File Nos. 33-12660;
811-5074
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. 23 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 23 [ X ]
(Check appropriate box or boxes.)
DREYFUS BASIC 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
Mark N. Jacobs, 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)
----
X on May 1, 1997 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
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, 1996 was filed on
February 27, 1997.
DREYFUS BASIC 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 5
5 Management of the Fund 7
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 16
7 Purchase of Securities Being Offered 8
8 Redemption or Repurchase 11
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-25
13 Investment Objectives and Policies B-2
14 Management of the Fund B-10
15 Control Persons and Principal B-14
Holders of Securities
16 Investment Advisory and Other B-14
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS BASIC 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-17, B-17 &
of Securities Being Offered B-22
20 Tax Status *
21 Underwriters B-17
22 Calculations of Performance Data B-24
23 Financial Statements B-27
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-9
30 Location of Accounts and Records C-12
31 Management Services C-12
32 Undertakings C-12
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
FOR USE BY BANKS ONLY
May 1, 1997
DREYFUS BASIC GNMA FUND
Supplement to Prospectus
Dated May 1, 1997
All mutual fund shares involve certain investment risks, including
the possible loss of principal.
080s050197BNK
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PROSPECTUS MAY 1, 1997
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. THE FUND'S
INVESTMENT OBJECTIVE 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.
YOU CAN PURCHASE OR REDEEM SHARES BY TELEPHONE USING DREYFUS
TELETRANSFER.
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 MAY 1, 1997, 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. THE SECURITIES AND EXCHANGE COMMISSION
MAINTAINS A WEB SITE (HTTP://WWW.SEC.GOV) THAT CONTAINS THE STATEMENT OF
ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND OTHER
INFORMATION REGARDING THE FUND. FOR A FREE COPY OF THE STATEMENT OF
ADDITIONAL INFORMATION, 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........................... 5
Management of the Fund............................ 7
How to Buy Shares................................. 8
Shareholder Services.............................. 10
How to Redeem Shares.............................. 11
Shareholder Services Plan......................... 14
Dividends, Distributions and Taxes................ 14
Performance Information........................... 15
General Information............................... 16
Appendix.......................................... 18
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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
<TABLE>
<CAPTION>
FEE TABLE
<S> <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 (after expense reimbursement)............................................. .08%
Other Expenses............................................................................ .57%
Total Fund Operating Expenses (after expense reimbursement)............................... .65%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
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>
- -------------------------------------------------------------------------------
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%.
- -------------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding
the costs and expenses borne by the Fund and investors, the payment of which
will reduce investors' annual return. The expenses noted above reflect an
undertaking by The Dreyfus Corporation, in effect through June 30, 1998, that
if certain Fund expenses, including the management fee, exceed .65% of the
value of the Fund's average net assets for the fiscal year, The Dreyfus
Corporation may waive its management fee or bear certain other expenses to
the extent of such excess expense. The expenses noted above, without
reimbursement, would have been: Management Fees _ .60% and Total Fund
Operating Expenses _ 1.17%. In addition, unlike certain other funds in the
Dreyfus Family of Funds, the Fund will charge your account, if your account
balance is less than $50,000, $2.00 for each redemption check you write; you
also will be charged $5.00 for each exchange made and for each redemption you
make by wire or pursuant to the Dreyfus TELETRANSFER Privilege, or if you
otherwise closeout your account. These charges will be paid to the Fund's
transfer agent and will reduce the transfer agency charges otherwise payable
by the Fund. See "Fund Exchanges" and "How to Redeem Shares." In addition,
certain securities dealers, banks or other financial institutions may charge
their clients direct fees for effecting transactions in Fund shares; such
fees are not reflected in the foregoing table. See "Management of the Fund,"
"How to Buy Shares" and "Shareholder Services Plan."
Page 3
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited 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>
Year Ended December 31,
-----------------------------------------------------------------------------------------
PER SHARE DATA: 1987(1) 1988 1989 1990 1991 1992 1993 1994 1995 1996
--------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $14.50 $14.44 $14.59 $14.55 $14.55 $15.34 $15.20 $15.39 $14.16 $15.42
--------- ------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income--net .59 1.34 1.22 1.20 1.06 1.16 1.11 1.08 1.03 .98
Net realized and unrealized gain
(loss) on investments (.06) .15 (.04) ._ .79 (.14) .19 (1.23) 1.25 (.27)
--------- ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM
INVESTMENT OPERATIONS .531 .49 1.18 1.20 1.85 1.02 1.30 (.15) 2.28 .71
--------- ------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Distributions from
investment income-net (.59) (1.34) (1.22) (1.20) (1.06) (1.16) (1.11) (1.08) (1.02) (.99)
--------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $14.44 $14.59 $14.55 $14.55 $15.34 $15.20 $15.39 $14.16 $15.42 $15.14
--------- ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN9 .16%(2) 10.56% 8.42% 8.58% 13.28% 7.02% 8.75% (.99%) 16.62% 4.81%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets ._ ._ ._ ._ ._ ._ ._ .06% .50% .65%
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% 6.86% 6.50%
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% .78% .52%
Portfolio Turnover Rate 110.33%(3) 1,025.99%(4) 287.61% ._40 .28% 30.99% 34.02% 290.20% 254.36% 332.96%
Net Assets, end of year
(000's omitted).. $1,820 $2,211 $278 $293 $25,036 $45,280 $54,224 $44,937 $55,615 57,665
*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.
Page 4
DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's investment objective is to provide you with as high a
level of current income as is consistent with the preservation of capital. It
cannot be changed without approval by the holders of a majority (as defined
in the Investment Company Act of 1940, as amended (the "1940 Act")) 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 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 collateralized by pools of mortgages. See "Appendix --
Investment Techniques -- Use of Derivatives" and "Certain Portfolio Securities
-- Mortgage-Related Securities."
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
will purchase Ginnie Maes and certain other mortgage-related securities on a
forward commitment basis.
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 is not guaranteed.
The Fund's annual portfolio turnover rate is not expected to exceed
500%. Higher portfolio turnover rates usually generate additional brokerage
commissions and expenses (which, however, the Fund typically does not incur
when it purchases portfolio securities) and the short-term gains realized
from these transactions are taxable to shareholders as ordinary income. In
addition, the Fund may engage in various investment techniques, such as
leveraging, short-selling, options and futures transactions, forward roll
transactions and lending portfolio securities. For a discussion of the
investment techniques and their related risks, see "Investment Considerations
and Risks" and "Appendix -- Investment Techniques" below and "Investment
Objective and Management Policies -- Management Policies" in the Statement of
Additional Information.
Page 5
INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- The Fund's net asset value per share should be expected to
fluctuate. Investors should consider the Fund as a supplement to an overall
investment program and should invest only if they are willing to undertake
the risks involved. See "Investment Objective and Management Policies" in the
Statement of Additional Information for further discussion of certain risks.
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.
MORTGAGE-RELATED SECURITIES -- Although certain mortgage-related securities
are guaranteed by a third party or otherwise similarly secured, the market
value of the security, which may fluctuate, is not secured. If a
mortgage-related security is purchased at a premium, all or part of the
premium may be lost if there is a decline in the market value of the
security, whether resulting from changes in interest rates or prepayments on
the underlying mortgage collateral. As with other interest-bearing
securities, the prices of certain mortgage-related securities are inversely
affected by changes in interest rates. However, although the value of a
mortgage-related security may decline when interest rates rise, the converse
is not necessarily true, since in periods of declining interest rates the
mortgages underlying the security are more likely to be prepaid. For this and
other reasons, a mortgage-related security's stated maturity may be shortened
by unscheduled prepayments on the underlying mortgages, and, therefore, it is
not possible to predict accurately the security's return to the Fund.
Moreover, with respect to stripped mortgage-backed securities, if the
underlying mortgage securities experience greater than anticipated
prepayments of principal, the Fund may fail to fully recoup its initial
investment even if the securities are rated in the highest rating category by
a nationally recognized statistical rating organization. During periods of
rapidly rising interest rates, prepayments of mortgage-related securities may
occur at slower than expected rates. Slower prepayments effectively may
lengthen a mortgage-related security's expected maturity which generally
would cause the value of such security to fluctuate more widely in response
to changes in interest rates. Were the prepayments on the Fund's
mortgage-related securities to decrease broadly, the Fund's effective
duration, and thus sensitivity to interest rate fluctuations, would increase.
USE OF DERIVATIVES -- The Fund may invest in derivatives ("Derivatives").
These are financial instruments which derive their value, at least in part,
from the performance of an underlying asset, index or interest rate. The
Derivatives the Fund may use include mortgage-related securities, options and
futures. While Derivatives can be used effectively in furtherance of the
Fund's investment objective, under certain market conditions, they can
increase the volatility of the Fund's net asset value, decrease the liquidity
of the Fund's portfolio and make more difficult the accurate pricing of the
Fund's portfolio. See "Appendix -- Investment Techniques -- Use of
Derivatives" below and "Investment Objective and Management Policies --
Management Policies -- Derivatives" in the Statement of Additional
Information.
SIMULTANEOUS INVESTMENTS -- Investment decisions for the Fund are made
independently from those of other investment companies advised by The Dreyfus
Corporation. If, however, such other investment companies desire to invest
in, or dispose of, the same securities as the Fund, available investments or
opportunities for sales will be allocated equitably to each investment
company. In some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by the Fund or the price paid or
received by the Fund.
