<PAGE>
Annual Report
----------------------
Dreyfus Premier
GNMA Fund
----------------------
December 31, 1997
<PAGE>
Dreyfus Premier GNMA Fund
- --------------------------------------------------------------------------------
Letter to Shareholders
Dear Shareholder:
We are pleased to report the performance for Dreyfus Premier GNMA Fund for
its 12-month reporting period ended December 31, 1997 as shown in the following
table:
Approximate
Total Return* Income Dividends Distribution Rate**
------------- ---------------- -------------------
Class A Shares 8.91% $0.851 5.51%
Class B Shares 8.43% $0.777 5.26%
Class C Shares 8.13% $0.747 5.06%
Lehman Brothers GNMA Index*** 9.53%
ECONOMIC REVIEW
Inflation seems to be under control. Not since the oil price collapse in 1986
has it been so restrained. As the economy approached the end of its seventh
consecutive year of expansion, inflation seemed to become even more subdued.
During the last quarter of 1997, the rate of increase in consumer prices fell
below the 2% level. Producer prices actually fell at an annual rate of 1.2% over
the first 11 months of the year.
The ongoing fear in financial markets has been that the Federal Reserve
Board's (the "Fed") unremitting fight against inflation could lead to further
increases in interest rates. Yet the Federal Open Market Committee (F.O.M.C.),
the policy-making arm of the Fed, has raised interest rates just once in over
two years, a period roughly coinciding with the latest surge of economic growth.
The last increase occurred on March 25, 1997 when the F.O.M.C. increased the
Federal Funds rate by a modest 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.) Investor concern about additional monetary restraint centers
on the low unemployment rate of just 4.6% as of December 31, 1997, a 24-year
low. In particular, there were fears that wages would rise at a rate that could
rekindle inflation. Over the last year, the gain in wages after adjusting for
inflation was 2%, the sharpest increase in 20 years.
Not surprisingly, an almost ideal economic climate -- plentiful jobs, low
interest rates and dwindling inflation -- has put consumers in an ebullient
mood. Though holiday retail sales were below expectations, spending in the third
quarter grew at the strongest pace in five years. Since consumer spending
accounts for two thirds of all economic activity, consumer attitudes are
important indicators of future economic conditions. The Conference Board (a
business-sponsored research group) reported in December that its Index of
Consumer Confidence rose to its highest level since 1969. So far, the serious
economic developments in Asia have not had an inhibiting effect on consumer
attitudes.
The Asian financial crisis, while bound to affect the import/export segment
of our economy, may also afford the Fed additional flexibility in implementing
monetary policy. While the Fed is concerned about the potential resurgence of
inflation, lower-priced Asian imports may counteract upward pressure on the rate
of U.S. inflation. Moreover, with our economic expansion mature by any
historical precedent (it's the second longest peacetime expansion in this
century), a slackening in overseas demand for U.S. products, combined with the
lower-priced imports, may help contain economic growth without additional
monetary tightening by the Fed. Regardless, we believe that it is unlikely that
the Fed would raise interest rates and further unsettle the international
financial markets while Asian countries struggle to stabilize their currencies
in relation to the U.S. dollar. Perhaps the biggest uncertainty ahead is the
extent to which the Asian turmoil will affect the U.S. economy. We are
particularly vigilant for developments abroad that might have either negative or
positive consequences for the Fund. The trouble in Asia shows the close and
sensitive relationship between our economy and the economies around the globe.
<PAGE>
MARKET ENVIRONMENT
The fourth quarter of 1997 was a pivotal time for interest rates. The 10-year
Treasury note managed to cross the 6.00% level (generally considered a
psychological barrier), ending the quarter at 5.74%. This is the lowest absolute
level of rates seen since October 1993. The decline in rates occurred largely
due to pressure from international markets. October saw a 50% correction to the
Hong Kong stock market, which triggered a general flight-to-quality movement
among asset allocators, taking place worldwide. Hence many worried investors
sought the credit protection and capital protection of the U.S. Treasury market.
