PREMIER GNMA FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Premier GNMA Fund.
For its semi-annual reporting period ended June 30, 1996, your Fund paid
income dividends of approximately $.439 per share for Class A shares, $.402
per share for Class B shares and $.381 per share for Class C shares,
producing annualized distribution rates per share of 5.92%, 5.67% and 5.39%,
respectively.*
THE ECONOMY
So far this year, the economic story has been upbeat: solid growth,
strong gains in employment and low inflation. Yet along with this good news
has come the fear that the Federal Reserve Board will tighten monetary policy
with the expectation that the continued economic expansion will bring a
resurgence in inflation. The growth in the economy has resulted in strong
gains in employment. Over recent months, these reports of new jobs have been
accompanied by rises in long-term interest rates, a reflection of the
market's concern that inflation perceptions by the Fed would result in its
acting to cool down an economy that risks overheating. To date, the Fed has
refrained from any tightening moves. The Fed has cut rates three times
between last July and January of this year, and has since held the Federal
Funds rate steady at 5.25%, even as long-term rates in the bond market have
risen more than a full percentage point.
The interplay between job growth and economic growth has become the
dominant force affecting how investors take the outlook for inflation and the
possibility that the Fed will raise short-term interest rates. Along with
handsome increases in new jobs have come solid gains in retail sales,
although many economists feel that heavy consumer debt burdens will act as a
constraint against any acceleration in growth. Automobile sales remain
strong, the third year in a row of steady growth for auto manufacturers. Yet,
what investors focus on and what concerns the Fed may be two different
things. On June 19, the Fed's Beige Book, a survey of business conditions in
the 12 districts of the Federal Reserve, reported that the economy was
growing at a moderate pace. Recent statements by officials of the Federal
Reserve Board have suggested that "sustained moderate growth" is the most
likely path for the economy and that labor markets, while tightening, do not
yet indicate significant inflationary pressures.
There seem to be few signs of inflation. Commodity and producer prices
remain subdued. Anecdotal reports from companies continue to attest to their
lack of ability to raise prices. Furthermore, some of the inflationary
consequences of running large budget deficits have eased due to the growth in
the economy. Higher than expected tax payments - a result of economic growth
- - have reduced the Federal budget deficit to the $130 billion level, the
lowest since the early 1980s.
Nevertheless, there are limits to non-inflationary economic expansion. As
always, we remain watchful for signs of price pressures that could lead to a
resurgence of inflation. For now, there are few indications of that. In fact,
there also appears to be a growing consensus that the rate of economic growth
could taper off in the second half of the year due to the effect of higher
long-term interest rates on certain key sectors of the economy like housing
and consumer spending.
MARKET ENVIRONMENT
The bond market over the last six months has been trading in a negative
environment. In order to gauge the extent of the decline we should look at
the activity of the 10-year Treasury note for that period. The 10-
year note has a similar maturity as that of the average life of the current
coupon GNMA, which is usually between 10 and 12 years. Since the beginning of
the year the 10-year Treasury note has lost about 110 basis points, due to
the rise in long-term interest rates during the reporting period. Over the
last six months this sell off in the Treasury market carried over to the GNMA
market. Your Fund performed well during this period, as compared to other
GNMA funds. For the six months ended June 30, 1996, Lipper Analytical
Services, Inc. ranked the Class A and B shares of the Fund 12th and 18th out
of 54 funds in its peer group, respectively. Class C shares were not rated
because performance was not available for the full time period.
THE PORTFOLIO
Throughout the first half of the year we maintained a duration which was
considerably shorter than that of the various indices against which the Fund
is judged. The Fund was structured defensively at the beginning of the year
in anticipation of rising interest rates, and we maintained this posture
throughout the reporting period. The longer a fund's duration, the more
volatile the fund will be as interest rates move. In a rising interest rate
environment, a shorter duration generally is advantageous to a fund. The
reverse is true in a declining interest rate environment. Our goal was to
maintain a duration which was about a half year shorter than the duration of
the indices against which the Fund is compared. Another important decision
that we have continued to adhere to was our issue selection. We have
maintained the posture of owning mostly seasoned GNMA securities. The GNMAs
that we own were issued in 1993 or earlier and have been through at least one
refinancing cycle. This is advantageous because the prepayments on these
securities have a higher degree of prepayment consistency than do more newly
issued securities. Since the time they were purchased, these seasoned GNMAs,
which comprise nearly the entire portfolio, have outperformed the non-seasoned
securities. These two decisions - maintaining a short duration and holding
seasoned GNMA securities - have produced positive results for your Fund
during the reporting period.
