DREYFUS BASIC GNMA FUND
(FORMERLY DREYFUS INVESTORS GNMA FUND)
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Dreyfus BASIC GNMA
Fund. As you know, the Dreyfus BASIC GNMA Fund changed its name from the
Dreyfus Investors GNMA Fund on November 1, 1995.
For its annual reporting period ended December 31, 1995, your Fund
produced a total return of 16.62%.* Income dividends of approximately $1.024
per share were paid, which is equivalent to an annualized distribution rate
per share of 6.66%.**
THE ECONOMY
Additional evidence that economic activity remained sluggish and that
inflation continued to be under control moved the Federal Reserve Board to
further ease the Federal Funds rate in December. (The Federal Funds rate is
the rate at which the nation's banks borrow money from each other, and all
other short-term rates are based on it.) This was the second reduction for
this important short-term rate in 1995, the first occurring in July. The
latest 25-basis-point reduction in December put the rate at 5.50%. Major
incentives for this additional reduction were the inflation report in
November _ the increase in the Consumer Price Index was flat for the first
time in 41\2 years _ and the generally slow rate of economic growth. As it
did in July, the Federal Reserve left unchanged the discount rate _ the rate
at which the Federal Reserve lends to member banks. The discount rate
remained at 5.25% throughout 1995.
Signs of an economic slowdown increased during the latter half of the
year. Weakening retail sales and very modest industrial production lent
credence to fears about the possibility of recession. Consumer spending was
inhibited last year by the slow rate of new job creation, sluggish growth in
wages and salaries, and the continued trend of corporate cost-related
layoffs. The lethargic pace of consumer spending last year culminated in one
of the worst holiday sales periods since the business slump in 1990-1991,
despite steep price markdowns by retailers.
Industrial production climbed modestly during the year. By November, the
nation's factories operated at only 83.1% of capacity, down for the third
consecutive month. This was a reflection of weakening demand and further
evidence of the diminishing pressure to raise prices. Furthermore,
inventories built up by year-end, another sign of slackening demand.
The political stalemate in Washington over the balanced budget adds
additional uncertainty to the economy; ultimately an accord will be reached
and fiscal policy will likely be a restraining force on the economy. As we go
forward without a budget agreement, reductions in annually appropriated
spending will tend to retard the economy. With an agreement, the combination
of cuts in appropriations and other spending reductions should have the same
effect.
There are strong indications that inflation is under control. Until
mid-year 1995, fear of inflation was the overriding concern of the Federal
Reserve. Now the focus seems to have shifted to actions designed to avoid
recession. In an election year, few things are less desirable for political
incumbents than recession.
THE PORTFOLIO
For the year ended December 31, 1995, the total return for your Fund was
16.62%. This performance lagged the 17.05% return for the Lehman Brothers
GNMA Index.*** Dividends paid from net investment income for the 12-month
period were approximately $1.024 per share. The annualized distribution rate
per share for the annual period was 6.66%, based on the closing net asset
value on December 31, 1995.
With interest rates declining over the course of last year, we have made
some specific adjustments to the portfolio. These adjustments were made in an
attempt to curtail the negative impact that faster prepayments would normally
have on mortgages at this point in the interest rate cycle. The Fund's
portfolio has been restructured so that nearly all of the mortgage securities
held are seasoned. This means that these mortgage securities were issued at
least two years ago and have been through at least one refinancing cycle and
will probably withstand the negative effects of another. We believe these
seasoned securities should prepay more slowly than recently issued mortgage
securities and should provide the shareholder with a better total return.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we greatly appreciate your continued confidence in the Fund
and in The Dreyfus Corporation.
Very truly yours,
[Garitt A. Kono signature logo]
Garitt A. Kono
Portfolio Manager
January 15, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
**Annualized distribution rate per share is based upon dividends per share
paid from net investment income during the period, divided by the net asset
value per share at the end of the period.
***SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Unlike the Fund, the Lehman
Brothers GNMA Index is an unmanaged total return performance benchmark for
the GNMA market, consisting of 15- and 30-year fixed-rate securities backed
by mortgage pools of the Government National Mortgage Association.
DREYFUS BASIC GNMA FUND DECEMBER 31, 1995
(FORMERLY DREYFUS INVESTORS GNMA FUND)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS BASIC GNMA
FUND AND
THE LEHMAN BROTHERS GNMA INDEX
[Exhibit A
Dollars
$21,970
Lehman Brothers
GNMA Index*
$20,556
Dreyfus BASIC
GNMA Fund
*Source: Lehman Brothers]
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
<S> <C> <C>
ONE YEAR ENDED FIVE YEARS ENDED FROM INCEPTION (8/5/87)
DECEMBER 31, 1995 DECEMBER 31, 1995 TO DECEMBER 31, 1995
___________ ___________ ______________
16.62% 8.75% 8.95%
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Dreyfus BASIC GNMA Fund
on 8/5/87 (Inception Date) to a $10,000 investment made in the Lehman
Brothers GNMA Index on that date. For comparative purposes, the value of the
Index on 7/31/87 is used as the beginning value on 8/5/87. All dividends and
capital gain distributions are reinvested.
The Fund invests primarily in Ginnie Maes and its performance, shown in the
line graph, takes into account all applicable fees and expenses. Unlike the
Fund, the Lehman Brothers GNMA Index is an unmanaged total return performance
benchmark for the GNMA market, consisting of 15 and 30-year fixed-rate GNMA
securities backed by mortgage pools of the Government National Mortgage
Association. All issues have at least one year to maturity and an outstanding
par value of at least $100 million. The Index does not take into account
charges, fees and other expenses. Further information relating to Fund
performance, including expense reimbursements, if applicable, is contained in
the Financial Highlights section of the Prospectus and elsewhere in this
report.
<TABLE>
<CAPTION>
DREYFUS BASIC GNMA FUND
(FORMERLY DREYFUS INVESTORS GNMA FUND)
STATEMENT OF INVESTMENTS DECEMBER 31, 1995
PRINCIPAL
BONDS AND NOTES-98.6% AMOUNT VALUE
_______ _______
<S> <C> <C>
MORTGAGE-BACKED SECURITIES-86.0%
Government National Mortgage Association I:
7%, 6/15/2008-12/15/2023................................................ $ 14,588,827 $ 14,802,140
7 1/2% (a).............................................................. 4,000,000 4,132,480
7 1/2%, 9/15/2021-6/15/2025............................................. 8,556,221 8,814,340
8%, 6/15/2016-11/15/2024................................................ 3,454,205 3,604,466
8 1/2%, 8/15/2018-2/15/2025............................................. 3,199,518 3,370,773
9%, 5/15/2016-11/15/2022................................................ 2,617,465 2,792,154
9 1/2%, 1/15/2017-12/15/2021............................................ 1,280,279 1,381,678
______
38,898,031
______
Government National Mortgage Association II:
9%, 3/20/2016-9/20/2021................................................. 243,425 257,722
9 1/2%, 9/20/2021-12/20/2021............................................ 434,743 464,934
______
722,656
______
Government National Mortgage Association I:
Project Loan;
9 1/4%, 10/15/2023...................................................... 963,301 1,023,199
______
Federal Home Loan Mortgage Corp.,
Real Estate Mortgage Investment Conduit:
Ser.77, Cl. F,
8 1/2%, 6/15/2017..................................................... 200,000 202,068
Ser.86, Cl. F,
9%, 10/15/2020........................................................ 300,000 340,656
Ser.128, Cl. H,
8 3/4%, 9/15/2019..................................................... 805,806 832,542
Ser.1030, Cl. E,
9%, 3/15/2019......................................................... 979,685 1,018,804
Ser.1092, Cl. J,
8 1/2%, 5/15/2020..................................................... 1,000,000 1,070,900
Ser.1395, Cl. C,
