursements, if applicable, is contained in the Condensed Financial
Information section of the Prospectus and elsewhere in this report.
<TABLE>
<CAPTION>
DREYFUS 100% U.S. TREASURY SHORT TERM FUND
STATEMENT OF INVESTMENTS DECEMBER 31, 1994
PRINCIPAL
BONDS AND NOTES--83.5% AMOUNT VALUE
-------------- ------------
<S> <S> <S>
U.S. TREASURY BONDS--6.0%
11 1/2%, 11/15/1995..................................................... $10,000,000 $10,368,750
------------
U.S. TREASURY NOTES--77.5%
11 1/4%, 5/15/1995...................................................... 10,000,000 10,175,000
9 1/4%, 1/15/1996....................................................... 15,000,000 15,276,570
9 3/8%, 4/15/1996....................................................... 20,000,000 20,450,000
7 1/2%, 12/31/1996...................................................... 15,000,000 14,947,260
8 1/2%, 4/15/1997....................................................... 15,000,000 15,225,000
7 3/8%, 11/15/1997...................................................... 30,000,000 29,685,930
7 7/8%, 1/15/1998....................................................... 28,000,000 28,043,764
------------
133,803,524
------------
TOTAL BONDS AND NOTES
(cost $149,007,664)..................................................... $144,172,274
============
SHORT-TERM INVESTMENTS--23.9%
U.S. TREASURY BILLS:
4.71%, 1/19/1995........................................................ $17,895,000 $17,842,926
3.58%, 1/26/1995........................................................ 23,468,000 23,388,443
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $41,262,557)...................................................... $ 41,231,369
============
TOTAL INVESTMENTS
(cost $190,270,221)..................................................... 107.4% $185,403,643
====== ============
LIABILITIES, LESS CASH AND RECEIVABLES ..................................... (7.4%) $ (12,847,674)
====== ============
NET ASSETS ........................................................... 100.0% $172,555,969
====== ============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS 100% U.S. TREASURY SHORT TERM FUND
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1994
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $190,270,221)_see statement..................................... $185,403,643
Cash.................................................................... 722,757
Interest receivable..................................................... 2,917,210
Receivable for shares of Beneficial Interest subscribed................. 32,600
Prepaid expenses........................................................ 3,199
------------
189,079,409
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 14,832
Payable for investment securities purchased............................. 14,980,950
Payable for shares of Beneficial Interest redeemed...................... 1,428,070
Accrued expenses ....................................................... 99,588 16,523,440
------------- ------------
NET ASSETS ................................................................ $172,555,969
============
REPRESENTED BY:
Paid-in capital......................................................... $191,014,933
Accumulated undistributed investment income_net......................... 33,214
Accumulated net realized (loss) on investments.......................... (13,625,600)
Accumulated gross unrealized (depreciation) on investments.............. (4,866,578)
--------------
NET ASSETS at value applicable to 11,855,516 shares outstanding
(unlimited number of $.001 par value shares of Beneficial
Interest authorized).................................................... $172,555,969
============
NET ASSET VALUE, offering and redemption price per share
($172,555,969 / 11,855,516 shares)...................................... $14.55
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS 100% U.S. TREASURY SHORT TERM FUND
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1994
INVESTMENT INCOME:
<S> <C> <C>
INTEREST INCOME......................................................... $ 14,692,059
EXPENSES:
Management fee_Note 2(a).............................................. $ 1,107,463
Shareholder servicing costs_Note 2(b)................................. 437,882
Registration fees..................................................... 40,863
Auditing fees......................................................... 40,031
Prospectus and shareholders' reports.................................. 28,488
Trustees' fees and expenses_Note 2(c)................................. 26,918
Custodian fees........................................................ 23,462
Legal fees............................................................ 16,144
Miscellaneous......................................................... 6,066
--------------
1,727,317
Less_reduction in management fee
due to undertakings_Note 2(a)..................................... 1,086,277
--------------
TOTAL EXPENSES.................................................. 641,040
--------------
INVESTMENT INCOME--NET.......................................... 14,051,019
