DREYFUS PREMIER GNMA FUND
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report the performance for Dreyfus Premier GNMA Fund for the
six-month period ended June 30, 1998 as shown in the following table:
<TABLE>
Annualized
Approximate Distribution Rate
Total Return* Income Dividends Per Share**
___________ _____________________ _________________
<S> <C> <C> <C>
Class A Shares 3.33% $0.417 5.41%
Class B Shares 3.01% $0.380 5.17%
Class C Shares 2.87% $0.351 4.77%
Lehman Brothers GNMA Index*** 3.34%
</TABLE>
THE ECONOMY
In recent testimony to Congress, Federal Reserve Board Chairman Alan Greenspan
proclaimed the economy to be "as impressive as any I have witnessed." Indeed,
the performance of the economy has been tremendous, with solid, noninflationary
economic growth and a robust rate of new job creation. Accordingly, the
unemployment rate hovers near its 28-year low. Not surprisingly, consumers brim
with confidence: new home sales were recently at record levels, and retail sales
have surged since January. The enthusiastic spending of consumers has, so far,
offset the adverse effects of the economic problems in Asia. In fact, the
financial crisis in the Far East has proved a boon to consumers, since lower
import prices have further subdued domestic price pressures and helped keep
interest rates low. Remarkably, despite the strengthening economy since the
beginning of this year, inflation has waned further. With inflation under
control and the economy just beginning to experience a reduction in foreign
demand, the Federal Reserve Board has been reluctant to raise interest rates for
fear of further roiling Asian financial markets. The last increase in short-term
rates came in March 1997 when the Federal Reserve Board Open Market Committee
(the policy-making arm of The Federal Reserve) hiked the target rate for Federal
Funds by one quarter of a percent to 5.5%.
Even with the booming job market, wage gains have had little inflationary
effect, since business spending in productivity-enhancing capital equipment has
been strong throughout the economic expansion. The one soft spot in the job
market has been in manufacturing: industrial production has slowed -- a clear
sign that Asian economic woes are being felt here -- and inventories of domestic
manufacturers have risen due to the reduction in foreign demand. It is widely
expected that the growing trade deficit will retard second-quarter economic
growth and possibly serve as a drag over the foreseeable future. This reduction
in foreign demand could further moderate the rate of domestic production and
consequently ease the demand for labor, thus lessening inflationary pressure
resulting from wage increases. Cheaper imports have also weakened the pricing
environment for U.S. manufacturers and, in consequence, acted as an additional
curb to inflation. All this has been part of what Chairman Greenspan called our
economy' s "virtuous cycle" where even so-called crises have proven economically
beneficial. As a further example, the economic upheavals in Asia and Russia have
caused nervous foreign investors to seek refuge in the U.S. bond market, causing
a demand surge that has helped maintain our low interest rate environment. Yet
we, along with Chairman Greenspan, are skeptical that our economy has somehow
moved "beyond history," and we share his vigilance regarding signs of
inflationary imbalances.
MARKET ENVIRONMENT
The first half of 1998 was a period of interest rate declines. Long-term
interest rates (30-year Treasury) reached one of their lowest levels in history.
By late June, 30-year U.S. Treasury rates fell to 5.57%. This was lower than the
bond rally in 1993 when rates only got down to 5.78%. This decline in interest
rates is attributed to many long-term economic factors. The main one is the
continued problems in the Asian economies. This has caused a permanent slowdown
in the U.S. economy. During this period, the U.S. fixed-income market continued
to see strong demand for U.S. Treasuries from overseas. This occurred as worried
international investors demanded securities with stability and liquidity; their
main destination was the U.S. securities market. This additional demand for U.S.
Treasuries led to these new lower interest rates.
What does this mean for the GNMA securities investor ? As U.S. Treasury rates
fell to new lows, so did the rate on new mortgage loans. Hence the typical U.S.
homeowner had a big opportunity to refinance his or her home mortgage into a
much lower interest rate loan. This led to a very large number of prepayments in
mortgage-backed securities. These increased prepayments caused mortgage-backed
securities to underperform other fixed-income investments during the first half
of 1998.
PORTFOLIO OVERVIEW
In this environment of falling interest rates and increasing prepayments, we
have looked to position the Fund to take advantage of this outlook. We have
positioned the duration of the Fund to be 10% longer than the duration of the
Lehman Brothers GNMA Index. Hence the duration of the Fund was 2.40 years at the
end of the second quarter of 1998.
