LETTER TO SHAREHOLDERS
Dear Shareholder:
As your Series' semi-annual reporting period ended on October 31, 1994,
the net asset value per share for Class A shares was $15.29, a decrease of
$.73 per share from $16.02 on April 30, 1994. Tax exempt income dividends of
approximately $.48 per share were paid during the 6-month period,
representing an annualized distribution rate per share of 5.89%, based on the
October 31 closing maximum offering price. For Class B shares during the same
period, the closing net asset value per share was $15.29, a decrease of $.73
from $16.02 on April 30, 1994. Tax exempt income dividends of approximately
$.43 per share were paid during the period, representing an annualized
distribution rate per share of 5.61%, based on the closing net asset value.
We are pleased to inform you that all dividends paid from net investment
income were fully exempt from Federal and Virgina State income taxes.*
FIXED-INCOME MARKETS
These past 12 months have been disappointing for all fixed-income
markets. As an example, long-term U.S. Treasury Bond yields are up over 200
basis points. At the beginning of the calendar year, there was speculation in
the municipal bond market that reinvestment would be so great, and bond
issuance so sparse, that the prices of municipal bonds would stay firm in
spite of any contrary trend in the markets. This might have proven to be true
had the trend been for fixed-income products to drift sideways or to trade to
the lower end of their trading ranges. However, the world of fixed income
experienced a more dramatic correction to which even the positive outlook for
municipals could not remain impervious. The interest rate change started with
the Federal Reserve Board's 25 basis-point increase in the Federal Funds rate
on February 4, and has continued through four additional rate hikes, some as
large as 50 basis points. Most analysts think more rate increases are
imminent.
A DEFENSIVE STRATEGY
Since the initial market corrections in the spring, we have taken some
defensive portfolio measures. Keeping more cash on hand, selling bonds as
they became market discounts and adding some shorter maturity securities have
helped limit the Series' volatility. During the market's recent declines,
these moves kept the Series' net asset value in a relatively more stable
position.
THE VIRGINIA TAX-EXEMPT MARKET
The supply of paper in the State of Virginia is lower this year, keeping
pace with a drop of almost 50% in general market new issuance. While this
creates few portfolio alternatives, it can help support the secondary market,
which may be beneficial when the Series' sells bonds. Such strong liquidity
has been an important price support mechanism. However, we believe the
greatest influence on prices this year has been the overall upward direction
of long-term interest rates.
OUR OUTLOOK
Looking forward, we currently expect the trend in short-term rates to be
higher. We think the Federal Reserve is likely to raise rates in this sector
until it receives convincing evidence of slower economic growth. Intermediate
and long-term interest rates, because they tend to anticipate inflation, have
some added complexity. Currently, inflation has only materialized in the
early phases of production. Although this threat seems distant, recent
higher-than-expected figures for Gross Domestic Product and from the National
Association of Purchasing Managers survey confirm our market view that
inflation may gain momentum at the consumer level. The result could be rising
long-term rates, which encourages us to remain cautious.
We have included a current Statement of Investments and recent financial
statements for your review. We look forward to serving your investment needs
in the future.
Very truly yours,
(logo signature)
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
November 14, 1994
New York, N.Y.
