Dreyfus Premier
GNMA Fund
ANNUAL REPORT December 31, 1999
(reg.tm)
The views expressed herein are current to the date of this report. These views
and the composition of the fund's portfolio are subject to change at any time
based on market and other conditions.
* Not FDIC-Insured
* Not Bank-Guaranteed
* May Lose Value
Year 2000 Issues (Unaudited)
The fund could be adversely affected if the computer systems used by Dreyfus and
the fund's other service providers do not properly process and calculate
date-related information from and after January 1, 2000. Dreyfus has taken steps
designed to avoid year 2000-related problems in its systems and to monitor the
readiness of other service providers. In addition, issuers of securities in
which the fund invests may be adversely affected by year 2000-related problems.
This could have an impact on the value of the fund's investments and its share
price.
Contents
THE FUND
- --------------------------------------------------
2 Letter from the President
3 Discussion of Fund Performance
6 Fund Performance
8 Statement of Investments
10 Statement of Assets and Liabilities
11 Statement of Operations
12 Statement of Changes in Net Assets
14 Financial Highlights
17 Notes to Financial Statements
21 Report of Independent Auditors
FOR MORE INFORMATION
- ---------------------------------------------------------------------------
Back Cover
The Fund
Dreyfus Premier GNMA Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Premier GNMA Fund
covering the 12-month period from January 1, 1999, through December 31, 1999.
Inside, you' ll find valuable information about how the fund was managed during
the reporting period, including a discussion with Michael Hoeh, portfolio
manager and a member of the Dreyfus Taxable Fixed Income Team.
The past year was challenging for most fixed-income investors. Faster than
expected economic growth in the U.S. and overseas fueled concerns that
long-dormant inflationary pressures might re-emerge, potentially reducing the
future value of bonds' interest and principal payments. These concerns prompted
the Federal Reserve Board to raise key short-term interest rates three times
during the summer and fall of 1999 in an attempt to prevent a reacceleration of
inflation.
While U.S. Treasury and agency securities declined sharply in this environment
during 1999, prices of higher yielding securities -- such as corporate bonds and
mortgage-backed securities -- fell less severely. In an environment of robust
economic growth, investors appeared more comfortable owning bonds that are
influenced primarily by credit risk, and they avoided securities that are most
affected by interest-rate risk.
We appreciate your confidence over the past year, and we look forward to your
continued participation in Dreyfus Premier GNMA Fund.
Sincerely,
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
January 14, 2000
DISCUSSION OF FUND PERFORMANCE
Michael Hoeh, Portfolio Manager Dreyfus Taxable Fixed Income Team
How did Dreyfus Premier GNMA Fund perform relative to its benchmark?
For the 12-month period ended December 31, 1999, Dreyfus Premier GNMA Fund
performed as shown in the following table:
<TABLE>
<CAPTION>
APPROXIMATE DISTRIBUTION RATE
TOTAL RETURN(1) INCOME DIVIDENDS PER SHARE(2
(_________________) ______________________ ______________________
<S> <C> <C> <C>
Class A Shares -0.75% $0.77 5.17%
Class B Shares 0.23% $0.694 4.87%
Class C Shares -0.03% $0.656 4.60%
Lehman Brothers
GNMA Index(3) -1.93%
</TABLE>
We attribute the fund' s generally positive absolute returns to our asset
allocation and duration strategies. We emphasized GNMA mortgage-backed
securities over U.S. Treasury securities, enabling us to benefit from the
relative strength of the GNMA market sector. In addition, by maintaining the
fund' s average duration -- a measure of sensitivity to changing interest rates
- -- toward the short end of its range, we successfully cushioned the eroding
effects of rising interest rates.
What is the fund's investment approach?
The fund invests primarily in GNMA (Government National Mortgage Association or
" Ginnie Mae" ) and GNMA-related securities. The remainder may be allocated to
other securities issued or guaranteed by the U.S. government, such as U.S.
Treasury securities. The fund' s goal is to provide a high level of current
income consistent with capital preservation.
We use a four-step investment approach:
* PREPAYMENT TREND ANALYSIS measures the rate at which homeowners are
prepaying their mortgages because of home sales or refinancing. An increase
in this trend adversely affects returns of mortgage-backed securities.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
* OPTION-ADJUSTED SPREAD ANALYSIS compares the early redemption
characteristics of different mortgage-backed securities with other
securities, such as U.S. Treasuries, to help us measure the risk that
individual securities may be vulnerable to early redemption.
