PRESIDENT'S LETTER
Dear Shareholder:
At the end of our fiscal year, April 30, 1994, the Dreyfus GNMA Fund's
net asset value was $14.48 per share. The total return of your Fund's
portfolio for this one-year period was .71%.* Dividends paid from net
investment income during the year amounted to $.995 per share, representing a
distribution rate per share of 6.87%, based on the April 30 closing net asset
value per share.
As our fiscal year began in May 1993, we had a new Administration and new
economic policies. The Omnibus Budget Reconciliation Act of 1993 was finally
passed. This bill is expected to reduce the Federal deficit by $500 billion
over the next five years. This reduction is to be accomplished by tax
increases and reductions in Federal government spending.
In March of 1993, inflation appeared to be increasing, causing the
Federal Open Market Committee to suggest a potential tightening of policy
which could lead to an increase in rates at its May meeting. By August,
however, fears of inflation had subsided and the Committee returned to a
neutral posture. In the fourth quarter of 1993, economic activity surged.
Gross Domestic Product increased by 7%, led by increased auto sales and
production. As economic growth became evident, the markets once again anticipa
ted monetary tightening.
From the beginning of the Fund's fiscal year, which was May 1, 1993, the
Federal Funds rate remained at 3% until February 4, 1994. At that time, the
Federal Reserve Board increased the Federal Funds rate to 3 1/4%. This was
the first time the Federal Reserve had raised rates in five years. This
original increase was followed by two additional 1/4 point increases on March
22, 1994 and April 18, 1994. Needless to say, these Federal Funds rate hikes
have caused interest rates all along the Treasury yield curve to increase
dramatically.
During the last fiscal year, the mortgage market had one of its most
volatile years ever. In March of 1993, the Mortgage Bankers Association
Refinancing Index (which is an index of mortgage refinancing volume based on
a three-week average of loan applications) reached a high of 1465, and then
surpassed that with a new high in September of 1723. In December, the Index
reached a low of 510 only to accelerate again, in February 1994, to 1036. As
one can imagine, this type of refinancing activity played havoc with the
mortgage market as prepayments of outstanding mortgages accelerated.
In managing the portfolio, we attempted to anticipate the prepayment and
refinancing trends in the mortgage market. We further attempted to anticipate
the fall in interest rates during the first half of the fiscal year and the
subsequent rise in rates thereafter.
We began the fiscal year by eliminating GNMA 8% and 8 1/2% coupons. Our
holdings in 8% coupons went from 27% to 22% and 8 1/2% coupons went from 17%
to 13%. We added GNMA 7 1/2% coupons with our holdings going from 8% to 26%.
As mid-fiscal year approached, we started to take a more defensive posture
and purchased 9% positions in GNMA fifteen-year securities. We bought nearly
equal amounts of 7% and 7 1/2% coupons in these securities. At the beginning
of the new calendar year, we sold our position in GNMA fifteen-year 7 1/2%
coupons and bought a like amount of GNMA thirty-year 8% coupons. These GNMA
8% coupons were of special interest. These securities were issued in 1993 and
as such were issued above the prevailing mortgage rate. (The actual mortgage r
ate during most of the year was represented by rates considerably lower than
8%.) Thus, these GNMA 8% coupons can be assumed to have been created with
very low points or no points at all. As it now stands, if these mortgages are
refinanced again, there will be up to a half-percent additional penalty. Due
to this penalty, it can be assumed that these 8% mortgages will have slower
prepayment characteristics than generic GNMAs of the same coupon.
Your Fund's one-year total return was .71% which compares to .06% return
for the Lehman Brothers GNMA Index.** By outperforming this Index by 65 basis
points, we believe we have employed a successful year-long strategy in a very
difficult market environment.
Your portfolio is currently structured defensively as the current backups
in rates can continue for a little longer. We will, however, be mindful of
the market's ability to rally dramatically should the economy begin to slow
once again. We will continue to make adjustments to your Fund's portfolio
when we deem it appropriate.
We look forward to continuing to serve your investment needs.
Very truly yours,
(Signature Logo)
Garitt A. Kono
President
May 16, 1994
New York, N.Y.
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** SOURCE: LEHMAN BROTHERS - The Lehman Brothers GNMA Index is an unmanaged
total return performance benchmark for the GNMA market, consisting of 15- to
30-year fixed-rate securities backed by mortgage pools of the Government
National Mortgage Association.
PERFORMANCE
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS GNMA FUND, INC.
