PREMIER MUNICIPAL BOND FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Premier Municipal Bond
Fund. For its semi-annual reporting period ended October 31, 1996, your Fund
produced a total return of 5.69% for Class A shares, 5.43% for Class B shares
and 5.30% for Class C shares. * Income dividends exempt from Federal personal
income taxes of approximately $.417 for Class A shares, $.382 for Class B shares
and $.365 for Class C shares were paid. ** This amounts to an annualized
Federally tax-free distribution rate per share of 5.56%, 5.33% and 5.09% for
Class A, Class B and Class C shares, respectively.***
THE ECONOMY
The fear of another round of monetary tightening by the Federal Reserve
Board ("the Fed") to ward off a resurgence in inflation has so far proved
unwarranted. Indeed, despite solid economic growth resulting in the creation of
new jobs and an overall tightening in the labor market, inflation has remained
subdued. Both the Consumer and Producer Price Indexes remained at annual rates
in the 3% range. This is the fifth consecutive year of inflation under 3%, the
longest period since the 1960s. Despite the duration of the economic recovery,
most economic reports underscore the tepid nature of the present inflationary
environment.
The increase in long-term interest rates early this year may have
contributed to the recently reported slowdown in the rate of economic growth.
During the third quarter, the growth rate of Gross Domestic Product cooled to
2.2%, less than half the second quarter's strong 4.7% pace. Consumers - the
initiators of two thirds of all economic activity - remained cautious throughout
the year. In the third quarter, the pace of consumer spending was at its slowest
in five years. Consumer borrowing has also declined from year-ago levels. Not
surprisingly, retail sales growth has also been modest this year. Consumers may
have been restrained by wages not rising as rapidly as had been previously
suspected, given the strength in the labor market. The Employment Cost Index,
considered to be an important gauge of wage inflation by Federal Reserve Board
Chairman Alan Greenspan, rose just .6% in the third quarter, the lowest reading
in over a year. This brought the growth in wages to 2.8% over the past twelve
months, slightly less than the rate of inflation as measured by the Consumer
Price Index.
The booming housing market also seems to have cooled, with both new housing
starts and existing home sales slackening since midyear. Industrial production
has slowed somewhat from its more rapid pace earlier in the year. Given the
level of capacity utilization, there appears to be no sign of production
bottlenecks that could push prices higher. Anecdotal evidence still supports the
assertion that corporations are reluctant to raise prices. The report that the
1996 Federal budget deficit had shrunk to $107.3 billion - its lowest level in
two decades - provided another favorable sign for inflation. The final reading
of the 1996 deficit marks the fourth straight decline from fiscal 1992's record
$290.4 billion.
Despite the relatively benign current environment for inflation, we are
alert for early signs of its potential resurgence. While wage increases so far
have remained modest, we believe workers should eventually expect compensation
that at least matches their cost of living. Furthermore, we are mindful that
price increases in energy and food may not continue to be as restrained as they
were over the past four years.
MARKET ENVIRONMENT
Since our last letter to you at the end of April, when the bond market
corrected nearly 100 basis points in four months, the bond market has gone
through a transition. Long-term interest rates as measured by the 30-year U.S.
Treasury bond stabilized over the next five months, vacillating around the 7%
level until mid-October, when the market established a new trading range as the
Treasury bond market rallied to a 6.45% yield. The municipal market has also
gone through a period of stabilization during which the retail (or individual)
investor became very active, strengthening the demand for municipal bonds. The
more recent rally in fixed income securities is built on the continued
speculation that the Federal Reserve Board's Open Market Committee could
potentially ease credit in response to weakening economic data. The new lower
rates have brought many issuers back into the municipal marketplace. Recently,
at the time of the election, $10 billion in new supply had to be digested by the
tax-exempt market in two weeks, which caused municipal bond prices to cheapen
relative to taxables. The increase in yields reversed the trend of
outperformance by the municipal market that has characterized 1996.
THE PORTFOLIO
The portfolio typically holds many high coupon bonds that help the Fund
derive most of its total return from income. During this last six-month period
we have chosen to replace some existing holdings with either those that have
better call protection and coincidental upside price potential, or those with
higher liquidity features. On a security by security basis we have used these
selection criteria in analyzing the risk/return function of each bond purchased
and sold. Our criteria stress accomplishing these goals without compromising
income or losing sight of the portfolio in its totality. Currently, the duration
(an industry measurement of price responsiveness to changes in interest rates
and therefore price risk of the Fund) is slightly longer, or more aggressive,
than it was at the time of our last letter, when it was slightly defensive
overall compared to other funds in our comparison group. As of the end of the
reporting period, the tax-exempt market was attractively valued compared to
taxable fixed income equivalents. We believe the current portfolio structure
should serve the portfolio well during a return to more conventional yield
relationships or through a repeated period of stabilization that we have
experienced. Included in this report is a series of detailed statements about
the Fund's holdings and financial condition. We hope you find them informative
and greatly appreciate your support.
