DREYFUS SHORT-INTERMEDIATE GOVERNMENT FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus
Short-Intermediate Government Fund for its six-month reporting period ended
May 31, 1997. Your Fund produced a total return, including bond price changes
and interest income, of 0.99%.* The Fund's tax-free annualized distribution
rate per share was 5.89%.** (Some income may be subject to the Federal
Alternative Minimum Tax for certain shareholders).
Economic Review
Plentiful jobs and low inflation spurred consumer confidence to its
highest level in 27 years by the end of the reporting period, May 31, 1997.
Economic growth surged 5.6% in the first quarter of this year, sharply higher
than the 3.8% rate in the last quarter of 1996. With unemployment at its
lowest level in 23 years, there was fear that without some preemptive
tightening in monetary policy, inflationary pressures would resume. As a
precaution, in March 1997, the Federal Open Market Committee, the policy-makin
g arm of the Federal Reserve Board (the "Fed"), raised the Federal Funds rate
one quarter of a percentage point to 5.50%. It was the first hike in
short-term rates in over two years. (The Federal Funds rate is the rate of
interest banks charge each other for overnight loans.) Fed Chairman Greenspan
likened the increase to "the small immediate discomfort of a vaccination
against the possibility of getting a serious disease." Subsequent to the
March rate increase, signs of inventory accumulation and some moderation in
retail sales may have helped stay the Fed from implementing additional
increases in short-term interest rates.
The great difference between the present economic recovery and previous
ones is the absence of inflation. The economy is now in its seventh year of
expansion, an expansion devoid of any appreciable resurgence in inflation.
The Producer Price Index, a measure of prices paid by manufacturers and an
indicator of so-called pipeline inflation, declined over the first four
months of this year and rose less than 1% over the previous 12 months.
Inflation on the consumer level has been similarly subdued. The Consumer
Price Index increased a modest 2.5% over the 12-month period ending in April.
On another front, the tight labor market has spawned fears that rising
wages would provide an inflationary stimulus to the economy. So far this has
not occurred. The Employment Cost Index, a gauge of wage and benefit
increases, has remained below 3%. The bipartisan budget agreement recently
reached between the Clinton Administration and the Republican Congressional
leadership has also eased inflationary fears.
The economic confidence of consumers is readily understandable. The
exceptionally low unemployment rate has combined with a strong economy that
has expanded with unusual vigor. But, despite huge business investment in
technology to improve productivity, it would be folly to assume that the
economy's capacity for non-inflationary growth is unlimited. Consumers
enjoying both job stability and rising personal incomes could increase their
spending to levels that would strain production and bring on inflation or the
Fed could again tighten credit, perhaps in another precautionary move.
Market Environment
The technical factors in the bond market are quite positive, and should
continue to push interest rates lower. A reduced deficit should mean less
issuance of debt by the Treasury. A balanced budget looks like an achievable
goal. U.S. interest rates are currently higher than almost all other
developed countries, making our rates attractive globally, and the dollar
continues to remain strong. Last, commodity prices have been drifting lower.
At the consumer level, the rate outlook is positive too. Bank lending
criteria, especially in the credit card arena, are becoming more stringent.
The primary reason for that is the continued rise of consumer delinquencies.
Retail sales have been sluggish, and car sales have also turned sluggish. In
fact, some of the hottest selling vehicles last year now have
incentives to buy them. Some of these loans carry 0% interest for two years,
and the biggest selling sport utility vehicle can be had for a 4.8% loan.
This clearly shows that auto dealers are having trouble clearing 1997
inventory.
Portfolio Overview
Currently, the maturity of the Fund is at a 2.35 year weighted average
life, which makes the effective duration 1.927 years. Going forward, we plan
to extend the maturity of the Fund to take advantage of the outlook for
interest rates. As for positioning on the interest rate curve, it is our
intention to move assets out of the one-year sector and into the three-year
sector. We anticipate that this will help the Fund in two ways - first by
extending duration in a declining rate environment, and also by locking in a
higher yield because of the very steep yield curve that exists between money
markets and three-year notes.
We plan to maintain this positive outlook for the immediately foreseeable
future. The two factors that we feel could change our allocation are consumer
behavior and foreign economies. If consumer spending were to increase
significantly or foreign economies were to appear much stronger, we would
readjust our outlook. As always, we will be monitoring these factors, as well
as numerous other indicators.
