Premier GNMA Fund
Letter to Shareholders
Dear Shareholder:
We are pleased to provide you with this report on the Premier GNMA Fund.
For its annual reporting period ended December 31, 1995, your Fund produced
total returns of 15.43%, 14.83% and 2.42% for Class A, Class B and Class C
shares, respectively.* Income dividends per share of approximately $.912 were
paid for Class A shares, approximately $.839 for Class B shares and
approximately $.159 for Class C shares, producing distribution rates per
share of 5.94%, 5.72% and 5.14%, respectively.**
THE ECONOMY
Additional evidence that economic activity remained sluggish and that
inflation continued to be under control moved the Federal Reserve Board to
further ease the Federal Funds rate in December. (The Federal Funds rate is
the rate at which the nation's banks borrow money from each other; all other
short-term rates are based on this rate.) This was the second reduction for
this important short-term rate in 1995, the first occurring in July. The
latest 25 basis-point reduction in December put the rate at 5.50%. Major
incentives for this additional reduction were the inflation report in
November _ the increase in the Consumer Price Index was flat for the first
time in 4 1/2 years _ and the generally slow rate of economic growth. As it
did in July, the Federal Reserve left unchanged the discount rate _ the rate
at which the Federal Reserve lends money to member banks. The discount rate
remained at 5.25% throughout 1995.
Signs of economic slowdown increased during the latter half of the year.
Weakening retail sales and very modest industrial production lent credence to
fears about the possibility of a recession. Consumer spending was inhibited
last year by the slow rate of new job creation, sluggish growth in wages and
salaries, and the continued trend of corporate cost-related layoffs. The
lethargic pace of consumer spending last year culminated in one of the worst
holiday sales periods since the business slump in 1990-1991, despite steep
price markdowns by retailers.
Industrial production climbed modestly during the year. By November,
though, the nation's factories operated at only 83.1% of capacity, down for
the third consecutive month. This was a reflection of weakening demand and
further evidence of the diminishing pressure to raise prices. Furthermore,
inventories built up by year-end, another sign of slackening demand.
The political stalemate in Washington over the balanced budget adds
additional uncertainty to the economy; ultimately an accord will be reached
and fiscal policy will likely be a restraining force on the economy. As we go
forward without a budget agreement, reductions in annually appropriated
spending will tend to retard the economy. With an agreement, the combination
of cuts in appropriations and other spending reductions should have the same
effect.
There are strong indications that inflation is under control. Until
mid-year 1995, fear of inflation was the overriding concern of the Federal
Reserve. Now, the focus seems to have shifted to actions designed to avoid
recession. In an election year, few things are less desirable for political
incumbents than recession.
THE PORTFOLIO
Over the last 12 months, the total return of the Fund lagged the total
return of the Lehman Brothers GNMA Index, which was 17.05% for the same time
period.*** For the last three months of the Fund's reporting period, we
closed the gap to where the Lehman Brothers Index returned 3.29% versus
3.41% for the Fund's Class A shares, 3.28% for Class B shares, and 2.42% for
Class C shares.+
With interest rates declining over the course of last year, we have made
some specific adjustments to the portfolio. These adjustments were made in an
attempt to curtail the negative impact that faster prepayments would have on
mortgages at this point in the interest rate cycle. The Fund's portfolio has
been restructured so that nearly all of the mortgage securities held are
seasoned. This means that these mortgage securities were issued at least two
years ago and have been through at least one refinancing cycle and will
probably withstand the negative effects of another. We believe these seasoned
securities should prepay more slowly than recently issued mortgage securities
and should provide the shareholder with a better total return.
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 greatly appreciate your continued confidence in the Fund
and in The Dreyfus Corporation.
Very truly yours,
[Garitt A. Kono signature logo]
Garitt A. Kono
Portfolio Manager
January 15, 1996
New York, N.Y.
* Total return includes the reinvestment of dividends and any capital
gains paid, without taking into account the maximum initial sales charge in
the case of Class A shares, or the applicable contingent deferred sales
charge imposed on redemptions in the case of Class B and Class C shares.