Page 6
MANAGEMENT OF THE FUND
INVESTMENT ADVISER -- 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 March 31, 1997, The Dreyfus Corporation managed
or administered approximately $82 billion in assets for approximately 1.7
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 authority of the Fund's Board in accordance with Massachusetts
law. The Fund's primary portfolio manager is Michael Hoeh. He has held that
position since March 1997 and has been employed by The Dreyfus Corporation
since October 1996. Prior to joining The Dreyfus Corporation, Mr. Hoeh was
Vice President of Portfolio Management at ARM Capital Advisors, Inc. From
1993 to 1994, Mr. Hoeh was Vice President in the Risk Management division of
Blackrock Financial Management where he was employed since January 1992. The
Fund's other portfolio managers are identified in the Statement of Additional
Information. The Dreyfus Corporation also provides research services for the
Fund and for 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 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 more than
$233 billion in assets as of December 31, 1996, including approximately $86
billion in proprietary mutual fund assets. As of December 31, 1996, Mellon,
through various subsidiaries, provided non-investment services, such as
custodial or administration services, for more than $1.046 trillion in
assets, including approximately $57 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, 1996, the Fund paid The Dreyfus Corporation a monthly management
fee at the effective annual rate of .08 of 1% of the value of the Fund's
average daily net assets pursuant to an undertaking 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 expense ratio of the Fund and increasing
yield to investors. 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.
In allocating brokerage transactions, The Dreyfus Corporation seeks
to obtain the best execution of orders at the most favorable net price.
Subject to this determination, The Dreyfus Corporation may consider, among
other things, the receipt of research services and/or the sale of shares of
the Fund or other funds managed, advised or administered by The Dreyfus
Corporation as factors in the selection of broker-dealers to execute
portfolio transactions for the Fund. See "Portfolio Transactions"in the
Statement of Additional Information.
Page 7
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, banks or other financial institutions in respect of these services.
DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund Services, Inc.
(the "Distributor"), located at 60 State Street, Boston, Massachusetts 02109.
The Distributor's ultimate parent is Boston Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus Transfer,
Inc., a wholly-owned subsidiary of The Dreyfus 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 and
Dreyfus TELETRANSFER redemption fee and the $2.00 checkwriting 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. Mellon Bank, N.A., One Mellon
Bank Center, Pittsburgh, Pennsylvania 15258, is the Fund's Custodian.
HOW TO BUY SHARES
Fund shares are sold without a sales charge. You may be charged a fee
if you effect transactions in Fund shares through a securities dealer, bank
or other financial institution. 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. However, the minimum initial investment for
Dreyfus-sponsored Keogh Plans, IRAs, SEP-IRAs and 403(b)(7) Plans with only
one participant is $5,000. Subsequent investments through such retirement
plan accounts must be at least $1,000. The initial investment must be
accompanied by the Account Application.
You may purchase Fund shares by check or wire, or through the Dreyfus
TELETRANSFER Privilege described below. Checks should be made payable to "The
Dreyfus Family of Funds," or, if for Dreyfus retirement plan accounts, to"The
Dreyfus Trust Company, Custodian." Payments to open new accounts which are
mailed should be sent to The Dreyfus Family 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. For Dreyfus
retirement plan accounts, both initial and subsequent investments should be
sent to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427. 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
Page 8
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 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.
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."
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. For purposes of determining net asset value, options and futures
contracts will be valued 15 minutes after the close of trading on the floor
of the New York Stock Exchange. 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 the Fund's Board. Each pricing service's procedures are reviewed
under the general supervision of the Board. For further information regarding
the methods employed in valuing Fund investments, see "Determination of Net
Asset Value" in the Statement of Additional Information.
For certain institutions that have entered into agreements with the
Distributor, payment for the purchase of shares may be transmitted, and must
be received by the Transfer Agent, within three business days after the order
is placed. If such payment is not received within three business days after
the order is placed, the order may be canceled and the institution could be
held liable for resulting fees and/or losses.
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 $1,000,000 ("Eligible Benefit
Plans"). Shares of funds in the Dreyfus Family of Funds then held by Eligible
Benefit Plans will be aggregated to determine the fee payable. 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.
Federal regulations require that you provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the 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").
Page 9
DREYFUS TELETRANSFER PRIVILEGE -- You may purchase shares (minimum $1,000,
maximum $150,000 per day) by telephone if you have checked the appropriate
box and supplied the necessary information on the Account Application or have
filed a Shareholder Services Form with the Transfer Agent. The proceeds will
be transferred between the bank account designated in one of these documents
and your Fund account. Only a bank account maintained in a domestic financial
institution which is an Automated Clearing House member may be so designated.
The Fund may modify or terminate this Privilege at any time. No fee currently
is contemplated for purchases of Fund shares pursuant to this Privilege.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER purchase of shares by calling 1-800-645-6561
or, if you are calling from overseas, call 516-794-5452.
SHAREHOLDER SERVICES
FUND EXCHANGES -- You may purchase up to four times per calendar year, 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. If your account balance is
less than $50,000, 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, by a separate signed
Shareholder Services Form, available by calling 1-800-645-6561, or by oral
request from any of the authorized signatories on the account by calling
1-800-645-6561. If you have established the Telephone Exchange Privilege, you
may telephone exchange instructions (including over The Dreyfus
TouchRegistration Mark automated telephone system) by calling 1-800-645-6561.
If you are calling from overseas, call 516-794-5452. See "How to Redeem
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 into which the exchange is made:
Telephone Exchange Privilege, Check Redemption Privilege, Wire Redemption
Privilege, Telephone Redemption Privilege, Dreyfus TELETRANSFER Privilege and
the dividend/capital gain distribution option (except for Dreyfus Dividend
Sweep) 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 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,
Page 10
at the time of the 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. See "Dividends,
Distributions and Taxes."
DREYFUS DIVIDEND SWEEP PRIVILEGE -- Dreyfus Dividend Sweep Privilege enables
you to invest automatically dividends or dividends and capital gain
distributions, if any, paid by the Fund in shares of another fund in the
Dreyfus Family of Funds of which you are a shareholder. Shares of the other
fund will be purchased at the then-current net asset value; however, a sales
load may be charged with respect to investments in shares of a fund sold with
a sales load. If you are investing in 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 you are investing in a fund that charges a
contingent deferred sales charge, the shares purchased will be subject to the
contingent deferred sales charge, if any, applicable to the purchased shares.
See "Shareholder Services" in the Statement of Additional Information. For
more information concerning this Privilege, or to request a Dividend Options
Form, please call toll free 1-800-645-6561. You may cancel your participation
in this Privilege by mailing written notification to The Dreyfus Family of
Funds, P.O. Box 9671, Providence, Rhode Island 02940-9671. To select a new
fund after cancellation, you must submit a new Dividend Options Form.
Enrollment in or cancellation of this Privilege is effective three business
days following receipt. This Privilege is available only for existing
accounts and may not be used to open new accounts. Minimum subsequent
investments do not apply. The Fund may modify or terminate this Privilege at
any time or charge a service fee. No such fee currently is contemplated.
Shares held under Keogh Plans, IRAs or other retirement plans are not
eligible for this Privilege.
HOW TO REDEEM 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.
IF YOUR ACCOUNT BALANCE IS LESS THAN $50,000, YOU WILL BE CHARGED
$5.00 WHEN YOU 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 or Dreyfus TELETRANSFER redemptions, for each of
which a $5.00 fee applies if your account balance is less than $50,000.
Securities dealers, banks and other financial institutions may charge their
clients a 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 OR BY THE
DREYFUS TELETRANSFER PRIVILEGE 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 OR DREYFUS
TELETRANSFER PURCHASE, 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 OR PUR-
Page 11
SUANT TO THE DREYFUS TELETRANSFER PRIVILEGE, FOR A PERIOD OF EIGHT BUSINESS
DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK OR DREYFUS
TELETRANSFER PURCHASE ORDER 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, or, if you have checked the appropriate box and
supplied the necessary information on the Account Application or have filed a
Shareholder Services Form with the Transfer Agent, through the Check
Redemption Privilege, the Wire Redemption Privilege, the Telephone Redemption
Privilege or the Dreyfus TELETRANSFER Privilege. The Fund makes available to
certain large institutions the ability to issue redemption instructions
through compatible computer facilities. The Fund reserves the right to refuse
any request made by wire or telephone, including requests made shortly after
a change of address, and may limit the amount involved or the number of such
requests. The Fund may modify or terminate any redemption Privilege at any
time. Shares held under Keogh Plans, IRAs or other retirement plans, and
shares for which certificates have been issued, are not eligible for the
Check Redemption,Wire Redemption, Telephone Redemption or Dreyfus TELETRANSFER
Privilege.
You may redeem Fund shares by telephone if you have checked the
appropriate box on the 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 (including over The Dreyfus TouchRegistration Mark automated
telephone system) 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.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may redeem
shares by written request mailed to The Dreyfus Family of Funds, P.O. Box
9671, Providence, Rhode Island 02940-9671, or, if for Dreyfus retirement plan
accounts, to The Dreyfus Trust Company, Custodian, P.O. Box 6427, Providence,
Rhode Island 02940-6427. 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
page 12
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 shareholder, 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 write Redemption Checks drawn on your
Fund 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, if your
account balance is less than $50,000. 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.
This Privilege will be terminated immediately, without notice, with respect
to any account which is, or becomes, subject to backup withholding on
redemptions (see "Dividends, Distributions and Taxes"). Any Redemption Check
written on an account which has become subject to backup withholding on
redemptions will not be honored by the Transfer Agent. If you hold shares in
a Dreyfus-sponsored IRA account, you may be permitted to make withdrawals
from your IRA account using checks furnished to you by The Dreyfus Trust
Company.
WIRE REDEMPTION PRIVILEGE -- 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 also 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 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, if your account balance is less than $50,000. You may telephone
redemption requests by calling 1-800-645-6561 or, if you are calling from
overseas, call 516-794-5452. The Statement of Additional Information sets
forth instructions for transmitting redemption requests by wire.