* Some income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
STATEMENT OF INVESTMENTS OCTOBER 31, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
------------ ------------
<S> <C> <C>
VIRGINIA-90.7%
Alexandria Redevelopment and Housing Authority,
MFHR, (United Dominion - Parkwood Court) 6.625%, 5/1/2006............... $ 3,000,000 $ 2,960,550
Arlington County Industrial Development Authority,
Hospital Facility Revenue (Arlington Hospital) 7.125%, 9/1/2021......... 200,000 219,842
Augusta County Industrial Development Authority, HR
(Augusta Hospital Corp. Project) 7%, 9/1/2021........................... 2,750,000 2,990,432
Chesapeake, Water and Sewer System Revenue, Refunding 6.50%, 7/1/2012....... 1,000,000 973,300
Chesapeake Bay Bridge and Tunnel Commission District, Revenue,
Refunding-General Resolution 6.375%, 7/1/2022 (Insured; MBIA)........... 1,500,000 1,449,780
Chesapeake Hospital Authority, Hospital Facility Revenue, Refunding
(Chesapeake General Hospital) 5.25%, 7/1/2018 (Insured; MBIA)........... 1,000,000 811,270
Commonwealth Transportation Board, Transportation Revenue
(Northern Virginia Transportation District Program) 5.50%, 5/15/2015.... 2,500,000 2,162,825
Community Housing Finance Corp. Arlington County,
Collateralized Mortgage Revenue, Refunding (Colonial Village Project):
6.125%, 12/1/2016 (Insured; FHA)...................................... 900,000 830,106
6.25%, 6/1/2022 (Insured; FHA)........................................ 1,000,000 916,740
Covington-Alleghany County Industrial Development Authority,
Hospital Facility Revenue (Alleghany Regional Hospital) 6.875%, 4/1/2022. 1,000,000 981,050
Fairfax County Water Authority, Water Revenue:
5%, 4/1/2016............................................................ 2,000,000 1,587,380
6.125%, 1/1/2029........................................................ 2,000,000 2,061,700
7.497%, 4/1/2029 (a,b).................................................. 2,000,000 1,420,000
Franklin 6.40%, 1/15/2012................................................... 1,000,000 992,860
Fredericksburg Industrial Development Authority, Hospital Facility Revenue,
Refunding
(MWH Medicorp Obligation Group) 6.70%, 8/15/2009 (Insured; FGIC)........ 195,000 197,944
Giles County Industrial Development Authority,
Solid Waste Disposal Facility Revenue (Hoechst Celanese Corp. Project)
6.625%, 12/1/2022....................................................... 1,500,000 1,432,920
Hampton Roads Medical College, General Revenue, Refunding 6.875%, 11/15/2016 500,000 501,925
Harrisonburg Redevelopment and Housing Authority,
MFHR, Refunding:
(Battery Heights Project) 7.375%, 11/20/2028.......................... 500,000 510,860
(Hanover Crossing Apartments Project) 6.35%, 3/1/2023................. 2,000,000 1,826,700
Henrico County 6.90%, 10/1/2009............................................. 300,000 323,421
Industrial Development Authority of Albermarle County,
HR, Refunding (Martha Jefferson Hospital):
5.875%, 10/1/2013..................................................... 2,360,000 2,108,684
5.50%, 10/1/2020...................................................... 1,500,000 1,208,295
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------ ------------
VIRGINIA (CONTINUED)
Industrial Development Authority of the City of Lynchburg,
Educational Facilities Revenue (Randolph-Macon Woman's College)
5.875%, 9/1/2013........................................................ $ 500,000 $ 449,900
Industrial Development Authority of the City of Williamsburg,
Hospital Facility Revenue (Williamsburg Community Hospital) 5.75%, 10/1/2022. 2,000,000 1,665,720
Industrial Development Authority of the County of Prince William,
HR, Refunding (Prince William Hospital):
5.625%, 4/1/2012...................................................... 1,000,000 870,020
5.25%, 4/1/2019....................................................... 1,000,000 786,800
Industrial Development Authority of the Town of West Point,
SWDR (Chesapeake Corp. Project) 6.375%, 3/1/2019........................ 3,500,000 3,181,360
Mecklenburg County Industrial Development Authority, Revenue
(Exempt Facility-Mecklenburg Cogeneration) 7.35%, 5/1/2008 (LOC; Fuji Bank) (c) 500,000 507,555
Nelson County Service Authority, Water and Sewer Revenue, Refunding
5.50%, 7/1/2018 (Insured; FGIC)......................................... 1,750,000 1,494,920
Newport News Redevelopment and Housing Authority, Mortgage Revenue, Refunding
(FHA-West Apartments-Section 8) 6.55%, 7/1/2024......................... 1,500,000 1,432,080
Peninsula Ports Authority, Health System Revenue, Refunding
(Riverside Health System Project) 6.625%, 7/1/2018...................... 500,000 486,280
Prince William County Park Authority, Revenue
6.875%, 10/15/2016...................................................... 3,000,000 2,906,220