Very truly yours,
(Richard J. Moynihan Signature)
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
New York, N.Y.
November 15, 1996
* Total return includes reinvestment of dividends and any capital gains
paid, without taking into account 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 or Class C shares.
**Some income may be subject to the Federal Alternative Minimum Tax (AMT)
for certain shareholders.
*** Distribution rate per share is based upon dividends per share paid from
net investment income during the period (annualized), divided by the maximum
offering price, in the case of Class A shares, or the net asset value per share,
in the case of Class B and Class C shares, at the end of the period.
<TABLE>
<CAPTION>
PREMIER MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS OCTOBER 31, 1996 (UNAUDITED)
Principal
Long-Term Municipal Investments-98.1% Amount Value
------------- -------------
<S> <C> <C>
Alabama-.5%
Mobile Industrial Development Board, SWDR, Refunding
(Mobile Energy Services Co. Project) 6.95%, 1/1/2020.................... $ 2,500,000 $ 2,653,125
Arizona-.4%
Maricopa County Pollution Control Corporation, PCR, Refunding
(Public Service Co. - Palo Verde) 6.375%, 8/15/2023..................... 1,000,000 999,240
Pima County Unified School District Number 1 5.875%, 7/1/2014 (Insured; FGIC) 1,000,000 1,031,900
California-1.6%
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue 6%, 1/1/2034 5,000,000 4,929,950
Sacramento Cogeneration Authority, Cogeneration Project Revenue
(Procter & Gamble Project) 6.50%, 7/1/2021.............................. 4,200,000 4,348,176
Colorado-9.7%
Arapahoe County Capital Improvement Trust Fund, Highway Revenue (E-470
Project):
Zero Coupon, 8/31/2005.................................................. 2,530,000 1,504,692
Zero Coupon, 8/31/2007.................................................. 4,000,000 2,077,440
7%, 8/31/2026........................................................... 7,000,000 7,595,560
Colorado, Board of Community Colleges and Occupational Education Revenue
(Red Rocks Community College Project) 6%, 11/1/2019 (Insured; AMBAC).... 300,000 308,499
Dawson Ridge, Metropolitan District Number 1, Refunding:
Zero Coupon, 10/1/2017.................................................. 9,930,000 2,496,998
Zero Coupon, 10/1/2022.................................................. 47,535,000 8,593,377
Denver City and County, Airport Revenue:
7.25%, 11/15/2023....................................................... 10,000,000 10,783,500
7.50%, 11/15/2023....................................................... 11,775,000 13,102,396
5.60%, 11/15/2025 (Insured; MBIA)....................................... 5,000,000 4,856,800
7%, 11/15/2025.......................................................... 4,225,000 4,438,954
Eagle County, Cordillera Metropolitan District 6.65%, 12/1/2015............. 200,000 212,512
Connecticut-1.2%
Connecticut Development Authority, First Mortgage Gross Revenue
(Elim Park Baptist Home, Inc. Project) 9%, 12/1/2020.................... 3,000,000 3,193,920
Mashantucket Western Pequot Tribe, Special Revenue 6.40%, 9/1/2011.......... 3,500,000 3,512,565
Delaware-.7%
Delaware Housing Authority, MFMR 7%, 5/1/2025............................... 3,725,000 3,853,699
Florida-4.2%
Jacksonville, District Water and Sewer Revenue 5%, 10/1/2020 (Insured; MBIA) 7,000,000 6,480,180
Palm Beach County, Solid Waste IDR:
(Okeelanta Power LP Project) 6.85%, 2/15/2021........................... 6,750,000 6,151,545
(Osceola Power LP) 6.95%, 1/1/2022...................................... 7,500,000 6,756,825
Santa Rosa Bay Bridge Authority, Revenue 6.25%, 7/1/2028.................... 5,000,000 4,976,900
Georgia -1.7%
Atlanta, Airport Facilities Revenue 7.25%, 1/1/2017......................... 5,000,000 5,407,950
PREMIER MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31,1996 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
------------- ------------
Georgia -1.7%
Georgia Municipal Electric Authority, Power Revenue, Refunding
5.50%, 1/1/2020 (Insured; FGIC)......................................... $ 4,250,000 $ 4,230,365
Illinois-8.5%
Chicago O'Hare International Airport, Special Facility Revenue
(American Airlines, Inc. Project) 7.875%, 11/1/2025..................... 6,000,000 6,471,120
Illinois Development Finance Authority, Revenue
(Community Rehabilitation Providers Facility):
8.75%, 3/1/2010....................................................... 6,800,000 7,191,680