TELEPHONE REDEMPTION PRIVILEGE -- You may request by telephone that
redemption proceeds (maximum $150,000 per day) be paid by check and mailed to
your address. You may telephone redemption instructions by calling
1-800-645-6561 or, if you are calling from overseas, call 516-794-5452.
page 13
DREYFUS TELETRANSFER PRIVILEGE -- You may request by telephone that
redemption proceeds (minimum $1,000 per day) be transferred between your Fund
account and your bank account. Only a bank account maintained in a domestic
financial institution which is an Automated Clearing House member may be
designated. Redemption proceeds will be on deposit in your account at an
Automated Clearing House member bank ordinarily two days after receipt of the
redemption request or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. Holders of jointly registered Fund or bank
accounts may redeem through the Dreyfus TELETRANSFER Privilege for transfer
to their bank account not more than $250,000 within any 30-day period. You
will be charged a $5.00 TELETRANSFER redemption fee for each Dreyfus
TELETRANSFER redemption, which will be deducted from your account and paid
to the Transfer Agent, if your account balance is less than $50,000.
If you have selected the Dreyfus TELETRANSFER Privilege, you may
request a Dreyfus TELETRANSFER redemption of shares by calling 1-800-645-6561
or, if you are calling from overseas, call 516-794-5452.
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 on each day the New York Stock Exchange is open for business. Dividends
usually are paid on the last business day of each month, and are
automatically reinvested in additional shares, or, at your option, paid in
cash. The Fund's earnings for Saturdays, Sundays and holidays are declared as
dividends on the next business day. If you redeem all shares in your account
at any time during the month, all dividends to which you are entitled will be
paid to you along with the proceeds of the redemption. If you are an omnibus
accountholder and indicate in a partial redemption request that a portion of
any accrued dividends to which such account is entitled belongs to an
underlying accountholder who has redeemed all shares in his or her account,
such portion of the accrued dividends will be paid to you along with the
proceeds of the redemption. Distributions from net realized securities gains,
if any, generally 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 1940 Act. 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 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
Page 14
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.
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.
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, 1996 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.
Page 15
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 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 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).
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. Before November 1, 1995, the Fund's
name was Dreyfus Investors GNMA 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.
Page 16
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 Board member. The Trust Agreement provides for indemnification from
the Fund's property for all losses and expenses of any shareholder held
personally liable for the obligations of the Fund. Thus, the risk of a
shareholder'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
Fund intends to conduct its operations 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
Board members.
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.
Page 17
APPENDIX
INVESTMENT TECHNIQUES
FORWARD COMMITMENTS -- The Fund may purchase or sell Ginnie Maes and other
mortgage-related securities on a forward commitment, when-issued or delayed
delivery basis, which means delivery and payment take place a number of days
after the date of the commitment to purchase or sell the securities at a
predetermined price and/or yield. Typically, no interest accrues to the
purchaser until the security is delivered. When purchasing a security on a
forward commitment basis, the Fund assumes the rights and risks of ownership
of the security, including the risk of price and yield fluctuations, and
takes such fluctuations into account when determining its net asset value.
Because the Fund is not required to pay for these securities until the
delivery date, these risks are in addition to the risks associated with the
Fund's other investments. If the Fund is fully or almost fully invested when
forward commitment purchases are outstanding, such purchases may result in a
form of leverage. The Fund intends to engage in forward commitments to
increase its portfolio's financial exposure to the types of securities in
which it invests. Leveraging the portfolio in this manner will increase the
Fund's exposure to changes in interest rates and will increase the volatility
of its returns. A segregated account of the Fund consisting of permissible
liquid assets at least equal at all times to the amount of the Fund's
purchase commitments will be established and maintained at the Fund's
custodian bank. At no time will the Fund have more than 331\3% of its assets
committed to purchase securities on a forward commitment basis.
FORWARD ROLL TRANSACTIONS -- To enhance current income, the Fund may enter
into forward roll transactions with respect to mortgage-related securities.
In a forward roll transaction, the Fund sells a mortgage-related security to
a financial institution, such as a bank or broker-dealer, and simultaneously
agrees to repurchase a similar security from the institution at a later date
at an agreed upon price. The securities that are repurchased will bear the
same interest rate as those sold, but generally will be collateralized by
different pools of mortgages with different 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 instruments, particularly
repurchase agreements, and the income from these investments, together with
any additional fee income received on the sale will generate income for the
Fund exceeding the yield on the securities sold. Forward roll transactions
involve the risk that the market value of the securities sold by the Fund may
decline below the purchase price of those securities. A segregated account of
the Fund consisting of permissible liquid assets 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 -- Leveraging exaggerates 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 limited to 331/3% of the value of the Fund's
total assets. These borrowings 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. See "Forward Commitments" above.
The Fund may enter into reverse repurchase agreements with banks,
brokers or dealers. This form of borrowing involves 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. Except for these transactions, the Fund's borrowings generally will
be unsecured.
Page 18
USE OF DERIVATIVES -- The Fund may invest in, or enter into, the types of
Derivatives enumerated under "Description of the Fund -- Investment
Considerations and Risks -- Use of Derivatives." These instruments and
certain related risks are described more specifically under "Investment
Objective and Management Policies -- Management Policies -- Derivatives" in
the Statement of Additional Information.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and the
Fund's portfolio as a whole. Derivatives permit the Fund to increase or
decrease the level of risk, or change the character of the risk, to which its
portfolio is exposed in much the same way as the Fund can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.
Derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in Derivatives
could have a large potential impact on the Fund's performance.
If the Fund invests in Derivatives at inappropriate times or judges
market conditions incorrectly, such investments may lower the Fund's return
or result in a loss. The Fund also could experience losses if its Derivatives
were poorly correlated with its other investments or if the Fund were unable
to liquidate its position because of an illiquid secondary market. The market
for many Derivatives is, or suddenly can become, illiquid. Changes in
liquidity may result in significant, rapid and unpredictable changes in the
prices for Derivatives.
Although the Fund will not be a commodity pool, certain Derivatives
subject the Fund to the rules of the Commodity Futures Trading Commission
which limit the extent to which the Fund can invest in such Derivatives. The
Fund may invest in futures contracts and options with respect thereto for
hedging purposes without limit. However, the Fund may not invest in such
contracts and options for other purposes if the sum of the amount of initial
margin deposits and premiums paid for unexpired options with respect to such
contracts, other than for bona fide hedging purposes, exceeds 5% of the
liquidation value of the Fund's assets, after taking into account unrealized
profits and unrealized losses on such contracts and options; 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%
limitation.
The Fund may invest up to 5% of its assets, represented by the
premium paid, in the purchase of call and put options. The Fund may write
(i.e., sell) 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.
When required by the Securities and Exchange Commission, the Fund will set
aside permissible liquid assets in a segregated account to cover its
obligations relating to its transactions in Derivatives. To maintain this requ
ired cover, the Fund may have to sell portfolio securities at disadvantageous
prices or times since it may not be possible to liquidate a Derivative
position at a reasonable price.
SHORT-SELLING -- In these transactions, the Fund sells a security it does not
own in anticipation of a decline in the market value of the security. To
complete the transaction, the Fund must borrow the security to make delivery
to the buyer. The Fund is obligated to replace the security borrowed by
purchasing it subsequently at the market price at the time of replacement.
The price at such time may be more or less than the price at which the
security was sold by the Fund, which would result in a loss or gain,
respectively.
Securities will not be sold short if, after effect is given to any
such short sale, the total market value of all securities sold short would
exceed 25% of the value of the Fund's net assets. The Fund may not 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 make a short sale which results in the Fund having sold short in the
aggregate more than 5% of the outstanding securities of any class of an
issuer.
Page 19
The Fund also may make short sales "against the box," in which the
Fund enters into a short sale of a security it owns in order to hedge an
unrealized gain on the security. At no time will more than 15% of the value
of the Fund's net assets be in deposits on short sales against the box.
LENDING PORTFOLIO SECURITIES -- The Fund may lend securities from its
portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. The Fund continues to be
entitled to payments in amounts equal to the interest or other distributions
payable on the loaned securities which affords the Fund an opportunity to
earn interest on the amount of the loan and on the loaned securities'
collateral. Loans of portfolio securities may not exceed 331/3% of the value
of the Fund's total assets, and the Fund will receive collateral consisting
of cash, U.S. Government securities or irrevocable letters of credit which
will be maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities. Such loans are terminable by
the Fund at any time upon specified notice. The Fund might experience risk of
loss if the institution with which it has engaged in a portfolio loan
transaction breaches its agreement with the Fund.
CERTAIN PORTFOLIO SECURITIES
MORTGAGE-RELATED SECURITIES -- 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.
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.
page 20
The Fund also may invest in stripped mortgage-backed securities
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. Stripped mortgage-backed
securities usually are structured with two classes that receive different
proportions of interest and principal distributions on a pool of mortgage-back
ed securities or whole loans. A common type of stripped mortgage-backed
security will have one class receiving some of the interest and most of the
principal from the mortgage collateral, while the other class will receive
most of the interest and the remainder of the principal.
REPURCHASE AGREEMENTS -- In a repurchase agreement, the Fund buys, and the
seller agrees to repurchase, a security at a mutually agreed upon time and
price (usually within seven days). The repurchase agreement thereby
determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. Repurchase agreements could involve risks in the event of a default
or insolvency of the other party to the agreement, including possible delays
or restrictions upon the Fund's ability to dispose of the underlying
securities. The Fund may enter into repurchase agreements with certain banks
or non-bank dealers.
ILLIQUID SECURITIES -- The Fund may invest up to 15% of the value of its net
assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Fund's investment
objective. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or
contractual restrictions on resale, repurchase agreements providing for
settlement in more than seven days after notice, certain mortgage-backed
securities, and certain privately negotiated, non-exchange traded options and
securities used to cover such options. As to these securities, the Fund is
subject to a risk that should the Fund desire to sell them when a ready buyer
is not available at a price the Fund deems representative of their value, the
value of the Fund's net assets could be adversely affected.
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 21
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Page 23
BASIC
GNMA
Fund
Prospectus
Registration Mark
Copy Rights 1997, Dreyfus Service Corporation
080p050197
Page 24
__________________________________________________________________________
DREYFUS BASIC GNMA FUND
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
MAY 1, 1997
__________________________________________________________________________
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 May 1, 1997, 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-10
Management Agreement B-14
Shareholder Services Plan B-16
Purchase of Shares B-17
Redemption of Shares B-17
Shareholder Services B-20
Determination of Net Asset Value B-22
Dividends, Distributions and Taxes B-22
Portfolio Transactions B-23
Performance Information B-24
Information about the Fund B-25
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors B-26
Financial Statements B-27
Report of Independent Auditors B-36
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "Description of the
Fund" and "Appendix."
