PRESIDENT'S LETTER
Dear Shareholder:
Since our last report to shareholders as of October 31, 1993, the bond
markets have been in a state of flux. Bond prices rallied to a cyclical high
last October and have moved irregularly lower ever since. Today, long-term
municipal bonds are generally returning 1% more than they were only six
months ago. This is reflected in a decline in the Fund's net asset value.
During the 12-month period ended April 30, 1994, Class A shares of
Premier State Municipal Bond Fund, Ohio Series paid income dividends of
approximately $.74 per share. This translates to a tax exempt distribution
rate per share of 5.56%, based on the closing maximum offering price per
share on April 30, 1994, adjusted for capital gain distributions.*
For the same period, Class B shares paid income dividends of
approximately $.66 per share, which translated to a tax exempt distribution
rate per share of 5.20%, based on the closing net asset value per share on
April 30, 1994, adjusted for capital gain distributions.*
Soon after his inauguration, President Clinton quickly moved to outline
his domestic economic agenda, which called for higher taxes and a substantial
reduction in the Federal budget deficit. In return it was expected that the
Federal Reserve Board would continue to maintain a stimulative policy.
Congress approved a budget package in early August that tilted fiscal policy
toward deficit reduction; in response, interest rates accelerated downward
during the Summer, before finally reaching their low point during the fourth
quarter of last year.
During the first half of its fiscal year, the Series' total return
benefited from the strong performance of the municipal market. Declining
interest rates, an accommodative Federal Reserve Board policy, low price
volatility, and a lackluster economy drove the municipal market to higher
price valuations. However, as the economy began to pick up steam during the
fourth quarter of 1993 and into the new year, a change in Federal Reserve
policy and rising interest rates had a negative impact on the municipal
market.
It appears that 1994 probably will be memorialized as the end of five
years of accommodative Federal Reserve policy. Since February, the Federal
Funds rate has been raised four times. Generally, it is anticipated that
further rate hikes will be forthcoming should the economy continue to signal
an unacceptable rate of growth. With such a heightened degree of nervousness
influencing both bonds and stocks, the markets could remain quite volatile.
Higher interest rates have had an effect on the supply of new municipal
bonds. While 1993 was a record year for bond issuance, new issuance has
fallen dramatically this year. At the same time, the appetites of individual
investors for tax exempt investments have been tempered. However, should
inflation fears subside and interest rates stabilize, attractive investment
opportunities could exist in municipal securities. New issuance has been
reduced, the highest Federal marginal tax rate has been increased and
municipal bonds are yielding substantially more than they were only a few
months ago. However, at this juncture it is still uncertain if and when such
a scenario will unfold.
Last year, when rates were reaching their cyclical lows, we altered our
security selection strategy. Specifically, we elected not to "chase the
market," and began to conduct our business somewhat more defensively. While
these actions limited performance during that period in 1993 when rates were
still declining, they positioned the Fund more advantageously for the market
decline which has occurred so far this year.
As we stated in our previous report to shareholders, it was our intention
to adopt a more defensive portfolio posture in order to reduce the volatility
of the portfolio. In response, we reduced the Series' exposure to those bonds
in the portfolio with the longest durations (price sensitivities) while
maintaining the more defensive securities (i.e., pre-refunded bonds), and
started building higher cash reserves. We still believe that a more defensive
stance currently is warranted in view of the heightened degree of uncertainty
about the near-term direction of the economy and inflation. Certainly, recent
moves by the Federal Reserve to hike short-term interest rates provide enough
of an impetus to maintain a cautious stance. The Federal Reserve generally
acts in a series of moves rather than taking a "one shot approach."
While we increased our cash reserves, which are invested in tax exempt
cash equivalent securities, to lessen the impact of rising rates on the
Series, we are reluctant to keep too much cash on hand. Because of the
restrictive investment choices in a State-specific portfolio, we are holding
less cash reserves than we might maintain in a national fund. As mentioned
previously, higher interest rates have severely curtailed the volume of new
municipal securities so we have some concern about the potential periodic
shortage of tax exempts if the financial markets stabilize and investors
increase their level of purchases. Higher tax rates and the large number of
bonds being retired lead us to believe that the potential demand for tax
exempt securities is substantial, especially in those States with the highest
tax structures.
As we have witnessed in recent weeks, negative influences on the markets
can be quite powerful. The potential still exists for further market
volatility and higher yields before bond prices begin to rise again. At
difficult times such as these, it can be easy to "lose sight of the forest
for the trees," as emotion often substitutes for logical investment
reasoning. Your Series is managed with the intention of achieving long-term
performance and income goals.
We appreciate your investment in the Series, and we want to assure you
that we are, at all times, working in the Series' best interest.
