File No. 33-12660
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 19 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 19 [ X ]
(Check appropriate box or boxes.)
DREYFUS INVESTORS GNMA FUND
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
----
on (date) pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
X on November 1, 1995 pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
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on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
----
Registrant has registered an indefinite number of shares of its
beneficial interest under the Securities Act of 1933 pursuant to
Section 24(f) of the Investment Company Act of 1940. Registrant's Rule
24f-2 Notice for the fiscal year ended December 31, 1994 was filed on
February 24, 1995.
DREYFUS INVESTORS GNMA FUND
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 4
4 General Description of Registrant 4
5 Management of the Fund 11
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 17, 19
7 Purchase of Securities Being Offered 12
8 Redemption or Repurchase 15
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
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10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-22
13 Investment Objectives and Policies B-2
14 Management of the Fund B-9
15 Control Persons and Principal B-13
Holders of Securities
16 Investment Advisory and Other B-13
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS INVESTORS GNMA FUND
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-22
18 Capital Stock and Other Securities *
19 Purchase, Redemption and Pricing B-15 & B-19
of Securities Being Offered
20 Tax Status *
21 Underwriters B-15
22 Calculations of Performance Data B-19
23 Financial Statements B-24
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-3
28 Business and Other Connections of C-4
Investment Adviser
29 Principal Underwriters C-11
30 Location of Accounts and Records C-14
31 Management Services C-14
32 Undertakings C-14
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
FOR USE BY BANKS ONLY
November 1, 1995
DREYFUS BASIC GNMA FUND
Supplement to Prospectus Dated November 1, 1995
All mutual fund shares involve certain investment risks, including
the possible loss of principal.
080/s042995IST
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PROSPECTUS November 1, 1995
DREYFUS BASIC GNMA FUND
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DREYFUS BASIC GNMA FUND (THE "FUND") IS AN OPEN-END, DIVERSIFIED,
MANAGEMENT INVESTMENT COMPANY, KNOWN AS A NO-LOAD MUTUAL FUND. ITS GOAL IS TO
PROVIDE YOU WITH AS HIGH A LEVEL OF CURRENT INCOME AS IS CONSISTENT WITH THE
PRESERVATION OF CAPITAL. THE FUND INVESTS PRINCIPALLY IN INSTRUMENTS ISSUED
BY THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION.
THE FUND IS DESIGNED TO BENEFIT INVESTORS WHO DO NOT ENGAGE IN
FREQUENT TRANSACTIONS IN FUND SHARES.
THE DREYFUS CORPORATION PROFESSIONALLY MANAGES THE FUND'S PORTFOLIO.
THIS PROSPECTUS SETS FORTH CONCISELY INFORMATION ABOUT THE FUND THAT
YOU SHOULD KNOW BEFORE INVESTING. IT SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED NOVEMBER 1, 1995,
WHICH MAY BE REVISED FROM TIME TO TIME, PROVIDES A FURTHER DISCUSSION OF
CERTAIN AREAS IN THIS PROSPECTUS AND OTHER MATTERS WHICH MAY BE OF INTEREST
TO SOME INVESTORS. IT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION AND IS INCORPORATED HEREIN BY REFERENCE. FOR A FREE COPY, WRITE TO
THE FUND AT 144 GLENN CURTISS BOULEVARD, UNIONDALE, NEW YORK 11556-0144, OR
CALL 1-800-645-6561. WHEN TELEPHONING, ASK FOR OPERATOR 144.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. THE NET ASSET VALUE OF FUNDS OF THIS TYPE WILL FLUCTUATE FROM TIME TO
TIME.
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TABLE OF CONTENTS
Page
Fee Table......................................... 3
Condensed Financial Information................... 4
Description of the Fund........................... 4
Management of the Fund............................ 11
How to Buy Fund Shares............................ 12
Shareholder Services.............................. 14
How to Redeem Fund Shares......................... 15
Fund Exchanges.................................... 17
Dividends, Distributions and Taxes................ 17
Performance Information........................... 18
General Information............................... 19
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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This Page Intentionally Left Blank
Page 2
FEE TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Exchange Fee.............................................................................. $5.00
Account Closeout Fee...................................................................... $5.00
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees .......................................................................... .00%
Other Expenses............................................................................ .65%
Total Fund Operating Expenses (after expense reimbursement)............................... .65%
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following expenses on
a $1,000 investment, assuming (1) 5%
annual return and (2) redemption
at the end of each time period: $12 $26 $41 $86
</TABLE>
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THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
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The purpose of the foregoing table is to assist you in understanding
the various costs and expenses that investors will bear, directly or
indirectly, the payment of which will reduce investors' return on an annual
basis. The Annual Fund Operating Expenses noted above have been restated to
reflect expense reimbursement pursuant to an undertaking by The Dreyfus
Corporation that, until June 30, 1998, if in any fiscal year of the Fund
certain Fund expenses, including the management fee, exceed .65 of 1% of the
value of its average net assets for the fiscal year, the Fund may deduct from
the payment to be made to The Dreyfus Corporation under the Management
Agreement, or The Dreyfus Corporation will bear, such excess expense. The
expenses noted above, without reimbursement, would have been:Management Fees
_ .60%, Other Expenses _ .89% and Total Fund Operating Expenses _ 1.49%.
In addition, unlike certain other funds in the Dreyfus Family of Funds, the
Fund will charge your account $2.00 for each redemption check you write; you
also will be charged $5.00 for each wire redemption you make and a $5.00
account closeout fee. These charges will be paid to the Fund's transfer agent
and will reduce the transfer agency charges otherwise payable by the Fund. See
"How to Redeem Fund Shares." The information in the foregoing table does not
reflect any other fee waivers or expense reimbursement arrangements that may
be in effect. See "Management of the Fund" and "Shareholder Services Plan."
Page 3
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited (except where
indicated)by Ernst & Young LLP, the Fund's independent auditors, whose report
thereon appears in the Statement of Additional Information. Further financial
data and related notes are included in the Statement of Additional Information,
available upon request.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share
of beneficial interest outstanding, total investment return, ratios to
average net assets and other supplemental data for each year indicated. This
information has been derived from the Fund's financial statements.*
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
______________________________________________ JUNE 30, 1995
1987(1) 1988 1989 1990 1991 1992 1993 1994 (UNAUDITED)
------ ------ ------ ------- ------ ------- ----- ----- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning $14.50 $14.44 $14.59 $14.55 $14.55 $15.34 $15.20 $15.39 $14.16
of year. ------ ------ ------ ------- ----- ----- ----- ----- ------
INVESTMENT OPERATIONS:
Investment income_net............. .59 1.34 1.22 1.20 1.06 1.16 1.11 1.08 .54
Net realized and unrealized gain
(loss) on investments (.06) .15 (.04) _ .79 (.14) .19 (1.23) .88
------ ------ ------ ------ ----- ----- ----- ----- ------
TOTAL FROM INVESTMENT OPERATIONS .53 1.49 1.18 1.20 1.85 1.02 1.30 (.15) 1.42
------ ------ ------ ------ ----- ----- ----- ----- ------
DISTRIBUTIONS:
Distributions from investment (.59) (1.34) (1.22) (1.20) (1.06) (1.16) 1.11 (1.08) (.54)
income-ne ------ ------ ------- ------- ----- ----- ----- ----- -------
Net asset value, end of year....... $14.44 $14.59 $14.55 $14.55 $15.34 $15.20 $15.39 $14.16 $15.04
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN.............. 9.16%(2) 10.56% 8.42% 8.58% 13.28% 7.02% 8.75% (.99%) 20.51%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net - - - - - - - .06%
assets .34%(2)
Ratio of net investment income to
average net assets 10.23%(2) 8.97% 8.64% 8.29% 7.78% 7.70% 7.15% 7.34% 7.38%(2)
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation (limited
to the expense limitation
provision of the Management
Agreement) 1.50%(2) 1.50% 1.50% 1.50% 1.50% 1.42% 1.28% 1.43% .99%(2)
Portfolio Turnover Rate............110.33%(3) 1,025.99%(4) 287.61% ._ 40.28% 30.99% 34.02% 290.20% 179.54%(3)
Net Assets, end of year
(000's Omitted) $1,820 $2,211 $278 $293 $25,036 $45,280 $54,224 $44,937 $50,079
* On August 23, 1991, the Fund's investment objective and certain of its
fundamental policies and restrictions were changed. See "Information about
the Fund" in the Statement of Additional Information.
(1) From August 5, 1987 (commencement of operations) to December 31, 1987.
(2) Annualized.
(3) Not annualized.
(4) The high portfolio turnover rate resulted from selling off large amounts
of unsettled securities bought to take advantage of favorable short-term
market fluctuations.
</TABLE>
Further information about the Fund's performance is contained in the
Fund's annual report, which may be obtained without charge by writing to the
address or calling the number set forth on the cover of this Prospectus.
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's goal is to provide you with as high a level of current
income as is consistent with the preservation of capital. The Fund's
investment objective cannot be changed without approval by the holders of a
majority (as defined in the Investment Company Act of 1940) of the Fund's
outstanding voting shares. There can be no assurance that the Fund's
investment objective will be achieved.
MANAGEMENT POLICIES
It is a fundamental policy of the Fund that it will invest at least
65% of the value of its net assets (except when maintaining a temporary
defensive position) in "GNMA Certificates" (popularly called "Ginnie Maes").
GNMA Certificates also may include other securities that in the future are
guaranteed by the Government National Mortgage Association ("GNMA"). The Fund
also may invest in other mortgage-related securities, including those issued
by government-related organizations such as the Federal National Mortgage
Association ("FNMA") and the Federal Home Loan Mortgage Corporation
("FHLMC"), private
Page 4
mortgage pass-through securities and collateralized mortgage obligations,
including real estate mortgage investment conduits or
REMICs. The mortgage-related securities in which the Fund may invest include
those with fixed, floating and variable interest rates, those with interest
rates that change based on multiples of changes in interest rates and those
with interest rates that change inversely to changes in interest rates, as
well as stripped mortgage-backed securities. Mortgage-related securities are
a form of derivative security.
Ginnie Maes are backed by the full faith and credit of the United
States. Ginnie Maes are mortgage-backed securities representing part
ownership of a pool of mortgage loans which are insured by the Federal
Housing Administration or Farmers' Home Administration or guaranteed by the
Veterans' Administration. The Fund will invest in Ginnie Maes only of the
"fully modified pass-through" type which are guaranteed as to timely payment
of principal and interest by GNMA, a U.S. Government corporation. The Fund wil
l purchase Ginnie Maes and certain other mortgage-related securities on a
forward commitment basis and may engage in options and futures transactions
and leveraging as described under "Investment Techniques" below.
Mortgage-related securities issued by FNMA include FNMA Guaranteed
Mortgage Pass-Through Certificates (also known as "Fannie Maes") which are
solely the obligations of FNMA and are not backed by or entitled to the full
faith and credit of the United States, but are guaranteed as to timely
payment of principal and interest by FNMA. Mortgage-related securities issued
by FHLMC include FHLMC Mortgage Participation Certificates (also known as
"Freddie Macs" or "PCs"). Freddie Macs are not guaranteed by the United
States and do not constitute a debt or obligation of the United States.
Freddie Macs entitle the holder to timely payment of interest, which is
guaranteed by FHLMC. The FHLMC guarantees either ultimate collection or
timely payment of all principal payments on the underlying mortgage loans.
When FHLMC does not guarantee timely payment of principal, FHLMC may remit
the amount due on account of its guarantee of ultimate payment of principal
at any time after default on an underlying mortgage, but in no event later
than one year after it becomes payable.
Collateralized mortgage obligations, which include those issued
through real estate mortgage investment conduits or REMICs, are debt
securities that are structured to pay principal and interest based on
payments received on a pool of mortgage-related securities pledged to secure
the obligations. The issuers of collateralized mortgage obligations typically
do not have assets other than those pledged to secure separately the
obligations. Holders of these obligations must rely principally on
distributions on the underlying mortgage-related securities and other
collateral securing the obligations for payments of principal and interest on
the obligations. Typically, collateralized mortgage obligations are
collateralized by Ginnie Mae, Fannie Mae or Freddie Mac Certificates, but
also may be collateralized by whole loans or private mortgage pass-through
securities. Although the mortgage-related securities securing these
obligations may be subject to a government guarantee or third-party support,
the obligations are not so guaranteed. Consequently, if the collateral
securing the obligations is insufficient to make payments on the obligations,
a holder could sustain a loss. See "Risk Factors" below.
The Fund may invest in private mortgage pass-through securities that
are structured similarly to the Ginnie Mae, Fannie Mae and Freddie Mac
mortgage pass-through securities and are issued by originators of, or
investors in, mortgage loans. Private mortgage pass-through securities
usually are backed by a pool of conventional fixed rate or adjustable rate
mortgage loans. Since these securities typically are not guaranteed by an
entity having the credit status of Ginnie Mae, Fannie Mae or Freddie Mac, such
securities generally are structured with one or more types of credit
enhancement.
The Fund also may invest in stripped mortgage-backed securities which
are derivative multiclass mortgage-backed securities. Stripped
mortgage-backed securities may be issued by agencies or instrumentalities of
the United States government, or by private originators of, or investors in,
mortgage loans, including savings and loan associations, mortgage banks,
commercial banks, investment banks and special purpose subsidiaries of the
foregoing. See "Risk Factors" below.
Page 5
The Fund may purchase other securities issued or guaranteed by, or
exchangeable for securities issued or guaranteed by, the U.S. Government or
issued by its agencies or instrumentalities that are backed by the full faith
and credit of the U.S. Government, and may enter into repurchase agreements
with respect to securities of the type in which the Fund may invest. For
temporary defensive purposes, the entire portfolio may be so invested. A
security guaranteed by the U.S. Government is guaranteed only as to principal
and interest, and there is no guarantee of the security's market value. The
value of Fund shares, similarly, is not guaranteed.
Securities issued or guaranteed by the U.S. Government or issued by
its agencies or instrumentalities include U.S. Treasury securities, which
differ in their interest rates, maturities and times of issuance. Treasury
Bills have initial maturities of one year or less; Treasury Notes have
initial maturities of one to ten years; and Treasury Bonds generally have
initial maturities of greater than ten years. Obligations issued by U.S.
Government agencies and instrumentalities that are supported by the full
faith and credit of the U.S. Treasury include those issued by the United
States Maritime Administration.
Repurchase agreements involve the acquisition by the Fund of an
underlying debt instrument, subject to an obligation of the seller to
repurchase, and the Fund to resell, the instrument at a fixed price usually
not more than one week after its purchase. Certain costs may be incurred by
the Fund in connection with the sale of the securities if the seller does not
repurchase them in accordance with the repurchase agreement. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the
securities, realization on the securities by the Fund may be delayed or
limited.
INVESTMENT TECHNIQUES
The Fund may engage in various investment techniques, such as
leveraging, short-selling, options and futures transactions, forward roll
transactions and lending portfolio securities, each of which involves risk.
Options and futures transactions involve so-called "derivative securities."
See "Risk Factors."
WHEN-ISSUED SECURITIES _ Ginnie Maes and other mortgage-related securities
purchased by the Fund frequently are offered on a when-issued basis, which
means that delivery and payment take place a number of days after the date of
the commitment to purchase. The payment obligation and the interest rate that
will be received on such securities are fixed at the time the Fund enters
into the commitment. The Fund will make commitments to purchase such
securities only with the intention of actually acquiring the securities, but
the Fund may sell these securities before the settlement date if it is deemed
advisable. The Fund will not accrue income in respect of a security purchased
on a when-issued basis prior to its stated delivery date.
Securities purchased on a when-issued basis are subject to changes in
value (i.e., appreciating when interest rates decline and depreciating when
interest rates rise) based upon changes, real or anticipated, in the level of
interest rates. Securities purchased on a when-issued basis may expose the
Fund to risk because they may experience such fluctuations prior to their
actual delivery. Purchasing securities on a when-issued basis can involve an
additional risk that the yields available in the market when the delivery
takes place actually may be higher than those obtained in the transaction
itself. A segregated account of the Fund consisting of cash, U.S. Government
securities or other high quality liquid debt securities at least equal to the
amount of the when-issued commitments will be established and maintained at
the Fund's custodian bank. Purchasing securities on a when-issued basis when
the Fund is fully or almost fully invested may result in greater potential
fluctuation in the value of the Fund's net assets and its net asset value per
share.
FORWARD ROLL TRANSACTIONS _ In order to enhance current income, the Fund may
enter into forward roll transactions with respect to mortgage-related
securities issued by GNMA, FNMA and FHLMC. In a forward roll transaction, the
Fund sells a mortgage 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 mortgage
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 prepayment 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 instru-
Page 6
ments, 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 repurchase price of those
securities. A segregated account of the Fund consisting of cash, U.S.
Government securities or other high quality liquid debt securities at least
equal to the amount of the repurchase price (including accrued interest) will
be established and maintained at the Fund's
custodian bank.
LEVERAGE THROUGH BORROWING _ The Fund may borrow for investment purposes up
to 331/3% of the value of its total assets. This borrowing, which is known as
leveraging, generally will be unsecured, except to the extent the Fund enters
into reverse repurchase agreements described below. Leveraging will
exaggerate the effect on net asset value of any increase or decrease in the
market value of the Fund's portfolio. Money borrowed for leveraging will be
subject to interest costs which may or may not be recovered by appreciation
of the securities purchased; in certain cases, interest costs may exceed the
return received on the securities purchased.
Among the forms of borrowing in which the Fund may engage is the
entry into reverse repurchase agreements with banks, brokers or dealers.
These transactions involve the transfer by the Fund of an underlying debt
instrument in return for cash proceeds based on a percentage of the value of
the security. The Fund retains the right to receive interest and principal
payments on the security. At an agreed upon future date, the Fund repurchases
the security at principal, plus accrued interest.
