DREYFUS BASIC GNMA FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report the performance for Dreyfus BASIC GNMA Fund. For
its semi-annual reporting period ended June 30, 1997 your Fund produced a
total return of 3.79%* compared to 4.04% for the Lehman Brothers GNMA
Index.** Income dividends paid from net investment income during the 6-month
period amounted to approximately $.483 per share, representing an annualized
distribution rate per share of 6.40%.***
ECONOMIC REVIEW
Despite recent moderation in the rate of new job creation, the latest
reported unemployment rate was 5% in June. When the unemployment rate was
last at that level, the inflation rate was heading toward double-digit
territory. Now inflation appears to be subdued; the Consumer Price Index rose
at an annual rate of just 1.4% for the 12-month period through May. Producer
prices have risen a minuscule 0.6% over the same time. It has been
unprecedented for the economy to have seven years of expansion, low
unemployment and low inflation at the same time.
Ever alert for signs of incipient inflation, the Federal Open Market
Committee (FOMC), the policy-making arm of the Federal Reserve, has raised
interest rates just once in more than two years. That hike came in March 1997
when the Federal Funds rate was increased by one-quarter of a percentage
point to 5.50%. (The Federal Funds rate is the rate of interest that banks
charge one another for overnight loans.) While there have been some signs
that wages are increasing (an area of particular concern to the Federal
Reserve), there have also been indications that the economy may be slowing
from its torrid first quarter pace when it surged at a 5.9% annual rate, the
biggest advance since the fourth quarter of 1987.
Indicating possible moderation in the rate of economic growth, retail
sales were in decline all spring despite record levels of consumer optimism
about the economy. The latest report on retail sales for March, April, and
May showed a decline at an annual rate of 5% over the previous three months.
This marked the first three-month decline since the fall of 1981. Yet,
despite their sluggish spending at checkout counters, consumers' confidence
in the economy continues to climb, heavily influenced by increased job
security and low inflation.
Throughout the current seven-year economic expansion, the pattern of
consumer spending has been stop-and-go, alternating between spurts of
spending and retrenchment. The 5% decline in retail sales for the three
months through May was preceded by a 15% advance over the previous
three-month period. On the production side of the economy, a survey of
corporate buyers compiled by the National Association of Purchasing
Management reported that growth in factory activity eased slightly during
June. The much observed supplier-delivery component of the survey, a measure
of how quickly orders are being satisfied and a possible sign of production
bottlenecks, also fell modestly. In further evidence of a slowing economy
during the second quarter, the Commerce Department recently reported that
factory orders fell in May.
Rising incomes, low unemployment and quiescent inflation have all
contributed to a feeling of confidence, as measured by the Conference Board's
Index of Consumer Sentiment, that has been unmatched for 28 years. Many
economists feel that the optimistic consumer sentiment indicators provide a
floor to economic growth and will spur consumer spending later in the year,
particularly if the unemployment rate remains low and job security worries
recede further. We are mindful of the potent role that consumers play in the
economy _ their spending accounts for about two-thirds of economic output. So
we remain alert to signs of any strain on productive capacity caused by
increases in consumer spending that might, in turn, lead to another
tightening in monetary policy by the Federal Reserve.
MARKET ENVIRONMENT
Interest rates for the first half of 1997 have been very stable. The
market has remained in a 75 basis-point range for the ten-year U.S. Treasury
Notes, both starting and ending the six-month period at approximately the
same rate of 6.45%. This interest rate stability has lead to a one-third
decline in one-month interest rate volatility of the 10-year Treasury.
For the first half of 1997, mortgages posted very strong performance. The
Lehman Brothers Mortgage Index outperformed the Lehman U.S. Treasury Index by
1.36% and outperformed the Lehman Brothers Corporate Bond Index by 0.85%.
This dramatic outperformance for a six-month period was attributed largely to
the decrease in interest rate volatility, an improved mortgage prepayment
environment, and increased demand for mortgage-backed securities during the
first half of 1997.
Spreads on mortgage-backed securities have compressed over this time
period, and the potential return advantage for mortgage-backed securities
going forward, in our view, is less positive. However, it is important to
note the demand for GNMA pass-throughs has remained strong due to added
demand for new Collateralized Mortgage Obligation (CMO) issuance, and we do
not expect this to diminish in the second half of 1997.
