DREYFUS SHORT-INTERMEDIATE GOVERNMENT FUND
STATEMENT OF ADDITIONAL INFORMATION
APRIL 1, 2000

           This Statement of Additional Information, which is not a prospectus, supplements and should be read in conjunction with the current Prospectus of Dreyfus Short-Intermediate Government Fund (the "Fund"), dated April 1, 2000, as it may be revised from time to time. To obtain a copy of the Fund's Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144, or call one of the following numbers:

           Call Toll Free 1-800-645-6561
           In New York City-- Call 1-718-895-1206
           Outside the U.S.-- Call 516-794-5452

           The Fund's most recent Annual Report and Semi-Annual Report to Shareholders are separate documents supplied with this Statement of Additional Information, and the financial statements, accompanying notes and report of independent auditors appearing in the Annual Report are incorporated by reference into this Statement of Additional Information.

TABLE OF CONTENTS

DESCRIPTION OF THE FUND

           The Fund is a Massachusetts business trust that commenced operations on April 6, 1987. The Fund is an open-end management investment company, known as a mutual fund. The Fund is a diversified fund, which means that, with respect to 75% of its total assets, the Fund will not invest more than 5% of its assets in the securities of any single issuer.

           The Dreyfus Corporation (the "Manager") serves as the Fund's investment adviser.

           Effective March 22, 2000, Dreyfus Service Corporation (the "Distributor") became the distributor of the Fund's shares.

Certain Portfolio Securities

           The following information supplements and should be read in conjunction with the Fund's Prospectus.

           U.S. Government Securities. Securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities include U.S. Treasury securities, which differ in their interest rates, maturities and times of issuance. Some obligations issued or guaranteed by U.S. Government agencies and instrumentalities are supported by the full faith and credit of the U.S. Treasury; others by the right of the issuer to borrow from the Treasury; others by discretionary authority of the U.S. Government to purchase certain obligations of the agency or instrumentality; and others only by the credit of the agency or instrumentality. These securities bear fixed, floating or variable rates of interest. While the U.S. Government currently provides financial support to such U.S. Government-sponsored agencies or instrumentalities, no assurance can be given that it will always do so, since it is not so obligated by law.

          U.S. Treasury securities include Treasury Inflation-Protection Securities ("TIPS"), which are issued by the U.S. Treasury designed to provide investors a long term investment vehicle that is not vulnerable to inflation. The interest rate paid by TIPS is fixed, while the principal value rises or falls semi-annually based on changes in a published Consumer Price Index. Thus, if inflation occurs, the principal and interest payments on the TIPS are adjusted accordingly to protect investors from inflationary loss. During a deflationary period, the principal and interest payments decrease, although the TIPS' principal will not drop below its face amount at maturity.

           In exchange for the inflation protection, TIPS generally pay lower interest rates than typical Treasury securities. Only if inflation occurs will TIPS offer a higher real yield than a conventional Treasury bond of the same maturity. In addition, it is not possible to predict with assurance how the market for TIPS will develop; initially, the secondary market for these securities may not be as active or liquid as the secondary market for conventional Treasury securities. Principal appreciation and interest payments on TIPS will be taxed annually as ordinary interest income for Federal income tax calculations. As a result, any appreciation in principal must be counted as interest income in the year the increase occurs, even though the investor will not receive such amounts until the TIPS are sold or mature. Principal appreciation and interest payments will be exempt from state and local income taxes.

           Mortgage-Related Securities. The Fund may invest up to 35% of its net assets in mortgage-related securities issued or guaranteed by U.S. Government agencies or instrumentalities, including those with fixed, floating or variable interest rates, those with interest rates that change based on multiples of changes in a specified index of interest rates and those with interest rates that change inversely to changes in interest rates, as well as stripped mortgage-backed securities which do not bear interest. Mortgage-related securities are a form of derivative collateralized by pools of commercial or residential mortgages. Pools of mortgage loans are assembled as securities for sale to investors by various governmental, government-related and private organizations. These securities may include complex instruments such as collateralized mortgage obligations, stripped mortgage-backed securities, mortgage pass-through securities, interests in real estate mortgage investment conduits ("REMICs"), and adjustable rate mortgages.

Residential Mortgage-Related Securities--The Fund may invest in mortgage-related securities representing participation interests in pools of one- to four-family residential mortgage loans issued or guaranteed by governmental agencies or instrumentalities, such as the Government National Mortgage Association (“GNMA”), the Federal National Mortgage Association (“FNMA”), and the Federal Home Loan Mortgage Corporation (“FHLMC”), or issued by private entities. Similar to commercial mortgage-related securities, residential mortgage-related securities have been issued using a variety of structures, including multi-class structures featuring senior and subordinated classes.

          Collateralized Mortgage Obligations and Multi-Class Pass-Through Securities--Collateralized mortgage obligations or “CMOs” are multiclass bonds backed by pools of mortgage pass-through certificates or mortgage loans. CMOs in which the Fund may invest may be collateralized by (a) pass-through certificates issued or guaranteed by GNMA, FNMA or FHLMC, (b) unsecuritized mortgage loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans’ Affairs or (c) any combination thereof.

           Each class of CMOs, often referred to as a "tranche," is issued at a specific coupon rate and has a stated maturity or final distribution date. Principal prepayments on collateral underlying a CMO may cause it to be retired substantially earlier than the stated maturities or final distribution dates. The principal and interest on the underlying mortgages may be allocated among the several classes of a series of a CMO in many ways. One or more tranches of a CMO may have coupon rates which reset periodically at a specified increment over an index, such as the London Interbank Offered Rate ("LIBOR") (or sometimes more than one index). These floating rate CMOs typically are issued with lifetime caps on the coupon rate thereon. The Fund also may invest in inverse floating rate CMOs. Inverse floating rate CMOs constitute a tranche of a CMO with a coupon rate that moves in the reverse direction to an applicable index such as the LIBOR. Accordingly, the coupon rate thereon will increase as interest rates decrease. Inverse floating rate CMOs are typically more volatile than fixed or floating rate tranches of CMOs.

           Many inverse floating rate CMOs have coupons that move inversely to a multiple of an applicable index such as LIBOR. The effect of the coupon varying inversely to a multiple of an applicable index creates a leverage factor. The markets for inverse floating rate CMOs with highly leveraged characteristics may at times by very thin. The Fund's ability to dispose of its positions in such securities will depend on the degree of liquidity in the markets for such securities. It is impossible to predict the amount of trading interest that may exist in such securities, and therefore the future degree of liquidity. It should be noted that inverse floaters based on multiples of a stated index are designed to be highly sensitive to changes in interest rates and can subject the holders thereof to extreme reductions of yield and loss of principal.

           As CMOs have evolved, some classes of CMO bonds have become more prevalent. The planned amortization class (PAC) and targeted amortization class (TAC), for example, were designed to reduce prepayment risk by establishing a sinking-fund structure. PAC and TAC bonds assure to varying degrees that investors will receive payments over a predetermined period under varying prepayment scenarios. Although PAC and TAC bonds are similar, PAC bond are better able to provide stable cash flows under various prepayment scenarios than TAC bonds because of the order in which these tranches are paid.

Stripped Mortgage-Backed Securities--The Fund also may invest in stripped mortgage-backed securities which are created by segregating the cash flows from underlying mortgage loans or mortgage securities to create two or more new securities, each with a specified percentage of the underlying security’s principal or interest payments. Mortgage securities may be partially stripped so that each investor class receives some interest and some principal. When securities are completely stripped, however, all of the interest is distributed to holders of one type of security, known as an interest-only security, or IO, and all of the principal is distributed to holders of another type of security known as a principal-only security, or PO. Strips can be created in a pass-through structure or as tranches of a CMO. The yields to maturity on IOs and POs are very sensitive to the rate of principal payments (including prepayments) on the related underlying mortgage assets. If the underlying mortgage assets experience greater than anticipated prepayments of principal, the Fund may not fully recoup its initial investment in IOs. Conversely, if the underlying mortgage assets experience less than anticipated prepayments of principal, the yield on POs could be materially and adversely affected.

Adjustable-Rate Mortgage Loans (“ARMs”)--ARMs eligible for inclusion in a mortgage pool will generally provide for a fixed initial mortgage interest rate for a specified period of time, generally for either the first three, six, twelve, thirteen, thirty-six, or sixty scheduled monthly payments. Thereafter, the interest rates are subject to periodic adjustment based on changes in an index. ARMs typically have minimum and maximum rates beyond which the mortgage interest rate may not vary over the lifetime of the loans. Certain ARMs provide for additional limitations on the maximum amount by which the mortgage interest rate may adjust for any single adjustment period. Limitations on monthly payments can result in monthly payments that are greater or less than the amount necessary to amortize a negatively amortizing ARM by its maturity at the interest rate in effect during any particular month.

           Repurchase Agreements. The Fund may enter into repurchase agreements. In a repurchase agreement, the Fund buys, and the seller agrees to repurchase, a security at a mutually agreed upon time and price (usually within seven days). The repurchase agreement thereby determines the yield during the purchaser's holding period, while the seller's obligation to repurchase is secured by the value of the underlying security. The Fund's custodian or sub-custodian will have custody of, and will hold in a segregated account, securities acquired by the Fund under a repurchase agreement. Repurchase agreements are considered by the staff of the Securities and Exchange Commission to be loans by the Fund. Repurchase agreements could involve risks in the event of a default or insolvency of the other party to the agreement, including possible delays or restrictions upon the Fund's ability to dispose of the underlying securities. In an attempt to reduce the risk of incurring a loss on a repurchase agreement, the Fund will enter into repurchase agreements only with domestic banks with total assets in excess of $1 billion, or primary government securities dealers reporting to the Federal Reserve Bank of New York, with respect to securities of the type in which the Fund may invest or government securities regardless of their remaining maturities, and will require that additional securities be deposited with it if the value of the securities purchased should decrease below resale price.

           Illiquid Securities. The Fund may invest up to 15% of the value of its net assets in securities as to which a liquid trading market does not exist, provided such investments are consistent with the Fund's investment objective. These securities may include securities that are not readily marketable, such as securities that are subject to legal or contractual restrictions on resale and repurchase agreements providing for settlement in more than seven days after notice. As to these securities, the Fund is subject to a risk that should the Fund desire to sell them when a ready buyer is not available at a price that the Fund deems representative of their value, the value of the Fund's net assets could be adversely affected.

Investment Techniques

           The following information supplements and should be read in conjunction with the Fund's Prospectus.

           Lending Portfolio Securities. The Fund may lend securities from its portfolio to brokers, dealers and other financial institutions needing to borrow securities to complete certain transactions. The Fund continues to be entitled to payments in amounts equal to the interest or other distributions payable on the loaned securities which affords the Fund an opportunity to earn interest on the amount of the loan and on the loaned securities' collateral. Loans of portfolio securities may not exceed 33-1/3% of the value of the Fund's total assets, and the Fund will receive collateral consisting of cash, U.S. Government securities or irrevocable letters of credit which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. Such loans are terminable by the Fund at any time upon specified notice. The Fund might experience risk of loss if the institution with which it has engaged in a portfolio loan transaction breaches its agreement with the Fund. In connection with its securities lending transactions, the Fund may return to the borrower or a third party which is unaffiliated with the Fund, and which is acting as a "placing broker," a part of the interest earned from the investment of collateral received for securities loaned.

           Borrowing Money. The Fund is permitted to borrow to the extent permitted under the Investment Company Act of 1940, as amended (the "1940 Act"), which permits an investment company to borrow in an amount up to 33-1/3% of the value of its total assets. The Fund currently intends to borrow money only for temporary or emergency (not leveraging) purposes, in an amount up to 15% of the value of its total assets (including the amount borrowed) valued at the lesser of cost or market, less liabilities (not including the amount borrowed) at the time the borrowing is made. While such borrowings exceed 5% of the Fund's total assets, the Fund will not make any additional investments.

           Short-Selling. In these transactions, the Fund sells a security it does not own in anticipation of a decline in the market value of the security. To complete the transaction, the Fund must borrow the security to make delivery to the buyer. The Fund is obligated to replace the security borrowed by purchasing it subsequently at the market price at the time of replacement. The price at such time may be more or less than the price at which the security was sold by the Fund, which would result in a loss or gain, respectively.

           Securities will not be sold short if, after effect is given to any such short sale, the total market value of all securities sold short would exceed 25% of the value of the Fund's net assets. The Fund may not make a short sale which results in the Fund having sold short in the aggregate more than 5% of the outstanding securities of any class of an issuer.

           The Fund also may make short sales "against the box," in which the Fund enters into a short sale of a security it owns. At no time will more than 15% of the value of the Fund's net assets be in deposits on short sales against the box.

           Until the Fund closes its short position or replaces the borrowed security, the Fund will: (a) segregate permissible liquid assets in an amount that, together with the amount deposited with the broker as collateral, always equals the current value of the security sold short; or (b) otherwise cover its short position.