SHORT-SELLING _ The Fund may make short sales, which are transactions in
which the Fund sells a security it does not own in anticipation of a decline
in the market value of that security. To complete such a transaction, the
Fund must borrow the security to make delivery to the buyer. The Fund then is
obligated to replace the security borrowed by purchasing it 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. The Fund will
incur a loss as a result of the short sale if the price of the security
increases between the date of the short sale and the date on which the Fund
replaces the borrowed security. The Fund will realize a gain if the security
declines in price between those dates.
No securities will 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 sell short
the securities of any single issuer listed on a national securities exchange
to the extent of more than 5% of the value of the Fund's net assets. The Fund
may not sell short the securities of any class of an issuer to the extent, at
the time of the transaction, of more than 5% of the outstanding securities of
that class.
In addition to the short sales discussed above, the Fund may make
short sales "against the box," a transaction in which the Fund enters into a
short sale of a security which the Fund owns. The Fund at no time will have
more than 15% of the value of its net assets in deposits on short sales
against the box.
CALL AND PUT OPTIONS ON SPECIFIC SECURITIES _ The Fund may invest
up to 5% of its assets, represented by the premium paid, in the purchase of
call and put options in respect of Ginnie Maes or other specific securities
in which the Fund may invest. The Fund also may write covered call and put
option contracts to the extent of 20% of the value of its net assets at the
time such option contracts are written. A call option gives the purchaser of
the option the right to buy, and obligates the writer to sell, the underlying
security at the exercise price at any time during the option period.
Conversely, a put option gives the purchaser of the option the right to sell,
and obligates the writer to buy, the underlying security at the exercise
price at any time during the option period. A covered call option sold by the
Fund, which is a call option with respect to which the Fund owns the
underlying security, exposes the Fund during the term of the option to
possible loss of opportunity to realize appreciation in the market price of
the underlying security or to possible continued holding of a security which
might otherwise have been sold to protect against depreciation in its market
price. The prinicipal reason for writing covered call options is to realize,
through the receipt of premiums, a greater return than would be realized on
the Fund's portfolio securities alone. A covered put option sold by the Fund
exposes the Fund during the term of the option to a decline in price of the
underlying security. Similarly, the prinicipal reason for
Page 7
writing covered put options is to realize income in the form of premiums. A
put option sold by the Fund is covered when, among other things, cash or
liquid securities are placed in a segregated account with the Fund's
custodian to fulfill the obligation undertaken.
To close out a position when writing covered options, the Fund may
make a "closing purchase transaction" by purchasing an option on the same
security with the same exercise price and expiration date as the option which
it has previously written on the security. To close out a position as a
purchaser of an option, the Fund may make a "closing sale transaction," which
involves liquidating the Fund's position by selling the option previously
purchased. The Fund will realize a profit or loss from a closing purchase or
sale transaction depending upon the difference between the amount paid to
purchase an option and the amount received from the sale thereof.
The Fund intends to treat options in respect of specific securities
that are not traded on a national securities exchange and the securities
underlying covered call options written by the Fund as illiquid securities.
The Fund will purchase options only to the extent permitted by the
policies of state securities authorities in states where shares of the Fund
are qualified for offer and sale.
FUTURES TRANSACTIONS _ The Fund is not a commodity pool. However, as a
substitute for a comparable market position in the underlying securities or
for hedging purposes, the Fund may engage in futures and options on futures
transactions, as described below.
The Fund's commodities transactions must constitute bona fide hedging
or other permissible transactions pursuant to regulations promulgated by the
Commodity Futures Trading Commission. In addition, the Fund may not engage in
such transactions if the sum of the amount of initial margin deposits and
premiums paid for unexpired commodity options, other than for bona fide
hedging transactions, would exceed 5% of the liquidation value of the Fund's
assets, after taking into account unrealized profits and unrealized losses on
such contracts it has entered into; provided, however, that in the case of an
option that is in-the-money at the time of purchase, the in-the-money amount
may be excluded in calculating the 5%. Pursuant to regulations and/or
published positions of the Securities and Exchange Commission, the Fund may
be required to segregate cash or high quality money market instruments in conn
ection with its commodities transactions in an amount generally equal to the
value of the underlying commodity. To the extent the Fund engages in the use
of futures and options on futures for other than bona fide hedging purposes,
the Fund may be subject to additional risk.
Initially, when purchasing or selling futures contracts the Fund will
be required to deposit with its custodian in the broker's name an amount of
cash or cash equivalents up to approximately 10% of the contract amount. This
amount is subject to change by the exchange or board of trade on which the
contract is traded and members of such exchange or board of trade may impose
their own higher requirements. This amount is known as "initial margin" and
is in the nature of a performance bond or good faith deposit on the contract
which is returned to the Fund upon termination of the futures position,
assuming all contractual obligations have been satisfied. Subsequent
payments, known as "variation margin," to and from the broker will be made
daily as the price of the index or securities underlying the futures contract
fluctuates, making the long and short positions in the futures contract more
or less valuable, a process known as "marking-to-market." At any time prior
to the expiration of a futures contract, the Fund may elect to close the
position by taking an opposite position, at the then prevailing price, which
will operate to terminate the Fund's existing position in the contract.
Although the Fund intends to purchase or sell futures contracts only
if there is an active market for such contracts, no assurance can be given
that a liquid market will exist for any particular contract at any particular
time. Many futures exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices during a single trading day.
Once the daily limit has been reached in a particular contract, no trades may
be made that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could move
to the limit for several consecutive trading days
Page 8
with little or no trading, thereby preventing prompt liquidation of futures
positions and potentially subjecting the Fund to substantial losses. If it is
not possible, or the Fund determines not, to close a futures position in
anticipation of adverse price movements, the Fund will be required to make
daily cash payments of variation margins. In such circumstances, an increase
in the value of the portion of the portfolio being hedged, if any, may offset
partially or completely losses on the futures contract. However, no
assurances can be given that the price of the dollar amount of the securities
being hedged will correlate with the price movements in a futures contract
and thus provide an offset to losses on the futures contract.
To the extent the Fund is engaging in a futures transaction as a
hedging device, because of the risk of an imperfect correlation between
securities in the Fund's portfolio that are the subject of a hedging
transaction and the futures contract used as a hedging device, it is possible
that the hedge will not be fully effective if, for example, losses on the
portfolio securities exceed gains on the futures contract or losses on the
futures contract exceed gains on the portfolio securities. For futures
contracts based on indices, the risk of imperfect correlation increases as the
composition of the Fund's portfolio varies from the composition of the index.
In an effort to compensate for the imperfect correlation of movements in the
price of the securities being hedged and movements in the price of futures
contracts, the Fund may buy or sell futures contracts in a greater or lesser
dollar amount than the dollar amount of the securities being hedged if the
historical volatility of the futures contract has been less or greater than
that of the securities. Such "over hedging" or "under hedging" may adversely
affect the Fund's net investment results if the market does not move as
anticipated when the hedge is established.
Successful use of futures by the Fund also is subject to The Dreyfus
Corporation's ability to predict correctly movements in the direction of the
market or interest rates. For example, if the Fund has hedged against the
possibility of a decline in the market adversely affecting the value of
securities held in its portfolio and prices increase instead, the Fund will
lose part or all of the benefit of the increased value of securities which it
has hedged because it will have offsetting losses in its futures positions.
Furthermore, if in such circumstances the Fund has insufficient cash, it may
have to sell securities to meet daily variation margin requirements. The Fund
may have to sell such securities at a time when it may be disadvantageous to
do so.
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract (a
long position if the option is a call and a short position if the option is a
put) at a specified exercise price at any time during the option exercise
period. The writer of the option is required upon exercise to assume an
offsetting futures position (a short position if the option is a call and a
long position if the option is a put). Upon exercise of the option, the
assumption of offsetting futures positions by the writer and holder of the
option will be accompanied by delivery of the accumulated cash balance in the
writer's futures margin account which represents the amount by which the
market price of the futures contract, at exercise, exceeds, in the case of a
call, or is less than, in the case of a put, the exercise price of the option
on the futures contract.
Call options sold by the Fund with respect to futures contracts will
be covered by, among other things, entering into a long position in the same
contract at a price no higher than the strike price of the call option, or by
ownership of the instruments underlying, or instruments the prices of which
are expected to move relatively consistently with the instruments underlying,
the futures contract. Put options sold by the Fund with respect to futures
contracts will be covered in the same manner as put options on specific
securities as described above.
LENDING PORTFOLIO SECURITIES _ From time to time, the Fund may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions.
Such loans may not exceed 331/3% of the value of the Fund's total assets. In
connection with such loans, 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. The Fund can increase its income
through the investment of such collateral.
Page 9
The Fund continues to be entitled to payments in amounts equal to the
interest, dividends or other distributions payable on the loaned security and
receives interest on the amount of the loan. Such loans will be terminable 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.
CERTAIN FUNDAMENTAL POLICIES
The Fund may (i) borrow money to the extent permitted under the
Investment Company Act of 1940, which currently limits borrowing to no more
than 331/3% of the value of the Fund's total assets; and (ii) invest up to
25% of the value of its total assets in the securities of issuers in any
single industry, provided that there shall be no limitation on the purchase
of Ginnie Maes or other securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. This paragraph describes
fundamental policies that cannot be changed without approval by the holders
of a majority (as defined in the Investment Company Act of 1940) of the
Fund's outstanding voting shares. See "Investment Objective and Management
Policies_Investment Restrictions" in the Statement of Additional Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES
The Fund may (i) pledge, hypothecate, mortgage or otherwise encumber
its assets, but only to secure permitted borrowings; and (ii) invest up to
15% of the value of its net assets in repurchase agreements providing for
settlement in more than seven days after notice and in other illiquid
securities. See "Investment Objective and Management Policies _ Investment
Restrictions" in the Statement of Additional Information.
RISK FACTORS
The Fund is designed to benefit investors who do not engage in
frequent redemptions or exchanges of Fund shares. Because charges may apply
to redemptions and exchanges of Fund shares, the Fund may not be an
appropriate investment for an investor who intends to engage frequently in
such transactions.
The prices of certain mortgage-related securities (such as Ginnie
Maes) are inversely affected by changes in interest rates, while others may
not be. However, though 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 prepay. Therefore, although mortgage-related securities may
offer yields which are higher than those available on other types of U.S.
Government securities, they may be less effective as a means of "locking in"
attractive long-term interest rates as a result of the need to reinvest
prepayments of principal generally and the possibility of significant
unscheduled prepayments resulting from declines in mortgage interest rates.
Prepayments and scheduled payments of principal will be reinvested at
prevailing interest rates, which may be less than the rate of interest that
was payable on the security in respect of which the principal payment was
made. Derivative mortgage-backed securities, such as stripped mortgage-backed
securities, and certain types of mortgage pass-through securities, including
those whose interest rates fluctuate based on multiples of a stated index,
are designed to be highly sensitive to changes in prepayment and interest
rates and can subject the holders thereof to extreme reductions of yield and
possibly loss of principal.
Although principal and interest payments on certain mortgage-related
securities are guaranteed or otherwise supported by third parties, the market
value of a mortgage-related security, which may fluctuate, is not so secured.
For Ginnie Maes, the U.S. Government only guarantees the timely payment of
principal and interest on the instrument. If the Fund purchases a
mortgage-related security 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 in the underlying
mortgage collateral. For these and other reasons, a mortgage-related
security's stated maturity may be shortened and, therefore, it is not
possible to predict accurately the mortgage-related security's return to the
Fund. In addition, no assurance can be given as to the liquidity of the
market for certain securities which may be purchased by the Fund, such as
multiclass pass-through securities and stripped mortgage-backed securities.
Determinations as to the liquidity of such securities are made in accordance
with guidelines established by the Fund's Board of Trustees. In accordance
with such
Page 10
guidelines, The Dreyfus Corporation monitors the Fund's investments
in such securities with particular regard to trading activity, availability
of reliable price information and other relevant information. The Fund will
not invest more than 15% of the value of its net assets in securities which
are illiquid.
The use of investment techniques such as short-selling, engaging in
financial futures and options transactions, forward roll transactions,
leverage through borrowing, purchasing securities on a forward commitment
basis and lending portfolio securities involves greater risk than that
incurred by many other funds with similar objectives. These risks are
described above under "Investment Techniques." In addition, using these
techniques may produce higher than normal portfolio turnover and may affect
the degree to which the Fund's net asset value fluctuates. Portfolio turnover
may vary from year to year, as well as within a year. Under normal market
conditions, the portfolio turnover rate of the Fund generally will not exceed
500%. Short-term gains realized from portfolio transactions are taxable to
shareholders as ordinary income. Higher portfolio turnover rates are likely
to result in comparatively greater brokerage commissions or transaction
costs. See "Portfolio Transactions" in the Statement of Additional
Information.
The Fund's ability to engage in certain short-term transactions may
be limited by the requirement that, to qualify as a regulated investment
company, it must earn less than 30% of its gross income from the disposition
of securities held for less than three months. This 30% test limits the
extent to which the Fund may sell securities held for less than three months,
effect short sales of securities held for less than three months, write
options expiring in less than three months and invest in certain futures
contracts, among other strategies. However, portfolio turnover will not
otherwise be a limiting factor in making investment decisions. You should
purchase Fund shares only as a supplement to an overall investment program
and only if you are willing to undertake the risks involved.
Investment decisions for the Fund are made independently from those
of other investment companies advised by The Dreyfus Corporation. However, if
such other investment companies are prepared to invest in, or desire to
dispose of, securities of the type in which the Fund invests at the same time
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.
MANAGEMENT OF THE FUND
The Dreyfus Corporation, located at 200 Park Avenue, New York, New
York 10166, was formed in 1947 and serves as the Fund's investment adviser.
The Dreyfus Corporation is a wholly-owned subsidiary of Mellon Bank, N.A.,
which is a wholly-owned subsidiary of Mellon Bank Corporation ("Mellon"). As
of August 2, 1995, The Dreyfus Corporation managed or administered
approximately $79 billion in assets for approximately 1.8 million investor
accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the Fund,
subject to the overall authority of the Fund's Board of Trustees in
accordance with Massachusetts law. The Fund's primary portfolio manager is
Garitt Kono. He has held that position since December 8, 1992 and has been
employed by The Dreyfus Corporation since September 1, 1992. For more than
five years prior to joining The Dreyfus Corporation, Mr. Kono was
Vice-President - Fixed Income at The First Boston Corporation. The Fund's
other portfolio manager is identified in the Fund's Statement of Additional
Information. The Dreyfus Corporation also provides research services for the
Fund as well as other funds advised by The Dreyfus Corporation through a
professional staff of portfolio managers and securities analysts.
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. Mellon's
Page 11
principal wholly-owned subsidiaries are Mellon Bank, N.A., Mellon Bank (DE)
National Association, Mellon Bank (MD), The Boston Company, Inc., AFCO Credit
Corporation and a number of companies known as Mellon Financial Services
Corporations. Through its subsidiaries, including The Dreyfus Corporation,
Mellon managed approximately $203 billion in assets as of June 30, 1995,
including approximately $73 billion in mutual fund assets. As of June 30,
1995, various subsidiaries of Mellon provided non-investment services, such
as custodial or administration services, for approximately $707 billion in
assets, including $71 billion in mutual fund assets.
Under the terms of the Management Agreement, the Fund has agreed to
pay The Dreyfus Corporation a monthly fee at the annual rate of .60 of 1% of
the value of the Fund's average daily net assets. For the fiscal year ended
December 31, 1994, no management fee was paid by the Fund pursuant to
undertakings by The Dreyfus Corporation. From time to time, The Dreyfus
Corporation may waive receipt of its fees and/or voluntarily assume certain
expenses of the Fund, which would have the effect of lowering the overall
expense ratio of the Fund and increasing yield to investors at the time such
amounts are waived or assumed, as the case may be. The Fund will not pay The
Dreyfus Corporation at a later time for any amounts it may waive, nor will
the Fund reimburse The Dreyfus Corporation for any amounts it may assume.
The Dreyfus Corporation has undertaken until June 30, 1998 that if in
any fiscal year of the Fund its aggregate expenses, exclusive of taxes,
brokerage, interest on borrowings and (with the prior written consent of the
necessary state securities commissions) extraordinary expenses, but including
the respective management fee, exceed .65 of 1% of the value of the Fund's
average daily net assets for the fiscal year, the Fund may deduct from the
payment to be made to The Dreyfus Corporation under the Management Agreement,
or The Dreyfus Corporation will bear, such excess expense.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay securities
dealers or others in respect of these services.
The Fund's distributor is Premier Mutual Fund Services, Inc. (the
"Distributor"), located at One Exchange Place, Boston, Massachusetts 02109.
The Distributor is a wholly-owned subsidiary of FDIDistribution Services,
Inc., a provider of mutual fund administration services, which in turn is a
wholly-owned subsidiary of FDIHoldings, Inc., the parent company of which is
Boston Institutional Group, Inc.
The Shareholder Services Group, Inc., a subsidiary of First Data
Corporation, P.O. Box 9671, Providence, Rhode Island 02940-9671, is the
Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent"). The
Transfer Agent will receive the $5.00 exchange fee, the $5.00 account closeout
fee, the $5.00 wire redemption fee and the $2.00 check writing charge,
described below. A sufficient number of your shares will be redeemed
automatically to pay these amounts. These payments will reduce the transfer
agency fee otherwise payable by the Fund. By purchasing Fund shares, you are
deemed to have consented to this procedure. The Bank of New York, 90
Washington Street, New York, New York 10286, is the Fund's Custodian.
