DREYFUS 100% U.S. TREASURY SHORT TERM FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus 100% U.S.
Treasury Short-Term Fund. For its annual reporting period ended December 31,
1996, your Fund paid income dividends of approximately $.902 per share, which
is equivalent to an annualized distribution rate per share of 6.04%.* Total
return for the year, which includes price fluctuations, was 4.07% **
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 12 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 also been helped by foreign demand for Treasuries. As foreigners
continued to buy Treasuries in record amounts, the 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 relatively defensively through most of 1996, with
a maximum dollar-weighted average portfolio maturity of less than 2.5 years.
(Under normal market conditions, the Fund's maturity ranges from 2-3 years.)
In June, the average maturity was about 2.18 years. We extended the Fund's
average maturity in the late part of the summer, and by September it was 2.4
years. This strategy benefited our shareholders as interest rates moved
higher from February to August 1996, and then declined afterwards. At the end
of the fiscal year, the Fund's average maturity was 2.41 years.
The Fund underperformed its benchmark index, the Merrill Lynch
Governments, U.S. Treasury, Short-Term Index, by 91 basis points. This is
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 signature logo]
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.
<TABLE>
<CAPTION>
DREYFUS 100% U.S. TREASURY SHORT TERM FUND DECEMBER 31, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS 100% U.S.
TREASURY SHORT TERM FUND AND
THE MERRILL LYNCH GOVERNMENTS, U.S. TREASURY, SHORT-TERM (1-2.99 YEARS) INDEX
[Exhibit A:
Dollars
$20,525
Dreyfus 100%
U.S. Treasury
Short Term Fund
$19,650
Merrill Lynch
Governments,
U.S. Treasury, Short-Term
(1-2.99 Years) Index*
*Source: Merrill Lynch, Pierce, Fenner and Smith Inc.]
Average Annual Total Returns
One Year Ended Five Years Ended From Inception (9/10/87)
December 31, 1996 December 31, 1996 to December 31, 1996
____________________ ____________________ ______________________
<S> <C> <C>
4.07% 5.76% 8.03%
</TABLE>
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 Governments, U.S. Treasury, Short-Term (1-2.99
Years) Index 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 shown in the line graph takes into account fees and
expenses. Unlike the Fund, the Merrill Lynch Governments, U.S. Treasury,
Short-Term (1-2.99 Years) Index is an unmanaged performance benchmark for
Treasury securities with maturities of 1-2.99 years; issues in the Index must
have par amounts outstanding greater than or equal to $25 million. The Index
does not take into account charges, fees and other expenses. Further
information relating to Fund performance, including expense reimbursements,
if applicable, is contained in the Financial Highlights section of the
Prospectus and elsewhere in this report.
<TABLE>
<CAPTION>
DREYFUS 100% U.S. TREASURY SHORT TERM FUND
STATEMENT OF INVESTMENTS DECEMBER 31, 1996
Principal
Bonds and Notes_113.8% Amount Value
______ ______
<S> <C> <C>
U.S. Treasury Bonds_4.8%
13 1/8%, 5/15/2001........................................................ $ 5,850,000 $7,379,227
13 3/4%, 8/15/2004........................................................ 1,200,000 1,727,437
______
9,106,664
______
U.S. Treasury Notes_109.0%
6 1/8%, 8/31/1998......................................................... 24,775,000 24,889,198
6%, 9/30/1998............................................................. 66,300,000 66,481,291
5 3/4%, 12/31/1998........................................................ 53,000,000 52,879,923
6 3/4%, 5/31/1999......................................................... 7,400,000 7,528,344
5 7/8%, 11/15/1999........................................................ 25,000,000 24,906,250
7 3/4%, 1/31/2000......................................................... 2,000,000 2,093,125
6 3/4%, 4/30/2000......................................................... 10,000,000 10,192,188
6 3/8%, 9/30/2001......................................................... 10,400,000 10,465,000
7 1/2%, 11/15/2001........................................................ 5,000,000 5,264,844
______
204,700,163
______
TOTAL INVESTMENTS
(cost $214,261,621)....................................................... 113.8% $213,806,827
====== ======
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (13.8%) $(25,980,491)
====== ======
NET ASSETS.................................................................. 100.0% $187,826,336
====== ======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS 100% U.S. TREASURY SHORT TERM FUND
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1996
Cost Value
______ ______
ASSETS: Investments in securities_See Statement of Investments $214,261,621 $213,806,827
Cash....................................... 224,124
Interest receivable........................ 2,411,925
Receivable for shares of Beneficial Interest subscribed 2,500
Prepaid expenses and other assets.......... 16,795
______
216,462,171
______
LIABILITIES:
Due to The Dreyfus Corporation and affiliates 58,336
Payable for investment securities purchased 28,027,773
Payable for shares of Beneficial Interest redeemed 494,600
Accrued expenses........................... 55,126
______
28,635,835
______
NET ASSETS.................................................................. $187,826,336
======
REPRESENTED BY: Paid-in capital............................ $203,851,786
Accumulated net realized gain (loss) on investments (15,570,656)
Accumulated net unrealized appreciation (depreciation)
on investments_Note 4....................... (454,794)
______
NET ASSETS.................................................................. $187,826,336
======
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST
AUTHORIZED) ........................................... 12,677,691
NET ASSET VALUE, offering and redemption price per share.................... $14.82
===
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS 100% U.S. TREASURY SHORT TERM FUND
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996
INVESTMENT INCOME
INCOME Interest Income............................ $13,116,806
EXPENSES: Management fee_Note 3(a)................... $ 1,167,392
Shareholder servicing costs_Note 3(b)...... 592,827
Professional fees.......................... 39,878