           Forward Commitments. The Fund may purchase or sell securities on a forward commitment, when issued or delayed delivery basis, which means that delivery and payment take place a number of days after the date of the commitment to purchase or sell the securities at a predetermined price and/or yield. Typically, no interest accrues to the purchaser until the security is delivered. When purchasing a security on a forward commitment basis, the Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations, and takes such fluctuations into account when determining its net asset value. Because the Fund is not required to pay for these securities until the delivery date, these risks are in addition to the risks associated with the Fund's other investments. If the Fund is fully or almost fully invested when forward commitment purchases are outstanding, such purchases may result in a form of leverage. The Fund intends to engage in forward commitments to increase its portfolio's financial exposure to the types of securities in which it invests. Leveraging the portfolio in this manner will increase the Fund's exposure to changes in interest rates and will increase the volatility of its returns. The Fund will segregate permissible liquid assets at least equal at all times to the amount of the Fund's purchase commitments. At no time will the Fund have more than 33-1/3% of its assets committed to purchase securities on a forward commitment basis.

           Forward Roll Transactions. To enhance current income, the Fund may enter into forward roll transactions with respect to mortgage-related securities. In a forward roll transaction, the Fund sells a mortgage-related security to a financial institution, such as a bank or broker-dealer, and simultaneously agrees to repurchase a similar security from the institution at a later date at an agreed upon price. The securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different pre-payment histories than those sold. During the period between the sale and repurchase, the Fund will not be entitled to receive interest and principal payments on the securities sold. Proceeds of the sale will be invested in short-term instruments, particularly repurchase agreements, and the income from these investments, together with any additional fee income received on the sale will generate income for the Fund exceeding the yield on the securities sold. Forward roll transactions involve the risk that the market value of the securities sold by the Fund may decline below the purchase price of those securities. The Fund will segregate permissible liquid assets at least equal to the amount of the repurchase price (including accrued interest).

Investment Considerations and Risks

           Mortgage-Related Securities. Mortgage-related securities are complex derivative instruments, subject to both credit and prepayment risk, and may be more volatile and less liquid than more traditional debt securities. Although certain mortgage-related securities are guaranteed by a third party (such as a U.S. Government agency or instrumentality with respect to government-related mortgage-backed securities) or otherwise similarly secured, the market value of the security, which may fluctuate, is not secured. Mortgage-related securities are subject to credit risks associated with the performance of the underlying mortgage properties. Adverse changes in economic conditions and circumstances are more likely to have an adverse impact on mortgage-related securities secured by loans on certain types of commercial properties than on those secured by loans on residential properties. In addition, these securities are subject to prepayment risk, although commercial mortgages typically have shorter maturities than residential mortgages and prepayment protection features. Some mortgage-related securities have structures that make their reactions to interest rate changes and other factors difficult to predict, making their value highly volatile.

           In certain instances, the credit risk associated with mortgage-related securities can be reduced by third party guarantees or other forms of credit support. Improved credit risk does not reduce prepayment risk which is unrelated to the rating assigned to the mortgage-related security. Prepayment risk can lead to fluctuations in value of the mortgage-related security which may be pronounced. If a mortgage-related security is purchased at a premium, all or part of the premium may be lost if there is a decline in the market value of the security, whether resulting from changes in interest rates or prepayments on the underlying mortgage collateral. Certain mortgage-related securities that may be purchased by the Fund, such as inverse floating rate collateral mortgage obligations, have coupons that move inversely to a multiple of a specific index which may result in a form of leverage. As with other interest-bearing securities, the prices of certain mortgage-related securities are inversely affected by changes in interest rates. However, although the value of a mortgage-related security may decline when interest rates rise, the converse is not necessarily true, since in periods of declining interest rates the mortgages underlying the security are more likely to be prepaid. For this and other reasons, a mortgage-related security's stated maturity may be shortened by unscheduled prepayments on the underlying mortgages, and, therefore, it is not possible to predict accurately the security's return to the Fund. Moreover, with respect to certain stripped mortgage-backed securities, if the underlying mortgage securities experience greater than anticipated prepayments of principal, the Fund may fail to fully recoup its initial investment even if the securities are rated in the highest rating category by a nationally recognized statistical rating organization. During periods of rapidly rising interest rates, prepayments of mortgage-related securities may occur at slower than expected rates. Slower prepayments effectively may lengthen a mortgage-related security's expected maturity which generally would cause the value of such security to fluctuate more widely in response to changes in interest rates. Were the prepayments on the Fund's mortgage-related securities to decrease broadly, the Fund's effective duration, and thus sensitivity to interest rate fluctuations, would increase.

           Simultaneous Investments. Investment decisions for the Fund are made independently from those of other investment companies advised by the Manager. If, however, such other investment companies desire to invest in, or depose of, the same securities as the Fund, available investments or opportunities for sales will be allocated equitably to each investment company. In some cases, this procedure may adversely affect the size of the position obtained for or disposed of by the Fund or the price paid or received by the Fund.

Investment Restrictions

           The Fund's investment objective is a fundamental policy, which cannot be changed without approval by the holders of a majority (as defined in the 1940 Act) of the Fund's outstanding voting shares. In addition, the Fund has adopted investment restrictions numbered 1 through 9 as fundamental policies. Investment restrictions numbered 10 and 11 are not fundamental policies and may be changed by a vote of a majority of the Fund's Board members at any time. The Fund may not:

           If a percentage restriction is adhered to at the time of investment, a later increase in percentage resulting from a change in values or assets will not constitute a violation of that restriction.

MANAGEMENT OF THE FUND

           The Fund's Board is responsible for the management and supervision of the Fund. The Board approves all significant agreements between the Fund and those companies that furnish services to the Fund. These companies are as follows:

           Board members and officers of the Fund, together with information as to their principal business occupations during at least the last five years, are shown below.

Board Members of the Fund

           The Fund has a standing nominating committee comprised of its Board members who are not "interested persons" of the Fund, as defined in the 1940 Act. The function of the nominating committee is to select and nominate all candidates who are not "interested persons" of the Fund for election to the Fund's Board.

           The Fund typically pays its Board members an annual retainer and a per meeting fee and reimburses them for their expenses. The Chairman of the Board receives an additional 25% of such compensation. Emeritus Board members are entitled to receive an annual retainer and a per meeting fee of one-half the amount paid to them as Board members. The aggregate amount of compensation paid to each Board member by the Fund for the fiscal year ended November 30, 1999, and by all other funds in the Dreyfus Family of Funds for which such person is a Board member (the number of which is set forth in parenthesis next to each Board member's total compensation)* for the year ended December 31, 1999, were as follows:

                                                 Total Compensation from
                                 Aggregate          Fund and Fund
Name of Board Member        Compensation from      Complex Paid to
                                  Fund**            Board Members

Joseph S. DiMartino            $ 8,125                  $642,177 (189)
Lucy Wilson Benson             $ 6,500                  $ 76,500 (29)
David W. Burke                 $ 6,500                  $228,500 (62)
Martin D. Fife                 $ 6,500                  $ 59,500 (14)
Whitney I. Gerard              $ 6,500                  $ 59,500 (14)
Arthur A. Hartman              $ 6,500                  $ 59,500 (14)
George L. Perry                $ 6,000                  $ 59,500 (14)
Paul D. Wolfowitz              $ 6,500                  $ 52,500 (13)

---------------------

*  Represents the number of separate portfolios comprising the investment
   companies in the Fund Complex, including the Fund, for which the Board member
   serves.
** Amount does not include reimbursed expenses for attending Board meetings,
   which amounted to $2,064 for all Board members as a group.

Officers of the Fund

           The address of each officer of the Fund is 200 Park Avenue, New York, New York 10166.

           The Fund's Board members and officers, as a group, owned less than 1% of the Fund's shares outstanding on March 15, 2000.

           The following persons are known by the Fund to own of record 5% or more of the Fund's outstanding voting securities as of March 15, 2000: Charles Schwab & Co., Inc., Reinvest Account, 101 Montgomery Street, San Francisco, California 94104-4122 - 26.0886%.

MANAGEMENT ARRANGEMENTS

          Investment Adviser. The Manager is a wholly-owned subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon"). Mellon is a publicly owned multibank holding company incorporated under Pennsylvania law in 1971 and registered under the Federal Bank Holding Company Act of 1956, as amended. Mellon provides a comprehensive range of financial products and services in domestic and selected international markets. Mellon is among the twenty-five largest bank holding companies in the United States based on total assets.

          The Manager provides management services pursuant to a Management Agreement (the "Agreement") between the Fund and the Manager. The Agreement is subject to annual approval by (i) the Fund's Board or (ii) vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of the Fund, provided that in either event the continuance also is approved by a majority of the Board members who are not "interested persons" (as defined in the 1940 Act) of the Fund or the Manager, by vote cast in person at a meeting called for the purpose of voting on such approval. The Agreement is terminable without penalty, on 60 days' notice, by the Fund's Board or by vote of the holders of a majority of the Fund's shares or, upon not less than 90 days' notice, by the Manager. The Agreement will terminate automatically in the event of its assignment (as defined in the 1940 Act).

          The following persons are officers and/or directors of the Manager: Christopher M. Condron, Chairman of the Board and Chief Executive Officer; Stephen E. Canter, President, Chief Operating Officer, Chief Investment Officer and a director; Thomas F. Eggers, Vice Chairman--Institutional and a director; Lawrence S. Kash, Vice Chairman; Ronald P. O'Hanley III, Vice Chairman; J. David Officer, Vice Chairman and a director; William T. Sandalls, Jr., Executive Vice President; Stephen R. Byers, Senior Vice President; Mark N. Jacobs, Vice President, General Counsel and Secretary; Diane P. Durnin, Vice President--Product Development; Patrice M. Kozlowski, Vice President--Corporate Communications; Mary Beth Leibig, Vice President--Human Resources; Ray Van Cott, Vice President--Information Systems; Theodore A. Schachar, Vice President--Tax; Wendy Strutt, Vice President; Richard Terres, Vice President; William H. Maresca, Controller; James Bitetto, Assistant Secretary; Steven F. Newman, Assistant Secretary; and Mandell L. Berman, Burton C. Borgelt, Steven G. Elliot, Martin C. McGuinn, Richard W. Sabo and Richard F. Syron, directors.

          The Manager's Code of Ethics (the "Code") subjects its employees' personal securities transactions to various restrictions to ensure that such trading does not disadvantage any fund advised by the Manager. In that regard, portfolio managers and other investment personnel of the Manager must preclear and report their personal securities transactions and holdings, which are reviewed for compliance with the Code, and are also subject to the oversight of Mellon's Investment Ethics Committee. Portfolio managers and other investment personnel who comply with the Code's preclearance and disclosure procedures and the requirements of the Committee may be permitted to purchase, sell or hold securities which also may be or are held in fund(s) they manage or for which they otherwise provide investment advice.

           The Manager manages the Fund's portfolio of investments in accordance with the stated policies of the Fund, subject to the approval of the Fund's Board. The Manager is responsible for investment decisions and provides the Fund with portfolio managers who are authorized by the Fund's Board to execute purchases and sales of securities. The Manager also maintains a research department with a professional staff of portfolio managers and securities analysts who provide research services for the Fund and for other funds advised by the Manager. The Fund's portfolio managers are Michael Hoeh, John Koerber and Gerald E. Thunelius, the Fund's primary portfolio manager.

           The Manager maintains office facilities on behalf of the Fund, and furnishes statistical and research data, clerical help, accounting, data processing, bookkeeping and internal auditing and certain other required services to the Fund. The Manager may pay the Distributor for shareholder services from the Manager's own assets, including past profits but not including the management fee paid by the Fund. The Distributor may use part or all of such payments to pay securities dealers, banks or other financial institutions in respect of these services. The Manager also may make such advertising and promotional expenditures, using its own resources, as it from time to time deems appropriate.

           All expenses incurred in the operation of the Fund are borne by the Fund, except to the extent specifically assumed by the Manager. The expenses borne by the Fund include: taxes, interest, loan commitment fees, interest and distributions paid on securities sold short, brokerage fees and commissions, if any, fees of Board members who are not officers, directors, employees or holders of 5% or more of the outstanding voting securities of the Manager or any of its affiliates, Securities and Exchange Commission fees, state Blue Sky qualification fees, advisory fees, charges of custodians, transfer and dividend disbursing agents' fees, certain insurance premiums, industry association fees, outside auditing and legal expenses, costs of independent pricing services, costs of maintaining the Fund's existence, costs attributable to investor services (including, without limitation, telephone and personnel expenses), costs of shareholders' reports and meetings, costs of preparing and printing prospectuses and statements of additional information for regulatory purposes and for distribution to existing shareholders, and any extraordinary expenses.

           As compensation for the Manager's services, the Fund has agreed to pay the Manager a monthly management fee at the annual rate of 0.50% of the value of the Fund's average daily net assets. All fees and expenses are accrued daily and deducted before payment of dividends to investors. The management fees payable for the fiscal years ended November 30, 1997, 1998 and 1999 amounted to $2,627,588, $2,381,444 and $2,324,856, respectively; however, pursuant to an undertaking in effect, the Manager reduced its fee by $58,909 in fiscal year 1997, resulting in a net fee paid of $2,568,679 in fiscal year 1997.

           The Manager has agreed that if in any fiscal year the aggregate expenses of the Fund, exclusive of taxes, brokerage, interest on borrowings and (with the prior written consent of the necessary state securities commissions) extraordinary expenses, but including the management fee, exceed 1-1/2% of the average value of the Fund's net assets for the fiscal year, the Fund may deduct from the payment to be made to the Manager under the Agreement, or the Manager will bear, such excess expense. Such deduction or payment, if any, will be estimated daily, and reconciled and effected or paid, as the case may be, on a monthly basis.