AND THE lehman brothers GNMA index
Exhibit A
$23,778
Lehman Brothers
GNMA Index*
$21,204
Dreyfus GNMA Fund
In Dollars
*Source: Lehman Brothers
AVERAGE ANNUAL TOTAL RETURN
ONE YEAR ENDED FIVE YEARS ENDED FROM INCEPTION (5/29/85)
APRIL 30, 1994 APRIL 30, 1994 TO APRIL 30, 1994
-------------- ---------------- -------------------------
0.71% 8.73% 8.79%
Past performance is not predictive of future performance.
The above illustration compares a $10,000 investment made in Dreyfus GNMA
Fund on 5/29/85 (Inception Date) to a $10,000 investment made in the Lehman
Brothers GNMA Index on that date. For comparative purposes the value of the
Index on 5/31/85 is used as the beginning value on 5/29/85. All dividends and
capital gain distributions are reinvested.
The Fund invests primarily in Ginnie Maes and its performance takes into
account all applicable fees and expenses. Unlike the Fund, the Lehman
Brothers GNMA Index is an unmanaged total return performance benchmark for
the GNMA market, consisting of 15- to 30-year fixed-rate GNMA securities and
is considered to be representative of the GNMA market. The Index does not
take into account charges, fees and other expenses. Further information
relating to Fund performance, including expense reimbursements, if applicable,
is contained in the Condensed Financial Information section of the
Prospectus and elsewhere in this report.
<TABLE>
<CAPTION>
DREYFUS GNMA FUND, INC.
STATEMENT OF INVESTMENTS
APRIL 30, 1994
PRINCIPAL
BONDS--88.7% AMOUNT VALUE
-------------- ----------------
<S> <C>
MORTGAGE-BACKED CERTIFICATES:
Government National Mortgage Association I:
7% (a).................................................................. $ 2,913,000 $ 2,852,002
7%, 5/15/2007-12/15/2023................................................ 252,681,270 247,390,124
7 1/2% (a) ............................................................. 45,000,000 45,098,100
7 1/2%, 8/15/2021-12/15/2023............................................ 128,369,558 124,598,060
8% (a) ................................................................. 100,000,000 99,750,000
8%, 10/15/2001-2/15/2024................................................ 513,560,533 512,981,395
8 1/2% (a) ............................................................. 90,000,000 91,855,800
9%, 7/15/2001-11/15/2001................................................ 912,155 956,048
10%, 11/15/2009-10/15/2020.............................................. 67,637,867 72,964,349
10 1/2%, 11/15/2012-6/15/2021........................................... 54,728,731 60,799,790
11%, 7/15/1999-9/15/2019................................................ 75,354,578 85,621,691
11 1/2%, 3/15/2010-7/15/2019............................................ 29,891,344 34,430,942
12%, 2/15/2015.......................................................... 119,292 138,527
14%, 5/15/2011-2/15/2015................................................ 6,675,215 7,891,306
15%, 6/15/2011-3/15/2013................................................ 3,469,375 4,112,285
-------------
1,391,440,419
=============
Government National Mortgage Association II:
9%, 3/20/2016........................................................... 4,397,575 4,510,241
10 1/2%, 7/20/2013-9/20/2018............................................ 9,716,124 10,599,611
12%, 9/20/2013-12/20/2015............................................... 2,486,727 2,806,893
13 1/2%, 9/20/2013-6/20/2015............................................ 1,815,558 2,077,670
-------------
19,994,415
=============
Government National Mortgage Association I,
Graduated Payment Mortgage:
10 1/4%, 7/15/2018-10/15/2018........................................... 526,905 574,158
10 3/4%, 3/15/2010-4/15/2016............................................ 2,314,586 2,572,083
11%, 9/15/2010-3/15/2011................................................ 827,219 923,896
11 1/4%, 7/15/2015-1/15/2016............................................ 3,840,852 4,318,539
12 1/4%, 2/15/2014-3/15/2015............................................ 70,965 80,788
-------------
8,469,464
=============
Government National Mortgage Association II,
Graduated Payment Mortgage:
11 1/4%, 4/20/2014-1/20/2016............................................ 801,559 899,245
11 3/4%, 6/20/2015-1/20/2016............................................ 496,454 559,594
-------------
1,458,839
=============
TOTAL BONDS
(cost $1,452,952,355)................................................... $1,421,363,137
=============
DREYFUS GNMA FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED)
APRIL 30, 1994
PRINCIPAL
SHORT-TERM INVESTMENTS--19.7% AMOUNT VALUE
-------------- ----------------
REPURCHASE AGREEMENTS:
Daiwa Securities America Inc., 3.55%
Dated 4/29/1994, Due 5/2/1994 in the amount of $110,632,719
(fully collateralized by $113,550,000 U.S. Treasury Bills
due 6/30/1994 to 10/20/1994, value $111,859,373)........................ $110,600,000 $ 110,600,000
Goldman, Sachs & Co., 3.50%
Dated 4/29/1994, Due 5/2/1994 in the amount of $110,032,083
(fully collateralized by $108,700,000 U.S. Treasury Notes,
6% due 11/15/1994, value $112,524,018).................................. 110,000,000 110,000,000
Nikko Securities Co. International Inc., 3.55%
Dated 4/29/1994, Due 5/2/1994 in the amount of $95,028,104
(fully collateralized by $100,140,000 U.S. Treasury Bills
due 3/9/1995, value $96,052,285)........................................ 95,000,000 95,000,000
-------------
TOTAL SHORT-TERM INVESTMENTS
(cost $315,600,000)..................................................... $ 315,600,000
=============
TOTAL INVESTMENTS
(cost $1,768,552,355)................................................... 108.4% $1,736,963,137