* CASH FLOW STRUCTURE ANALYSIS helps us determine the predictability and
security of cash flows provided by different bond structures.
* TOTAL-RATE-OF-RETURN SCENARIOS calculate expected rates of return for each
security relative to U.S. Treasury securities under different interest-rate
scenarios over a six-month time frame. This helps us estimate which
securities are likely to provide above-average returns in any given
interest-rate environment.
What other factors influenced the fund's performance?
While the entire U.S. bond market was negatively influenced by inflation fears
and rising interest rates during 1999, their effects were less severe for the
fund' s holdings of GNMA mortgage-backed securities than for U.S. Treasury
securities. That' s because mortgage prepayments decline when interest rates
rise, helping to support the prices of mortgage-backed securities.
Higher interest rates were largely the result of faster than expected economic
growth. Soon after 1999 began, fixed-income investors grew concerned that
long-dormant inflationary pressures might re-emerge. In response, the Federal
Reserve Board raised short-term interest rates by a total of 0.75 percentage
points in an attempt to forestall an acceleration of inflation. At the same
time, strong economic growth reassured investors that a recession was unlikely,
and they became more comfortable holding higher yielding assets such as
corporate bonds and mortgage-backed securities.
As assets flowed into higher yielding bonds, they flowed out of U.S. Treasury
securities, putting downward pressure on prices. As a result, U.S. Treasury
securities underperformed most other sectors of the bond market in 1999,
including mortgage-backed securities. As prices of U.S. Treasury securities
fell, the differences in yields between U.S. Treasury securities and
mortgage-backed securities tightened during the summer, before moderating
somewhat during the second half of the year. We took
advantage of these market conditions by emphasizing GNMA mortgage-backed
securities and generally avoiding U.S. Treasury securities.
What is the fund's current strategy?
Our strategy is to emphasize those areas of the government-guaranteed market
sector that we believe will provide the highest returns with the least risk.
This strategy was relatively successful in 1999' s rising interest-rate
environment, largely because of our focus on GNMA securities. GNMA
adjustable-rate mortgage securities (ARMs) ranked among the best-performing
securities in the portfolio. Unlike fixed-rate securities, which tend to decline
in price as interest rates rise, the income payments on adjustable-rate
securities generally rise along with rising interest rates.
During the fourth quarter of 1999, we reduced our holdings of 30-year GNMA
pass-through mortgage-backed securities and increased our holdings in the
15-year maturity range. This shift was rewarded when 15-year securities
generally outperformed 30-year bonds. We also increased our holdings of U.S.
Treasury Inflation Protection Securities in order to help protect the portfolio
from a potentially higher rate of inflation in 2000.
Throughout most of 1999, we maintained the fund's average duration toward the
short end of the neutral range. This relatively defensive position enabled us to
avoid the brunt of price declines in the bond market. Toward the end of the
reporting period, we lengthened the fund' s duration to neutral in order to
enhance the fund' s yield.
January 14, 2000
(1) 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. HAD THESE
CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. NEITHER THE MARKET VALUE
OF GNMA SECURITIES NOR THE VALUE OF THE FUND'S SHARES ARE GUARANTEED. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT
RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, FUND SHARES MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST.
(2) 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 IN THE CASE OF CLASS A SHARES, OR THE NET ASSET VALUE PER SHARE IN THE
CASE OF CLASS B AND C SHARES, AT THE END OF THE PERIOD.
(3) 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 SECURITIES BACKED BY MORTGAGE POOLS OF THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION.
The Fund
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Premier GNMA Fund
Class A shares and the Lehman Brothers GNMA Index
((+)) SOURCE: LEHMAN BROTHERS
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 12/31/89 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 $100
MILLION. THE INDEX DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES.
THESE FACTORS CAN CONTRIBUTE TO THE INDEX POTENTIALLY OUTPERFORMING THE FUND.
FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE
REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION
OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT.
Average Annual Total Returns AS OF 12/31/99
<TABLE>
<CAPTION>
Inception From
Date 1 Year 5 Years 10 Years Inception
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
WITH SALES CHARGE (4.5%) 1/29/87 (3.77)% 6.07% 6.73% --
WITHOUT SALES CHARGE 1/29/87 0.75% 7.06% 7.22% --
CLASS B SHARES
WITH REDEMPTION((+)) 1/15/93 (3.59)% 6.19% -- 5.17%
WITHOUT REDEMPTION 1/15/93 0.23% 6.51% -- 5.17%
CLASS C SHARES
WITH REDEMPTION((+)(+)) 10/16/95 (0.99)% -- -- 4.62%
WITHOUT REDEMPTION 10/16/95 (0.03)% -- -- 4.62%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND
IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS
A SHARES.