As U.S. Treasuries rallied to new lows in interest rates, so did corporate
bonds and mortgage-backed securities. In general, mortgage-backed securities
performed strongly, with the Salomon Brothers Mortgage Index posting a 2.35%
gain for the quarter. While values increased, the spread over U.S. Treasuries on
both mortgage-backed securities and corporate bonds widened. This lag typically
occurs when the market begins to demand a higher yield spread for taking on
either corporate credit or mortgage prepayment risk. In line with the market
trend, spreads on both GNMAs and CMOs were wider by 10 to 25 basis points versus
comparable-term U.S. Treasuries. With the Mortgage Bankers Association
refinancing index (a forward-looking indicator) also hitting an all-time high,
mortgage-backed securities investors continued to sell mortgage-backed
securities in favor of prepayment-protected fixed-income securities.
PORTFOLIO OVERVIEW
The Fund is currently positioned for both a continued rally in the U.S.
Treasury market as well as a wave of mortgage prepayments. In order to position
ourselves for this outlook, we increased the duration of the entire Fund to be
10% longer than the Lehman Brothers GNMA Index. Hence the duration of the Fund
was 3.35 years at the end of the year.
In order to position the Fund for the oncoming prepayment wave, we invested
the Fund in more call-protected mortgage products, such as project loan
holdings. These GNMA project loans have at least 5 years of lockout from any
type of prepayment. These securities have tightened versus U.S. Treasuries
during the fourth quarter as investor demand for high yielding, call-protected
mortgage-backed securities increased.
In the fixed rate collateral market, we have also focused on
less-prepayment-sensitive securities. We swapped into lower dollar-priced,
deep-discount 30-year GNMA collateral. During the fourth quarter, we added to
our position of GNMA 6.5% 30-year pass-throughs, while we decreased our holdings
of premium securities. In premiums, we sold our position of 30-year GNMA 8%
collateral.
Lastly, we have also added adjustable-rate GNMA securities to the Fund. In
this market, we have chosen the discount GNMA 5.5% and 6% new-issue pools. At
their discount dollar price, they will benefit if mortgage prepayments continue
to rise, and they offer an attractive yield for short-duration securities. We
purchased these securities while decreasing the cash holdings of the Fund. These
securities are expected to perform strongly if interest rate volatility
decreases, which we think could happen if investors start to see signs that the
Asian markets are beginning to stabilize.
<PAGE>
Included in this report is a series of detailed statements about your Fund's
holdings and its financial condition. We appreciate your continued confidence in
the Fund and in The Dreyfus Corporation.
Sincerely,
/s/ Michael Hoeh
Michael Hoeh
Portfolio Manager
January 20, 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 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, 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 backed by mortgage pools of the
Government National Mortgage Association.
<PAGE>
Dreyfus Premier GNMA Fund December 31, 1997
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN DREYFUS PREMIER GNMA
FUND CLASS A SHARES AND THE LEHMAN BROTHERS GNMA INDEX
Dollars
$24,640
Lehman Brothers
GNMA Index*
$22,718
Dreyfus
Premier GNMA Fund
(Class A Shares)
*Source: Lehman Brothers
Average Annual Total Returns
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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 12/31/97 Sales Charge Sales Charge (4.5%) Period Ended 12/31/97 Redemption Redemption*
- -------------------- ---------------- ------------------- --------------------- ----------- ---------------------
<S> <C> <C> <C> <C> <C>
1 Year 8.91% 3.99% 1 Year 8.43% 4.43%
5 Years 6.60 5.63 From Inception (1/15/93) 5.95 5.63
10 Years 9.05 8.55
Class C Shares
- ----------------------------------------------------------
% Return Reflecting
Applicable Contingent
% Return Deferred Sales
Assuming Charge Upon
Period Ended 12/31/97 No Redemption Redemption**
- --------------------- ------------- ---------------------
1 Year 8.13% 7.13%
From Inception (10/16/95) 6.34 6.34
<FN>
- --------------
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Class A shares of
Dreyfus Premier GNMA Fund on 12/31/87 to a $10,000 investment made in the
Lehman Brothers GNMA Index on that date. All dividends and capital gain
distributions are reinvested. Performance for Class B 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. 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. These factors can contribute to the Index potentially outperforming
the Fund. 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.