Very truly yours,
[Gerald Thunelius signature logo]
Gerald Thunelius
Portfolio Manager
June 17, 1997
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid.
** 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.
<TABLE>
<CAPTION>
DREYFUS SHORT-INTERMEDIATE GOVERNMENT FUND
STATEMENT OF INVESTMENTS MAY 31, 1997 (UNAUDITED)
Principal
Bonds and Notes-95.0% Amount Value
------- -------
<S> <C> <C>
U.S. Government Agencies-41.7%
Federal Home Loan Banks, Notes:
9 1/4%, 11/25/1998........................................................ $ 25,000,000 $ 26,073,425
5.99%, 11/27/1998......................................................... 15,200,000 15,160,754
6.685%, 11/5/1999......................................................... 10,000,000 10,010,870
6 5/8%, 11/19/1999........................................................ 20,000,000 20,020,920
6.58%, 9/25/2000.......................................................... 7,500,000 7,488,277
Federal Home Loan Mortgage,
Deb., 6.63%, 3/20/2000.................................................... 20,000,000 20,012,840
Federal National Mortgage Association:
Medium-Term Notes:
5.58%, 1/15/1998........................................................ 10,000,000(a) 10,001,610
6.07%, 4/23/1998........................................................ 35,000,000 35,049,469
7.89%, 2/23/2000........................................................ 15,950,000 16,188,341
6.41%, 5/22/2000........................................................ 35,000,000 34,997,970
Notes:
8.65%, 2/10/1998........................................................ 10,000,000 10,190,370
6 1/2%, 1/27/2000....................................................... 10,035,000 10,028,156
State of Israel,
Gtd. Notes, 5 1/4%, 3/15/1998............................................. 10,000,000 9,948,640
-------
225,171,642
-------
U.S. Treasury Notes-53.3%
9 1/8%, 5/15/1999......................................................... 70,000,000 73,707,816
7 3/4%, 11/30/1999........................................................ 6,000,000 6,197,813
7 3/4%, 12/31/1999........................................................ 44,700,000 46,222,594
7 3/4%, 1/31/2000......................................................... 23,000,000 23,797,812
7 1/8%, 2/29/2000......................................................... 31,000,000 31,605,470
8 3/4%, 8/15/2000......................................................... 50,000,000 53,390,625
8 1/2%, 11/15/2000........................................................ 50,000,000 53,195,315
-------
288,117,445
-------
TOTAL BONDS AND NOTES
(cost $515,201,668)....................................................... $513,289,087
=======
DREYFUS SHORT-INTERMEDIATE GOVERNMENT FUND
STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1997 (UNAUDITED)
Principal
Short-Term Investments-1.9% Amount Value
------- -------
Repurchase Agreements;
Aubrey G. Lanston & Co., 5.45%
dated 5/30/1997, due 6/2/1997 in the amount of
$10,397,720 (fully collateralized by $10,728,000
U.S. Treasury Bills, 10/16/1997, value $10,513,440)
(cost $10,393,000)........................................................ $ 10,393,000 $ 10,393,000
=======
TOTAL INVESTMENTS
(cost $525,594,668)....................................................... 96.9% $523,682,087
==== =======
CASH AND RECEIVABLES (NET).................................................. 3.1% $ 16,534,491
==== =======
NET ASSETS.................................................................. 100.0% $540,216,578
==== =======
Notes to Statement of Investments:
(a) Variable rate security-interest rate subject to periodic change.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS SHORT-INTERMEDIATE GOVERNMENT FUND
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1997 (UNAUDITED)
Cost Value
-------- --------
ASSETS: Investments in securities-See Statement of Investments $525,594,668 $523,682,087
Cash....................................... 11,173,340
Interest receivable........................ 6,435,542
Receivable for shares of Beneficial Interest subscribed 52,829
Prepaid expenses and other assets.......... 43,436
--------
541,387,234
--------
LIABILITIES: Due to The Dreyfus Corporation and affiliates 250,036
Payable for shares of Beneficial Interest redeemed 727,968
Payable for investment securities purchased 103,186
Accrued expenses........................... 89,466
--------
1,170,656
--------
NET ASSETS.................................................................. $540,216,578
========
REPRESENTED BY: Paid-in capital............................ $581,013,957
Accumulated undistributed investment income-net 109,914
Accumulated net realized gain (loss) on investments (38,994,712)
Accumulated net unrealized appreciation (depreciation)
.................... on investments-Note 4(b) (1,912,581)
--------
NET ASSETS.................................................................. $540,216,578
========
SHARES OUTSTANDING
(unlimited number of $.001 par value shares of Beneficial Interest authorized) 50,311,765
NET ASSET VALUE, offering and redemption price per share.................... $10.74
====