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.
Very truly yours,
[Garitt A. Kono signature logo]
Garitt A. Kono
Portfolio Manager
July 15, 1996
New York, N.Y.
* Annualized distribution rate per share is based upon dividends per share
paid from net investment income during the period, divided by the maximum
offering price per share at the end of the period in the case of Class A
shares, or the net asset value per share at the end of the period in the case
of Class B and Class C shares.
<TABLE>
PREMIER GNMA FUND
STATEMENT OF INVESTMENTS JUNE 30, 1996 (UNAUDITED)
PRINCIPAL
BONDS-92.9% AMOUNT VALUE
_______ _______
<S> <C> <C>
MORTGAGE-BACKED SECURITIES
Government National Mortgage Association I:
7%, 6/15/2008-11/15/2023................................................ $ 38,353,054 $ 37,146,453
7 1/2% (a).............................................................. 5,000,000 4,932,800
7 1/2%, 3/15/2002-7/1/2026.............................................. 48,465,469 48,173,964
8%, 4/15/2017-2/15/2025................................................. 12,619,880 12,760,893
8 1/2%, 10/15/2017-12/15/2022........................................... 6,394,100 6,602,579
9%, 4/15/2016-12/15/2022................................................ 8,837,677 9,303,484
9 1/2%, 10/15/2016-1/15/2025............................................ 8,502,067 9,147,387
10%, 10/15/2016-10/15/2020.............................................. 1,187,036 1,306,234
10 1/2%, 2/15/2016-8/15/2019............................................ 470,128 522,783
11%, 2/15/2010-8/15/2019................................................ 2,549,790 2,854,753
11 1/2%, 1/15/2013...................................................... 166,509 183,625
______
132,934,955
______
Government National Mortgage Association II:
9%, 7/20/2025........................................................... 8,744,150 9,099,338
11%, 7/20/2013-10/20/2015............................................... 2,191,018 2,402,583
______
11,501,921
______
Government National Mortgage Association I,
Project Loan;
9 1/4%, 10/15/2013...................................................... 4,798,450 5,068,363
______
TOTAL BONDS
(cost $149,251,527)..................................................... $149,505,239
=======
SHORT-TERM INVESTMENTS-3.8%
U.S. TREASURY BILLS:
4.68%, 8/8/1996 (b)..................................................... $ 43,000 $ 42,770
5%, 8/1/1996 (b)........................................................ 5,846,000 5,820,452
5.48%, 8/22/1996 (b).................................................... 253,000 251,113
______
TOTAL SHORT-TERM INVESTMENTS
(cost $6,114,335)....................................................... $ 6,114,335
=======
TOTAL INVESTMENTS
(cost $155,365,862)..................................................... 96.7% $155,619,574
==== =======
CASH AND RECEIVABLES (NET).................................................. 3.3% $ 5,235,424
==== =======
NET ASSETS .......................................................... 100.0% $160,854,998
==== =======
NOTES TO STATEMENT OF INVESTMENTS:
(a) Purchased on a forward commitment basis.
(b) Held by the custodian in a segregated account as collateral for
securities purchased on a forward commitment basis.
