File No. 33-10238
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 19 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 19 [X]
(Check appropriate box or boxes.)
PREMIER STATE MUNICIPAL BOND FUND
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Daniel C. Maclean III, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b) of Rule 485
----
X on February 18, 1994 pursuant to paragraph (b) of Rule 485
----
60 days after filing pursuant to paragraph (a) of Rule 485
----
on (date) pursuant to paragraph (a) of Rule 485
----
Registrant has registered an indefinite number of shares of its
beneficial interest under the Securities Act of 1933 pursuant to
Section 24(f) of the Investment Company Act of 1940. Registrant's Rule 24f-2
Notices for the fiscal year ended April 30, 1993 were filed for its Series on
June 24 and June 29, 1993.
PREMIER STATE MUNICIPAL BOND FUND
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis *
3 Condensed Financial Information 8
4 General Description of Registrant 21
5 Management of the Fund 37
6 Capital Stock and Other Securities 59
7 Purchase of Securities Being Offered 39
8 Redemption or Repurchase 46
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-34
13 Investment Objectives and Policies B-2
14 Management of the Fund B-10
15 Control Persons and Principal B-14
Holders of Securities
16 Investment Advisory and Other B-14
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
PREMIER STATE MUNICIPAL BOND FUND
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-28
18 Capital Stock and Other Securities B-34
19 Purchase, Redemption and Pricing B-16,
of Securities Being Offered B-22, B-26
20 Tax Status *
21 Underwriters B-16
22 Calculations of Performance Data B-29
23 Financial Statements B-98
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-4
27 Indemnification C-4
28 Business and Other Connections of C-5
Investment Adviser
29 Principal Underwriters C-38
30 Location of Accounts and Records C-38
31 Management Services C-38
32 Undertakings C-38
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
February 18, 1994
PREMIER STATE MUNICIPAL BOND FUND
Supplement to Prospectus Dated February 18, 1994
The following information supplements and should be read in
conjunction with the section of the Fund's Prospectus entitled "Management
of the Fund."
The Fund's manager, The Dreyfus Corporation ("Dreyfus"), has entered
into an Agreement and Plan of Merger (the "Merger Agreement") providing
for the merger of Dreyfus with a subsidiary of Mellon Bank Corporation
("Mellon").
Following the merger, it is planned that Dreyfus 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 Dreyfus and of Mellon. The merger is
expected to occur in mid-1994, but could occur significantly later.
As a result of regulatory requirements and the terms of the Merger
Agreement, Dreyfus 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.
___________________________
The following information supplements and should be read in
conjunction with the section of the Fund's Prospectus entitled
"Performance Information."
From time to time advertising materials for the Fund also may refer
to Value Line Mutual Fund Survey company ratings and related analyses
supporting the rating.
<PAGE>
PREMIER STATE MUNICIPAL BOND FUND
Prospectus February 18, 1994
Premier State Municipal Bond Fund (the "Fund") is an open-end,
non-diversified, management investment company, known as a mutual fund. Its
goal is to maximize current income exempt from Federal and, where applicable,
from State income taxes, without undue risk.
The Fund permits you to invest in any of fifteen separate portfolios (each, a
"Series"): the Arizona Series, the Colorado Series, the Connecticut Series, the
Florida Series, the Georgia Series, the Maryland Series, the Massachusetts
Series, the Michigan Series, the Minnesota Series, the North Carolina Series,
the Ohio Series, the Oregon Series, the Pennsylvania Series, the Texas Series
and the Virginia Series. Each Series seeks to achieve the Fund's investment
objective by investing in Municipal Obligations primarily issued by issuers in
the State after which it is named and believed to be exempt from Federal and,
where applicable, from that State's income tax. It is anticipated that
substantially all dividends paid by each Series will be exempt from Federal
income tax and also, where applicable, will be exempt from the personal income
tax of the State after which the Series is named.
By this Prospectus, Class A and Class B shares of each Series are being
offered. 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 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, as described herein. The Fund offers
these alternatives to permit an investor to choose the method of purchasing
shares that is most beneficial given the amount of the purchase, the length of
time the investor expects to hold the shares and other circumstances.
The Fund provides free redemption checks with respect to Class A shares,
which you can use in amounts of $500 or more for cash or to pay bills. You can
purchase or redeem shares by telephone using the TeleTransfer Privilege.
The Dreyfus Corporation serves as the Fund's investment adviser and, in that
capacity, is responsible for determining whether investing in particular
securities is consistent with the Fund's investment objective, including
whether the securities subject the Fund to undue risk.