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS SHORT-INTERMEDIATE GOVERNMENT FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
INVESTMENT INCOME
INCOME Interest Income............................ $ 18,095,568
EXPENSES: Management fee-Note 3(a)................... $ 1,370,741
Shareholder servicing costs-Note 3(b)...... 514,509
Registration fees.......................... 40,374
Trustees' fees and expenses-Note 3(c)...... 32,169
Custodian fees-Note 3(b)................... 23,792
Professional fees.......................... 19,641
Prospectus and shareholders' reports....... 15,481
Loan commitment fees-Note 2................ 3,548
Miscellaneous.............................. 5,399
-------
Total Expenses....................... 2,025,654
-------
INVESTMENT INCOME-NET....................................................... 16,069,914
-------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 4:
Net realized gain (loss) on investments:
Long transactions...................... $ (6,985,695)
Short sale transactions................ 271,170
-------
Net Realized Gain (Loss)............. (6,714,525)
Net unrealized appreciation (depreciation) on investments (4,359,424)
-------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... (11,073,949)
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 4,995,965
=======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS SHORT-INTERMEDIATE GOVERNMENT FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
May 31, 1997 Year Ended
(Unaudited) November 30, 1996
--------- ----------
OPERATIONS:
Investment income-net.................................................. $ 16,069,914 $ 34,130,666
Net realized gain (loss) on investments................................ (6,714,525) (1,219,661)
Net unrealized appreciation (depreciation) on investments.............. (4,359,424) (4,555,506)
-------- --------
Net Increase (Decrease) in Net Assets Resulting from Operations.... 4,995,965 28,355,499
-------- --------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net.................................................. (16,047,830) (34,042,836)
-------- --------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold.......................................... 141,182,183 220,320,537
Dividends reinvested................................................... 12,774,554 27,170,603
Cost of shares redeemed................................................ (172,007,758) (246,164,984)
-------- --------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (18,051,021) 1,326,156
-------- --------
Total Increase (Decrease) in Net Assets.......................... (29,102,886) (4,361,181)
NET ASSETS:
Beginning of Period.................................................... 569,319,464 573,680,645
-------- --------
End of Period.......................................................... $ 540,216,578 $ 569,319,464
======== ========
Undistributed investment income-net...................................... $ 109,914 $ 87,830
-------- --------
Shares Shares
-------- --------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................ 13,039,191 20,156,773
Shares issued for dividends reinvested................................. 1,184,410 2,490,316
Shares redeemed........................................................ (15,894,799) (22,544,889)
-------- --------
Net Increase (Decrease) in Shares Outstanding...................... (1,671,198) 102,200
======== ========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS SHORT-INTERMEDIATE GOVERNMENT 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.
<TABLE>
<CAPTION>
Six Months Ended
May 31, 1997 Year Ended November 30,
------------------------------------------------------
PER SHARE DATA: (Unaudited) 1996 1995 1994 1993 1992
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $10.95 $11.06 $10.57 $11.45 $11.58 $11.71
---- ---- ---- ---- ---- ----
Investment Operations:
Investment income-net................. .32 .65 .73 .76 .78 .82
Net realized and unrealized gain (loss)
on investments...................... (.21) (.11) .49 (.82) .14 .09
---- ---- ---- ---- ---- ----
Total from Investment Operations...... .11 .54 1.22 (.06) .92 .91
---- ---- ---- ---- ---- ----
Distributions:
Dividends from investment income-net.. (.32) (.65) (.73) (.76) (.78) (.83)
Dividends from net realized gain on investments .- .- .- (.06) (.27) (.21)
---- ---- ---- ---- ---- ----
Total Distributions................... (.32) (.65) (.73) (.82) (1.05) (1.04)
---- ---- ---- ---- ---- ----
Net asset value, end of period........ $10.74 $10.95 $11.06 $10.57 $11.45 $11.58
==== ==== ==== ==== ==== ====
TOTAL INVESTMENT RETURN................... 1.99%(1) 5.08% 11.91% (.57%) 8.29% 8.05%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .74%(1) .74% .66% .47% .40% .35%
Ratio of net investment income
to average net assets............... 5.86%(1) 5.99% 6.73% 6.91% 6.75% 7.00%
Decrease reflected in above expense ratios
due to undertakings by the Manager.. .- .- .09% .30% .35% .42%
Portfolio Turnover Rate............... 470.16%(2) 594.44% 387.60% 695.60% 317.00% 225.52%
Net Assets, end of period (000's Omitted) $540,217 $569,319 $573,681 $496,513 $551,543 $333,646
(1) Annualized.