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
PREMIER GNMA FUND
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1996 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $155,365,862)-see statement..................................... $155,619,574
Cash.................................................................... 244,562
Receivable for investment securities sold............................... 10,189,368
Interest receivable..................................................... 973,692
Receivable for shares of Beneficial Interest subscribed................. 64,574
Prepaid expenses........................................................ 1,339
_______
167,093,109
LIABILITIES:
Due to The Dreyfus Corporation and affiliates........................... $ 91,799
Due to Distributor...................................................... 43,759
Payable for investment securities purchased............................. 4,896,875
Payable for shares of Beneficial Interest redeemed...................... 1,106,685
Accrued expenses........................................................ 98,993 6,238,111
____________ ____________
NET ASSETS ................................................................ $160,854,998
============
REPRESENTED BY:
Paid-in capital......................................................... $169,486,091
Accumulated net realized (loss) on investments.......................... (8,884,805)
Accumulated net unrealized appreciation on investments-Note 3........... 253,712
____________
NET ASSETS at value......................................................... $160,854,998
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 8,518,061
============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 2,826,540
============
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 1,129
============
NET ASSET VALUE per share:
Class A Shares
($120,739,001 / 8,518,061 shares)..................................... $14.17
=====
Class B Shares
($40,099,976 / 2,826,540 shares)...................................... $14.19
=====
Class C Shares
($16,021 / 1,129 shares).............................................. $14.19
=====
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
PREMIER GNMA FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 6,011,598
EXPENSES:
Management fee-Note 3(a).............................................. $ 462,794
Shareholder servicing costs-Note 3(c)................................. 289,150
Distribution fees-Note 3(b)........................................... 102,924
Custodian fees-Note 3(c).............................................. 28,466
Professional fees..................................................... 21,543
Trustees' fees and expenses-Note 3(d)................................. 14,554
Registration fees..................................................... 11,400
Prospectus and shareholders' reports.................................. 6,391
Miscellaneous......................................................... 18,395
_____
TOTAL EXPENSES.................................................... 955,617
_____
INVESTMENT INCOME-NET............................................. 5,055,981
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 4............................... $ (6,894)
Net unrealized (depreciation) on investments............................ (5,763,477)
_____
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS................. (5,770,371)
_____
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (714,390)
======
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
PREMIER GNMA FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR END SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 1996
1995 (UNAUDITED)
------------- -------------
<S> <C> <C>
OPERATIONS:
Investment income-net............................................... $ 11,179,371 $ 5,055,981
Net realized gain (loss) on investments............................. 6,055,099 (6,894)
Net unrealized appreciation (depreciation) on investments for the period 8,010,015 (5,763,477)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 25,244,485 (714,390)
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares.................................................... (8,886,343) (3,900,110)
Class B shares.................................................... (2,293,017) (1,155,544)
Class C shares.................................................... (11) (327)
------------- -------------
TOTAL DIVIDENDS............................................... (11,179,371) (5,055,981)
------------- -------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares.................................................... 16,093,996 10,561,802
Class B shares.................................................... 8,057,178 3,482,620
Class C shares.................................................... 1,000 16,094
Dividends reinvested:
Class A shares.................................................... 6,027,082 2,663,058
Class B shares.................................................... 1,439,805 756,217
Class C shares.................................................... 11 327
Cost of shares redeemed:
Class A shares.................................................... (40,036,785) (22,677,744)
Class B shares.................................................... (6,333,160) (4,656,422)
Class C shares.................................................... - (1,004)
------------- -------------
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (14,750,873) (9,855,052)
------------- -------------
TOTAL (DECREASE) IN NET ASSETS.............................. (685,759) (15,625,423)
NET ASSETS:
Beginning of period............................................... 177,166,180 176,480,421
------------- -------------
End of period..................................................... $176,480,421 $160,854,998
============= =============
</TABLE>
<TABLE>
PREMIER GNMA FUND
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
SHARES
________________________________________________________________________________
CLASS A CLASS B
_____________________________________ ________________________________
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 1996 DECEMBER 31, JUNE 30, 1996
1995 (UNAUDITED) 1995 (UNAUDITED)
_______ _________ _______ _________
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold................... 1,144,697 737,725 567,691 240,581
Shares issued for dividends reinvested 424,403 185,838 101,147 52,732
Shares redeemed............... (2,840,710) (1,584,162) (446,457) (324,964)
_______ _________ _______ _________
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING... (1,271,610) (660,599) 222,381 (31,651)
======== ========== ======== ==========
SHARES
______________________________________
CLASS C
_____________________________________
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 1996
1995* (UNAUDITED)
______________ ________________
CAPITAL SHARE TRANSACTIONS
(CONTINUED):
Shares sold................... 69 1,107
Shares issued for dividends reinvested 1 23
Shares redeemed............... - (71)
______________ ________________
NET INCREASE
IN SHARES OUTSTANDING... 70 1,059
================ =================
*From October 16, 1995 (commencement of initial offering) to December 31,
1995.
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
PREMIER 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.
