Dreyfus Premier
GNMA Fund
SEMIANNUAL REPORT June 30, 2000
(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
Contents
THE FUND
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2 Letter from the President
3 Discussion of Fund Performance
6 Statement of Investments
8 Statement of Assets and Liabilities
9 Statement of Operations
10 Statement of Changes in Net Assets
12 Financial Highlights
15 Notes to Financial Statements
FOR MORE INFORMATION
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Back Cover
The Fund
Dreyfus Premier GNMA Fund
LETTER FROM THE PRESIDENT
Dear Shareholder:
We are pleased to present this semiannual report for Dreyfus Premier GNMA Fund,
covering the six-month period from January 1, 2000 through June 30, 2000.
Inside, you'll find valuable information about how the fund was managed during
the reporting period, including a discussion with the fund's portfolio manager,
Michael Hoeh.
Tighter monetary policy adversely affected most -- but not all -- sectors of the
bond market over the past six months. This was primarily a result of efforts by
the Federal Reserve Board (the "Fed" ) to forestall potential inflationary
pressures. The Fed raised short-term interest rates three times during the
reporting period, for a total increase of 1.00 percentage points. These rate
hikes contributed to a total interest-rate increase of 1.75 percentage points
since late June 1999, before the current reporting period began.
Higher interest rates led to an erosion of most bond prices, especially among
higher yielding securities. U.S. Treasury securities represented a notable
exception. Prices of these direct obligations of the federal government rose
primarily because of reduced supply amid robust demand from domestic and foreign
investors.
We appreciate your confidence over the past six months, and we look forward to
your continued participation in Dreyfus Premier GNMA Fund.
Sincerely,
/s/Stephen E. Canter
Stephen E. Canter
President and Chief Investment Officer
The Dreyfus Corporation
July 17, 2000
DISCUSSION OF FUND PERFORMANCE
Michael Hoeh, Portfolio Manager
How did Dreyfus Premier GNMA Fund perform relative to its benchmark?
For the six-month period ended June 30, 2000, the fund's Class A shares produced
a total return of 3.68%, Class B shares produced a total return of 3.42% and
Class C shares produced a total return of 3.21%.(1 )In comparison, the fund's
benchmark, the Lehman Brothers GNMA Index, produced a total return of 4.12% for
the same period.(2)
We attribute the fund's slight underperformance to our modest position in U.S.
Treasury securities, which provided lower yields than GNMA pass-through
mortgage-backed securities. However, on an income basis, the relatively low
yields provided by U.S. Treasury securities were mostly offset by higher yields
achieved from GNMA project loans sponsored by the U.S. Department of Housing and
Urban Development.
What is the fund's investment approach?
The fund invests primarily in Government National Mortgage Association ("GNMA"
or "Ginnie Mae") 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 likely to
prepay their mortgages because of home sales or refinancing. An increase in this
trend can adversely affect returns of mortgage-related securities.
*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 their vulnerability to early redemption.
The Fund
DISCUSSION OF FUND PERFORMANCE (CONTINUED)
*CASH FLOW STRUCTURE ANALYSIS helps us determine the predictability and
security of cash flows provided by different bond structures. We analyze
30-year, 15-year, adjustable-rate and project loans securities for inclusion
into the fund.
*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?
First, the fund was influenced by inflation fears and rising interest rates.
When the reporting period began on January 1, 2000, we were becoming
increasingly concerned that robust economic growth might rekindle long-dormant
inflationary pressures, especially with wages rising in a tight job market. In
an attempt to ease these pressures, the Federal Reserve Board (the "Fed") raised
short-term interest rates three times during the reporting period, causing most
bond prices to fall. These interest-rate hikes followed three previous increases
implemented before the current reporting period began, for a total increase of
1.75 percentage points since June 1999. Although rising interest rates hurt most
bond market sectors, mortgage-backed securities generally declined less than
other types of securities because higher interest rates reduce the risk that
homeowners will prepay their mortgages.