Portfolio Securities
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.
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. 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 $1 billion, or primary government
securities dealers reporting to the Federal Reserve Bank of New York, with
respect to securities of the type in which the Fund may invest, and will
require that additional securities be deposited with it if the value of the
securities purchased should decrease below resale price.
Illiquid Securities. Where a substantial market of qualified
institutional buyers develops for certain restricted securities purchased by
the Fund pursuant to Rule 144A under the Securities Act of 1933, as amended,
the Fund intends to treat such securities as liquid securities in accordance
with procedures approved by the Fund's Board. Because it is not possible to
predict with assurance how the market for specific restricted securities
sold pursuant to Rule 144A will develop, the Fund's Board has directed the
Manager to monitor carefully the Fund's investments in such securities with
particular regard to trading activity, availability of reliable price
information and other relevant information. To the extent that, for a
period of time, qualified institutional buyers cease purchasing restricted
securities pursuant to Rule 144A, the Fund's investing in such securities
may have the effect of increasing the level of illiquidity in its investment
portfolio during such period.
Management Policies
Leverage Through Borrowing. For borrowings for investment purposes,
the Investment Company Act of 1940, as amended (the "1940 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 required 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 permissible liquid
assets 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.
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 permissible liquid assets, at
such a level that the amount deposited in the account plus the amount
deposited with the broker as collateral always equals the current value of
the security sold short, or (b) otherwise cover its short position.
Derivatives. The Fund may invest in, or enter into, Derivatives (as
defined in the Prospectus) for a variety of reasons, including to hedge
certain market risks, to manage the interest rate sensitivity (sometimes
called duration) of fixed-income securities, to provide a substitute for
purchasing or selling particular securities or to increase potential income
gain. Derivatives may provide a cheaper, quicker or more specifically
focused way for the Fund to invest than "traditional" securities would.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives. Exchange-traded Derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
variation margin requirements) operated by the clearing agency in order to
reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated
with Derivatives purchased on an exchange. By contrast, no clearing agency
guarantees over-the-counter Derivatives. Therefore, each party to an over-
the-counter Derivative bears the risk that the counterparty will default.
Accordingly, the Manager will consider the creditworthiness of
counterparties to over-the-counter Derivatives in the same manner as it
would review the credit quality of a security to be purchased by the Fund.
Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only
investor with sufficient understanding of the Derivative to be interested in
bidding for it.
Futures Transactions--In General. The Fund may enter into futures contracts
in U.S. domestic markets. Engaging in these transactions involves risk of
loss to the Fund which could adversely affect the value of the Fund's net
assets. 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 with little or no trading, thereby preventing prompt
liquidation of futures positions and potentially subjecting the Fund to
substantial losses.
Successful use of futures by the Fund also is subject to the Manager's
ability to predict correctly movements in the direction of the relevant
market and, to the extent the transaction is entered into for hedging
purposes, to ascertain the appropriate correlation between the transaction
being hedged and the price movements of the futures contract. For example,
if the Fund uses futures to hedge against the possibility of a decline in
the market value of securities held in its portfolio and the prices of such
securities instead increase, 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.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, the Fund may be required to segregate permissible
liquid assets in connection with its commodities transactions in an amount
generally equal to the value of the underlying commodity. The segregation
of such assets will have the effect of limiting the Fund's ability otherwise
to invest those assets.
Specific Futures Transactions. The Fund may purchase and sell interest rate
futures contracts. An interest rate future obligates the Fund to purchase or
sell an amount of a specific debt security at a future date at a specific
price.
Options--In General. The Fund may purchase and write (i.e., sell) call or
put options with respect to specific securities. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell,
the underlying security or securities at the exercise price at any time
during the option period, or at a specific date. Conversely, a put option
gives the purchaser of the option the right to sell, and obligates the
writer to buy, the underlying security or securities at the exercise price
at any time during the option period, or at a specific date.
A covered call option written by the Fund is a call option with respect
to which the Fund owns the underlying security or otherwise covers the
transaction by segregating cash or other securities. A put option written
by the Fund is covered when, among other things, cash or liquid securities
having a value equal to or greater than the exercise price of the option are
placed in a segregated account with the Fund's custodian to fulfill the
obligation undertaken. The principal reason for writing covered call and
put options is to realize, through the receipt of premiums, a greater return
than would be realized on the underlying securities alone. The Fund
receives a premium from writing covered call or put options which it retains
whether or not the option is exercised.
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 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 of the 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.
Future Developments. The Fund may take advantage of opportunities in
the area of options and futures contracts and options on futures contracts
and any other Derivatives which are not presently contemplated for use by
the Fund or which are not currently available but which may be developed, to
the extent such opportunities are both consistent with the Fund's investment
objective and legally permissible for the Fund. Before entering into such
transactions or making any such investment, the Fund will provide
appropriate disclosure in its Prospectus or Statement of Additional
Information.
Forward Commitments. Securities purchased on a forward commitment or
when-issued basis are subject to changes in value (generally changing in the
same way, i.e., appreciating when interest rates decline and depreciating
when interest rates rise) based upon the public's perception of the
creditworthiness of the issuer and changes, real or anticipated, in the
level of interest rates. Securities purchased on a forward commitment or
when-issued basis may expose the Fund to risks because they may experience
such fluctuations prior to their actual delivery. Purchasing securities on
a when-issued basis can involve the additional risk that the yield available
in the market when the delivery takes place actually may be higher than that
obtained in the transaction itself. Purchasing securities on a forward
commitment or 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.
Lending Portfolio Securities. In connection with its securities
lending transactions, the Fund may return to the borrower or a third party
which is unaffiliated with the Fund, and which is acting as a "placing
broker," a part of the interest earned from the investment of collateral
received for securities loaned.
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; and (5) the Fund may pay only reasonable custodian fees in connection
with the loan.
Investment Restrictions
The Fund has adopted investment restrictions numbered 1 through 8 as
fundamental policies, which cannot be changed without approval by the
holders of a majority (as defined in the 1940 Act) of the Fund's outstanding
voting shares. Investment restrictions numbered 9 through 13 are not
fundamental policies and may be changed by a vote of a majority of the
Fund's Board members at any time. The Fund may not:
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 1940 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 1940 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 1940 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 change 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 than 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
Board members and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Board member who is deemed to be an "interested
person" of the Fund, as defined in the 1940 Act, is indicated by an
asterisk.
Board Members of the Fund
JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of
the Board of various funds in the Dreyfus Family of Funds. He also is
Chairman of the Board of Directors of Noel Group, Inc., a venture
capital company; and a director of The Muscular Dystrophy Association,
HealthPlan Services Corporation, Belding Heminway Company, Inc., a
manufacturer and marketer of industrial threads and buttons, Curtis
Industries, Inc., a national distributor of security products,
chemicals, and automotive and other hardware, and Staffing Resources,
Inc. For more than five years prior to January 1995, 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 53 years old
and his address is 200 Park Avenue, New York, New York 10166.
GORDON J. DAVIS, Board Member. 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 also is 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. He is 55 years old and his address is 241 Central Park West,
New York, New York 10024.
*DAVID P. FELDMAN, Board Member. Mr. Feldman is a trustee of Corporate
Property Investors, a real estate investment company, and a director of
several mutual funds in the 59 Wall Street Mutual Funds Group, and of
Jeffrey Company, a private investment company. Mr. Feldman was
employed by AT&T Investment Management Corporation from July 1961 to
his retirement in April 1997, most recently serving as Chairman and
Chief Executive Officer. He is 57 years old and his address is c/o
AT&T, One Oak Way, Berkeley Heights, New Jersey 07922.
LYNN MARTIN, Board Member. Professor, J.L. Kellogg Graduate School of
Management, Northwestern University. During the Spring Semester 1993,
she was a Visiting Fellow at the Institute of Politics, Kennedy School
of Government, Harvard University. She also is an advisor to the
international accounting firm of Deloitte & Touche, LLP and chair of
its Council for 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 served in the United
States House of Representatives as a Congresswoman from the State of
Illinois. She also is a Director of Harcourt General, Inc., Ameritech,
Ryder System, Inc., The Proctor & Gamble Co., a consumer company, and
TRW, Inc., an aerospace and automotive equipment company. She is 57
years old and her address is c/o Deloitte & Touche, LLP, Two Prudential
Plaza, 180 N. Stetson Avenue, Chicago, Illinois 60601.
EUGENE McCARTHY, Board Member Emeritus. Writer and columnist; former
Senator from Minnesota from 1958 to 1970. He is 81 years old and his
address is 271 Hawlin Road, Woodville, Virginia 22749.
DANIEL ROSE, Board Member. 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 also is 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 67 years old and
his address is c/o Rose Associates, Inc., 200 Madison Avenue, New York,
New York 10016.
*PHILIP L. TOIA, Board Member. Retired. Mr. Toia was employed by The
Dreyfus Corporation from August 1986 through January 1997, most
recently serving as Vice Chairman, Administration and Operations. He
is 64 years old and his address is c/o Ms. Amy Letteney, 42 White Birch
Road, New Canaan, Connecticut 06840.
SANDER VANOCUR, Board Member. Since January 1992, Mr. Vanocur has been
President of Old Owl Communications, a full-service communications
firm. From May 1995 to June 1996, he was a Professional in Residence
at the Freedom Forum in Arlington, VA. From January 1994 to May 1995,
he served as Visiting Professional Scholar at the Freedom Forum
Amendment Center at Vanderbilt University. From November 1989 to
November 1995 he was 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 69 years old and his address is 2928 P Street, N.W.,
Washington, DC 20007.
