DREYFUS PREMIER GNMA FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report the performance for Dreyfus Premier GNMA Fund
for its semi-annual reporting period ended June 30, 1997 as shown in the
following table:
<TABLE>
<CAPTION>
Approximate Annualized
Total Return* Income Dividends** Distribution Rate***
_______________ __________________ _____________________
<S> <C> <C> <C>
Investment Shares 1.17% $ .283 5.94%
Class A Shares 3.00% $0.414 5.54%
Class B Shares 2.74% $0.378 5.30%
Class C Shares 2.61% $0.359 5.03%
Lehman Brothers
GNMA Index**** 4.04% N/A N/A
</TABLE>
ECONOMIC REVIEW
Despite recent moderation in the rate of new job creation, the latest
reported unemployment rate (5% in June) was the lowest
since 1973. When the unemployment rate was last at that level, the inflation
rate was heading toward double-digit territory. Now, inflation appears to be
subdued; the Consumer Price Index rose at an annual rate of just 1.4% for the
twelve-month period through May. Producer prices rose a minuscule 0.6% over
the same time period. It has been unprecedented for the economy to have seven
years of expansion, low unemployment and low inflation at the same time.
Ever alert for signs of incipient inflation, the Federal Open Market
Committee, the policy-making arm of the Federal Reserve Board (the "Fed"),
has raised interest rates just once in more than two years. That hike came in
March 1997 when the Federal Funds rate was increased by one quarter of a
percentage point to 5.50%. (The Federal Funds rate is the rate of interest
that banks charge one another for overnight loans.) While there have been
some signs that wages are increasing (an area of particular concern to the
Fed), there have also been indications that the economy may be slowing from
its torrid first quarter pace when it surged at a 5.9% annual rate, the
biggest advance since the fourth quarter of 1987.
Indicating possible moderation in the rate of economic growth, retail
sales declined this spring despite record levels of consumer optimism about
the economy. The latest report on retail sales through June showed a decline
at an annual rate of 5% over the previous three months. This marked the first
three-month decline since the fall of 1981. Yet, despite their sluggish
spending at retail counters, consumers' confidence in the economy continues
to climb, heavily influenced by increased job security and low inflation.
Throughout the current seven-year economic expansion, the pattern of
consumer spending has been stop-and-go, alternating between spurts of
spending and retrenchment. The 5% decline in retail sales for the three
months through May was preceded by a 15% advance over the previous
three-month period. On the production side of the economy, a survey of
corporate buyers compiled by the National Association of Purchasing
Management reported that growth in factory activity eased slightly during
June. The much-observed supplier-delivery component of the survey, a measure
of how quickly orders are being satisfied and a possible sign of production
bottlenecks, also fell modestly. In further evidence of a slowing economy
during the second quarter, the Commerce Department recently reported that
factory orders fell in May.
Rising incomes, low unemployment and quiescent inflation have all
contributed to a feeling of confidence, as measured by the Conference Board's
Index of Consumer Sentiment, that has been unmatched for 28 years. Many
economists feel that the optimistic consumer sentiment indicators provide a
floor to economic growth and will spur consumer spending later in the year,
particularly if the unemployment rate remains low and job security worries
recede further. We are mindful of the potent role that consumers play in the
economy _ their spending accounts for about two thirds of economic output.
So, we remain alert to signs of any strain on productive capacity caused by
increases in consumer spending that might, in turn, lead to another
tightening in monetary policy by the Fed.
MARKET ENVIRONMENT
Interest rates for the first half of 1997 have been very stable. The
market has remained in a 75 basis-point range for ten-year U.S. Treasury
notes, starting and ending the six-month time period at approximately the
same rate of 6.45%. This interest rate stability has lead to a one-third
decline in one-month interest rate volatility on the ten-year Treasury during
the period.
For the first half of 1997 mortgages posted very strong performance. The
Lehman Brothers Mortgage Index outperformed the Lehman U.S. Treasury Index by
1.36% and outperformed the Lehman Brothers Corporate Bond Index by 0.85%.
This dramatic outperformance for a six-month period was attributed largely
to: the decrease in interest rate volatility, an improved mortgage prepayment
environment, and an increase in the demand for mortgage-backed securities
during the first half.
Spreads on mortgage-backed securities have compressed over this time
period, and the potential return advantage for mortgage-backed securities
going forward is less positive. It is important to note the demand for GNMA
pass-throughs has remained strong due to added demand from new CMO issuance,
and we do not expect this to diminish in the second half of 1997.