We have also made adjustments to our asset allocation. Hence we continued to
add call-protected assets to the Fund. These are primarily in GNMA project
loans. These bonds typically have 10 years of protection from any type of
mortgage loan refinancing. During the first half of 1998, we have increased our
holdings in GNMA project loans to over 10% of the Fund. These securities have
outperformed fixed-rate pass-through securities because their coupon payments
are not cut short by loan prepayments.
We have also focused on discount dollar priced securities. These securities
directly benefit from increases in homeowner refinancing. During the first half
of the year, we increased our holding to 28% of the Fund in 15-year and 30-year
GNMA 6.50% coupon pass-through securities. To increase this position we sold our
prepay-sensitive premium 30-year GNMA 8.00% and 8.50% seasoned GNMA pass-through
securities.
Last, we have decreased our exposure to adjustable-rate GNMA securities (GNMA
ARMs) . During the first quarter of 1998, The Department of Housing and Urban
Development (HUD) issued a tremendous amount of adjustable-rate securities. HUD
actually issued so much that it reached the limits of what it can issue each
year by government mandate. Hence in May of this year, HUD announced that it
would be forced to discontinue the GNMA adjustable-rate program for the
remainder of its financial reporting year. This was a shock to the market, and
caused a demand surge in GNMA ARMs as investors rushed to purchase as many ARMs
as possible. This extra demand, with falling future supply, pushed the price of
GNMA ARMs up beyond their fair market value. At that point in time we decided it
was a good opportunity to decrease our position and take profits. So we reduced
this position. Once this program opens up again, we will look for a more
suitable time to re-enter the GNMA ARM market.
Thank you for your confidence in Dreyfus. We look forward to continuing to
serve your investment needs.
Sincerely,
[Michael Hoeh signature logo]
Michael Hoeh
Portfolio Manager
August 10, 1998
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 applicable contingent deferred sales charge
imposed on redemptions in the case of Class B and Class C shares.
**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 per share 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: LEHMAN BROTHERS -- The Lehman Brothers GNMA Index is an unmanaged
total return performance benchmark for the GNMA market, consisting of 15- and
30-year fixed-rate GNMA securities.
<TABLE>
DREYFUS PREMIER GNMA FUND
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS JUNE 30, 1998 (UNAUDITED)
Principal
Bonds--110.5% Amount Value
- ------------------------------------------------------- _____________ ____________
_
Mortgage-Backed Securities:
Government National Mortgage Association I:
<S> <C> <C>
6 1/2%, 11/15/2007-5/15/2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,470,956 $ 19,767,358
6 1/2%, 5/15/2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,207,497 (a) 5,285,610
6 1/2%, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000 (b) 4,984,350
7%, 6/15/2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,045,332 (a) 4,170,455
7% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,900,000 (b) 15,120,350
7 1/2%, 3/15/2002-12/15/2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,304,356 29,249,600
8%, 4/15/2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,878,702 (a) 5,140,932
8%, 12/15/2021-1/15/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 667,350 699,256
8 1/2%, 10/15/2017-12/15/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,201,045 4,495,492
9%, 4/15/2016-12/15/2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,030,264 5,463,648
9 1/2%, 10/15/2016-1/15/2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,852,479 5,280,368
11 1/2%, 1/15/2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,504 115,307
_____________
99,772,726
_____________
Government National Mortgage Association I,
Project Loans:
6 3/8%, 2/15/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,496,300 1,495,357
6 1/2% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 935,000 (b) 940,545
6 5/8%, 3/15/2033 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,993,298 4,041,937
7%, 5/15/2030 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,992,677 2,072,384
7 1/2%, 12/15/2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 959,188 1,001,449
9 1/4%, 10/15/2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,717,055 (a) 5,094,419
_____________
14,646,091
_____________
Government National Mortgage Association II:
4 1/2%, 5/20/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,930,006 (c) 6,826,056
5%, 4/20/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,580,567 (c) 13,521,084
5 1/2%, 4/20/2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,039,777 (c) 7,070,541
9%, 7/20/2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,168,467 4,458,925
11%, 12/20/2013-10/20/2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,272,274 1,444,005
_____________
33,320,611
_____________
TOTAL BONDS
(cost $144,509,632) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $147,739,428
_____________
DREYFUS PREMIER GNMA FUND
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1998 (UNAUDITED)
Principal
Short-Term Investments--3.4% Amount Value
- ------------------------------------------------------- _____________ ____________
U.S. Treasury Bills:
5.18%, 9/17/1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,529,000 (a) $ 4,481,083
5.08%, 10/1/1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,000 (a) 93,793
_____________
(cost $4,573,966) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,574,876
_____________
TOTAL INVESTMENTS
(cost $149,083,598) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113.9% $152,314,304
_______ _____________
LIABILITIES, LESS CASH AND RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . (13.9%) ($ 18,634,164)
_______ _____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $133,680,140
_______ _____________
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.