Class C total return is calculated since its inception on October 16, 1995.
** 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 C shares. Distribution rate for Class C shares is annualized.
*** Source: LIPPER ANALYTICAL SERVICES, INC. The Lehman Brothers GNMA Index
is an unmanaged total return performance benchmark for the GNMA market,
consisting of 15 and 30-year fixed rate GNMA securities backed by mortgage
pools of the Government National Mortgage Association. The Index does not
take into account charges, fees and other expenses.
+ Class C total return is calculated since its inception on October 16,
1995.
Premier GNMA Fund December 31, 1995
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PREMIER GNMA FUND
CLASS A SHARES AND
THE LEHMAN BROTHERS GNMA INDEX
[Exhibit A:
$21,953
Lehman Brothers
GNMA Index*
Dollars
$20,959
Premier GNMA Fund
(Class A Shares)
*Source: Lehman Brothers]
<TABLE>
<CAPTION>
Average Annual Total Returns
Class A Shares Class B Shares
------------------------------ ------------------------------
% Return Reflecting
% Return Applicable Contingent
Reflecting % Return Deferred Sales
% Return Without Maximum Initial Assuming No Charge Upon
Period ended 12/31/95 Sales Charge Sales Charge (4.5%) Period ended 12/31/95 Redemption Redemption*
- --------------------- ---------------- ----------------- --------------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
1 Year 15.43% 10.22% 1 Year 14.83% 11.83%
5 Years 8.30 7.30 From Inception (1/15/93) 5.88 5.29
From Inception (1/29/87) 9.21 8.65
</TABLE>
Actual Aggregate Total Returns
Class C Shares
______________________________
% Return Reflecting
Applicable Contingent
% Return Deferred Sales
Assuming No Charge Upon
Period ended 12/31/95 Redemption Redemption**
- --------------------- --------- -----------
From Inception (10/16/95) 2.42% 1.42%
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Class A shares of
Premier GNMA Fund on 1/29/87 (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 1/31/87 is used as the beginning value on 1/29/87. All
dividends and capital gain distributions are reinvested. Performance for
Class B shares and Class C shares will vary from the performance of Class A
shares shown above due to differences in charges and expenses.
The Fund invests primarily in Ginnie Maes and its performance shown in the
line graph takes into account the maximum initial sales charge on Class A
shares and all other 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 and 30-year fixed rate GNMA securities
backed by mortgage pools of the Government National Mortgage Association. All
issues have at least one year to maturity and an outstanding par value of at
least $100 million. 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 Financial
Highlights section of the Prospectus and elsewhere in this report.
* Maximum contingent deferred sales charge for Class B shares is 3% and is
reduced to 0% after five years.
**Maximum contingent deferred sales charge for Class C shares is 1% within
one year of the date of purchase.
<TABLE>
<CAPTION>
Premier GNMA Fund
Statement of Investments December 31, 1995
Principal
Bonds and Notes-92.4% Amount Value
_______ _______
<S> <C> <C>
Mortgage-Backed Securities-83.3%
Government National Mortgage Association I:
7% (a).................................................................. $ 10,000,000 $ 10,112,500
7%, 6/15/2008-12/15/2023................................................ 33,415,009 33,902,552
7 1/2% (a).............................................................. 20,000,000 20,687,400
7 1/2%, 2/15/2022-11/15/2024............................................ 22,929,717 23,620,716
8%, 5/15/2017-10/15/2024................................................ 8,373,579 8,736,645
8 1/2%, 11/1/2019-3/15/2025............................................. 14,036,826 14,767,564
9%, 4/15/2016-12/15/2022................................................ 10,272,314 10,948,271
9 1/2%, 10/15/2016-1/15/2025............................................ 9,683,202 10,448,304
10%, 10/15/2016-10/15/2020.............................................. 1,405,107 1,548,730
10 1/2%, 2/15/2016-8/15/2019............................................ 581,995 648,140