PORTFOLIO OVERVIEW
The portfolio, throughout all of the first half of the year, continued to
maintain a duration that was longer than the duration of the Index. The
Fund's positive performance was attributed to the Fund's use of
nontraditional GNMA product sectors, such as GNMA ARMs, and GNMA Project
loans. These sectors outperformed traditional GNMA 30-year fixed rate
pass-through securities during the first half of 1997. The main weakness in
the Fund's performance can be attributed to the duration positioning of the
Fund. In March of this year, the Fund's duration was 10% longer than that of
the Index and this contributed to weak performance for the month.
Currently the Fund is positioned for a declining interest rate
environment. The duration of the Fund as of June 30 was one third of a year
longer than the duration of the Lehman GNMA Index. This additional
lengthening was accomplished by adding discount GNMA 15-year 6.5% securities
while selling both short-term Treasuries and premium GNMA 30-year 7.5%
securities. Also of significance was the addition of a 10% holding of GNMA
Project Loans to the portfolio. GNMA Project Loans have explicit prepayment
lockout protection preventing any prepayments from occurring.
The Fund currently holds a position in GNMA discount ARMs. It is our
expectation that prepayments of adjustable rate mortgages will accelerate in
the second half of 1997, and that this will have a positive impact on the
performance of these discount securities. We continue to monitor the events
in the mortgage marketplace and it is our expectation that this multisector
strategy will help to limit the downside risk while providing a strong
potential for performance in the second half of 1997.
Very truly yours,
[Michael Hoeh signature logo]
Michael Hoeh
Portfolio Manager
July 17, 1997
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid, and does not take into consideration the maximum initial sales charge
in the case of Class A shares or the contingent deferred sales charge imposed
on redemptions in the case of Class B and Class C shares.
** Income dividends per share were exempt from Federal personal income
taxes. Some income may be subject to the Federal Alternative Minimum Tax for
certain shareholders.
*** Distribution rate per share is based upon dividends per share paid from
net investment income during the period (annualized), divided by the maximum
offering price at the end of the period, in the case of Class A shares, or
the net asset value per share in the case of Class B or Class C shares.
****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.
<TABLE>
<CAPTION>
DREYFUS PREMIER GNMA FUND
STATEMENT OF INVESTMENTS JUNE 30, 1997 (UNAUDITED)
Principal
Bonds and Notes_116.2% Amount Value
__________ __________
<S> <C> <C> <C>
Mortgage-Backed Securities_106.5%
Government National Mortgage Association I:
61\2%, 5/15/2009 (a)...................................................... $ 6,114,374 $ 6,057,021
61\2%, 11/15/2007-5/15/2012............................................... 30,651,261 30,268,812
7%, 6/15/2009............................................................. 4,899,862 4,922,793
71\2%, 3/15/2002-7/15/2023................................................ 4,710,345 4,756,081
8%, (b)................................................................... 13,000,000 13,284,310
8%, 4/15/2008 (a)......................................................... 6,161,147 6,409,502
8%, 12/15/2021-1/15/2022.................................................. 788,853 812,826
81\2%, 10/15/2017-12/15/2022.............................................. 5,503,683 5,761,790
9%, 4/15/2016-12/15/2022.................................................. 7,249,928 7,760,290
91\2%, 10/15/2016-1/15/2025............................................... 7,823,251 8,494,431
10%, 10/15/2016-10/15/2020................................................ 936,773 1,033,083
101\2%, 2/15/2016-8/15/2019............................................... 298,326 330,769
11%, 2/15/2010-8/15/2019.................................................. 1,927,212 2,145,818
111\2%, 1/15/2013......................................................... 109,498 119,413
_____________
92,156,939
_____________
Government National Mortgage Association I,
Project Loans:
7%, 4/15/2021............................................................. 982,722 962,753
7.325%, 6/15/2022......................................................... 2,206,000 2,187,381
73\4%, 5/15/2032-7/15/2032................................................ 9,935,197 10,140,060
7.80%, 5/15/2032.......................................................... 2,836,300 2,899,209
81\8%, 6/15/2030.......................................................... 2,987,696 3,116,525
91\4%, 10/15/2023 (a)..................................................... 4,759,676 5,104,753
_____________
24,410,681
_____________
Government National Mortgage Association II:
51\2%, (b,c).............................................................. 13,000,000 12,853,750
7%, 12/20/2025-5/20/2027.................................................. 9,198,825 9,019,048
9%, 7/20/2025 (a)......................................................... 6,866,142 7,230,871
11%, 12/20/2013-10/20/2015................................................ 1,675,254 1,847,898
_____________
30,951,567
_____________
Total Mortgage-Backed Securities............................................ 147,519,187
=============
U.S. Treasury Bonds_2.8%
61\2%, 11/15/2026 (a)..................................................... 500,000 480,000
65\8%, 2/15/2027 (a)...................................................... 3,500,000 3,429,453
_____________
Total U.S. Treasury Bonds................................................... 3,909,453
=============
DREYFUS PREMIER GNMA FUND
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1997 (UNAUDITED)
Principal
Bonds and Notes (continued) Amount Value
__________ __________
U.S. Treasury Notes_6.9%
63\8%, 4/30/1999 (a)...................................................... $ 1,100,000 $ 1,106,188
6 3/8%, 4/30/1999......................................................... 8,400,000 8,447,250
_____________
Total U.S. Treasury Notes................................................... 9,553,438
=============
TOTAL BONDS AND NOTES
(cost $158,216,022)....................................................... 116.2% $160,982,078
======= =============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (16.2%) $ (22,426,264)
======= =============
NET ASSETS.................................................................. 100.0% $138,555,814
======= =============
Notes to Statement of Investments:
(a) Held by the custodian in a segregated account as collateral for
securities purchased on a forward commitment basis.