HOW TO BUY FUND SHARES
Fund shares are sold without a sales charge. You may be charged a
nominal fee if you effect transactions in Fund shares through a securities
dealer, bank or other financial institution. Share 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 $10,000. Subsequent investments
must be at least $1,000. The initial investment must be accompanied by the
Fund's Account Application.
You may purchase Fund shares by check or wire. Checks should be made
payable to "The Dreyfus Family of Funds." Payments to open new accounts which
are mailed should be sent to The Dreyfus Family
Page 12
of Funds, P.O. Box 9387, Providence, Rhode Island 02940-9387, together with
your Account Application. For subsequent investments, your Fund account number
should appear on the check and an investment slip should be enclosed and sent
to The Dreyfus Family of Funds, P.O. Box 105, Newark, New Jersey 07101-0105.
Neither initial nor subsequent investments should be made by third party
check. Purchase orders may be delivered in person only to a Dreyfus Financial
Center. THESE ORDERS WILL BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY
UPON RECEIPT THEREBY. For the location of the nearest Dreyfus Financial
Center, please call one of the telephone numbers listed under "General
Information."
Wire payments may be made if your bank account is in a commercial
bank that is a member of the Federal Reserve System or any other bank having
a correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York, DDA# 8900119535/Dreyfus BASIC
GNMA Fund, for purchase of Fund shares in your name. The wire must include
your Fund account number (for new accounts, your Taxpayer Identification
Number ("TIN") should be included instead), account registration and dealer
number, if applicable. If your initial purchase of Fund shares is by wire,
please call 1-800-645-6561 after completing your wire payment to obtain your
Fund account number. Please include your Fund account number on the Fund's
Account Application and promptly mail the Account Application to the Fund, as
no redemptions will be permitted until the Account Application is received.
You may obtain further information about remitting funds in this manner from
your bank. All payments should be made in U.S. dollars and, to avoid fees and
delays, should be drawn only on U.S. banks. A charge will be imposed if any
check used for investment in your account does not clear. The Fund makes
available to certain large institutions the ability to issue purchase
instructions through compatible computer facilities.
Fund shares also may be purchased through IRA Accounts, and other
kinds of retirement accounts, such as Keogh Plans, and SEP-IRAs, provided the
opening balance is at least $5,000. Subsequent investments through such
retirement accounts must be at least $1,000. For details, please contact
Dreyfus Retirement Services, a division of Dreyfus Service Corporation, by
calling toll free 1-800-358-5566.
Subsequent investments also may be made by electronic transfer of
funds from an account maintained in a bank or other domestic financial
institution that is an Automated Clearing House member. You must direct the
institution to transmit immediately available funds through the Automated
Clearing House to The Bank of New York with instructions to credit your Fund
account. The instructions must specify your Fund account registration and
your Fund account number PRECEDED BY THE DIGITS "1111."
The Distributor may pay dealers a fee of up to .5% of 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 of Funds or certain other products made available by the
Distributor to such plans or programs exceeds one million dollars. All
present holdings of shares of funds in the Dreyfus Family of Funds by such
employee benefit plans or programs will be aggregated to determine the fee
payable with respect to each such purchase of Fund shares. The Distributor
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.
Fund 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 agent. 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 each
business day using available market quotations or at fair value as determined
by one or more independent pricing services approved by
Page 3
the Board of Trustees. Each pricing service's procedures are reviewed under
the general supervision of the Board of Trustees. For further information
regarding the methods employed in valuing Fund investments, see
"Determination of Net Asset Value" in the Fund's Statement of Additional
Information.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject you
to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
FUND EXCHANGES
You may purchase, in exchange for shares of the Fund, shares of
certain other funds managed or administered by The Dreyfus Corporation, to
the extent such shares are offered for sale in your state of residence. These
funds have different investment objectives which may be of interest to you.
If you desire to use this service, please call 1-800-645-6561 to determine if
it is available and whether any conditions are imposed on its use. You will
be charged a $5.00 fee for each exchange you make out of the Fund. This fee
will be deducted from your account and paid to the Transfer Agent.
To request an exchange, you must give exchange instructions to the
Transfer Agent in writing or by telephone. Before any exchange, you must
obtain and should review a copy of the current prospectus of the fund into
which the exchange is being made. Prospectuses may be obtained by calling
1-800-645-6561. Except in the case of Personal Retirement Plans, the shares
being exchanged must have a current value of at least $1,000; furthermore,
when establishing a new account by exchange, the shares being exchanged must
have a value of at least the minimum initial investment required for the fund
into which the exchange is being made. 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 that you specifically refuse this Privilege. The Telephone
Exchange Privilege may be established for an existing account by written
request, signed by all shareholders on the account, or by a separate signed
Shareholder Services Form, also available by calling 1-800-645-6561. If you
have established the Telephone Exchange Privilege, you may telephone exchange
instructions by calling 1-800-221-4060 or, if you are calling from overseas,
call 1-401-455-3306. See "How to Redeem Fund Shares _ Procedures." Upon an
exchange into a new account, the following shareholder services and
privileges, as applicable and where available, will be automatically carried
over to the fund in which the exchange is made: Telephone Exchange Privilege,
Check Redemption Privilege, Wire Redemption Privilege, Telephone Redemption
Privilege and the dividend/capital gain distribution option selected by the
investor.
Shares will be exchanged at the next determined net asset value;
however, a sales load may be charged with respect to exchanges into funds
sold with a sales load. If you are exchanging into a fund that charges a
sales load, you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load, if the shares of the fund from
which you are exchanging were: (a) purchased with a sales load, (b) acquired
by a previous exchange from shares purchased with a sales load, or (c)
acquired through reinvestment of dividends or distributions paid with respect
to the foregoing categories of shares. To qualify, at the time of an exchange
you must notify the Transfer Agent. Any such qualification is subject to
confirmation of your holdings through a check of appropriate records. See
"Fund Exchanges" in the Statement of Additional Information. The Fund
reserves the right to reject any exchange request in whole or in part. The
availability of Fund Exchanges may be modified or terminated at any time upon
notice to shareholders.
The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder and, therefore, an exchanging shareholder may realize a
taxable gain or loss.
Page 14
HOW TO REDEEM FUND SHARES
GENERAL _ You may request redemption of your shares at any time. Redemption
requests should be transmitted to the Transfer Agent as described below. When
a request is received in proper form, the Fund will redeem the shares at the
next determined net asset value.
YOU WILL BE CHARGED $5.00 WHEN YOUR REDEEM ALL SHARES IN YOUR ACCOUNT
OR YOUR ACCOUNT IS OTHERWISE CLOSED OUT. The fee will be deducted from your
redemption proceeds and paid to the Transfer Agent. The account closeout fee
does not apply to exchanges out of the Fund or to wire redemptions, for each
of which a $5.00 fee applies. Securities dealers, banks and other financial
institutions may charge a nominal fee for effecting redemptions of Fund
shares. Any certificates representing Fund shares being redeemed must be
submitted with the redemption request. The value of the shares redeemed may
be more or less than their original cost, depending on the Fund's
then-current net asset value.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt by the Transfer Agent of a redemption request in
proper form, except as provided by the rules of the Securities and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, AND
SUBSEQUENTLY SUBMIT A WRITTEN REDEMPTION REQUEST TO THE TRANSFER AGENT, THE
REDEMPTION PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE
OF YOUR PURCHASE CHECK, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN
ADDITION, THE FUND WILL NOT HONOR REDEMPTION CHECKS UNDER THE CHECK
REDEMPTION PRIVILEGE, AND WILL REJECT REQUESTS TO REDEEM SHARES BY WIRE OR
TELEPHONE, FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER
AGENT OF THE PURCHASE CHECK AGAINST WHICH SUCH REDEMPTION IS REQUESTED. THESE
PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED BY WIRE PAYMENT, OR
IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE IN YOUR ACCOUNT TO COVER
THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY REDEMPTION IS EFFECTIVE,
DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED
TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP. Fund shares will not be
redeemed until the Transfer Agent has received your Account Application.
The Fund reserves the right to redeem your account at its option upon
not less than 30 days' written notice if your account's net asset value is
$5,000 or less ($500 or less if you were a Fund shareholder on October 31,
1995) and remains so during the notice period. The $5.00 account closeout fee
would be charged in such case.
PROCEDURES _ You may redeem Fund shares by using the regular redemption
procedure through the Transfer Agent, the Check Redemption Privilege, the
Wire Redemption Privilege or the Telephone Redemption Privilege. The Fund
makes available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select a telephone redemption
privilege or telephone exchange privilege (which is granted automatically
unless you refuse it), you authorize the Transfer Agent to act on telephone
instructions from any person representing himself or herself to be you and
reasonably believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such as requiring
a form of personal identification, to confirm that instructions are genuine
and, if it does not follow such procedures, the Fund or the Transfer Agent
may be liable for any loss due to unauthorized or fraudulent instructions.
Neither the Fund nor the Transfer Agent will be liable for following
telephone instructions reasonably believed to be genuine.
During times of drastic economic or market conditions, you may
experience difficulty in contacting the Transfer Agent by telephone to
request a redemption or exchange of Fund shares. In such cases, you should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in your redemption request being
processed at a later time than it would have been if telephone redemption had
been used. During the delay, the Fund's net asset value may fluctuate.
Page 15
REGULAR REDEMPTION _ Under the regular redemption procedure, you may redeem
your shares by written request mailed to The Dreyfus Family of Funds, P.O.
Box 9671, Providence, Rhode Island 02940-9671. Redemption requests may be
delivered in person only to a Dreyfus Financial Center. THESE REQUESTS WILL
BE FORWARDED TO THE FUND AND WILL BE PROCESSED ONLY UPON RECEIPT THEREBY. For
the location of the nearest Dreyfus Financial Center please call one of the
telephone numbers listed under "General Information." Redemption requests
must be signed by each investor, including each owner of a joint account, and
each signature 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 Signature Program, the Securities
Transfer Agents Medallion Program ("STAMP") and the Stock Exchanges Medallion
Program. If you have any questions with respect to signature-guarantees,
please call one of the telephone numbers listed under "General Information."
Redemption proceeds of at least $5,000 will be wired to any member
bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE _ You may request on the Account Application,
Shareholder Services Form or by later written request that the Fund provide
Redemption Checks drawn on the Fund's account. Redemption Checks may be made
payable to the order of any person in the amount of $1,000 or more. Potential
fluctuations in the net asset value of Fund shares should be considered in
determining the amount of the check. Redemption Checks should not be used to
close an account. Your account will be charged $2.00 for each Redemption
Check you write. The Transfer Agent also will impose a fee for stopping
payment of a Redemption Check upon your request or if the Transfer Agent
cannot honor the Redemption Check because of insufficient funds or other
valid reason. You should date your Redemption Checks with the current date
when you write them. Please do not postdate your Redemption Checks. If you
do, the Transfer Agent will honor, upon presentment, even if presented before
the date of the check, all postdated Redemption Checks which are dated within
six months of presentment for payment, if they are otherwise in good order.
The Fund may return an unpaid Redemption Check that would draw your account
balance below $5.00 and you may be subject to extra charges. Shares for which
certificates have been issued may not be redeemed by Redemption Check. Shares
held under Keogh Plans, IRAs or other retirement plans are not eligible for
this Privilege. This Privilege may be modified or terminated at any time by
the Fund or the Transfer Agent upon notice to investors.
WIRE REDEMPTION PRIVILEGE _ You may request by wire or telephone that
redemption proceeds (minimum $5,000) be wired to your account at a bank which
is a member of the Federal Reserve System, or a correspondent bank if your
bank is not a member. You will be charged a $5.00 wire redemption fee for each
wire redemption, which will be deducted from your account and paid to the
Transfer Agent. To establish the Wire Redemption Privilege, you must
check the appropriate box and supply the necessary information on the Fund's
Account Application or file a Shareholder Services Form with the Transfer
Agent. You may direct that redemption proceeds be paid by check (maximum
$150,000 per day)made out to the owners of record and mailed to your address.
Redemption proceeds of less than $5,000 will be paid automatically by check.
Holders of jointly registered Fund or bank accounts may have redemption
proceeds of not more than $250,000 wired within any 30-day period. You may
telephone redemption requests by calling 1-800-221-4060 or, if you are
calling from overseas, call 1-401-455-3306. The Fund reserves the right to
refuse any redemption request, including requests made shortly after a change
of address, and may limit the amount involved or the number of such requests.
This Privilege may be modified or terminated at any time by the Transfer
Agent or the Fund. The Fund's Statement of Additional Information sets forth
instructions for transmitting redemption requests by wire. Shares held under
Keogh Plans, IRAs or other retirement plans, and shares for which
certificates have been issued, are not eligible for this Privilege.
Page 16
TELEPHONE REDEMPTION PRIVILEGE _ You may redeem Fund shares (maximum
$150,000 per day) by telephone if you have checked the appropriate box on the
Fund's Account Application or have filed a Shareholder Services Form with the
Transfer Agent. The redemption proceeds will be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-221-4060 or, if you are calling from overseas, call 1-401-455-3306. The
Fund reserves the right to refuse any request made by telephone, including
requests made shortly after a change of address, and may limit the amount
involved or the number of telephone redemption requests. This Privilege may
be modified or terminated at any time by the Transfer Agent or the Fund.
Shares held under Keogh Plans, IRAs or other retirement plans, and shares for
which the certificates have been issued, are not eligible for this Privilege.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan pursuant to which
the Fund reimburses Dreyfus Service Corporation, a wholly-owned subsidiary of
The Dreyfus Corporation, an amount not to exceed an annual rate of .25 of 1%
of the value of the Fund's average daily net assets for certain allocated
expenses of providing personal services and/or maintaining shareholder
accounts. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Fund and providing reports and other information, and services related to the
maintenance of shareholder accounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from its net investment income
daily and pays such dividends monthly. Distributions from net realized
securities gains, if any, are declared and paid once a year, but the Fund may
make distributions on a more frequent basis to comply with distribution
requirements of the Internal Revenue Code of 1986, as amended (the "Code"),
in all events in a manner consistent with the provisions of the Investment
Company Act of 1940. The Fund will not make distributions from net realized
securities gains unless capital loss carryovers, if any, have been utilized
or have expired. You may choose whether to receive dividends and
distributions in cash or to reinvest in additional shares at net asset value.
All expenses are accrued daily and deducted before declaration of dividends
to investors.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by the Fund will be taxable to U.S. shareholders
as ordinary income whether received in cash or reinvested in Fund shares. No
dividend paid by the Fund will qualify for the dividends received deduction
allowable to certain U.S. corporations. Distributions from net realized
long-term securities gains of the Fund generally will be taxable to U.S.
shareholders as long-term capital gains for Federal income tax purposes,
regardless of how long shareholders have held their Fund shares and whether
such distributions are received in cash or reinvested in Fund shares. The
Code provides that the net capital gain of an individual generally will not
be taxed at a rate in excess of 28%. Dividends and distributions may be
subject to state and local taxes.
Dividends derived from net investment income, together with
distributions from net realized short-term securities gains and all or a
portion of any gains realized from the sale or other disposition of certain
market discount bonds, paid by the Fund to a foreign investor generally are
subject to U.S. nonresident withholding taxes at the rate of 30%, unless the
foreign investor claims the benefit of a lower rate specified in a tax
treaty. Distributions from net realized long-term securities gains paid by
the Fund to a foreign investor as well as the proceeds of any redemptions
from a foreign investor's account, regardless of the extent to which gain or
loss may be realized, generally will not be subject to U.S. nonresident
withholding tax. However, such distributions may be subject to backup
withholding, as described below, unless the foreign investor certifies his
non-U.S. residency status.
Notice as to the tax status of your dividends and distributions will
be mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year.
Page 17
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends, distributions
from net realized securities gains and the proceeds of any redemption,
regardless of the extent to which gain or loss may be realized, paid to a
shareholder if such shareholder fails to certify either that the TIN
furnished in connection with opening an account is correct, or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return. Furthermore, the IRS may
notify the Fund to institute backup withholding if the IRS determines a
shareholder's TIN is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
record owner of the account, and may be claimed as a credit on the record
owner's Federal income tax return.
Management of the Fund believes that the Fund has qualified for the
fiscal year ended December 31, 1994 as a "regulated investment company" under
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 taxes to the extent its earnings are
distributed in accordance with applicable provisions of the Code. The Fund is
subject to a non-deductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable investment income and capital gains.
You should consult your tax adviser regarding specific questions as
to Federal, state or local taxes.
PERFORMANCE INFORMATION
For purposes of advertising, performance may be calculated on several
bases, including current yield, average annual total return and/or total
return.
Current yield refers to the Fund's annualized net investment income
per share over a 30-day period, expressed as a percentage of the net asset
value per share at the end of the period. For purposes of calculating current
yield, the amount of net investment income per share during that 30-day
period, computed in accordance with regulatory requirements, is compounded by
assuming that it is reinvested at a constant rate over a six-month period. An
identical result is then assumed to have occurred during a second six-month
period which, when added to the result for the first six months, provides an
"annualized" yield for an entire one-year period. Calculations of the Fund's
current yield may reflect absorbed expenses pursuant to any undertaking that
may be in effect. See "Management of the Fund."
Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment in the Fund was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of
a stated period of time, after giving effect to the reinvestment of dividends
and distributions during the period. The return is expressed as a percentage
rate which, if applied on a compounded annual basis, would result in the
redeemable value of the investment at the end of the period. Advertisements
of the Fund's performance will include the Fund's average annual total return
for one, five and ten year periods, or for shorter time periods depending
upon the length of time during which the Fund has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the income
and principal changes for a specified period and dividing by the net asset
value per share at the beginning of the period. Advertisements may include
the percentage rate of total return or may include the value of a
hypothetical investment at the end of the period which assumes the
application of the percentage rate of total return.