</TABLE>
<TABLE>
DREYFUS PREMIER GNMA FUND
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1998 (UNAUDITED)
Cost Value
_____________ _____________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments . $149,083,598 $152,314,304
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 2,798,774
Receivable for investment securities sold . . . . . . . . 7,553,404
Interest receivable . . . . . . . . . . . . . . . . . . . 799,113
Receivable for shares of Beneficial Interest subscribed . 525,027
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 23,211
_____________
164,013,833
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates . . . . . . 85,687
Due to Distributor . . . . . . . . . . . . . . . . . . . 36,564
Payable for investment securities purchased . . . . . . . 30,062,166
Payable for shares of Beneficial Interest redeemed . . . 62,340
Accrued expenses . . . . . . . . . . . . . . . . . . . . 86,936
_____________
30,333,693
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $133,680,140
_____________
REPRESENTED BY: Paid-in capital . . . . . . . . . . . . . . . . . . . . . $135,860,486
Accumulated undistributed investment income--net . . . . 44
Accumulated net realized gain (loss) on investments . . . (5,411,096)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 . . . . . . . . . . . . . . . . 3,230,706
_____________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $133,680,140
_____________
_____________
NET ASSET VALUE PER SHARE
_____________________________________________________
Class A Class B Class C
____________ ____________ ____________
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $95,260,367 $37,799,654 $620,119
Shares Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,423,707 2,546,767 41,784
NET ASSET VALUE PER SHARE. . . . . . . . . . . . . . . . . . . . . . . . . $14.83 $14.84 $14.84
_______ _______ _______
_______ _______ _______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS PREMIER GNMA FUND
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
INVESTMENT INCOME
<S> <C> <C>
INCOME Interest Income . . . . . . . . . . . . . . . . . . . . . $4,443,824
EXPENSES: Management fee--Note 3(a) . . . . . . . . . . . . . . . . $ 364,160
Shareholder servicing costs--Note 3(c) . . . . . . . . . 238,730
Distribution fees--Note 3(b) . . . . . . . . . . . . . . 96,480
Registration fees . . . . . . . . . . . . . . . . . . . . 26,553
Professional fees . . . . . . . . . . . . . . . . . . . . 23,210
Custodian fees--Note 3(c) . . . . . . . . . . . . . . . . 20,495
Trustees' fees and expenses--Note 3(d) . . . . . . . . . 16,916
Prospectus and shareholders' reports . . . . . . . . . . 10,977
Loan commitment fees--Note 2 . . . . . . . . . . . . . . 849
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 136
___________
Total Expenses . . . . . . . . . . . . . . . . . . . . 798,506
___________
INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,645,318
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments . . . . . . . . . $1,131,565
Net unrealized appreciation (depreciation) on investments . . (545,673)
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . 585,892
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $4,231,210
___________
___________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS PREMIER GNMA FUND
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1998 Year Ended
(Unaudited) December 31, 1997
________________ ________________
OPERATIONS:
<S> <C> <C>
Investment income--net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,645,318 $ 8,000,888
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . 1,131,565 897,569
Net unrealized appreciation (depreciation) on investments . . . . . . . . . . . (545,673) 2,761,124
_____________ _____________
Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . 4,231,210 11,659,581
_____________ _____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,661,673) (5,918,534)
Class B shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (983,901) (2,072,934)
Class C shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,453) (1,667)
_____________ _____________
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,653,027) (7,993,135)
_____________ _____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,626,612 32,138,926
Class B shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,293,413 4,659,005
Class C shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 517,351 107,034
Dividends reinvested:
Class A shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,808,157 4,022,706
Class B shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 693,710 1,431,495
Class C shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,739 1,502
Cost of shares redeemed:
Class A shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32,652,005) (54,989,643)
Class B shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,133,636) (8,182,513)
Class C shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,861) (16,644)
_____________ _____________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions . . (853,520) (20,828,132)
_____________ _____________
Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . (275,337) (17,161,686)
NET ASSETS:
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133,955,477 151,117,163
_____________ _____________
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $133,680,140 $133,955,477
_____________ _____________
_____________ _____________
UNDISTRIBUTED INVESTMENT INCOME--NET . . . . . . . . . . . . . . . . . . . . . . . $ 44 $ 7,753
_____________ _____________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS PREMIER GNMA FUND
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
____________________________
Six Months Ended
June 30, 1998 Year Ended
(Unaudited) December 31, 1997
_______________ ________________
________________
CAPITAL SHARE TRANSACTIONS:
Class A
________
<S> <C> <C>
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,064,005 2,194,845
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . 121,912 277,860
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,201,318) (3,775,941)
__________ __________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . (15,401) (1,303,236)
__________ __________
__________ __________
Class B
________
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221,831 320,620
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . 46,741 98,717
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (345,826) (564,582)
__________ __________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . (77,254) (145,245)
__________ __________
__________ __________
Class C
________
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,837 7,322
Shares issued for dividends reinvested . . . . . . . . . . . . . . . . . . . . 454 103
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (932) (1,160)
__________ __________
Net Increase (Decrease) in Shares Outstanding . . . . . . . . . . . . 34,359 6,265
__________ __________
__________ __________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
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.
