LETTER TO SHAREHOLDERS
Dear Shareholder:
As of April 30, 1995, the net asset value of the Dreyfus GNMA Fund, Inc.
was $14.32. For the 12-month period ended April 30, 1995, the total return of
the Fund was 5.81%.* Dividends paid from net investment income amounted to
$.955 per share, representing an annualized distribution rate per share of
6.67%, based on the April 30, 1995 closing net asset value. There were no
capital gain distributions paid to shareholders this year.
The calendar year 1994 was one of the worst for the bond market in nearly
70 years. Since November, however, the picture has brightened considerably.
During 1994, the Federal Reserve Board tightened short-term interest rates
six different times. Then on February 1, 1995, the Federal Reserve tightened
them yet again. The Federal Funds rate went from 3% in early February 1994 to
6% on February 1, 1995.
With the national elections last November behind us, the bond markets
began a substantial rally. On November 11, 1994, the 30-year Treasury bond
was yielding 8.16% and by April 30, 1995, the same bond was yielding 7.34%.
In years such as 1994, with periods of high volatility and Federal
Reserve tightening actions to raise interest rates, bond prices will decline.
While the Fund has had individual months during the past year with negative
returns, the Fund's total return for the last fiscal quarter ended April 30,
1995 was 3.81%, our semi-annual return was 6.05% and the nine-month total
return was 4.22%.
Over the last 12 months, the Fund's performance has lagged other similar
type funds in the Lipper GNMA Funds Category.** For example, for the three
months ended April 30, 1995, the Fund's total return was 3.81% compared to
4.19% for the Lipper Average. For the fiscal year, the Fund's total return
was 5.81% compared to 6.93% for the Lipper Average. The main reason for the
underperformance was that Lehman Brothers made a major correction in its GNMA
Index, which we use as a benchmark for determining the duration of securities
in the Fund's portfolio.***
Because of the conservative manner in which the Fund is managed,
typically the Fund is no more than a year in duration longer or shorter than
the Index. For several months in late 1994 and early 1995, the Lehman GNMA
Index did not accurately depict the overall duration of the market until it
was readjusted on January 30, 1995. We immediately began to make changes in
the portfolio to conform with the corrected Lehman figures. Prior to then,
investment decisions which were made based on the Index significantly
affected the Fund's relative performance. Had the Index reflected the
duration of the market correctly, the Fund's performance would have been
better on a relative basis. To eliminate this type of problem in the future,
we will look to three indexes in an attempt to come up with the proper
duration for the market and for the Fund. Currently, the duration of the Fund
is just over five years with the composite of three indexes at about 4 1/2
years.
The major strategy employed throughout the year in the Fund has been one
of anticipating higher prepayment rates in May through October 1995 and
structuring the portfolio so that faster prepayments, if they occur, will not
affect the Fund too severely. Currently, approximately 35% of the portfolio
is invested in mortgages we consider "burned out." This means that these
securities have higher coupons and have not been refinanced through one and
often two refinancing cycles. Another 30% of the portfolio is invested in 7
1/2% and 8% GNMA coupons with costs below or close to par. We are hopeful
that these strategies will result in higher yields for the Fund along with
better and more consistent returns. Of course, as economic or market
conditions dictate, the portfolio may be restructured accordingly.
Going forward, we see more volatility in the market. We do believe that
the stringent Federal Reserve policies will be effective in curtailing
domestic inflation. In our opinion, the dollar's weakness still remains a
problem, and both the Treasury department and the Federal Reserve are
currently reviewing their options.
Very truly yours,
(Garitt A. Kono Signature Logo)
Garitt A. Kono
Portfolio Manager
May 15, 1995
New York, N.Y.
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Average total return for all
funds in the Lipper GNMA Funds Category reflect reinvestment of
distributions. The Fund's share price, yield and investment return fluctuate
and an investor may receive more or less than original cost upon redemption.
Past performance is no guarantee of future results.
*** SOURCE: LEHMAN BROTHERS - The Lehman Brothers GNMA Index is an
unmanaged total return performance benchmark for the GNMA market, consisting
of 15- and 30-year fixed-rate securities backed by mortgage pools of the
Government National Mortgage Association.
DREYFUS GNMA FUND, INC.
APRIL 30, 1995
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS GNMA FUND,
INC. AND
THE LEHMAN BROTHERS GNMA INDEX
$25,818
Lehman Brothers
GNMA Index*
In Dollars
$22,434
Dreyfus GNMA
Fund
*Source: Lehman Brothers
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR ENDED FIVE YEARS ENDED FROM INCEPTION (5/29/85)
APRIL 30, 1995 APRIL 30, 1995 TO APRIL 30, 1995
----------------- ------------------ ----------------------------
<S> <C> <C> <C>
5.81% 8.18% 8.48%
</TABLE>
Past performance is not predictive of future performance.