ANNE WEXLER, Board Member. Chairman of the Wexler Group, consultants
specializing in government relations and public affairs. She also is a
director of Alumax, Comcast Corporation, The New England Electric
System, NOVA Corporation and a member of the board of the Carter Center
of Emory University, the Council of Foreign Relations, the National
Park Foundation, Visiting Committee of the John F. Kennedy School of
Government at Harvard University and the Economic Club of Washington.
She is 67 years old and her address is c/o The Wexler Group, 1317 F
Street, Suite 600, N.W., Washington, DC 20004.
REX WILDER, Board Member. Financial Consultant. He is 76 years old and his
address is 290 Riverside Drive, New York, New York 10025.
For so long as the Fund's plan described in the section captioned
"Shareholder Services Plan" remains in effect, the Board members of the Fund
who are not "interested persons" of the Fund, as defined in the 1940 Act,
will be selected and nominated by the Board members who are not "interested
persons" of the Fund.
Meetings of shareholders will not be held for the purpose of electing
Board members unless and until such time as less than a majority of the
Board members holding office have been elected by shareholders, at which
time the Board members then in office will call a shareholders' meeting for
the election of Board members. Under the 1940 Act, shareholders of record
of not less than two-thirds of the outstanding shares of the Fund may remove
a Board member through a declaration in writing or by vote cast in person or
by proxy at a meeting called for that purpose. The Board members are
required to call a meeting of shareholders for the purpose of voting upon
the question of removal of any such Board member 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 Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. For the fiscal year
ended December 31, 1996, the aggregate amount of compensation paid to each
Board member 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) was as
follows:
Total
Compensation from
Aggregate Fund and Fund
Name of Board Compensation from Complex Paid to
Member Fund* Board Member
Gordon J. Davis $3,500 $ 88,536 (25)
Joseph S. DiMartino $4,375 $517,075 (92)
David P. Feldman $3,500 $122,257 (27)
Lynn Martin $3,500 $ 41,666 (11)
Eugene McCarthy+ $2,180 $ 29,041 (11)
Daniel Rose $3,500 $ 84,593 (21)
Philip L. Toia** $ 0 $ 0
Sander Vanocur $3,500 $ 77,093 (21)
Anne Wexler $3,500 $ 62,034 (16)
Rex Wilder $3,500 $ 42,666 (11)
_______________________
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $5,398 for all Board members as a group.
+ Board member Emeritus as of March 29, 1996.
++ Board member as of February 3, 1997.
Officers of the Fund
MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer and a director 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 of which
is Boston Institutional Group, Inc. She is 39 years old.
JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor since September 1995 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. He is 32 years old.
ELIZABETH A. KEELEY, Vice President and Assistant Secretary. Assistant Vice
President of the Distributor since September 1995 and an officer of
other investment companies advised or administered by the Manager. She
is 27 years old.
DOUGLAS C. CONROY, Vice President and Assistant Secretary. Supervisor of
Treasury Services and Administration of Funds Distributor, Inc. and an
officer of other investment companies advised or administered by the
Manager. From April 1993 to January 1995, he was a Senior Fund
Accountant for Investors Bank & Trust Company. From December 1991 to
March 1993, he was employed as a Fund Accountant at The Boston
Company, Inc. He is 27 years old.
MARK A. KARPE, Vice President and Assistant Secretary. Senior Paralegal of
the Distributor and an officer of other investment companies advised
or administered by the Manager. Prior to August 1993, he was employed
as an Associate Examiner at the National Association of Securities
Dealers, Inc. He is 27 years old.
RICHARD W. INGRAM, Vice President and Assistant Treasurer. Senior Vice
President and Director of Client Services and Treasury Operations of
Funds Distributor, Inc. and an officer of other investment companies
advised or administered by the Manager. From March 1994 to November
1995, he was Vice President and Division Manager for First Data
Investor Services Group. From 1989 to 1994, he was Vice President,
Assistant Treasurer and Tax Director -- Mutual Funds at The Boston
Company, Inc. He is 41 years old.
MARY A. NELSON, Vice President and Assistant Treasurer. Vice President and
Manager of Treasury Services and Administration of Funds Distributor,
Inc. and an officer of other investment companies advised or
administered by the Manager. From September 1989 to July 1994, she
was an Assistant Vice President and Client Manager for The Boston
Company, Inc. She is 32 years old.
MICHAEL S. PETRUCELLI, Vice President and Assistant Treasurer. Director of
Strategic Client Initiatives for Funds Distributor, Inc. and an officer
of other investment companies advised or administered by the Manager.
From December 1989 through November 1996, he was employed by GE
Investments where he held various financial, business development and
compliance positions. He also served as Treasurer of the GE Funds and
as Director of the GE Investment Services. He is 35 years old.
JOSEPH F. TOWER, III, Vice President and 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 34 years old.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
The Fund's Board members and officers, as a group, owned less than 1%
of the Fund's voting securities outstanding on April 1, 1997.
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 Board or (ii) vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities
of the Fund, provided that in either event the continuance also is approved
by a majority of the Board members who are not "interested persons" (as
defined in the 1940 Act) of the Fund or the Manager, by vote cast in person
at a meeting called for the purpose of voting such approval. The Agreement
was approved by shareholders on August 3, 1994, and was last approved by the
Fund's Board, including a majority of the Board members who are not
"interested persons" of any party to the Agreement, at a meeting held on
October 14, 1996. The Agreement is terminable without penalty, on 60 days'
notice, by the Fund's Board or by vote of the holders of a majority of the
Fund's 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 1940 Act).
The following persons are officers and/or directors of the Manager: W.
Keith Smith, Chairman of the Board; Christopher M. Condron, President, Chief
Executive Officer, Chief Operating Officer and a director; Stephen E.
Canter, Vice Chairman, Chief Investment Officer and a director; Lawrence S.
Kash, Vice Chairman-Distribution and a director; William T. Sandalls, Jr.,
Senior Vice President and Chief Financial Officer; Mark N. Jacobs, Vice
President, General Counsel and Secretary; Patrice M. Kozlowski, Vice
President-Corporate Communications; Mary Beth Leibig, Vice President-Human
Resources; Jeffrey N. Nachman, Vice President-Mutual Fund Accounting; Andrew
S. Wasser, Vice President-Information Systems; Elvira Oslapas, Assistant
Secretary; and Mandell L. Berman, Burton C. Borgelt and Frank V. Cahouet,
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
Board. The Manager is responsible for investment decisions, and provides
the Fund with portfolio managers who are
authorized by the Board to execute purchases and sales of securities. The
Fund's portfolio managers are Michael Hoeh, Roger King, Kevin M. McClintock,
Matthew Olson 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's review at the meeting subsequent to such
transactions.
The Manager maintains office facilities on behalf of the Fund and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager also may make such advertising or
promotional expenditures, using its own resources, as it from time to time
deems appropriate.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include: taxes, interest, loan commitment fees,
interest and distributions paid on securities sold short, brokerage fees and
commissions, if any, fees of Board members who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, 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.
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, 1994, 1995 and 1996, the management
fees payable to the Manager amounted to $285,899, $299,419 and $331,359,
respectively, which amounts were reduced by $285,899, $299,419 and $288,728,
respectively, pursuant to undertakings by the Manager, resulting in no
management fees being paid by the Fund for the fiscal years 1994 and 1995
and $42,631 being paid by the Fund for fiscal 1996.
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
Board for its review. In addition, the Plan provides that material
amendments of the Plan must be approved by the Fund's Board, and by the
Board members who are not "interested persons" (as defined in the 1940 Act)
of the Fund and have no direct or indirect financial interest in the
operation of the 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 Board members cast in person at a meeting
called for the purpose of voting on the Plan. The Plan was last so approved
on October 14, 1996. The Plan is terminable at any time by vote of a
majority of the Board members who are not "interested persons" and have no
direct or indirect financial interest in the operation of the Plan.
For the fiscal year ended December 31, 1996, the fee payable by the
Fund pursuant to the Plan amounted to $113,809.
PURCHASE OF SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Buy Shares."
The Distributor. The Distributor serves as the Fund's distributor on a
best efforts basis 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. In some states,
certain financial institutions effecting transactions in Fund shares may be
required to register as dealers pursuant to state law.
Dreyfus TeleTransfer Privilege. Dreyfus TeleTransfer purchase orders
may be made at any time. Purchase orders received by 4:00 p.m., New York
time, on any business day that Dreyfus Transfer, Inc., the Fund's transfer
and dividend disbursing agent (the "Transfer Agent"), and the New York Stock
Exchange are open for business will be credited to the shareholder's Fund
account on the next bank business day following such purchase order.
Purchase orders made after 4:00 p.m., New York time, on any business day the
Transfer Agent and the New York Stock Exchange are open for business, or
orders made on Saturday, Sunday or any Fund holiday (e.g., when the New York
Stock Exchange is not open for business), will be credited to the
shareholder's Fund account on the second bank business day following such
purchase order. To qualify to use Dreyfus TeleTransfer Privilege, the
initial payment for purchase of Fund shares must be drawn on, and redemption
proceeds paid to, the same bank and account as are designated on the Account
Application or Shareholder Services Form on file. If the proceeds of a
particular redemption are to be wired to an account at any other bank, the
request must be in writing and signature-guaranteed. See "Redemption of
Shares--Dreyfus TeleTransfer Privilege."
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 SHARES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "How to Redeem Shares."
Check Redemption Privilege. An investor may indicate on the Account
Application, Shareholder Services Form or by later written request that the
Fund provide Redemption Checks ("Checks") drawn on the investor's Fund
account. Checks will be sent only to the registered owner(s) of the account
and only to the address of record. The Account Application, Shareholder
Services Form 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 to the Transfer
Agent for payment, 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, if
applicable. 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, if the investor's account balance is less than $50,000. 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 ($5,000 minimum)
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, or to a correspondent bank if the investor's bank is not a
member of the Federal Reserve System. Fees ordinarily are imposed by such
bank and borne by the investor. Immediate notification by the correspondent
bank to 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."