Second, the fund responded to forces that are unique to the GNMA market. For
example, in the wake of negative comments in Congress and the U.S. Treasury
Department, prices of some U.S. Government agency securities declined,
specifically those issued by Federal National Home Mortgage Association ("Fannie
Mae" ) and Federal Home Loan Corporation ("Freddie Mac") which are INDIRECT
obligations of the federal government. At the same time, prices of Ginnie Mae
securities, which are direct obligations of the federal government, rose as
investors shifted assets from indirect obligations to direct obligations,
benefiting fund performance.
What is the fund's current strategy?
After maintaining the fund's average duration -- a measure of sensitivity to
changing interest rates -- for most of the reporting period at a point that was
shorter than that of our benchmark, we recently extended to a more neutral
position. This modest extension is intended to help us lock in prevailing yields
for a longer time if the economy slows and interest rates begin to decline.
Indeed, while economic growth has remained robust during the first half of 2000,
we have recently seen signs that the Fed's interest-rate hikes may be having a
moderating effect on the economy.
From a sector allocation standpoint, we have continued to emphasize GNMA
pass-through securities over U.S. Treasury securities because of their higher
yields. As of June 30, 2000, the fund allocated approximately 114% of its net
asset value to government-guaranteed GNMA securities and 4% of its net asset
value to inflation-indexed U.S. Treasury securities. Of course, while the
individual securities within the portfolio are government guaranteed as to the
timely payment of principal and interest, their market value and also fund share
value are not guaranteed.
July 17, 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. 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) SOURCE: LEHMAN BROTHERS -- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE
APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE LEHMAN BROTHERS GNMA INDEX
(UNHEDGED) 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
STATEMENT OF INVESTMENTS
June 30, 2000 (Unaudited)
<TABLE>
Principal
BONDS AND NOTES--118.3% Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MORTGAGE-BACKED--114.4%
Government National Mortgage Association I:
6.5%, 11/15/2007-5/15/2028 12,219,419 11,976,275
7.5%, 3/15/2022-12/15/2023 7,028,866 7,049,063
8%, 4/15/2008-12/15/2022 7,692,011 7,808,306
8.5%, 10/15/2017-12/15/2022 2,131,525 2,209,819
9%, 10/15/2016-12/15/2022 2,612,988 2,730,002
9.5%, 11/15/2016-1/15/2025 2,250,724 2,366,851
11.5%, 1/15/2013 34,499 37,571
Project Loans:
6.25%, 11/15/2018 1,438,965 1,365,218
6.32%, 10/15/2033 1,510,735 1,421,027
6.35%, 6/15/2030-2/15/2034 4,140,281 3,877,926
6.375%, 2/15/2028 1,462,970 1,399,872
6.45%, 8/15/2033-11/15/2033 5,304,890 5,118,843
6.5%, 7/15/2033 922,499 892,222
6.625%, 8/15/2028-11/15/2033 3,778,205 3,608,522
6.7%, 2/15/2033 3,707,734 3,602,286
8.5%, 10/15/2016-2/15/2017 1,179,365 1,217,318
Government National Mortgage Association II:
5.5%, 4/20/2030 2,993,778 (a) 2,887,110
6% 2,000,000 (a,b) 1,958,120
6%, 4/20/2030 5,980,548 (a) 5,849,693
7%, 9/20/2028-10/20/2029 8,820,041 8,552,445
7.5% 9,900,000 (b) 9,788,625
8% 31,050,000 (b) 31,224,501
8%, 10/20/2026 6,182,726 6,242,575
9%, 7/20/2025 1,575,494 1,611,920
11%, 12/20/2013-10/20/2015 562,430 622,452
125,418,562
Principal
BONDS AND NOTES (CONTINUED) Amount ($) Value ($)
------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENTS--3.9%
U. S. Treasury Inflation Protection Securities:
3.625%, 4/15/2029 2,100,000 2,180,531
3.875%, 7/15/2002 2,000,000 2,123,655
4,304,186
TOTAL BONDS AND NOTES
(cost $130,979,787) 129,722,748
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SHORT-TERM INVESTMENTS--20.3%
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U.S. GOVERNMENTS;
U. S. Treasury Bills:
5.75%, 8/3/2000 3,320,000 3,304,230
5.97%, 8/17/2000 19,050,000 18,916,841
TOTAL SHORT-TERM INVESTMENTS
(cost $22,213,292) 22,221,071
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TOTAL INVESTMENTS
(cost $153,193,079) 138.6% 151,943,819
LIABILITIES, LESS CASH AND RECEIVABLES (38.6%) (42,288,794)
NET ASSETS 100.0% 109,655,025
(A) ADJUSTABLE RATE MORTGAGE-INTEREST RATE SUBJECT TO CHANGE PERIODICALLY.