Performance will vary from time to time and past results are not
necessarily representative of future results. You should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as
Page 18
that described above, may not provide a basis for comparison with other
investments or other investment companies using a different method of
calculating performance. For purposes of advertising, calculations of
average annual total return and certain calculations of total return will
take into account the performance of Dreyfus Investors GNMA Fund, L.P. the
assets and liabilities of which were transferred to the Fund in exchange for
shares of the Fund on December 31, 1993. See "General Information."
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 Monitortrademark, N. Palm Beach, Fla.
33408, Merrill Lynch Mortgage Master Index, Moody's Bond Survey Bond Index,
Lehman Brothers Bond Indices, Salomon Brothers Bond Indices, Morningstar,
Inc. and other industry publications. In addition, data may be used comparing
the difference in yields between Ginnie Maes and comparable term Treasury
Notes (which are direct obligations of the U.S. Government). Within the
securities industry, Ginnie Maes often have an assumed average life of
approximately 12 years due to prepayments of principal on underlying
mortgages.
GENERAL INFORMATION
The Fund was organized as an unincorporated business trust under the
laws of the Commonwealth of Massachusetts pursuant to an Agreement and
Declaration of Trust (the "Trust Agreement") dated May 14, 1993, and
commenced operations on January 1, 1994. On November 1, 1995, the Fund's name
was changed from Dreyfus Investors GNMA Fund to Dreyfus BASICGNMA Fund. The
Fund is authorized to issue an unlimited number of shares of beneficial
interest, par value $.001 per share. Each share has one vote.
On December 31, 1993, all of the assets and liabilities of Dreyfus
Investors GNMA Fund, L.P.(the "Partnership") were transferred to the Fund in
exchange for shares of beneficial interest of the Fund pursuant to a proposal
approved at a Meeting of Partners of the Partnership held on November 24,
1993.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Trust Agreement disclaims shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be given
in each agreement, obligation or instrument entered into or executed by the
Fund or a Trustee. 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's
incurring financial loss on account of 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
Trustees intend to conduct the operations of the Fund in such a way so as to
avoid, as far as possible, ultimate liability of the shareholders for
liabilities of the Fund. As discussed under "Management of the Fund" in the
Statement of Additional Information, the Fund ordinarily will not hold
shareholder meetings; however, shareholders under certain circumstances may
have the right to call a meeting of shareholders for the purpose of voting to
remove Trustees.
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account. The Fund sends annual and
semi-annual financial statements to all its shareholders.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn
Curtiss Boulevard, Uniondale, New York 11556-0144, or by calling toll free
1-800-645-6561; in New York City, call
1-718-895-1206; outside the U.S. and Canada, call 516-794-5452.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
Page 190
DREYFUS
BASIC
GNMA
Fund
Prospectus
(LION LOGO)
Registration Mark
Copy Rights 1995, Dreyfus Service Corporation
080p13000095
DREYFUS BASIC GNMA FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
NOVEMBER 1, 1995
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Dreyfus BASIC GNMA Fund (the "Fund"), dated November 1, 1995, 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 the following numbers:
Call Toll Free 1-800-645-6561
In New York City - Call 1-718-895-1206
Outside the U.S. and Canada - Call 516-794-5452
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.
TABLE OF CONTENTS
Page
Investment Objective and Management Policies . . . . . . . . . . .B-2
Management of the Fund . . . . . . . . . . . . . . . . . . . . . .B-9
Management Agreement . . . . . . . . . . . . . . . . . . . . . . .B-13
Shareholder Services Plan. . . . . . . . . . . . . . . . . . . . .B-14
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . . . . .B-15
Redemption of Fund Shares. . . . . . . . . . . . . . . . . . . . .B-15
Fund Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . .B-17
Determination of Net Asset Value . . . . . . . . . . . . . . . . .B-19
Performance Information. . . . . . . . . . . . . . . . . . . . . .B-19
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . .B-20
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . .B-22
Information about the Fund . . . . . . . . . . . . . . . . . . . .B-22
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . . .B-23
Financial Statements . . . . . . . . . . . . . . . . . . . . . . .B-24, B-33
Report of Independent Auditors . . . . . . . . . . . . . . . . . .B-32, B-42
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Description
of the Fund."
Ginnie Maes. Ginnie Maes are created by an "issuer," which is a
Federal Housing Administration ("FHA") approved mortgagee that also meets
criteria imposed by the Government National Mortgage Association (the
"GNMA"). The issuer assembles a pool of FHA, Farmers' Home Administration
or Veterans' Administration ("VA") insured or guaranteed mortgages which
are homogeneous as to interest rate, maturity and type of dwelling. Upon
application by the issuer, and after approval by GNMA of the pool, GNMA
provides its commitment to guarantee timely payment of principal and
interest on the Ginnie Maes backed by the mortgages included in the pool.
The Ginnie Maes, endorsed by GNMA, then are sold by the issuer through
securities dealers. The Fund will only invest in Ginnie Maes of the "fully
modified pass-through" type which are guaranteed as to timely payment of
principal and interest by the GNMA, a U.S. Government corporation.
GNMA is authorized under the National Housing Act to guarantee timely
payment of principal and interest on Ginnie Maes. This guarantee is backed
by the full faith and credit of the United States. GNMA may borrow U.S.
Treasury funds to the extent needed to make payments under its guarantee.
When mortgages in the pool underlying a Ginnie Mae are prepaid by
mortgagors or by result of foreclosure, such principal payments are passed
through to the certificate holders. Accordingly, the life of the Ginnie
Mae is likely to be substantially shorter than the stated maturity of the
mortgages in the underlying pool. Because of such variation in prepayment
rates, it is not possible to predict the life of a particular Ginnie Mae,
but FHA statistics indicate that 25- to 30-year single family dwelling
mortgages have an average life of approximately 12 years. The majority of
Ginnie Maes are backed by mortgages of this type, and accordingly the
generally accepted practice treats Ginnie Maes as 30-year securities which
prepay fully in the 12th year.
Ginnie Maes bear a stated "coupon rate" which represents the effective
FHA-VA mortgage rate at the time of issuance, less 0.5%, which constitutes
the GNMA's and issuer's fees. For providing its guarantee, the GNMA
receives an annual fee of 0.06% of the outstanding principal on
certificates backed by single family dwelling mortgages, and the issuer
receives an annual fee of 0.44% for assembling the pool and for passing
through monthly payments of interest and principal.
Payments to holders of Ginnie Maes consist of the monthly
distributions of interest and principal less the GNMA's and issuer's fees.
The actual yield to be earned by a holder of a Ginnie Mae is calculated by
dividing interest payments by the purchase price paid for the Ginnie Mae
(which may be at a premium or a discount from the face value of the
certificate). Monthly distributions of interest, as contrasted to
semi-annual distributions which are common for other fixed interest
investments, have the effect of compounding and thereby raising the
effective annual yield earned on Ginnie Maes. Because of the variation in
the life of the pools of mortgages which back various Ginnie Maes, and
because it is impossible to anticipate the rate of interest at which future
principal payments may be reinvested, the actual yield earned from a
portfolio of Ginnie Maes will differ significantly from the yield estimated
by using an assumption of a 12-year life for each Ginnie Mae included in
such a portfolio as described above.
Government-Related Securities. Mortgage-related securities issued by
the Federal National Mortgage Association (the "FNMA") include FNMA
Guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes")
which are solely the obligations of the FNMA and are not backed by or
entitled to the full faith and credit of the United States. The FNMA is a
government-sponsored organization owned entirely by private stockholders.
Fannie Maes are guaranteed as to timely payment of principal and interest
by the FNMA.
Mortgage-related securities issued by the Federal Home Loan Mortgage
Corporation (the "FHLMC") include FHLMC Mortgage Participation Certificates
(also known as "Freddie Macs" or "PCs"). The FHLMC is a corporate
instrumentality of the United States, created pursuant to an Act of
Congress, which is owned entirely by Federal Home Loan Banks. Freddie Macs
are not guaranteed by the United States or by any Federal Home Loan Bank
and do not constitute a debt or obligation of the United States or of any
Federal Home Loan Bank. Freddie Macs entitle the holder to timely payment
of interest, which is guaranteed by the FHLMC. The FHLMC guarantees either
ultimate collection or timely payment of all principal payments on the
underlying mortgage loans. While the FHLMC does not guarantee timely
payment of principal, the FHLMC may remit the amount due on account of its
guarantee of ultimate payment of principal at any time after default on an
underlying mortgage, but in no event later than one year after it becomes
payable.
Collateralized Mortgage Obligations. Collateralized mortgage
obligations or "CMOs" are debt obligations collateralized by mortgage loans
or mortgage pass-through securities. Typically, CMOs are collateralized by
Ginnie Mae, Fannie Mae or Freddie Mac Certificates, but also may be
collateralized by whole loans or Private Pass-Throughs, described below
(such collateral collectively hereinafter referred to as "Mortgage
Assets"). Multiclass pass-through securities may be equity interests in a
trust composed of Mortgage Assets. Unless the context indicates otherwise,
all references herein to CMOs include multiclass pass-through securities.
Payments of principal of and interest on the Mortgage Assets, and any
reinvestment income thereon, provide the funds to pay debt service on the
CMOs or make scheduled distributions on the multiclass pass-through
securities. CMOs may be issued by agencies or instrumentalities of the
U.S. Government, or by private originators of, or investors in, mortgage
loans, including savings and loan associations, mortgage banks, commercial
banks, investment banks and special purpose subsidiaries of the foregoing.
The issuer of a series of CMOs may elect to be treated as a Real Estate
Mortgage Investment Conduit.
Private Mortgage Pass-Through Securities. Private mortgage pass-
through securities ("Private Pass-Throughs") are structured similarly to
the Ginnie Mae, Fannie Mae and Freddie Mac mortgage pass-through securities
and are issued by originators of, or investors in, mortgage loans,
including savings and loan associations, mortgage banks, commercial banks,
investment banks and special purpose subsidiaries of the foregoing.
Private Pass-Throughs usually are backed by a pool of conventional fixed
rate or adjustable rate mortgage loans. Since Private Pass-Throughs
typically are not guaranteed by an entity having the credit status of
Ginnie Mae, Fannie Mae or Freddie Mac, such securities generally are
structured with one or more types of credit enhancement.
Stripped Mortgage-Backed Securities. Stripped mortgage-backed
securities ("SMBS") are derivative multiclass mortgage securities. SMBS
may be issued by agencies or instrumentalities of the U.S. Government, or
by private originators of, or investors in, mortgage loans, including
savings and loan associations, mortgage banks, commercial banks, investment
banks and special purpose subsidiaries of the foregoing.
SMBS usually are structured with two classes that receive different
proportions of the interest and principal distributions on a pool of
Mortgage Assets. A common type of SMBS will have one class receiving some
of the interest and most of the principal from the Mortgage Assets, while
the other class will receive most of the interest and the remainder of the
principal. In the most extreme case, one class will receive all of the
interest (the interest-only or "IO" class), while the other class will
receive all of the principal (the principal-only or "PO" class). The yield
to maturity on an IO class is extremely sensitive to the rate of principal
payments (including prepayments) on the related underlying Mortgage Assets,
and a rapid rate of principal payments may have a material adverse effect
on the Fund's yield to maturity. If the underlying Mortgage Assets
experience greater than anticipated prepayments of principal, the Fund may
fail to fully recoup its initial investment in these securities even if the
securities are rated in the highest rating category by any nationally
recognized statistical rating organization. In addition, no assurance can
be given as to the liquidity of the market for certain SMBS. Determination
as to the liquidity of such securities will be made in accordance with
guidelines established by the Fund's Board of Trustees. In accordance with
such guidelines, the Manager will monitor the Fund's investments in such
securities with particular regard to trading activity, availability of
reliable price information and other relevant information. The Fund will
not invest more than 15% of the value of its net assets in securities that
are illiquid.
Repurchase Agreements. 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. 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 one billion dollars 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, and will require that additional securities be deposited with it if
the value of the securities purchased should decrease below resale price.
The Manager will monitor on an ongoing basis the value of the collateral to
assure that it always equals or exceeds the repurchase price. The Fund
will consider on an ongoing basis the creditworthiness of the institutions
with which it enters into repurchase agreements.
Leverage Through Borrowing. The Fund may borrow for investment
purposes. The Investment Company Act of 1940, as amended (the "Act"),
requires the Fund to maintain continuous asset coverage (that is, total
assets including borrowings, less liabilities exclusive of borrowings) of
300% of the amount borrowed. If the 300% asset coverage should decline as
a result of market fluctuations or other reasons, the Fund may be required
to sell some of its portfolio holdings within three days to reduce the debt
and restore the 300% asset coverage, even though it may be disadvantageous
from an investment standpoint to sell at that time. The Fund also may be
required to maintain minimum average balances in connection with such
borrowing or to pay a commitment or other fee to maintain a line of credit;
either of those requirements would increase the cost of borrowing over the
stated interest rate. To the extent the Fund enters into a reverse
repurchase agreement, the Fund will maintain in a segregated custodial
account cash or U.S. Government securities or other high quality liquid
debt securities at least equal to the aggregate amount of its reverse
repurchase obligations, plus accrued interest, in certain cases, in
accordance with releases promulgated by the Securities and Exchange
Commission. The Securities and Exchange Commission views reverse
repurchase transactions as collateralized borrowings by the Fund. These
agreements, which are treated as if reestablished each day, are expected to
provide the Fund with a flexible borrowing tool.
Short-Selling. The Fund may engage in short-selling. Until the Fund
closes its short position or replaces the borrowed security, the Fund will:
(a) maintain a segregated account, containing cash or U.S. Government
securities, at such a level that (i) the amount deposited in the account
plus the amount deposited with the broker as collateral will equal the
current value of the security sold short and (ii) the amount deposited in
the segregated account plus the amount deposited with the broker as
collateral will not be less than the market value of the security at the
time it was sold short; or (b) otherwise cover its short position.
Options Transactions. The Fund may engage in options transactions,
such as purchasing or writing covered call or put options. In return for a
premium, the writer of a covered call option forfeits the right to any
appreciation in the value of the underlying security above the strike price
for the life of the option (or until a closing purchase transaction can be
effected). Nevertheless, the call writer retains the risk of a decline in
the price of the underlying security. The writer of a covered put option
accepts the risk of a decline in the price of the underlying security. The
size of the premiums that the Fund may receive may be adversely affected as
new or existing institutions, including other investment companies, engage
in or increase their option-writing activities.
Options written ordinarily will have expiration dates between one and
nine months from the date written. The exercise price of the options may
be below, equal to or above the market values of the underlying securities
at the time the options are written. In the case of call options, these
exercise prices are referred to as "in-the-money," "at-the-money" and
"out-of-the-money," respectively. The Fund may write (a) in-the-money call
options when the Manager expects that the price of the underlying security
will remain stable or decline moderately during the option period, (b)
at-the-money call options when the Manager expects that the price of the
underlying security will remain stable or advance moderately during the
option period and (c) out-of-the-money call options when the Manager
expects that the premiums received from writing the call option plus the
appreciation in market price of the underlying security up to the exercise
price will be greater than the appreciation in the price of the underlying
security alone. In these circumstances, if the market price of the
underlying security declines and the security is sold at this lower price,
the amount of any realized loss will be offset wholly or in part by the
premium received. Out-of-the-money, at-the-money and in-the-money put
options (the reverse of call options as to the relation of exercise price
to market price) may be utilized in the same market environments that such
call options are used in equivalent transactions.
So long as the Fund's obligation as the writer of an option continues,
the Fund may be assigned an exercise notice by the broker-dealer through
which the option was sold, requiring the Fund to deliver, in the case of a
call, or take delivery of, in the case of a put, the underlying security
against payment of the exercise price. This obligation terminates when the
option expires or the Fund effects a closing purchase transaction. The
Fund can no longer effect a closing purchase transaction with respect to an
option once it has been assigned an exercise notice.
While it may choose to do otherwise, the Fund generally will purchase
or write only those options for which the Manager believes there is an
active secondary market so as to facilitate closing transactions. There is
no assurance that sufficient trading interest to create a liquid secondary
market on a securities exchange will exist for any particular option or at
any particular time, and for some options no such secondary market may
exist. A liquid secondary market in an option may cease to exist for a
variety of reasons. In the past, for example, higher than anticipated
trading activity or order flow, or other unforeseen events, at times have
rendered certain clearing facilities inadequate and resulted in the
institution of special procedures, such as trading rotations, restrictions
on certain types of orders or trading halts or suspensions in one or more
options. There can be no assurance that similar events, or events that may
otherwise interfere with the timely execution of customers' orders, will
not recur. In such event, it might not be possible to effect closing
transactions in particular options. If as a covered call option writer the
Fund is unable to effect a closing purchase transaction in a secondary
market, it will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise or it
otherwise covers its position.
Lending Portfolio Securities. To a limited extent, the Fund may lend
its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which at all times is
maintained in an amount equal to at least 100% of the current market value
of the securities loaned. By lending its portfolio securities, the Fund
can increase its income through the investment of the cash collateral. For
the purposes of this policy, the Fund considers collateral consisting of
U.S. Government securities or irrevocable letters of credit issued by banks
whose securities meet the standards for investment by the Fund to be the
equivalent of cash. From time to time, 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. Such loans may not exceed 33-
1/3% of the value of the Fund's total assets.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value of
the securities rises above the level of such collateral; (3) the Fund must
be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any dividends, interest or
other distributions payable on the loaned securities, and any increase in
market value; (5) the Fund may pay only reasonable custodian fees in
connection with the loan; and (6) while voting rights on the loaned
securities may pass to the borrower, the Fund's Board of Trustees must
terminate the loan and regain the right to vote the securities if a
material event adversely affecting the investment occurs. These conditions
may be subject to future modification.