Very truly yours,
(Signature Logo)
Richard J. Moynihan
President
May 16, 1994
New York, N.Y.
*Some income may be subject to the Federal Alternative Minimum Tax for
certain investors.
PERFORMANCE
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN Premier STATE
Municipal Bond Fund,
OHIO SERIES Class A Shares AND THE lehman brothers municipal bond index
Exhibit A
$17,932
Lehman Brothers
Municipal Bond Index*
$13,653
Premier State Municipal
Bond Fund,
Ohio Series
(Class A Shares)
In Dollars
*Source: Lehman Brothers
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
CLASS A CLASS B
- ------------------------------------------------------------- -----------------------------------------------------
% Return Reflecting
% Return Applicable Contingent
Reflecting % Return Deferred Sales
% Return Without Maximum Initial Assuming No Charge Upon
PERIODS ENDED 4/30/94 SALES CHARGE SALES CHARGE (4.5%) PERIODS ENDED 4/30/94 REDEMPTION REDEMPTION*
- -------------------- ----------- ------------------ -------------------- --------- ----------------
<S> <C> <C> <C> <C> <C>
1 Year 2.78% (1.87)% 1 Year 2.24% (0.67)%
5 Year 8.89 7.89 From Inception (1/15/93) 5.46 3.16
From Inception (5/28/87) 5.29 4.60
</TABLE>
Past performance is not predictive of future performance. Share price and
investment return fluctuate and share price may be more or less than original
cost upon redemption.
The above graph compares a $10,000 investment made in Class A shares of
Premier State Municipal Bond Fund, Ohio Series on 5/28/87 (Inception Date) to
a $10,000 investment made in the Lehman Brothers Municipal Bond Index on that
date. For comparative purposes the value of the Index on 5/31/87 is used as
the beginning value on 5/28/87. All dividends and capital gain distributions
are reinvested. Performance for Class B shares will differ from the results
shown above due to difference in charges and expenses charged to that class.
The Series invests primarily in Ohio municipal securities and its performance
shown in the graph takes into account the maximum initial sales charge on
Class A shares and all other applicable fees and expenses. Unlike the Series,
the Lehman Brothers Municipal Bond Index is an unmanaged total return
performance benchmark for the long-term, investment grade tax exempt bond
market, calculated by using municipal bonds selected to be representative of
the market. The Index does not take into account charges, fees and other
expenses. Further information relating to Series performance, including
expense reimbursements, if applicable, is contained in the Condensed
Financial Information section of the Prospectus and elsewhere in this report.
*Maximum contingent deferred sales charge for Class B shares is 3% and is
reduced to 0% after five years.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1994
PRINCIPAL
MUNICIPAL BONDS--98.4% AMOUNT VALUE
-------------- --------------
<S> <C> <C>
OHIO--91.3%
Akron Bath Copley Joint Township Hospital District, Revenue:
(Akron Children's Hospital Medical Center) 7.70%, 11/15/2005............ $ 500,000 $ 547,595
(Akron City Hospital Project) 8.875%, 11/15/2007........................ 500,000 575,890
(Summa Health Systems) 5.75%, 11/15/2008................................ 5,000,000 4,777,000
Akron-Wilbeth Housing Development Corp., First Mortgage Revenue
7.90%, 8/1/2003 (Insured; FHA).......................................... 1,805,000 2,176,686
Allen County, Industrial First Mortgage Revenue, Refunding
6.75%, 11/15/2008 (Guaranteed; Kmart Corp.)............................. 1,280,000 1,302,528
City of Barberton, Hospital Facilities Revenue
(The Barberton Citizens Hospital Co. Project) 7.25%, 1/1/2012........... 2,400,000 2,579,160
Berea:
7.50%, 12/1/2005 ....................................................... 425,000 480,416
7.55%, 12/1/2006 ....................................................... 455,000 515,424
7.55%, 12/1/2007 ....................................................... 320,000 362,496
Butler County, Hospital Facilities Revenue, Refunding and Improvement
(Fort Hamilton Hughes Hospital) 7.25%, 1/1/2001......................... 4,000,000 4,134,560
City of Cambridge, HR Refunding (Guernsey Memorial Hospital Project)
8%, 12/1/2006........................................................... 2,000,000 2,136,460
Canton 7.875%, 12/1/2008. .................................................. 1,000,000 1,145,490
Clermont County, Hospital Facilities Revenue, Refunding (Mercy Health
Systems)
7.50%, 9/1/2019 (Insured; AMBAC)........................................ 1,000,000 1,117,650
City of Cleveland:
6.75%, 7/1/2004 (Insured; MBIA)......................................... 1,500,000 1,637,115
COP (Motor Vehicle, Motorized and Communication Equipment) 7.10%, 7/1/2002 2,000,000 2,047,620
Parking Facility Improvement Revenue 8%, 9/15/2012...................... 5,000,000 5,340,950
Public Power System Revenue (First Mortgage Improvement):
7%, Series A, 11/15/2017.............................................. 1,125,000 1,157,164
7%, Series B, 11/15/2017.............................................. 8,675,000 8,923,018
Waterworks Improvement First Mortgage Revenue:
6.50%, 1/1/2011 (Insured; AMBAC)...................................... 2,000,000 2,062,000
6.25%, 1/1/2015 (Insured; AMBAC)...................................... 3,000,000 3,030,000
7.875%, 1/1/2016...................................................... 650,000 713,018
Cleveland City School District:
8%, 12/1/2001........................................................... 1,675,000 1,916,183
5.875%, 12/1/2011 (Insured; FGIC)....................................... 1,000,000 984,330
Cleveland State University, General Receipts 5.375%, 6/1/2008 (Insured; AMBAC) 2,000,000 1,935,620
City of Columbus, Sewer Systems Revenue, Refunding 6.25%, 6/1/2008.......... 1,750,000 1,787,940
Columbus City School District, School Building Renovation and Improvement
6.65%, 12/1/2012 (Insured; FGIC)........................................ 2,250,000 2,482,695
Cuyahoga County:
Health Care Facilities Revenue (Judson Retirement Community) 8.875%, 11/15/2019 3,500,000 3,976,350
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1994
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
-------------- ------------
OHIO (CONTINUED)
Cuyahoga County (continued):
HR:
(Fairview General Hospital) 7.375%, 8/1/2019.......................... $ 4,000,000 $ 4,475,920
(Meridia Health Systems) 7%, 8/15/2023................................ 1,750,000 1,823,710
Refunding:
(Deaconess Hospital) 7.45%, 10/1/2018............................. 5,000,000 5,416,850
(Meridia Health Systems) 7.25%, 8/15/2019......................... 4,715,000 4,972,298
Jail Facilities 7%, 10/1/2013........................................... 6,125,000 6,857,060
Refunding:
(Cleveland Clinic Foundation) 8%, 12/1/2015........................... 1,000,000 1,092,350
(Mount Sinai Medical Center) 8.125%, 11/15/2014....................... 1,000,000 1,101,310
Eaton, IDR Refunding (Baxter International Inc. Project) 6.50%, 12/1/2012... 1,500,000 1,493,475
Erie County, Hospital Improvement Revenue, Refunding
(Firelands Community Hospital) 8.875%, 1/1/2015......................... 700,000 780,094
Euclid City School District 7.10%, 12/1/2011................................ 1,000,000 1,084,710
Village of Evendale, IDR Refunding (Ashland Oil, Inc. Project) 6.90%, 11/1/2010 2,000,000 2,046,700
Fairlawn, Health Care Facilities Revenue (Village at Saint Edward Project)
8.75%, 10/1/2019........................................................ 2,420,000 2,626,837
Franklin County:
6.375%, 12/1/2012....................................................... 1,635,000 1,775,479
Hospital Facilities Revenue, Refunding Improvement (Doctors Hospital
Project)
5.875%, 12/1/2013..................................................... 2,750,000 2,529,560
Hospital Improvement Revenue (The Children's Hospital Project) 6.60%, 11/1/2011 1,500,000 1,550,760
HR:
(Holy Cross Health Systems Corp.-Mount Carmel Health) 6.75%, 6/1/2019 2,500,000 2,551,075
Refunding 5.375%, 12/1/2020........................................... 2,000,000 1,824,940
Refunding Improvement:
(The Children's Hospital Project) 6.60%, 5/1/2013................. 4,000,000 4,063,520
(Riverside United Hospital) 7.60%, 5/15/2020...................... 5,300,000 6,032,036
(Worthington Christian Village Congregate Care Project):
10.25%, 8/1/2015................................................ 875,000 940,205
7.80%, 2/1/2017 (Insured; FHA).................................. 5,690,000 6,219,739
Gallia County, Local School District 7.375%, 12/1/2004...................... 570,000 647,389
Greater Cleveland Gateway Economic Development Corp.:
Senior Lien Excise Tax Revenue 6.875%, 9/1/2005 (Insured; FSA).......... 1,500,000 1,633,650
Stadium Revenue 7.50%, 9/1/2005......................................... 5,675,000 6,247,210
Hamilton County:
Electric Systems Mortgage Revenue, Refunding 8%, 10/15/2022 (Insured; FGIC) 750,000 854,865
Hospital Facilities Improvement Revenue, Refunding (Deaconess Hospital)
7%, 1/1/2012.......................................................... 2,570,000 2,724,354
Hospital Facilities Refunding Revenue (Episcopal Retirement Homes, Inc.)