11%, 2/15/2010-8/15/2019................................................ 2,950,279 3,322,287
11 1/2%, 1/15/2013...................................................... 225,586 250,540
---------
138,993,649
---------
Government National Mortgage Association II;
11%, 7/20/2013-10/20/2015............................................... 2,619,337 2,891,093
---------
Government National Mortgage Association I,
Project Loan;
9 1/4%, 10/15/2023...................................................... 4,816,504 5,115,994
---------
Total Mortgage-Backed Securities............................................ 147,000,736
=======
U.S. Treasury Notes_9.1%
6 1/2%, 8/15/2005 (b)................................................... 15,000,000 15,996,090
=======
TOTAL BONDS AND NOTES
(cost $156,979,637)..................................................... $162,996,826
=======
Premier GNMA Fund
Statement of Investments (continued) December 31, 1995
Principal
Short-Term Investments_24.5% Amount Value
_______ _______
U.S. Treasury Bills:
5.33%, 1/4/1996......................................................... $ 5,759,000 $ 5,757,157
6.86%, 1/11/1996........................................................ 1,977,000 1,973,896
5.46%, 1/25/1996........................................................ 413,000 411,670
5.34%, 2/29/1996........................................................ 614,000 609,125
6.08%, 3/7/1996 (b)..................................................... 16,000,000 15,852,800
6.08%, 3/7/1996......................................................... 18,883,000 18,709,277
---------
TOTAL SHORT-TERM INVESTMENTS
(cost $43,313,925)...................................................... $ 43,313,925
========
TOTAL INVESTMENTS
(cost $200,293,562)..................................................... 116.9% $206,310,751
===== ========
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (16.9%) $ (29,830,330)
===== ========
NET ASSETS ........................................................... 100.0% $176,480,421
===== ========
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.
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
Premier GNMA Fund
Statement of Assets and Liabilities December 31, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $200,293,562)-see statement..................................... $206,310,751
Interest receivable..................................................... 1,238,543
Receivable for shares of Beneficial Interest subscribed................. 136,316
Prepaid expenses........................................................ 12,162
_______
207,697,772
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 80,593
Due to Distributor...................................................... 56,626
Due to Custodian........................................................ 152,359
Payable for investment securities purchased............................. 30,791,615
Payable for shares of Beneficial Interest redeemed...................... 8,876
Accrued expenses........................................................ 127,282 31,217,351
______ _______
NET ASSETS ................................................................ $176,480,421
=======
REPRESENTED BY:
Paid-in capital......................................................... $179,341,143
Accumulated net realized (loss) on investments.......................... (8,877,911)
Accumulated net unrealized appreciation on investments_Note 3........... 6,017,189
_______
NET ASSETS at value......................................................... $176,480,421
=======
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 9,178,660
=======
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 2,858,191
=======
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 70
=======
NET ASSET VALUE per share:
Class A Shares
($134,545,047 / 9,178,660 shares)..................................... $14.66
=======
Class B Shares
($41,934,347 / 2,858,191 shares)...................................... $14.67
=======
Class C Shares
($1,027/ 70 shares)................................................... $14.67
=======
See notes to financial statements.