====== ==============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (8.4%) $(135,016,562)
====== ==============
NET ASSETS.................................................................. 100.0% $1,601,946,575
====== ==============
NOTE TO STATEMENT OF INVESTMENTS;
(a) Purchased on a when-issued basis.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS GNMA FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1994
ASSETS:
<S> <C> <C>
Investments in securities, at value (cost $1,768,552,355)--see statement
(including repurchase agreements of $315,600,000)-Note 1(a,b)......... $1,736,963,137
Cash.................................................................... 8,098,791
Receivable for investment securities sold............................... 98,558,754
Interest receivable..................................................... 9,338,014
Receivable for subscriptions to Common Stock............................ 6,268
Prepaid expenses........................................................ 253,247
--------------
1,853,218,211
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 1,065,659
Payable for investment securities purchased............................. 248,171,771
Payable for Common Stock redeemed....................................... 1,327,884
Accrued expenses........................................................ 706,322 251,271,636
------------ -----------
NET ASSETS.................................................................. $1,601,946,575
==============
REPRESENTED BY:
Paid-in capital......................................................... $1,776,704,704
Accumulated undistributed investment income-net......................... 9,578,536
Accumulated net realized (loss) on investments.......................... (152,747,447)
Accumulated net unrealized (depreciation) on investments-Note 3......... (31,589,218)
--------------
NET ASSETS at value applicable to 110,660,823 shares outstanding
(1.1 billion shares of $.01 par value Common Stock authorized).......... $1,601,946,575
==============
NET ASSET VALUE, offering and redemption price per share
($1,601,946,575 / 110,660,823 shares)................................... $14.48
======
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1994
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 135,350,396
EXPENSES:
Management fee--Note 2(a)............................................. $ 10,846,802
Shareholder servicing costs-Note 2(b)................................. 5,513,217
Custodian fees........................................................ 465,741
Prospectus and shareholders' reports-Note 2(b)........................ 151,756
Professional fees..................................................... 109,521
Registration fees..................................................... 39,158
Directors' fees and expenses-Note 2(c)................................ 28,661
Miscellaneous......................................................... 32,404
-------------
TOTAL EXPENSES.................................................. 17,187,260
--------------
INVESTMENT INCOME--NET.......................................... 118,163,136
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments--Note 3.............................. $ (17,084,575)
Net unrealized (depreciation) on investments............................ (83,513,627)
-------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (100,598,202)
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 17,564,934
==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS GNMA FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
--------------------------------
1993 1994
------------ -------------
<S> <C> <C>
OPERATIONS:
Investment income--net.................................................. $ 132,497,814 $ 118,163,136
Net realized gain (loss) on investments................................. 40,670,845 (17,084,575)
Net unrealized appreciation (depreciation) on investments for the year.. 14,920,282 (83,513,627)
------------ -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 188,088,941 17,564,934
------------ -------------
NET EQUALIZATION (DEBITS)--NOTE 1(E)........................................ (151,835) (705,521)
------------ -------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net.................................................. (132,935,183) (118,531,793)
------------ -------------
- - --CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 459,876,439 213,775,561
Dividends reinvested.................................................... 100,738,605 90,441,867
Cost of shares redeemed................................................. (514,925,067) (458,066,041)
------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS..... 45,689,977 (153,848,613)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................... 100,691,900 (255,520,993)
NET ASSETS:
Beginning of year....................................................... 1,756,775,668 1,857,467,568
------------- -------------
End of year (including undistributed investment income-net:
$10,652,714 in 1993 and $9,578,536 in 1994)........................... $1,857,467,568 $1,601,946,575
============== ==============
SHARES SHARES
-------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 30,298,481 14,080,956
Shares issued for dividends reinvested.................................. 6,653,483 5,964,089
Shares redeemed......................................................... (33,904,995) (30,353,818)
-------------- -------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING......................... 3,046,969 (10,308,773)
============== =============
See notes to financial statements.