-----------------
This Prospectus sets forth concisely information about the Fund that you
should know before investing. It should be read and retained for future
reference.
Part B (also known as the Statement of Additional Information), dated
February 18, 1994, which may be revised from time to time, provides a further
discussion of certain areas in this Prospectus and other matters which may be
of interest to some investors. It has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. For a free copy,
write to the Fund at 144 Glenn Curtiss Boulevard, Uniondale, New York
11556-0144, or call 1-800-554-4611. When telephoning, ask for Operator 666.
-----------------
The Fund's shares are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. The
Fund's shares involve certain investment risks, including the possible loss of
principal. The Fund's share price, yield and investment return fluctuate and
are not guaranteed.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Fee Table............................................. 3
Condensed Financial Information....................... 8
Alternative Purchase Methods.......................... 20
Description of the Fund............................... 21
Management of the Fund................................ 37
How to Buy Fund Shares................................ 39
Shareholder Services.................................. 43
How to Redeem Fund Shares............................. 46
Distribution Plan and Shareholder Services Plan....... 50
Dividends, Distributions and Taxes.................... 51
Performance Information............................... 58
General Information................................... 59
<PAGE>
FEE TABLE
<TABLE>
<CAPTION>
ARIZONA SERIES COLORADO SERIES
------------------- ------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................... 4.50% -- 4.50% --
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)............. -- 3.00% -- 3.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees....................................................... .55% .55% .55% .55%
12b-1 Fees............................................................ -- .50% -- .50%
Service Fees.......................................................... .25% .25% .25% .25%
Other Expenses........................................................ .15% .15% .15% .15%
Total Fund Operating Expenses......................................... .95% 1.45% .95% 1.45%
EXAMPLE
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
</TABLE>
<TABLE>
<CAPTION>
Class A Class B Class B* Class A Class B Class B*
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR........................................................................ $ 54 $ 45 $ 15 $ 54 $ 45 $ 15
3 YEARS....................................................................... $ 74 $ 66 $ 46 $ 74 $ 66 $ 46
5 YEARS....................................................................... $ 95 $ 89 $ 79 $ 95 $ 89 $ 79
10 YEARS**.................................................................... $156 $148 $148 $156 $148 $148
</TABLE>
<TABLE>
<CAPTION>
CONNECTICUT SERIES FLORIDA SERIES
------------------- ------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................... 4.50% -- 4.50% --
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to change)............. -- 3.00% -- 3.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees....................................................... .55% .55% .55% .55%
12b-1 Fees............................................................ -- .50% -- .50%
Service Fees.......................................................... .25% .25% .25% .25%
Other Expenses........................................................ .10% .10% .10% .10%
Total Fund Operating Expenses......................................... .90% 1.40% .90% 1.40%
EXAMPLE
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
</TABLE>
<TABLE>
<CAPTION>
Class A Class B Class B* Class A Class B Class B*
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR........................................................................ $ 54 $ 44 $ 14 $ 54 $ 44 $ 14
3 YEARS....................................................................... $ 72 $ 64 $ 44 $ 72 $ 64 $ 44
5 YEARS....................................................................... $ 93 $ 87 $ 77 $ 93 $ 87 $ 77
10 YEARS**.................................................................... $151 $142 $142 $151 $142 $142
<FN>
- --------------
*Assuming no redemption of Class B shares.
**Ten-year figures assume conversion of Class B shares to Class A shares at the end of the sixth year following the date of
purchase.