           The aggregate of the fees payable to the Manager is not subject to reduction as the value of the Fund's net assets increases.

           Distributor. The Distributor, a wholly-owned subsidiary of the Manager, located at 200 Park Avenue, New York, New York 10166, serves as the Fund's distributor on a best efforts basis pursuant to an agreement which is renewable annually.

           The Distributor may pay dealers a fee based on the amount invested through such dealers in Fund shares by employees participating in qualified or non-qualified employee benefit plans or other programs where (i) the employers or affiliated employers maintaining such plans or programs have a minimum of 250 employees eligible for participation in such plans or programs, or (ii) such plan's or program's aggregate investment in the Dreyfus Family or Funds or certain other products made available by the Distributor to such plan or programs exceeds $1,000,000 ("Eligible Benefit Plans"). Generally, the fee paid to dealers will not exceed 1% of the amount invested through such dealers. The Distributor, however, may pay dealers a higher fee and reserves the right to cease paying these fees at any time. The Distributor will pay such fees from its own funds, other than amounts received from the Fund, including past profits or any other source available to it.

           Transfer and Dividend Disbursing Agent and Custodian. Dreyfus Transfer, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of the Manager, P.O. Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and dividend disbursing agent. Under a transfer agency agreement with the Fund, the Transfer Agent arranges for the maintenance of shareholder account records for the Fund, the handling of certain communications between shareholders and the Fund and the payment of dividends and distributions payable by the Fund. For these services, the Transfer Agent receives a monthly fee computed on the basis of the number of shareholder accounts it maintains for the Fund during the month, and is reimbursed for certain out-of-pocket expenses.

           Mellon Bank, N.A. (the "Custodian"), One Mellon Bank Center, Pittsburgh, Pennsylvania 15258, is the Fund's custodian. Under a custody agreement with the Fund, the Custodian holds the Fund's securities and keeps all necessary accounts and records. For its custody services, the Custodian receives a monthly fee based on the market value of the Fund's assets held in custody and receives certain securities transactions charges.

HOW TO BUY SHARES

           General. Fund shares are sold without a sales charge. You may be charged a fee if you effect transactions in Fund shares through a securities dealer, bank or other financial institution. Stock certificates are issued only upon your written request. No certificates are issued for fractional shares. The Fund reserves the right to reject any purchase order.

           The minimum initial investment is $2,500, or $1,000 if you are a client of a securities dealer, bank or other financial institution which maintains an omnibus account in the Fund and has made an aggregate minimum initial purchase for its customers of $2,500. Subsequent investments must be at least $100. However, the minimum initial investment is $750 for Dreyfus-sponsored Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a non-working spouse, Roth IRAs, IRAs set up under a Simplified Employee Pension Plan ("SEP-IRAs") and rollover IRAs) and 403(b)(7) Plans with only one participant and $500 for Dreyfus-sponsored Education IRAs, with no minimum for subsequent purchases. The initial investment must be accompanied by the Account Application. For full-time or part-time employees of the Manager or any of its affiliates or subsidiaries, directors of the Manager, Board members of a fund advised by the Manager, including members of the Fund's Board, or the spouse or minor child of any of the foregoing, the minimum initial investment is $1,000. For full-time or part-time employees of the Manager or any of its affiliates or subsidiaries who elect to have a portion of their pay directly deposited into their Fund accounts, the minimum initial investment is $50. The Fund reserves the right to offer Fund shares without regard to minimum purchase requirements to employees participating in certain qualified or non-qualified employee benefit plans or other programs where contributions or account information can be transmitted in a manner and form acceptable to the Fund. The Fund reserves the right to vary further the initial and subsequent investment minimum requirements at any time.

           Fund shares also are offered without regard to the minimum initial investment requirements through Dreyfus-Automatic Asset Builder(reg.tm), Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan pursuant to the Dreyfus Step Program described under "Shareholder Services." These services enable you to make regularly scheduled investments and may provide you with a convenient way to invest for long-term financial goals. You should be aware, however, that periodic investment plans do not guarantee a profit and will not protect you against loss in a declining market.

           Shares are sold on a continuous basis at the net asset value per share next determined after an order in proper form is received by the Transfer Agent or other entity authorized to receive orders on behalf of the Fund. Net asset value per share is determined as of the close of trading on the floor of the New York Stock Exchange (currently 4:00 p.m., New York time), on each day the New York Stock Exchange is open for business. Net asset value per share is computed by dividing the value of the Fund's net assets (i.e., the value of its assets less liabilities) by the total number of shares outstanding. The Fund's investments are valued by an independent pricing service approved by the Fund's Board and are valued at fair value as determined by the pricing service under the general supervision of the Board. For further information regarding the methods employed in valuing Fund investments, see "Determination of Net Asset Value."

           Dreyfus TeleTransfer Privilege. You may purchase shares by telephone if you have checked the appropriate box and supplied the necessary information on the Account Application or have filed a Shareholder Services Form with the Transfer Agent. The proceeds will be transferred between the bank account designated in one of these documents and your Fund account. Only a bank account maintained in a domestic financial institution which is an Automated Clearing House ("ACH") member may be so designated.

           Dreyfus TeleTransfer purchase orders may be made at any time. Purchase orders received by 4:00 p.m., New York time, on any day that the Transfer Agent or the New York Stock Exchange are open for business will be credited to the shareholder's Fund account on the next bank business day following such purchase order. Purchase orders made after 4:00 p.m., New York time, on any day the Transfer Agent and the New York Stock Exchange are open for business, or orders made on Saturday, Sunday or any Fund holiday (e.g., when the New York Stock Exchange is not open for business), will be credited to the shareholder's Fund account on the second bank business day following such purchase order. To qualify to use Dreyfus TeleTransfer Privilege, the initial payment for purchase of Fund shares must be drawn on, and redemption proceeds paid to, the same bank and account as are designated on the Account Application or Shareholder Services Form on file. If the proceeds of a particular redemption are to be wired to an account at any other bank, the request must be in writing and signature guaranteed. See "How to Redeem Shares--Dreyfus TeleTransfer Privilege."

           Procedures for Multiple Accounts. Special procedures have been designed for banks and other institutions that wish to open multiple accounts. The institutions may open a single master account by filing one application with the Transfer Agent, and may reopen individual sub-accounts at the same time or at some later date. The Transfer Agent will provide each institution with a written confirmation for each transaction in a sub-account. Duplicate confirmations may be transmitted to the beneficial owner of the sub-account at no additional charge. Upon receipt of funds for investment by interbank wire, the Transfer Agent will promptly confirm the receipt of the investment by telephone or return wire to the transmitting bank, if the investor so requests.

           The Transfer Agent also will provide each institution with a monthly statement setting forth, for each sub-account, the share balance, income earned for the month, income earned for the year to date and the total current value of the account.

           Reopening an Account. You may reopen an account with a minimum investment of $100 without filing a new Account Application during the calendar year the account is closed or during the following calendar year, provided the information on the old Account Application is still applicable.

SHAREHOLDER SERVICES PLAN

           The Fund has adopted a Shareholder Services Plan pursuant to which the Fund reimburses the Distributor an amount not to exceed an annual rate of 0.25% 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 related 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.

           A quarterly report of the amounts expended under the Shareholder Services Plan, and the purposes for which such expenditures were incurred, must be made to the Fund's Board for its review. In addition, the Shareholder Services Plan provides that material amendments of the Shareholder Services Plan must be approved by the Fund's Board, and by the Board members who are not "interested persons" (as defined in the 1940 Act) of the Fund and have no direct or indirect financial interest in the operation of the Shareholder Services Plan by vote cast in person at a meeting called for the purpose of considering such amendments. The Shareholder Services Plan is subject to annual approval by such vote of the Board members cast in person at a meeting called for the purpose of voting on the Shareholder Services Plan. The Shareholder Services Plan is terminable at any time by vote of a majority of the Board members who are not "interested persons" and have no direct or indirect financial interest in the operation of the Shareholder Services Plan.

           For the fiscal year ended November 30, 1999, the Fund paid $402,898 pursuant to the Shareholder Services Plan.

HOW TO REDEEM SHARES

           Check Redemption Privilege. The Fund provides Redemption Checks ("Checks") automatically upon opening an account, unless you specifically refuse the Check Redemption Privilege by checking the applicable "No" box on the Account Application. The Check Redemption Privilege may be established for an existing account by a separate signed Shareholder Services Form. Checks will be sent only to the registered owner(s) of the account and only to the address of record. The Account Application, or Shareholder Services Form must be manually signed by the registered owner(s). Checks may be made payable to the order of any person in an amount of $500 or more. When a Check is presented to the Transfer Agent for payment, the Transfer Agent, as your agent, will cause the Fund to redeem a sufficient number of full and fractional shares in your account to cover the amount of the Check. Dividends are earned until the Check clears. After clearance, a copy of the Check will be returned to you. You generally will be subject to the same rules and regulations that apply to checking accounts, although election of this Privilege creates only a shareholder-transfer agent relationship with the Transfer Agent.

           You should date your Checks with the current date when you write them. Please do not postdate your Checks. If you do, the Transfer Agent will honor, upon presentment, even if presented before the date of the Check, all postdated Checks which are dated within six months of presentment for payment, if they are otherwise in good order.

           Checks are free, but the Transfer Agent will impose a fee for stopping payment of a Check upon your request or if the Transfer Agent cannot honor a Check due to insufficient funds or other valid reason. If the amount of the Check is greater than value of the shares in an investor's account, the Check will be returned marked insufficient funds. Checks should not be used to close an account.

           This Privilege will be terminated immediately, without notice, with respect to any account which is, or becomes, subject to backup withholding on redemptions. Any Check written on an account which has become subject to backup withholding on redemptions will not be honored by the Transfer Agent. If you hold shares in a Dreyfus-sponsored IRA account, you may be permitted to make withdrawals from your IRA account using checks furnished to you by The Dreyfus Trust Company.

           Wire Redemption Privilege. By using this Privilege, you authorize the Transfer Agent to act on wire, telephone or letter redemption instructions from any person representing himself or herself to be you, and reasonably believed by the Transfer Agent to be genuine. Ordinarily, the Fund will initiate payment for shares redeemed pursuant to this Privilege on the next business day after receipt if the Transfer Agent receives the redemption request in proper form. Redemption proceeds ($1,000 minimum) will be transferred by Federal Reserve wire only to the commercial bank account specified by you on the Account Application or Shareholder Services Form or to a correspondent bank if your bank is not a member of the Federal Reserve System. Fees ordinarily are imposed by such bank and borne by the investor. Immediate notification by the correspondent bank to your bank is necessary to avoid a delay in crediting the funds to your bank account.

           If you have access to telegraphic equipment, you may wire redemption requests to the Transfer Agent by employing the following transmittal code which may be used for domestic or overseas transmissions:

           If you do not have direct access to telegraphic equipment, you may have the wire transmitted by contacting a TRT Cables operator at 1-800-645-7171, toll free. You should advise the operator that the above transmittal code must be used and should also inform the operator of the Transfer Agent's answer back sign.

           To change the commercial bank or account designated to receive redemption proceeds, a written request must be sent to the Transfer Agent. This request must be signed by each shareholder, with each signature guaranteed as described below under "Share Certificates; Signatures."

           Dreyfus TeleTransfer Privilege. You may request by telephone that redemption proceeds be transferred between your Fund account and your bank account. Only a bank account maintained in a domestic financial institution which is an ACH member may be designated. Holders of jointly registered Fund or bank accounts may redeem through the Dreyfus TeleTransfer Privilege for transfer to their bank account not more than $500,000 within any 30-day period. You should be aware that if you have selected the Dreyfus TeleTransfer Privilege, any request for a wire redemption will be effected as a Dreyfus TeleTransfer transaction through the ACH system unless a more prompt transmittal specifically is requested. Redemption proceeds will be on deposit in your account at an ACH member bank ordinarily two business days after receipt of the redemption request. See "How to Buy Shares--Dreyfus TeleTransfer Privilege."

           Share Certificates; Signatures. Any certificates representing Fund shares to be redeemed must be submitted with the redemption request. Written redemption requests must be signed by each shareholder, including each owner of a joint account, and each signature must be guaranteed. Signatures on endorsed certificates submitted for redemption also must be guaranteed. The Transfer Agent has adopted standards and procedures pursuant to which signature-guarantees in proper form generally will be accepted from domestic banks, brokers, dealers, credit unions, national securities exchanges, registered securities associations, clearing agencies and savings associations, as well as from participants in the New York Stock Exchange Medallion Program, the Securities Transfer Agents Medallion Program ("STAMP") and the Stock Exchanges Medallion program. Guarantees must be signed by an authorized signatory of the guarantor and "Signature-Guaranteed" must appear with the signature. The Transfer Agent may request additional documentation from corporations, executors, administrators, trustees or guardians, and may accept other suitable verification arrangements from foreign investors, such as consular verification. For more information with respect to signature-guarantees, please call one of the telephone numbers listed on the cover.

           Redemption Commitment. The Fund has committed itself to pay in cash all redemption requests by any shareholder of record, limited in amount during any 90-day period to the lesser of $250,000 or 1% of the value of the Fund's net assets at the beginning of such period. Such commitment is irrevocable without the prior approval of the Securities and Exchange Commission. In the case of requests for redemption in excess of such amount, the Board reserves the right to make payments in whole or in part in securities or other assets of the Fund in case of an emergency or any time a cash distribution would impair the liquidity of the Fund to the detriment of the existing shareholders. In such event, the securities would be valued in the same manner as the Fund's portfolio is valued. If the recipient sells such securities, brokerage charges might be incurred.