8.50%, 9/1/2010....................................................... 4,535,000 4,810,048
8.25%, 8/1/2012....................................................... 4,080,000 4,271,597
Illinois Health Facilities Authority, Revenue (Beverly Farm Foundation)
9.125%, 12/15/2015...................................................... 2,000,000 2,385,960
Robbins, RRR (Robbins Resource Recovery Partners) 8.375%, 10/15/2016........ 23,500,000 24,097,500
Indiana-7.2%
East Chicago, PCR, Refunding:
(Inland Steel Co., Project Number 10) 6.80%, 6/1/2013................... 10,000,000 10,126,100
(Inland Steel Co., Project Number 11) 7.125%, 6/1/2007.................. 3,000,000 3,134,640
Indiana Development Finance Authority, PCR, Refunding
(Inland Steel Co., Project Number 12) 6.85%, 12/1/2012.................. 4,000,000 4,096,400
Indianapolis Airport Authority, Special Facilities Revenue:
(Federal Express Corp. Project) 7.10%, 1/15/2017........................ 7,500,000 8,036,625
(United Airlines, Inc. Project) 6.50%, 11/15/2031....................... 16,250,000 16,325,562
Kentucky-3.4%
Kenton County, Special Airport Facilities Revenue
(Delta Airlines Project) 6.125%, 2/1/2022............................... 8,455,000 8,321,749
Louisville and Jefferson County Regional Airport Authority, Airport System
Revenue
(Louisville International Airport):
5.50%, 7/1/2016 (Insured; MBIA)....................................... 4,000,000 3,871,360
5.625%, 7/1/2025 (Insured; MBIA)...................................... 4,000,000 3,888,800
Perry County, SWDR (TJ International Project) 7%, 6/1/2024.................. 3,500,000 3,624,355
Louisiana-4.4%
Louisiana Housing Finance Agency, MFHR, Refunding
(LaBelle Projects) 9.75%, 10/1/2020..................................... 4,245,000 4,330,409
Louisiana Public Facilities Authority, Student Loan Revenue
7%, 9/1/2006............................................................ 3,000,000 3,166,770
Parish of West Feliciana, PCR:
(Gulf States Utilities - II) 7.70%, 12/1/2014........................... 10,000,000 10,831,300
(Gulf States Utilities - III) 7.70%, 12/1/2014.......................... 6,500,000 7,040,345
Maryland-.5%
Maryland Energy Financing Administration, SWDR
(Wheelabrator Water Projects) 6.45%, 12/1/2016.......................... 3,000,000 3,119,910
PREMIER MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
------------- --------------
Massachusetts-2.1%
Massachusetts Industrial Finance Agency, Water Treatment Revenue
(American Hingham) 6.95%, 12/1/2035..................................... $ 2,640,000 $ 2,691,269
Massachusetts Water Resource Authority:
5%, 12/1/2016 (Insured; MBIA)........................................... 5,000,000 4,677,900
5%, 12/1/2025 (Insured; MBIA)........................................... 5,000,000 4,568,200
Michigan-1.2%
Wayne Charter County, Special Airport Facilities Revenue, Refunding
(Northwest Airlines, Inc.) 6.75%, 12/1/2015............................. 5,000,000 5,108,000
Wayne County Building Authority 8%, 3/1/2017 (Prerefunded 3/1/2002) (a)..... 1,500,000 1,753,230
Nevada-2.4%
Clark County, IDR (Southwest Gas Corp.) 7.50%, 9/1/2032..................... 13,000,000 13,960,180
New Jersey-7.2%
Camden County Pollution Control Financing Authority, Solid Waste RRR
7.50%, 12/1/2010........................................................ 2,000,000 2,001,220
New Jersey Economic Development Authority, First Mortgage Gross Revenue
(The Evergreens) 9.25%, 10/1/2022....................................... 15,000,000 16,329,300
New Jersey Sports and Exposition Authority, Revenue, Refunding
(Monmouth Park) 8%, 1/1/2025............................................ 4,000,000 4,389,040
New Jersey Transportation Trust Fund Authority, Refunding
(Transportation System) 5%, 6/15/2015 (Insured; MBIA)................... 10,000,000 9,426,800
Union County Utilities Authority, Solid Waste Revenue 7.20%, 6/15/2014...... 9,500,000 9,744,815
New York-11.6%
New York City:
8%, 6/1/2000............................................................ 2,190,000 2,446,690
7.50%, 2/1/2001......................................................... 5,000,000 5,431,900
7.10%, 2/1/2009......................................................... 5,000,000 5,358,400
7%, 2/1/2020............................................................ 10,000,000 10,695,500
6.625%, 2/15/2025....................................................... 7,000,000 7,252,560