The above graph 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, 1995
PRINCIPAL
BONDS AND NOTES-95.6% AMOUNT VALUE
---------------- ----------------
<S> <C> <C>
MORTGAGE-BACKED CERTIFICATES-87.5%
Government National Mortgage Association I:
7%, 11/15/2022-8/15/2024................................................ $ 49,335,629 $ 46,760,802
7 1/2%, 10/15/2021-2/15/2025............................................ 243,650,356 238,014,724
8%, 4/15/2017-3/15/2025................................................. 200,837,578 201,088,625
8 1/2%, 2/15/2006-3/15/2025............................................. 202,167,398 206,588,799
9%, 7/15/2001-3/15/2025................................................. 240,572,913 250,941,714
9 1/4%, 10/15/2023...................................................... 7,016,962 7,174,843
9 1/2%, 1/15/2016-11/15/2024............................................ 81,505,895 85,886,837
10%, 11/15/2009-10/15/2020.............................................. 51,350,349 55,265,813
10 1/2%, 11/15/2012-6/15/2021........................................... 40,056,028 43,748,393
11%, 7/15/1999-9/15/2019................................................ 54,670,459 60,478,729
11 1/2%, 3/15/2010-7/15/2019............................................ 20,966,447 23,410,296
12%, 2/15/2015.......................................................... 39,076 43,875
----------------
1,219,403,450
----------------
Government National Mortgage Association II:
9%, 3/20/2016........................................................... 3,302,316 3,398,281
9 1/2%, 2/20/2016-2/20/2025............................................. 15,534,148 16,213,767
10 1/2%, 7/20/2013-9/20/2018............................................ 7,085,873 7,615,046
12%, 9/20/2013-12/20/2015............................................... 1,746,048 1,903,734
13 1/2%, 7/20/2014-6/20/2015............................................ 1,170,350 1,316,269
----------------
30,447,097
----------------
Government National Mortgage Association I,
Graduated Payment Mortgage:
10 1/4%, 7/15/2018-10/15/2018........................................... 405,332 437,378
10 3/4%, 3/15/2010-4/15/2016............................................ 1,288,440 1,400,367
11%, 9/15/2010-3/15/2011................................................ 740,131 804,196
11 1/4%, 7/15/2015-1/15/2016............................................ 2,338,834 2,552,978
12 1/4%, 2/15/2014-3/15/2015............................................ 70,169 77,011
----------------
5,271,930
----------------
Government National Mortgage Association II,
Graduated Payment Mortgage:
11 1/4%, 4/20/2014-1/20/2016............................................ 528,454 575,518
11 3/4%, 6/20/2015-1/20/2016............................................ 349,043 380,565
----------------
956,083
----------------
TOTAL MORTGAGE-BACKED CERTIFICATES.......................................... 1,256,078,560
================
U.S. TREASURY BONDS-4.5%
7 5/8%, 2/15/2025....................................................... 63,000,000 65,165,625
============ ============
U.S. TREASURY NOTES-3.6%
7 1/2%, 2/15/2005....................................................... 50,000,000 51,546,900
============ ============
TOTAL BONDS
(cost $1,345,312,710)................................................... $1,372,791,085
================
DREYFUS GNMA FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
SHORT-TERM INVESTMENT-3.8% AMOUNT VALUE
---------------- ----------------
REPURCHASE AGREEMENT:
Lanston (Aubrey G.) & Co., Inc., 5.90%
Dated 4/28/1995, Due 5/1/1995 in the amount of $54,026,550
(fully collateralized by $55,620,000. U.S. Treasury Bills
due 7/27/1995, value $54,856,523)
(cost $54,000,000)...................................................... $ 54,000,000 $ 54,000,000
============
TOTAL INVESTMENTS
(cost $1,399,312,710)................................................... 99.4% $1,426,791,085
======== =============
CASH AND RECEIVABLES (NET).................................................. .6% $9,082,353
======== ==========
NET ASSETS .......................................................... 100.0% $1,435,873,438
======== =============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS GNMA FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
ASSETS:
<S> <C> <C>
Investments in securities, at value-Note 1(a,b)
(cost $1,399,312,710)-see statement................................... $1,426,791,085
Cash.................................................................... 1,388,250
Interest receivable..................................................... 10,667,757
Receivable for investment securities sold............................... 187,692
Receivable for subscriptions to Common Stock............................ 2,663
Prepaid expenses........................................................ 38,810
--------------
1,439,076,257
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 913,454
Due to Distributor...................................................... 30,502
Payable for investment securities purchased............................. 918,414
Payable for Common Stock redeemed....................................... 697,564
Accrued expenses........................................................ 642,885 3,202,819
-------------- ------------
NET ASSETS ................................................................ $1,435,873,438
===============
REPRESENTED BY:
Paid-in capital......................................................... $1,533,086,475
Accumulated undistributed investment income-net......................... 10,935,760
Accumulated net realized (loss) on investments.......................... (135,627,172)
Accumulated net unrealized appreciation on investments-Note 3........... 27,478,375
--------------
NET ASSETS at value applicable to 100,263,923 shares outstanding
(1.1 billion shares of $.01 par value Common Stock authorized).......... $1,435,873,438
===============
NET ASSET VALUE, offering and redemption price per share
($1,435,873,438 / 100,263,923 shares)................................... $14.32
=======
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS GNMA FUND, INC.