</TABLE>
3
<PAGE>
FEE TABLE
<TABLE>
<CAPTION>
GEORGIA SERIES MARYLAND SERIES
------------------- ------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................... 4.50% -- 4.50% --
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)............. -- 3.00% -- 3.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees....................................................... .55% .55% .55% .55%
12b-1 Fees............................................................ -- .50% -- .50%
Service Fees.......................................................... .25% .25% .25% .25%
Other Expenses........................................................ .15% .15% .11% .11%
Total Fund Operating Expenses......................................... .95% 1.45% .91% 1.41%
EXAMPLE
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
</TABLE>
<TABLE>
<CAPTION>
Class A Class B Class B* Class A Class B Class B*
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR........................................................................ $ 54 $ 45 $ 15 $ 54 $ 44 $ 14
3 YEARS....................................................................... $ 74 $ 66 $ 46 $ 73 $ 65 $ 45
5 YEARS....................................................................... $ 95 $ 89 $ 79 $ 93 $ 87 $ 77
10 YEARS**.................................................................... $156 $148 $148 $152 $143 $143
</TABLE>
<TABLE>
<CAPTION>
MASSACHUSETTS SERIES MICHIGAN SERIES
-------------------- ------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................... 4.50% -- 4.50% --
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)............. -- 3.00% -- 3.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees....................................................... .55% .55% .55% .55%
12b-1 Fees............................................................ -- .50% -- .50%
Service Fees.......................................................... .25% .25% .25% .25%
Other Expenses........................................................ .13% .13% .14% .14%
Total Fund Operating Expenses......................................... .93% 1.43% .94% 1.44%
EXAMPLE
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
</TABLE>
<TABLE>
<CAPTION>
Class A Class B Class B* Class A Class B Class B*
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR........................................................................ $ 54 $ 45 $ 15 $ 54 $ 45 $ 15
3 YEARS....................................................................... $ 73 $ 65 $ 45 $ 74 $ 66 $ 46
5 YEARS....................................................................... $ 94 $ 88 $ 78 $ 95 $ 89 $ 79
10 YEARS**.................................................................... $154 $145 $145 $155 $146 $146
<FN>
- --------------
*Assuming no redemption of Class B shares.
**Ten-year figures assume conversion of Class B shares to Class A shares at the end of the sixth year following the date of
purchase.
</TABLE>
4
<PAGE>
FEE TABLE
<TABLE>
<CAPTION>
MINNESOTA SERIES NORTH CAROLINA SERIES
-------------------- ---------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................... 4.50% -- 4.50% --
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)............. -- 3.00% -- 3.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees....................................................... .55% .55% .55% .55%
12b-1 Fees............................................................ -- .50% -- .50%
Service Fees.......................................................... .25% .25% .25% .25%
Other Expenses........................................................ .13% .13% .25% .25%
Total Fund Operating Expenses......................................... .93% 1.43% 1.05% 1.55%
EXAMPLE
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
</TABLE>
<TABLE>
<CAPTION>
Class A Class B Class B* Class A Class B Class B*
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR........................................................................ $ 54 $ 45 $ 15 $ 55 $ 46 $ 16
3 YEARS....................................................................... $ 73 $ 65 $ 45 $ 77 $ 69 $ 49
5 YEARS....................................................................... $ 94 $ 88 $ 78 $100 $ 94 $ 84
10 YEARS**.................................................................... $154 $145 $145 $167 $157 $157
</TABLE>
<TABLE>
<CAPTION>
OHIO SERIES OREGON SERIES
------------------- ------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................... 4.50% -- 4.50% --
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)............. -- 3.00% -- 3.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees....................................................... .55% .55% .55% .55%
12b-1 Fees............................................................ -- .50% -- .50%
Service Fees.......................................................... .25% .25% .25% .25%
Other Expenses........................................................ .13% .13% .15% .15%
Total Fund Operating Expenses......................................... .93% 1.43% .95% 1.45%
EXAMPLE
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
</TABLE>
<TABLE>
<CAPTION>
Class A Class B Class B* Class A Class B Class B*
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR........................................................................ $ 54 $ 45 $ 15 $ 54 $ 45 $ 15
3 YEARS....................................................................... $ 73 $ 65 $ 45 $ 74 $ 66 $ 46
5 YEARS....................................................................... $ 94 $ 88 $ 78 $ 95 $ 89 $ 79
10 YEARS**.................................................................... $154 $145 $145 $156 $148 $148
<FN>
- --------------
*Assuming no redemption of Class B shares.
**Ten-year figures assume conversion of Class B shares to Class A shares at the end of the sixth year following the date of
purchase.
</TABLE>
5
<PAGE>
FEE TABLE
<TABLE>
<CAPTION>
PENNSYLVANIA SERIES TEXAS SERIES
------------------- ------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................... 4.50% -- 4.50% --
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)............. -- 3.00% -- 3.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees....................................................... .55% .55% .55% .55%
12b-1 Fees............................................................ -- .50% -- .50%
Service Fees.......................................................... .25% .25% .25% .25%
Other Expenses........................................................ .14% .14% .18% .18%
Total Fund Operating Expenses......................................... .94% 1.44% .98% 1.48%
EXAMPLE
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
</TABLE>
<TABLE>
<CAPTION>
Class A Class B Class B* Class A Class B Class B*
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR........................................................................ $ 54 $ 45 $ 15 $ 55 $ 45 $ 15
3 YEARS....................................................................... $ 74 $ 66 $ 46 $ 75 $ 67 $ 47
5 YEARS....................................................................... $ 95 $ 89 $ 79 $ 97 $ 91 $ 81
10 YEARS**.................................................................... $155 $146 $146 $160 $151 $151
<FN>
- --------------
*Assuming no redemption of Class B shares.