Rector and Visitors of the University of Virginia, General Revenue Pledge
5.375%, 6/1/2020........................................................ 4,370,000 3,647,027
Richmond Industrial Development Authority, HR (Retreat Hospital)
7.35%, 7/1/2021......................................................... 1,900,000 1,860,613
Richmond Metropolitan Authority, Expressway Revenue, Refunding
6.375%, 7/15/2016 (Insured; FGIC)....................................... 1,500,000 1,459,470
South Boston Industrial Development Authority, HR
(Halifax Community Hospital Inc. Project) 7.375%, 9/1/2011.............. 500,000 526,710
Southeastern Public Service Authority, Revenue:
5.125%, 7/1/2013 (Insured; MBIA)........................................ 7,850,000 6,477,742
(Regional Solid Waste System):
10.50%, 7/1/1995...................................................... 250,000 265,097
6%, 7/1/2013.......................................................... 1,250,000 1,149,950
6%, 7/1/2017.......................................................... 1,750,000 1,587,267
Upper Occoquan Sewer Authority, Regional Sewer Revenue
6.50%, 7/1/2017 (Insured; MBIA)......................................... 1,000,000 1,063,240
Virginia, Higher Educational Institution 6.60%, 6/1/2009.................... 300,000 318,747
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------ ------------
VIRGINIA (CONTINUED)
Virginia Beach Development Authority:
Hospital Facility Revenue (Sentara Bayside Hospital) 6.30%, 11/1/2021... $ 2,000,000 $ 1,842,500
Nursing Home Revenue (Sentara Life Care Corp.) 7.75%, 11/1/2021......... 1,000,000 1,067,540
Virginia College Building Authority, Educational Facilities Revenue:
(Hampton University Project) 6.50%, 4/1/2008............................ 350,000 352,720
(Randolph - Macon College Project) 6.625%, 5/1/2013..................... 1,000,000 998,530
(Refunding - Washington and Lee University Project) 6.40%, 1/1/2012..... 500,000 497,370
Virginia Housing Development Authority:
Commonwealth Mortgage:
6.95%, 1/1/2010....................................................... 2,500,000 2,506,625
6.85%, 1/1/2027....................................................... 2,000,000 1,930,640
Multi-Family:
7.10%, 5/1/2013....................................................... 500,000 504,115
Refunding 5.90%, 11/1/2017............................................ 2,000,000 1,762,680
Virginia Public Building Authority, Building Revenue 5.75%, 8/1/2012........ 1,000,000 915,670
Virginia Resources Authority, Water and Sewer System Revenue:
(Lot 7-Rapidan Service Authority) 7.125%, 10/1/2016..................... 250,000 259,288
(Lot 9-Frederick County) 6%, 10/1/2012.................................. 500,000 469,825
(Lot 11-Rapidan Service Authority) 5.50%, 10/1/2019..................... 1,250,000 1,056,263
Virginia Transportation Board, Transportation Contract Revenue, Refunding
(United States Route 58 Corridor Program) 5.25%, 5/15/2012.............. 250,000 213,608
Washington County Industrial Development Authority,
Hospital Facility Revenue (First Mortgage - Johnston Memorial Hospital)
7%, 7/1/2022................................................................ 750,000 759,870
Winchester Industrial Development Authority, HR
4.44%, 1/1/1998 (Insured; AMBAC) (a).................................... 3,400,000 2,981,392
York County, COP 6.625%, 3/1/2012........................................... 500,000 506,705
U.S. RELATED-9.3%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 2,000,000 1,894,940
Puerto Rico (Public Improvement):
7.70%, 7/1/2020......................................................... 1,000,000 1,128,050
6.80%, 7/1/2021......................................................... 1,000,000 1,085,980
Puerto Rico Electric Power Authority, Power Revenue 7%, 7/1/2021............ 325,000 329,371
Puerto Rico Highway and Transportation Authority, Highway Revenue 6.625%, 7/1/2018. 2,000,000 2,150,380
Virgin Islands Public Finance Authority, Revenue, Refunding, Matching Fund
Loan Notes
7.25%, 10/1/2018........................................................ 1,500,000 1,488,120
----------
TOTAL INVESTMENTS (cost $92,598,244)........................................ $87,307,484
===========
</TABLE>
<TABLE>
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company MFHR Multi-Family Housing Revenue
FHA Federal Housing Administration SWDR Solid Waste Disposal Revenue
HR Hospital Revenue
</TABLE>
<TABLE>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------- -------- ---------------- --------------------
<S> <C> <C> <C>
AAA Aaa AAA 31.1%
AA Aa AA 29.3
A A A 26.5
BBB Baa BBB 11.4
Not Rated Not Rated Not Rated 1.7
-----
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Inverse Floater Security - the interest rate is subject to change
periodically.