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 117,593,218
EXPENSES:
Management fee-Note 2(a).............................................. $ 8,957,493
Shareholder servicing costs-Note 2(b)................................. 4,609,540
Custodian fees........................................................ 555,572
Prospectus and shareholders' reports-Note 2(b)........................ 115,803
Professional fees..................................................... 90,994
Directors' fees and expenses-Note 2(c)................................ 42,595
Registration fees..................................................... 36,503
Miscellaneous......................................................... 137,401
------------
TOTAL EXPENSES.................................................. 14,545,901
--------------
INVESTMENT INCOME-NET........................................... 103,047,317
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $(80,789,008)
Net unrealized appreciation on investments.............................. 59,067,593
------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (21,721,415)
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $81,325,902
==============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS GNMA FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
-----------------------------------
1994 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 118,163,136 $ 103,047,317
Net realized (loss) on investments...................................... (17,084,575) (80,789,008)
Net unrealized appreciation (depreciation) on investments for the year.. (83,513,627) 59,067,593
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 17,564,934 81,325,902
--------------- -------------
NET EQUALIZATION (DEBITS)-NOTE 1(E)......................................... (705,521) (782,557)
---------------- ------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net................................................... (118,531,793) (100,907,536)
--------------- -------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold........................................... 213,775,561 98,695,554
Dividends reinvested.................................................... 90,441,867 76,473,356
Cost of shares redeemed................................................. (458,066,041) (320,877,856)
--------------- -------------
(DECREASE) IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS.............. (153,848,613) (145,708,946)
--------------- -------------
TOTAL (DECREASE) IN NET ASSETS.................................... (255,520,993) (166,073,137)
NET ASSETS:
Beginning of year....................................................... 1,857,467,568 1,601,946,575
------------- --------------
End of year (including undistributed investment income-net:
$9,578,536 in 1994 and $10,935,760 in 1995)........................... $1,601,946,575 $1,435,873,438
============== ==============
SHARES SHARES
---------------- ----------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 14,080,956 6,996,614
Shares issued for dividends reinvested.................................. 5,964,089 5,428,508
Shares redeemed......................................................... (30,353,818) (22,822,022)
--------------- -------------
NET (DECREASE) IN SHARES OUTSTANDING.................................. (10,308,773) (10,396,900)
=============== =============
</TABLE>
See notes to financial statements.
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 the Fund's financial statements.
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
-------------------------------------------------------
PER SHARE DATA: 1991 1992 1993 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........... $14.07 $14.74 $14.90 $15.35 $14.48
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net........................ 1.27 1.20 1.10 .99 .98
Net realized and unrealized gain (loss) on investments .68 .17 .46 (.87) (.18)
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS........... 1.95 1.37 1.56 .12 .80
------- ------- ------- ------- -------
DISTRIBUTIONS;
Dividends from investment income-net......... (1.28) (1.21) (1.11) (.99) (.96)
------- ------- ------- ------- -------
Net asset value, end of year................. $14.74 $14.90 $15.35 $14.48 $14.32
======= ------- ------- ------- -------
TOTAL INVESTMENT RETURN.......................... 14.44% 9.65% 10.80% .71% 5.81%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... .97% .95% .94% .95% .97%
Ratio of net investment income to average net assets 8.81% 8.05% 7.20% 6.54% 6.90%
Portfolio Turnover Rate...................... 25.85% 61.00% 155.90% 211.40% 362.70%
Net Assets, end of year (000's Omitted)...... $1,583,793 $1,756,776 $1,857,468 $1,601,947 $1,435,873
</TABLE>
See notes to financial statements.
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, until August 24, 1994, acted as the distributor of the Fund's
shares, which are sold to the public without a sales load. Dreyfus Service
Corporation is a wholly-owned subsidiary of The Dreyfus Corporation
("Manager"). Effective August 24, 1994, the Manager became a direct
subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc.