CLASS A SHARES
_____________________________________________________________________________
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30, 1996
_________________________________________________
PER SHARE DATA: 1991 1992 1993 1994 1995 (UNAUDITED)
____ ____ ____ ____ ____ __________
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $14.38 $15.30 $14.90 $14.84 $13.54 $14.66
____ ____ ____ ____ ____ __________
INVESTMENT OPERATIONS:
Investment income-net................. 1.20 1.10 .95 .88 .91 .44
Net realized and unrealized
gain (loss) on investments.......... .92 (.15) .24 (1.30) 1.12 (.49)
____ ____ ____ ____ ____ __________
TOTAL FROM INVESTMENT OPERATIONS.... 2.12 .95 1.19 (.42) 2.03 (.05)
____ ____ ____ ____ ____ __________
DISTRIBUTIONS:
Dividends from investment income-net.. (1.20) (1.10) (.95) (.88) (.91) (.44)
Dividends from net realized
gain on investments................. - (.25) (.30) - - -
____ ____ ____ ____ ____ __________
TOTAL DISTRIBUTIONS................. (1.20) (1.35) (1.25) (.88) (.91) (.44)
____ ____ ____ ____ ____ __________
Net asset value, end of period........ $15.30 $14.90 $14.84 $13.54 $14.66 $14.17
==== ==== ==== ==== ==== ==========
TOTAL INVESTMENT RETURN(1)................ 15.43% 6.50% 8.20% (2.91%) 15.43% (.56%)(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .64% .71% .78% .94% 1.03% 1.01%(2)
Ratio of net investment income
to average net assets............... 8.09% 7.23% 6.24% 6.20% 6.45% 6.14%(2)
Decrease reflected in above expense ratios
due to undertakings by the Manager.. .52% .36% .22% .06% - -
Portfolio Turnover Rate............... 36.90% 60.12% 274.95% 427.27% 349.24% 75.47%(3)
Net Assets, end of period (000's Omitted) $113,434 $163,967 $197,239 $141,456 $134,545 $120,739
(1) Exclusive of sales load.
(2) Annualized.
(3) Not annualized.
</TABLE>
See independent accountants' review report and notes to financial statements.
PREMIER GNMA FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
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.
<TABLE>
CLASS B SHARES CLASS C SHARES
________________________________________ _______________________________________
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30, 1996 DECEMBER 31, JUNE 30, 1996
______________________
PER SHARE DATA: 1993(1) 1994 1995 (UNAUDITED) 1995(2) (UNAUDITED)
_______ ______ ______ ___________ _______ ______________
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period............... $14.98 $14.84 $13.55 $14.67 $14.48 $14.67
_______ ______ ______ ___________ _______ ______________
INVESTMENT OPERATIONS:
Investment income-net..... .83 .80 .84 .40 .16 .38
Net realized and unrealized
gain (loss) on investments .16 (1.29) 1.12 (.48) .19 (.48)
_______ ______ ______ ___________ _______ ______________
TOTAL FROM INVESTMENT
OPERATIONS.......... .99 (.49) 1.96 (.08) .35 (.10)
_______ ______ ______ ___________ _______ ______________
DISTRIBUTIONS:
Dividends from investment
income-net.............. (.83) (.80) (.84) (.40) (.16) (.38)
Dividends from net realized
gain on investments (.30) - - - - -
------- ----- ------- ---------- ----------- ----------------
TOTAL DISTRIBUTIONS..... (1.13) (.80) (.84) (.40) (.16) (.38)
_______ ______ ______ ___________ _______ ______________
Net asset value, end of period $14.84 $13.55 $14.67 $14.19 $14.67 $14.19
======= ====== ====== =========== ======= ==============
TOTAL INVESTMENT RETURN(3).... 7.03%(4) (3.39%) 14.83% (1.06%)(4) 11.47%(4) (1.34%)(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets.............. 1.30%(4) 1.51% 1.55% 1.52%(4) 1.79%(4) 1.77%(4)
Ratio of net investment income
to average net assets... 5.38%(4) 5.61% 5.89% 5.62%(4) 5.25%(4) 5.40%(4)
Decrease reflected in above
expense ratios due to
undertakings by the Manager .20%(4) .05% - - - -
Portfolio Turnover Rate... 274.95% 427.27% 349.24% 75.47%(5) 349.24% 75.47%(5)
Net Assets, end of period
(000's Omitted)......... $29,648 $35,710 $41,934 $40,100 $1 $16
(1) From January 15, 1993 (commencement of initial offering) to December 31, 1993.