</TABLE>
DREYFUS GNMA FUND, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This information
has been derived from information provided in the Fund's financial
statements.
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
- - ------------------------------------------------------------
PER SHARE DATA: 1990 1991 1992 1993 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year....................... $14.18 $14.07 $14.74 $14.90 $15.35
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income--net................................... 1.29 1.27 1.20 1.10 .99
Net realized and unrealized gain (loss) on investments (.10) .68 .17 .46 (.87)
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS....................... 1.19 1.95 1.37 1.56 .12
------- ------- ------- ------- -------
DISTRIBUTIONS;
Dividends from investment income--net.................... (1.30) (1.28) (1.21) (1.11) (.99)
------- ------- ------- ------- -------
Net asset value, end of year............................. $14.07 $14.74 $14.90 $15.35 $14.48
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN 8.56% 14.44% 9.65% 10.80% .71%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................. .97% .97% .95% .94% .95%
Ratio of net investment income to average net assets8.98% 8.81% 8.05% 7.20% 6.54%
Portfolio Turnover Rate.................................. 272.40% 25.85% 61.00% 155.90% 211.40%
Net Assets, end of year (000's Omitted).................. $1,496,469 $1,583,793 $1,756,776 $1,857,468 $1,601,947
See notes to financial statements.
</TABLE>
DREYFUS GNMA FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. Dreyfus Service
Corporation ("Distributor") acts as the distributor of the Fund's shares,
which are sold to the public without a sales load. The Distributor is a
wholly-owned subsidiary of The Dreyfus Corporation ("Manager").
(A) PORTFOLIO VALUATION: The Fund's investments (excluding short-term
investments) are valued each business day by an independent pricing service
("Service") approved by the Board of Directors. Investments for which quoted
bid prices in the judgment of the Service are readily available and are
representative of the bid side of the market are valued at the mean between
the quoted bid prices (as obtained by the Service from dealers in such
securities) and asked prices (as calculated by the Service based upon its
evaluation of the market for such securities). Other investments (which
constitute a majority of the portfolio securities) are carried at fair value
as determined by the Service, based on methods which include consideration
of: yields or prices of securities of comparable quality, coupon, maturity
and type; indications as to values from dealers; and general market
conditions. Short-term investments are carried at amortized cost, which
approximates value.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income (including, where applicable, amortization of discount on short-term
investments) is recognized on the accrual basis.
The Fund may enter into repurchase agreements with financial
institutions, deemed to be creditworthy by the Fund's Manager, subject to the
seller's agreement to repurchase and the Fund's agreement to resell such
securities at a mutually agreed upon price. Securities purchased subject to
repurchase agreements are deposited with the Fund's custodian and, pursuant
to the terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. If the value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the Fund will require the seller to
deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults on its repurchase
obligation, the Fund maintains the right to sell the underlying securities at
market value and may claim any resulting loss against the seller.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and 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.
On April 29, 1994, the Board of Directors declared a cash dividend of
$.078 per share from undistributed investment income-net, payable on May 2,
1994 (ex-dividend date) to shareholders of record as of the close of business
on April 29, 1994.
(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 provisions available to
certain investment companies, as defined in applicable sections of the
Internal Revenue Code, and to make distributions of taxable income sufficient
to relieve it from all, or substantially all, Federal income taxes.
The Fund has an unused capital loss carryover of approximately
$132,464,000 available for Federal income tax purposes to be applied against
future net securities profits, if any, realized subsequent to April 30, 1994.
If not applied, $47,417,000 of the carryover expires in fiscal 1996,
$39,660,000 expires in fiscal 1997, $39,156,000 expires in fiscal 1998 and
$6,231,000 expires in fiscal 1999.