(2) Not annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS SHORT-INTERMEDIATE GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Short-Intermediate Government 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. 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 and U.S. Government obligations) 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. Investments in U.S. Government obligations are
valued at the mean between quoted bid and asked prices. Short-term
investments 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. Interest
income, including, where applicable, amortization of discount on investments,
is recognized on the accrual basis.
The Fund may enter into repurchase agreements with financial
institutions, deemed to be creditworthy by the Fund's Manager, subject to the
seller's agreement to repurchase and the Fund's agreement to resell such
securities at a mutually agreed upon price. Securities purchased subject to
repurchase agreements are deposited with the Fund's custodian and, pursuant
to the terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. If the value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the Fund will require the seller to
deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults on its repurchase
obligation, the Fund maintains the right to sell the underlying securities at
market value and may claim any resulting loss against the seller.
(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, if any, 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.
DREYFUS SHORT-INTERMEDIATE GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The Fund has an unused capital loss carryover of approximately $32,300,000
available for Federal income tax purposes to be
applied against future net securities profit, if any, realized subsequent to
November 30, 1996. If not applied, $26,610,000 of the carryover expires in
fiscal 2002, $4,470,000 expires in fiscal 2003 and $1,220,000 expires in
fiscal 2004.
NOTE 2-BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rate in effect at the time of borrowings. For the period ended May 31,
1997, the Fund did not borrow under the Facility.
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 .50 of 1% of the value
of the Fund's average daily net assets and is payable monthly. The Agreement
provides that if in any full fiscal year the aggregate expenses of the Fund,
exclusive of taxes, brokerage, interest on borrowings, commitment fees and
extraordinary expenses, exceed 11\2% of the value of the Fund's average net
assets, the Fund may deduct from payments to be made to the Manager, or the
Manager will bear the amount of such excess to the extent required by state
law. The Manager has undertaken through November 30, 1997, to reduce the
management fee paid by the Fund, to the extent that the Fund's aggregate
annual expenses (exclusive of certain expenses as described above) exceed an
annual rate of .75 of 1% of the value of the Fund's average daily net assets.
There was no reimbursement for the period ended May 31, 1997.
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) 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 May 31, 1997, the Fund was charged an aggregate of
$318,544 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 $98,381 during the period ended May 31, 1997.
The Fund entered into a custody agreement with Mellon to provide
custodial services for the Fund. During the period ended May 31, 1997,
$23,792 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 $4,000 and an attendance fee of $500
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
DREYFUS SHORT-INTERMEDIATE GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 4-SECURITIES TRANSACTIONS:
(a) The following summarizes the aggregate amount of purchases and sales
of investment securities and securities sold short, excluding short-term
securities, during the period ended May 31, 1997:
Purchases Sales
------------------- -----------------
Long transactions.................. $2,678,156,324 $2,725,695,756
Short sale transactions............ 383,683,618 383,954,788
----------- -----------
Total.......................... $3,061,839,942 $3,109,650,544
=========== ===========
The Fund is engaged in short-selling which obligates the Fund to replace
the security borrowed by purchasing the security at
current market value. The Fund would incur a loss if the price of the
security increases between the date of the short sale and the date on which
the Fund replaces the borrowed security. The Fund would realize a gain if the
price of the security declines between those dates. Until the Fund replaces
the borrowed security, the Fund will maintain daily, a segregated account
with a broker and custodian, of cash and/or U.S. Government securities
sufficient to cover the short position. At May 31, 1997, there were no
securities sold short outstanding.
(b) At May 31, 1997, accumulated net unrealized depreciation on
investments was $1,912,581, consisting of $572,059 gross unrealized
appreciation and $2,484,640 gross unrealized depreciation.
At May 31, 1997, 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).
Registration Mark
[Dreyfus lion "d" logo]
DREYFUS SHORT-INTERMEDIATE
GOVERNMENT 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. 542SA975
Registration Mark
[Dreyfus logo]
Short-Intermediate
Government
Fund
Semi-Annual
Report
May 31, 1997