(B) PURCHASED ON A FORWARD COMMITMENT BASIS.
(C) PRINCIPAL AMOUNT FOR ACCRUAL PURPOSES IS PERIODOCALLY ADJUSTED BASED ON CHANGES TO THE CONSUMER PRICE INDEX.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
The Fund
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
Cost Value
--------------------------------------------------------------------------------
ASSETS $:
Investments in securities--See Statement of
Investments 153,193,079 151,943,819
Cash 538,723
Receivable for investment securities sold 6,937,292
Interest receivable 766,645
Receivable for shares of Beneficial Interest subscribed 25,878
Prepaid expenses 7,182
160,219,539
--------------------------------------------------------------------------------
LIABILITIES ($):
Due to The Dreyfus Corporation and affiliates 111,644
Payable for investment securities purchased 50,150,034
Payable for shares of Beneficial Interest redeemed 232,357
Accrued expenses 70,479
50,564,514
--------------------------------------------------------------------------------
NET ASSETS ($) 109,655,025
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS ($):
Paid-in capital 116,413,145
Accumulated undistributed investment income--net 22,392
Accumulated net realized gain (loss) on investments (5,531,252)
Accumulated net unrealized appreciation (depreciation)
on investments--Note 4 (1,249,260)
--------------------------------------------------------------------------------
NET ASSETS ($) 109,655,025
<TABLE>
NET ASSET VALUE PER SHARE
Class A Class B Class C
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Assets ($) 80,805,327 26,343,328 2,506,370
Shares Outstanding 5,636,558 1,836,330 174,725
------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($) 14.34 14.35 14.34
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME ($):
INTEREST INCOME 3,736,999
EXPENSES:
Management fee--Note 3(a) 304,752
Shareholder servicing costs--Note 3(c) 205,394
Distribution fees--Note 3(b) 77,132
Registration fees 23,947
Professional fees 19,056
Trustees' fees and expenses--Note 3(d) 17,669
Custodian fees--Note 3(c) 17,174
Prospectus and shareholders' reports 12,139
Loan commitment fees--Note 2 469
Miscellaneous 10,772
TOTAL EXPENSES 688,504
INVESTMENT INCOME--NET 3,048,495
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($)
Net realized gain (loss) on investments (356,016)
Net unrealized appreciation (depreciation) on investments 1,115,189
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 759,173
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 3,807,668
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
--------------------------------------------------------------------------------
OPERATIONS ($):
Investment income--net 3,048,495 6,657,626
Net realized gain (loss) on investments (356,016) (1,429,905)
Net unrealized appreciation
(depreciation) on investments 1,115,189 (4,444,246)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 3,807,668 783,475
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS FROM ($):
Investment income--net:
Class A shares (2,321,875) (4,848,685)
Class B shares (714,145) (1,627,726)
Class C shares (58,589) (119,145)
TOTAL DIVIDENDS (3,094,609) (6,595,556)
--------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS ($):
Net proceeds from shares sold:
Class A shares 24,228,297 42,677,342
Class B shares 2,936,686 11,917,827
Class C shares 768,560 2,750,159
Dividends reinvested:
Class A shares 1,550,840 3,317,557
Class B shares 413,830 1,078,382
Class C shares 32,004 44,695
Cost of shares redeemed:
Class A shares (30,660,410) (51,061,402)
Class B shares (8,005,605) (22,391,393)
Class C shares (560,190) (2,987,948)
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS (9,295,988) (14,654,781)
TOTAL INCREASE (DECREASE) IN NET ASSETS (8,582,929) (20,466,862)
--------------------------------------------------------------------------------
NET ASSETS ($):
Beginning of Period 118,237,954 138,704,816
END OF PERIOD 109,655,025 118,237,954
Undistributed investment income--net 22,392 68,506
SEE NOTES TO FINANCIAL STATEMENTS.