           Suspension of Redemption. The right of redemption may be suspended or the date of payment postponed (a) during any period when the New York Stock Exchange is closed (other than customary weekend and holiday closings), (b) when trading in the markets the Fund ordinarily utilizes is restricted, or when an emergency exists as determined by the Securities and Exchange Commission so that disposal of the Fund's investments or determination of its net asset value is not reasonably practicable, or (c) for such other periods as the Securities and Exchange Commission by order may permit to protect the Fund's shareholders.

SHAREHOLDER SERVICES

           Fund Exchanges. You may purchase, in exchange for shares of the Fund, shares of certain other funds managed or administered by the Manager, to the extent such shares are offered for sale in your state of residence. Shares of other funds purchased by exchange will be purchased on the basis of relative net asset value per share, as follows:

           To accomplish an exchange under item D above, you must notify the Transfer Agent of your prior ownership of fund shares and your account number.

           To request an exchange, you must give exchange instructions to the Transfer Agent in writing or by telephone. The ability to issue exchange instructions by telephone is given to all Fund shareholders automatically, unless you check the applicable "No" box on the Account Application, indicating you specifically refuse this privilege. By using the Telephone Exchange Privilege, you authorize the Transfer Agent to act on telephonic instructions (including over The Dreyfus Touch(reg.tm.) automated telephone system) from any person representing himself or herself to be you and believed reasonably by the Transfer Agent to be genuine. Telephone exchanges may be subject to limitations as to the amount involved or the number of telephone exchanges permitted. Shares that have been issued in certificate form are not eligible for telephone exchange. No fees currently are charged shareholders directly in connection with exchanges, although the Fund reserves the right, upon not less than 60 days' written notice, to charge shareholders a nominal administrative fee in accordance with rules promulgated by the Securities and Exchange Commission.

           To establish a personal retirement plan by exchange, shares of the fund being exchanged must have a value of at least the minimum initial investment required for the fund into which the exchange is being made.

           Dreyfus Auto-Exchange Privilege. Dreyfus Auto-Exchange Privilege permits you to purchase, in exchange for shares of the Fund, shares of certain other funds in the Dreyfus Family of Funds of which you are a shareholder. This Privilege is available only for existing accounts. Shares will be exchanged on the basis of relative net asset value as described above under "Fund Exchanges." Enrollment in or modification or cancellation of this Privilege is effective three business days following notification by the investor. You will be notified if your account falls below the amount designated to be exchanged under this Privilege. In this case, your account will fall to zero unless additional investments are made in excess of the designated amount prior to the next Auto-Exchange transaction. Shares held under IRA and other retirement plans are eligible for this Privilege. Exchanges of IRA shares may be made between IRA accounts and from regular accounts to IRA accounts, but not from IRA accounts to regular accounts. With respect to all other retirement accounts, exchanges may be made only among those accounts.

           Shareholder Services Forms and prospectuses of the other funds may be obtained by calling 1-800-645-6561. The Fund reserves the right to reject any exchange request in whole or in part. Shares may be exchanged only between accounts having identical names and other identifying designations. The Fund Exchanges service or the Dreyfus Auto-Exchange Privilege may be modified or terminated at any time upon notice to shareholders.

           Dreyfus-Automatic Asset Builder(reg.tm.). Dreyfus-Automatic Asset Builder permits you to purchase Fund shares (minimum of $100 and maximum of $150,000 per transaction) at regular intervals selected by you. Fund shares are purchased by transferring funds from the bank account designated by you.

           Dreyfus Government Direct Deposit Privilege. Dreyfus Government Direct Deposit Privilege enables you to purchase Fund shares (minimum of $100 and maximum of $50,000 per transaction) by having Federal salary, Social Security, or certain veterans', military or other payments from the U.S. Government automatically deposited into your fund account. You may deposit as much of such payments as you elect.

           Dreyfus Payroll Savings Plan. Dreyfus Payroll Savings Plan permits you to purchase Fund shares (minimum of $100 per transaction) automatically on a regular basis. Depending upon your employer's direct deposit program, you may have part or all of your paycheck transferred to your existing Dreyfus account electronically through the ACH system at each pay period. To establish a Dreyfus Payroll Savings Plan account, you must file an authorization form with your employer's payroll department. It is the sole responsibility of your employer to arrange for transactions under the Dreyfus Payroll Savings Plan.

           Dreyfus Step Program. Dreyfus Step Program enables you to purchase Fund shares without regard to the Fund's minimum initial investment requirements through Dreyfus-Automatic Asset Builder(reg.tm.), Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan. To establish a Dreyfus Step Program account, you must supply the necessary information on the Account Application and file the required authorization form(s) with the Transfer Agent. For more information concerning this Program, or to request the necessary authorization form(s), please call toll free 1-800-782-6620. You may terminate your participation in this Program at any time by discontinuing your participation in Dreyfus-Automatic Asset Builder, Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan, as the case may be, as provided under the terms of such Privilege(s). The Fund may modify or terminate this Program at any time.

           Dreyfus Dividend Options. Dreyfus Dividend Sweep allows you to invest automatically on the payment date your dividends or dividends and capital gain distributions, if any, from the Fund in shares of certain other funds in the Dreyfus Family of Funds of which you are a shareholder. Shares of other funds purchased pursuant to this privilege will be purchased on the basis of relative net asset value per share as follows:

           Dreyfus Dividend ACH permits you to transfer electronically dividends or dividends and capital gain distributions, if any, from the Fund to a designated bank account. Only an account maintained at a domestic financial institution which is an ACH member may be so designated. Banks may charge a fee for this service.

           Monthly or Quarterly Distribution Plans. The Monthly or Quarterly Distribution Plans permit you to receive monthly or quarterly payments from the Fund consisting of proceeds from the redemption of shares purchased for your account through the automatic reinvestment of dividends declared on your account during the preceding month or calendar quarter.

           You may open a Monthly or Quarterly Distribution Plan by submitting a request to the Transfer Agent. A Monthly or Quarterly Distribution Plan may be ended at any time by you, the Fund or the Transfer Agent. Shares for which certificates have been issued must be presented before redemption under the Monthly or Quarterly Distribution Plans.

           Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits you to request withdrawal of a specified dollar amount (minimum of $50) on either a monthly or quarterly basis if you have a $5,000 minimum account. Withdrawal payments are the proceeds from sales of Fund shares, not the yield on the shares. If withdrawal payments exceed reinvested dividends and distributions, your shares will be reduced and eventually may be depleted. Automatic Withdrawal may be terminated at any time by you, the Fund or the Transfer Agent. Shares for which certificates have been issued may not be redeemed through the Automatic Withdrawal Plan.

           Corporate Pension/Profit-Sharing and Personal Retirement Plans. The Fund makes available to corporations a variety of prototype pension and profit sharing plans including a 401(k) Salary Reduction Plan. In addition, the Fund makes available Keogh Plans, IRAs (including regular IRAs, spousal IRAs for a non-working spouse, SEP-IRAs, Roth IRAs, Education IRAs and rollover IRAs) and 403(b)(7) Plans. Plan support services are also available.

           If you wish to purchase Fund shares in conjunction with a Keogh Plan, a 403(b)(7) Plan or an IRA, including a SEP-IRA, you may request from the Distributor forms for adoption of such plans.

           The entity acting as custodian for Keogh Plans, 403(b)(7) Plans or IRAs may charge a fee, payment of which could require the liquidation of shares. All fees charged are described in the appropriate form.

           Shares may be purchased in connection with these plans only by direct remittance to the entity acting as custodian. Purchases for these plans may not be made in advance of receipt of funds.

           You should read the prototype retirement plan and the appropriate form of custodial agreement for further details as to eligibility, service fees and tax implications, and should consult a tax adviser.

DETERMINATION OF NET ASSET VALUE

           Valuation of Portfolio Securities. The Fund's investments are valued each business day using available market quotations or at fair value as determined by one or more independent pricing services (collectively, the "Service") approved by the Board. The Service may use available market quotations, or employ electronic data processing techniques and/or a matrix system to determine valuations. The Service's procedures are reviewed by the Fund's officers under the general supervision of the Board. Expenses and fees, including the management fee (reduced by the expense limitation, if any), are accrued daily and are taken into account for the purpose of determining the net asset value of Fund shares.

           New York Stock Exchange Closings. The holidays (as observed) on which the New York Stock Exchange is closed currently are: New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.

DIVIDENDS, DISTRIBUTIONS AND TAXES

           Management believes that the Fund has qualified for the fiscal year ended November 30, 1999 as a "regulated investment company" under the Internal Revenue Code of 1986, as amended (the "Code"). The Fund intends to continue to so qualify if such qualification is in the best interests of its shareholders. Such qualification relieves the Fund of any liability for Federal income tax to the extent its earnings are distributed in accordance with applicable provisions of the Code. If the Fund did not qualify as a regulated investment company, it would be treated for tax purposes as an ordinary corporation subject to Federal income tax.

           The Fund ordinarily declares dividends from its net investment income on each day the Fund is open for business. Fund shares begin earning income dividends on the day following the date of purchase. The Fund's earnings for Saturdays, Sundays and holidays are declared as dividends on the next business day. Dividends usually are paid on the last business day of each month and are automatically reinvested in additional Fund shares at net asset value or, at your option, paid in cash. If you redeem all shares in your account at any time during the month, all dividends to which you are entitled will be paid to you along with the proceeds of the redemption. If you are an omnibus accountholder and indicate in a partial redemption request that a portion of any accrued dividends to which such account is entitled belongs to an underlying accountholder who has redeemed all shares in his or her account, such portion of the accrued dividends will be paid to you along with the proceeds of the redemption.

           If you elect to receive dividends and distributions in cash, and your dividend or distribution check is returned to the Fund as undeliverable or remains uncashed for six months, the Fund reserves the right to reinvest such dividend or distribution and all future dividends and distributions payable to you in additional Fund shares at net asset value. No interest will accrue on amounts represented by uncashed distribution or redemption checks.

           Any dividend or distribution paid shortly after your purchase may have the effect of reducing the aggregate net asset value of the shares below the cost of your investment. Such a distribution would be a return on investment in an economic sense although taxable as stated under "Distributions and Taxes" in the Fund's Prospectus. In addition, the Code provides that if a shareholder holds Fund shares for six months or less and has received a capital gain dividend with respect to such shares, any loss incurred on the sale of such shares will be treated as a long-term capital loss to the extent of the capital gain dividend received.

           Ordinarily, gains and losses realized from portfolio transactions will be treated as capital gains or losses. However, all or a portion of any gains realized from the sale or other disposition of certain market discount bonds will be treated as ordinary income. In addition, all or a portion of the gain realized from engaging in "conversion transactions" (generally including certain transactions designed to convert ordinary income into capital gain) may be treated as ordinary income.

           If the Fund either (1) holds an appreciated financial position with respect to stock, certain debt obligations, or partnership interests ("appreciated financial position") and then enters into a short sale, futures, forward, or offsetting notional principal contract (collectively, a "Contract") respecting the same or substantially identical property or (2) holds an appreciated financial position that is a Contract and then acquires property that is the same as, or substantially identical to, the underlying property, the Fund generally will be taxed as if the appreciated financial position were sold at its fair market value on the date the Fund enters into the financial position or acquires the property, respectively.

PORTFOLIO TRANSACTIONS

           Portfolio securities ordinarily are purchased from and sold to parties acting as either principal or agent. Newly-issued securities ordinarily are purchased directly from the issuer or from an underwriter; other purchases and sales usually are placed with those dealers from which it appears that the best price or execution is obtained. Usually no brokerage commissions, as such, are paid by the Fund for such purchases and sales, although the price paid usually includes an undisclosed compensation to the dealer acting as agent. The prices paid to underwriters of newly-issued securities usually include a concession paid by the issuer to the underwriter, and purchases of after-market securities from dealers ordinarily are executed at a price between the bid and asked price. No brokerage commissions have been paid by the Fund to date.

           Transactions are allocated to various dealers by the Fund's portfolio managers in their best judgment. The primary consideration is prompt and effective execution of orders at the most favorable price. Subject to that primary consideration, dealers may be selected for research, statistical or other services to enable the Manager to supplement its own research and analysis with the views and information of other securities firms and may be selected based upon their sales of shares of the Fund or other funds advised by the Manager or its affiliates.

           Research services furnished by brokers through which the Fund effects securities transactions may be used by the Manager in advising other funds it advises and, conversely, research services furnished to the Manager by brokers in connection with other funds the Manager advises may be used by the Manager in advising the Fund. Although it is not possible to place a dollar value on these services, it is the opinion of the Manager that the receipt and study of such services should not reduce the overall expenses of its research department.

PERFORMANCE INFORMATION

           The Fund's current yield for the 30-day period ended November 30, 1999 was 5.06%. Current yield is computed pursuant to a formula which operates as follows: The amount of the Fund's expenses accrued for the 30-day period (net of reimbursements) is subtracted from the amount of the dividends and interest earned (computed in accordance with regulatory requirements) by the Fund during the period. That result is then divided by the product of: (a) the average daily number of shares outstanding during the period that were entitled to receive dividends, and (b) the net asset value per share on the last day of the period less any undistributed earned income per share reasonably expected to be declared as a dividend shortly thereafter. The quotient is then added to 1, and that sum is raised to the 6th power, after which 1 is subtracted. The current yield is then arrived at by multiplying the result by 2.