((+)(+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS 1%
FOR SHARES REDEEMED WITHIN ONE YEAR OF THE DATE OF PURCHASE.
The Fund
STATEMENT OF INVESTMENTS STATEMENT OF INVESTMENTS
December 31, 1999
(CONTINUED)
<TABLE>
<CAPTION>
Principal
BONDS AND NOTES--117.5% Amount($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--111.5%
<S> <C> <C>
Government National Mortgage Association I:
6.5%, 11/15/2007-3/15/2029 19,778,953 (a) 19,100,338
7.5%, 3/15/2022-12/15/2023 7,535,139 7,521,674
8% 13,300,000 (b) 13,441,246
8%, 4/15/2008-12/15/2022 8,382,769 (a) 8,504,507
8.5%, 10/15/2017-12/15/2022 2,309,140 2,402,767
9%, 10/15/2016-12/15/2022 2,900,344 3,068,612
9.5%, 11/15/2016-1/15/2025 2,496,003 2,687,588
11.5%, 1/15/2013 35,071 38,052
56,764,784
Government National Mortgage Association I,
Project Loans:
6.25%, 11/15/2018 1,458,920 1,368,642
6.32%, 10/15/2033 1,516,741 1,410,569
6.35%, 6/15/2030-2/15/2034 4,157,831 (a) 3,886,278
6.375%, 2/15/2028 1,472,075 1,392,951
6.45%, 8/15/2033-11/15/2033 4,829,787 (a) 4,610,254
6.5%, 7/15/2033 926,066 886,124
6.625%, 7/15/2033-11/15/2033 3,299,400 3,153,596
6.7%, 2/15/2033 3,722,290 (a) 3,582,704
7.12%, 2/15/2039 1,983,337 (a) 1,988,910
22,280,028
Government National Mortgage Association II:
5.5% 1,000,000 (b,c) 979,370
6% 9,000,000 (b,c) 8,921,250
7%, 9/1/2028-10/20/2029 32,109,520 30,912,668
7.5% 2,700,000 (b) 2,671,299
8%, 10/20/2026 6,751,894 6,798,279
9%, 7/20/2025 1,816,607 1,886,419
11%, 12/20/2013-10/20/2015 616,574 687,759
52,857,044
TOTAL MORTGAGE-BACKED SECURITIES 131,901,856
U.S. GOVERNMENTS--6.0%
U.S. Treasury Bonds,
6.125%, 8/15/2029 3,250,000 3,098,583
U.S. Treasury Inflation Protection Securities,
3.755%, 1/15/2008 4,000,000 (d) 3,968,160
TOTAL U.S. GOVERNMENTS 7,066,743
TOTAL BONDS AND NOTES
(cost $141,334,078) 138,968,599
Principal
SHORT-TERM INVESTMENTS--4.5% Amount($) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS:
4.82%, 1/13/2000 3,400,000 (a) 3,395,614
4.408%, 3/30/2000 1,920,000 (a) 1,896,058
TOTAL SHORT-TERM INVESTMENTS
(cost $5,290,642) 5,291,672
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $146,624,720) 122.0% 144,260,271
LIABILITIES, LESS CASH AND RECEIVABLES (22.0%) (26,022,317)
NET ASSETS 100.0% 118,237,954
(A) SECURITIES HELD IN WHOLE OR IN PART BY THE CUSTODIAN IN A SEGREGATED
ACCOUNT AS COLLATERAL FOR SECURITIES PURCHASED ON A FORWARD COMMITMENT
BASIS.
(B) PURCHASED ON A FORWARD COMMITMENT BASIS.
(C) ADJUSTABLE RATE MORTGAGE-INTEREST RATE SUBJECT TO CHANGE PERIODICALLY.