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments_Note 3............................... $(13,625,600)
Net unrealized (depreciation) on investments............................ (1,006,227)
--------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (14,631,827)
--------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (580,808)
===============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS 100% U.S. TREASURY SHORT TERM FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
--------------------------------
1993 1994
-------------- --------------
OPERATIONS:
<S> <C> <C>
Investment income_net................................................... $ 14,115,850 $ 14,051,019
Net realized gain (loss) on investments................................. 56,537 (13,625,600)
Net unrealized (depreciation) on investments for the year............... (2,514,719) (1,006,227)
-------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... 11,657,668 (580,808)
-------------- ------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income_net................................................... (14,115,850) (14,017,805)
-------------- ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................... 160,026,733 138,150,896
Dividends reinvested.................................................... 11,481,759 10,359,891
Cost of shares redeemed................................................. (124,808,796) (149,655,822)
-------------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 46,699,696 (1,145,035)
-------------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... 44,241,514 (15,743,648)
NET ASSETS:
Beginning of year....................................................... 144,058,103 188,299,617
-------------- ------------
End of year (including undistributed investment income_net;
$33,214 in 1994)...................................................... $188,299,617 $172,555,969
============ =============
SHARES SHARES
-------------- ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 9,984,860 9,091,012
Shares issued for dividends reinvested.................................. 717,765 686,796
Shares redeemed......................................................... (7,800,266) (9,881,489)
-------------- ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... 2,902,359 (103,681)
============ =============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS 100% U.S. TREASURY SHORT 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 year indicated. This
information has been derived from the Fund's financial statements.
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
PER SHARE DATA: 1990 1991 1992 1993 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........... $15.62 $15.40 $16.18 $15.91 $15.75
------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income_net........................ 1.14 1.13 1.35 1.25 1.15
Net realized and unrealized gain (loss) on investments (.22) .78 (.27) (.16) (1.20)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS........... .92 1.91 1.08 1.09 (.05)
------ ------ ------ ------ ------
DISTRIBUTIONS;
Dividends from investment income_net......... (1.14) (1.13) (1.35) (1.25) (1.15)
------ ------ ------ ------ ------
Net asset value, end of year................. $15.40 $16.18 $15.91 $15.75 $14.55
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN 6.24% 12.92% 7.01% 7.03% (.33%)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... -- -- .03% .11% .35%
Ratio of net investment income to average net assets 7.50% 8.60% 8.34% 7.82% 7.61%
Decrease reflected in above expense ratios due to
undertakings by the Manager (limited to the
expense limitation provision of the management
agreement)................................. 1.50% 1.50% 1.09% .85% .59%
Portfolio Turnover Rate...................... -- 59.59% 137.93% 322.62% 499.11%
Net Assets, end of year (000's omitted)...... $239 $29,183 $144,058 $188,300 $172,556
</TABLE>
See notes to financial statements.
DREYFUS 100% U.S. TREASURY SHORT TERM FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. Dreyfus Service
Corporation, until August 24, 1994, acted as the exclusive distributor of the
Fund's shares, which are sold to the public without a sales charge. Dreyfus
Service Corporation is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
Effective January 1, 1994, the Fund was reorganized as a Massachusetts
business trust under the name Dreyfus 100% U.S. Treasury Short Term Fund.
(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.
Prior to January 1, 1994 the Fund was a limited partnership and was not
required to distribute realized capital gains to avoid Federal income and
excise taxes. Prior years' gains and losses had been allocated to
shareholders and not paid, in accordance with the limited partnership
structure. This resulted in a difference between financial reporting purposes
versus Federal Income tax purposes, with respect to the treatment of such
allocated gains and losses. The Fund has therefore reclassified $414,104 from
accumulated net realized loss on investments to paid-in-capital. This amount
represented the cumulative effect of such differences. Results of operations
and net assets were not effected by this reclassification.