* The maximum contingent deferred sales charge for Class B shares is 4% and
is reduced to 0% after six years.
** The maximum contingent deferred sales charge for Class C shares is 1%
for shares redeemed within one year of the date of purchase.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Premier GNMA Fund
- --------------------------------------------------------------------------------
Statement of Investments December 31, 1997
Principal
Bonds--115.6% Amount Value
- ------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Mortgage-Backed Securities--114.1%
Government National Mortgage Association I:
6 1/2%, 11/15/2007-5/15/2012................................................ $18,043,827 $ 18,164,849
6 1/2%, 5/15/2009-11/15/2009................................................ 8,535,494(a) 8,624,383
7%, 6/15/2009............................................................... 4,459,114(a) 4,571,562
7 1/2%, 3/15/2002-12/15/2027................................................ 31,230,416 32,159,115
8%, 4/15/2008............................................................... 5,565,178(a) 5,867,757
8%, 12/15/2021-1/15/2022.................................................... 756,858 792,097
8 1/2%, 10/15/2017-12/15/2022............................................... 5,043,422 5,368,171
9%, 4/15/2016-12/15/2022.................................................... 6,219,967 6,742,994
9 1/2%, 10/15/2016-1/15/2025................................................ 7,002,911 7,641,167
10%, 10/15/2016-10/15/2020.................................................. 839,279 920,060
11 1/2%, 1/15/2013.......................................................... 107,651 117,430
------------
90,969,585
------------
Government National Mortgage Association I:
Project Loans:
6 3/4%, 1/15/2034........................................................... 1,469,201 1,472,874
7%, 4/15/2037............................................................... 1,928,506 1,961,040
7 1/2%, 9/15/2032........................................................... 1,230,775 1,277,311
8 1/4%, 11/15/2035.......................................................... 644,622 676,647
9 1/4%, 10/15/2023.......................................................... 4,738,870(a) 5,120,917
------------
10,508,789
------------
Government National Mortgage Association II:
5 1/2%...................................................................... 21,500,000(b,c) 21,473,125
6%.......................................................................... 9,500,000(b,c) 9,571,250
7%, 12/20/2025-9/20/2027.................................................... 12,843,860 12,924,374
9%, 7/20/2025............................................................... 5,449,749(a) 5,819,296
11%, 12/20/2013-10/20/2015.................................................. 1,429,634 1,619,999
------------
51,408,044
------------
Total Mortgage-Backed Securities............................................... 152,886,418
============
U.S. Treasury Bonds--1.5%
6 1/8%, 11/15/2027.......................................................... 1,000,000 1,028,125
6 1/8%, 11/15/2027.......................................................... 1,000,000(a) 1,028,125
------------
Total U.S. Treasury Bonds...................................................... 2,056,250
============
TOTAL BONDS
(cost $151,167,575)......................................................... $154,942,668
============
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Premier GNMA Fund
- -------------------------------------------------------------------------------
Statement of Investments (continued) December 31, 1997
Principal
Short-Term Investments--7.1% Amount Value
- ------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
U.S. Treasury Bills:
4.96%, 1/22/1998............................................................ $ 5,595,000(a) $ 5,578,551
5.34%, 2/5/1998............................................................. 2,326,000(a) 2,314,626
5.14%, 2/26/1998............................................................ 584,000(a) 579,486
5.15%, 3/12/1998............................................................ 148,000(a) 146,524
5.31%, 3/19/1998............................................................ 429,000(a) 424,260
5.57%, 4/2/1998............................................................. 416,000(a) 410,525
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $9,452,686)........................................................... $ 9,453,972
============
TOTAL INVESTMENTS
(cost $160,620,261)......................................................... 122.7% $164,396,640
====== ============
LIABILITIES, LESS CASH AND RECEIVABLES......................................... (22.7%) $(30,441,163)
====== ============
NET ASSETS..................................................................... 100.0% $133,955,477
====== ============
<FN>
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.