(D) PRINCIPAL AMOUNT FOR ACCRUAL PURPOSES IS PERIODICALLY ADJUSTED BASED ON
CHANGES TO THE CONSUMER PRICE INDEX.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
Cost Value
- --------------------------------------------------------------------------------
ASSETS ($):
Investments in securities--See Statement of
Investments 146,624,720 144,260,271
Interest receivable 918,190
Receivable for shares of Beneficial Interest subscribed 40,013
Receivable for investment securities sold 13,125
Prepaid expenses 16,007
145,247,606
- --------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 74,215
Due to Distributor 39,633
Cash overdraft due to Custodian 399,424
Payable for investment securities purchased 26,226,284
Payable for shares of Beneficial Interest redeemed 179,603
Accrued expenses 90,493
27,009,652
- --------------------------------------------------------------------------------
NET ASSETS ($) 118,237,954
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 125,709,133
Accumulated undistributed investment income--net 68,506
Accumulated net realized gain (loss) on investments (5,175,236)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 (2,364,449)
NET ASSETS ($) 118,237,954
NET ASSET VALUE PER SHARE
<TABLE>
<CAPTION>
Class A Class B Class C
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Assets ($) 85,157,390 30,833,219 2,247,345
Shares Outstanding 5,984,092 2,164,771 157,834
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 14.23 14.24 14.24
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 8,225,621
EXPENSES:
Management fee--Note 3(a) 711,592
Shareholder servicing costs--Note 3(c) 459,631
Distribution fees--Note 3(b) 192,644
Professional fees 64,759
Registration fees 35,913
Custodian fees--Note 3(c) 32,390
Trustees' fees and expenses--Note 3(d) 29,910
Prospectus and shareholders' reports 20,597
Loan commitment fees--Note 2 1,108
Miscellaneous 19,451
TOTAL EXPENSES 1,567,995
INVESTMENT INCOME--NET 6,657,626
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($):
Net realized gain (loss) on investments (1,429,905)
Net unrealized appreciation (depreciation) on investments (4,444,246)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (5,874,151)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 783,475
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31,
-----------------------------------
1999 1998
- --------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 6,657,626 7,114,363
Net realized gain (loss) on investments (1,429,905) 2,797,330
Net unrealized appreciation (depreciation)
on investments (4,444,246) (1,696,582)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 783,475 8,215,111
- --------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares (4,848,685) (5,149,217)
Class B shares (1,627,726) (1,926,683)
Class C shares (119,145) (39,780)
TOTAL DIVIDENDS (6,595,556) (7,115,680)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 42,677,342 56,066,526
Class B shares 11,917,827 12,810,406
Class C shares 2,750,159 2,868,856
Dividends reinvested:
Class A shares 3,317,557 3,495,046
Class B shares 1,078,382 1,344,579
Class C shares 44,695 23,643
Cost of shares redeemed:
Class A shares (51,061,402) (61,029,061)
Class B shares (22,391,393) (11,479,877)
Class C shares (2,987,948) (450,210)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (14,654,781) 3,649,908
TOTAL INCREASE (DECREASE) IN NET ASSETS (20,466,862) 4,749,339
- --------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 138,704,816 133,955,477
END OF PERIOD 118,237,954 138,704,816
Undistributed investment income--net 68,506 6,436
SEE NOTES TO FINANCIAL STATEMENTS.
Year Ended December 31,
---------------------------
1999 1998
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A (A)
Shares sold 2,920,168 3,776,757
Shares issued for dividends reinvested 227,949 235,306
Shares redeemed (3,502,729) (4,112,467)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (354,612) (100,404)
- --------------------------------------------------------------------------------
CLASS B (A)
Shares sold 814,420 861,589
Shares issued for dividends reinvested 73,962 90,452
Shares redeemed (1,527,240) (772,433)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (638,858) 179,608
- --------------------------------------------------------------------------------
CLASS C
Shares sold 187,195 193,103
Shares issued for dividends reinvested 3,074 1,589
Shares redeemed (204,314) (30,238)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (14,045) 164,454
(A) DURING THE PERIOD ENDED DECEMBER 31, 1999, 36,118 CLASS B SHARES
REPRESENTING $518,787 WERE AUTOMATICALLY CONVERTED TO 36,152 CLASS A SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------
CLASS A SHARES 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 14.89 14.76 14.37 14.66 13.54
Investment Operations:
Investment income--net .78 .81 .85 .88 .91
Net realized and unrealized gain (loss)
on investments (.67) .13 .39 (.29) 1.12
Total from Investment Operations .11 .94 1.24 .59 2.03
Distributions:
Dividends from investment income--net (.77) (.81) (.85) (.88) (.91)
Net asset value, end of period 14.23 14.89 14.76 14.37 14.66
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (A) .75 6.51 8.91 4.25 15.43
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.06 1.05 1.05 1.04 1.03
Ratio of net investment income
to average net assets 5.31 5.44 5.87 6.17 6.45
Portfolio Turnover Rate 425.33 283.20 518.62 267.22 349.24
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 85,157 94,369 95,071 111,267 134,545
(A) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------
CLASS B SHARES 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 14.90 14.78 14.38 14.67 13.55
Investment Operations:
Investment income--net .70 .73 .78 .81 .84