(b) Purchased on a forward commitment basis.
(c) Adjustable rate mortgage-interest rate subject to change
periodically.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER GNMA FUND
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1997 (UNAUDITED)
Cost Value
____________ ____________
ASSETS: Investments in securities_See Statement of Investments $158,216,022 $160,982,078
Cash....................................... 2,313,745
Receivable for investment securities sold.. 25,955,160
Interest receivable........................ 1,078,729
Receivable for shares of Beneficial Interest subscribed 5,000
Prepaid expenses........................... 8,372
______________
190,343,084
______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 85,265
Due to Distributor......................... 37,831
Payable for investment securities purchased 51,504,224
Payable for shares of Beneficial Interest redeemed 89,606
Accrued expenses........................... 70,344
______________
51,787,270
______________
NET ASSETS.................................................................. $138,555,814
===============
REPRESENTED BY: Paid-in capital............................ $144,912,815
Accumulated net realized gain (loss) on investments (9,123,057)
Accumulated net unrealized appreciation (depreciation)
on investments_Note 4 2,766,056
______________
NET ASSETS.................................................................. $138,555,814
===============
NET ASSET VALUE PER SHARE
__________________________
Class A Class B Class C
______________ ____________ ____________
Net Assets............................................. $99,950,292 $38,581,722 $23,800
Shares Outstanding.................................... 6,949,263 2,680,247 1,654
NET ASSET VALUE PER SHARE.............................. $14.38 $14.39 $14.39
======= ====== =======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER GNMA FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
INVESTMENT INCOME
INCOME Interest Income............................ $ 4,897,642
EXPENSES: Management fee_Note 3(a)................... $ 389,939
Shareholder servicing costs _Note 3(c)..... 239,168
Distribution fees_Note 3(b)................ 96,778
Registration fees.......................... 27,341
Professional fees.......................... 25,785
Custodian fees_Note 3(c)................... 19,987
Trustees' fees and expenses_Note 3(d)...... 17,268
Prospectus and shareholders' reports....... 10,845
Loan commitment fees_Note 2................ 935
Miscellaneous.............................. 33,048
____________
Total Expenses....................... 861,094
______________
INVESTMENT INCOME_NET....................................................... 4,036,548
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $(1,682,827)
Net unrealized appreciation (depreciation)
on investments 1,750,801
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 67,974
______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 4,104,522
===============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER GNMA FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
_______________ ___________________
OPERATIONS:
Investment income_net................................................... $ 4,036,548 $ 9,840,332
Net realized gain (loss) on investments................................. (1,682,827) 1,437,681
Net unrealized appreciation (depreciation) on investments............... 1,750,801 (5,001,934)
_____________ _______________
Net Increase (Decrease) in Net Assets Resulting from Operations..... 4,104,522 6,276,079
_____________ _______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net:
Class A shares........................................................ (3,006,626) (7,540,292)
Class B shares........................................................ (1,029,581) (2,299,266)
Class C shares........................................................ (341) (774)
_____________ _______________
Total Dividends..................................................... (4,036,548) (9,840,332)
_____________ _______________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 4,059,852 14,387,058
Class B shares........................................................ 2,004,970 4,915,210
Class C shares........................................................ 23,363 16,094
Dividends reinvested:
Class A shares........................................................ 2,073,263 5,148,131
Class B shares........................................................ 704,974 1,540,231
Class C shares........................................................ 284 774
Cost of shares redeemed:
Class A shares........................................................ (17,493,996) (40,109,763)
Class B shares........................................................ (3,985,389) (7,695,736)
Class C shares........................................................ (16,644) (1,004)
_____________ _______________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (12,629,323) (21,799,005)
_____________ _______________
Total Increase (Decrease) in Net Assets........................... (12,561,349) (25,363,258)
NET ASSETS:
Beginning of Period................................................... 151,117,163 176,480,421
_____________ _______________
End of Period........................................................... $138,555,814 $151,117,163