Investment Restrictions. The Fund has adopted investment restrictions
numbered 1 through 8 as fundamental policies. These restrictions cannot be
changed without approval by the holders of a majority (as defined in the
Act) of the Fund's outstanding voting shares. Investment restrictions
numbered 9 through 13 are not fundamental policies and may be changed by a
vote of a majority of the Fund's Trustees at any time. The Fund may not:
1. Invest more than 25% of the value of its total assets in the
securities of issuers in any single industry, provided that
there shall be no limitation on the purchase of Ginnie Maes or
other securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
2. Invest in commodities, except that the Fund may purchase
and sell options, forward contracts, futures contracts, including
those relating indices, and options on futures contracts or
indices.
3. Purchase, hold or deal in real estate, or oil, gas or other
mineral leases or exploration or development programs,
provided that the Fund may purchase Ginnie Maes without
limitation and purchase and sell securities that are secured by
real estate or issued by companies that invest or deal in real
estate, real estate investment trust securities and mortgage-
backed securities.
4. Borrow money, except to the extent permitted under the Act (which
currently limits borrowing to no more than 33-1/3% of the value of
the Fund's total assets). For purposes of this Investment
Restriction, the entry into options, forward contracts, futures
contracts, including those relating to indices, and options on
futures contracts or indices shall not constitute borrowing.
5. Make loans to others, except through the purchase of debt
obligations or the entry into repurchase agreements. However, the
Fund may lend its portfolio securities in an amount not to exceed
33-1/3% of the value of its total assets. Any loans of portfolio
securities will be made according to guidelines established by the
Securities and Exchange Commission and the Fund's Trustees.
6. Act as an underwriter of securities of other issuers.
7. Issue any senior security (as such term is defined in Section
18(f) of the Act), except to the extent the activities permitted
in Investment Restriction Nos. 2, 4 and 10 may be deemed to give
rise to a senior security.
8. Purchase securities on margin, but the Fund may make
margin deposits in connection with transactions in options,
forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
9. Invest in the securities of a company for the purpose of
exercising management or control.
10. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except to the extent necessary to secure permitted
borrowings and to the extent related to the deposit of assets in
escrow in connection with writing covered put and call options
and the purchase of securities on a forward commitment basis and
collateral and initial or variation margin arrangements with
respect to options, forward contracts, futures contracts,
including those relating to indices, and options on futures
contracts or indices.
11. Enter into repurchase agreements providing for settlement
in more than seven days after notice or purchase securities
which are illiquid, if, in the aggregate, more than 15% of the
value of the Fund's net assets would be so invested.
12. Invest in securities of other investment companies, except
to the extent permitted under the Act.
13. Purchase common stocks, preferred stocks, warrants or
other equity securities, or purchase corporate bonds or
debentures, state bonds, municipal bonds or industrial bonds.
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.
The Fund may make commitments more restrictive that the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interests of the Fund and its investors, the Fund reserves the right to
revoke the commitment by terminating the sale of Fund shares in the state
involved.
MANAGEMENT OF THE FUND
Trustees and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Trustee who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Trustees of the Fund
GORDON J. DAVIS, Trustee. Since October 1994, senior partner with the law
firm of LeBoeuf, Lamb, Greene & MacRae. From 1983 to September 1994,
Mr. Davis was a senior partner with the law firm of Lord Day & Lord,
Barrett Smith. From 1978 to 1983, he was Commissioner of Parks and
Recreation for the City of New York. He is also a Director of
Consolidated Edison, a utility company, and Phoenix Home Life
Insurance Company and a member of various other corporate and not-for-
profit boards of directors and trustees. He is 53 years old and his
address is 241 Central Park West, New York, New York 10024.
*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board of various funds in the Dreyfus Family of Funds. For
more than five years prior thereto, he was President, a director and,
until August 1994, Chief Operating Officer of the Manager and
Executive Vice President and a director of Dreyfus Service
Corporation, a wholly-owned subsidiary of the Manager and, until
August 24, 1994, the Fund's distributor. From August 1994 to December
31, 1994, he was a director of Mellon Bank Corporation. He is
Chairman of the Board of Directors of the Noel Group, Inc., a venture
capital company; a director of the Muscular Dystrophy Association,
HealthPlan Services Corporation, Belding Heminway Company, Inc., a
manufacturer and marketer of industrial threads, specialty yarns, home
furnishings and fabrics, Curtis Industries Inc., a national
distributor of security products, chemicals and automotive and other
hardware, Simmons Outdoor Corporation and Staffing Resources, Inc.;
and a trustee of Bucknell University. He is 51 years old and his
address is 200 Park Avenue, New York, New York 10166.
*DAVID P. FELDMAN, Trustee. Chairman and Chief Executive Officer of AT&T
Investment Management Corporation. He is also a trustee of Corporate
Property Investors, a real estate investment company. Mr. Feldman is
also a Board member of 27 other funds in the Dreyfus Family of Funds.
He is 55 years old and his address is One Oak Way, Berkeley Heights,
New Jersey 07922.
LYNN MARTIN, Trustee. Holder of the Davee Chair at the J.L. Kellogg
Graduate School of Management, Northwestern University. During the
Spring Semester 1993, she was a Visiting Fellow at the Institute of
Policy, Kennedy School of Government, Harvard University. Ms. Martin
also is a consultant to the international accounting firm of Deloitte
& Touche, and chairwoman of its Council on the Advancement of Women.
From January 1991 through January 1993, Ms. Martin served as Secretary
of the United States Department of Labor. From 1981 to 1991, she was
United States Congresswoman for the State of Illinois. She is also a
director of Harcourt General Corporation, a publishing, insurance and
retailing company, Ameritech Corporation, a telecommunications and
information company, and Ryder Systems Incorporated, a transportation
company. She is 55 years old and her address is 3750 Lake Shore
Drive, Chicago, Illinois 60613.
EUGENE McCARTHY, Trustee. Writer and columnist; former Senator from
Minnesota from 1958-1970. He is also a director of Harcourt Brace
Jovanovich, Inc., publishers. He is 79 years old and his address is
271 Hawlin Road, Woodville, Virginia 22749.
DANIEL ROSE, Trustee. President and Chief Executive Officer of Rose
Associates, Inc., a New York based real estate development and
management firm. In July 1994, Mr. Rose received a Presidential
appointment to serve as a Director of the Baltic-American Enterprise
Fund, which will make equity investments and loans and provide
technical business assistance to new business concerns in the Baltic
states. He is also chairman of the Housing Committee of The Real
Estate Board of New York, Inc., and a trustee of Corporate Property
Investors, a real estate investment company. He is 65 years old and
his address is c/o Rose Associates, Inc., 380 Madison Avenue, New
York, New York 10017.
SANDER VANOCUR, Trustee. Since January 1994, Mr. Vanocur has served as
Visiting Professional Scholar at the Freedom Forum First Amendment
Center at Vanderbilt University. Since January 1992, Mr. Vanocur has
been the President of Old Owl Communications, a full-service
communications firm, and since November 1989, he has served as a
Director of the Damon Runyon-Walter Winchell Cancer Research Fund.
From June 1986 to December 1991, he was a Senior Correspondent of ABC
News and, from October 1986 to December 1991, he was Anchor of the ABC
News program "Business World," a weekly business program on the ABC
television network. Mr. Vanocur joined ABC News in 1977. He is 67
years old and his address is 2928 P Street, N.W., Washington, D.C.
20007.
ANNE WEXLER, Trustee. Chairman of the Wexler Group, consultants
specializing in government relations and public affairs. She is also
a director of American Cyanamid Company, Alumax, The Continental
Corporation, Comcast Corporation, The New England Electric System,
NOVA and a member of the board of the Carter Center of Emory
University, the Council of Foreign Relations, the National Parks
Foundation; Visiting Committee of the John F. Kennedy School of
Government at Harvard University and the Board of Visitors of the
University of Maryland School of Public Affairs. She is 65 years old
and her address is c/o The Wexler Group, 1317 F Street, Suite 600,
N.W., Washington, D.C. 20004.
REX WILDER, Trustee. Financial Consultant. He is 74 years old and his
address is 290 Riverside Drive, New York, New York 10025.
For so long as the Fund's Shareholder Services Plan described in the
section captioned "Shareholder Services Plan" remains in effect, the
Trustees of the Fund who are not "interested persons" of the Fund, as
defined in the Act, will be selected and nominated by the Trustees who are
not "interested persons" of the Fund.
The Trustees, with the exception of Anne Wexler and Joseph S.
DiMartino, were elected at a meeting of shareholders held on August 3,
1994. No further meetings of shareholders will be held for the purpose of
electing Trustees unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders, at which time
the Trustees then in office will call a shareholders' meeting for the
election of Trustees. Under the Act, shareholders of record of not less
than two-thirds of the outstanding shares of the Fund may remove a Trustee
through a declaration in writing or by vote cast in person or by proxy at a
meeting called for that purpose. The Trustees are required to call a
meeting of shareholders for the purpose of voting upon the question of
removal of any such Trustee when requested in writing to do so by the
shareholders of record of not less than 10% of the Fund's outstanding
shares.
The Fund typically pays its Trustees 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. For the fiscal year
ended December 31, 1994, the aggregate amount of compensation paid to each
Trustee by the Fund 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) were as
follows:
<TABLE>
<CAPTION>
(5)
(3) Total
(2) Pension or (4) Compensation from
(1) Aggregate Retirement Benefits Estimated Annual Fund and Fund
Name of Board Compensation from Accrued as Part of Benefits Upon Complex Paid to
Member Fund* Fund's Expenses Retirement Board Member
<S> <C> <C> <C> <C>
Gordon J. Davis $3,500 none none $ 29,602 (26)
Joseph S. DiMartino** $4,375 none none $445,000 (94)
David P. Feldman $3,500 none none $ 85,631 (28)
Lynn Martin $3,250 none none $ 26,852 (12)
Eugene McCarthy $3,500 none none $ 29,403 (12)
Daniel Rose $3,500 none none $ 62,006 (22)
Sander Vanocur $3,500 none none $ 62,006 (22)
Anne Wexler $1,181 none none $ 26,329 (17)
Rex Wilder $3,500 none none $ 29,403 (12)
-------------------------------
* Amount does not include reimbursed expenses for attending Board meetings, which amounted to $455 for all Trustees
as a group.
** Estimated amounts for the current fiscal year ending December 31, 1995.
</TABLE>
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President and Chief Operating
Officer of the Distributor and an officer of other investment
companies advised or administered by the Manager. From December 1991
to July 1994, she was President and Chief Compliance Officer of Funds
Distributor, Inc., the ultimate parent company of which is Boston
Institutional Group, Inc. Prior to December 1991, she served as Vice
President and Controller, and later as Senior Vice President, of The
Boston Company Advisors, Inc. She is 37 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From February 1992
to July 1994, he served as Counsel for The Boston Company Advisors,
Inc. From August 1990 to February 1992, he was employed as an
associate at Ropes & Gray. He is 30 years old.
ERIC B. FISCHMAN, Vice President and Assistant Secretary. Associate
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From September 1992
to August 1994, he was an attorney with the Board of Governors of the
Federal Reserve System. He is 30 years old.
FREDERICK C. DEY, Vice President and Assistant Treasurer. Senior Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. From 1988 to August
1994, he was Manager of the High Performance Fabric Division of
Springs Industries Inc. He is 33 years old.
JOSEPH S. TOWER, III, Assistant Treasurer. Senior Vice President,
Treasurer and Chief Financial Officer of the Distributor and an
officer of other investment companies advised or administered by the
Manager. From July 1988 to August 1994, he was employed by The Boston
Company, Inc. where he held various management positions in the
Corporate Finance and Treasury areas. He is 32 years old.
JOHN J. PYBURN, Assistant Treasurer. Assistant Treasurer of the
Distributor and an officer of other investment companies advised or
administered by the Manager. From 1984 to July 1994, he was Assistant
Vice President in the Mutual Fund Accounting Department of theManager.
He is 59 years old.
RUTH D. LEIBERT, Assistant Secretary. Assistant Vice President of the
Distributor of an officer of other investment companies advised or
administered by the Manager. From March 1992 to July 1994, she was a
Compliance Officer for The Managers Funds, a registered investment
company. From March 1990 until September 1991, she was Development
Director of The Rockland Center for the Arts. She is 50 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
The Fund's Trustees and officers, as a group, owned less than 1% of
the Fund's voting securities outstanding on August 15, 1995.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") dated August 24, 1994 with the Fund, which is
subject to annual approval by (i) the Fund's Trustees or (ii) vote of a
majority (as defined in the Act) of the outstanding voting securities of
the Fund, provided that in either event the continuance also is approved by
a majority of the Trustees who are not "interested persons" (as defined in
the Act) of the Fund or the Manager, by vote cast in person at a meeting
called for the purpose of voting such approval. The Agreement was approved
by shareholders on August 3, 1994 and was last approved by the Fund's Board
of Trustees, including a majority of the Trustees who are not "interested
persons" of any party to this Agreement, at the meeting held on May 31,
1994. The Agreement is terminable without penalty, on 60 days' notice, by
the Fund's Trustees or by vote of the holders of a majority of the Fund's
outstanding securities, or, on 90 days' notice, by the Manager. The
Agreement will terminate automatically in the event of its assignment (as
defined in the Act).
The following persons are officers and/or directors of the Manager:
Howard Stein, Chairman of the Board and Chief Executive Officer; W. Keith
Smith, Vice Chairman of the Board; Robert E. Riley, President, Chief
Operating Officer and a director; Lawrence S. Kash, Vice Chairman--
Distribution and a director; Philip L. Toia, Vice Chairman--Operations and
Administration; Stephen E. Canter, Vice Chairman and Chief Investment
Officer; Daniel C. Maclean, Vice President and General Counsel; Barbara E.
Casey, Vice President--Retirement Services; Henry D. Gottmann, Vice
President--Retail; Elie M. Genadry, Vice President--Wholesale; Mark N.
Jacobs, Vice President--Fund Legal and Compliance and Secretary; Jeffrey N.
Nachman, Vice President--Mutual Fund Accounting; Diane M. Coffey, Vice
President--Corporate Communications; Katherine C. Wickham, Vice President--
Human Resources; William F. Glavin, Jr., Vice President--Product
Management; Andrew S. Wasser, Vice President--Information Services; Maurice
Bendrihem, Controller; Elvira Oslapas, Assistant Secretary; and Mandell L.
Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene, Julian M.
Smerling and David B. Truman, directors.
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
Trustees. The Manager is responsible for investment decisions, and
provides the Fund with portfolio managers who are
authorized by the Trustees to execute purchases and sales of securities.
The Fund's portfolio managers are Garitt Kono and Gerald E. Thunelius. The
Manager also maintains a research department with a professional staff of
portfolio managers and securities analysts who provide research services
for the Fund as well as for other funds advised by the Manager. All
purchases and sales are reported for the Board of Trustees' review at the
meeting subsequent to such transactions.
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 Trustees who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, 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 maintaining
the Fund's existence, costs of independent pricing services, 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.
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.
As compensation for its services, the Fund has agreed to pay the
Manager a monthly management fee at the annual rate of .60 of 1% of the
value of the Fund's average daily net assets. All fees and expenses are
accrued daily and deducted before declaration of dividends to investors.
For the fiscal years ended December 31, 1992, 1993 and 1994 the management
fees payable to the Manager were $231,376, $317,545 and $285,899,
respectively, which were reduced by $231,376, $317,545 and $285,899,
respectively, as a result of undertakings by The Dreyfus Corporation.
Thus, no management fee was paid by the Fund pursuant to such undertakings
by the Manager for the fiscal years ended December 31, 1992, 1993 and 1994.
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 the expense limitation of any state having jurisdiction over the
Fund, the Fund may deduct from the payment to be made to the Manager under
the Agreement, or the Manager will bear, such excess expense to the extent
required by state law. 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.
SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services Plan."
The Fund has adopted a Shareholder Services Plan (the "Plan") pursuant
to which the Fund reimburses Dreyfus Service Corporation for certain
allocated expenses of providing personal services and/or maintaining
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and
services related to the maintenance of shareholder accounts.
A quarterly report of the amounts expended under the Plan, and the
purposes for which such expenditures were incurred, must be made to the
Trustees for their review. In addition, the Plan provides that material
amendments of the Plan must be approved by the Board of Trustees, and by
the Trustees who are not "interested persons" (as defined in the Act) of
the Fund and have no direct or indirect financial interest in the operation
of the Plan by vote cast in person at a meeting called for the purpose of
considering such amendments. The Plan is subject to annual approval by
such vote of the Trustees cast in person at a meeting called for the
purpose of voting on the Plan. The Plan is terminable at any time by vote
of a majority of the Trustees who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Plan.
For the fiscal year ended December 31, 1994, Dreyfus Service
Corporation waived receipt of $107,507 payable by the Fund pursuant to the
Plan.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor also
acts as distributor for other funds in the Dreyfus Family of Funds and for
certain other investment companies.
Reopening an Account. An investor may reopen an account with a
minimum investment of $10,000 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.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Check Redemption Privilege. An investor may indicate on the Account
Application or by later written request that the Fund provide Redemption
Checks ("Checks") drawn on the Fund's account. Checks will be sent only to
the registered owner(s) of the account and only to the address of record.
The Account Application or later written request must be manually signed by
the registered owner(s). Checks may be made payable to the order of any
person in an amount of $1,000 or more. When a Check is presented for
payment to The Shareholder Services Group, Inc., the Fund's transfer and
dividend disbursing agent (the "Transfer Agent"), the Transfer Agent, as
the investor's agent, will cause the Fund to redeem a sufficient number of
full and fractional shares in the investor's account to cover the amount of
the Check and the $2.00 charge. Dividends are earned until the Check
clears. After clearance, a copy of the Check will be returned to the
investor. Investors 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.