Dreyfus TeleTransfer Privilege. Investors should be aware that if they
have selected the Dreyfus TeleTranfer Privilege, any request for a wire
redemption will be effected as a Dreyfus TeleTransfer transaction through
the Automated Clearing House ("ACH") system unless more prompt transmittal
specifically is requested. Redemption proceeds will be on deposit in the
investor's account at an ACH member bank ordinarily two business days after
receipt of the redemption request. Investors will be charged a $5.00 fee
for each redemption made pursuant to this Privilege, which will be deducted
from the investor's account and paid to the Transfer Agent, if the
investor's account balance is less than $50,000. See "Purchase of Shares--
Dreyfus TeleTransfer Privilege."
Share Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each 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 Fund's
Board reserve the right to make payments in whole or part in securities
(which may include non-marketable 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 might 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.
SHAREHOLDER SERVICES
The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "Shareholder Services."
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 (including
over The Dreyfus Touchr automated telephone system) 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 investor's account and paid to
the Transfer Agent, if the investor's account balance is less than $50,000.
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.
The Fund Exchanges service 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 the Fund
Exchanges service may be modified or terminated at any time upon notice to
shareholders.
Dreyfus Dividend Sweep. Dreyfus Dividend Sweep allows investors to
invest automatically their dividends or dividends and capital gain
distributions, if any, from the Fund, in shares of another fund in the
Dreyfus Family of Funds of which the investor is a shareholder. Shares of
other funds purchased pursuant to this privilege will be purchased on the
basis of relative net asset value per share as follows:
A. Dividends and distributions paid by a fund may be invested without
imposition of a sales load in shares of other funds that are
offered without a sales load.
B. Dividends and distributions paid by a fund which does not
charge a sales load may be invested in shares of other funds sold
with a sales load, and the applicable sales load will be deducted.
C. Dividends and distributions paid by a fund which charges a
sales load may be invested in 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 charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid by a fund may be invested in
shares of other funds that impose a contingent deferred sales
charge ("CDSC") and the applicable CDSC, if any, will be imposed
upon redemption of such shares.
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 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 Fund's Board. 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
Fund's Board. 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.
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, 1996 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. 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 in the
Prospectus. 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.
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, 1996
was 5.97%, which reflects the waiver of a portion of the management fee by
the Manager. Had a portion of the management fee not been waived, the
Fund's current yield for the 30-day period ended December 31, 1996 would
have been 5.37%. 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 9.408 year
periods ended December 31, 1996 was 4.81%, 7.09% and 8.50%, respectively.
The Fund's average annual total return for the 5.359 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, 1996 was 8.18%. 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,
1996, and the period August 23, 1991 to December 31, 1996, was 115.46% and
52.37%, 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 and
also may include comparisons to FDIC-insured bank investments, such as
certificates of deposit. In addition, advertising material for the Fund may
include biographical information relating to its portfolio manager and may
refer to, or include commentary by, the portfolio manager relating to
investment strategy, asset growth, current or past business, political,
economic or financial conditions and other matters of general interest to
investors.
INFORMATION ABOUT THE FUND
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 November 1, 1995, the Fund changed its name from Dreyfus
Investors GNMA Fund to Dreyfus BASIC GNMA Fund. On August 23, 1991, the
Fund had changed its name from Dreyfus Foreign Investors GNMA Fund, L.P. to
Dreyfus Investors GNMA Fund, L.P. 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.
TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN,
COUNSEL AND INDEPENDENT AUDITORS
Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with the Fund,
the Transfer Agent arranges for the maintenance of shareholder account
records for the Fund, the handling of certain communications between
shareholders and the Fund and the payment of dividends and distributions
payable by the Fund. For these services, the Transfer Agent receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Fund during the month, and is reimbursed for certain out-
of-pocket expenses. For the fiscal year ended December 31, 1996, the Fund
paid the Transfer Agent $47,334.
Mellon Bank, N.A. (the "Custodian"), the Manager's parent, One Mellon
Bank Center, Pittsburgh, Pennsylvania 15258, acts as custodian of the Fund's
investments. Under a custody agreement with the Fund, the Custodian holds
the Fund's securities and keeps all necessary accounts and records. For its
custody services, the Custodian receives a monthly fee based on the market
value of the Fund's assets held in custody and receives certain securities
transactions charges. For the period May 29, 1996 (effective date of
custody agreement) through December 31, 1996, the Fund paid the Custodian
$11,728.
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares being sold pursuant to the Fund's Prospectus.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
<TABLE>
<CAPTION>
DREYFUS BASIC GNMA FUND
STATEMENT OF INVESTMENTS DECEMBER 31, 1996
Principal
Bonds and Notes_121.4% Amount Value
------------ -----------
<S> <C> <C>
Mortgage-Backed Securities_97.2%
Government National Mortgage Association I:
6 1/2% (a)................................................................ $ 3,500,000 $ 3,328,255
7 1/2% (a)................................................................ 3,500,000 3,492,335
7 1/2%, 8/15/2025 (b)..................................................... 3,615,723 3,632,641
7 1/2%, 11/15/2010-7/15/2023.............................................. 4,061,643 4,110,681
8%, 2/15/2025 (b)......................................................... 2,191,161 2,245,244
8%, 6/15/2017-4/15/2022................................................... 867,632 892,382
8 1/2%, 8/15/2018-3/15/2022............................................... 1,913,590 2,003,424
9%, 5/15/2016-11/15/2022.................................................. 2,011,988 2,145,790
9 1/2%, 1/15/2017-12/15/2021.............................................. 1,702,949 1,850,091
------------
23,700,843
------------
Government National Mortgage Association II:
5% (a,c).................................................................. 1,000,000 975,000
5 1/2% (a,c).............................................................. 8,933,001 8,847,783
9%, 3/20/2016-7/20/2025................................................... 2,130,367 2,233,802
9 1/2%, 9/20/2021-12/20/2021.............................................. 321,167 346,482
------------
12,403,067
------------
Government National Mortgage Association I,
Project Loan:
7%, 4/15/2021-1/15/2036................................................... 1,884,972 1,836,969
7 1/8% (a)................................................................ 2,000,000 1,965,000
7 1/4% (a)................................................................ 8,718,200 8,628,228
9 1/4%, 10/15/2023........................................................ 955,904 1,021,919
------------
13,452,116
------------
Federal Home Loan Mortgage Corp.,
Real Estate Mortgage Investment Conduit:
Ser. 86, Cl. F,
9%, 10/15/2020 (b)...................................................... 300,000 324,780
Ser. 128, Cl. H,
8 3/4%, 9/15/2019 (b)................................................... 440,282 447,653
Ser. 1030, Cl. E,
9%, 3/15/2019 (b)....................................................... 480,469 490,064
Ser. 1092, Cl. J,
8 1/2%, 5/15/2020 (b)................................................... 1,000,000 1,032,660
Ser. 1455, Cl. K,
7%, 6/15/2020 (b)....................................................... 1,500,000 1,483,875
------------
3,779,032
------------
Federal National Mortgage Association:
7.13%, 1/1/2012........................................................... 2,500,000 2,500,000
Real Estate Mortgage Investment Conduit;
Cl. G27-E,
8 1/2%, 2/25/2018 (b)................................................... 181,824 181,878
------------
2,681,878
------------
Total Mortgage-Backed Securities............................................ 56,016,936
============
DREYFUS BASIC GNMA FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1996
Principal
Bonds and Notes (continued) Amount Value
-------------- -------------
U.S. Treasury Notes_24.2%
5 3/4%, 12/31/1998 (b).................................................... $ 7,000,000 $ 6,984,141
6 1/8%, 12/31/2001 (b).................................................... 7,000,000 6,974,844
------------
13,958,985
============
TOTAL BONDS AND NOTES
(cost $69,898,391)........................................................ $ 69,975,921
============
Short-Term Investments_25.3%
Repurchase Agreements:
Lanston (Aubrey G.) & Co., Inc., 5 3/4%
Dated 12/31/1996, Due 1/2/1997 in the amount of $7,302,332 (fully
collateralized
by $7,291,000 U.S. Treasury Notes, 6 1/2%, 4/30/1997, value $7,394,952) (b) $ 7,300,000 $ 7,300,000
Nikko Securties Co. International, Inc., 5 3/4%
Dated 12/31/1996, Due 1/2/1997 in the amount of $7,302,332 (fully
collateralized
by $7,372,000 U.S. Treasury Notes, 5 3/8%, 11/30/1997, value $7,372,279) (b) 7,300,000 7,300,000
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $14,600,000)........................................................ $ 14,600,000
============
TOTAL INVESTMENTS
(cost $84,498,391)........................................................ 146.7% $ 84,575,921
====== =============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (46.7%) $(26,910,459)
====== =============
NET ASSETS.................................................................. 100.0% $ 57,665,462
====== =============
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.