6.80%, 1/1/2008 (LOC; The Fifth Third Bank) (a)....................... 2,450,000 2,532,247
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1994
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
-------------- -----------
OHIO (CONTINUED)
Hamilton County (continued):
IDR (Provident Association Partnership) 9%, 12/1/2008 (b)............... $ 1,405,000 $ 599,935
Mortgage Revenue (Judson Care Center) 7.80%, 8/1/2019 (Insured; FHA).... 3,970,000 4,317,296
Sewer Systems Improvement Revenue, Refunding 6.70%, 12/1/2013........... 2,000,000 2,199,140
Hilliard School District 6.30%, 12/1/2014................................... 2,000,000 2,022,780
Kirtland Local School District 7.50%, 12/1/2009............................. 760,000 834,966
Knox County, IDR (Weyerhaeuser Co. Project) 9%, 10/1/2007................... 1,000,000 1,238,380
Lowellville, Sanitary Sewer Systems Revenue (Browning-Ferris Industries Inc.)
7.25%, 6/1/2006......................................................... 1,400,000 1,457,624
Mahoning County, Health Care Facilities Revenue
(Youngstown Osteopathic Hospital Project)
7.60%, 8/1/2010 (LOC; Marine Midland Bank) (a).......................... 3,775,000 4,127,434
Marion County, Health Care Facilities Revenue (United Church Homes Inc.):
8.875%, 12/1/2012....................................................... 2,305,000 2,776,787
Refunding and Improvement 6.375%, 11/15/2010............................ 3,000,000 2,830,650
Miami County, Hospital Facilities Revenue, Refunding
(Upper Valley Medical Center) 8.375%, 5/1/2013.......................... 525,000 584,493
Montgomery County, Refunding:
5.45%, 9/1/2010......................................................... 1,000,000 952,130
Water Revenue (Greater Moraine-Beaver Creek Sewer District)
5.30%, 11/15/2007 (Insured; AMBAC).................................... 1,890,000 1,820,977
Muskingum County, Revenue, Refunding (Franciscan Health Advisory Services)
7.50%, 3/1/2012......................................................... 3,185,000 3,427,633
Newark 6%, 12/1/2018 (Insured; AMBAC)....................................... 1,000,000 984,150
Northeast Regional Sewer District, Wastewater Improvement Revenue
6.50%, 11/15/2016 (Insured; AMBAC)...................................... 2,000,000 2,053,520
State of Ohio:
Economic Development Revenue:
Ohio Enterprise Bond Fund (VSM Corp. Project) 7.375%, 12/1/2011....... 885,000 925,453
(Sponge Inc. Project) 8.375%, 6/1/2014................................ 1,705,000 1,902,388
Mortgage Revenue (Odd Fellows Home Ohio Inc. Project)
8.15%, 8/1/2017 (Insured; FHA)........................................ 350,000 384,153
Ohio Building Authority, Workers' Compensation Facilities
(William Green Building) 4.90%, 4/1/2007.............................. 4,375,000 3,946,338
PCR (Standard Oil Co. Project)
6.75%, 12/1/2015 (Guaranteed; British Petroleum Co. p.l.c.)........... 1,350,000 1,432,606
Ohio Air Quality Development Authority, Revenue:
Pollution Control:
(Cincinnati Gas and Electric) 10.125%, 12/1/2015...................... 900,000 991,656
(Pennsylvania Power Co. Project) 8.10%, 9/1/2018 ..................... 1,000,000 1,062,970
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1994
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
-------------- -----------
OHIO (CONTINUED)
Ohio Air Quality Development Authority, Revenue (continued):
Pollution Control (continued):
Refunding:
(Cleveland Electric Illuminating Co. Project) 6.85%, 7/1/2023..... $ 5,250,000 $ 5,020,365
(Ohio Edison) 7.45%, 3/1/2016 (Insured; FGIC)..................... 3,500,000 3,859,800
Refunding (Ohio Power Co. Project) 7.40%, 8/1/2009...................... 1,500,000 1,567,200
Ohio Building Authority:
State Correctional Facilities 8%, 8/1/2006.............................. 400,000 450,452
State Facilities (Columbus State Building Project):
7.35%, 10/1/2005...................................................... 1,795,000 2,025,047
7.75%, 10/1/2008...................................................... 500,000 562,705
Ohio Capital Corp. for Housing, MFHR Refunding
7.60%, 11/1/2023 (Collateralized; FNMA)................................. 1,250,000 1,336,425
Ohio Higher Educational Facility Community, Revenue:
(Case Western Reserve Project) 7.70%, 10/1/2018......................... 500,000 550,395
(Oberlin College) 7.375%, 10/1/2014..................................... 400,000 448,688
Ohio Housing Finance Agency:
Mortgage Revenue (Saint Francis Court Apartment Project)
8%, 10/1/2026 (Insured; FHA).......................................... 695,000 718,769
SFMR (GNMA Mortgage Backed Securities Program):
8.25%, 12/15/2019 .................................................... 220,000 228,459