</FN>
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Premier GNMA Fund
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1997
Cost Value
------------ ------------
<S> <C> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $160,620,261 $164,396,640
Receivable for investment securities sold........ 55,071,767
Interest receivable.............................. 889,657
Receivable for shares of Beneficial Interest subscribed 22,460
Prepaid expenses................................. 31,863
------------
220,412,387
------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates.... 90,690
Due to Distributor............................... 34,138
Cash overdraft due to Custodian.................. 36,949
Payable for investment securities purchased...... 86,150,759
Payable for shares of Beneficial Interest redeemed 42,095
Accrued expenses................................. 102,279
------------
86,456,910
------------
NET ASSETS..................................................................... $133,955,477
============
REPRESENTED BY: Paid-in capital.................................. $136,714,006
Accumulated undistributed investment income--net. 7,753
Accumulated net realized gain (loss) on investments (6,542,661)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4......................... 3,776,379
------------
NET ASSETS..................................................................... $133,955,477
============
</TABLE>
NET ASSET VALUE PER SHARE
-------------------------
<TABLE>
<CAPTION>
Class A Class B Class C
----------- ------------- ----------
<S> <C> <C> <C>
Net Assets..................................................... $95,070,956 $38,774,826 $109,695
Shares Outstanding............................................. 6,439,108 2,624,021 7,425
NET ASSET VALUE PER SHARE...................................... $14.76 $14.78 $14.77
====== ====== ======
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
<PAGE>
Dreyfus Premier GNMA Fund
- --------------------------------------------------------------------------------
Statement of Operations Year Ended December 31, 1997
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME Interest Income............................ $ 9,660,584
EXPENSES: Management fee--Note 3(a).................. $ 767,175
Shareholder servicing costs--Note 3(c)..... 475,914
Distribution fees--Note 3(b)............... 193,543
Professional fees.......................... 54,277
Registration fees.......................... 49,860
Custodian fees............................. 39,689
Trustees' fees and expenses--Note 3(d)..... 33,737
Prospectus and shareholders' reports....... 15,510
Loan commitment fees--Note 2............... 1,485
Miscellaneous.............................. 28,506
----------
Total Expenses........................... 1,659,696
-----------
INVESTMENT INCOME--NET................................................... 8,000,888
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments.... $ 897,569
Net unrealized appreciation (depreciation)
on investments........................... 2,761,124
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................... 3,658,693
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $11,659,581
===========
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier GNMA Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1997 December 31, 1996
----------------- -----------------
OPERATIONS:
<S> <C> <C>
Investment income--net................................................. $ 8,000,888 $ 9,840,332
Net realized gain (loss) on investments................................ 897,569 1,437,681
Net unrealized appreciation (depreciation) on investments.............. 2,761,124 (5,001,934)
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from Operations.. 11,659,581 6,276,079
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares...................................................... (5,918,534) (7,540,292)
Class B shares...................................................... (2,072,934) (2,299,266)
Class C shares...................................................... (1,667) (774)
------------ ------------
Total Dividends.................................................. (7,993,135) (9,840,332)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares...................................................... 32,138,926 14,387,058
Class B shares...................................................... 4,659,005 4,915,210
Class C shares...................................................... 107,034 16,094
Dividends reinvested:
Class A shares...................................................... 4,022,706 5,148,131
Class B shares...................................................... 1,431,495 1,540,231
Class C shares...................................................... 1,502 774
Cost of shares redeemed:
Class A shares...................................................... (54,989,643) (40,109,763)
Class B shares...................................................... (8,182,513) (7,695,736)
Class C shares...................................................... (16,644) (1,004)
------------ ------------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (20,828,132) (21,799,005)
------------ ------------
Total Increase (Decrease) in Net Assets....................... (17,161,686) (25,363,258)
NET ASSETS:
Beginning of Period.................................................... 151,117,163 176,480,421
------------ ------------
End of Period.......................................................... $133,955,477 $151,117,163
============ ============
Undistributed investment income--net................................... $ 7,753 --
------------- -------------
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier GNMA Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
Shares
--------------------------------------
Year Ended Year Ended
December 31, 1997 December 31, 1996
------------------- -----------------
CAPITAL SHARE TRANSACTIONS:
<S> <C> <C>
Class A
-------
Shares sold.............................................................. 2,194,845 1,005,176
Shares issued for dividends reinvested................................... 277,860 359,656
Shares redeemed.......................................................... (3,775,941) (2,801,148)
---------- ----------
Net Increase (Decrease) in Shares Outstanding................... (1,303,236) (1,436,316)
========== ==========
Class B
-------
Shares sold.............................................................. 320,620 340,609
Shares issued for dividends reinvested................................... 98,717 107,520
Shares redeemed.......................................................... (564,582) (537,054)
---------- ----------
Net Increase (Decrease) in Shares Outstanding................... (145,245) (88,925)
========== ==========
Class C
-------
Shares sold.............................................................. 7,322 1,107
Shares issued for dividends reinvested................................... 103 54
Shares redeemed.......................................................... (1,160) (71)
---------- ----------
Net Increase (Decrease) in Shares Outstanding................... 6,265 1,090
========== ==========
</TABLE>
See notes to financial statements.