(c) Adjustable rate mortgage-interest rate subject to change
periodically.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS BASIC GNMA FUND
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1996
Cost Value
-------------- -------------
ASSETS: Investments in securities_Note 1(a,b)
(including Repurchase Agreements of $14,600,000) $ 84,498,391 $ 84,575,921
Cash....................................... 258,112
Receivable for investment securities sold.. 24,875,382
Interest receivable........................ 315,141
Receivable for shares of Beneficial Interest subscribed 98,959
Paydowns receivable........................ 21,218
Prepaid expenses........................... 15,970
------------
110,160,703
------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates 47,522
Payable for investment securities purchased 52,317,278
Payable for shares of Beneficial Interest redeemed 74,117
Accrued expenses........................... 56,324
------------
52,495,241
------------
NET ASSETS.................................................................. $ 57,665,462
==============
REPRESENTED BY: Paid-in capital............................ $ 57,220,184
Accumulated net realized gain (loss) on investments 367,748
Accumulated net unrealized appreciation (depreciation)
on investments_Note 4...................... 77,530
------------
NET ASSETS.................................................................. $ 57,665,462
==============
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST
AUTHORIZED) ........................................... 3,809,797
NET ASSET VALUE, offering and redemption price per share.................... $15.14
=======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS BASIC GNMA FUND
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996
INVESTMENT INCOME
INCOME Interest Income............................ $ 3,949,047
EXPENSES: Management fee_Note 3(a)................... $ 331,359
Shareholder servicing costs_Note 3(b)...... 179,207
Trustees' fees and expenses_Note 3(c)...... 37,107
Audit fees................................. 25,640
Custodian fees_Note 3(b)................... 20,301
Registration fees.......................... 19,357
Legal fees................................. 17,575
Prospectus and shareholders' reports....... 3,570
Miscellaneous.............................. 13,585
-----------
Total Expenses....................... 647,701
Less_reduction in management fee due to
undertaking_Note 3(a).................. (288,728)
-----------
Net Expenses......................... 358,973
-----------
INVESTMENT INCOME_NET....................................................... 3,590,074
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $ 560,242
Net unrealized appreciation (depreciation) on investments (1,566,344)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... (1,006,102)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 2,583,972
===========
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS BASIC GNMA FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, 1996 December 31, 1995
------------------- -------------------
OPERATIONS:
Investment income_net.......................................... $ 3,590,074 $ 3,425,681
Net realized gain (loss) on investments........................ 560,242 1,605,147
Net unrealized appreciation (depreciation) on investments...... (1,566,344) 2,562,661
-------------- --------------
Net Increase (Decrease) in Net Assets Resulting from Operations 2,583,972 7,593,489
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net.......................................... (3,609,453) (3,415,254)
-------------- --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold.................................. 18,750,779 22,533,965
Dividends reinvested........................................... 2,422,189 2,239,783
Cost of shares redeemed........................................ (18,096,600) (18,274,607)
-------------- --------------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 3,076,368 6,499,141
-------------- --------------
Total Increase (Decrease) in Net Assets.................... 2,050,887 10,677,376
NET ASSETS:
Beginning of Period............................................ 55,614,575 44,937,199
-------------- --------------
End of Period.................................................. $ 57,665,462 $ 55,614,575
============== ===============
UNDISTRIBUTED INVESTMENT INCOME_NET.............................. ___ $ 19,379
-------------- --------------
Shares Shares
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Shares sold.................................................... 1,243,306 1,509,390
Shares issued for dividends reinvested......................... 161,081 150,171
Shares redeemed................................................ (1,200,815) (1,227,891)
-------------- --------------
Net Increase (Decrease) in Shares Outstanding................ 203,572 431,670
============== ==============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS BASIC GNMA FUND
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated May 1, 1997.
DREYFUS BASIC GNMA FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus BASIC GNMA Fund (the "Fund") is registered under the Investment
Company Act of 1940 ("Act") as a diversified open-end management investment
company. The Fund's investment objective is to provide an investor with as
high a level of current income as is consistent with the preservation of
capital by investing principally in instruments issued by the Government
National Mortgage Association. The Dreyfus Corporation ("Manager") serves as
the Fund's investment adviser. The Manager is a direct subsidiary of Mellon
Bank, N.A. ("Mellon"). Premier Mutual Fund Services, Inc. acts as the
distributor of the Fund's shares, which are sold to the public without a
sales charge.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: The Fund's investments (excluding U.S.
Government obligations and short-term investments) are valued each business
day by an independent pricing service ("Service") approved by the Board of
Trustees. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to values from dealers;
and general market conditions. Investments in U.S. Government obligations are
valued at the mean between quoted bid and asked prices. Short-term investments
are carried at amortized cost, which approximates value.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income (including, where applicable, amortization of discount on 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.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
DREYFUS BASIC GNMA FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2--BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $100 million
unsecured line of credit primarily to be utilized for temporary or emergency
purposes, including the financing of redemptions. Interest is charged to the
Fund at rates which are related to the Federal Funds rate in effect at the
time of borrowings. During the period ended December 31, 1996, the Fund did
not borrow under the line of credit.
NOTE 3--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the value
of the Fund's average daily net assets and is payable monthly. The Agreement
provides that if in any fiscal year the aggregate expenses of the Fund,
exclusive of taxes, brokerage, interest on borrowings and extraordinary
expenses, 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. However, the Manager has undertaken through
June 30, 1998 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
(exclusive of certain expenses as described above) exceed an annual rate of
.65 of 1% of the value of the Fund's average daily net assets. The reduction
in management fee, pursuant to the undertaking, amounted to $288,728 during
the period ended December 31, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, an
amount not to exceed an annual rate of .25 of 1% of the value of the Fund's
average daily net assets for certain allocated expenses of providing personal
services and/or maintaining shareholder accounts. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
During the period ended December 31, 1996, the Fund was charged an aggregate
of $113,809 pursuant to the Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such
compensation amounted to $47,334 during the period ended December 31, 1996.
Effective May 29, 1996, the Fund entered into a custody agreement with
Mellon to provide custodial services for the Fund. During the period ended
December 31, 1996, $11,728 was charged to Mellon pursuant to the custody
agreement.
(C) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation and the Trustee Emeritus receives 50% of such compensation .
DREYFUS BASIC GNMA FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales (including paydowns) of
investment securities, excluding short-term securities, during the period
ended December 31, 1996, amounted to $193,032,358 and $176,812,849,
respectively.
At December 31, 1996, accumulated net unrealized appreciation on
investments was $77,530, consisting of $608,421 gross unrealized appreciation
and $530,891 gross unrealized depreciation.
At December 31, 1996, 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
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, 1996, 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 verification by
examination of securities held by the custodian as of December 31, 1996 and
confirmation of securities not held by the custodian by correspondence with
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus BASIC GNMA Fund at December 31, 1996, 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 & Young, LLP)
New York, New York
February 5, 1997
DREYFUS BASIC 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 nine years in the period ended December 31,
1996.
Included in Part B of the Registration Statement:
Statement of Investments--December 31, 1996
Statement of Assets and Liabilities--December 31, 1996
Statement of Operations--year ended December 31, 1996
Statement of Changes in Net Assets--for each of the
years ended December 31, 1995 and 1996
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors, dated
February 5, 1997
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 are incorporated by reference to
Exhibit (1)(b) of Post-Effective Amendment No. 19 to the
Registration Statement on Form N-1A, filed on August 24,
1995.
(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. 20 to the Registration
Statement on Form N-1A, filed on October 25, 1995.
(6) Distribution Agreement is incorporated by reference to
Exhibit (6) of Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A, filed on October 25,
1995.
(8) Custody Agreement is incorporated by reference to Exhibit (8)
of Post-Effective Amendment No. 21 to the Registration
Statement on Form N-1A, filed on April 11, 1996.
(9) Shareholder Services Plan is incorporated by reference to
Exhibit (9) of Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A, filed on October 25,
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 are
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.
(17) Financial Data Schedule.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Other Exhibits
______________
(a) Powers of Attorney of the Trustees and Officers.
(b) Certificate of Secretary is incorporated by reference
to Other Exhibits (b) of Post-Effective 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 April 1, 1997
______________ ____________________________
Beneficial Interest 2,766
(Par value $.001)
Item 27. Indemnification
_______ _______________
Reference is made to Article EIGHT of the Registrant's Agreement
and Declaration of Trust previously filed as Exhibit 1 to Post-
Effective Amendment No. 14 to the Registration Statement on Form
N-1A on November 1, 1993. The application of these provisions is
limited by Article 10 of the Registrant's By-Laws previously filed
as Exhibit 2 to Post-Effective Amendment No. 14 to the
Registration Statement on Form N-1A on November 1, 1993 and by the
following undertaking set forth in the rules promulgated by the
Securities and Exchange Commission: Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be
permitted to trustees, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in such Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a trustee, officer or controlling person of
the registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in such Act and will
be governed by the final adjudication of such issue.
The Distribution Agreement is incorporated by Reference to
Exhibit (6) of Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A, filed on October 25, 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, is a
registered broker-dealer. 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:
Skillman Foundation;
Member of The Board of Vintners Intl.
BURTON C. BORGELT Chairman Emeritus of the Board and
Director Past Chairman, Chief Executive Officer and
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405;
Director:
DeVlieg-Bullard, Inc.
1 Gorham Island
Westport, Connecticut 06880
Mellon Bank Corporation***;
Mellon Bank, N.A.***
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation***;
Mellon Bank, N.A.***;
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
W. KEITH SMITH Chairman and Chief Executive Officer:
Chairman of the Board The Boston Company****;
Vice Chairman of the Board:
Mellon Bank Corporation***;
Mellon Bank, N.A.***;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation***;
Executive Officer, The Boston Company****;
Chief Operating Deputy Director:
Officer and a Mellon Trust***;
Director Chief Executive Officer:
The Boston Company Asset Management,
Inc.****;
President:
Boston Safe Deposit and Trust Company****
STEPHEN E. CANTER Director:
Vice Chairman and The Dreyfus Trust Company++;
Chief Investment Officer, Formerly, Chairman and Chief Executive Officer:
and a Director Kleinwort Benson Investment Management
Americas Inc.*
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:
Dreyfus America Fund+++;
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
World Balanced Fund++++;
President:
The Boston Company****;
Laurel Capital Advisors***;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.***;
Boston Safe Deposit and Trust
Company****
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus Acquisition Corporation*;
Dreyfus America Fund+++;
World Balanced Fund++++;
Vice President and Director:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Service Corporation*;
Major Trading Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
MARK N. JACOBS Vice President, Secretary and Director:
Vice President, Lion Management, Inc.*;
General Counsel Secretary:
and Secretary The Dreyfus Consumer Credit Corporation*;
Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.**;
Major Trading Corporation*;
The Truepenny Corporation*
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
JEFFREY N. NACHMAN President and Director:
Vice President-Mutual Fund Dreyfus Transfer, Inc.
Accounting One American Express Plaza
Providence, Rhode Island 02903
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation***
Services
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 131 Second Street, Lewes,
Delaware 19958.
*** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
**** The address of the business so indicated is One Boston Place, Boston,
Massachusetts 02108.