New York State Dormitory Authority, Revenue:
Department of Health 5.50%, 7/1/2025.................................... 6,000,000 5,587,440
Mental Health Services Facilities Improvement 5.125%, 8/15/2021 (Insured; MBIA) 4,750,000 4,452,175
New York State Energy Research and Development Authority, Electric Facilities
Revenue (Long Island Lighting Co.):
7.15%, 9/1/2019....................................................... 3,650,000 3,735,483
7.15%, 6/1/2020....................................................... 4,000,000 4,093,680
7.15%, 12/1/2020...................................................... 5,000,000 5,117,100
7.15%, 2/1/2022....................................................... 7,500,000 7,675,650
New York State Housing Finance Agency, Service Contract Obligation Revenue
7.30%, 3/15/2021 (Prerefunded 9/15/2001) (a)............................ 5,000,000 5,692,450
PREMIER MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
-------------...--------------
North Carolina-1.7%
Martin County Industrial Facilities and Pollution Control Financing Authority,
SWDR (Weyerhaeuser Co.) 6.80%, 5/1/2024................................. $ 2,000,000 $ 2,166,020
North Carolina Eastern Municipal Power Agency, Power System Revenue,
Refunding
7%, 1/1/2013............................................................ 3,500,000 3,877,860
North Carolina Municipal Power Agency Number 1, Catawba Electric Revenue,
Refunding 5.375%, 1/1/2020 (Insured; AMBAC)............................. 4,000,000 3,861,040
Oklahoma-1.2%
Holdenville Industrial Authority, Correctional Facility Revenue:
6.60%, 7/1/2010......................................................... 2,045,000 2,097,475
6.70%, 7/1/2015......................................................... 4,625,000 4,781,094
Oregon-.2%
Clackamas County, (School District Number 115) 6.15%, 6/1/2014 (Insured; AMBAC) 200,000 210,348
Oregon Health Housing Educational and Cultural Facilities Authority,
Refunding
(Lewis and Clark College Project) 6.125%, 10/1/2024 (Insured; MBIA)..... 200,000 207,972
Oregon Housing and Community Services Department, Mortgage Revenue
(Single Family Mortgage Program) 6.20%, 7/1/2015........................ 200,000 204,362
Portland, Sewer System Revenue 6.25%, 6/1/2015.............................. 300,000 313,209
Pennsylvania-6.5%
Beaver County Industrial Development Authority, PCR, Refunding 7.75%, 7/15/2025 6,000,000 6,502,080
Blair County Hospital Authority, Revenue (Altoona Hospital)
7.81%, 7/1/2013 (Insured; AMBAC) (b).................................... 5,000,000 5,517,600
Lancaster County Hospital Authority, Revenue (Health Center - United Church
Homes Project) 9.125%, 10/1/2014 (Prerefunded 10/1/1999) (a)............ 1,465,000 1,678,260
Lehigh County General Purpose Authority, Revenue (Wiley House):
8.75%, 11/1/2014........................................................ 2,000,000 2,080,780
9.50%, 11/1/2016........................................................ 3,000,000 3,221,490
Montgomery County Higher Education and Health Authority, First Mortgage
Revenue
(AHF/Montgomery, Inc. Project) 10.50%, 9/1/2020......................... 3,475,000 3,767,109
Pennsylvania Convention Center Authority, Revenue, Refunding 6.70%, 9/1/2014 3,125,000 3,370,875
Pennsylvania Intergovernmental Cooperative Authority, Special Tax Revenue
(Philadelphia Funding Program) 6.80%, 6/15/2022 (Prerefunded 6/15/2002) (a) 5,500,000 6,100,270
Philadelphia, Water and Sewer Revenue 7.35%, 9/1/2004....................... 4,940,000 5,617,817
Rhode Island-.5%
Providence, Special Obligation Tax Increment 6.65%, 6/1/2016................ 3,000,000 3,113,940
South Carolina-.3%
Darlington County, IDR (Sunoco Products Co. Project) 6%, 4/1/2026........... 1,500,000 1,513,725
PREMIER MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996 (UNAUDITED)
Principal
Long-Term Municipal Investments (continued) Amount Value
------------- --------------
Texas-9.1%
Alliance Airport Authority, Special Facilities Revenue:
(American Airlines, Inc. Project) 7%, 12/1/2011......................... $ 10,700,000 $ 11,770,535
(Federal Express Corp. Project) 6.375%, 4/1/2021........................ 5,000,000 5,019,750
Dallas - Fort Worth International Airport Facility, Improvement, Revenue:
(American Airlines, Inc.) 7.50%, 11/1/2025.............................. 8,000,000 8,523,040
(Delta Airlines, Inc.) 7.125%, 11/1/2026................................ 4,200,000 4,380,768
Gulf Coast Waste Disposal Authority, Revenue