**Ten-year figures assume conversion of Class B shares to Class A shares at the end of the sixth year following the date of
purchase.
</TABLE>
6
<PAGE>
FEE TABLE
<TABLE>
<CAPTION>
VIRGINIA SERIES
-------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B
------- -------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................... 4.50% --
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)............. -- 3.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees....................................................... .55% .55%
12b-1 Fees............................................................ -- .50%
Service Fees.......................................................... .25% .25%
Other Expenses........................................................ .23% .23%
Total Fund Operating Expenses......................................... 1.03% 1.53%
EXAMPLE
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
</TABLE>
<TABLE>
<CAPTION>
Class A Class B Class B*
------- ------- --------
<S> <C> <C> <C>
1 YEAR........................................................................ $ 55 $ 46 $ 16
3 YEARS....................................................................... $ 76 $ 68 $ 48
5 YEARS....................................................................... $ 99 $ 93 $ 83
10 YEARS**.................................................................... $165 $157 $157
<FN>
- --------------
*Assuming no redemption of Class B shares.
**Ten-year figures assume conversion of Class B shares to Class A shares at the end of the sixth year following the date of
purchase.
</TABLE>
- -------------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLES SHOULD NOT BE CONSIDERED AS REPRESENTATIVE
OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, EACH
SERIES' ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN GREATER
OR LESS THAN 5%.
- -------------------------------------------------------------------------------
The purpose of the foregoing tables is to assist you in understanding the
various costs and expenses that investors will bear, directly or indirectly,
the payment of which will reduce investors' return on an annual basis. For
Class A, Other Expenses are based on data for the Fund's fiscal year ended
April 30, 1993, except for the Arizona, Colorado, Georgia and Oregon Series for
which Other Expenses are based on estimated amounts. For Class B, Other
Expenses are estimated based on expenses incurred by Class A. Prior to January
15, 1993, Class A shares of each Series then operational were subject to 12b-1
fees, but no service fees. Long-term investors in Class B could pay more in
12b-1 fees than the economic equivalent of paying a front-end sales charge. The
information in the foregoing tables does not reflect any fee waivers or expense
reimbursement arrangements that may be in effect. Certain Service Agents (as
defined below) may charge their clients direct fees for effecting transactions
in the relevant Series' shares; such fees are not reflected in the foregoing
tables. See "Management of the Fund," "How to Buy Fund Shares" and
"Distribution Plan and Shareholder Services Plan."
7
<PAGE>
CONDENSED FINANCIAL INFORMATION
The information in the following table has been audited (except where
indicated) by Ernst & Young, the Fund's independent auditors, whose report
thereon appears in the Statement of Additional Information. Further financial
data and related notes are included in the Statement of Additional Information,
available upon request.
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 Series (except the Colorado Series
and Oregon Series which had not commenced operations as of the date of the
financial information) for the periods indicated. This information has been
derived from information provided in the Fund's financial statements.
<TABLE>
<CAPTION>
ARIZONA SERIES
----------------------------------------------------------------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------- -------------- --------------- --------------
Period Ended April 30, Six Month Period Ended
----------------------------- ------------------------------
1993(1) 1993(2) October 31, 1993 (Unaudited)
------ ------ ----------------------------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period $12.50 $12.65 $13.10 $13.12
------ ------ ------ ------
Investment Operations:
Investment income net .51 .21 .38 .35
Net realized and unrealized gain on investments .62 .47 .66 .67
------ ------ ------ ------
Total from Investment Operations 1.13 .68 1.04 1.02
------ ------ ------ ------
Distributions:
Dividends from investment income net (.51) (.21) (.38) (.35)
------ ------ ------ ------
Net asset value, end of period $13.12 $13.12 $13.78 $13.79
------ ------ ------ ------
------ ------ ------ ------
TOTAL INVESTMENT RETURN(3)(4) 14.01% 18.49% 15.97% 15.53%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(4) -- .50% -- .50%
Ratio of net investment income to average net assets(4) 5.71% 4.61% 5.53% 4.90%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation(4) 1.87% 1.68% 1.42% 1.44%
Portfolio Turnover Rate(5) 5.94% 5.94% -- --
Net Assets, end of period (000's omitted) $5,671 $1,745 $9,796 $4,833
- ----------------
<FN>
(1) From September 3, 1992 (commencement of operations) to April 30, 1993.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales charge.