           The Fund's average annual total return for the 1, 5 and 10 year periods ended November 30, 1999 was 2.33%, 6.24% and 6.80%, respectively. Average annual total return is calculated by determining the ending redeemable value of an investment purchased with a hypothetical $1,000 payment made at the beginning of the period (assuming the reinvestment of dividends and distributions), dividing by the amount of the initial investment, taking the "n"th root of the quotient (where "n" is the number of years in the period) and subtracting 1 from the result.

           The Fund's aggregate total return for the period April 6, 1987 (commencement of operations) to November 30, 1999 was 130.73%. Total return is calculated by subtracting the amount of the Fund's net asset value per share at the beginning of a stated period from the net asset value per share at the end of the period (after giving effect to the reinvestment of dividends and distributions during the period), and dividing the result by the net asset value per share at the beginning of the period.

           Comparative performance information may be used from time to time in advertising or marketing the Fund's shares, including data from Lipper Analytical Services, Inc., Bank Rate Monitor(TM), Moody's Bond Survey Bond Index, Lehman Brothers Municipal Bond Index, Salomon Brothers Corporate Bond Rate-of-Return Index, Bond Buyer's 20-Bond Index and other industry publications. From time to time, advertising materials for the Fund may refer to or discuss then-current or past economic conditions, developments and/or events, actual or proposed tax legislation, or to statistical or other information concerning trends relating to investment companies, as compiled by industry associations such as the Investment Company Institute. From time to time, advertising materials for the Fund also may refer to Morningstar ratings and related analyses supporting such ratings.

           From time to time, advertising materials may refer to studies performed by the Manager or its affiliates, such as "The Dreyfus Tax Informed Investing Study" or "The Dreyfus Gender Investment Comparison Study (1996 & 1997)" or other such studies.

           From time to time, advertising material for the Fund may include statistical data or general discussions about the growth and development of Dreyfus Retirement Services (in terms of new customers, assets under management, market share, etc.) and its presence in the defined contribution plan market and biographical information relating to its portfolio manager, and may refer to, or include commentary by the portfolio manager relating to investment strategy, asset growth, current or past business, political, economic or financial conditions and other matters of general interest to investors.

INFORMATION ABOUT THE FUND

           Each Fund share has one vote, and when issued and paid for in accordance with the terms of the offering, is fully paid and non-assessable. Fund shares are of one class and have equal rights as to dividends and in liquidation. Shares have no preemptive, subscription or conversion rights and are freely transferable.

           The Fund is organized as an unincorporated business trust under the laws of the Commonwealth of Massachusetts. Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Fund. However, the Fund's Agreement and Declaration of Trust ("Trust Agreement") disclaims shareholder liability for acts or obligations of the Fund and requires that notice of such disclaimer be given in the agreement, obligation or instrument entered into or executed by the Fund or a Board member. The Trust Agreement provides for indemnification from the Fund's property for all losses and expenses of any shareholder held personally liable for the obligations of the Fund. Thus, the risk of a shareholder incurring financial loss on account of a shareholder liability is limited to circumstances in which the Fund itself would be unable to meet its obligations, a possibility which management believes is remote. Upon payment of any liability incurred by the Fund, the shareholder paying such liability will be entitled to reimbursement from the general assets of the Fund. The Fund intends to conduct its operations in a way so as to avoid, as far as possible, ultimate liability of the shareholders for liabilities of the Fund.

           Unless otherwise required by the 1940 Act, ordinarily it will not be necessary for the Fund to hold annual meetings of shareholders. As a result, Fund shareholders may not consider each year the election of Board members or the appointment of auditors. However, the holders of at least 10% of the shares outstanding and entitled to vote may require the Fund to hold a special meeting of shareholders for purposes of removing a Board member from office. Fund shareholders may remove a Board member by the affirmative vote of two-thirds of the Fund's outstanding voting shares. In addition, the Board will call a meeting of shareholders for the purpose of electing Board members if, at any time, less than a majority of the Board members then holding office have been elected by shareholders.

           The Fund is intended to be a long-term investment vehicle and is not designed to provide investors with a means of speculating on short-term market movements. A pattern of frequent purchases and exchanges can be disruptive to efficient portfolio management and, consequently, can be detrimental to the Fund's performance and its shareholders. Accordingly, if the Fund's management determines that an investor is following a market-timing strategy or is otherwise engaging in excessive trading, the Fund, with or without prior notice, may temporarily or permanently terminate the availability of Fund Exchanges, or reject in whole or part of any purchase or exchange request, with respect to such investor's account. Such investors also may be barred from purchasing other funds in the Dreyfus Family of Funds. Generally, an investor who makes more than four exchanges out of the Fund during any calendar year or who makes exchanges that appear to coincide with a market-timing strategy may be deemed to be engaged in excessive trading. Accounts under common ownership or control will be considered as one account for purposes of determining a pattern of excessive trading. In addition, the Fund may refuse or restrict purchase or exchange requests by any person or group if, in the judgment of the Fund's management, the Fund would be unable to invest the money effectively in accordance with its investment objective and policies or could otherwise be adversely affected or if the Fund receives or anticipates receiving simultaneous orders that may significantly affect the Fund (e.g., amounts equal to 1% or more of the Fund's total assets). If an exchange request is refused, the Fund will take no other action with respect to the shares until it receives further instructions from the investor. The Fund may delay forwarding redemption proceeds for up to seven days if the investor redeeming shares is engaged in excessive trading or if the amount of the redemption request otherwise would be disruptive to efficient portfolio management or would adversely affect the Fund. The Fund's policy on excessive trading applies to investors who invest in the Fund directly or through financial intermediaries, but does not apply to the Dreyfus Auto-Exchange Privilege, to any automatic investment or withdrawal privilege described herein, or to participants in employer-sponsored retirement plans.

           During times of drastic economic or market conditions, the Fund may suspend Fund Exchanges temporarily without notice and treat exchange requests based on their separate components--redemption orders with a simultaneous request to purchase the other fund's shares. In such a case, the redemption request would be processed at the Fund's next determined net asset value but the purchase order would be effective only at the net asset value next determined after the fund being purchased receives the proceeds of the redemption, which may result in the purchase being delayed.

           To offset the relatively higher costs of servicing smaller accounts, the Fund will charge regular accounts with balances below $2,000 an annual fee of $12. The valuation of accounts and the deductions are expected to take place during the last four months of each year. The fee will be waived for any investor whose aggregate Dreyfus mutual fund investments total at least $25,000, and will not apply to IRA accounts or to accounts participating in automatic investment programs or opened through a securities dealer, bank or other financial institution, or to other fiduciary accounts.

           The Fund sends annual and semi-annual financial statements to all its shareholders.

COUNSEL AND INDEPENDENT AUDITORS

           Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York 10038-4982, as counsel for the Fund, has rendered its opinion as to certain legal matters regarding the due authorization and valid issuance of the shares being sold pursuant to the Fund's Prospectus.

          Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, independent auditors, have been selected as independent auditors of the Fund.

YEAR 2000 ISSUES

           The Fund could be adversely affected if the computer systems used by the Manager and the Fund's other service providers do not properly process and calculate date-related information from and after January 1, 2000. The Manager 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.

Dreyfus Short-Intermediate Government Fund  -                            $19,306
Merrill Lynch Governmenst, U.S. Treasury, Short-Term (1-3 years) Index - $18,974

                   Inception
Fund                  Date          1 Year        5 Years     10 Years
                     4/6/87          2.33%         6.24%        6.80%

                                          Principal
BONDS AND NOTES--87.3%                     Amount($)               Value ($)
--------------------------------------------------------------------------------

U.S. GOVERNMENT AGENCY--11.9%

FICO Coupon Strips:


   0%, 6/6/2000                            17,967,000               17,441,465

   Ser. 15, 0%, 9/7/2001                    2,500,000                2,238,975

Federal Home Loan Banks, Ser. A-1,
   Coupon Strips, 0%, 2/25/2003             1,789,000                1,455,985

Federal Home Loan Mortgage,
   Medium-Term Notes, 6.95%, 4/1/2004       5,000,000                5,064,300

Federal National Mortgage Association:

   Coupon Strips, 0%, 4/8/2001              5,500,000                5,074,701

   Coupon Strips, 0%, 7/24/2001             1,227,000                1,108,010

   Medium-Term Notes, 7.18%, 10/1/2003      3,000,000                2,974,920

   Principal Strips, 0%, 8/7/2001           6,000,000                5,405,100

Tennessee Valley Authority,
  Valley Indexed Principal Securities,

   3.375%, 1/15/2007                       11,093,000(a)            10,829,930

                                                                    51,593,386

U.S. GOVERNMENT--46.5%

U.S. Treasury Bonds,

   10.75%, 5/15/2003                       10,000,000               11,395,400

U.S. Treasury Inflation Protection Securities:

   3.375%, 1/15/2007                       19,700,000(a)            19,875,527

   3.625%, 1/15/2008                       20,000,000(a)            20,035,400

U.S. Treasury Notes:

   5.875%, 10/31/2001                      60,500,000               60,371,740

   5.875%, 11/30/2001                      47,500,000               47,398,350

   5.875%, 11/15/2004                      13,400,000               13,272,164

   6%, 8/15/2004                           22,000,000               21,882,080

   6%, 8/15/2009                            8,000,000                7,900,880

                                                                   202,131,541

U.S. GOVERNMENT AGENCY/MORTGAGE-BACKED--28.9%

Federal Home Loan Mortgage:

  REMIC, Multiclass Mortgage Participation Ctfs.,

    Ser. 1978, Cl. PH, 7%, 1/15/2024

    (Interest Only Obligation)              4,451,239(b)               612,045

  Structured Pass-Through Ctfs.,

      Ser. T-22, Cl. A6, 7.05%, 11/25/2029  5,000,000                4,962,500

Federal National Mortgage Association:

   6%, 10/1/2013                           28,169,108               27,007,133

   7.5%, 12/15/2029                        20,000,000(c)            19,962,400

  REMIC Trust, Gtd. Pass-Through Ctfs.:

      Ser. 1995-W1, Cl. A6, 8.1%, 4/25/2025 5,935,711                5,987,649

      Ser. 1997-56, Cl. PM, 7%, 6/18/2026

         (Interest Only Obligation)         3,000,000(b)               774,840

      Ser. 1998-49, Cl. MA, 6.5%, 10/17/05  7,606,444                7,541,074

Government National Mortgage Association I,

   8%, 12/15/2029                          20,000,000(c)            20,350,000

Government National Mortgage Association II,

  Adjustable Rate Mortgage,

   6%, 1/20/2030                            2,300,000(c)             2,284,906

U.S. Government Gtd. Development,

  Participation Ctfs.

  (Gtd. By U.S. Small Business Administration):

      Ser. 1997-20E, 7.3%, 5/1/2017         6,255,654                6,235,040

      Ser. 1997-20F, 7.2%, 6/1/2017         4,139,193                4,112,467

      Ser. 1997-20G, 6.85%, 7/1/2017       11,276,521               11,030,916

      Ser. 1998-20E, 6.3%, 5/1/2018         1,876,736                1,782,772

      Ser. 1998-20J, 5.5%, 10/1/2018        4,323,670                3,939,827

      Ser. 1998-20L, 5.8%, 12/1/2018        9,841,175                9,102,962

                                                                   125,686,531

TOTAL BONDS AND NOTES

   (cost $384,049,198)                                             379,411,458
-------------------------------------------------------------------------------


SHORT-TERM INVESTMENTS--44.8%
-------------------------------------------------------------------------------

REPURCHASE AGREEMENTS;

UBS Securities, 5.58%

  Dated 11/30/1999, due 12/1/1999
  in the amount of $194,965,215
  (fully collateralized by
  $204,518,000 U.S. Treasury Bills,
  5/4/2000-7/20/2000 value
  $198,836,827) (cost $194,935,000)       194,935,000              194,935,000
-------------------------------------------------------------------------------

TOTAL INVESTMENTS (cost $578,984,198)           132.1%             574,346,458

LIABILITIES, LESS CASH AND RECEIVABLES          (32.1%)           (139,564,222)

NET ASSETS                                      100.0%             434,782,236

                                            Principal
NOTES                                        Amount($)             Value ($)


U.S. Treasury Notes, 6%, 8/15/2009

   (proceeds $15,090,141)                   15,000,000             14,814,150

SEE NOTES TO FINANCIAL STATEMENTS.