(Champion International Corp.) 7.45%, 5/1/2026.......................... 7,000,000 7,537,250
Rio Grande City Consolidated Independent School District, Public Facilities,
LR
6.75%, 7/15/2010........................................................ 6,000,000 6,240,960
Texas Public Property Finance Corp., Revenue (Mental Health and Retardation
Center)
8.20%, 10/1/2012 (Prerefunded 10/1/2002) (a)............................ 8,305,000 9,658,466
Utah-3.2%
Carbon County, SWDR, Refunding:
(East Carbon Development Corp.) 9%, 7/1/2012............................ 4,000,000 4,211,760
(Laidlaw Inc./ECDC Project) 7.50%, 2/1/2010............................. 3,300,000 3,641,451
(Sunnyside Cogeneration) 9.25%, 7/1/2018................................ 15,000,000 10,715,850
Virginia-1.5%
Chesapeake Bay Bridge and Tunnel Commission, District Revenue, Refunding
(General Resolution) 5%, 7/1/2022 (Insured; MBIA)....................... 3,355,000 3,080,225
Upper Occoquan Sewer Authority, Regional Sewer Revenue
5.15%, 7/1/2020 (Insured; MBIA)......................................... 6,000,000 5,674,140
West Virginia-1.3%
Upshur County, SWDR (TJ International Project) 7%, 7/15/2025................ 7,000,000 7,268,730
Wyoming-.3%
Sweetwater County, SWDR (FMC Corp. Project) 7%, 6/1/2024.................... 1,825,000 1,937,311
U.S. Related-3.8%
Puerto Rico Commonwealth:
5.40%, 7/1/2025......................................................... 5,000,000 4,725,050
Refunding:
6.25%, 7/1/2013 (Insured; MBIA)....................................... 3,000,000 3,296,790
6%, 7/1/2014.......................................................... 400,000 404,980
Puerto Rico Commonwealth Aqueduct and Sewer Authority, Revenue, Refunding
6.25%, 7/1/2013......................................................... 8,000,000 8,680,560
Puerto Rico Commonwealth Highway and Transportation Authority, Highway
Revenue
5%, 7/1/2036............................................................ 5,000,000 4,398,750
Puerto Rico Electric Power Authority, Power Revenue 6.25%, 7/1/2017......... 520,000 532,490
------------ -----------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $544,580,594)................... $567,730,462
==========
PREMIER MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1996 (UNAUDITED)
Principal
Short-Term Municipal Investments-1.9% Amount Value
------------- ----------------
Florida-.4%
Hillsborough County Industrial Development Authority, PCR, Refunding, VRDN
(Tampa Electric Company Gannon) 3.55% (c)............................... $ 2,520,000 $ 2,520,000
New York-1.5%
New York State Energy Research and Development Authority, PCR, Refunding,
VRDN
(New York Electric and Gas) 3.45% (LOC; Union Bank of Switzerland) (c,d) 8,400,000 8,400,000
--------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $10,920,000)................... $ 10,920,000
==============
TOTAL INVESTMENTS-100.0% (cost $555,500,594)................................ $578,650,462
==============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Summary of Abbreviations
AMBAC American Municipal Bond Assurance Corporation MFHR Multi-Family Housing Revenue
FGIC Financial Guaranty Insurance Company MFMR Multi-Family Mortgage Revenue
IDR Industrial Development Revenue PCR Pollution Control Revenue
LOC Letter of Credit RRR Resources Recovery Revenue
LR Lease Revenue SWDR Solid Waste Disposal Revenue
MBIA Municipal Bond Investors Assurance VRDN Variable Rate Demand Notes
Insurance Corporation
</TABLE>
<TABLE>
<CAPTION>
Summary of Combined Ratings
Fitch (e) or Moody's or Standard & Poor's Percentage of Value
- --------- -------- ----------------- -------------------
<S> <C> <C> <C>
AAA Aaa AAA 17.4%
A A A 10.8
BBB Baa BBB 36.3
BB Ba BB 10.9
F-1+ & F-1 MIGI, VMIG1 & P1 SP1 & A1 1.9
Not Rated (f) Not Rated (f) Not Rated (f) 22.7
--------
100.0%
========
</TABLE>
Notes to Statement of Investments:
(a) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) Inverse floater security - the interest rate is subject to change
periodically.
(c) Securities payable on demand. The interest rate, which is subject to
change, is based on bank prime rates or an index of market interest rates.
(d) Secured by letters of credit.
(e) Fitch currently provides creditworthiness information for a limited
number of investments.
(f) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's, have been determined by the Manager to be of comparable quality to
those rated securities in which the Fund may invest.