DREYFUS GNMA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(E) EQUALIZATION: The Fund follows the accounting practice known as
"equalization" by which a portion of the amounts received on issuances and
the amounts paid on redemptions of Fund shares (equivalent, on a per share
basis, to the amount of distributable investment income-net on the date of
the transaction) is allocated to undistributed investment income-net so that
undistributed investment income-net per share is unaffected by Fund shares
issued or redeemed.
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, interest, brokerage and extraordinary
expenses, exceed 1 1/2% of the average daily value of the Fund's net assets
for any full fiscal year. No expense reimbursement was required for the year
ended April 30, 1994.
(B) The Fund has adopted a Service Plan (the "Plan") pursuant to which
the Fund pays the Distributor, at an annual rate of .20 of 1% of the value of
the Fund's average daily net assets, for costs and expenses in connection
with advertising, marketing and distributing the Fund's shares and for
servicing shareholder accounts. The Distributor may make payments to one or
more Service Agents (a securities dealer, financial institution, or other
industry professional) based on the value of the Fund's shares owned by
clients of the Service Agent. The Plan also separately provides for the Fund
to bear the costs of preparing, printing and distributing certain of the
Fund's prospectuses and statements of additional information and costs
associated with implementing and operating the Plan, not to exceed the
greater of $100,000 or .005 of 1% of the Fund's average daily net assets for
any full fiscal year. During the year ended April 30, 1994, the Fund was
charged $3,632,952 pursuant to the Plan, substantially all of which was
retained by the Distributor.
(C) Certain officers and directors of the Fund are "affiliated persons,"
as defined in the Act, of the Manager and/or the Distributor. Each director
who is not an "affiliated person" receives an annual fee of $4,500 and an
attendance fee of $500 per meeting.
(D) On December 5, 1993, the Manager entered into an Agreement and Plan
of Merger (the "Merger Agreement") providing for the merger of the Manager
with a subsidiary of Mellon Bank Corporation ("Mellon").
Following the merger, it is planned that the Manager will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a number
of contingencies, including receipt of certain regulatory approvals and
approvals of the stockholders of the Manager and of Mellon. The merger is
expected to occur in mid-1994, but could occur later.
As a result of regulatory requirements and the terms of the Merger
Agreement, the Manager will seek various approvals from the Fund's board and
shareholders before completion of the merger. Shareholder approval will be
solicited by a proxy statement.
NOTE 3--SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales (including paydowns) of
investment securities, excluding short-term securities, during the year ended
April 30, 1994, amounted to $3,621,062,755 and $3,936,862,177, respectively.
At April 30, 1994, accumulated net unrealized depreciation on investments
was $31,589,218, consisting of $20,414,324 gross unrealized appreciation and
$52,003,542 gross unrealized depreciation.
At April 30, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS GNMA FUND, INC.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS GNMA FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Dreyfus GNMA Fund, Inc., including the statement of investments, as of April
30, 1994, and the related statement of operations for the year then ended,
the statement of changes in net assets for each of the two years in the
period then ended, and financial highlights for each of the years indicated
therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus GNMA Fund, Inc. at April 30, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the indicated years, in conformity with generally accepted accounting
principles.
(Ernst and Young logo Signature)
New York, New York
June 8, 1994
4
GNMA
Fund, Inc.
Annual Report
April 30, 1994
DREYFUS GNMA FUND, INC.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
DISTRIBUTOR
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
110 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A. 265AR944
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS GNMA FUND, INC. AND THE
LEHMAN BROTHERS GNMA INDEX
EXHIBIT A:
________________________________________________
| | | |
| PERIOD | LEHMAN BROTHERS | DREYFUS |
| | GNMA INDEX * | GNMA FUND |
|----------- | ------------------ | ------------|
| 5/29/85 | 10,000 | 10,000 |
| 4/30/86 | 11,877 | 11,874 |
| 4/30/87 | 12,625 | 12,406 |
| 4/30/88 | 13,765 | 13,279 |
| 4/30/89 | 14,917 | 13,951 |
| 4/30/90 | 16,550 | 15,144 |
| 4/30/91 | 19,216 | 17,331 |
| 4/30/92 | 21,463 | 19,003 |
| 4/30/93 | 23,763 | 21,054 |
| 4/30/94 | 23,778 | 21,204 |
|_______________________________________________|