8.125%, 3/1/2020 ..................................................... 510,000 529,620
Zero Coupon, 9/1/2021................................................. 20,875,000 2,562,615
7.85%, 9/1/2021 ...................................................... 2,220,000 2,287,799
7.65%, 3/1/2029 ...................................................... 5,880,000 6,073,864
7.80%, 3/1/2030 ...................................................... 4,065,000 4,199,917
Ohio Public Facilities Community, Higher Education Facilities 7.25%, 5/1/2004 1,300,000 1,439,269
Ohio Water Development Authority:
Pollution Control Facilities Revenue:
(Cleveland Electric Illuminating Project) 8%, 10/1/2023............... 5,800,000 6,017,790
(Ohio Edison) 8.10%, 10/1/2023........................................ 3,700,000 3,906,645
(Pennsylvania Power Co. Project) 8.10%, 9/1/2018...................... 2,000,000 2,129,340
Refunding:
(Ohio Edison) 7.625%, 7/1/2023.................................... 9,390,000 9,641,840
(Toledo Edison Co.):
7.55%, 6/1/2023 ................................................ 2,000,000 2,038,080
8%, 10/1/2023 .................................................. 3,635,000 3,784,907
Pure Water Revenue 7.75%, 6/1/2014...................................... 500,000 551,545
Ottawa County, Sanitary Sewer Systems Special Assessment
(Portage-Catawba Island Sewer Project) 7%, 9/1/2011 (Insured; AMBAC).... 1,000,000 1,088,320
Reynoldsburg City School District, School Building Construction and
Improvement
6.55%, 12/1/2017 (Insured; FGIC)........................................ 2,000,000 2,061,440
Ross County, HR (Medical Center Hospital Project) 7.50%, 12/1/2014.......... 2,000,000 2,233,100
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1994
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
-------------- ------------
OHIO (CONTINUED)
Shelby County, Hospital Facilities Revenue, Refunding and Improvement
(The Shelby County Memorial Hospital Association) 7.70%, 9/1/2018....... $ 2,500,000 $ 2,676,175
South Euclid, Recreation Facilities 7%, 12/1/2011........................... 2,285,000 2,491,176
Springdale, Hospital Facilities First Mortgage Revenue,
(Southwestern Seniors Services, Inc.):
5.875%, 11/1/2012..................................................... 3,000,000 2,735,280
6%, 11/1/2018......................................................... 1,250,000 1,089,975
Student Loan Funding Corp.:
Student Loan Revenue, Refunding 7.20%, 8/1/2003......................... 3,150,000 3,350,277
Student Loan Senior Subordinated Revenue 6.15%, 8/1/2010................ 6,775,000 6,664,974
University of Cincinnati, COP 6.75%, 12/1/2009 (Insured; MBIA).............. 750,000 794,430
University of Ohio:
General Receipts:
5%, 12/1/2008 (Insured; FGIC)......................................... 2,000,000 1,862,460
5.875%, 12/1/2012..................................................... 3,000,000 2,886,690
Revenue 7.15%, 12/1/2009................................................ 6,000,000 6,639,300
University of Toledo, General Receipts 5.75%, 12/1/2012 (Insured; FGIC)..... 2,000,000 1,950,860
Warren 7.75%, 11/1/2010..................................................... 2,785,000 3,215,115
City of Westerville, Water Systems Refunding and Improvement 6.45%, 12/1/2011 2,590,000 2,649,622
City of Westerville School District 6.25%, 12/1/2009........................ 1,610,000 1,658,509
U.S. RELATED--7.1%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 3,000,000 3,035,280
Puerto Rico Highway and Transportation Authority, Highway Revenue, Refunding
7.461%, 7/1/2007 (c).................................................... 7,750,000 6,839,375
Puerto Rico Public Buildings Authority, Public Education and Health
Facilities Refunding
(Guaranteed; Commonwealth of Puerto Rico) 5.70%, 7/1/2009............... 3,430,000 3,298,905
Virgin Islands Public Finance Authority, Revenue, Refunding
Matching Fund Loan Notes 7.25%, 10/1/2018............................... 5,200,000 5,531,708
Virgin Islands Water and Power Authority, Electric Systems Revenue 7.40%, 7/1/2011 3,450,000 3,711,062
----------
TOTAL MUNICIPAL BONDS
(cost $295,167,907)..................................................... $309,012,729
============
SHORT-TERM MUNICIPAL INVESTMENT--1.6%
OHIO;
Ohio Air Quality Development Authority Revenue (JMG Funding Limited
Partnership)
VRDN 3.15% (LOC; Societe Generale) (a,d)
(cost $5,000,000)....................................................... $ 5,000,000 $ 5,000,000
============
TOTAL INVESTMENTS--100.0%
(cost $300,167,907)..................................................... $314,012,729
============
</TABLE>