+ 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 69, Route 'd'Esch,
L-1470 Luxembourg.
++++ The address of the business so indicated is 69, Route 'd'Esch,
L-2953 Luxembourg.
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 Funds, 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 GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
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) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Income Funds
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Short Term Treasury Fund
30) Dreyfus Insured Municipal Bond Fund, Inc.
31) Dreyfus Intermediate Municipal Bond Fund, Inc.
32) Dreyfus International Funds, Inc.
33) Dreyfus Investment Grade Bond Funds, Inc.
34) The Dreyfus/Laurel Funds, Inc.
35) The Dreyfus/Laurel Funds Trust
36) The Dreyfus/Laurel Tax-Free Municipal Funds
37) Dreyfus LifeTime Portfolios, Inc.
38) Dreyfus Liquid Assets, Inc.
39) Dreyfus Massachusetts Intermediate Municipal Bond Fund
40) Dreyfus Massachusetts Municipal Money Market Fund
41) Dreyfus Massachusetts Tax Exempt Bond Fund
42) Dreyfus MidCap Index Fund
43) Dreyfus Money Market Instruments, Inc.
44) Dreyfus Municipal Bond Fund, Inc.
45) Dreyfus Municipal Cash Management Plus
46) Dreyfus Municipal Money Market Fund, Inc.
47) Dreyfus New Jersey Intermediate Municipal Bond Fund
48) Dreyfus New Jersey Municipal Bond Fund, Inc.
49) Dreyfus New Jersey Municipal Money Market Fund, Inc.
50) Dreyfus New Leaders Fund, Inc.
51) Dreyfus New York Insured Tax Exempt Bond Fund
52) Dreyfus New York Municipal Cash Management
53) Dreyfus New York Tax Exempt Bond Fund, Inc.
54) Dreyfus New York Tax Exempt Intermediate Bond Fund
55) Dreyfus New York Tax Exempt Money Market Fund
56) Dreyfus 100% U.S. Treasury Intermediate Term Fund
57) Dreyfus 100% U.S. Treasury Long Term Fund
58) Dreyfus 100% U.S. Treasury Money Market Fund
59) Dreyfus 100% U.S. Treasury Short Term Fund
60) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
61) Dreyfus Pennsylvania Municipal Money Market Fund
62) Dreyfus Premier California Municipal Bond Fund
63) Dreyfus Premier Equity Funds, Inc.
64) Dreyfus Premier Global Investing, Inc.
65) Dreyfus Premier GNMA Fund
66) Dreyfus Premier Growth Fund, Inc.
67) Dreyfus Premier Insured Municipal Bond Fund
68) Dreyfus Premier Municipal Bond Fund
69) Dreyfus Premier New York Municipal Bond Fund
70) Dreyfus Premier State Municipal Bond Fund
71) Dreyfus Premier Value Fund
72) Dreyfus S&P 500 Index Fund
73) Dreyfus Short-Intermediate Government Fund
74) Dreyfus Short-Intermediate Municipal Bond Fund
75) The Dreyfus Socially Responsible Growth Fund, Inc.
76) Dreyfus Stock Index Fund, Inc.
77) Dreyfus Tax Exempt Cash Management
78) The Dreyfus Third Century Fund, Inc.
79) Dreyfus Treasury Cash Management
80) Dreyfus Treasury Prime Cash Management
81) Dreyfus Variable Investment Fund
82) Dreyfus Worldwide Dollar Money Market Fund, Inc.
83) General California Municipal Bond Fund, Inc.
84) General California Municipal Money Market Fund
85) General Government Securities Money Market Fund, Inc.
86) General Money Market Fund, Inc.
87) General Municipal Bond Fund, Inc.
88) General Municipal Money Market Fund, Inc.
89) General New York Municipal Bond Fund, Inc.
90) General New York Municipal Money Market 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
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Vice President
and Chief Financial Officer and Assistant
Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Roy M. Moura+ First Vice President None
Dale F. Lampe+ Vice President None
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Paul Prescott+ Vice President None
Elizabeth A. Keeley++ Assistant Vice President Vice President
and Assistant
Secretary
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. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. 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 Board member or Board members when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares 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 certifies that it meets all
of the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and 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 April 1997.
DREYFUS BASIC 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 04/23/97
______________________________ Executive, Financial and Accounting
Marie E. Connolly Officer)
/s/ Joseph S. DiMartino* Chairman of the Board 04/23/97
______________________________
Joseph S. DiMartino
/s/ Gordon J. Davis* Trustee 04/23/97
______________________________
Gordon J. Davis
/s/ David P. Feldman* Trustee 04/23/97
______________________________
David P. Feldman
/s/ Lynn Martin* Trustee 04/23/97
______________________________
Lynn Martin
/s/ Daniel Rose* Trustee 04/23/97
______________________________
Daniel Rose
/s/ Philip L. Toia* Trustee 04/23/97
______________________________
Philip L. Toia
/s/ Sander Vanocur* Trustee 04/23/97
______________________________
Sander Vanocur
/s/ Anne Wexler* Trustee 04/23/97
______________________________
Anne Wexler
/s/ Rex Wilder* Trustee 04/23/97
______________________________
Rex Wilder
*BY: /s/ Elizabeth A. Keeley
___________________________
Elizabeth A. Keeley,
Attorney-in-Fact
DREYFUS BASIC GNMA FUND
Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A under
the Securities Act of 1933 and
the Investment Company Act of 1940
EXHIBITS
INDEX TO EXHIBITS
(11) Consent of Independent Auditors.
(17) Financial Data Schedule.
Other Exhibits
(a) Powers of Attorney
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Transfer and Dividend Disbursing Agent,
Custodian, Counsel and Independent Auditors" and to the use of our report
dated February 5, 1997, in this Registration Statement (Form N-1A No. 33-12660)
of Dreyfus BASIC GNMA Fund.
ERNST & YOUNG LLP
New York, New York
April 24, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000811789
<NAME> DREYFUS BASIC GNMA FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 84498
<INVESTMENTS-AT-VALUE> 84576
<RECEIVABLES> 25310
<ASSETS-OTHER> 274
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 110160
<PAYABLE-FOR-SECURITIES> 52317
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 178
<TOTAL-LIABILITIES> 52495
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57220
<SHARES-COMMON-STOCK> 3810
<SHARES-COMMON-PRIOR> 3606
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 368
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 77
<NET-ASSETS> 57665
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3949
<OTHER-INCOME> 0
<EXPENSES-NET> 359
<NET-INVESTMENT-INCOME> 3590
<REALIZED-GAINS-CURRENT> 560
<APPREC-INCREASE-CURRENT> (1566)
<NET-CHANGE-FROM-OPS> 2584
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3609)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1243
<NUMBER-OF-SHARES-REDEEMED> (1201)
<SHARES-REINVESTED> 161
<NET-CHANGE-IN-ASSETS> 2051
<ACCUMULATED-NII-PRIOR> 19
<ACCUMULATED-GAINS-PRIOR> (192)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 331
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 648
<AVERAGE-NET-ASSETS> 55227
<PER-SHARE-NAV-BEGIN> 15.42
<PER-SHARE-NII> .98
<PER-SHARE-GAIN-APPREC> (.27)
<PER-SHARE-DIVIDEND> (.99)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.14
<EXPENSE-RATIO> .007
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
OTHER EXHIBITS (a)
POWER OF ATTORNEY
The undersigned hereby constitute and appoint Elizabeth A. Bachman,
Marie E. Connolly, Richard W. Ingram, Mark A. Karpe and John E. Pelletier,
and each of them, with full power to act without the other, his or her true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her, and in his or her name, place and stead, in
any and all capacities (until revoked in writing) to sign any and all
amendments to the Registration Statement of each Fund enumerated on Exhibit A
hereto (including post-effective amendments and amendments thereto), and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
________________________________________ October 14, 1996
Gordon J. Davis
________________________________________ October 14, 1996
Joseph S. DiMartino
________________________________________ October 14, 1996
David P. Feldman
________________________________________ October 14, 1996
Lynn Martin
________________________________________ October 14, 1996
Daniel Rose
________________________________________ October 14, 1996
Sander Vanocur
________________________________________ October 14, 1996
Anne Wexler
________________________________________ October 14, 1996
Rex Wilder
EXHIBIT A
Dreyfus Global Growth Fund
Premier Global Investing, Inc.
Premier Strategic Growth Fund
Dreyfus BASIC GNMA Fund
Dreyfus 100% U.S. Treasury Short Term Fund
Dreyfus 100% U.S. Treasury Intermediate Term Fund
Dreyfus 100% U.S. Treasury Long Term Fund
Dreyfus 100% U.S. Treasury Money Market Fund
Dreyfus Florida Municipal Money Market Fund
Dreyfus Florida Intermediate Municipal Bond Fund
Dreyfus New Jersey Municipal Bond Fund, Inc.
Dreyfus New York Insured Tax Exempt Bond Fund
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Elizabeth A. Keeley,
Marie E. Connolly, Richard W. Ingram, Mark A. Karpe and John E. Pelletier,
and each of them, with full power to act without the other, his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him, and in his name, place and stead, in any and all
capacities (until revoked in writing) to sign any and all amendments to the
Registration Statement of Dreyfus Global Growth Fund, Dreyfus Premier Global
Investing, Inc., Dreyfus BASIC GNMA Fund, Dreyfus 100% U.S. Treasury Short
Term Fund, Dreyfus 100% U.S. Treasury Intermediate Term Fund, Dreyfus 100%
U.S. Treasury Long Term Fund, Dreyfus 100% U.S. Treasury Money Market Fund,
Dreyfus Florida Municipal Money Market Fund, Dreyfus Florida Intermediate
Municipal Bond Fund, Dreyfus New Jersey Municipal Bond Fund, Inc. and Dreyfus
New York Insured Tax Exempt Bond Fund (including post-effective amendments
and amendments thereto), and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his or her substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
________________________________________ April 11, 1997
Philip L. Toia