PORTFOLIO OVERVIEW
The portfolio's performance has been quite strong over the first half of
1997. The Fund placed in the top 15% of its Lipper peer group. It ranked 8
out of 54 funds in the Lipper GNMA Funds category for the six months ended
6/30/97.+ This performance was largely attributed to the Fund's use of
non-traditional GNMA product sectors, such as GNMA ARMS, and GNMA Project
loans. While these securities provide greater returns under certain market
conditions, they also tend to be more volatile under other market conditions.
The main weakness in the Fund's performance was attributed to the duration
positioning of the Fund. In March of this year, the Fund's duration was 10%
longer than that of the Lehman Brothers GNMA Index, which contributed to weak
performance for the month.
Currently the Fund is positioned for a declining interest rate
environment. The duration of the Fund as of June 30th was half a year longer
than the duration of the Lehman GNMA Index. This lengthening was accomplished
by adding discount GNMA 15-year 6.5% securities while selling both short-term
Treasuries and premium GNMA 30-year 7.5% securities. Also of significance was
the addition of a 10% holding of GNMA Project Loans to the portfolio. GNMA
project loans have explicit prepayment lockout protection, which prevents any
prepayments from occurring. These securities generate high yield and are
expected to outperform GNMA 30-year securities in the event of a Treasury
market rally. Of course, in the event of a market decline, these securities
are likely to underperform the GNMA 30-year securities.
Additionally, the portfolio holds a position in conventional CMOs. This
is principally in PAC - IO (Planned Amortization Class - Interest Only)
securities collateralized by 30-year 7.0% FNMA and FHLMC certificates. These
securities have high current yield, many above 9%. These PAC - IOs have been
positioned as a hedge for the Fund's current long duration exposure. Given
the decline in market rate volatility, the Fund has benefited from this
hedging strategy. Should market rate volatility rise, however, these
positions could detract from future performance.
Included in this report is a series of detailed statements about your
Fund's holdings and its financial condition. We hope they are informative.
Please know that we appreciate greatly your continued confidence in the Fund
and in The Dreyfus Corporation.
Sincerely,
[Michael Hoeh signature logo]
Michael Hoeh
Portfolio Manager
July 17, 1997
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. _ Unlike the Fund, the Lehman
Brothers GNMA Index is an unmanaged total return performance benchmark for
the GNMA market, consisting of 15- and 30-year fixed-rate securities backed
by mortgage pools of the Government National Mortgage Association.
*** Distribution rate per share is based upon dividends per share paid
from net investment income during the period (annualized), divided by the net
asset value per share at the end of the period.
+ SOURCE: LIPPER ANALYTICAL SERVICES, INC.
<TABLE>
DREYFUS BASIC GNMA FUND
STATEMENT OF INVESTMENTS JUNE 30, 1997 (UNAUDITED)
Principal
Bonds_122.3% Amount Value
_____________ ___________
<S> <C> <C>
Mortgage-Backed Securities_117.9%
Government National Mortgage Association I:
6 1/2%, (a)............................................................... $ 3,000,000 $ 2,952,180
6 1/2%, 5/15/2009 (b)..................................................... 3,639,504 3,605,366
6 1/2%, 10/15/2010-2/15/2012.............................................. 5,182,263 5,114,813
7%, (a)................................................................... 1,500,000 1,470,000
7%, 6/15/2009............................................................. 979,972 984,559
7 1/2%, 9/15/2021-7/15/2023............................................... 2,131,803 2,151,365
7 1/2%, 8/15/2025 (b)..................................................... 3,435,653 3,462,482
8%, (a)................................................................... 3,250,000 3,321,078
8%, 4/15/2008 (b)......................................................... 2,965,502 2,804,157
8%, 9/15/2008-4/15/2022................................................... 1,367,269 1,692,657
8 1/2%, 2/15/2005-3/15/2022............................................... 1,888,802 1,986,636
9%, 5/15/2016-11/15/2022.................................................. 1,773,572 1,903,135
9 1/2%, 1/15/2017-12/15/2021.............................................. 1,500,463 1,627,907
_____________
33,076,335
_____________
Government National Mortgage Association I,
Project Loans:
7%, 4/15/2021-9/15/2035................................................... 3,868,192 3,795,204
7.325%, 6/15/2022......................................................... 992,000 983,628