6%, 11/15/2018........................................................ 1,658,080 1,649,740
Ser.1455, Cl. K,
7%, 6/15/2020......................................................... 1,500,000 1,498,905
______
6,613,615
______
Federal National Mortgage Association,
Real Estate Mortgage Investment Conduit;
Cl. G27-E,
8 1/2%, 2/25/2018....................................................... 562,165 568,653
______
TOTAL MORTGAGE-BACKED SECURITIES............................................ 47,826,154
======
DREYFUS BASIC GNMA FUND
(FORMERLY DREYFUS INVESTORS GNMA FUND)
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1995
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
_______ _______
U.S. TREASURY NOTES-12.6%
4 5/8%, 2/15/1996....................................................... $ 600,000 $ 599,672
6 1/2%, 8/15/2005....................................................... 6,000,000 6,398,436
______
TOTAL U.S. TREASURY NOTES................................................... 6,998,108
======
TOTAL BONDS AND NOTES
(cost $53,180,388)...................................................... $ 54,824,262
======
SHORT-TERM INVESTMENT-8.4%
REPURCHASE AGREEMENT;
Lehman Government Securities Inc., 5.70%
Dated 12/29/1995, Due 1/2/1996 in the amount of $4,702,977 (fully
collateralized
by $4,700,000 U.S. Treasury Notes, 7 5/8%, due 4/30/1996, value
$4,800,698) (b)
(cost $4,700,000)....................................................... $ 4,700,000 $ 4,700,000
======
TOTAL INVESTMENTS
(cost $57,880,388)...................................................... 107.0% $ 59,524,262
==== ======
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (7.0%) $ (3,909,687)
==== ======
NET ASSETS ................................................................ 100.0% $ 55,614,575
==== ======
NOTES TO STATEMENT OF INVESTMENTS:
(a) Purchased on a forward commitment basis.
(b) Held by the custodian in a segregated account as collateral for
securities purchased on a forward commitment basis.
See notes to financial statements.
DREYFUS BASIC GNMA FUND
(FORMERLY DREYFUS INVESTORS GNMA FUND)
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1995
ASSETS:
Investments in securities, at value-Note 1(a)
(cost $57,880,388)-see statement...................................... $59,524,262
Cash.................................................................... 65,573
Interest receivable..................................................... 453,632
Paydowns receivable..................................................... 35,110
Receivable for shares of Beneficial Interest subscribed................. 7,124
Prepaid expenses........................................................ 9,257
______
60,094,958
LIABILITIES:
Due to The Dreyfus Corporation and subsidiaries......................... $ 39,173
Payable for investment securities purchased............................. 4,129,271
Payable for shares of Beneficial Interest redeemed...................... 235,756
Accrued expenses........................................................ 76,183 4,480,383
_____ ______
NET ASSETS ................................................................ $55,614,575
======
REPRESENTED BY:
Paid-in capital......................................................... $54,143,816
Accumulated undistributed investment income-net......................... 19,379
Accumulated net realized (loss) on investments.......................... (192,494)
Accumulated net unrealized appreciation on investments-Note 3........... 1,643,874
______
NET ASSETS at value applicable to 3,606,225 shares outstanding
(unlimited number of $.001 par value shares of
Beneficial Interest authorized)......................................... $55,614,575
======
NET ASSET VALUE, offering and redemption price per share
($55,614,575 / 3,606,225 shares)........................................ $15.42
======
See notes to financial statements.