Net realized and unrealized gain (loss)
on investments (.67) .12 .40 (.29) 1.12
Total from Investment Operations .03 .85 1.18 .52 1.96
Distributions:
Dividends from investment income--net (.69) (.73) (.78) (.81) (.84)
Net asset value, end of period 14.24 14.90 14.78 14.38 14.67
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (A) .23 5.90 8.43 3.71 14.83
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.57 1.56 1.55 1.55 1.55
Ratio of net investment income
to average net assets 4.76 4.93 5.36 5.65 5.89
Portfolio Turnover Rate 425.33 283.20 518.62 267.22 349.24
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 30,833 41,775 38,775 39,833 41,934
(A) EXCLUSIVE OF SALES CHARGE.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------
CLASS C SHARES 1999 1998 1997 1996 1995(a)
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period 14.90 14.77 14.38 14.67 14.48
Investment Operations:
Investment income--net .66 .68 .75 .77 .16
Net realized and unrealized gain (loss)
on investments (.66) .13 .39 (.29) .19
Total from Investment Operations - .81 1.14 .48 .35
Distributions:
Dividends from investment income--net (.66) (.68) (.75) (.77) (.16)
Net asset value, end of period 14.24 14.90 14.77 14.38 14.67
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B) (.03) 5.62 8.13 3.44 11.47(c)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to average net assets 1.85 1.80 1.80 1.79 1.79(c)
Ratio of net investment income
to average net assets 4.52 4.40 5.11 5.42 5.25(c)
Portfolio Turnover Rate 425.33 283.20 518.62 267.22 349.24(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period ($ X 1,000) 2,247 2,561 110 17 1
(A) FROM OCTOBER 16, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO DECEMBER 31, 1995.
(B) EXCLUSIVE OF SALES CHARGE.
(C) ANNUALIZED.
(D) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Significant Accounting Policies:
Dreyfus Premier GNMA Fund (the "fund" ) is registered under the Investment
Company Act of 1940, as amended (the "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 (the
" Manager" ) serves as the fund's investment adviser. The Manager is a direct
subsidiary of Mellon Bank, N.A. ("Mellon"), which is a wholly-owned subsidiary
of Mellon Financial Corporation.
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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 custody
agreement, the fund receives net earnings credits based on available cash
balances left on deposit.
(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 of 1986, as amended (the
" 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 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 $3,705,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1999. 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 $500 million
redemption credit facility (the "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, 1999, 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.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, retained
$948 during the period ended December 31, 1999, from commissions earned on sales
of the fund's shares.
(b) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1
under the Act, Class B and Class C shares pay the Distributor for distributing
their 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, 1999, Class B and
Class C shares were charged $172,667 and $19,977, respectively, pursuant to the
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 their 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 December 31, 1999, Class A, Class B and Class C
shares were charged $230,459, $86,333 and $6,659, 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
The Fund
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
fund. During the period ended December 31, 1999, the fund was charged $100,874
pursuant to the transfer agency agreement.
The fund compensates Mellon under a custody agreement for providing custodial
services for the fund. During the period ended December 31, 1999, the fund was
charged $32,390 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 December
31, 1999, amounted to $599,605,946 and $611,871,802, respectively.
The fund may purchase or sell securities on a when-issued basis. The price of
the underlying securities is fixed at the time the transaction is negotiated and
settlement may take place a month or more after that date. With respect to
purchase commitments, the fund will identify securities as segregated in its
records with a value at least equal to the amount of its commitments. Losses may
arise due to changes in the market value of the underlying securities, if the
counter-party does not meet the terms of the settlement agreement, or if the
issuer does not issue the securities due to political, economic, or other
factors.
At December 31, 1999, accumulated net unrealized depreciation on investments was
$2,364,449, consisting of $378,328 gross unrealized appreciation and $2,742,777
gross unrealized depreciation.
At December 31, 1999, 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).
INDEPENDENT AUDITORS REPORT
Shareholders and Board of Trustees
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,
1999, 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 auditing standards generally accepted
in the United States. 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, 1999 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, 1999, 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 accounting principles generally accepted in the United
States.
New York, New York
February 14, 2000
The Fund
For More Information
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
Distributor
Premier Mutual Fund Services, Inc.
60 State Street
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