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
1994, this security amounted to $1,420,000 or 1.6% of net assets.
(c) Secured by letters of credit.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
See independent accountants' review report and notes to financial statements.
<TABLE>
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1994 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $92,598,244)-see statement...................................... $87,307,484
Cash.................................................................... 3,869,612
Interest receivable..................................................... 1,658,251
Receivable for shares of Beneficial Interest subscribed................. 152,118
Prepaid expenses........................................................ 9,010
------------
92,996,475
LIABILITIES:
Due to the Distributor.................................................. $ 30,730
Payable for investment securities purchased............................. 2,967,257
Payable for shares of Beneficial Interest redeemed...................... 294,525
Accrued expenses and other liabilities.................................. 4,226 3,296,738
------------ -----------
NET ASSETS ................................................................ $89,699,737
===========
REPRESENTED BY:
Paid-in capital......................................................... $95,874,332
Accumulated net realized capital losses and distributions in
excess of net realized gain on investments............................ (883,835)
Accumulated net unrealized (depreciation) on investments-Note 3(b)...... (5,290,760)
------------
NET ASSETS at value......................................................... $89,699,737
===========
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 4,115,962
===========
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 1,751,120
===========
NET ASSET VALUE per share:
Class A Shares
($62,929,403 / 4,115,962 shares)...................................... $15.29
======
Class B Shares
($26,770,334 / 1,751,120 shares)...................................... $15.29
======
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1994 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 2,914,882
EXPENSES:
Management fee-Note 2(a)............................................. $ 254,488
Shareholder servicing costs-Note 2(c)................................. 153,429
Distribution fees (Class B shares)-Note 2(b).......................... 66,334
Professional fees..................................................... 9,664
Custodian fees........................................................ 4,595
Prospectus and shareholders' reports.................................. 4,372
Registration fees..................................................... 1,622
Trustees' fees and expenses-Note 2(d)................................. 406
Miscellaneous......................................................... 9,255
----------
504,165
Less-management fee waived due to
undertaking-Note 2(a)............................................. 254,488
----------
TOTAL EXPENSES.................................................. 249,677
------------
INVESTMENT INCOME-NET........................................... 2,665,205
------------
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments (including options transactions)-Note 3(a) $(729,856)
Net realized gain on financial futures-Note 3(a)........................ 48,742
----------
NET REALIZED (LOSS)................................................... (681,114)
Net unrealized (depreciation) on investments............................ (3,613,090)
------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (4,294,204)
------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $(1,628,999)
============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1994
1994 (UNAUDITED)
----------- ------------
<S> <C> <C>
OPERATIONS:
Investment income-net.................................................. $ 4,642,019 $ 2,665,205
Net realized (loss) on investments...................................... (105,697) (681,114)
Net unrealized (depreciation) on investments for the period............. (4,819,942) (3,613,090)
----------- ------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............ (283,620) (1,628,999)
----------- ------------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net:
Class A shares........................................................ (3,641,582) (1,953,225)
Class B shares........................................................ (1,000,437) (711,980)
From net realized gain on investments:
Class A shares........................................................ (48,263) --
Class B shares........................................................ (16,560) --
In excess of net realized gain on investments:
Class A shares........................................................ (72,239) --
Class B shares........................................................ (24,785) --
----------- ------------
TOTAL DIVIDENDS................................................... (4,803,866) (2,665,205)
----------- ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 17,318,650 4,210,158
Class B shares........................................................ 18,814,589 3,701,847
Dividends reinvested:
Class A shares........................................................ 2,089,707 1,056,177
Class B shares........................................................ 582,077 389,738
Cost of shares redeemed:
Class A shares........................................................ (6,302,664) (4,593,784)
Class B shares........................................................ (911,833) (1,302,710)
----------- ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...... 31,590,526 3,461,426
----------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 26,503,040 (832,778)
NET ASSETS:
Beginning of period..................................................... 64,029,475 90,532,515
----------- ------------
End of period........................................................... $90,532,515 $89,699,737
============= ===========
</TABLE>
<TABLE>
SHARES
------------------------------------------------------------------
CLASS A CLASS B
--------------------------------- -----------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1994 APRIL 30, OCTOBER 31, 1994
1994 (UNAUDITED) 1994 (UNAUDITED)
-------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold........................... 1,010,771 263,773 1,095,592 232,981
Shares issued for dividends reinvested. 122,266 66,590 34,099 24,588
Shares redeemed....................... (370,731) (288,252) (53,790) (82,614)
---------- -------- ---------- ---------
NET INCREASE IN SHARES OUTSTANDING 762,306 42,111 1,075,901 174,955
========= ======== ========= =========
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
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 Series' financial statements.