DREYFUS BASIC GNMA FUND
(FORMERLY DREYFUS INVESTORS GNMA FUND)
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1995
INVESTMENT INCOME:
INTEREST INCOME......................................................... $3,672,726
EXPENSES:
Management fee-Note 2(a).............................................. $ 299,419
Shareholder servicing costs-Note 2(b)................................. 178,512
Registration fees..................................................... 37,216
Trustees' fees and expenses-Note 2(c)................................. 37,079
Auditing fees......................................................... 25,439
Custodian fees........................................................ 23,686
Legal fees............................................................ 20,762
Prospectus and shareholders' reports.................................. 8,261
Miscellaneous......................................................... 7,670
_____
TOTAL EXPENSES.................................................... 638,044
Less-expense reimbursement from Manager due to
undertakings-Note 2(a)............................................ 390,999
_____
NET EXPENSES...................................................... 247,045
_____
INVESTMENT INCOME-NET............................................. 3,425,681
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $1,605,147
Net unrealized appreciation on investments.............................. 2,562,661
_____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 4,167,808
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $7,593,489
======
See notes to financial statements.
DREYFUS BASIC GNMA FUND
(FORMERLY DREYFUS INVESTORS GNMA FUND)
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
________________________________
1994 1995
______ ______
OPERATIONS:
Investment income-net................................................... $ 3,499,509 $ 3,425,681
Net realized gain (loss) on investments................................. (1,967,259) 1,605,147
Net unrealized appreciation (depreciation) on investments for the year.. (2,115,432) 2,562,661
______ ______
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... (583,182) 7,593,489
______ ______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................... (3,490,557) (3,415,254)
______ ______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold........................................... 18,193,639 22,533,965
Dividends reinvested.................................................... 2,338,409 2,239,783
Cost of shares redeemed................................................. (25,744,866) (18,274,607)
______ ______
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS............................................. (5,212,818) 6,499,141
______ ______
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... (9,286,557) 10,677,376
NET ASSETS:
Beginning of year....................................................... 54,223,756 44,937,199
______ ______
End of year (including undistributed investment income-net:
$8,952 in 1994 and $19,379 in 1995)................................... $ 44,937,199 $ 55,614,575
====== ======
SHARES SHARES
______ ______
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 1,237,307 1,509,390
Shares issued for dividends reinvested.................................. 159,653 150,171
Shares redeemed......................................................... (1,744,696) (1,227,891)
______ ______
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... (347,736) 431,670
====== ======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS BASIC GNMA FUND
(FORMERLY DREYFUS INVESTORS GNMA FUND)
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each year indicated. This
information has been derived from the Fund's financial statements.
YEAR ENDED DECEMBER 31,
____________________________________________________________
PER SHARE DATA: 1991 1992 1993 1994 1995
___ ___ ___ ___ ___
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........... $14.55 $15.34 $15.20 $15.39 $14.16
___ ___ ___ ___ ___
INVESTMENT OPERATIONS:
Investment income-net........................ 1.06 1.16 1.11 1.08 1.03
Net realized and unrealized gain (loss)
on investments............................. .79 (.14) .19 (1.23) 1.25
___ ___ ___ ___ ___
TOTAL FROM INVESTMENT OPERATIONS........... 1.85 1.02 1.30 (.15) 2.28
___ ___ ___ ___ ___
DISTRIBUTIONS;
Dividends from investment income-net......... (1.06) (1.16) (1.11) (1.08) (1.02)
___ ___ ___ ___ ___
Net asset value, end of year................. $15.34 $15.20 $15.39 $14.16 $15.42
___ ___ ___ ___ ___
___ ___ ___ ___ ___
TOTAL INVESTMENT RETURN.......................... 13.28% 7.02% 8.75% (.99%) 16.62%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .- .- .- .06% .50%
Ratio of net investment income to average
net assets................................. 7.78% 7.70% 7.15% 7.34% 6.86%
Decrease reflected in above expense ratios due to
undertakings by the Manager (limited to the
expense limitation provision of the management
agreement)................................. 1.50% 1.42% 1.28% 1.43% .78%
Portfolio Turnover Rate...................... 40.28% 30.99% 34.02% 290.20% 254.36%
Net Assets, end of year (000's Omitted)...... $25,036 $45,280 $54,224 $44,937 $55,615
See notes to financial statements.