(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 are readily available and are representative of the bid side of
the market in the judgment of the Service are valued at the mean between the
quoted bid prices (as obtained by the Service from dealers in such
securities) and asked prices (as calculated by the Service based upon its
evaluation of the market for such securities). Other investments (which
constitute a majority of the portfolio securities) are carried at fair value
as determined by the Service, based on methods which include consideration
of: yields or prices of securities of comparable quality, coupon, maturity
and type; indications as to values from dealers; and general market
conditions. Short-term investments are carried at amortized cost, which
approximates value.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income (including, where applicable, amortization of discount on short-term
investments) is recognized on the accrual basis.
The Fund may enter into repurchase agreements with financial
institutions, deemed to be creditworthy by the Fund's Manager, subject to the
seller's agreement to repurchase and the Fund's agreement to resell such
securities at a mutually agreed upon price. Securities purchased subject to
repurchase agreements are deposited with the Fund's custodian and, pursuant
to the terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. If the value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the Fund will require the seller to
deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults on its repurchase
obligation, the Fund maintains the right to sell the underlying securities at
market value and may claim any resulting loss against the seller.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Fund may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Fund not to distribute such gain.
DREYFUS GNMA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
On April 28, 1995, the Board of Directors declared a cash dividend of
$.086 per share from undistributed investment income-net, payable on May 1,
1995 (ex-dividend date) to shareholders of record as of the close of business
on April 28, 1995.
(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.
The Fund has an unused capital loss carryover of approximately
$102,569,000 available for Federal income tax purposes to be applied against
future net securities profits, if any, realized subsequent to April 30, 1995.
The carryover does not include net realized securities losses from November
1, 1994 through April 30, 1995 which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, $3,786,000 of the
carryover expires in fiscal 1997, $34,058,000 expires in fiscal 1998 and
$64,725,000 expires in fiscal 2003.
In connection with the adoption of Statement of Position 93-2
("Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies"),
the Fund has reclassified $99,142,000 from accumulated net realized loss on
investments to paid-in-capital. Results of operations and net assets were not
effected by this reclassification.
(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, 1995.
(B) On August 2, 1994, Fund shareholders approved a revised Service Plan
(the "Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the Plan,
effective August 24, 1994, the Fund (a) reimburses the Distributor for
payments to certain Service Agents for distributing the Fund's shares and
servicing shareholder accounts and (b) pays the Manager, Dreyfus Service
Corporation or any affiliate (collectively "Dreyfus") for advertising and
marketing relating to the Fund and for servicing shareholder accounts, at an
aggregate annual rate of .20 of 1% of the value of the Fund's average daily
net assets. Each of the Distributor and Dreyfus may pay Service Agents (a
securities dealer, financial institution or other industry professional) a
fee in respect of the Fund's shares owned by shareholders with whom the
Service Agent has a servicing relationship or for whom the Service Agent is
the dealer or holder of record. Each of the
DREYFUS GNMA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Distributor and Dreyfus determine the amounts to be paid to Service Agents to
which it will make payments and the basis on which such payments are made.
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.
Prior to August 24, 1994, the Fund's Service Plan ("prior Service Plan")
provided that the Fund pay Dreyfus Service Corporation 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. Dreyfus Service
Corporation made payments to one or more Service Agents based on the value of
the Fund's shares owned by clients of the Service Agent. The prior Service
Plan also separately provided 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, 1995, $2,007,279 was charged to the Fund
pursuant to the Plan and $992,986 was charged pursuant to the prior Service
Plan.
(C) Prior to August 24, 1994, certain officers and directors of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each director who is not an "affiliated person"
receives an annual fee of $4,500 and an attendance fee of $500 per meeting.
The Chairman of the Board receives an additional 25% of such compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales (including paydowns) of
investment securities, excluding short-term securities, during the year ended
April 30, 1995, amounted to $4,938,255,630 and $4,965,106,267, respectively.
At April 30, 1995, accumulated net unrealized appreciation on investments
was $27,478,375, consisting of $32,198,737 gross unrealized appreciation and
$4,720,362 gross unrealized depreciation.
At April 30, 1995, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
DREYFUS GNMA FUND, INC.
REPORT OF ERNST & YOUNG LLP, 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, 1995, and the related statement of operations for the year then ended,
the statement of changes in net assets for each of the two years in the
period then ended, and financial highlights for each of the years indicated
therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Dreyfus GNMA Fund, Inc. at April 30, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the indicated years, in conformity with generally accepted accounting
principles.
(Ernst and Young LLP Signature Logo)
New York, New York
June 6, 1995
DREYFUS GNMA FUND, INC.
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
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. 265AR954
GNMA
Fund, Inc.
Annual Report
April 30, 1995
(Dreyfus Lion Logo)
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 |
| 4/30/95 | 25,818 | 22,434 |
|--------------------------------------------------- |
*Source: Lehman Brothers