CLASS A SHARES CLASS B SHARES
__________________________________________________ ___________________________________
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED
YEAR ENDED APRIL 30, OCTOBER 31, 1994 APRIL 30, OCTOBER 31, 1994
______________________________ _________________ ___________________ ________________
PER SHARE DATA: 1992(1) 1993 1994 (UNAUDITED) 1993(2) 1994 (UNAUDITED)
----- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period............. $15.00 $15.50 $16.80 $16.02 $16.25 $16.80 $16.02
----- ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net... .78 1.00 .97 .48 .26 .88 .43
Net realized and unrealized
gain (loss) on investments. .50 1.31 (.75) (.73) .55 (.75) (.73)
----- ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS........ 1.28 2.31 .22 (.25) .81 .13 (.30)
----- ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net............ (.78) (1.00) (.97) (.48) (.26) (.88) (.43)
Dividends from net realized
gain on investments... -- (.01) (.01) -- -- (.01) --
Dividends in excess of net
realized gain on investments -- -- (.02) -- -- (.02) --
----- ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS... (.78) (1.01) (1.00) (.48) (.26) (.91) (.43)
----- ------ ------ ------ ------ ------ ------
Net asset value, end of period $15.50 $16.80 $16.02 $15.29 $16.80 $16.02 $15.29
===== ====== ===== ====== ====== ====== =======
TOTAL INVESTMENT RETURN (3). 11.54%(4) 15.32% 1.10% (3.29%)(4) 17.22%(4) .54% (3.83%)(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets............ -- .27% .46% .39%(4) .83%(4) 1.01% .91%(4)
Ratio of net investment income
to average net assets. 6.42%(4) 6.02% 5.64% 5.92%(4) 4.62%(4) 5.02% 5.36%(4)
Decrease reflected in above
expense ratios due to under-
takings by the Manager 1.22%(4) .76% .55% .55%(4) .54%(4) .54% .55%(4)
Portfolio Turnover Rate. 5.96%(5) 9.32% 30.69% 9.42%(5) 9.32% 30.69% 9.42%(5)
Net Assets, end of period
(000's Omitted)....... $23,096 $55,627 $65,279 $62,929 $8,402 $25,254 $26,770
(1) From August 1, 1991 (commencement of operations) to April 30, 1992.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
See independent accountants' review report and notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering fifteen series including the Virginia Series (the "Series"). Dreyfus
Service Corporation, until August 24, 1994, acted as the distributor of the
Fund's shares. Dreyfus Service Corporation is a wholly-owned subsidiary of
The Dreyfus Corporation ("Manager"). Effective August 24, 1994, the Manager
became a subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' 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.
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the Series.
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series 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 Series 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, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series 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.
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 average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
has undertaken from May 1, 1994 to waive receipt of the management fee
payable to it by the Series until such time as the net assets of the Series
exceed $100 million, regardless of whether they remain at that level. The
management fee waived, pursuant to the undertaking, amounted to $254,488 for
the six months ended October 31, 1994.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
Dreyfus Service Corporation retained $10,269 during the six months ended
October 31, 1994 from commissions earned on sales of the Series' Class A
shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $18,356
from contingent deferred sales charges imposed upon redemptions of the
Series' Class B shares.
(B) On August 3, 1994, Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series' Class B shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B shares.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Series pay Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of the Series' Class B shares
average daily net assets, for the costs and expenses in connection with
advertising, marketing and distributing the Series' Class B shares. Dreyfus
Service Corporation made payments to one or more Service Agents based on the
value of the Series' Class B shares owned by clients of the Service Agent.
During the six months ended October 31, 1994, $25,380 was charged to the
Series pursuant to the Class B Distribution Plan and $40,954 was charged to
the Series pursuant to the prior Class B Distribution Plan.