<PAGE>
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
--------------------------------------------------
Year Ended December 31,
--------------------------------------------------
PER SHARE DATA: 1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $14.37 $14.66 $13.54 $14.84 $14.90
------ ------ ------ ------ ------
Investment Operations:
Investment income--net.................................. .85 .88 .91 .88 .95
Net realized and unrealized gain (loss) on investments.. .39 (.29) 1.12 (1.30) .24
------ ------ ------ ------ ------
Total from Investment Operations........................ 1.24 .59 2.03 (.42) 1.19
------ ------ ------ ------ ------
Distributions:
Dividends from investment income--net................... (.85) (.88) (.91) (.88) (.95)
Dividends from net realized gain on investments......... -- -- -- -- (.30)
------ ------ ------ ------ ------
Total Distributions..................................... (.85) (.88) (.91) (.88) (1.25)
------ ------ ------ ------ ------
Net asset value, end of period.......................... $14.76 $14.37 $14.66 $13.54 $14.84
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN*................................... 8.91% 4.25% 15.43% (2.91%) 8.20%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................. 1.05% 1.04% 1.03% .94% .78%
Ratio of net investment income to average net assets.... 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................................. 518.62% 267.22% 349.24% 427.27% 274.95%
Net Assets, end of period (000's Omitted)............... $95,071 $111,267 $134,545 $141,456 $197,239
<FN>
- -----------
* Exclusive of sales load.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
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
----------------------------------------------------
Year Ended December 31,
----------------------------------------------------
PER SHARE DATA: 1997 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.................................. .78 .81 .84 .80 .83
Net realized and unrealized gain (loss) on investments.. .40 (.29) 1.12 (1.29) .16
------ ------ ------ ------ ------
Total from Investment Operations........................ 1.18 .52 1.96 (.49) .99
------ ------ ------ ------ ------
Distributions:
Dividends from investment income--net................... (.78) (.81) (.84) (.80) (.83)
Dividends from net realized gain on investments......... -- -- -- -- (.30)
------ ------ ------ ------ ------
Total Distributions..................................... (.78) (.81) (.84) (.80) (1.13)
------ ------ ------ ------ ------
Net asset value, end of period.......................... $14.78 $14.38 $14.67 $13.55 $14.84
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2)................................. 8.43% 3.71% 14.83% (3.39%) 7.03%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................. 1.55% 1.55% 1.55% 1.51% 1.30%(3)
Ratio of net investment income to average net assets.... 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................................. 518.62% 267.22% 349.24% 427.27% 274.95%
Net Assets, end of period (000's Omitted)............... $38,775 $39,833 $41,934 $35,710 $29,648
<FN>
- ---------------
(1) From January 15, 1993 (commencement of initial offering) to December 31,
1993.
(2) Exclusive of sales load.