7 3/4%, (a)............................................................... 4,437,600 4,535,291
7.95%, 7/15/2032.......................................................... 977,500 1,015,984
8 1/8%, 6/15/2030-11/15/2034.............................................. 1,741,642 1,816,625
9 1/4%, 10/15/2023........................................................ 951,935 1,020,951
_____________
13,167,683
_____________
Government National Mortgage Association II:
5 1/2%, (a,c)............................................................. 3,000,000 2,966,250
7%, 12/20/2025-5/20/2027.................................................. 3,898,859 3,820,151
9%, 3/20/2016-7/20/2025................................................... 1,841,325 1,940,873
9 1/2%, 9/20/2021-12/20/2021.............................................. 293,342 316,096
_____________
9,043,370
_____________
Government National Mortgage Association I,
Real Estate Mortgage Investment Conduit,
Collateralized Mortgage Obligations:
Ser. 1997-4, Cl. G,
7 1/2%, 11/16/2024 (b)................................................ 1,000,000 995,050
_____________
Government National Mortgage Association II,
Real Estate Mortgage Investment Conduit,
Collateralized Mortgage Obligations:
Ser. 1997-2, Cl. K,
7 1/2%, 1/20/2024 (b)................................................. 2,780,000 2,756,008
_____________
DREYFUS BASIC GNMA FUND
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1997 (UNAUDITED)
Principal
Bonds (continued) Amount Value
__________ __________
Mortgage-Backed Securities (continued)
Federal Home Loan Mortgage Corp.,
Real Estate Mortgage Investment Conduit:
Collateralized Mortgage Obligations:
Ser. 86, Cl. F,
9%, 10/15/2020 (b).................................................... $ 300,000 $ 302,622
Ser. 128, Cl. H,
8 3/4%, 9/15/2019 (b)................................................. 299,034 302,647
Ser. 1030, Cl. E,
9%, 3/15/2019 (b)..................................................... 334,568 339,554
Ser. 1092, Cl. J,
8 1/2%, 5/15/2020 (b)................................................. 1,000,000 1,028,600
Stripped Securities, Interest Only Class:
Ser. 1499, Cl. E,
7%, 4/15/2023......................................................... (d) 537,965
Ser. 1541, Cl. FA,
7%, 5/15/2019......................................................... (e) 1,181,238
Ser. 1547, Cl. B,
7%, 2/15/2022......................................................... (f) 519,855
Ser. 1583, Cl. ID,
7%, 2/15/2023......................................................... (g) 2,024,646
Ser. 1590, Cl. JA,
6 1/2%, 10/15/2021.................................................... (h) 1,712,700
Ser. 1596, Cl. L,
6 1/2%, 12/15/2012.................................................... (i) 452,682
Ser. 1916, Cl. PI,
7%, 12/15/2011........................................................ (j) 401,389
_____________
8,803,898
_____________
Federal National Mortgage Association,
Real Estate Mortgage Investment Conduit:
Collateralized Mortgage Obligations:
Cl. G27-E,
8 1/2%, 2/25/2018 (b)................................................. 31,951 31,863
Stripped Securities, Interest Only Class:
Ser. 1993-61, Cl. N,
7%, 3/25/2022......................................................... (k) 2,177,215
Ser. 1993-137, Cl. PT,
7%, 6/25/2022......................................................... (l) 1,166,800
_____________
3,375,878
_____________
Total Mortgage-Backed Securities............................................ 71,218,222
==============
DREYFUS BASIC GNMA FUND
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1997 (UNAUDITED)
Principal
Bonds (continued) Amount Value
__________ __________
U.S. Treasury Bonds_4.4%
6 1/2%, 11/15/2026........................................................ $ 250,000 $ 240,000
6 5/8%, 2/15/2027......................................................... 2,500,000 2,449,610
_____________
2,689,610
==============
TOTAL BONDS
(cost $73,238,628)........................................................ $ 73,907,832
==============
Short-Term Investments_5.8%
Repurchase Agreements:
Lanston (Aubrey G.) & Co., Inc., 5 1/2%
Dated 6/30/1997, Due 7/1/1997 in the amount of $3,500,535 (fully
collateralized
by $3,509,000 U.S. Treasury Notes, 6 1/4%, 5/15/1998, value $3,547,415)
(cost $3,500,000)......................................................... $ 3,500,000 $ 3,500,000
==============
TOTAL INVESTMENTS
(cost $76,738,628)........................................................ 128.1% $ 77,407,832
======= ==============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (28.1%) $(16,982,665)
======= ==============
NET ASSETS.................................................................. 100.0% $ 60,425,167
======= ==============
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.