If the amount of the Check, plus any applicable charges, is greater
than the 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.
Wire Redemption Privilege. By using this Privilege, the investor
authorizes the Transfer Agent to act on wire or telephone redemption
instructions from any person representing himself or herself to be the
investor and reasonably believed by the Transfer Agent to be genuine. An
investor will be charged a $5.00 fee for each wire redemption from the
Fund, which will be deducted from the investor's account and paid to the
Transfer Agent. Ordinarily, the Fund will initiate payment for shares
redeemed pursuant to this Privilege on the next business day after receipt
by the Transfer Agent of a redemption request in proper form. Redemption
proceeds will be transferred by Federal Reserve wire only to the commercial
bank account specified by the investor on the Account Application or
Shareholder Services Form. Redemption proceeds, if wired, must be in the
amount of $5,000 or more and will be wired to the investor's account at the
bank of record designated in the investor's file at the Transfer Agent, if
the investor's bank is a member of the Federal Reserve System, or to a
correspondent bank if the investor's bank is not a member. Fees ordinarily
are imposed by such bank and usually borne by the investor. Immediate
notification by the correspondent bank to the investor's bank is necessary
to avoid a delay in crediting the funds to the investor's bank account.
Investors with access to telegraphic equipment may wire redemption
requests to the Transfer Agent by employing the following transmittal code
which may be used for domestic or overseas transmissions:
Transfer Agent's
Transmittal Code Answer Back Sign
144295 144295 TSSG PREP
Investors who do not have direct access to telegraphic equipment may
have the wire transmitted by contacting a TRT Cables operator at
1-800-654-7171, toll free. Investors 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."
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 investor, 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 Signature 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 further information with respect to signature-
guarantees, investors may 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 investor 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 of Trustees reserve the right to make payments in whole
or 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 sold such securities, brokerage charges would be incurred.
Suspension of Redemptions. 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.
FUND EXCHANGES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Fund
Exchanges."
Shares of other funds purchased by exchange will be purchased on the
basis of relative net asset value per share as follows:
A. Exchanges for shares of funds that are offered without a sales
load will be made without a sales load.
B. Shares of funds purchased without a sales load may be exchanged
for shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Shares of funds purchased with a sales load may be exchanged
without a sales load for shares of other funds sold without a
sales load.
D. Shares of funds purchased with a sales load, shares of funds
acquired by a previous exchange from shares purchased with a
sales load, and additional shares acquired through reinvestment
of dividends or distributions of any such funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales load
that could have been imposed in connection with the Purchased
Shares (at the time the Purchased Shares were acquired), without
giving effect to any reduced loads, the difference will be
deducted.
To accomplish an exchange under item D above, investors must notify
the Transfer Agent of their prior ownership of fund shares and their
account number.
To request an exchange, an investor 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 the investor checks the applicable "No" box on the
Account Application, indicating that the investor specifically refuses this
privilege. By using the Telephone Exchange Privilege, the investor
authorizes the Transfer Agent to act on telephonic instructions from any
person representing himself or herself to be the investor, and reasonably
believed 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 issued in certificate form are not eligible
for telephone exchange. Investors will be charged a $5.00 fee for each
exchange made out of the Fund, which will be deducted from the investors's
account and paid to the Transfer Agent.
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.
For Dreyfus-sponsored Keogh Plans, IRAs and Simplified Employee Pension
Plans ("SEP-IRAs") with only one participant, the minimum initial
investment is $750. To exchange shares held in Corporate Plans, 403(b)(7)
Plans and SEP-IRAs with more than one participant, the minimum initial
investment is $100 if the plan has at least $2,500 invested among the funds
in the Dreyfus Family of Funds. To exchange shares held in Personal
Retirement Plans, the shares exchanged must have a current value of at
least $100.
This Privilege is available to shareholders resident in any state in
which shares of the fund being acquired may legally be sold. Shares may be
exchanged only between accounts having identical names and other
identifying designations.
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. The availability of Fund
Exchanges may be modified or terminated at any time upon notice to
shareholders.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
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 of Trustees. The Service may use
available market quotations, employ electronic data processing techniques
and/or a matrix system to determine valuations. The procedures of the
Service are reviewed by the officers of the Fund under the general
supervision of the Board of Trustees. Expenses and fees, including the
management fees (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,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Performance
Information."
The Fund's current yield for the 30-day period ended December 31, 1994
was 7.57%, which reflects the absorption of expenses pursuant to expense
limitations in effect. See "Management of the Fund" in the Prospectus.
Had expenses not been absorbed, the Fund's yield for the same period would
have been 6.32%. 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 7.408 year
periods ended December 31, 1994 was -.99%, 7.23% and 7.95%, respectively.
The Fund's average annual total return for the 3.359 year period beginning
with the effectiveness of the Fund's current investment objective,
fundamental investment policies and investment restrictions on August 23,
1991 and ending December 31, 1994 was 6.78%. The Fund's average annual
total return figures referenced above reflect the absorption of certain
expenses. Had these expenses not been absorbed, average annual total
return would have been lower. 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.
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. The Fund's total return for the period from August 5, 1987 to
December 31, 1994, and the period August 23, 1991 to December 31, 1994, was
76.27% and 24.66%, respectively. The Fund's total return figures
referenced above reflect the absorption of certain expenses. Had these
expenses not been absorbed, total return would have been lower.
Because of the Fund's organizational structure and its investment
policies, as of the date hereof, the Fund has the ability to seek higher
yields than those generally available from other GNMA funds. From time to
time, advertising materials for the Fund may include this information.
Advertising materials for the Fund, from time to time, also may include
comparisons to FDIC-insured bank investments, such as certificates of
deposit.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
Management of the Fund believes that the Fund has qualified for the
fiscal year ended December 31, 1994 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. As a regulated investment company, the Fund
pays no Federal income tax on net investment income and net realized
capital gains to the extent that such income and gains are distributed to
shareholders. To qualify as a regulated investment company, a Fund must
distribute at least 90% of its net income (consisting of net investment
income and net short-term capital gain) to its shareholders and must derive
less than 30% of its annual gross income from gain on the sale of
securities held for less than three months. The Code, however, allows a
Fund to net certain offsetting positions, making it easier for the Fund to
satisfy the 30% test. The term "regulated investment company" does not
imply the supervision of management or investment practices or policies by
any government agency.
Any dividend or distribution declared and paid shortly after an
investor's purchase may have the effect of reducing the net asset value of
his shares below the cost of his investment. Such a distribution would be
a return on investment in an economic sense although taxable as stated
above. In addition, the Code provides that if a shareholder has not held
his shares for more than six months and has received a capital gains
dividend with respect to such shares, any loss incurred on the sale of such
shares will be treated as long-term capital loss.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. 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 under Section 1276 of the Code.
In addition, all or a portion of the gain realized from engaging in
"conversion transactions" may be treated as ordinary income under Section
1258 of the Code. "Conversion transactions" are defined to include certain
forward, futures, option and "straddle" transactions, transactions marketed
or sold to produce capital gains, or transactions described in Treasury
regulations to be issued in the future.
Under Section 1256 of the Code, any gain or loss the Fund realizes
from certain futures and options transactions will be treated as 60% long-
term capital gain or loss and 40% short-term capital gain or loss. Gain or
loss will arise upon exercise or lapse of such futures contracts and
options as well as from closing transactions. In addition, any such
futures contracts or options remaining unexercised at the end of the Fund's
taxable year will be treated as sold for their then fair market value,
resulting in additional gain or loss to the Fund characterized in the
manner described above.
Offsetting positions held by the Fund involving certain futures
contracts or options may constitute "straddles." "Straddles" are defined
to include "offsetting positions" in actively traded personal property.
The tax treatment of "straddles" is governed by Sections 1092 and 1258 of
the Code, which, in certain circumstances, overrides or modifies the
provisions of Section 1256 of the Code. As such, all or a portion of any
short or long-term capital gain from certain "straddle" transactions may be
recharacterized to ordinary income.
If the Fund were treated as entering into "straddles" by reason of its
futures or options transactions, such "straddles" would be characterized as
"mixed straddles" if the futures or options transactions comprising a part
of such "straddles" were governed by Section 1256 of the Code. The Fund
may make one or more elections with respect to "mixed straddles."
Depending on which election is made, if any, the results to the Fund may
differ. If no election is made to the extent the "straddle" rules apply to
positions established by the Fund, losses realized by the Fund will be
deferred to the extent of unrealized gain in the offsetting position.
Moreover, as a result of the "straddle" and conversion transaction rules,
short-term capital loss on "straddle" positions may be recharacterized as
long-term capital loss, and long-term capital gain may be treated as short-
term capital gain or ordinary income.
Investment by the Fund in securities issued at a discount or providing
for deferred interest or for payment of interest in the form of additional
obligations could cause the Fund to recognize income prior to the receipt
of cash payments. For example, the Fund could be required to accrue as
income each year a portion of the discount (or deemed discount) at which
such securities were issued. A portion of such income would be allocable
to an investor even though no corresponding distribution were made to the
investor, thus causing the investor's income to exceed distributions to
him.
PORTFOLIO TRANSACTIONS
Portfolio securities 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 whom it appears that
the best price or execution will be 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.
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 from brokers should not reduce the
overall expenses of its research department.
The use of investment techniques such as forward roll transactions,
leverage through borrowing, short-selling and engaging in financial futures
and options transactions may produce higher than normal portfolio turnover.
Portfolio turnover may vary from year to year, as well as within a year.
During the fiscal year the use of forward roll transactions caused a
significant increase in the Fund's portfolio turnover rate. The Fund's
portfolio turnover rate for the two fiscal years ended December 31, 1994
was 37.02% and 290.20%, respectively.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the fund's Prospectus entitled "General
Information."
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 sends annual and semi-annual financial statements to all its
shareholders.
Effective August 23, 1991, the Fund changed its name from Dreyfus
Foreign Investors GNMA Fund, L.P. to Dreyfus Investors GNMA Fund, L.P.
Effective November 1, 1995 the Fund changed its name from Dreyfus Investors
GNMA Fund to Dreyfus BASIC GNMA Fund. Effective January 1, 1994, the Fund
began operating as a Massachusetts business trust.
Effective August 23, 1991, the Fund changed its investment objective
from that of providing investors with as high a level of current income,
free of U.S. Federal income tax and U.S. tax withholding requirements for
qualifying foreign investors, as is consistent with the preservation of
capital to its current investment objective, and changed certain of its
fundamental policies and investment restrictions to permit the Fund to
invest at least 65% of its assets in GNMA Certificates, invest in other
mortgage-related securities, engage in options and futures transactions,
borrow and pledge its assets for investment and temporary or emergency
purposes, enter into repurchase agreements and invest in illiquid
securities.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT AUDITORS
The Bank of New York, 90 Washington Street, New York, New York 10286,
acts as custodian of the Fund's investments. The Shareholder Services
Group, Inc., a subsidiary of First Data Corporation, P.O. Box 9671,
Providence, Rhode Island 02940-9671, acts as transfer and dividend
disbursing agent. Neither The Bank of New York nor The Shareholder
Services Group, Inc. has any part in determining the investment policies of
the Fund or which securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares of beneficial interest 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 auditors of the Fund.
<TABLE>
<CAPTION>
DREYFUS INVESTORS GNMA FUND
STATEMENT OF INVESTMENTS DECEMBER 31, 1994
PRINCIPAL
BONDS AND NOTES--92.5% AMOUNT VALUE
----------- -------------
<S> <C> <C>
MORTGAGE-BACKED CERTIFICATES--73.5%
Government National Mortgage Association I:
7 1/2%, 2/15/2022-8/15/2024............................................. $ 4,976,514 $ 4,626,566
8%, 8/15/2006-7/15/2024................................................. 7,376,515 7,130,631
8 1/2%, 7/15/2017-12/15/2024............................................ 7,623,571 7,506,777
9% (a).................................................................. 1,000,000 1,010,930
9%, 12/15/2009-6/15/2018................................................ 2,960,637 2,994,850
9 1/4%, 10/15/2023...................................................... 970,029 966,081
9 1/2%, 1/15/2017-8/15/2020............................................. 260,720 269,519
-----------
24,505,354
-----------
Government National Mortgage Association II:
9%, 3/20/2016-9/20/2021................................................. 313,112 312,229
9 1/2%, 9/20/2021-12/20/2021............................................ 532,670 542,322
-----------
854,551
-----------
Federal Home Loan Mortgage Corp.,
Real Estate Mortgage Investment Conduit:
Ser. 77, Cl. F,
8 1/2%, 6/15/2017..................................................... 200,000 198,448
Ser. 86, Cl. F,
9%, 10/15/2020........................................................ 300,000 300,030
Ser.128, Cl. H,
8 3/4%, 9/15/2019..................................................... 1,000,000 993,880
Ser.1030, Cl. E,
9%, 3/15/2019......................................................... 1,000,000 1,004,670
Ser.1092, Cl. J,
8 1/2%, 5/15/2020..................................................... 1,000,000 979,450
Ser.1395, Cl. C,
6%, 11/15/2018........................................................ 2,000,000 1,880,260
Ser.1455, Cl. K,
7%, 6/15/2020......................................................... 1,500,000 1,391,265
-----------
6,748,003
-----------
Federal National Mortgage Association,
Real Estate Mortgage Investment Conduit;
Cl. G27-E,
8 1/2%, 2/25/2018....................................................... 910,115 895,090
-----------
TOTAL MORTGAGE-BACKED CERTIFICATES.......................................... 33,002,998
===========
U.S. TREASURY BONDS--8.9%
8%, 11/15/2021.......................................................... 4,000,000 4,016,876
===========
U.S. TREASURY NOTES--10.1%
4 5/8%, 2/15/1996....................................................... 600,000 582,281
7 1/4%, 11/30/1996...................................................... 4,000,000 3,969,376
-----------
TOTAL U.S. TREASURY NOTES................................................... 4,551,657
===========
TOTAL BONDS AND NOTES
(cost $42,490,318)...................................................... $41,571,531
===========
DREYFUS INVESTORS GNMA FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1994
PRINCIPAL
SHORT-TERM INVESTMENTS--8.7% AMOUNT VALUE
------------- -------------
REPURCHASE AGREEMENT;
Daiwa Securities America Inc., 5 1/4%
Dated 12/30/1994, Due 1/3/1995 in the amount of $3,932,293 (fully collateralized
by $4,070,000 U.S. Treasury Bills, due 5/18/1995, value $3,976,759) (b)
(cost $3,930,000)....................................................... $ 3,930,000 $ 3,930,000
============
TOTAL INVESTMENTS
(cost $46,420,318)...................................................... 101.2% $45,501,531
==== ===========
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (1.2%) $(564,332)
==== ===========
NET ASSETS ........................................................... 100.0% $44,937,199
==== ===========
NOTES TO STATEMENT OF INVESTMENTS:
(a) Purchased on a when-issued basis.
(b) Held by the custodian in a segregated account for when-issued
securities purchased.
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS INVESTORS GNMA FUND
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1994
ASSETS:
<S> <C> <C>
Investments in securities, at value--Note 1(b)
(cost $46,420,318)--see statement..................................... $45,501,531
Cash.................................................................... 392,428
Interest receivable..................................................... 311,424
Prepaid expenses........................................................ 12,479
Due from The Dreyfus Corporation........................................ 387,034
-------------
46,604,896
LIABILITIES:
Payable for investment securities purchased............................. $1,374,339
Payable for shares of Beneficial Interest redeemed...................... 148,815
Accrued expenses........................................................ 144,543 1,667,697
-------------- -----------
NET ASSETS ................................................................ $44,937,199
============
REPRESENTED BY:
Paid-in capital......................................................... $47,814,293
Accumulated undistributed investment income_net......................... 8,952
Accumulated net realized (loss) on investments.......................... (1,967,259)
Accumulated net unrealized (depreciation) on investments_Note 4......... (918,787)
-------------
NET ASSETS at value applicable to 3,174,555 shares outstanding
(unlimited number of $.001 par value shares of
Beneficial Interest authorized)......................................... $44,937,199
============
NET ASSET VALUE, offering and redemption price per share
($44,937,199 / 3,174,555 shares)........................................ $14.16
======
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1994
INVESTMENT INCOME:
INTEREST INCOME......................................................... $3,530,067
EXPENSES:
Management fee--Note 3(a)............................................. $ 285,899
Shareholder servicing costs_Note 3(b)................................. 183,183
Registration fees..................................................... 41,653
Auditing fees......................................................... 37,315
Prospectus and shareholders' reports.................................. 27,909
Trustees' fees and expenses_Note 3(c)................................. 27,293
Custodian fees........................................................ 21,116
Legal fees............................................................ 14,409
Miscellaneous......................................................... 71,714
-------------
710,491
Less_expense reimbursement from Manager due to
undertakings_Note 3(a)............................................ 679,933
-------------
TOTAL EXPENSES.................................................. 30,558
------------
INVESTMENT INCOME--NET.......................................... 3,499,509
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments--Note 4.............................. $(1,967,259)
Net unrealized (depreciation) on investments............................ (2,115,432)
-------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (4,082,691)
------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (583,182)
============
See notes to financial statements.