<TABLE>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation HR Hospital Revenue
COP Certificate of Participation IDR Industrial Development Revenue
FGIC Financial Guaranty Insurance Corporation LOC Letter of Credit
FHA Federal Housing Administration MBIA Municipal Bond Insurance Association
FNMA Federal National Mortgage Association MFHR Multi-Family Housing Revenue
FSA Financial Security Assurance PCR Pollution Control Revenue
GNMA Government National Mortgage Association SFMR Single Family Mortgage Revenue
VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <C> <C>
AAA Aaa AAA 23.6%
AA Aa AA 7.8
A A A 30.9
BBB Baa BBB 27.2
B B B 1.9
F1 MIG1 SP1 1.6
Not Rated Not Rated Not Rated 7.0
--------
100.0%
========
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(b) Non-income accruing security; interest payment in default. The
valuation of this security has been determined in good faith under the
direction of the Board of Trustees.
(c) Residual interest security - the interest rate is subject to change
periodically.
(d) Securities payable on demand. The interest rate, which is subject
to change, is based upon bank prime rates or an index of market interest
rates.
(e) Fitch currently provides creditworthiness information for a limited
amount of investments.
(f) At April 30, 1994, the Fund had $98,460,505 (30.6% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from health care projects.
See notes to financial statements.
<TABLE>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1994
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $300,167,907)-see statement..................................... $314,012,729
Cash.................................................................... 842,368
Interest receivable..................................................... 6,199,940
Receivable for shares of Beneficial Interest subscribed................. 747,275
Prepaid expenses........................................................ 35,223
--------------
321,837,535
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $209,711
Payable for shares of Beneficial Interest redeemed...................... 212,572
Accrued expenses........................................................ 52,753 475,036
---------- ------------
NET ASSETS ................................................................ $321,362,499
============
REPRESENTED BY:
Paid-in capital......................................................... $306,702,732
Accumulated undistributed net realized gain on investments.............. 814,945
Accumulated net unrealized appreciation on investments-Note 3........... 13,844,822
--------------
NET ASSETS at value......................................................... $321,362,499
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 23,118,630
============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 2,175,703
============
NET ASSET VALUE per share:
Class A Shares
($293,705,643 / 23,118,630 shares).................................... $12.70
=======
Class B Shares
($27,656,856 / 2,175,703 shares)...................................... $12.71
=======
See notes to financial statements.
</TABLE>
<TABLE>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1994
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $20,986,650
EXPENSES:
Management fee--Note 2(a)............................................. $ 1,811,687
Shareholder servicing costs-Note 2(c)................................. 1,018,307
Professional fees..................................................... 124,980
Distribution fees (Class B shares)-Note 2(b).......................... 102,349
Prospectus and shareholders' reports.................................. 44,522
Custodian fees........................................................ 34,187
Registration fees..................................................... 7,893
Trustees' fees and expenses-Note 2(d)................................. 2,832
Miscellaneous......................................................... 21,226
-------------
3,167,983
Less-reduction in management fee due to
undertakings-Note 2(a)............................................ 386,259
-------------
TOTAL EXPENSES.................................................. 2,781,724
-----------
INVESTMENT INCOME--NET.......................................... 18,204,926
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain on investments--Note 3................................ $ 1,272,432
Net unrealized (depreciation) on investments............................ (10,949,018)
-------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (9,676,586)
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 8,528,340
============
See notes to financial statements.