<TABLE>
<CAPTION>
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996 (UNAUDITED)
Cost Value
------------- -------------
<S> <C> <C> <C>
ASSETS: Investments in securities-See Statement of Investments $555,500,594 $578,650,462
Interest receivable........................ 11,482,582
Receivable for investment securities sold.. 2,936,679
Receivable for shares of Beneficial Interest subscribed 91,017
Prepaid expenses........................... 48,565
-------------
593,209,305
-------------
LIABILITIES: Due to The Dreyfus Corporation and affiliates 270,992
Due to Distributor......................... 169,936
Cash overdraft due to Custodian............ 9,678,110
Payable for shares of Beneficial Interest redeemed 571,488
Accrued expenses........................... 73,143
-----------
10,763,669
------------
NET ASSETS.................................................................. $582,445,636
============
REPRESENTED BY: Paid-in capital............................ $561,759,766
Accumulated net realized gain (loss) on investments (2,463,998)
Accumulated net unrealized appreciation (depreciation)
on investments....................................... 23,149,868
-------------
NET ASSETS.................................................................. $582,445,636
=============
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
-----------------------------------------
Class A Class B Class C
---------------- --------------- --------------
<S> <C> <C> <C>
Net Assets.................................................. $472,024,209 $109,497,734 $ 923,693
Shares Outstanding.......................................... 33,214,000 7,703,537 64,921
NET ASSET VALUE PER SHARE................................... $14.21 $14.21 $14.23
====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
SEE NOTES TO FINANCIAL STATEMENTS.
<S> <C> <C> <C>
PREMIER MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1996 (UNAUDITED)
INVESTMENT INCOME
INCOME Interest Income............................ $20,014,985
EXPENSES: Management fee-Note 2(a)................... $ 1,608,284
Shareholder servicing costs -Note 2(c)..... 921,368
Distribution fees-Note 2(b)................ 274,240
Professional fees.......................... 52,235
Registration fees.......................... 45,810
Custodian fees............................. 27,556
Trustees' fees and expenses-Note 2(d)...... 14,162
Prospectus and shareholders' reports....... 12,359
Miscellaneous.............................. 16,320
------------
Total Expenses....................... 2,972,334
--------------
INVESTMENT INCOME-NET....................................................... 17,042,651
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS-Note 3:
Net realized gain (loss) on investments.... $ 2,424,472
Net unrealized appreciation (depreciation) on investments 12,504,006
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 14,928,478
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $31,971,129
===========
</TABLE>
<TABLE>
<CAPTION>
SEE NOTES TO FINANCIAL STATEMENTS
PREMIER MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
October 31, 1996 Year Ended
(Unaudited) April 30, 1996
------------------- -----------------
OPERATIONS:
<S> <C> <C>
Investment income-net.................................................. $ 17,042,651 $ 35,452,066
Net realized gain (loss) on investments................................ 2,424,472 13,702,073
Net unrealized appreciation (depreciation) on investments.............. 12,504,006 (13,168,792)
------------------- -----------------
Net Increase (Decrease) in Net Assets Resulting from Operations.. 31,971,129 35,985,347
------------------- -----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares....................................................... (14,084,200) (29,748,887)
Class B shares....................................................... (2,936,442) (5,700,103)
Class C shares....................................................... (22,009) (3,076)
------------------- -----------------
Total Dividends.................................................. (17,042,651) (35,452,066)
------------------- -----------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares....................................................... 28,329,497 40,674,840
Class B shares....................................................... 6,025,665 19,195,766
Class C shares....................................................... 1,290,974 359,668
Dividends reinvested:
Class A shares....................................................... 7,949,177 17,177,404
Class B shares....................................................... 1,674,175 3,289,792
Class C shares....................................................... 16,975 2,003
Cost of shares redeemed:
Class A shares....................................................... (50,439,151) (80,027,504)
Class B shares....................................................... (7,890,540) (14,906,844)
Class C shares....................................................... (754,820) (10,150)
------------------- -----------------
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (13,798,048) (14,245,025)
------------------- -----------------
Total Increase (Decrease) in Net Assets........................ 1,130,430 (13,711,744)
NET ASSETS:
Beginning of Period.................................................... 581,315,206 595,026,950
------------------- -----------------
End of Period.......................................................... $582,445,636 $581,315,206