(2) From October 16, 1995 (commencement of initial offering) to December 31, 1995.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
See independent accountants' review report and notes to financial statements.
</TABLE>
PREMIER GNMA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier 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 investors with as high a level
of current income as is consistent with the 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. (the "Distributor") acts as the
distributor of the Fund's shares. The Fund offers Class A, Class B and Class
C shares. Class A shares are subject to a sales charge imposed at the time of
purchase, Class B shares are subject to a contingent deferred sales charge
imposed at the time of redemption on redemptions made within five years of
purchase and Class C shares are subject to a contingent deferred sales charge
imposed at the time of redemption on redemptions made within one year of
purchase. Other differences between the three Classes include the services
offered to and the expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Fund's investments (excluding U.S.
Government obligations and short-term investments) are valued each business
day by an independent pricing service ("Service") approved by the Board of
Trustees. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to values from dealers;
and general market conditions. Investments in U.S. Government obligations are
valued at the mean between quoted bid and asked prices. Short-term investments
are carried at amortized cost, which approximates value.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income (including, where applicable, amortization of discount on short-term
investments) is recognized on the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
PREMIER GNMA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The Fund has an unused capital loss carryover of approximately $8,882,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1995. If not
applied, the carryover expires in fiscal 2002.
NOTE 2-BANK LINE OF CREDIT:
The Fund participates in a $100 million unsecured line of credit provided
by The Bank of New York, primarily for temporary or emergency purposes,
including the meeting of redemption requests that otherwise might require the
untimely disposition of securities. Interest is payable at the Federal Funds
rate plus .50% on an annualized basis. For the period ended June 30, 1996,
the Fund did not borrow under the line of credit.
NOTE 3-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 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 and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund for any full year. The most stringent state
expense limitation applicable to the Fund presently requires reimbursement of
expenses in any full year that such expenses (excluding distribution expenses
and certain expenses as described above) exceed 21\2% of the first $30
million, 2% of the next $70 million and 11\2% of the excess over $100 million
of the average value of the Fund's net assets in accordance with California
"blue sky" regulations. There was no expense reimbursement for the six months
ended June 30, 1996.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $1,388 during the six months ended June 30, 1996 from commissions
earned on sales of the Fund's shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Fund pays the Distributor for distributing the Fund's Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the six months ended June 30,
1996, $102,879 was charged to the Fund for the Class B shares and $45 was
charged to the Fund for the Class C shares.
(C) Under the Shareholder Services Plan, the Fund pays the Distributor at
an annual rate of .25 of 1% of the value of the average daily net assets of
Class A, Class B and Class C shares for the provision of certain services.
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. The Distributor may make payments to
Service Agents (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. During the six months ended June 30,
1996, $158,907, $51,439 and $15 were charged to Class A, B and C shares,
respectively, by the Distributor pursuant to the Shareholder Services Plan.
PREMIER GNMA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 $56,360 during the six months ended
June 30, 1996.
Effective May 29, 1996, the Fund entered into a custody agreement with
Mellon to provide custodial services for the Fund. During the period from May
29, 1996 through June 30, 1996, $4,296 was paid to Mellon pursuant to the
custody agreement.
(D) 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 $500
per meeting. The Chairman of the Board receives an additional 25% 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 six months
ended June 30, 1996, amounted to $114,544,322 and $122,113,180, respectively.
At June 30, 1996, accumulated net unrealized appreciation on investments
was $253,712, consisting of $2,328,180 gross unrealized appreciation and
$2,074,468 gross unrealized depreciation.
At June 30, 1996, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
PREMIER GNMA FUND
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER GNMA FUND
We have reviewed the accompanying statement of assets and liabilities of
Premier GNMA Fund, including the statement of investments, as of June 30,
1996, and the related statements of operations and changes in net assets and
financial highlights for the six month period ended June 30, 1996. These
financial statements and financial highlights are the responsibility of the
Fund's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements and financial highlights taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets for the year ended
December 31, 1995 and financial highlights for each of the five years in the
period ended December 31, 1995 and in our report dated February 14, 1996, we
expressed an unqualified opinion on such statement of changes in net assets
and financial highlights.
[Ernst & Young LLP signature logo]
New York, New York
August 2, 1996
PREMIER 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. 027/614SA966
Semi-Annual Report
Premier
GNMA Fund
June 30, 1996
(Dreyfus Lion Logo)