</TABLE>
<TABLE>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
---------------------------------
1993 1994
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Investment income--net.................................................. $ 16,323,252 $ 18,204,926
Net realized gain on investments........................................ 932,730 1,272,432
Net unrealized appreciation (depreciation) on investments for the year.. 16,202,120 (10,949,018)
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 33,458,102 8,528,340
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares........................................................ (16,274,444) (17,203,535)
Class B shares........................................................ (48,808) (1,001,391)
Net realized gain on investments:
Class A shares........................................................ (1,587,530) (616,962)
Class B shares........................................................ --- (46,746)
------------ ------------
TOTAL DIVIDENDS................................................... (17,910,782) (18,868,634)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 44,655,966 29,869,777
Class B shares........................................................ 8,694,588 21,032,260
Dividends reinvested:
Class A shares........................................................ 11,923,897 11,652,834
Class B shares........................................................ 36,975 757,951
Cost of shares redeemed:
Class A shares........................................................ (19,590,383) (34,259,537)
Class B shares........................................................ (297,015) (1,396,011)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...... 45,424,028 27,657,274
------------ ------------
TOTAL INCREASE IN NET ASSETS.................................... 60,971,348 17,316,980
NET ASSETS:
Beginning of year....................................................... 243,074,171 304,045,519
------------ ------------
End of year............................................................. $304,045,519 $321,362,499
============ ============
</TABLE>
<TABLE>
SHARES
-------------------------------------------------------------------
CLASS A CLASS B
--------------------------------- -----------------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
--------------------------------- -----------------------------
1993 1994 1993* 1994
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 3,501,210 2,243,350 667,842 1,576,802
Shares issued for dividends reinvested. 933,913 877,259 2,832 57,130
Shares redeemed........................ (1,536,483) (2,588,901) (22,776) (106,127)
-------- -------- -------- ---------
NET INCREASE IN SHARES OUTSTANDING 2,898,640 531,708 647,898 1,527,805
========= ========== ========= =========
</TABLE>
* From January 15, 1993 (commencement of initial offering) to April 30, 1993.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, OHIO 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 year indicated. This
information has been derived from information provided in the Series'
financial statements.
<TABLE>
CLASS A SHARES CLASS B SHARES
------------------------------------ ----------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
------------------------------------ ----------------------
PER SHARE DATA: 1990 1991 1992 1993 1994 1993(1) 1994
-------- ------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $11.66 $11.54 $12.00 $12.35 $13.09 $12.69 $13.09
-------- ------- -------- -------- ---------- -------- --------
INVESTMENT OPERATIONS:
Investment income--net................ .88 .86 .80 .77 .74 .20 .66
Net realized and unrealized gain (loss)
on investments...................... (.08) .46 .36 .81 (.36) .40 (.35)
-------- ------- -------- -------- ---------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS .80 1.32 1.16 1.58 .38 .60 .31
-------- ------- -------- -------- ---------- -------- --------
DISTRIBUTIONS:
Dividends from investment income--net. (.88) (.86) (.80) (.77) (.74) (.20) (.66)
Dividends from net realized gain on investments (.04) - (.01) (.07) (.03) -- . (.03)
-------- ------- -------- -------- ---------- -------- --------
TOTAL DISTRIBUTIONS............. (.92) (.86) (.81) (.84) (.77) (.20) (.69)
-------- ------- -------- -------- ---------- -------- --------
Net asset value, end of year.......... $11.54 $12.00 $12.35 $13.09 $12.70 $13.09 $12.71
===== ====== ========= ======= ======= ====== =======
TOTAL INVESTMENT RETURN (2)............... 6.95% 11.84% 9.97% 13.24% 2.78% 16.36%(3) 2.24%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets -- .21% .52% .70% .81% 1.17%(3) 1.38%
Ratio of net investment income to average
net assets.......................... 7.30% 7.20% 6.53% 6.03% 5.57% 4.62%(3) 4.89%
Decrease reflected in above expense ratios due
to undertakings by the Manager...... 1.12% .78% .41% .23% .12% .13%(3) .10%
Portfolio Turnover Rate............... 14.58% 3.00% 13.68% 6.08% 7.73% 6.08% 7.73%
Net Assets, end of year (000's Omitted) $92,864 $176,223 $243,074 $295,564 $293,706 $8,482 $27,657
</TABLE>
(1)From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(2)Exclusive of sales load.
(3)Annualized.
See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
NOTES TO FINANCIAL STATEMENTS
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 Ohio Series (the "Series"). Dreyfus
Service Corporation ("Distributor") acts as the distributor of the Fund's
shares. The Distributor is a wholly-owned subsidiary of The Dreyfus
Corporation ("Manager").
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.
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 in the judgment of
the Service are readily available and are representative of the bid side of
the market are valued at the mean between the quoted bid prices (as obtained
by the Service from dealers in such securities) and asked prices (as calculate
d 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, when appropriate,
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.
(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 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.