DREYFUS INVESTORS GNMA FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1994
------------- -----------
OPERATIONS:
Investment income--net.................................................. $ 3,785,367 $ 3,499,509
Net realized (loss) on investments...................................... (60,023) (1,967,259)
Net unrealized appreciation (depreciation) on investments for the year.. 574,560 (2,115,432)
------------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... 4,299,904 (583,182)
------------- -----------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net.................................................. (3,785,367) (3,490,557)
------------- -----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................... 33,607,000 18,193,639
Dividends reinvested.................................................... 2,722,292 2,338,409
Cost of shares redeemed................................................. (27,899,871) (25,744,866)
------------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 8,429,421 (5,212,818)
------------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... 8,943,958 (9,286,557)
NET ASSETS:
Beginning of year....................................................... 45,279,798 54,223,756
------------- -----------
End of year (including undistributed investment income_net;
$8,952 in 1994)....................................................... $54,223,756 $44,937,199
=========== ===========
SHARES SHARES
------------- -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 2,165,927 1,237,307
Shares issued for dividends reinvested.................................. 175,569 159,653
Shares redeemed......................................................... (1,798,971) (1,744,696)
------------- -----------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... 542,525 (347,736)
=========== ===========
See notes to financial statements.
</TABLE>
DREYFUS INVESTORS GNMA FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Prospectus dated November 1, 1995.
DREYFUS INVESTORS GNMA FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940
("Act") as a diversified open-end management investment company. Dreyfus
Service Corporation, until August 24, 1994, acted as the exclusive
distributor of the Fund's shares, which are sold to the public without a
sales charge. Dreyfus Service Corporation is a wholly-owned subsidiary of The
Dreyfus Corporation ("Manager"). Effective August 24, 1994, the Manager
became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
Effective January 1, 1994, the Fund was reorganized as a
Massachusetts business trust under the name of Dreyfus Investors GNMA Fund.
(A) PORTFOLIO VALUATION: The Fund's investments (excluding short-term
investments) are valued each business day by an independent pricing service
("Service") approved by the Fund's Board of Trustees. Investments for which
quoted bid prices are readily available and are representative of the bid
side of the market in the judgment of the Service are valued at the mean
between the quoted bid prices (as obtained by the Service from dealers in
such securities) and asked prices (as calculated by the Service based upon
its evaluation of the market for such securities). Other investments, which
constitute a majority of the portfolio securities, are carried at fair value
as determined by the Service, based on methods which include consideration
of: yields or prices of securities of comparable quality, coupon, maturity
and type; indications as to values from dealers; and general market
conditions. Short-term investments are carried at amortized cost, which
approximates value.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income (including, where applicable, amortization of discount on short-term
investments) is recognized on the accrual basis.
The Fund may enter into repurchase agreements with financial
institutions, deemed to be creditworthy by the Fund's Manager, subject to the
seller's agreement to repurchase and the Fund's agreement to resell such
securities at a mutually agreed upon price. Securities purchased subject to
repurchase agreements are deposited with the Fund's custodian and, pursuant
to the terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. If the value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the Fund will require the seller to
deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults on its repurchase
obligation, the Fund maintains the right to sell the underlying securities at
market value and may claim any resulting loss against the seller.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to
declare dividends daily from investment income-net. Such dividends are paid
monthly. Dividends from net realized capital gain, if any, are normally
declared and paid annually, but the Fund may make distributions on a more
frequent basis to comply with the distribution requirements of the Internal
Revenue Code. To the extent that net realized capital gain can be offset by
capital loss carryovers, if any, it is the policy of the Fund not to
distribute such gain.
DREYFUS INVESTORS GNMA FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Prior to January 1, 1994 the Fund was a limited partnership and was
not required to distribute realized capital gains to avoid Federal income and
excise taxes. Prior years' gains and losses had been allocated to
shareholders and not paid, in accordance with the limited partnership
structure. This resulted in a difference between financial reporting purposes
versus Federal Income tax purposes, with respect to the treatment of such
allocated gains and losses. The Fund has therefore reclassified $100,016 from
accumulated net realized loss on investments to paid-in-capital. This amount
represented the cumulative effect of such differences. Results of operations
and net assets were not effected by this reclassification.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interest of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately of
$1,040,000 available for Federal income tax purposes to be applied against
future net securities profits, if any realized subsequent to December 31,
1994. The carryover does not include net realized securities losses from
November 1, 1994 through December 31, 1994 which are treated, for Federal
income tax purposes, as arising in fiscal 1995. If not applied, the carryover
expires in fiscal 2002.
NOTE 2--BANK LINE OF CREDIT:
In accordance with an agreement with a bank, the Fund may borrow up
to the lesser of 25 percent of its net assets or $5,000,000 under a
short-term unsecured line of credit. Interest on borrowings is charged at
rates which are related to Federal Funds rates in effect from time to time.
There were no borrowings during the year ended December 31, 1994.
NOTE 3--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the
Manager, the management fee is computed at the annual rate of .60 of 1% of
the average daily value of the Fund's net assets and is payable monthly. The
Agreement provides for an expense reimbursement from the Manager should the
Fund's aggregate expenses, exclusive of taxes, interest on borrowings,
brokerage and extraordinary expenses, exceed the expense limitation of any
state having jurisdiction over the Fund. The most stringent state expense limi
tation applicable to the Fund presently requires reimbursement of expenses in
any full fiscal year that such expenses (exclusive of certain expenses as
described above) exceed 21/2% of the first $30 million, 2% of the next $70
million and 11/2% of the excess over $100 million of the average value of the
Fund's net assets in accordance with California "blue sky" regulations.
However, the Manager had undertaken from January 1, 1994 through March 31,
1995, or until such time as the net assets of the Fund exceed $100 million,
regardless of whether they remain at that level, to waive receipt of the
management fee payable to it by the Fund. In addition, during the year ended
December 31, 1994, the Manager voluntarily assumed all or part of the remainin
g expenses of the Fund. The expense reimbursement pursuant to the
undertakings amounted to $679,933 for the year ended December 31, 1994.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund
reimburses the Dreyfus Service Corporation an amount not to exceed an annual
rate of .25 of 1% of the value of the Fund's average
DREYFUS INVESTORS GNMA FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
daily net assets for servicing shareholder accounts. The services provided
may include personal services relating to shareholder accounts, such as
answering shareholder inquiries regarding the Fund and providing reports and
other information, and services related to the maintenance of shareholder
accounts. During the year ended December 31, 1994, the Fund was charged an
aggregate of $107,507 pursuant to the Shareholder Services Plan.
(C) Prior to August 24, 1994, certain officers and trustees of the
Fund were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives an annual fee of $2,500 and an attendance fee of $250 per meeting.
NOTE 4--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales (including paydowns) of
investment securities, excluding short-term securities, during the year ended
December 31, 1994, amounted to $122,867,054 and $127,276,240, respectively.
At December 31, 1994, accumulated net unrealized depreciation on
investments was $918,787, consisting of $17,869 gross unrealized appreciation
and $936,656 gross unrealized depreciation.
At December 31, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS INVESTORS GNMA FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS INVESTORS GNMA FUND
We have audited the accompanying statement of assets and liabilities
of Dreyfus Investors GNMA Fund, including the statement of investments, as of
December 31, 1994, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in
the period then ended, and financial highlights for each of the years
indicated therein. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus Investors GNMA Fund at December 31, 1994, the results of
its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the indicated years, in conformity with generally accepted
accounting principles.
(logo signature)
New York, New York
February 10, 1995
<TABLE>
<CAPTION>
DREYFUS INVESTORS GNMA FUND
STATEMENT OF INVESTMENTS JUNE 30, 1995 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES-92.8% AMOUNT VALUE
---------------- ---------------
<S> <C> <C>
MORTGAGE-BACKED CERTIFICATES-76.1%
Government National Mortgage Association I:
7%, 11/15/2022-7/15/2024................................................ $ 5,944,963 $ 5,859,475
7 1/2%, 9/15/2021-6/15/2025............................................. 8,864,243 8,927,889
8%, 6/15/2017-11/15/2024................................................ 3,597,712 3,688,770
8 1/2%, 8/15/2018-2/15/2025............................................. 3,470,732 3,608,451
9%, 12/15/2009-11/15/2022............................................... 4,674,684 4,914,539
9 1/4%, 10/15/2023...................................................... 966,745 998,463
9 1/2%, 1/15/2017-12/15/2021............................................ 1,382,180 1,467,266
---------------
29,464,853
---------------
Government National Mortgage Association II:
9%, 3/20/2016-9/20/2021................................................. 287,976 299,944
9 1/2%, 9/20/2021-12/20/2021............................................ 490,024 515,290
---------------
815,234
---------------
Federal Home Loan Mortgage Corp.,
Real Estate Mortgage Investment Conduit:
Ser.77, Cl. F,
8 1/2%, 6/15/2017..................................................... 200,000 202,974
Ser.86, Cl. F,
9%, 10/15/2020........................................................ 300,000 331,170
Ser.128, Cl. H,
8 3/4%, 9/15/2019..................................................... 1,000,000 1,028,560
Ser.1030, Cl. E,
9%, 3/15/2019......................................................... 1,000,000 1,040,010
Ser.1092, Cl. J,
8 1/2%, 5/15/2020..................................................... 1,000,000 1,053,390
Ser.1395, Cl. C,
6%, 11/15/2018........................................................ 1,948,083 1,914,264
Ser.1455, Cl. K,
7%, 6/15/2020......................................................... 1,500,000 1,477,875
---------------
7,048,243
---------------
Federal National Mortgage Association,
Real Estate Mortgage Investment Conduit;
Cl. G27-E,
8 1/2%, 2/25/2018....................................................... 767,749 773,185
---------------
TOTAL MORTGAGE-BACKED CERTIFICATES.......................................... 38,101,515
===============
U.S. TREASURY BONDS-11.2%
8 3/4%, 5/15/2020....................................................... 4,500,000 5,585,625
===============
DREYFUS INVESTORS GNMA FUND
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1995 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
------------------------------
U.S. TREASURY NOTES-5.5%
4 5/8%, 2/15/1996....................................................... $ 600,000 $ 595,969
7 1/2%, 2/15/2005....................................................... 2,000,000 2,178,438
---------------
TOTAL U.S. TREASURY NOTES................................................... 2,774,407
===============
TOTAL BONDS AND NOTES
(cost $45,635,826)...................................................... $46,461,547
===============
SHORT-TERM INVESTMENTS-8.6%
Repurchase Agreement;
Lanston (Aubrey G.) & Co., Inc., 6.10%
Dated 6/30/1995, Due 7/3/1995 in the amount of $4,302,186 (fully
collateralized
by $4,470,000 U.S. Treasury Bills, due 12/14/1995, value $4,358,079)
(cost $4,300,000)....................................................... $ 4,300,000 $ 4,300,000
===============
TOTAL INVESTMENTS
(cost $49,935,826)...................................................... 101.4% $50,761,547
-------------- ---------------
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (1.4%) $ (682,582)
============== ===============
NET ASSETS.................................................................. 100.0% $50,078,965
============== ===============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS INVESTORS GNMA FUND
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value-Note 1(b)
(cost $49,935,826)-see statement...................................... $50,761,547
Interest receivable..................................................... 371,044
Receivable for shares of Beneficial Interest subscribed................. 71,140
Prepaid expenses........................................................ 22,212
---------------
51,225,943
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 56,253
Due to Custodian........................................................ 57,951
Payable for investment securities purchased............................. 948,670
Payable for shares of Beneficial Interest redeemed...................... 16,471
Accrued expenses........................................................ 67,633 1,146,978
-------------- ---------------
NET ASSETS.................................................................. $50,078,965
===============
REPRESENTED BY:
Paid-in capital......................................................... $50,141,979
Accumulated net realized (loss) on investments.......................... (888,735)
Accumulated net unrealized appreciation on investments-Note 4........... 825,721
---------------
NET ASSETS at value applicable to 3,330,690 outstanding shares of
Beneficial Interest, equivalent to $15.04 per share
(unlimited number of $.001 par value shares authorized)................. $50,078,965
===============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS INVESTORS GNMA FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $1,785,371
EXPENSES:
Management fee-Note 3(a).............................................. $ 138,833
Shareholder servicing costs-Note 3(b)................................. 87,274
Registration fees..................................................... 20,108
Trustees' fees and expenses-Note 3(c)................................. 16,664
Auditing fees......................................................... 15,675
Custodian fees........................................................ 13,012
Legal fees............................................................ 6,055
Prospectus and shareholders' reports.................................. 5,263
Miscellaneous......................................................... 4,055
----------------
306,939
Less-expense reimbursement from Manager due to
undertakings-Note 3(a)............................................ 229,087
----------------
TOTAL EXPENSES.................................................. 77,852
---------------
INVESTMENT INCOME-NET........................................... 1,707,519
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 4................................. $1,078,524
Net unrealized appreciation on investments.............................. 1,744,508
----------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 2,823,032
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $4,530,551
===============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS INVESTORS GNMA FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 1995
1994 (UNAUDITED)
--------------- -------------------
<S> <C> <C>
OPERATIONS:
Investment income-net.................................................. $ 3,499,509 $ 1,707,519
Net realized gain (loss) on investments................................ (1,967,259) 1,078,524
Net unrealized appreciation (depreciation) on investments for the period (2,115,432) 1,744,508
--------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...... (583,182) 4,530,551
--------------- -------------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net.................................................. (3,490,557) (1,716,471)
--------------- -------------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold.......................................... 18,193,639 9,969,567
Dividends reinvested................................................... 2,338,409 1,131,092
Cost of shares redeemed................................................ (25,744,866) (8,772,973)
--------------- -------------------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (5,212,818) 2,327,686
--------------- -------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.......................... (9,286,557) 5,141,766
NET ASSETS:
Beginning of period.................................................... 54,223,756 44,937,199
--------------- -------------------
End of period (including undistributed investment income-net;
$8,952 in 1994)...................................................... $ 44,937,199 $ 50,078,965
=============== ===================
SHARES SHARES
----------------- -------------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................ 1,237,307 678,930
Shares issued for dividends reinvested................................. 159,653 77,060
Shares redeemed........................................................ (1,744,696) (599,855)
----------------- -------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING........................ (347,736) 156,135
================= ===================
</TABLE>
See notes to financial statements.
DREYFUS INVESTORS GNMA FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Prospectus dated November 1, 1995.
See notes to financial statements.
DREYFUS INVESTORS GNMA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. Premier Mutual Fund
Services, Inc. (the "Distributor") acts as the distributor of the Fund's
shares, which are sold to the public without a sales charge. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc. The Dreyfus Corporation ("Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
(A) PORTFOLIO VALUATION: The Fund's investments (excluding short-term
investments) are valued each business day by an independent pricing service
("Service") approved by the Fund's Board of Trustees. Investments for which
quoted bid prices are readily available and are representative of the bid
side of the market in the judgment of the Service are valued at the mean
between the quoted bid prices (as obtained by the Service from dealers in
such securities) and asked prices (as calculated by the Service based upon
its evaluation of the market for such securities). Other investments, which
constitute a majority of the portfolio securities, are carried at fair value
as determined by the Service, based on methods which include consideration
of: yields or prices of securities of comparable quality, coupon, maturity
and type; indications as to values from dealers; and general market
conditions. Short-term investments are carried at amortized cost, which
approximates value.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income (including, where applicable, amortization of discount on short-term
investments) is recognized on the accrual basis.
The Fund may enter into repurchase agreements with financial
institutions, deemed to be creditworthy by the Fund's Manager, subject to the
seller's agreement to repurchase and the Fund's agreement to resell such
securities at a mutually agreed upon price. Securities purchased subject to
repurchase agreements are deposited with the Fund's custodian and, pursuant
to the terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. If the value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the Fund will require the seller to
deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults on its repurchase
obligation, the Fund maintains the right to sell the underlying securities at
market value and may claim any resulting loss against the seller.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Fund not to distribute such gain.
DREYFUS INVESTORS GNMA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interest of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $1,040,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1994. The
carryover does not include net realized securities losses from November 1,
1994 through December 31, 1994 which are treated, for Federal income tax
purposes, as arising in fiscal 1995. If not applied, the carryover expires in
fiscal 2002.
NOTE 2-BANK LINE OF CREDIT:
In accordance with an agreement with a bank, the Fund may borrow up to
the lesser of 25 percent of its net assets or $5,000,000 under a short-term
unsecured line of credit. Interest on borrowings is charged at rates which
are related to Federal Funds rates in effect from time to time.
There were no borrowings during the six months ended June 30, 1995.
NOTE 3-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, interest on borrowings, brokerage and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund. The most stringent state expense limitation
applicable to the Fund presently requires reimbursement of expenses in any
full fiscal year that such expenses (exclusive of certain expenses as
described above) exceed 2 1/2% of the first $30 million, 2% of the next $70
million and 1 1/2% of the excess over $100 million of the average value of
the Fund's net assets in accordance with California "blue sky" regulations.
However, the Manager had undertaken from January 1, 1995 through March 31,
1995, to waive receipt of the management fee payable to it by the Fund, and
thereafter through July 31, 1995 to reduce the management fee paid by, or
reimburse such excess expense of the Fund, to the extent that the Fund's
aggregate expenses (excluding certain expenses as described above) exceeded
specified annual percentages of the Funds' average daily net assets. The
Manager has currently undertaken through December 31, 1995, or until such
time as the net assets of the Fund exceed $100 million, regardless of whether
they remain at that level, to reduce the management fee paid by, or reimburse
such excess expenses of the Fund, to the extent that the Fund's aggregate
annual expenses (excluding certain expenses as described above) exceed an
annual rate of .65 of 1% of the average daily value of the Fund's net assets.
In addition, during the six months ended June 30, 1995, the Manager
voluntarily assumed all or part of the remaining expenses of the Fund. The
expense reimbursement, pursuant to the undertakings, amounted to $229,087 for
the six months ended June 30, 1995.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
the Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, an
amount not to exceed an annual rate of .25
DREYFUS INVESTORS GNMA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
of 1% of the value of the Fund's average daily net assets for servicing
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts. During the six months
ended June 30, 1995, the Fund was charged an aggregate of $64,000 pursuant to
the Shareholder Services Plan.
(C) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales (including paydowns) of
investment securities, excluding short-term securities, during the six months
ended June 30, 1995, amounted to $79,944,508 and $77,867,307, respectively.