                                              Cost                  Value



ASSETS ($):

Investments in securities--See Statement
   of Investments (including Repurchase
   Agreements of $194,935,000) --Note 1(b)  578,984,198            574,346,458

Receivable for investment securities
sold                                                                15,874,176

Receivable from brokers for proceeds on
 securities sold short                                              15,090,141

Interest receivable                                                  3,158,240

Receivable for shares of Beneficial
 Interest subscribed                                                    51,268

Prepaid expenses and other
assets                                                                  58,462

                                                                   608,578,745



LIABILITIES ($):

Due to The Dreyfus Corporation and affiliates                          222,136

Cash overdraft due to Custodian                                      2,279,624

Payable for investment securities
purchased                                                          153,597,811

Securities sold short, at value
  (proceeds $15,090,141)--
   See Statement of Securities Sold
   Short                                                            14,814,150

Payable for shares of Beneficial Interest
redeemed                                                             2,769,702

Accrued expenses                                                       113,086

                                                                   173,796,509


NET ASSETS ($)                                                     434,782,236

COMPOSITION OF NET ASSETS ($):

Paid-incapital                                                     489,212,952

Accumulated undistributed investment
income--net                                                             72,014

Accumulated net realized gain (loss)
 on investments and securities sold
 short                                                             (50,140,981)

Accumulated net unrealized appreciation
 (depreciation) on investments and
 securities sold short--Note 4(b)                                   (4,361,749)

NET ASSETS ($)                                                     434,782,236

SHARES OUTSTANDING

(unlimited number of $.001 par value
 shares of Beneficial Interest authorized)                          41,705,615

NET ASSET VALUE, offering and redemption
 price per share($)                                                      10.43

SEE NOTES TO FINANCIAL STATEMENTS.

STATEMENT OF OPERATIONS

Year Ended November 30, 1999



INVESTMENT INCOME ($):

INTEREST INCOME                                                     31,245,222

EXPENSES:

Management fee--Note 3(a)                                            2,324,856

Shareholder servicing costs--Note 3(b)                                 744,302

Professional fees                                                       55,338

Trustees' fees and expenses--Note 3(c)                                  55,274

Custodian fees--Note 3(b)                                               47,773

Prospectus and shareholders' reports                                    41,895

Registration fees                                                       37,554

Loan commitment fees--Note 2                                             4,553

Miscellaneous                                                           12,825

TOTAL EXPENSES                                                       3,324,370

INVESTMENT INCOME--NET                                              27,920,852

REALIZED AND UNREALIZED GAIN (LOSS)
 ON INVESTMENTS--NOTE 4 ($):

Net realized gain (loss) on investments:

Long transactions                                                  (20,301,733)

Short sale transactions                                              4,757,032

NET REALIZED GAIN (LOSS)                                           (15,544,701)

Net unrealized appreciation (depreciation)
 on investments and securities sold
 short                                                              (2,139,885)

NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS                                                        (17,684,586)

NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS                                                          10,236,266

SEE NOTES TO FINANCIAL STATEMENTS.

                                                                      The Fund

STATEMENT OF CHANGES IN NET ASSETS

                                                   Year Ended November 30,
                                             -----------------------------------
                                                    1999              1998


OPERATIONS ($):

Investment income--net                           27,920,852        32,639,194

Net realized gain (loss) on investments         (15,544,701)        1,956,888

Net unrealized appreciation (depreciation)
   on investments                                (2,139,885)       (1,581,674)

NET INCREASE (DECREASE) IN NET ASSETS
   RESULTING FROM OPERATIONS                     10,236,266        33,014,408

DIVIDENDS TO SHAREHOLDERS FROM ($):

INVESTMENT INCOME--NET                          (27,880,155)      (32,804,499)

BENEFICIAL INTEREST TRANSACTIONS ($):

Net proceeds from shares sold                   146,416,081       162,536,723

Dividends reinvested                             22,936,354        26,502,951

Cost of shares redeemed                        (204,640,779)     (189,707,314)

INCREASE (DECREASE) IN NET ASSETS FROM
   BENEFICIAL INTEREST TRANSACTIONS             (35,288,344)         (667,640)

TOTAL INCREASE (DECREASE) IN NET ASSETS         (52,932,233)         (457,731)

NET ASSETS ($):

Beginning of Period                             487,714,469       488,172,200

END OF PERIOD                                   434,782,236       487,714,469

Undistributed investment income--net                 72,014            31,317

CAPITAL SHARE TRANSACTIONS (SHARES):

Shares sold                                      13,793,084        14,998,195

Shares issued for dividends reinvested            2,169,933         2,446,543

Shares redeemed                                 (19,323,645)      (17,512,879)

NET INCREASE (DECREASE) IN SHARES OUTSTANDING    (3,360,628)          (68,141)

SEE NOTES TO FINANCIAL STATEMENTS.

                                                              Year Ended November 30,
                                                  --------------------------------------------

                                                   1999       1998       1997       1996       1995
----------------------------------------------------------------------------------------------------------------------

PER SHARE DATA ($):


Net asset value, beginning of period              10.82      10.82      10.95      11.06      10.57

Investment Operations:

Investment income--net                              .63        .74        .66        .65        .73

Net realized and unrealized
   gain (loss) on investments                      (.39)       .01       (.13)      (.11)       .49

Total from Investment Operations                    .24        .75        .53        .54       1.22

Distributions:

Dividends from investment income--net             (.63)       (.75)      (.66)      (.65)      (.73)

Net asset value, end of period                    10.43      10.82      10.82      10.95      11.06
----------------------------------------------------------------------------------------------------------------------

TOTAL RETURN (%)                                   2.33       7.21       4.93       5.08      11.91
----------------------------------------------------------------------------------------------------------------------

RATIOS/SUPPLEMENTAL DATA (%):

Ratio of expenses to average net assets             .71        .70        .74        .74        .66

Ratio of net investment income
   to average net assets                           6.00       6.85       6.13       5.99       6.73

Decrease reflected in above expense ratios
   due to undertakings by the Manager                --         --        .01         --        .09

Portfolio Turnover Rate                        1,096.12     902.14     818.39     594.44      387.60
----------------------------------------------------------------------------------------------------------------------

Net Assets, end of period ($ x 1,000)           434,782    487,714    488,172    569,319     573,681

SEE NOTES TO FINANCIAL STATEMENTS.

                                      Purchases ($)           Sales ($)
--------------------------------------------------------------------------------

Long transactions                     4,650,512,595        4,732,815,689

Short sale transactions               4,523,012,609        4,542,859,782

     TOTAL                            9,173,525,204        9,275,675,471

STATEMENT OF INVESTMENTS

May 31, 2000 (Unaudited)

                                                                   Principal
BONDS AND NOTES--113.5%                                             Amount ($)       Value ($)


U.S. GOVERNMENT--40.8%

U.S. Treasury Bonds:

   7.625%, 2/15/2007                                                 10,000,000      10,116,400

   8.375%, 8/15/2008                                                  5,000,000       5,215,300

   10%, 5/15/2010                                                     7,500,000       8,498,025

   10.375%, 11/15/2009                                                5,000,000       5,672,600

   10.75%, 2/15/2003                                                 15,000,000      16,442,850

   10.75%, 8/15/2005                                                 21,000,000      24,722,460

   11.875%, 11/15/2003                                               15,000,000      17,347,200

   12%, 5/15/2005                                                    10,000,000      12,221,300

   12.75%, 11/15/2010                                                 7,500,000       9,508,650

U.S. Treasury Inflation Protection
  Securities:

   3.625%, 7/15/2002                                                 10,000,000(a)   10,596,597

   3.625%, 1/15/2008                                                 16,400,000(a)   16,728,433

   3.875%, 4/15/2029                                                  8,800,000(a)    9,000,188

U.S. Treasury Notes:

   6%, 8/15/2004                                                      2,000,000       1,956,300

   6.375%, 4/30/2002                                                  6,000,000       5,961,900

                                                                                    153,988,203

U.S. GOVERNMENT AGENCIES--31.3%

Federal Home Loan Banks:

   Notes, 6.75%, 2002                                                50,000,000      49,588,500

   Ser. A-1, Coupon Strips, 0%, 2/25/2003                             1,789,000       1,470,390

Federal Home Loan Mortgage,

   Notes, 7.375%, 5/15/2003                                          25,000,000      25,006,750

Federal National Mortgage Association:

   Coupon Strips, 0%, 7/24/2001                                       1,227,000       1,134,977

   Principal Strips, 0%, 8/7/2001                                     6,000,000       5,515,200

Tennessee Valley Authority,

  Valley Indexed Principal Securities,

   3.375%, 1/15/2007                                                 35,500,000(a)   35,312,446

                                                                                    118,028,263

U.S. GOVERNMENT AGENCIES/
  MORTGAGE-BACKED--41.4%

Federal Home Loan Mortgage:

   7.5%                                                              20,000,000(b)   19,475,000

   8%                                                                 5,000,000(b)    4,975,000

   REMIC, Mutliclass Mortgage Participation Ctfs.,

      Ser. 1978, Cl. PH, 7%, 1/15/2024

      (Interest Only Obligation)                                      3,861,135(c)      503,154

   Structured Pass-Through Ctfs.,

      Ser. T-22, Cl. A6, 7.05%, 11/25/2029                            5,000,000       4,812,500


                                                                      Principal
BONDS AND NOTES (CONTINUED)                                           Amount ($)        Value ($)


U.S. GOVERNMENT AGENCIES/MORTGAGE-BACKED (CONTINUED)

Federal National Mortgage Association:

   6%, 10/1/2013                                                     26,639,391      25,041,028

   7.5%                                                               5,000,000(b)    4,856,250

   REMIC Trust, Gtd. Pass-Through Ctfs.:

      Ser. 1995-W1, Cl. A6, 8.1%, 4/25/2025                           4,494,858       4,518,782

      Ser. 1997-56, Cl. PM, 7%, 6/18/2026

         (Interest Only Obligation)                                   2,944,851(c)      748,022

      Ser. 1998-49, Cl. MA, 6.5%, 10/17/2005                          7,039,862       6,884,246

Government National Mortgage Association I:

   7.5%                                                              30,000,000(b)   29,465,400

   8%                                                                30,000,000(b)   30,056,100

Government National Mortgage Association II,

  Adjustable Rate Mortgage,

   6.5%                                                              15,000,000(b)   14,671,875

U.S. Government Gtd. Development,

  Participation Ctfs.

  (Gtd. By U.S. Small Business Administration),

   Ser. 1997-20G, Cl. 1, 6.85%, 7/1/2017                             10,807,509      10,314,586

                                                                                    156,321,943

TOTAL BONDS AND NOTES

   (cost $431,241,497)                                                              428,338,409


SHORT-TERM INVESTMENTS--7.9%


REPURCHASE AGREEMENTS;

UBS Securities, 6.35%

  Dated 5/31/2000, due 6/1/2000 in the
  amount of $29,970,285 (fully collateralized by

  $30,375,000 U.S. Treasury Notes,

  6.375%, 3/31/2001 value $31,215,603)

   (cost $29,965,000)                                                29,965,000      29,965,000

TOTAL INVESTMENTS (cost $461,206,497)                                     121.4%    458,303,409

LIABILITIES, LESS CASH AND RECEIVABLES                                   (21.4%)    (80,835,302)

NET ASSETS                                                               100.0%     377,468,107

(a) PRINCIPAL AMOUNT FOR ACCRUAL PURPOSES IS PERIODICALLY ADJUSTED BASED ON CHANGES TO THE CONSUMER PRICE
    INDEX.

(b) PURCHASED ON A FORWARD COMMITMENT BASIS.

(c) NOTIONAL FACE AMOUNT SHOWN.

SEE NOTES TO FINANCIAL STATEMENTS.

STATEMENT OF SECURITIES SOLD SHORT

May 31, 2000 (Unaudited)

                                                                    Principal
NOTES                                                                Amount ($)        Value ($)


U.S. Treasury Notes, 6.5%, 2/15/2010

   (proceeds $39,059,297)                                            38,500,000       39,075,960

SEE NOTES TO FINANCIAL STATEMENTS.

STATEMENT OF ASSETS AND LIABILITIES

May 31, 2000 (Unaudited)
                                                                       Cost           Value

ASSETS ($):

Investments in securities--See Statement of
   Investments--Note 1(b)                                           461,206,497     458,303,409

Receivable for investment securities sold                                           114,407,359

Receivable from brokers for proceeds on securities sold short                        39,059,297

Interest receivable                                                                   4,103,666

Receivable for shares of Beneficial Interest subscribed                                 100,935

                                                                                    615,974,666


LIABILITIES ($):

Due to The Dreyfus Corporation and affiliates                                           206,318

Cash overdraft due to Custodian                                                         603,563

Payable for investment securities purchased                                         198,054,731

Securities sold short, at value (proceeds $39,059,297)

   --See Statement of Securities Sold Short                                          39,075,960

Payable for shares of Beneficial Interest redeemed                                      464,199

Accrued expenses                                                                        101,788

                                                                                    238,506,559


NET ASSETS ($)                                                                      377,468,107


COMPOSITION OF NET ASSETS ($):

Paid-in capital                                                                     435,688,507

Accumulated net realized gain (loss) on investments
   and securities sold short                                                        (55,300,649)

Accumulated net unrealized appreciation (depreciation)
   on investments and securities sold short--Note 4(b)                               (2,919,751)


NET ASSETS ($)                                                                      377,468,107


SHARES OUTSTANDING

(unlimited number of $.001 par value shares of Beneficial Interest authorized)       36,526,263

NET ASSET VALUE, offering and redemption price per share ($)                              10.33

SEE NOTES TO FINANCIAL STATEMENTS.