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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 provisions available to certain investment
companies, as defined in applicable sections of the Internal Revenue Code,
and to make distributions of income and net realized capital gain sufficient
to relieve it from all, or substantially all, Federal income 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
had undertaken from May 1, 1993 through January 19, 1994, to reduce the
management fee paid by the Series, to the extent that the Series' aggregate
expenses (excluding certain expenses as described above) exceeded specified
annual percentages of the Series' average daily net assets. The Manager has
currently undertaken from January 20, 1994 through July 1, 1994, to waive
receipt of the management fee payable to it by the Series in excess of an
annual rate of .50 of 1% of the Series' average daily net assets. The
reduction in management fee, pursuant to the undertakings, amounted to
$386,259 for the year ended April 30, 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.
The Distributor retained $72,122 during the year ended April 30, 1994
from commissions earned on sales of the Series' Class A shares.
The Distributor retained $14,812 during the year ended April 30, 1994
from contingent deferred sales charges imposed upon redemptions of the
Series' Class B shares.
(B) Under the Distribution Plan ("Class B Distribution Plan") adopted
pursuant to Rule 12b-1 under the Act, the Series pays the Distributor 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. The Distributor may
make payments to one or more Service Agents (a securities dealer, financial
institution, or other industry professional) based on the value of the
Series' Class B shares owned by clients of the Service Agent. During the year
ended April 30, 1994, $102,349 was charged to the Series pursuant to the
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 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. For the year ended April 30, 1994,
$772,320 and $51,174 were charged to the Class A and Class B shares,
respectively, pursuant to the Shareholder Services Plan.
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) Certain officers and trustees of the Fund are "affiliated persons,"
as defined in the Act, of the Manager and/or the Distributor. 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.
(E) On December 5, 1993, the Manager entered into an Agreement and Plan
of Merger (the "Merger Agreement") providing for the merger of the Manager
with a subsidiary of Mellon Bank Corporation ("Mellon").
Following the merger, it is planned that the Manager will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a number
of contingencies, including receipt of certain regulatory approvals and
approvals of the stockholders of the Manager and of Mellon. The merger is
expected to occur in mid-1994, but could occur later.
As a result of regulatory requirements and the terms of the Merger
Agreement, the Manager will seek various approvals from the Fund's board and
shareholders before completion of the merger. Shareholder approval will be
solicited by a proxy statement.
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $112,282,940 and
$86,829,848, respectively, for the year ended April 30, 1994, and consisted
entirely of municipal bonds and short-term municipal investments.
At April 30, 1994, accumulated net unrealized appreciation on investments
was $13,844,822, consisting of $17,717,390 gross unrealized appreciation and
$3,872,568 gross unrealized depreciation.
At April 30, 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, OHIO SERIES
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
We have audited the accompanying statement of assets and liabilities of
Premier State Municipal Bond Fund, Ohio Series (one of the Series
constituting the Premier State Municipal Bond Fund), including the statement
of investments, as of April 30, 1994, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of
the two years in the period then ended, and financial highlights for each of
the years indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1994 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Ohio Series at April 30, 1994,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated years, in conformity with generally
accepted accounting principles.
(Ernest And Young Signature Logo)
New York, New York
June 7, 1994
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Series hereby makes the following
designations regarding its fiscal year ended April 30, 1994:
-- All the dividends paid from investment income-net are
"exempt-interest dividends" (not subject to regular Federal, and for
individuals who are Ohio residents, Ohio personal income taxes).
-- The portion of the $.0262 per share paid by the Series on
December 9, 1993 representing a long-term capital gain distribution is
$.0078 per share.
As required by Federal tax law rules, shareholders will receive
notification of their portion of the Series' taxable ordinary dividends (if
any) and capital gain distributions (if any) paid for the 1994 calendar year
on Form 1099-DIV which will be mailed by January 31, 1995.
PREMIER STATE MUNICIPAL
BOND FUND, OHIO SERIES
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
DISTRIBUTOR
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
110 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. 057AR944
Annual Report
Premier State
Municipal Bond Fund
Ohio Series
April 30, 1994
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
CLASS A SHARES AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
EXHIBIT A:
___________________________________________________
| | | |
| | | PREMIER STATE |
| PERIOD | LEHMAN BROTHERS |MUNICIPAL BOND FUND,|
| | MUNICIPAL | OHIO SERIES |
| | BOND INDEX * | CLASS A |
|-----------|-----------------|--------------------|
| 5/28/87 | 10,000 | 9,552 |
| 4/30/88 | 10,929 | 7,912 |
| 4/30/89 | 11,905 | 8,918 |
| 4/30/90 | 12,763 | 9,538 |
| 4/30/91 | 14,229 | 10,668 |
| 4/30/92 | 15,582 | 11,731 |
| 4/30/93 | 17,553 | 13,284 |
| 4/30/94 | 17,932 | 13,653 |
|--------------------------------------------------|