(C) Under the Shareholder Services Plan, the Series pays the Distributor,
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A and Class B shares for servicing shareholder accounts. The
services provided may include personal services relating to shareholder
accounts, such as
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
answering shareholder inquiries regarding the Series and providing reports
and other information, and services related to the maintenance of shareholder
accounts. The Distributor may make payments to Service Agents in respect of
these services. The Distributor determines the amounts to be paid to Service
Agents. From May 1, 1994 through August 23, 1994, $51,924 and $20,477 were
charged to Class A and Class B shares, respectively, by Dreyfus Service
Corporation. From August 24, 1994 through October 31, 1994, $30,585 and
$12,690 were charged to Class A and Class B shares, respectively, by the
Distributor pursuant to the Shareholder Services Plan.
(D) Prior to August 24, 1994 certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting.
NOTE 3-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding options transactions, amounted to $11,733,250 and $8,461,684,
respectively, for the six months ended October 31, 1994, and consisted
entirely of long-term municipal investments.
In addition, the following table summarizes the Series' call/put options
written transactions for the six months ended October 31, 1994:
<TABLE>
OPTIONS TERMINATED
------------------
NET
NUMBER OF PREMIUMS REALIZED
CONTRACTS RECEIVED COST GAIN
----------- --------- --------- -----------
<S> <C> <C> <C> <C>
OPTIONS WRITTEN:
Contracts outstanding April 30, 1994........ -- --
Contracts written........................... 250 $172,627
-------- ---------
Contracts terminated;
Expired................................... 250 $172,627 -- $172,627
--------- ---------- ========= ==========
Contracts outstanding October 31, 1994...... -- --
-------- ---------
</TABLE>
As a writer of call options, the Series receives a premium at the outset
and then bears the market risk of unfavorable
changes in the price of the financial instrument underlying the option.
Generally, the Series would incur a gain, to the extent of the
premium, if the price of the underlying financial instrument decreases
between the date the option is written and the date on which the option is
terminated. Generally, the Series would realize a loss, if the price of the
financial instrument increases between those dates. At October 31, 1994, there
were no call options written outstanding.
As a writer of put options, the Series receives a premium at the onset and
then bears the market risk of unfavorable changes in the price of the financial
instrument underlying the option. Generally, the Series would incur a gain, to
the extent of the premium, if the price of the underlying financial instrument
increases between the date the option is written and the date on which the
option is terminated. Generally, the Series would realize a loss, if the price
of the financial instrument declines between those dates. At October 31, 1994,
there were no put options written outstanding.
The Series engages in trading financial futures contracts. The Series is
exposed to market risk as a result of changes in the value of the underlying
financial instruments. Investments in financial futures require the Series to
"mark to market" on a daily basis, which reflects the change in the market
value of the
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
contract at the close of each day's trading. Accordingly, variation margin
payments are made or received to reflect daily unrealized gains or losses.
When the contracts are closed, the Series recognizes a realized gain or
loss. These investments require initial margin deposits with a custodian,
which consist of cash or cash equivalents, up to approximately 10% of the
contract amount. The amount of these deposits is determined by the exchange
or Board of Trade on which the contract is traded and is subject to change.
At October 31, 1994, there were no financial futures contracts outstanding.
(B) At October 31, 1994, accumulated net unrealized depreciation on
investments was $5,290,760, consisting of $975,301 gross unrealized
appreciation and $6,266,061 gross unrealized depreciation.
At October 31, 1994, 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).
PREMIER STATE MUNICIPAL BOND FUND, Virginia Series
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
We have reviewed the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Virginia Series (one of the Series constituting the Premier State Municipal
Bond Fund) as of October 31, 1994, and the related statements of operations
and changes in net assets and financial highlights for the six month period
ended October 31, 1994. These financial statements and financial highlights
are the responsibility of the Fund's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements and financial highlights taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modification that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepting
auditing standards, the statement of changes in net assets for the year ended
April 30, 1994 and financial highlights for each of the three years in the
period ended April 30, 1994 and in our report dated June 7, 1994, we
expressed an unqualified opinion on such statement of changes in net assets
and financial highlights.
New York, New York
December 6, 1994
PREMIER STATE MUNICIPAL
BOND FUND, VIRGINIA SERIES
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
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
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 066/625SA9410
Semi-Annual Report
Premier State
Municipal Bond Fund
Virginia Series
October 31, 1994
