Dreyfus U.S. Treasury
Short 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
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
17 Report of Independent Auditors
18 Important Tax Information
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus U.S. Treasury
Short Term Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus U.S. Treasury Short
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 Short 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 Short Term Fund perform relative to its
benchmark?
For the 12-month period ended December 31, 1999, Dreyfus U.S. Treasury Short
Term Fund produced a total return of 1.39% .(1) In contrast, the fund's
benchmark, the Merrill Lynch Governments, U.S. Treasury, Short-Term (1-3 Years)
Index, provided a 3.06% total return.(2) The fund's income dividends paid from
net investment income during the period amounted to approximately $0.8202 per
share, representing a distribution rate per share of 5.79%.(3)
We attribute the fund's modest absolute performance to rising interest rates and
a highly volatile bond market, in which the U.S. Treasury sector was
particularly hard-hit. We attribute the fund's relative underperformance to the
benchmark' s AVERAGE WEIGHTED MATURITY -- a measure of the fund's sensitivity to
changing interest rates -- which was shorter than the average weighted maturity
for the fund. A shorter average weighted maturity generally helps bond market
performance when interest rates are rising.
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 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 considered to rank among the highest credit
quality investments available. By investing in these obligations, the fund seeks
to maintain a high degree of safety. Of course, the market value of the fund's
securities and the value of fund shares
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
are not insured or guaranteed by the U.S. government. The fund generally
maintains an average dollar-weighted maturity of between two and three years
What other factors influenced the fund's performance?
Like virtually all fixed-income investments, 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, SHORT-TERM (1-3 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 $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
Short Term Fund and the Merrill Lynch Governments, U.S. Treasury, Short-Term
(1-3 Years) Index
- --------------------------------------------------------------------------------
Average Annual Total Returns AS OF 12/31/99
<TABLE>
1 Year 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FUND 1.39% 5.77% 6.13%
</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
SHORT TERM FUND ON 12/31/89 TO A $10,000 INVESTMENT MADE IN THE MERRILL LYNCH
GOVERNMENTS, U.S. TREASURY, SHORT-TERM (1-3 YEARS) 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 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 (1-3 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 $1 BILLION. THE INDEX DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND
OTHER EXPENSES. FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING
EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS
SECTION OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
STATEMENT OF INVESTMENTS
December 31, 1999
<TABLE>
Principal
BONDS AND NOTES--102.3% Amount ($) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY--27.9%
Federal Home Loan Banks,
Medium-Term Notes, 5.86%, 4/28/2003 10,000,000 9,741,300
Federal Home Loan Mortgage,
Medium-Term Notes, 5.5%, 5/15/2002 7,000,000 6,831,307
Federal National Mortgage Association:
Medium-Term Notes, 6.25%, 11/15/2002 10,000,000 9,897,300
Medium-Term Notes, 6.94%, 9/5/2007 5,000,000 4,809,300
Tennessee Valley Authority,
Valley Indexed Principal Securities,
3.375%, 1/15/2007 13,303,000 (a) 12,883,184
U.S. Government Gtd. Development,
Participation Ctfs.
(Gtd. By U.S. Small Business Administration):
Ser. 1998-20, Cl. E, 6.3%, 5/1/2018 175,140 164,447
Ser. 1998-20, Cl. J, 5.5%, 10/1/2018 229,634 204,293
Ser. 1998-20, Cl. L, 5.8%, 12/1/2018 1,434,977 1,300,204
45,831,335
U.S. TREASURY BONDS--19.3%
11.75%, 2/15/2001 5,000,000 5,303,700
12.375%, 5/15/2004 16,500,000 20,109,210
13.125%, 5/15/2001 5,850,000 6,373,867
31,786,777
U.S. TREASURY INFLATION PROTECTION SECURITIES--3.2%
3.625%, 7/15/2002 5,000,000 (a) 5,199,650
U.S. TREASURY NOTES--51.9%
5.5%, 8/31/2001 30,000,000 29,657,400
5.625%, 9/30/2001 30,000,000 29,711,400
5.875%, 10/31/2001 6,000,000 5,963,160
6.125%, 12/31/2001 15,000,000 14,967,900
8.5%, 11/15/2000 5,000,000 5,099,850
85,399,710
TOTAL BONDS AND NOTES
(cost $172,251,925) 168,217,472
The Fund
STATEMENT OF INVESTMENTS (CONTINUED)
Principal
SHORT-TERM INVESTMENTS--.6% Amount ($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS:
4.23%, 1/13/2000 790,000 788,981
4.96%, 3/30/2000 280,000 276,508
TOTAL SHORT-TERM INVESTMENTS
(cost $1,065,453) 1,065,489
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $173,317,378) 102.9% 169,282,961
LIABILITIES, LESS CASH AND RECEIVABLES (2.9%) (4,818,211)
NET ASSETS 100.0% 164,464,750
(A) PRINCIPAL AMOUNT FOR ACCRUAL PURPOSES IS PERIODICALLY ADJUSTED BASED
ON CHANGES TO THE CONSUMER PRICE INDEX.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 173,317,378 169,282,961
Cash 1,316,081
Interest receivable 2,370,151
Prepaid expenses and other assets 13,937
72,983,130
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 93,308
Payable for investment securities purchased 6,991,502
Payable for shares of Beneficial Interest redeemed 1,329,640
Accrued expenses 103,930
8,518,380
- --------------------------------------------------------------------------------
NET ASSETS ($) 164,464,750
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 188,587,531
Accumulated net realized gain (loss) on investments (20,088,364)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 (4,034,417)
- --------------------------------------------------------------------------------
NET ASSETS ($) 164,464,750