</TABLE>
DREYFUS BASIC GNMA FUND
(FORMERLY 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. 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.
On July 17, 1995, the Fund's Trustees approved a change to the Fund's
name, effective November 1, 1995, from "Dreyfus Investors GNMA Fund" to
"Dreyfus BASIC 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 are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to
DREYFUS BASIC GNMA FUND
(FORMERLY DREYFUS INVESTORS GNMA FUND)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best 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 $192,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1995. If not
applied, the carryover expires in fiscal 2002.
In connection with the adoption of Statement of Position 93-2
("Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies"),
the Fund has reclassified $169,618 from accumulated net realized loss on
investments to paid-in capital. Results of operations and net assets were not
effected by this reclassification.
NOTE 2-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 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, 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 (exclusive of certain expenses as described above) exceeded
specified annual percentages of the Funds' average daily net assets. The
Manager has currently undertaken through June 30, 1998 to reduce the
management fee paid by the Fund, to the extent that the Fund's aggregate
annual expenses (exclusive of certain expenses as described above) exceed an
annual rate of .65 of 1% of the average daily value of the Fund's net assets.
In addition, during the year ended December 31, 1995, the Manager voluntarily
assumed all or part of the remaining expenses of the Fund. The expense
reimbursement, pursuant to the undertakings, amounted to $390,999 for the
year ended December 31, 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.
DREYFUS BASIC GNMA FUND
(FORMERLY DREYFUS INVESTORS GNMA FUND)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Effective December 1, 1995, the Fund compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a
transfer agency agreement for providing personnel and facilities to perform
transfer agency services for the Fund. Such compensation amounted to $3,869
for the period from December 1, 1995 through December 31, 1995.
(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 of 1% of the value of the Fund's
average daily net assets for certain allocated expenses of providing personal
services and/or maintaining shareholder accounts. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
During the year ended December 31, 1995, the Fund was charged an aggregate of
$124,129 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 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales (including paydowns) of
investment securities, excluding short-term securities, during the year ended
December 31, 1995, amounted to $126,948,692 and $117,836,425, respectively.
At December 31, 1995, accumulated net unrealized appreciation on
investments was $1,643,874, consisting of $1,662,236 gross unrealized
appreciation and $18,362 gross unrealized depreciation.
At December 31, 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 BASIC GNMA FUND
(FORMERLY DREYFUS INVESTORS GNMA FUND)
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS BASIC GNMA FUND
We have audited the accompanying statement of assets and liabilities of
Dreyfus BASIC GNMA Fund, including the statement of investments, as of
December 31, 1995, 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, 1995 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 BASIC GNMA Fund at December 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the indicated years, in conformity with generally accepted accounting
principles.
[Ernst and Young LLP signature logo]
New York, New York
February 6, 1996
[Dreyfus logo]
DREYFUS BASIC
GNMA FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903
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in the Prospectus, which must
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BASIC
GNMA
Fund
Annual Report
December 31, 1995
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN DREYFUS BASIC GNMA FUND AND
THE LEHMAN BROTHERS GNMA INDEX
EXHIBIT A:
_______________________________________________________
| | | |
| | LEHMAN BROTHERS | |
| PERIOD | GNMA | DREYFUS BASIC |
| | INDEX * | GNMA FUND |
|-----------|------------------------|-----------------|
| 8/5/87 | 10,000 | 10,000 |
| 12/31/87 | 10,306 | 10,374 |
| 12/31/88 | 11,213 | 11,470 |
| 12/31/89 | 12,972 | 12,436 |
| 12/31/90 | 14,344 | 13,503 |
| 12/31/91 | 16,646 | 15,296 |
| 12/31/92 | 17,879 | 16,370 |
| 12/31/93 | 19,056 | 17,803 |
| 12/31/94 | 18,769 | 17,627 |
| 12/31/95 | 21,970 | 20,556 |
|------------------------------------------------------|
*Lehman Brothers