At June 30, 1995, accumulated net unrealized appreciation on investments
was $825,721, consisting of $904,678 gross unrealized appreciation and
$78,957 gross unrealized depreciation.
At June 30, 1995, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
DREYFUS INVESTORS GNMA FUND
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information for the period from August
5, 1987 (commencement of operations) to December 31, 1987
and for each of the seven years in the period ended December
31, 1994 and for the six month period ended June 30, 1995
(Unaudited).
Included in Part B of the Registration Statement:
Statement of Investments--December 31, 1994
Statement of Assets and Liabilities--December 31, 1994
Statement of Operations--year ended December 31, 1994
Statement of Changes in Net Assets--for each of the
years ended December 31, 1993 and 1994
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors,
dated February 10, 1995
Statement of Investments--June 30, 1995 (Unaudited)
Statement of Assets and Liabilities--June 30, 1995
(Unaudited)
Statement of Operations--June 30, 1995 (Unaudited)
Statement of Changes in Net Assets--for the six month
period ended June 30, 1995 (Unaudited)
Notes to Financial Statements
All schedules and other financial statement information, for which
provision is made in the applicable accounting regulations of the
Securities and Exchange Commission, are either omitted because they are not
required under the related instructions, they are inapplicable, or the
required information is presented in the financial statements or notes
thereto which are included in Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1)(a) Registrant's Agreement and Declaration of Trust is
incorporated by reference to Exhibit (1) of Post-Effective
Amendment No. 14 to the Registration Statement on Form N-1A,
filed on November 1, 1993.
(1)(b) Articles of Amendment.
(2) Registrant's By-Laws, as amended, are incorporated by
reference to Exhibit (2) of Post-Effective Amendment No. 14
to the Registration Statement on Form N-1A, filed on
November 1, 1993.
(5) Management Agreement is incorporated by reference to Exhibit
(5) of Post-Effective Amendment No. 17 to the Registration
Statement on Form N-1A, filed on February 24, 1995.
(6) Distribution Agreement is incorporated by reference to
Exhibit (6) of Post-Effective Amendment No. 17 to the
Registration Statement on Form N-1A, filed on February 24,
1995.
(8) Amended and Restated Custody Agreement is incorporated by
reference to Exhibit (8) of Post-Effective Amendment No. 14
to the Registration Statement on Form N-1A, filed on
November 1, 1993.
(9) Shareholder Services Plan is incorporated by reference to
Exhibit (9) of Post-Effective Amendment No. 17 to the
Registration Statement on Form N-1A, filed on February 24,
1995.
(10) Opinion and consent of Registrant's counsel is incorporated
by reference to Exhibit (10) of Post-Effective Amendment No.
15 to the Registration Statement on Form N-1A, filed on
December 30, 1993.
(11) Consent of Independent Auditors.
(16) Schedules of Computation of Performance Data is incorporated
by reference to Exhibit (10) of Post-Effective Amendment No.
15 to the Registration Statement on Form N-1A, filed on
December 30, 1993.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney of the Trustees and Officers are
incorporated by reference to Other Exhibits (a) of
Post-Effective Amendment No. 17 to the Registration
Statement on Form N-1A, filed on February 24, 1995.
(b) Certificate of Secretary is incorporated by reference
to Other Exhibits (b) of Post-Effect Live Amendment No.
17 to the Registration Statement on Form N-1A, filed on
February 24, 1995.
Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 26. Number of Holders of Securities.
_______ ________________________________
(1) (2)
Number of Record
Title of Class Holders as of August 15, 1995
______________ ______________________________
Beneficial Interest 2,479
(Par value $.001)
Item 27. Indemnification
_______ _______________
The Statement as to the general effect of any contract,
arrangements or statute under which a director, officer,
underwriter or affiliated person of the Registrant is insured or
indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any
director, officer, affiliated person or underwriter for their own
protection, is incorporated by reference to Item 4 of Part II of
Pre-Effective Amendment No. 14 to the Registration Statement on
Form N-1A, filed on November 1, 1993.
The Distribution Agreement is incorporated by Reference to
Exhibit (6) of Post-Effective Amendment No. 17 to the
Registration Statement on Form N-1A, filed on February 24, 1995.
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business consists
primarily of providing investment management services as the
investment adviser and manager for sponsored investment companies
registered under the Investment Company Act of 1940 and as an
investment adviser to institutional and individual accounts.
Dreyfus also serves as sub-investment adviser to and/or
administrator of other investment companies. Dreyfus Service
Corporation, a wholly-owned subsidiary of Dreyfus, serves
primarily as a registered broker-dealer of shares of investment
companies sponsored by Dreyfus and of other investment companies
for which Dreyfus acts as investment adviser, sub-investment
adviser or administrator. Dreyfus Management, Inc., another
wholly-owned subsidiary, provides investment management services
to various pension plans, institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.**
LAWRENCE M. GREENE Director:
Director Dreyfus America Fund
JULIAN M. SMERLING None
Director
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
DAVID B. TRUMAN Former Director:
(cont'd) Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board:
Chairman of the Board and Dreyfus Acquisition Corporation*;
Chief Executive Officer The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
Avnet, Inc.**;
Dreyfus America Fund++++;
The Dreyfus Fund International
Limited+++++;
World Balanced Fund+++;
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
Trustee:
Corporate Property Investors
New York, New York;
W. KEITH SMITH Chairman and Chief Executive Officer:
Vice Chairman of the Board The Boston Company
One Boston Place
Boston, Massachusetts 02108
Vice Chairman of the Board:
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
ROBERT E. RILEY Director:
President, Chief Dreyfus Service Corporation*;
Operating Officer, Former Executive Vice President:
and a Director Prudential Investment Corporation
751 Board Street
Newark, New Jersey 07102
STEPHEN E. CANTER Former Chairman and Chief Executive Officer:
Vice Chairman and Kleinwort Benson Investment Management
Chief Investment Officer, Americas Inc.*;
and a Director
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Director:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++'
Dreyfus Service Corporation*;
President:
The Boston Company
One Boston Place
Boston, Massachusetts 02108;
Laurel Capital Advisors
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Group Holdings, Inc.
Executive Vice President
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258;
Boston Safe Deposit & Trust
One Boston Place
Boston, Massachusetts 02108
PHILIP L. TOIA Chairman of the Board and Trust Investment
Vice Chairman-Operations Officer:
and Administration The Dreyfus Trust Company+++;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
Director:
The Dreyfus Security Savings Bank F.S.B.+;
Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
President and Director:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Partnership Management, Inc.+;
Dreyfus Service Organization*;
The Truepenny Corporation*;
PHILIP L. TOIA Formerly, Senior Vice President:
(cont'd) The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
BARBARA E. CASEY President:
Vice President- Dreyfus Retirement Services Division;
Dreyfus Retirement Executive Vice President:
Services Boston Safe Deposit & Trust Co.
One Boston Place
Boston, Massachusetts 02108;
DIANE M. COFFEY None
Vice President-
Corporate Communications
ELIE M. GENADRY President:
Vice President- Institutional Services Division of Dreyfus
Institutional Sales Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.*;
Vice President:
The Dreyfus Trust Company++;
HENRY D. GOTTMANN Executive Vice President:
Vice President-Retail Dreyfus Service Corporation*;
Sales and Service Vice President:
Dreyfus Precious Metals*;
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and General Dreyfus Precious Metals, Inc.*;
Counsel Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director:
The Dreyfus Trust Company++;
DANIEL C. MACLEAN Secretary:
(cont'd) Seven Six Seven Agency, Inc.*;
JEFFREY N. NACHMAN None
Vice President-Mutual Fund
Accounting
WILLIAM F. GLAVIN, JR. Senior Vice President:
Vice President-Corporate The Boston Company Advisors, Inc.
Development 53 State Street
Exchange Place
Boston, Massachusetts 02109
KATHERINE C. WICKHAM Formerly, Assistant Commissioner:
Vice President- Department of Parks and Recreation of the
Human Resources City of New York
830 Fifth Avenue
New York, New York 10022
MARK N. JACOBS Vice President, Secretary and Director:
Vice President-Fund Lion Management, Inc.*;
Legal and Compliance, Secretary:
and Secretary The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation
Services One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Consumer Credit Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals*
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
ELVIRA OSLAPAS Assistant Secretary:
Assistant Secretary Dreyfus Service Corporation*;
Dreyfus Management, Inc.*;
Dreyfus Acquisition Corporation, Inc.*;
The Truepenny Corporation+;
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Fund, Inc.
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) The Dreyfus Convertible Securities Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) Dreyfus Focus Funds, Inc.
22) The Dreyfus Fund Incorporated
23) Dreyfus Global Bond Fund, Inc.
24) Dreyfus Global Growth, L.P. (A Strategic Fund)
25) Dreyfus GNMA Fund, Inc.
26) Dreyfus Government Cash Management
27) Dreyfus Growth and Income Fund, Inc.
28) Dreyfus Growth Opportunity Fund, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Equity Fund, Inc.
34) Dreyfus Investors GNMA Fund
35) The Dreyfus/Laurel Funds, Inc.
36) The Dreyfus/Laurel Funds Trust
37) The Dreyfus/Laurel Tax-Free Municipal Funds
38) The Dreyfus/Laurel Investment Series
39) The Dreyfus Leverage Fund, Inc.
40) Dreyfus Life and Annuity Index Fund, Inc.
41) Dreyfus LifeTime Portfolios, Inc.
42) Dreyfus Liquid Assets, Inc.
43) Dreyfus Massachusetts Intermediate Municipal Bond Fund
44) Dreyfus Massachusetts Municipal Money Market Fund
45) Dreyfus Massachusetts Tax Exempt Bond Fund
46) Dreyfus Michigan Municipal Money Market Fund, Inc.
47) Dreyfus Money Market Instruments, Inc.
48) Dreyfus Municipal Bond Fund, Inc.
49) Dreyfus Municipal Cash Management Plus
50) Dreyfus Municipal Money Market Fund, Inc.
51) Dreyfus New Jersey Intermediate Municipal Bond Fund
52) Dreyfus New Jersey Municipal Bond Fund, Inc.
53) Dreyfus New Jersey Municipal Money Market Fund, Inc.
54) Dreyfus New Leaders Fund, Inc.
55) Dreyfus New York Insured Tax Exempt Bond Fund
56) Dreyfus New York Municipal Cash Management
57) Dreyfus New York Tax Exempt Bond Fund, Inc.
58) Dreyfus New York Tax Exempt Intermediate Bond Fund
59) Dreyfus New York Tax Exempt Money Market Fund
60) Dreyfus Ohio Municipal Money Market Fund, Inc.
61) Dreyfus 100% U.S. Treasury Intermediate Term Fund
62) Dreyfus 100% U.S. Treasury Long Term Fund
63) Dreyfus 100% U.S. Treasury Money Market Fund
64) Dreyfus 100% U.S. Treasury Short Term Fund
65) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
66) Dreyfus Pennsylvania Municipal Money Market Fund
67) Dreyfus Short-Intermediate Government Fund
68) Dreyfus Short-Intermediate Municipal Bond Fund
69) Dreyfus Short-Term Income Fund, Inc.
70) The Dreyfus Socially Responsible Growth Fund, Inc.
71) Dreyfus Strategic Growth, L.P.
72) Dreyfus Strategic Income
73) Dreyfus Strategic Investing
74) Dreyfus Tax Exempt Cash Management
75) The Dreyfus Third Century Fund, Inc.
76) Dreyfus Treasury Cash Management
77) Dreyfus Treasury Prime Cash Management
78) Dreyfus Variable Investment Fund
79) Dreyfus-Wilshire Target Funds, Inc.
80) Dreyfus Worldwide Dollar Money Market Fund, Inc.
81) General California Municipal Bond Fund, Inc.
82) General California Municipal Money Market Fund
83) General Government Securities Money Market Fund, Inc.
84) General Money Market Fund, Inc.
85) General Municipal Bond Fund, Inc.
86) General Municipal Money Market Fund, Inc.
87) General New York Municipal Bond Fund, Inc.
88) General New York Municipal Money Market Fund
89) Pacifica Funds Trust -
Pacific American Money Market Portfolio
Pacific American U.S. Treasury Portfolio
90) Peoples Index Fund, Inc.
91) Peoples S&P MidCap Index Fund, Inc.
92) Premier Insured Municipal Bond Fund
93) Premier California Municipal Bond Fund
94) Premier Global Investing, Inc.
95) Premier GNMA Fund
96) Premier Growth Fund, Inc.
97) Premier Municipal Bond Fund
98) Premier New York Municipal Bond Fund
99) Premier State Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Operating Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Assistant
and Chief Financial Officer Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Frederick C. Dey++ Senior Vice President Vice President
and Assistant
Treasurer
Eric B. Fischman++ Vice President and Associate Vice President
General Counsel and Assistant
Secretary
Lynn H. Johnson+ Vice President None
Ruth D. Leibert++ Assistant Vice President Assistant
Secretary
Paul Prescott+ Assistant Vice President None
Leslie M. Gaynor+ Assistant Treasurer None
Mary Nelson+ Assistant Treasurer None
John J. Pyburn++ Assistant Treasurer Assistant
Treasurer
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is One Exchange Place, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 30. Location of Accounts and Records
________________________________
1. The Shareholder Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a trustee or trustees when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares of common stock and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, and State of
New York on the 23rd day of August 1995.
DREYFUS INVESTORS GNMA FUND
BY: /s/ Marie E. Connolly*
_____________________________________
MARIE E. CONNOLLY, PRESIDENT AND TREASURER
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.
Signatures Title Date
___________________________ ______________________________ ___________
/s/ Marie E. Connolly* President and Treasurer (Principal 8/23/95
______________________________ Executive, Financial and Accounting
Marie E. Connolly Officer)
/s/ Joseph S. DiMartino* Chairman of the Board 8/23/95
______________________________
Joseph S. DiMartino
/s/ Gordon J. Davis* Trustee 8/23/95
______________________________
Gordon J. Davis
/s/ David P. Feldman* Trustee 8/23/95
______________________________
David P. Feldman
/s/ Lynn Martin* Trustee 8/23/95
______________________________
Lynn Martin
/s/ Eugene McCarthy* Trustee 8/23/95
______________________________
Eugene McCarthy
/s/ Daniel Rose* Trustee 8/23/95
______________________________
Daniel Rose
/s/ Sander Vanocur* Trustee 8/23/95
______________________________
Sander Vanocur
/s/ Anne Wexler* Trustee 8/23/95
______________________________
Anne Wexler
/s/ Rex Wilder* Trustee 8/23/95
______________________________
Rex Wilder
*BY: /s/ Eric B. Fischman
_____________________
Eric B. Fischman,
Attorney-in-Fact
DREYFUS INVESTORS GNMA FUND
Post-Effective Amendment No. 19 to
Registration Statement on Form N-1A under
the Securities Act of 1933 and
the Investment Company Act of 1940
___________________
EXHIBITS
___________________
INDEX OF EXHIBITS
_________________
(1) Articles of Amendment.
(11) Consent of Independent Auditors.
DREYFUS INVESTORS GNMA FUND
ARTICLES OF AMENDMENT
Dreyfus Investors GNMA Fund, a business trust
formed by an Agreement and Declaration of Trust dated May
14, 1993 pursuant to the laws of The Commonwealth of
Massachusetts (the "Trust"), hereby certifies to the
Secretary of State of The Commonwealth of Massachusetts
that:
FIRST: The Agreement and Declaration of Trust of
the Trust is hereby amended by striking out Article I,
Section 1 and inserting in lieu thereof the following:
"Section 1. Name. This Trust shall be
known as 'Dreyfus BASIC GNMA Fund.'"
SECOND: The amendment to the Agreement and
Declaration of Trust herein made was duly approved at a
meeting of the Trustees of the Trust on July 17, 1995
pursuant to Article IX, Section 8 of the Agreement and
Declaration of Trust.
IN WITNESS WHEREOF, Dreyfus Investors GNMA Fund
has caused these Articles to be filed in its name and on
its behalf by its Trustees.
DREYFUS INVESTORS GNMA FUND
By:/s/Gordon J. Davis
Gordon J. Davis, Trustee
By:/s/Joseph S. DiMartino
Joseph S. DiMartino, Trustee
By:/s/David P. Feldman
David P. Feldman, Trustee
By:/s/Lynn Martin
Lynn Martin, Trustee
By:/s/Eugene McCarthy
Eugene McCarthy, Trustee
By:/s/Daniel Rose
Daniel Rose, Trustee
By:/s/Sander Vanocur
Sander Vanocur, Trustee
By:/s/Anne Wexler
Anne Wexler, Trustee
By:/s/Rex Wilder
Rex Wilder, Trustee
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this 17th day of July 1995, before me
personally appeared the above-name Trustees of the Trust,
to me known, and known to me to be the persons described in
and who executed the foregoing instrument, and who duly
acknowledged to me that such Trustee had executed the same.
Notary Public
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors" and to the use of our report
dated February 10, 1995, in this Registration Statement (Form N-1A 33-12660)
of Dreyfus Investors GNMA Fund.
ERNST & YOUNG LLP
New York, New York
August 22, 1995
<TABLE> <S> <C>
<ARTICLE> 6
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<NAME> DREYFUS INVESTORS GNMA FUND
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<DISTRIBUTIONS-OF-INCOME> 1716
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<NUMBER-OF-SHARES-REDEEMED> (600)
<SHARES-REINVESTED> 77
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<ACCUMULATED-GAINS-PRIOR> (1967)
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-EXPENSE> 307
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<PER-SHARE-NAV-BEGIN> 14.16
<PER-SHARE-NII> .54
<PER-SHARE-GAIN-APPREC> .88
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<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 15.04
<EXPENSE-RATIO> .003
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