STATEMENT OF OPERATIONS

Six Months Ended May 31, 2000 (Unaudited)



INVESTMENT INCOME ($):

INTEREST INCOME                                                                        12,573,839

EXPENSES:

Management fee--Note 3(a)                                                                997,075

Shareholder servicing costs--Note 3(b)                                                   332,592

Trustees' fees and expenses--Note 3(c)                                                    29,285

Professional fees                                                                         25,957

Custodian fees--Note 3(b)                                                                 20,729

Prospectus and shareholders' reports                                                      19,005

Registration fees                                                                         14,632

Miscellaneous                                                                             11,008

TOTAL EXPENSES                                                                         1,450,283

INVESTMENT INCOME--NET                                                                11,123,556


REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):

Net realized gain (loss) on investments:

Long transactions                                                                     (6,173,915)

Short sale transactions                                                                1,014,247

NET REALIZED GAIN (LOSS)                                                              (5,159,668)

Net unrealized appreciation (depreciation) on investments

   and securities sold short                                                           1,441,998

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS                                (3,717,670)

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                                   7,405,886

SEE NOTES TO FINANCIAL STATEMENTS.

STATEMENT OF CHANGES IN NET ASSETS

                                                              Six Months Ended
                                                                 May 31, 2000             Year Ended
                                                                 (Unaudited)            November 30,1999


OPERATIONS ($):

Investment income--net                                               11,123,556       27,920,852

Net realized gain (loss) on investments                              (5,159,668)     (15,544,701)

Net unrealized appreciation (depreciation)
   on investments                                                     1,441,998       (2,139,885)

NET INCREASE (DECREASE) IN NET ASSETS
   RESULTING FROM OPERATIONS                                         7,405,886        10,236,266


DIVIDENDS TO SHAREHOLDERS FROM ($):

INVESTMENT INCOME--NET                                              (11,195,570)     (27,880,155)

BENEFICIAL INTEREST TRANSACTIONS ($):

Net proceeds from shares sold                                        46,508,127      146,416,081

Dividends reinvested                                                  9,462,421       22,936,354

Cost of shares redeemed                                            (109,494,993)    (204,640,779)

INCREASE (DECREASE) IN NET ASSETS FROM
   BENEFICIAL INTEREST TRANSACTIONS                                 (53,524,445)     (35,288,344)

TOTAL INCREASE (DECREASE) IN NET ASSETS                             (57,314,129)     (52,932,233)


NET ASSETS ($):

Beginning of Period                                                 434,782,236      487,714,469

END OF PERIOD                                                       377,468,107      434,782,236

Undistributed investment income--net                                      --              72,014


CAPITAL SHARE TRANSACTIONS (SHARES):

Shares sold                                                           4,501,185       13,793,084

Shares issued for dividends reinvested                                  916,057        2,169,933

Shares redeemed                                                     (10,596,594)     (19,323,645)

NET INCREASE (DECREASE) IN SHARES OUTSTANDING                        (5,179,352)      (3,360,628)

SEE NOTES TO FINANCIAL STATEMENTS.

                                     Six Months Ended
                                        May 31, 2000                    Year Ended November 30,
                                                          ------------------------------------------------------
                                       (Unaudited)        1999      1998        1997        1996        1995


PER SHARE DATA ($):

Net asset value,
   beginning of period                      10.43         10.82      10.82      10.95       11.06       10.57

Investment Operations:

Investment income--net                        .29           .63        .74        .66         .65         .73

Net realized and unrealized
   gain (loss) on investments               (.10)          (.39)       .01       (.13)       (.11)        .49

Total from Investment Operations             .19            .24        .75        .53         .54        1.22

Distributions:

Dividends from investment
   income--net                              (.29)          (.63)      (.75)      (.66)       (.65)       (.73)

Net asset value, end of period             10.33          10.43      10.82      10.82       10.95       11.06


TOTAL RETURN (%)                            3.71(a)        2.33       7.21       4.93        5.08       11.91


RATIOS/SUPPLEMENTAL DATA (%):

Ratio of expenses to
   average net assets                        .73(a)         .71        .70        .74        .74          .66

Ratio of net investment income
  to average net assets                     5.56(a)        6.00       6.85       6.13       5.99         6.73

Decrease reflected in
   above expense ratios due
   to undertakings by
   The Dreyfus Corporation                    --           --          --         .01        --           .09

Portfolio Turnover Rate                   634.48(b)    1,096.12     902.14     818.39     594.44       387.60


Net Assets, end of period
   ($ x 1,000)                           377,468        434,782    487,714    488,172    569,319      573,681

(a) ANNUALIZED.

(b) NOT ANNUALIZED.

SEE NOTES TO FINANCIAL STATEMENTS.

                                      Purchases ($)            Sales ($)


Long transactions                     2,425,689,152        2,373,112,414

Short sale transactions               1,014,536,488        1,039,519,891

     TOTAL                            3,440,225,640        3,412,632,305

                                1 Year             5 Years          10 Years


FUND                            1.39%               5.77%             6.13%

                                                    Principal
BONDS AND NOTES--102.3%                              Amount($)       Value ($)


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

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

                                                             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

NET ASSET VALUE, offering and redemption price per share ($)             14.16

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.

                                              Year Ended December 31,
                                   --------------------------------------------
                                     1999      1998     1997      1996     1995
-------------------------------------------------------------------------------


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

(c) 2000 Dreyfus Service Corporation                                  081AR9912

                  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

June 30, 2000 (Unaudited)

STATEMENT OF INVESTMENTS

                                                                     Principal
BONDS AND NOTES--85.4%                                                 Amount ($)      Value ($)


U.S. GOVERNMENT AGENCIES--20.0%

Federal Home Loan Banks,

   Medium-Term Notes, 5.86%, 4/28/2003                             10,000,000          9,719,300

Tennessee Valley Authority,

  Valley Indexed Principal Securities,

   3.375%, 1/15/2007                                               17,500,000(a)      17,539,651
                                                                                      27,258,951

U.S. TREASURY BONDS--21.6%

   10.75%, 8/15/2005                                                7,000,000          8,345,260

   12%, 5/15/2005                                                   1,000,000          1,236,250

   12.375%, 5/15/2004                                              16,500,000         19,872,105

                                                                                      29,453,615

U.S. TREASURY INFLATION PROTECTION SECURITIES--19.5%

   3.625%, 7/15/2002                                               25,000,000(a)      26,545,690

U.S. TREASURY NOTES--24.3%

   5.75%, 11/30/2002                                               12,500,000         12,317,500

   6.375%, 6/30/2002                                                1,000,000          1,000,620

   6.75%, 5/15/2005                                                 9,000,000          9,213,750

   7.5%, 2/15/2005                                                 10,000,000         10,490,600

                                                                                      33,022,470

TOTAL BONDS AND NOTES
   (cost $116,552,272)                                                               116,280,726


SHORT-TERM INVESTMENTS--15.4%


U.S. TREASURY BILLS:

   5.46%, 8/3/2000                                                  6,630,000          6,598,508

   5.6%, 8/17/2000                                                 14,530,000         14,428,435

TOTAL SHORT-TERM INVESTMENTS

   (cost $21,020,496)                                                                 21,026,943


TOTAL INVESTMENTS
   (cost $137,572,768)                                                  100.8%       137,307,669

LIABILITIES, LESS CASH AND RECEIVABLES                                    (.8%)       (1,129,852)

NET ASSETS                                                              100.0%       136,177,817

STATEMENT OF ASSETS AND LIABILITIES

June 30, 2000 (Unaudited)

                                                                          Cost          Value



ASSETS ($):

Investments in securities--See Statement of
Investments                                                         137,572,768      137,307,669

Interest receivable                                                                    1,807,281

Receivable for shares of Beneficial Interest subscribed                                   14,199
                                                                                     139,129,149


LIABILITIES ($):

Due to The Dreyfus Corporation and affiliates                                             68,823

Cash overdraft due to Custodian                                                           61,930

Payable for shares of Beneficial Interest redeemed                                     2,748,817

Accrued expenses                                                                          71,762

                                                                                       2,951,332


NET ASSETS ($)                                                                       136,177,817


COMPOSITION OF NET ASSETS ($):

Paid-in capital                                                                      159,869,507

Accumulated net realized gain (loss) on investments                                  (23,426,591)

Accumulated net unrealized appreciation (depreciation)
   on investments--Note 4                                                               (265,099)


NET ASSETS ($)                                                                       136,177,817


SHARES OUTSTANDING

(unlimited number of $.001 par value shares of Beneficial
 Interest authorized)                                                                  9,584,459

NET ASSET VALUE, offering and redemption price per share ($)                               14.21

SEE NOTES TO FINANCIAL STATEMENTS.

STATEMENT OF OPERATIONS

Six Months Ended June 30, 2000 (Unaudited)


INVESTMENT INCOME ($):

INTEREST INCOME                                                                        5,006,070

EXPENSES:

Management fee--Note 3(a)                                                                451,637

Shareholder servicing costs--Note 3(b)                                                   171,261

Professional fees                                                                         21,065

Trustees' fees and expenses--Note 3(c)                                                    19,869

Registration fees                                                                         10,819

Custodian fees--Note 3(b)                                                                  8,703

Prospectus and shareholders' reports                                                       3,827

Miscellaneous                                                                                704

TOTAL EXPENSES                                                                           687,885

Less--reduction in management fee due to
  undertaking--Note 3(a)                                                                 (85,697)

NET EXPENSES                                                                             602,188

INVESTMENT INCOME--NET                                                                 4,403,882


REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):

Net realized gain (loss) on investments                                               (3,338,227)

Net unrealized appreciation (depreciation) on investments                              3,769,318

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS                                   431,091

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                                   4,834,973

SEE NOTES TO FINANCIAL STATEMENTS.


STATEMENT OF CHANGES IN NET ASSETS

                                                               Six Months Ended
                                                                  June 30, 2000       Year Ended
                                                                  (Unaudited)      December 31, 1999


OPERATIONS ($):

Investment income--net                                                4,403,882        9,846,245

Net realized gain (loss) on investments                              (3,338,227)      (4,633,209)

Net unrealized appreciation (depreciation)
   on investments                                                     3,769,318       (2,850,088)

NET INCREASE (DECREASE) IN NET ASSETS
   RESULTING FROM OPERATIONS                                          4,834,973        2,362,948


DIVIDENDS TO SHAREHOLDERS FROM ($):

INVESTMENT INCOME--NET                                               (4,403,882)      (9,846,245)


BENEFICIAL INTEREST TRANSACTIONS ($):

Net proceeds from shares sold                                        14,662,476       46,404,112

Dividends reinvested                                                  3,634,392        8,093,872

Cost of shares redeemed                                             (47,014,892)     (68,458,107)

INCREASE (DECREASE) IN NET ASSETS FROM
   BENEFICIAL INTEREST TRANSACTIONS                                 (28,718,024)     (13,960,123)

TOTAL INCREASE (DECREASE) IN NET ASSETS                             (28,286,933)     (21,443,420)


NET ASSETS ($):

Beginning of Period                                                 164,464,750      185,908,170

END OF PERIOD                                                       136,177,817      164,464,750


CAPITAL SHARE TRANSACTIONS (SHARES):

Shares sold                                                           1,038,853        3,205,363

Shares issued for dividends reinvested                                  257,436          560,525

Shares redeemed                                                      (3,328,979)      (4,724,607)

NET INCREASE (DECREASE) IN SHARES OUTSTANDING                        (2,032,690)        (958,719)

SEE NOTES TO FINANCIAL STATEMENTS.

                                  Six Months Ended
                                   June 30, 2000                  Year Ended December 31,
                                                    -----------------------------------------------------------
                                    (Unaudited)     1999       1998        1997    1996        1995
-------------------------------------------------------------------------------------------------------------

PER SHARE DATA ($):

Net asset value,

   beginning of period                  14.16        14.78       14.77     14.82    15.14      14.55

Investment Operations:

Investment income--net                     .41          .82        .87        .93      .90      1.03

Net realized and unrealized
   gain (loss) on investments              .05         (.62)       .01       (.05)    (.32)      .59

Total from Investment Operations           .46          .20        .88        .88      .58      1.62

Distributions:

Dividends from investment
   income--net                             (.41)       (.82)      (.87)      (.93)     (.90)   (1.03)

Net asset value,
   end of period                          14.21       14.16      14.78      14.77     14.82     15.14


TOTAL RETURN (%)                           6.64(a)     1.39       6.14       6.12      4.07     11.38


RATIOS/SUPPLEMENTAL DATA (%):

Ratio of expenses to
   average net assets                       .80(a)      .80        .79        .70        .70      .65

Ratio of net investment income
   to average net assets                   5.83(a)     5.68       5.91       6.29       6.04     6.90

Decrease reflected in above
   expense ratios due to
   undertakings by
   The Dreyfus Corporation                  .11(a)      .12        .14        .31        .27      .29

Portfolio Turnover Rate                  513.75(b) 1,007.65     773.31     563.77     539.38   480.44


Net Assets, end of period
   ($ x 1,000)                          136,178     164,465    185,908    195,398    187,826  188,726

(A) ANNUALIZED.

(B) NOT ANNUALIZED.