Class A Shares
_______________________________________________
Six Months Ended
June 30, 1998 Year Ended December 31,
_________________________________________________
PER SHARE DATA: (Unaudited) 1997 1996 1995 1994 1993
__________ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . $14.76 $14.37 $14.66 $13.54 $14.84 $14.90
______ ______ ______ ______ ______ ______
Investment Operations:
Investment income--net . . . . . . . . . . . . . .42 .85 .88 .91 .88 .95
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . .07 .39 (.29) 1.12 (1.30) .24
______ ______ ______ ______ ______ ______
Total from Investment Operations . . . . . . . . .49 1.24 .59 2.03 (.42) 1.19
______ ______ ______ ______ ______ ______
Distributions:
Dividends from investment income--net . . . . . . (.42) (.85) (.88) (.91) (.88) (.95)
Dividends from net realized gain on investments . . -- -- -- -- -- (.30)
______ ______ ______ ______ ______ ______
Total Distributions . . . . . . . . . . . . . . . (.42) (.85) (.88) (.91) (.88) (1.25)
______ ______ ______ ______ ______ ______
Net asset value, end of period . . . . . . . . . $14.83 $14.76 $14.37 $14.66 $13.54 $14.84
______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______
TOTAL INVESTMENT RETURN(1) . . . . . . . . . . . . . 6.72%(2) 8.91% 4.25% 15.43% (2.91%) 8.20%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . 1.06%(2) 1.05% 1.04% 1.03% .94% .78%
Ratio of net investment income
to average net assets . . . . . . . . . . . . 5.65%(2) 5.87% 6.17% 6.45% 6.20% 6.24%
Decrease reflected in above expense ratios
due to undertakings by the Manager . . . . . -- -- -- -- .06% .22%
Portfolio Turnover Rate . . . . . . . . . . . . . 98.07%(3) 518.62% 267.22% 349.24% 427.27% 274.95%
Net Assets, end of period (000's Omitted) . . . . $95,260 $95,071 $111,267 $134,545 $141,456 $197,239
- -----------------------------
(1) Exclusive of sales load.
(2) Annualized
(3) Not annualized
SEE NOTES TO FINANCIAL STATEMENTS.
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.
Class B Shares
_________________________________________________________________
Six Months Ended
June 30, 1998 Year Ended December 31,
______________________________________________________
PER SHARE DATA: (Unaudited) 1997 1996 1995 1994 1993(1)
__________ ______ ______ ______ ______ ______
Net asset value, beginning of period . . . . . . $14.78 $14.38 $14.67 $13.55 $14.84 $14.98
_______ _______ _______ _______ _______ _______
Investment Operations:
Investment income--net . . . . . . . . . . . . . .38 .78 .81 .84 .80 .83
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . .06 .40 (.29) 1.12 (1.29) .16
______ ______ ______ ______ ______ ______
Total from Investment Operations . . . . . . . . .44 1.18 .52 1.96 (.49) .99
______ ______ ______ ______ ______ ______
Distributions:
Dividends from investment income--net . . . . . . (.38) (.78) (.81) (.84) (.80) (.83)
Dividends from net realized gain on investments . . -- -- -- -- -- (.30)
______ ______ ______ ______ ______ ______
Total Distributions . . . . . . . . . . . . . . . (.38) (.78) (.81) (.84) (.80) (1.13)
______ ______ ______ ______ ______ ______
Net asset value, end of period . . . . . . . . . $14.84 $14.78 $14.38 $14.67 $13.55 $14.84
______ ______ ______ ______ ______ ______
______ ______ ______ ______ ______ ______
TOTAL INVESTMENT RETURN(2) . . . . . . . . . . . . . 6.07%(3) 8.43% 3.71% 14.83% (3.39%) 7.03%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . 1.56%(3) 1.55% 1.55% 1.55% 1.51% 1.30%(3)
Ratio of net investment income
to average net assets . . . . . . . . . . . . 5.15%(3) 5.36% 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 . . . . . . . . . . . . . 98.07%(4) 518.62% 267.22% 349.24% 427.27% 274.95%
Net Assets, end of period (000's Omitted) . . . . $37,800 $38,775 $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.