(d) Notional face $864,285.
(e) Notional face $4,904,658.
(f) Notional face $1,750,000.
(g) Notional face $5,059,464.
(h) Notional face $6,000,000.
(i) Notional face $1,800,000.
(j) Notional face $1,538,360.
(k) Notional face $7,218,166.
(l) Notional face $4,000,000.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS BASIC GNMA FUND
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1997 (UNAUDITED)
Cost Value
_____________ _____________
<S> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $76,738,628 $77,407,832
Cash....................................... 464,603
Receivable for investment securities sold.. 2,982,501
Interest receivable........................ 608,398
Receivable for shares of Beneficial Interest subscribed 77,760
Paydowns receivable........................ 25,597
Prepaid expenses........................... 15,540
_____________
81,582,231
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 79,692
Payable for investment securities purchased 21,017,189
Payable for shares of Beneficial Interest redeemed 15,943
Accrued expenses........................... 44,240
_____________
21,157,064
_____________
NET ASSETS.................................................................. $60,425,167
==============
REPRESENTED BY: Paid-in capital............................ $59,625,659
Accumulated net realized gain (loss) on investments 130,304
Accumulated net unrealized appreciation (depreciation)
on investments_Note 4 669,204
_____________
NET ASSETS.................................................................. $60,425,167
=============
SHARES OUTSTANDING
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES OF BENEFICIAL INTEREST
AUTHORIZED) ........................................... 3,969,650
NET ASSET VALUE, offering and redemption price per share.................... $15.22
=======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS BASIC GNMA FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME
INCOME Interest Income............................ $2,032,512
EXPENSES: Management fee_Note 3(a)................... $ 171,749
Shareholder servicing costs_Note 3(b)...... 107,564
Registration fees.......................... 23,564
Trustees' fees and expenses_Note 3(c)...... 17,819
Auditing fees.............................. 14,623
Custodian fees_Note 3(b)................... 12,556
Legal fees................................. 8,729
Prospectus and shareholders' reports....... 4,360
Loan commitment fees_Note 2................ 360
Miscellaneous.............................. 5,916
_____________
Total Expenses....................... 367,240
Less_expense reimbursement from Manager due to
undertaking_Note 3(a).................. (180,818)
_____________
Net Expenses......................... 186,422
______________
INVESTMENT INCOME_NET....................................................... 1,846,090
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $(237,444)
Net unrealized appreciation (depreciation) on investments 591,674
_____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 354,230
______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $2,200,320
==============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS BASIC GNMA FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
_________________ ___________________
<S> <C> <C>
OPERATIONS:
Investment income_net............................................... $ 1,846,090 $ 3,590,074
Net realized gain (loss) on investments............................. (237,444) 560,242
Net unrealized appreciation (depreciation) on investments........... 591,674 (1,566,344)
______________ ________________
Net Increase (Decrease) in Net Assets Resulting from Operations... 2,200,320 2,583,972
______________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net............................................... (1,846,090) (3,609,453)
______________ ________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold....................................... 9,649,841 18,750,779
Dividends reinvested................................................ 1,287,990 2,422,189
Cost of shares redeemed............................................. (8,532,356) (18,096,600)
______________ ________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 2,405,475 3,076,368
______________ ________________
Total Increase (Decrease) in Net Assets......................... 2,759,705 2,050,887
NET ASSETS:
Beginning of Period................................................. 57,665,462 55,614,575
______________ ________________
End of Period....................................................... $ 60,425,167 $ 57,665,462
=============== =================
Shares Shares
______________ ________________
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................... 640,172 1,243,306
Shares issued for dividends reinvested.............................. 85,340 161,081
Shares redeemed..................................................... (565,659) (1,200,815)
______________ ________________
Net Increase (Decrease) in Shares Outstanding..................... 159,853 203,572
=============== =================
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS BASIC GNMA FUND
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each period indicated. This
information has been derived from the Fund's financial statements.