============= ===============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER GNMA FUND
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
_____________________________________
Six Months Ended
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
_____________ __________________
CAPITAL SHARE TRANSACTIONS:
Class A
_______
Shares sold........................................................... 283,519 1,005,176
Shares issued for dividends reinvested................................ 145,061 359,656
Shares redeemed....................................................... (1,221,662) (2,801,148)
_____________ _______________
Net Increase (Decrease) in Shares Outstanding (793,082) (1,436,316)
============= ===============
Class B
_______
Shares sold......................................................... 140,034 340,609
Shares issued for dividends reinvested................................ 49,278 107,520
Shares redeemed....................................................... (278,330) (537,054)
_____________ _______________
Net Increase (Decrease) in Shares Outstanding (89,018) (88,925)
============= ===============
Class C
______
Shares sold........................................................... 1,634 1,107
Shares issued for dividends reinvested................................ 20 54
Shares redeemed....................................................... (1,160) (71)
_____________ _______________
Net Increase (Decrease) in Shares Outstanding 494 1,090
============= ===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS 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.
<TABLE>
<CAPTION>
Class A Shares
________________________________________________________________________
Six Months Ended
June 30, 1997 Year Ended December 31,
_____________________________________________________
PER SHARE DATA: (Unaudited) 1996 1995 1994 1993 1992
____________ _______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $14.37 $14.66 $13.54 $14.84 $14.90 $15.30
_______ _______ _______ _______ _______ _______
Investment Operations:
Investment income_net................. .41 .88 .91 .88 .95 1.10
Net realized and unrealized gain (loss)
on investments...................... .01 (.29) 1.12 (1.30) .24 (.15)
_______ _______ _______ _______ _______ _______
Total from Investment Operations...... .42 .59 2.03 (.42) 1.19 .95
_______ _______ _______ _______ _______ _______
Distributions:
Dividends from investment income_net.. (.41) (.88) (.91) (.88) (.95) (1.10)
Dividends from net realized gain on investments __ __ __ __ (.30) (.25)
_______ _______ _______ _______ _______ _______
Total Distributions................... (.41) (.88) (.91) (.88) (1.25) (1.35)
_______ _______ _______ _______ _______ _______
Net asset value, end of period........ $14.38 $14.37 $14.66 $13.54 $14.84 $14.90
======= ====== ======= ======= ====== =======
TOTAL INVESTMENT RETURN (1)............... 6.05%(2) 4.25% 15.43% (2.91%) 8.20% 6.50%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.08%(2) 1.04% 1.03% .94% .78% .71%
Ratio of net investment income
to average net assets............... 5.83%(2) 6.17% 6.45% 6.20% 6.24% 7.23%
Decrease reflected in above expense ratios
due to undertakings by the Manager.. __ __ __ .06% .22% .36%
Portfolio Turnover Rate............... 315.77%(3) 267.22% 349.24% 427.27% 274.95% 60.12%
Net Assets, end of period (000's Omitted) $99,950 $111,267 $134,545 $141,456 $197,239 $163,967
(1) Exclusive of sales load.
(2) Annualized.
(3) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS 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>
<CAPTION>
Class B Shares
______________________________________________________________
Six Months Ended
June 30, 1997 Year Ended December 31,
__________________________________________
PER SHARE DATA: (Unaudited) 1996 1995 1994 1993(1)
__________ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $14.38 $14.67 $13.55 $14.84 $14.98
_______ _______ _______ _______ _______
Investment Operations:
Investment income_net........................ .38 .81 .84 .80 .83
Net realized and unrealized gain (loss)
on investments............................. .01 (.29) 1.12 (1.29) .16
_______ _______ _______ _______ _______
Total from Investment Operations............. .39 .52 1.96 (.49) .99
_______ _______ _______ _______ _______
Distributions:
Dividends from investment income_net......... (.38) (.81) (.84) (.80) (.83)
Dividends from net realized gain on investments __ __ __ __ (.30)
_______ _______ _______ _______ _______
Total Distributions.......................... (.38) (.81) (.84) (.80) (1.13)
_______ _______ _______ _______ _______
Net asset value, end of period............... $14.39 $14.38 $14.67 $13.55 $14.84
======= ======= ====== ======== =======
____ _______ ____ ____
TOTAL INVESTMENT RETURN (2)...................... 5.53%(3) 3.71% 14.83% (3.39%) 7.03%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... 1.58%(3) 1.55% 1.55% 1.51% 1.30%(3)
Ratio of net investment income
to average net assets...................... 5.32%(3) 5.65% 5.89% 5.61% 5.38%(3)
Decrease reflected in above expense ratios
due to undertakings by the Manager......... __ __ __ .05% .20%(3)
Portfolio Turnover Rate...................... 315.77%(4) 267.22% 349.24% 427.27% 274.95%
Net Assets, end of period (000's Omitted).... $38,582 $39,833 $41,934 $35,710 $29,648
(1) From January 15, 1993 (commencement of initial offering) to December 31, 1993.