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
--------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
CLASS A(A)
Shares sold 1,705,556 2,920,168
Shares issued for dividends reinvested 109,453 227,949
Shares redeemed (2,162,543) (3,502,729)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (347,534) (354,612)
--------------------------------------------------------------------------------
CLASS B(A)
Shares sold 207,155 814,420
Shares issued for dividends reinvested 29,194 73,962
Shares redeemed (564,790) (1,527,240)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (328,441) (638,858)
--------------------------------------------------------------------------------
CLASS C
Shares sold 54,229 187,195
Shares issued for dividends reinvested 2,255 3,074
Shares redeemed (39,593) (204,314)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 16,891 (14,045)
(A) DURING THE PERIOD ENDED JUNE 30, 2000, 188,395 CLASS B SHARES REPRESENTING
$2,685,347 WERE AUTOMATICALLY CONVERTED TO 188,592 CLASS A SHARES AND DURING THE
PERIOD ENDED DECEMBER 31, 1999, 36,118 CLASS B SHARES REPRESENTING $518,787 WERE
AUTOMATICALLY CONVERTED TO 36,152 CLASS A SHARES
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the
fiscal periods indicated. All information (except portfolio turnover rate)
reflects financial results for a single fund share. Total return shows how much
your investment in the fund would have increased (or decreased) during each
period, assuming you had reinvested all dividends and distributions. These
figures have been derived from the fund's financial statements.
<TABLE>
Six Months Ended
June 30, 2000 Year Ended December 31,
-----------------------------------------
CLASS A SHARES (Unaudited) 1999 1998 1997 1996 1995
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<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA ($):
Net asset value,
beginning of period 14.23 14.89 14.76 14.37 14.66 13.54
Investment Operations:
Investment income--net .40 .78 .81 .85 .88 .91
Net realized and unrealized
gain (loss) on investments .11 (.67) .13 .39 (.29) 1.12
Total from Investment Operations .51 .11 .94 1.24 .59 2.03
Distributions:
Dividends from investment
income--net (.40) (.77) (.81) (.85) (.88) (.91)
Net asset value, end of period 14.34 14.23 14.89 14.76 14.37 14.66
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TOTAL RETURN (%)(A) 7.38(b) .75 6.51 8.91 4.25 15.43
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RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses
to average net assets 1.10(b) 1.06 1.05 1.05 1.04 1.03
Ratio of net investment income
to average net assets 5.64(b) 5.31 5.44 5.87 6.17 6.45
Portfolio Turnover Rate 378.11(c) 425.33 283.20 518.62 267.22 349.24
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Net Assets,
end of period ($ X 1,000) 80,805 85,157 94,369 95,071 111,267 134,545
(A) EXCLUSIVE OF SALES CHARGE.
(B) ANNUALIZED.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
Six Months Ended
June 30, 2000 Year Ended December 31,
-----------------------------------------
CLASS B SHARES (Unaudited) 1999 1998 1997 1996 1995
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PER SHARE DATA ($):
Net asset value,
beginning of period 14.24 14.90 14.78 14.38 14.67 13.55
Investment Operations:
Investment income--net .36 .70 .73 .78 .81 .84
Net realized and unrealized
gain (loss) on investments .12 (.67) .12 .40 (.29) 1.12
Total from Investment Operations .48 .03 .85 1.18 .52 1.96
Distributions:
Dividends from investment
income--net (.37) (.69) (.73) (.78) (.81) (.84)
Net asset value, end of period 14.35 14.24 14.90 14.78 14.38 14.67
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(A) 6.86(b) .23 5.90 8.43 3.71 14.83
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses
to average net assets 1.61(b) 1.57 1.56 1.55 1.55 1.55
Ratio of net investment income
to average net assets 5.14(b) 4.76 4.93 5.36 5.65 5.89
Portfolio Turnover Rate 378.11(c) 425.33 283.20 518.62 267.22 349.24
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Net Assets,
end of period ($ X 1,000) 26,343 30,833 41,775 38,775 39,833 41,934
(A) EXCLUSIVE OF SALES CHARGE.