(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
$10,865,000 available for Federal income tax purposes to be applied against
future net securities profit, if any realized subsequent to December 31,
1994. The carryover does not include net realized securities losses from
November 1, 1994 through December 31, 1994 which are treated, for Federal
income tax purposes, as arising in fiscal 1995. If not applied, the carryover
expires in fiscal 2002.
DREYFUS 100% U.S. TREASURY SHORT TERM FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--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 average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, interest on borrowings, brokerage and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund. The most stringent state expense limitation
applicable to the Fund presently requires reimbursement of expenses in any
full year that such expenses (exclusive of distribution expenses and certain
expenses as described above) exceed 21/2% of the first $30 million, 2% of the
next $70 million and 11/2% of the excess over $100 million of the average
value of the Fund's net assets in accordance with California "blue sky"
regulations. However, the Manager had undertaken from January 1, 1994 through
January 30, 1995 to reduce the management fee paid by, and reimburse such
excess expenses of the Fund, to the extent that the Fund's aggregate expenses
(excluding certain expenses, as described above) exceeded specified annual
percentages of the Fund's average daily net assets. The reduction in the
management fee pursuant to the undertakings, amounted to $1,086,277 for the
year ended December 31, 1994.
The Manager has currently undertaken from January 31, 1995 through March
31, 1995, or until such time as the net assets of the Fund exceed $250
million, regardless of whether they remain at that level, to waive receipt of
the management fee payable to it by the Fund in excess of an annual rate of
.20 of 1% of the average daily value of the Fund's net assets.
The undertaking may be modified by the Manager from time to time,
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 an amount not to exceed an annual rate of .25 of
1% of the value of the Fund's average daily net assets for servicing
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 year ended
December 31, 1994, the Fund was charged an aggregate of $281,184 pursuant to
the Shareholder Services Plan.
(C) Prior to August 24, 1994, certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives an annual fee of $2,500 and an attendance fee of $250 per meeting.
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
other than short-term securities, during the year ended December 31, 1994,
amounted to $816,953,546 and $860,107,051, respectively.
At December 31, 1994, 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 100% U.S. TREASURY SHORT TERM FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS 100% U.S. TREASURY SHORT TERM FUND
We have audited the accompanying statement of assets and liabilities of
Dreyfus 100% U.S. Treasury Short Term Fund, including the statement of
investments, as of December 31, 1994, 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 confirmation of
securities owned as of December 31, 1994 by correspondence with the custodian
and brokers. 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 Short Term Fund at December 31, 1994,
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.
(Logo Signature)
New York, New York
February 3, 1995
DREYFUS 100% U.S. TREASURY SHORT TERM FUND
IMPORTANT TAX INFORMATION (UNAUDITED)
For State individual income tax purposes, the Fund hereby designates
100.00% of the ordinary income dividends paid during its fiscal year ended
December 31, 1994 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.
DREYFUS 100% U.S. TREASURY
SHORT TERM FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 081AR9412
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS 100% U.S. TREASURY SHORT TERM FUND AND THE
MERRILL LYNCH TREASURY MASTER INDEX-SHORT-TERM
EXHIBIT A:
____________________________________________________________
| | | |
| | MERRILL LYNCH | |
| PERIOD | TREASURY MASTER |DREYFUS 100% U.S. TREASURY |
| | INDEX-SHORT-TERM *| SHORT TERM FUND |
|-----------| ------------------|---------------------------|
| 9/10/87 | 10,000 | 10,000 |
| 12/31/87 | 10,369 | 10,623 |
| 12/31/88 | 11,014 | 11,460 |
| 12/31/89 | 12,212 | 12,930 |
| 12/31/90 | 13,399 | 13,737 |
| 12/31/91 | 14,964 | 15,512 |
| 12/31/92 | 15,907 | 16,600 |
| 12/31/93 | 16,768 | 17,766 |
| 12/31/94 | 16,863 | 17,707 |
|-----------------------------------------------------------|
*Source: Merrill Lynch, Pierce, Fenner and Smith Inc.