- --------------------------------------------------------------------------------
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized)
11,617,149
NET ASSET VALUE, offering and redemption price per share ($) 14.16
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 11,232,892
EXPENSES:
Management fee--Note 3(a) 1,039,985
Shareholder servicing costs--Note 3(b) 413,794
Professional fees 45,330
Trustees' fees and expenses--Note 3(c) 36,967
Registration fees 24,813
Custodian fees--Note 3(b) 20,028
Prospectus and shareholders' reports 14,316
Miscellaneous 5,284
TOTAL EXPENSES 1,600,517
Less--reduction in management fee due to undertaking--Note 3(a) (213,870)
NET EXPENSES 1,386,647
INVESTMENT INCOME--NET 9,846,245
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (4,633,209)
Net unrealized appreciation (depreciation) on investments (2,850,088)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (7,483,297)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2,362,948
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
--------------------------------
1999 1998
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 9,846,245 11,139,837
Net realized gain (loss) on investments (4,633,209) 832,747
Net unrealized appreciation (depreciation)
on investments (2,850,088) (808,441)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 2,362,948 11,164,143
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
INVESTMENT INCOME--NET (9,846,245) (11,139,837)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold 46,404,112 62,426,365
Dividends reinvested 8,093,872 8,943,065
Cost of shares redeemed (68,458,107) (80,883,327)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (13,960,123) (9,513,897)
TOTAL INCREASE (DECREASE) IN NET ASSETS (21,443,420) (9,489,591)
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 185,908,170 195,397,761
END OF PERIOD 164,464,750 185,908,170
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (SHARES):
Shares sold 3,205,363 4,201,259
Shares issued for dividends reinvested 560,525 604,417
Shares redeemed (4,724,607) (5,463,061)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (958,719) (657,385)
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
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value, beginning of period 14.78 14.77 14.82 15.14 14.55
Investment Operations:
Investment income--net .82 .87 .93 .90 1.03
Net realized and unrealized
gain (loss) on investments (.62) .01 (.05) (.32) .59
Total from Investment Operations .20 .88 .88 .58 1.62
Distributions:
Dividends from investment income--net (.82) (.87) (.93) (.90) (1.03)
Net asset value, end of period 14.16 14.78 14.77 14.82 15.14
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 1.39 6.14 6.12 4.07 11.38
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets .80 .79 .70 .70 .65
Ratio of net investment income
to average net assets 5.68 5.91 6.29 6.04 6.90
Decrease reflected in above expense ratios
due to undertakings by
The Dreyfus Corporation .12 .14 .31 .27 .29
Portfolio Turnover Rate 1,007.65 773.31 563.77 539.38 480.44
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ x 1,000) 164,465 185,908 195,398 187,826 188,726
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus U.S. Treasury Short 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) 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.
(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.
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 $6,109 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 $19,441,000
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
principles. If not applied, $9,564,000 of the carryover expires in fiscal 2002,
$2,004,000 expires in fiscal 2003, $2,702,000 expires in fiscal 2004, $717,000
expires in fiscal 2005 and $4,454,000 expires in fiscal 2007.
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 borrowing. During the period ended December 31, 1999, 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 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 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 $213,870
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 $240,405 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 $76,083 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 $20,028 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 (including paydowns) of investment
securities, excluding short-term securities, during the period ended December
31, 1999, amounted to $1,465,464,533 and $1,447,987,348, respectively.
At December 31, 1999, accumulated net unrealized depreciation on investments was
$4,034,417, consisting of $4,373 gross unrealized appreciation and $4,038,790
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).
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus U.S. Treasury Short Term Fund
We have audited the accompanying statement of assets and liabilities of Dreyfus
U.S. Treasury Short Term Fund, including the statement of investments, 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 Short 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.
New York, New York
February 4, 2000
The Fund
IMPORTANT TAX INFORMATION (Unaudited)
For State individual income tax purposes, the fund hereby designates 85.39% 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.
NOTES
For More Information
Dreyfus 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
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 081AR9912
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS U.S. TREASURY SHORT TERM FUND AND THE
MERRILL LYNCH GOVERNMENTS, U.S. TREASURY, SHORT-TERM
(1-3 YEARS) INDEX
EXHIBIT A:
MERRILL LYNCH
GOVERNMENTS, U.S.
TREASURY, DREYFUS
SHORT-TERM U.S. TREASURY
PERIOD (1-3 YEARS) SHORT TERM
INDEX* FUND
12/31/89 10,000 10,000
12/31/90 10,973 10,624
12/31/91 12,254 11,997
12/31/92 13,026 12,838
12/31/93 13,731 13,740
12/31/94 13,809 13,694
12/31/95 15,328 15,253
12/31/96 16,091 15,873
12/31/97 17,162 16,845
12/31/98 18,363 17,879
12/31/99 18,925 18,128
*Source: Bloomberg L.P.