Pro Forma Statement of Assets and Liabilities
September 30, 2000 (Unaudited)


                                               Dreyfus Short-   Dreyfus U.S.                 Pro Forma
                                               Intermediate     Treasury Short               Combined
                                               Government Fund  Term Fund      Adjustments   (Note 1)
ASSETS: Investments in securities,
             at value - See Statement
             of Investments *                $ 411,274,472    $ 111,633,905                   $ 522,908,377
        Cash                                         --               1,156                           1,156
        Interest receivable                      5,638,528        1,986,193                       7,624,721
        Receivable from brokers for
             proceeds on securities
             sold short                          4,939,787             --                         4,939,787
        Receivable for investment
             securities sold                     3,497,448             --                         3,497,448
        Paydown receivables                        603,334             --                           603,334
        Receivable for shares
             of Beneficial                          26,224               45                          26,269
        Interest subscribed
        Prepaid expenses and
             other assets                           57,748            2,977                          60,725
                                                   ------             -----                          ------

             Total Assets                      426,037,541      113,624,276                     539,661,817
                                               -----------      -----------                     -----------

LIABILITIES:
        Due to the Dreyfus Corporation
            and affiliates                         132,557           34,829                         167,386
        Cash overdraft due to Custodian             51,529             --                            51,529
        Payable for investment securities
             purchased                          51,856,875             --                        51,856,875
        Securities sold short, at value
             (proceeds $4,939,787)-
             see statement                       4,946,381             --                         4,946,381
        Dividend payable                         1,723,629          519,612                       2,243,241
        Payable for shares of Beneficial
             Interest redeemed                      52,237           23,813                          76,050
        Accrued expenses                           178,219          130,532         60,000a         368,751
                                                  -------          -------         ------           -------

             Total Liabilities                  58,941,427          708,786         60,000       59,710,213
                                                ==========          =======         ======       ==========

NET ASSETS                                   $ 367,096,114    $ 112,915,490  $     (60,000)   $ 479,951,604
                                             =============    =============  =============    =============

REPRESENTED
BY:     Paid-in capital                      $ 419,015,830    $ 135,494,303                   $ 554,510,133
        Accumulated undistributed
            investment income-net                  56,624            17,299        (60,000)a         13,923
        Accumulated net realized
            gain (loss) on
            investments                       (53,660,218)     (23,106,898)                     (76,767,116)
        Accumulated net unrealized
            appreciation (depreciation)
            on investments                      1,683,878          510,786                        2,194,664
                                                ---------          -------                        ---------

NET ASSETS                                  $ 367,096,114    $ 112,915,490   $     (60,000)   $ 479,951,604
                                            =============    =============   =============    =============

Shares of  Beneficial Interest outstanding
     (unlimited number of $.001 par values
     shares authorized):
Dreyfus Short-Intermediate Government Fund    34,925,887
                                              ==========

Shares of  Beneficial Interest outstanding
     (unlimited number of $.001 par value
     shares authorized):
Dreyfus U.S. Treasury Short Term Fund                          7,877,317
                                                               =========

NET ASSET VALUE per share-Note 3:
Dreyfus Short-Intermediate Government Fund
     ($367,096,114 / 34,925,887 shares)     $       10.51
                                            =============

Dreyfus U.S. Treasury Short Term Fund
     ($112,915,490 / 7,877,317 shares)                        $    14.33
                                                              ==========

Pro forma Combined
     ($479,951,604 / 45,666,320 shares)                                                    $       10.51
                                                                                           =============


                                            $ 409,584,000   $111,123,119                   $ 520,707,119
                                            =============   ============                   =============

* Investments in securities, at cost

(a) To reflect estimated merger costs.

                                                    See notes to pro forma financial statements.

Pro Forma Statement of Operations
----------------------------------------------------------------------------------------------------------------
For the Twelve Months Ended September 30, 2000 (Unaudited)


                                            Dreyfus              Dreyfus                         Pro Forma
                                       Short-Intermediate     U.S. Treasury                      Combined
                                        Government Fund      Short Term Fund   Adjustments       (Note 1)
                                      --------------------  -----------------  ------------      -----------
INVESTMENT INCOME:

INCOME:     Interest Income             $   25,387,481      $   9,682,087                       $ 35,069,568
                                        --------------      -------------                       ------------
EXPENSES:   Management fee              $    1,988,170      $     895,994     $  (149,332)(a)   $  2,734,832
            Shareholder
            servicing costs                   623,874            768,882                           1,392,756
            Custodian fees                     65,594             18,540                              84,134
                                                                    -
           Trustees' fees
           and expenses                        56,180             38,011          (38,011)(b)         56,180
           Professional fees                   47,324             40,225          (30,000)(b)         57,549
           Registration fees                   30,527             23,097                              53,624
           Prospectus and
            shareholders' reports              28,982             12,979          (5,000)(b)          36,961
          Loan commitment fees                  3,207               --                                 3,207

         Miscellaneous                         15,037              4,556                              19,593
                                          --------------      -------------       -------------  --------------
             Total Expenses                 2,858,895          1,802,284          (222,343)        4,438,836
                                          --------------      -------------       -------------  --------------

        Less- reduction in
          management
        fee due to undertaking                  --             (599,583)                            (599,583)
                                         --------------      -------------       -------------  --------------
             Net Expenses                  2,858,895          1,202,701          (222,343)         3,839,253
                                         --------------      -------------       -------------  --------------

INVESTMENT INCOME-NET                     22,528,586          8,479,386           222,343         31,230,315
                                         --------------      -------------       -------------  ----------------

REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:

      Net realized gain (loss)
          on investments               $  (8,223,446)       $(3,901,175)                        $(12,124,621)
                                         --------------      -------------       -------------  --------------

        Net unrealized appreciation
   (depreciation) on investments             4,203,254          (949,453)                          3,253,801

NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS                  (4,020,192)        (4,850,628)              -         (8,870,820)

NET INCREASE IN NET ASSETS RESULTING
     FROM OPERATIONS                       $18,508,394        $ 3,628,758      $  222,343         $22,359,495

(a) Reflects reduction due to lower management fee rate of the Dreyfus Short-Intermediate
    Government Fund.
(b) Reflects the anticipated savings of the Merger.

                                                     See notes to pro forma financial statements.

Pro Forma  STATEMENT OF SECURITIES SOLD SHORT
DREYFUS SHORT-INTERMEDIATE GOVERNMENT FUND
September 30, 2000 (Unaudited)


                                                Principal
 Notes                                          Amount($)                  Value($)

U.S. Treasury Notes, 5.75%, 8/15/2010
        (proceeds $4,939,787)                    4,965,000                 4,946,381



See notes to pro forma financial statements.

Pro Forma  STATEMENT OF INVESTMENTS
DREYFUS SHORT-INTERMEDIATE GOVERNMENT FUND
September 30, 2000 (Unaudited)
                              Principal Amount ($)                                  Value
                      Dreyfus                                    Dreyfus          Dreyfus
                      Short-           Dreyfus         Pro Forma Short-           U.S. Treasury Pro Forma
                      Intermediate     U.S. Treasury   Combined  Intermediate     Short Term    Combined
                      Government Fund  Short Term Fund (Note 1)  Government Fund  Fund          (Note 1)
                      ---------------  ---------------- -------- --------------- --------------- -----------
Bonds and Notes
91.7%

U. S. Governments
36.7%
U. S. Treasury Bonds:
10.375%, 11/15/2012     2,155,000                     2,155,000   2,677,588                     2,677,588
10.75%, 2/15/2003      10,000,000                    10,000,000  11,031,200                    11,031,200
11.625%, 11/15/2002                    15,000,000    15,000,000                    16,659,300  16,659,300
11.875%,11/15/2003     15,000,000                    15,000,000  17,479,650                    17,479,650
12%, 5/15/2005          5,000,000                     5,000,000   6,207,800                     6,207,800
12%, 8/15/2013          1,844,000                     1,844,000   2,513,593                     2,513,593
12.375%, 5/15/2004                      7,500,000     7,500,000                     9,042,150   9,042,150
12.75%, 11/15/2010      6,170,000       2,313,000     8,483,000   7,953,500         2,981,596  10,935,096

U. S. Treasury Inflation
Protection Securities,
3.625%, 7/15/2002      42,533,000 a    12,541,000 a  55,074,000  45,788,954        13,501,029  59,289,983

U. S. Treasury Notes:
5.25%, 8/15/2003        6,000,000       2,000,000     8,000,000   5,889,360         1,963,120   7,852,480
5.75%, 8/15/2003       12,000,000                    12,000,000  11,940,000                    11,940,000
5.875%, 11/15/2005                        959,000       959,000                       959,595     959,595
6.25%, 8/31/2002                       13,017,000    13,017,000                    13,041,342  13,041,342
6.375%, 6/30/2002                       6,000,000     6,000,000                     6,031,860   6,031,860
6.75%, 5/15/2005                        3,479,000     3,479,000                     3,605,114   3,605,114
7.5%, 2/15/2005                         5,250,000     5,250,000                     5,571,562   5,571,562
U. S. Treasury
Principal
Strips,
0%, 11/15/2004         5,000,000        3,750,000     8,750,000   3,917,650         2,938,237   6,855,887
                                                                115,399,295        76,294,905 191,694,200

U. S. Government Agencies
30.9%
Federal Home Loan Banks:
Bonds, 7.25%,
5/15/2002             75,000,000                    75,000,000   75,894,375                    75,894,375
Medium-Term Notes,
5.86%,
4/28/2003                             10,000,000                                    9,853,600    9,853,600
Ser. A-1, Coupon
Strips, 0%,
2/25/2003              1,789,000                     1,789,000   1,529,752                       1,529,752

Federal National
Mortgage Association:
Coupon Strips, 0%,
7/24/2001              1,227,000                     1,227,000   1,165,630                       1,165,630
Notes, 7%, 2005       10,000,000       3,000,000    13,000,000  10,183,880         3,055,164    13,239,044
Principal Strips,
0%, 8/7/2001           6,000,000                     6,000,000   5,672,400                       5,672,400
Tennessee Valley
Authority,
Valley Indexed
Principal Securities,
3.375%, 1/15/2007     35,500,000 a     17,500,000 a 53,000,000  36,184,745        17,837,550    54,022,295
                                                               130,630,782        30,746,314   161,377,096

U. S. Government
Agencies/
Mortgage-Backed
24.1%
Federal Home Loan
Mortgage:
7.5%                 20,000,000 b                  20,000,000  19,987,400                       19,987,400
REMIC, Multiclass
Mortgage
Participation Ctfs.
(Interest Only
Obligation)
Ser. 1992, Cl. PG,
7%, 4/25/2014         2,354,348 c                   2,354,348     136,111                          136,111
Ser. 1978, Cl. PH,
7%,
1/15/2024             3,424,503 c                   3,424,503     441,975                          441,975

Structured Pass-
Through Ctfs.
Ser. T-22, Cl.
A6, 7.05%
11/25/2029            5,000,000                     5,000,000   4,925,000                        4,925,000

Federal National
Mortgage
 Association,
 7.5%                 5,000,000 b                   5,000,000   4,996,850                        4,996,850
 6%, 10/1/2013       25,484,056                    25,484,056  24,600,014                       24,600,014
 6.79%, 11/1/2003     5,178,401                     5,178,401   5,141,525                        5,141,525
 6.985%, 11/1/2003    6,790,518                     6,790,518   6,774,107                        6,774,107
 REMIC Trust, Gtd.
Pass-Through Ctfs.:
Ser. 1995-W1, Cl.
A6, 8.1%,
4/25/2025             3,753,738                     3,753,738   3,765,473                        3,765,473
Ser. 1997-56, Cl.
PM, 7%,
6/18/2026
(Interest Only
Obligation)          2,813,522 c                    2,813,522     643,171                          643,171
Ser. 1998-49, Cl.
MA, 6.5%,
10/17/2005           6,253,633                      6,253,633   6,205,949                        6,205,949

Government National
Mortgage
Association II,
Adjustable Rate
Mortgage:
7.5%                 23,500,000 b                  23,500,000  23,477,910                       23,477,910
6.5%, 7/20/2030      14,951,847                    14,951,847  14,861,986                       14,861,986
U. S. Government
Gtd.
Development,
Participation Ctfs.
(Gtd. By U. S.
Small Business
Administration),
Ser. 1997-20G,
Cl. I,
6.85%, 7/1/2017     10,429,080                    10,429,080   10,277,824                       10,277,824
                                                              126,235,295                      126,235,295

Total Bonds and Notes
(cost $370,577,028,
$106,531,423
and $477,108,451,
 respectively)                                                372,265,372        107,041,219   479,306,591

Short-Term Investments
8.3%

Repurchase Agreements
5.5%
Greenwich Capital, 6.48%

Repurchase Agreements  5.5%
Greenwich Capital
Dated 9/29/2000, due
10/2/2000 in the
amount of $29,040,674
(fully collateralized by
$31,275,000 U. S.
Treasury Bills,
8/30/2001 value
  $29,617,425)      29,025,000                    29,025,000   29,025,000                       29,025,000

U. S. Treasury Bills
2.8%
5.9%, 10/12/2000    10,000,000       4,600,000    14,600,000    9,984,100          4,592,686    14,576,786

Total Short-Term
Investments
(cost $39,006,972,
$4,591,696
and $43,598,668,
respectively)                                                  39,009,100          4,592,686    43,601,786


Total Investments
(cost $409,584,000,
$111,123,119
and $520,707,119,
respectively)                           100.0%                411,274,472        111,633,905  522,908,377


a Principal amount for accrual purposes is periodically adjusted based on changes to the Consumer
  Price Index.
b Purchased on a forward commitment basis.
c Notional face amount shown.

See notes to proforma financial statements.