Six Months Ended
June 30, 1997 Year Ended December 31,
______________________________________________________
PER SHARE DATA: (Unaudited) 1996 1995 1994 1993 1992
________ _______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $15.14 $15.42 $14.16 $15.39 $15.20 $15.34
________ _______ _______ _______ _______ _______
Investment Operations:
Investment income_net................. .48 .98 1.03 1.08 1.11 1.16
Net realized and unrealized gain (loss)
on investments...................... .08 (.27) 1.25 (1.23) .19 (.14)
________ _______ _______ _______ _______ _______
Total from Investment Operations...... .56 .71 2.28 (.15) 1.30 1.02
________ _______ _______ _______ _______ _______
Distributions:
Dividends from investment income_net.. (.48) (.99) (1.02) (1.08) (1.11) (1.16)
________ _______ _______ _______ _______ _______
Net asset value, end of period........ $15.22 $15.14 $15.42 $14.16 $15.39 $15.20
======== ======== ======= ======= ======= ========
TOTAL INVESTMENT RETURN................... 7.64%(1) 4.81% 16.62% (.99%) 8.75% 7.02%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .65%(1) .65% .50% .06% __ __
Ratio of net investment income
to average net assets............... 6.45%(1) 6.50% 6.86% 7.34% 7.15% 7.70%
Decrease reflected in above expense ratios
due to undertakings by the Manager.. .63%(1) .52% .78% 1.43% 1.28% 1.42%
Portfolio Turnover Rate............... 333.10%(2) 332.96% 254.36% 290.20% 34.02% 30.99%
Net Assets, end of period (000's Omitted) $60,425 $57,665 $55,615 $44,937 $54,224 $ 45,280
(1) Annualized.
(2) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS BASIC GNMA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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. is the distributor
of the Fund's shares, which are sold to the public without a sales charge.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) PORTFOLIO VALUATION: Investments in securities (excluding 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, if any, it is the policy of the Fund not to distribute such gain.
DREYFUS BASIC GNMA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(d) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best 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.
NOTE 2_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended June
30, 1997, the Fund did not borrow under the Facility.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the value
of the Fund's average daily net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings,
commitment fees and extraordinary expenses, exceed the expense limitation of
any state having jurisdiction over the Fund. The Fund may deduct from the
payments to be made to the Manager under the agreement, or the Manager will
bear, such excess expense to the extent required by state law. 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 expense reimbursement, pursuant to the undertaking, amounted
to $180,818 during the period ended June 30, 1997.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(b) Under the Shareholder Services Plan, the Fund reimburses Dreyfus
Service Corporation, a wholly-owned subsidiary of the Manager, an amount not
to exceed an annual rate of .25 of 1% of the value of the Fund's average
daily net assets for certain allocated expenses of providing personal
services and/or maintaining shareholder accounts. The services provided may
include personal services relating to shareholder accounts, such as answering
shareholder inquiries regarding the Fund and providing reports and other
information, and services related to the maintenance of shareholder accounts.
During the period ended June 30, 1997, the Fund was charged an aggregate of
$78,000 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 $24,827 during the period ended June 30, 1997.
The Fund compensates Mellon to provide custodial services for the Fund.
During the period ended June 30, 1997, $12,556 was charged by Mellon pursuant
to the custody agreement.
DREYFUS BASIC GNMA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(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.
NOTE 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales (including paydowns) of
investment securities, excluding short-term securities, during the period
ended June 30, 1997 amounted to $229,490,262 and $225,580,793, respectively.
At June 30, 1997, accumulated net unrealized appreciation on investments
was $669,204, consisting of $801,276 gross unrealized appreciation and
$132,072 gross unrealized depreciation.
At June 30, 1997, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
[Dreyfus Lion "d" logo]
Registration Mark
DREYFUS BASIC
GNMA FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
Mellon Bank. N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 080SA976
[Dreyfus logo]
Registration Mark
BASIC
GNMA
Fund
Semi-Annual
Report
June 30, 1997