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.
Class C Shares
_______________________________________________
Six Months Ended
June 30,1998 Year Ended December 31,
PER SHARE DATA: (Unaudited) 1997 1996 1995(1)
________________ ______ ______ ______
Net asset value, beginning of period . . . . . . . . . . . . . $14.77 $14.38 $14.67 $14.48
______ ______ ______ ______
Investment Operations:
Investment income--net . . . . . . . . . . . . . . . . . . . . .35 .75 .77 .16
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . . . .07 .39 (.29) .19
______ ______ ______ ______
Total from Investment Operations . . . . . . . . . . . . . . . .42 1.14 .48 .35
______ ______ ______ ______
Distributions:
Dividends from investment income--net . . . . . . . . . . . . . (.35) (.75) (.77) (.16)
______ ______ ______ ______
Net asset value, end of period . . . . . . . . . . . . . . . . $14.84 $14.77 $14.38 $14.67
______ ______ ______ ______
______ ______ ______ ______
TOTAL INVESTMENT RETURN(2) . . . . . . . . . . . . . . . . . . . . 5.79%(3) 8.13% 3.44% 11.47%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets . . . . . . . . . . . . 1.81%(3) 1.80% 1.79% 1.79%(3)
Ratio of net investment income
to average net assets . . . . . . . . . . . . . . . . . . . 4.59%(3) 5.11% 5.42% 5.25%(3)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . 98.07%(4) 518.62% 267.22% 349.24%
Net Assets, end of period (000's Omitted) . . . . . . . . . . . $620 $110 $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
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
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").
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 ("CDSC")
imposed on Class B share redemptions made within six years of purchase (five
years for shareholders beneficially owning Class B shares on November 30, 1996)
and Class C shares are subject to a CDSC imposed on shares redeemed within one
year of purchase. Other differences between the 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 short-term
investments other than U.S. Treasury Bills) 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.
Short-term investments, excluding U.S. Treasury Bills, 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. Under the terms of the
custodian agreement, the Fund received net earnings credits of $5,315 during the
period ended June 30, 1998 based on available cash balances left on deposit.
Income earned under this arrangement is included in interest income.
(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
DREYFUS PREMIER GNMA FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Revenue Code, and to make distributions of taxable income sufficient to relieve
it from substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $6,548,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1997. 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. During the period ended June
30, 1998, 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, 1998, Class B and
Class C shares were charged $95,258 and $1,222, respectively, pursuant to the
Distribution Plan.
(C) Under the Shareholder Services Plan, Class A, Class B and Class C shares
pay the Distributor at an annual rate of .25 of 1% of the value of the average
daily net assets 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, 1998, Class A, Class B and Class C
shares were charged $117,491, $47,629 and $408, respectively, 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. During the period
ended June 30, 1998, the Fund was charged $50,152 pursuant to the transfer
agency agreement.
The Fund compensates Mellon under a custody agreement to provide custodial
services for the Fund. During the period ended June 30, 1998, the Fund was
charged $20,495 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.
DREYFUS PREMIER GNMA FUND
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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,
1998 amounted to $150,597,944 and $158,233,732, respectively.
At June 30, 1998, accumulated net unrealized appreciation on investments was
$3,230,706, consisting of $3,285,206 gross unrealized appreciation and $54,500
gross unrealized depreciation.
At June 30, 1998, 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
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. 027/614/665SA986
SEMI-ANNUAL REPORT
- -------------------------------------------------------------------------------
DREYFUS PREMIER
GNMA FUND
- -------------------------------------------------------------------------------
JUNE 30, 1998
(reg.tm)
[reg.tm signature logo]