=================== =================
</TABLE>
<TABLE>
<CAPTION>
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
--------------------------------------
Six Months Ended
October 31, 1996 Year Ended
(Unaudited) April 30, 1996
----------------- ----------------
CAPITAL SHARE TRANSACTIONS:
Class A
--------
<S> <C> <C>
Shares sold............................................................ 2,029,920 2,877,435
Shares issued for dividends reinvested................................. 566,922 1,202,513
Shares redeemed........................................................ (3,605,504) (5,613,780)
------------- ----------------
Net Increase (Decrease) in Shares Outstanding (1,008,662) (1,533,832)
============= ================
Class B
-------
Shares sold............................................................ 431,403 1,363,135
Shares issued for dividends reinvested................................. 119,401 230,256
Shares redeemed........................................................ (565,721) (1,045,329)
------------- ----------------
Net Increase (Decrease) in Shares Outstanding (14,917) 548,062
============= ================
Class C*
---------
Shares sold............................................................ 92,623 25,139
Shares issued for dividends reinvested................................. 1,209 141
Shares redeemed........................................................ (53,478) (713)
------------- ----------------
Net Increase (Decrease) in Shares Outstanding 40,354 24,567
============= ================
* From July 13, 1995 (commencement of initial offering) to April 30, 1996.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This information
has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Class A Shares
-------------------------------------------------------------------------
Six Months Ended
October 31, 1996 Year Ended April 30,
- ----------------------- (Unaudited) 1996 1995 1994 1993 1992
-------------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $13.85 $13.86 $13.81 $14.45 $13.75 $13.28
-------------- ------- ------ ------ ------ -------
Investment Operations:
Investment income-net................. .42 .86 .84 .89 .92 .94
Net realized and unrealized gain (loss)
on investments...................... .36 (.01) .05 (.59) .91 .49
-------------- ------- ------ ------ ------ -------
Total from Investment Operations...... .78 .85 .89 .30 1.83 1.43
-------------- ------- ------ ------ ------ -------
Distributions:
Dividends from investment income-net.. (.42) (.86) (.84) (.89) (.92) (.94)
Dividends from net realized gain on investments -- -- -- (.05) (.21) (.02)
-------------- ------- ------ ------ ------ -------
Total Distributions................... (.42) (.86) (.84) (.94) (1.13) (.96)
-------------- ------- ------ ------ ------ -------
Net asset value, end of period........ $14.21 $13.85 $13.86 $13.81 $14.45 $13.75
============== ======= ====== ====== ====== =======
TOTAL INVESTMENT RETURN(1)................ 11.29%(2) 6.08% 6.72% 1.84% 13.76% 11.08%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .92%(2) .92% .92% .85% .74% .54%
Ratio of net investment income
to average net assets............... 5.92%(2) 5.98% 6.16% 6.01% 6.43% 6.90%
Decrease reflected in above expense ratios due
to undertakings by the Manager...... -- -- -- .06% .20% .40%
Portfolio Turnover Rate............... 10.81%(3) 36.59% 38.60% 22.15% 30.99% 50.72%
Net Assets, end of period (000's Omitted) $472,024 $474,044 $495,616 $546,036 $526,606 $388,793
(1) Exclusive of sales load.
(2) Annualized.
(3) Not annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This information
has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Class B Shares
-----------------------------------------------------------------
Six Months Ended
October 31, 1996 Year Ended April 30,
--------------------------------------------
PER SHARE DATA: (Unaudited) 1996 1995 1994 1993(1)
--------------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $13.85 $13.86 $13.81 $14.45 $14.02
--------------- ------- ------- ------- ---------
Investment Operations:
Investment income-net........................ .38 .78 .77 .80 .24
Net realized and unrealized gain (loss) on investments .36 (.01) .05 (.59) .43
--------------- ------- ------- ------- ---------
Total from Investment Operations............. .74 .77 .82 .21 .67
--------------- ------- ------- ------- ---------
Distributions:
Dividends from investment income-net......... (.38) (.78) (.77) (.80) (.24)
Dividends from net realized gain on investments .- .- .- (.05) .-
--------------- ------- ------- ------- ---------
Total Distributions.......................... (.38) (.78) (.77) (.85) (.24)
--------------- ------- ------- ------- ---------
Net asset value, end of period............... $14.21 $13.85 $13.86 $13.81 $14.45
=============== ======= ======= ======= =========
TOTAL INVESTMENT RETURN(2)....................... 10.77%(3) 5.53% 6.15% 1.26% 16.80%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... 1.44%(3) 1.43% 1.44% 1.40% 1.15%(3)
Ratio of net investment income
to average net assets...................... 5.42%(3) 5.46% 5.62% 5.33% 5.13%(3)
Decrease reflected in above expense ratios due
to undertakings by the Manager............. -- -- -- .05% .10%(3)
Portfolio Turnover Rate...................... 10.81%(4) 36.59% 38.60% 22.15% 30.99%
Net Assets, end of period (000's Omitted).... $109,498 $106,931 $99,411 $95,643 $19,855
(1) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(2) Exclusive of sales load.
(3) Annualized.