(3) Annualized.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
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
-------------------------------
Year Ended December 31,
-------------------------------
PER SHARE DATA: 1997 1996 1995(1)
------- ------- --------
<S> <C> <C> <C>
Net asset value, beginning of period...................................... $14.38 $14.67 $14.48
------ ------ ------
Investment Operations:
Investment income--net.................................................... .75 .77 .16
Net realized and unrealized gain (loss) on investments.................... .39 (.29) .19
------ ------ ------
Total from Investment Operations.......................................... 1.14 .48 .35
------ ------ ------
Distributions:
Dividends from investment income--net..................................... (.75) (.77) (.16)
------ ------ ------
Net asset value, end of period............................................ $14.77 $14.38 $14.67
====== ====== ======
TOTAL INVESTMENT RETURN(2)................................................... 8.13% 3.44% 11.47%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................... 1.80% 1.79% 1.79%(3)
Ratio of net investment income to average net assets...................... 5.11% 5.42% 5.25%(3)
Portfolio Turnover Rate................................................... 518.62% 267.22% 349.24%
Net Assets, end of period (000's Omitted)................................. $110 $17 $1
<FN>
- ------------
(1) From October 16, 1995 (commencement of intital offering) to December 31,
1995.
(2) Exclusive of sales load.
(3) Annualized.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
Dreyfus Premier GNMA Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
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, effective March 31, 1997,
a change in the Fund's name from "Premier GNMA Fund" to "Dreyfus Premier GNMA
Fund."
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 share redemptions made within five years of purchase 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 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, including U.S. Treasury Bills, are
valued at the mean between quoted bid and asked prices. 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.
(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.
<PAGE>
Dreyfus Premier GNMA Fund
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NOTES TO FINANCIAL STATEMENTS (continued)
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to qualify
as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the applicable provisions of
the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $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
December 31, 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 December 31, 1997, the Fund
was charged $193,298 and $245 for Class B and Class C shares, respectively,
pursuant to the Distribution Plan.
(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 December 31, 1997, the Fund was charged
$251,985, $96,649 and $82 for Class A, B and C shares, 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 December 31, 1997, the Fund was charged $99,750 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 December 31, 1997, the Fund was
charged $39,689 pursuant to the custody agreement.
<PAGE>
Dreyfus Premier GNMA Fund
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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 4--Securities Transactions:
The aggregate amount of purchases and sales (including paydowns) of
investment securities, excluding short-term securities, during the period ended
December 31, 1997 amounted to $900,756,941 and $939,941,433, respectively.
At December 31, 1997, accumulated net unrealized appreciation on investments
was $3,776,379, consisting of $3,950,562 gross unrealized appreciation and
$174,183 gross unrealized depreciation.
At December 31, 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).
<PAGE>
Dreyfus Premier GNMA Fund
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Report of Ernst & Young LLP, Independent Auditors
SHAREHOLDERS AND BOARD OF DIRECTORS
DREYFUS PREMIER GNMA FUND
We have audited the accompanying statement of assets and liabilities of
Dreyfus Premier GNMA Fund, including the statement of investments, as of
December 31, 1997, 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 and financial highlights. Our procedures included verification by
examination of securities held by the custodian as of December 31, 1997 and
confirmation of securities not held by the custodian by correspondence with
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dreyfus Premier GNMA Fund at December 31, 1997, 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 & Young LLP
New York, New York
February 12, 1998
<PAGE>
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. 027/614AR9712
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN DREYFUS PREMIER GNMA FUND CLASS A SHARES AND THE
LEHMAN BROTHERS GNMA INDEX
EXHIBIT A:
LEHMAN BROTHERS DREYFUS PREMIER
PERIOD GNMA GNMA FUND
INDEX * (CLASS A SHARES)
12/31/87 10,000 9,552
12/31/88 10,880 10,790
12/31/89 12,587 12,140
12/31/90 13,918 13,423
12/31/91 16,151 15,494
12/31/92 17,348 16,501
12/31/93 18,489 17,854
12/31/94 18,211 17,335
12/31/95 21,317 20,009
12/31/96 22,496 20,859
12/31/97 24,640 22,718
*Source: Lehman Brothers