Trustees' fees and expenses_Note 3(c)...... 33,978
Custodian fees_Note 3(b)................... 18,945
Registration fees.......................... 16,829
Prospectus and shareholders' reports....... 12,815
Miscellaneous.............................. 4,022
______
Total Expenses....................... 1,886,686
Less_reduction in management fee due to
undertaking_Note 3(a).................. (524,729)
______
Net Expenses......................... 1,361,957
______
INVESTMENT INCOME_NET....................................................... 11,754,849
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $(2,701,782)
Net unrealized appreciation (depreciation) on investments (1,586,270)
______
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... (4,288,052)
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 7,466,797
======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS 100% U.S. TREASURY SHORT TERM FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, 1996 December 31, 1995
_________ _________
OPERATIONS:
Investment income_net............................................... $ 11,754,849 $ 12,424,362
Net realized gain (loss) on investments............................. (2,701,782) 756,726
Net unrealized appreciation (depreciation) on investments........... (1,586,270) 5,998,054
_______ _______
Net Increase (Decrease) in Net Assets Resulting from Operations... 7,466,797 19,179,142
_______ _______
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net............................................... (11,820,993) (12,391,432)
_______ _______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold....................................... 97,381,967 82,806,129
Dividends reinvested................................................ 8,806,448 8,752,599
Cost of shares redeemed............................................. (102,733,977) (82,176,313)
_______ _______
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 3,454,438 9,382,415
_______ _______
Total Increase (Decrease) in Net Assets....................... (899,758) 16,170,125
NET ASSETS:
Beginning of Period................................................. 188,726,094 172,555,969
_______ _______
End of Period....................................................... $ 187,826,336 $ 188,726,094
======= =======
UNDISTRIBUTED INVESTMENT INCOME_NET..................................... ___ $ 66,144
_______ _______
Shares Shares
_______ _______
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................... 6,545,260 5,545,332
Shares issued for dividends reinvested.............................. 593,259 586,742
Shares redeemed..................................................... (6,927,652) (5,520,766)
_______ _______
Net Increase (Decrease) in Shares Outstanding..................... 210,867 611,308
======= =======
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 period indicated. This
information has been derived from the Fund's financial statements.
Year Ended December 31,
______________________________________________________
PER SHARE DATA: 1996 1995 1994 1993 1992
___ ___ ___ ___ ___
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $15.14 $14.55 $15.75 $15.91 $16.18
___ ___ ___ ___ ___
Investment Operations:
Investment income_net........................ .90 1.03 1.15 1.25 1.35
Net realized and unrealized gain (loss)
on investments............................. (.32) .59 (1.20) (.16) (.27)
___ ___ ___ ___ ___
Total from Investment Operations............. .58 1.62 (.05) 1.09 1.08
___ ___ ___ ___ ___
Distributions:
Dividends from investment income_net......... (.90) (1.03) (1.15) (1.25) (1.35)
___ ___ ___ ___ ___
Net asset value, end of period............... $14.82 $15.14 $14.55 $15.75 $15.91
=== === === === ===
TOTAL INVESTMENT RETURN.......................... 4.07% 11.38% (.33%) 7.03% 7.01%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .70% .65% .35% .11% .03%
Ratio of net investment income
to average net assets...................... 6.04% 6.90% 7.61% 7.82% 8.34%
Decrease reflected in above expense ratios
due to undertakings by the Manager......... .27% .29% .59% .85% 1.09%
Portfolio Turnover Rate...................... 539.38% 480.44% 499.11% 322.62% 137.93%
Net Assets, end of period (000's Omitted).... $187,826 $188,726 $172,556 $188,300 $144,058
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS 100% U.S. TREASURY SHORT TERM FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus 100% U.S. Treasury Short Term Fund (the "Fund") is registered
under the Investment Company Act of 1940 ("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 ("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
$15,571,000 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, $10,865,000 of the carryover expires in fiscal 2002,
$2,004,000 expires in fiscal 2003 and $2,702,000 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
.70 of 1% of the value of the Fund's average daily net assets. The reduction
in management fee, pursuant to the undertaking, amounted to $524,729 during
the period ended December 31, 1996.
DREYFUS 100% U.S. TREASURY SHORT TERM FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 $433,112 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 $112,665 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, $10,976 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 $958,172,153 and $887,474,662, respectively.
At December 31, 1996, accumulated net unrealized depreciation on
investments was $454,794, consisting of $155,812 gross unrealized
appreciation and $610,606 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).
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, 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 Short 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 and Young LLP signature logo]
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.
[Dreyfus lion "d" logo]
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
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. 081AR9612
[Dreyfus logo]
100% U.S. Treasury
Short Term Fund
Annual Report
December 31, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS 100% U.S. TREASURY SHORT TERM FUND AND THE
MERRILL LYNCH GOVERNMENTS, U.S. TREASURY, SHORT-TERM
(1-2.99 YEARS) INDEX
EXHIBIT A:
MERRILL LYNCH
GOVERNMENTS, U.S. DREYFUS 100% U.S.
PERIOD TREASURY, SHORT-TERM TREASURY
(1-2.99 YEARS) INDEX* 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
12/31/95 18,718 19,722
12/31/96 19,650 20,525
*Source: Merrill Lynch, Pierce, Fenner and Smith Inc.