Premier GNMA Fund
Statement of Operations year ended December 31, 1995
INVESTMENT INCOME:
Interest Income......................................................... $13,207,081
Expenses:
Management fee-Note 2(a).............................................. $ 972,298
Shareholder servicing costs-Note 2(c)................................. 635,476
Distribution fees-Note 2(b)........................................... 194,472
Custodian fees........................................................ 66,171
Professional fees..................................................... 58,725
Registration fees..................................................... 37,208
Trustees' fees and expenses-Note 2(d)................................. 35,165
Prospectus and shareholders' reports.................................. 9,350
Miscellaneous......................................................... 18,845
_____
Total Expenses.................................................... 2,027,710
______
INVESTMENT INCOME-NET............................................. 11,179,371
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $6,055,099
Net unrealized appreciation on investments.............................. 8,010,015
_____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 14,065,114
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $25,244,485
======
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
Premier GNMA Fund
Statement of Changes in Net Assets
Year Ended December 31,
________________________________
1994 1995
_______ ______
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 12,477,594 $ 11,179,371
Net realized gain (loss) on investments................................. (15,855,259) 6,055,099
Net unrealized appreciation (depreciation) on investments for the year.. (3,139,629) 8,010,015
_______ _______
Net Increase (Decrease) In Net Assets Resulting From Operations... (6,517,294) 25,244,485
_______ _______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (10,554,358) (8,886,343)
Class B shares........................................................ (1,923,236) (2,293,017)
Class C shares........................................................ __ (11)
_______ _______
Total Dividends................................................... (12,477,594) (11,179,371)
_______ _______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 17,118,960 16,093,996
Class B shares........................................................ 14,080,674 8,057,178
Class C shares........................................................ -- 1,000
Dividends reinvested:
Class A shares........................................................ 7,266,865 6,027,082
Class B shares........................................................ 1,207,098 1,439,805
Class C shares........................................................ __ 11
Cost of shares redeemed:
Class A shares........................................................ (64,284,402) (40,036,785)
Class B shares........................................................ (6,115,464) (6,333,160)
_______ _______
(Decrease) In Net Assets From Beneficial Interest Transactions.... (30,726,269) (14,750,873)
_______ _______
Total (Decrease) In Net Assets.................................. (49,721,157) (685,759)
NET ASSETS:
Beginning of year..................................................... 226,887,337 177,166,180
_______ _______
End of year........................................................... $177,166,180 $176,480,421
======= =======
</TABLE>
<TABLE>
<CAPTION>
Shares
-------------------------------------------------------------------------------
Class A Class B Class C
---------------------------- ---------------------------- ----------
Year Ended December 31, Year Ended December 31, Year Ended
---------------------------- ---------------------------- December 31,
CAPITAL SHARE TRANSACTIONS: 1994 1995 1994 1995 1995*
_______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
Shares sold............. 1,204,210 1,144,697 989,793 567,691 69
Shares issued for dividends
reinvested............ 516,077 424,403 85,980 101,147 1
Shares redeemed......... (4,564,951) (2,840,710) (437,183) (446,457) __
_______ _______ _______ _______ _______
Net Increase (Decrease)
In Shares
Outstanding..... (2,844,664) (1,271,610) 638,590 222,381 70
======= ======= ======= ======= =======
*From October 16, 1995 (commencement of operations) to December 31, 1995.
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
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 year indicated. This
information has been derived from the Fund's financial statements.
Class A Shares Class B Shares Class C Shares
-------------------------------------------- ------------------------ --------------
Year Ended
Year Ended December 31, Year Ended December 31, December 31,
-------------------------------------------- ------------------------
PER SHARE DATA: 1991 1992 1993 1994 1995 1993(1) 1994 1995 1995(2)
___ ___ ___ ___ ___ ___ ___ ___ ___
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $14.38 $15.30 $14.90 $14.84 $13.54 $14.98 $14.84 $13.55 $14.48
___ ___ ___ ___ ___ ___ ___ ___ ___
Investment Operations:
Investment income_net......... 1.20 1.10 .95 .88 .91 .83 .80 .84 .16
Net realized and unrealized gain (loss)
on investments.............. .92 (.15) .24 (1.30) 1.12 .16 (1.29) 1.12 .19
___ ___ ___ ___ ___ ___ ___ ___ ___
Total from Investment
Operations............ 2.12 .95 1.19 (.42) 2.03 .99 (.49) 1.96 .35
___ ___ ___ ___ ___ ___ ___ ___ ___
Distributions:
Dividends from investment
income_net.................. (1.20) (1.10) (.95) (.88) (.91) (.83) (.80) (.84) (.16)
Dividends from net realized gain
on investments.............. _ (.25) (.30) _ _ (.30) _ _ _
___ ___ ___ ___ ___ ___ ___ ___ ___
Total Distributions..... (1.20) (1.35) (1.25) (.88) (.91) (1.13) (.80) (.84) (.16)
___ ___ ___ ___ ___ ___ ___ ___ ___
Net asset value, end of year.. $15.30 $14.90 $14.84 $13.54 $14.66 $14.84 $13.55 $14.67 $14.67
=== === === === === === === === ===
TOTAL INVESTMENT RETURN (3)....... 15.43% 6.50% 8.20% (2.91%) 15.43% 7.03%(4) (3.39%) 14.83% 11.47%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets.......... .64% .71% .78% .94% 1.03% 1.30%(4) 1.51% 1.55% 1.79%(4)
Ratio of net investment income to
average net assets.......... 8.09% 7.23% 6.24% 6.20% 6.45% 5.38%(4) 5.61% 5.89% 5.25%(4)
Decrease reflected in above expense
ratios due to undertakings by
the Manager................. .52% .36% .22% .06% _ .20%(4) .05% _ _
Portfolio Turnover Rate....... 36.90% 60.12% 274.95% 427.27% 349.24% 274.95% 427.27% 349.24% 349.24%
Net Assets, end of year
(000's Omitted)............. $113,434 $163,967 $197,239 $141,456 $134,545 $29,648 $35,710 $41,934 $1
(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.