(B) ANNUALIZED.
(C) NOT ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
The Fund
FINANCIAL HIGHLIGHTS (CONTINUED)
Six Months Ended
June 30, 2000 Year Ended December 31,
-----------------------------------------
CLASS C SHARES (Unaudited) 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA ($):
Net asset value,
beginning of period 14.24 14.90 14.77 14.38 14.67 14.48
Investment Operations:
Investment income--net .34 .66 .68 .75 .77 .16
Net realized and unrealized
gain (loss) on investments .11 (.66) .13 .39 (.29) .19
Total from Investment Operations .45 -- .81 1.14 .48 .35
Distributions:
Dividends from investment
income--net (.35) (.66) (.68) (.75) (.77) (.16)
Net asset value, end of period 14.34 14.24 14.90 14.77 14.38 14.67
------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(B) 6.44(c) (.03) 5.62 8.13 3.44 11.47(c)
------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA (%):
Ratio of expenses to
average net assets 1.87(c) 1.85 1.80 1.80 1.79 1.79(c)
Ratio of net investment income
to average net assets 4.89(c) 4.52 4.40 5.11 5.42 5.25(c)
Portfolio Turnover Rate 378.11(d) 425.33 283.20 518.62 267.22 349.24
------------------------------------------------------------------------------------------------------------------------------------
Net Assets,
end of period ($ X 1,000) 2,506 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 (Unaudited)
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.
Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned
subsidiary of the Manager, became the distributor of the fund's shares. Prior to
March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. 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 Class C shares redeemed within one year of
purchase. Class B shares automatically convert to Class A shares after six
years. 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.
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
(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.
Securities for which there are no such valuations are valued at fair value as
determined in good faith under the direction of the Board of Trustees.
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, if any, 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 June
30, 2000, 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.
DSC retained $133 during the period ended June 30, 2000 from commissions earned
on sales of the fund's shares.
(b) Under the Distribution 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
The Fund
NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED)
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,
2000, Class B and Class C shares were charged $68,266 and $8,866, respectively,
pursuant to the Plan, of which $44,644 and $6,033 for Class B and Class C
shares, respectively, were paid to DSC.
(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 June 30, 2000, Class A, Class B and Class C
shares were charged $101,435, $34,133 and $2,955, respectively, pursuant to the
Shareholder Services Plan, of which $67,573, $22,322 and $2,011 for Class A,
Class B and Class C shares respectively, were paid to DSC.
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, 2000, the fund was charged $49,825 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 June 30, 2000, the fund was
charged $17,174 pursuant to the custody agreement.
(d) Each Board member also serves as a Board member of other funds within the
Dreyfus complex (collectively, the "Fund Group"). Effective April 13, 2000, each
Board member who is not an "affiliated person" as defined in the Act receives an
annual fee of $50,000 and an attendance fee of $6,500 for each in person meeting
and $500 for tele
phone meetings. These fees are allocated among the funds in the Fund Group. The
Chairman of the Board receives an additional 25% of such compensation. Prior to
April 13, 2000, each Board member who was not an "affiliated person" as defined
in the Act received from the fund an annual fee of $2,500 and an attendance fee
of $500 per meeting. The Chairman of the Board received an additional 25% of
such compensation. Subject to the fund's Emeritus Program Guidelines, Emeritus
Board members, if any, receive 50% of the fund's annual retainer fee and per
meeting fee paid at the time the Board member achieves emeritus status.
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,
2000, amounted to $511,471,142 and $521,454,845, respectively.
The fund may purchase or sell securities on a forward commitment 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 June 30, 2000, accumulated net unrealized depreciation on investments was
$1,249,260, consisting of $373,168 gross unrealized appreciation and $1,622,428
gross unrealized depreciation.
At June 30, 2000, 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).
The Fund
Notes
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
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
To obtain information:
BY TELEPHONE
Call your financial representative
or 1-800-554-4611
BY MAIL Write to:
The Dreyfus Premier Family of Funds
144 Glenn Curtiss Boulevard
Uniondale, NY 11556-0144
(c) 2000 Dreyfus Service Corporation 027SA006