(4) Not Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average net
assets and other supplemental data for each period indicated. This information
has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Class C Shares
-----------------------------------
Six Months Ended
October 31, 1996 Year Ended
PER SHARE DATA: (Unaudited) April 30, 1996(1)
-------------- ------------------
<S> <C> <C>
Net asset value, beginning of period................................ $13.87 $14.28
------- ---------
Investment Operations:
Investment income-net............................................... .37 .60
Net realized and unrealized gain (loss)
on investments.................................................... .36 (.41)
------- ---------
Total from Investment Operations.................................... .73 .19
------- ---------
Distributions:
Dividends from investment income-net................................ (.37) (.60)
------- ---------
Net asset value, end of period...................................... $14.23 $13.87
======= =========
TOTAL INVESTMENT RETURN(2).............................................. 10.51%(3) 1.56%(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of operating expenses to average net assets................... 1.67%(3) 1.77%(3)
Ratio of net investment income
to average net assets............................................. 5.05%(3) 4.84%(3)
Portfolio Turnover Rate............................................. 10.81%(4) 36.59%
Net Assets, end of period (000's Omitted)........................... $924 $340
(1) From July 13, 1995 (commencement of initial offering) to April 30, 1996.
(2) Exclusive of sales load.
(3) Annualized.
(4) Not annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PREMIER MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier Municipal Bond 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 maximize current income exempt
from Federal income tax to the extent consistent with the preservation of
capital. The Dreyfus Corporation ("Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Fund is authorized to issue an unlimited
number of $.001 par value shares in the following classes of shares: Class A,
Class B and Class C. Class A shares are subject to a sales charge imposed at the
time of purchase, Class B shares are subject to a contingent deferred sales
charge imposed at the time of redemption on redemptions made within six years of
purchase and Class C shares are subject to a contingent deferred sales charge
imposed at the time of redemption on redemptions made within one year of
purchase. Other differences between the three Classes include the services
offered to and the expenses borne by each Class and certain voting rights.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: The Fund's investments (excluding options and
financial futures on municipal and U.S. treasury securities) 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 municipal securities of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general market
conditions. Options and financial futures on municipal and U.S. treasury
securities are valued at the last sales price on the securities exchange on
which such securities are primarily traded or at the last sales price on the
national securities market on each business day. Investments not listed on an
exchange or the national securities market, or securities for which there were
no transactions, are valued at the average of the most recent bid and asked
prices. Bid price is used when no asked price is available.
(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,
adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual basis.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date.
(c) Dividends to shareholders: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Internal Revenue Code. To the extent
that net realized capital gain can be offset by capital loss carryovers, it is
the policy of the Fund not to distribute such gain.
(d) Federal income taxes: It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal Revenue
Code, and to make distributions of income and net realized capital gain
sufficient to relieve it from substantially all Federal income and excise taxes.
The Fund has an unused capital loss carryover of approximately $5,239,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1996. If not
applied, the carryover expires in fiscal 2003.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement ("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. The Agreement provides
that if in any full fiscal year the aggregate expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, exceed the expense
limitation of any state having jurisdiction over the Fund, the Fund may deduct
from payments to be made to the Manager, or the Manager will bear the amount of
such excess to the extent requires by state law. The most stringent state
expense limitation applicable to the Fund presently requires reimbursement of
expenses in any full fiscal year that such expenses (excluding distribution
expenses and certain expenses as described above) exceed 2 1/2% of the first $30
million, 2% of the next $70 million and 1 1/2% of the excess over $100 million
of the average value of the Fund's net assets in accordance with California
"blue sky" regulations. There was no expense reimbursement for the period ended
October 31, 1996.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $3,196 during the period ended October 31, 1996 from commissions earned
on sales of the Fund's shares.
(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 October 31, 1996, $270,973 was
charged to the Fund for the Class B shares and $3,267 was charged to the Fund
for the Class C shares.
(c) Under the Shareholder Services Plan, the Fund pays the Distributor at
an annual rate of .25 of 1% of the value of the average daily net assets of
Class A, Class B and Class C shares for the provision of certain services. The
services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Fund and
providing reports and other information, and services related to the maintenance
of shareholder accounts. The Distributor may make payments to Service Agents (a
securities dealer, financial institution or other industry professional) in
respect of these services. The Distributor determines the amounts to be paid to
Service Agents. During the period ended October 31, 1996, $594,462, $135,487 and
$1,089 were charged to Class A, Class B and Class C shares, respectively, by the
Distributor pursuant to the Shareholder Services Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of
the Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $131,196, for the period ended October 31, 1996.
(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 $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
PREMIER MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended October 31, 1996
amounted to $60,689,614 and $70,331,923, respectively.
At October 31, 1996, accumulated net unrealized appreciation on investments
was $23,149,868, consisting of $31,087,675 gross unrealized appreciation and
$7,937,807 gross unrealized depreciation.
At October 31, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting purposes
(see the Statement of Investments).
(Dreyfus Lion D Logo)
PREMIER MUNICIPAL
BOND FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN The Bank of New York 90 Washington Street New York, NY 10286 TRANSFER
AGENT & DIVIDEND DISBURSING AGENT Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 022/612SA9610
(Dreyfus Logo)
Semi-Annual Report
Premier Municipal
Bond Fund
October 31, 1996