(2) Exclusive of sales load.
(3) Annualized.
(4) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS 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>
<CAPTION>
Class C Shares
______________________________________________________
Six Months Ended
June 30, 1997 Year Ended December 31,
_________________________
PER SHARE DATA: (Unaudited) 1996 1995(1)
___________ ______ ______
<S> <C> <C> <C>
Net asset value, beginning of period....................... $14.38 $14.67 $14.48
_______ ______ ______
Investment Operations:
Investment income_net...................................... .36 .77 .16
Net realized and unrealized gain (loss)
on investments........................................... .01 (.29) .19
_______ ______ ______
Total from Investment Operations........................... .37 .48 .35
_______ ______ ______
Distributions:
Dividends from investment income_net....................... (.36) (.77) (.16)
_______ ______ ______
Net asset value, end of period............................. $14.39 $14.38 $14.67
======= ======== =========
TOTAL INVESTMENT RETURN (2).................................... 5.26%(3) 3.44% 11.47%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.................... 1.83%(3) 1.79% 1.79%(3)
Ratio of net investment income
to average net assets.................................... 5.07%(3) 5.42% 5.25%(3)
Portfolio Turnover Rate.................................... 315.77%(4) 267.22% 349.24%
Net Assets, end of period (000's Omitted).................. $24 $17 $1
(1) From October 16, 1995 (commencement of initial offering) to December 31, 1995.
(2) Exclusive of sales load.
(3) Annualized.
(4) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS PREMIER GNMA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus 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 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").
On January 31, 1997, the Fund's Trustees approved a change to the Fund's
name from "Premier GNMA Fund" to "Dreyfus Premier GNMA Fund," which change
became effective March 31, 1997.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. The Fund is authorized to issue an unlimited number of
$.001 par value shares in the following classes of shares: Class A, Class B
and Class C. 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.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (excluding U.S.
Government obligations and short-term investments) are valued each business
day by an independent pricing service ("Service") approved by the Board of
Trustees. Investments for which quoted bid prices are readily available and
are representative of the bid side of the market in the judgment of the
Service are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated
by the Service based upon its evaluation of the market for such securities).
Other investments (which constitute a majority of the portfolio securities)
are carried at fair value as determined by the Service, based on methods
which include consideration of: yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to values from dealers;
and general market conditions. Investments in U.S. Government obligations are
valued at the mean between quoted bid and asked prices. Short-term
investments are carried at amortized cost, which approximates value.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income (including, where applicable, amortization of discount on short-term
investments) is recognized on the accrual basis.
(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.
DREYFUS PREMIER GNMA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The Fund has an unused capital loss carryover of approximately $7,445,000
available for Federal income tax purposes to be
applied against future net securities profits, if any, realized subsequent to
December 31, 1996. If not applied, the carryover expires in fiscal 2002.
NOTE 2_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended June
30, 1997, the Fund did not borrow under the Facility.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement 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.
(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 period ended June 30, 1997,
$96,727 was charged to the Fund for the Class B shares and $51 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 period ended June 30, 1997,
$128,865, $48,364 and $17 were charged to Class A, B and C shares,
respectively, by the Distributor pursuant to the Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such
compensation amounted to $48,466 during the period ended June 30, 1997.
The Fund compensates Mellon under a custody agreement to provide
custodial services for the Fund. During the period ended June 30, 1997,
$19,987 was charged by 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 period
ended June 30, 1997, amounted to $552,231,866 and $581,896,006, respectively.
At June 30, 1997, accumulated net unrealized appreciation on investments
was $2,766,056, consisting of $2,875,156 gross unrealized appreciation and
$109,100 gross unrealized depreciation.
At June 30, 1997, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
DREYFUS 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. 027/614SA976
Semi-Annual Report
Dreyfus Premier
GNMA Fund
June 30, 1997
[Dreyfus lion2hres logo]
Registration Mark