See notes to financial statements.
</TABLE>
Premier GNMA Fund
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. Premier Mutual Fund
Services, Inc. (the "Distributor") acts as the distributor of the Fund's
shares. 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. The Dreyfus Corporation ("Manager") serves
as the Fund's investment adviser. The Manager is a direct subsidiary of
Mellon Bank, N.A.
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 (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.
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 $956,937 from accumulated net realized loss on
investments to paid-in capital. Results of operations and net assets were not
effected by this reclassification.
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 .55 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, 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 year ended
December 31, 1995.
Effective December 1, 1995, 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 $9,707 for the period from
December 1, 1995 through December 31, 1995.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $5,925 during the year ended December 31, 1995 from commissions
earned on sales of the Fund's Class A 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 year ended December 31, 1995,
$194,470 was charged to the Fund for the Class B shares and $2 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 in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. For the year ended December 31, 1995,
$344,717, $97,235 and $1 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 (continued)
(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 3-Securities Transactions:
The aggregate amount of purchases and sales (including paydowns) of
investment securities, excluding short-term securities, during the year ended
December 31, 1995, amounted to $556,749,458 and $577,517,770, respectively.
At December 31, 1995, accumulated net unrealized appreciation on
investments was $6,017,189, consisting of $6,026,570 gross unrealized
appreciation and $9,381 gross unrealized depreciation.
At December 31, 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).
Premier GNMA Fund
Report of Ernst & Young LLP, Independent Auditors
Shareholders and Board of Trustees
Premier GNMA Fund
We have audited the accompanying statement of assets and liabilities of
Premier GNMA Fund, including the statement of investments, as of December 31,
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 December 31, 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 Premier GNMA Fund at December 31, 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
February 14, 1996
[Dreyfus lion "d" logo]
Premier GNMA Fund
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
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 027/614AR9512
[Dreyfus logo]
Annual Report
Premier
GNMA Fund
December 31, 1995
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN PREMIER GNMA FUND CLASS A SHARES AND THE LEHMAN
BROTHERS GNMA INDEX
EXHIBIT A:
____________________________________________________
| | | |
| | LEHMAN BROTHERS | PREMIER |
| PERIOD | GNMA | GNMA FUND |
| | INDEX * | (CLASS A SHARES)|
|----------- | ------------------ | ----------------|
| 1/29/87 | 10,000 | 9,552 |
| 12/31/87 | 10,298 | 10,006 |
| 12/31/88 | 11,205 | 11,302 |
| 12/31/89 | 12,963 | 12,716 |
| 12/31/90 | 14,333 | 14,060 |
| 12/31/91 | 16,633 | 16,229 |
| 12/31/92 | 17,866 | 17,284 |
| 12/31/93 | 19,041 | 18,701 |
| 12/31/94 | 18,755 | 18,158 |
| 12/31/95 | 21,953 | 20,959 |
---------------------------------------------------
*Source: Lehman Brothers