(4) Annualized.
(5) Not annualized.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT SERIES
------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------------------------------------------- ---------------- --------------- --------------
Year Ended April 30,
-------------------------------------------------- Period Ended Six Month Period Ended
1988(1) 1989 1990 1991 1992 1993 April 30, 1993(2) October 31, 1993 (Unaudited)
------ ------ ------ ------ ------ ------ ---------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of period $11.00 $10.72 $11.05 $10.88 $11.28 $11.45 $11.89 $12.26 $12.26
------ ------ ------ ------ ------ ------ ------ ------ ------
Investment Operations:
Investment income--net .76 .81 .80 .77 .72 .71 .18 .35 .31
Net realized and
unrealized gain (loss)
on investments (.28) .38 (.15) .40 .17 .81 .37 .48 .47
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations .48 1.19 .65 1.17 .89 1.52 .55 .83 .78
------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions:
Dividends from investment
income--net (.76) (.81) (.80) (.77) (.72) (.71) (.18) (.35) (.31)
Dividends from net
realized gain on
investment -- (.05) (.02) -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (.76) (.86) (.82) (.77) (.72) (.71) (.18) (.35) (.31)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end
of period $10.72 $11.05 $10.88 $11.28 $11.45 $12.26 $12.26 $12.74 $12.73
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN(3) 5.00%(4) 11.54% 5.93% 11.10% 8.14% 13.62% 16.08%(4) 13.51%(4) 12.76(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets -- -- -- .21% .52% .69% 1.12%(4) .78%(4) 1.29%(4)
Ratio of net investment
income to average
net assets 7.31%(4) 7.24% 7.05% 6.81% 6.30% 5.93% 4.57%(4) 5.45%(4) 4.76%(4)
Decrease reflected in
above expense ratios
due to undertakings by
The Dreyfus Corporation
(limited to the expense
limitation provision
of the Management
Agreement) 1.50%(4) 1.42% 1.10% .75% .41% .21% .12%(4) .13%(4) .12%(4)
Portfolio Turnover Rate 91.09%(5) 72.52% 12.62% 6.30% 8.53% 24.22% 24.22% 7.40%(5) 7.40%(5)
Net Assets, end of
period (000's omitted) $11,641 $31,056 $83,206 $183,788 $280,305 $360,020 $9,492 $392,109 $23,982
<FN>
- ----------
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales charge.
(4) Annualized.
(5) Not annualized.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
FLORIDA SERIES
------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------------------------------------------- ---------------- --------------- --------------
Year Ended April 30,
-------------------------------------------------- Period Ended Six Month Period Ended
1988(1) 1989 1990 1991 1992 1993 April 30, 1993(2) October 31, 1993 (Unaudited)
------ ------ ------ ------ ------ ------ ---------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of period $12.00 $12.85 $13.48 $13.34 $13.93 $14.33 $14.59 $15.02 $15.01
------ ------ ------ ------ ------ ------ ------ ------ ------
Investment Operations:
Investment income net .92 1.02 1.02 .99 .95 .92 .24 .44 .39
Net realized and
unrealized gain
(loss) on investments .85 .63 (.11) .61 .41 .86 .42 .46 .47
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations 1.77 1.65 .91 1.60 1.36 1.78 .66 .90 .86
------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions:
Dividends from investment
income net (.92) (1.02) (1.02) (.99) (.95) (.92) (.24) (.44) (.39)
Dividends from net
realized gain
on investment -- -- (.03) (.02) (.01) (.17) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (.92) (1.02) (1.05) (1.01) (.96) (1.09) (.24) (.44) (.39)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $12.85 $13.48 $13.34 $13.93 $14.33 $15.02 $15.01 $15.48 $15.48
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN(3) 16.24%(4) 13.32% 6.83% 12.40% 10.09% 12.84% 15.60%(4)) 11.96%(4) 11.53%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets -- -- -- .21% .52% .69% 1.12%(4) .76%(4) 1.27%(4)
Ratio of net investment
income to average
net assets 7.76%(4) 7.26% 7.24% 7. 11% 6.65% 6.21% 4.87%(4) 5.63%(4) 4.88%(4)
Decrease reflected in
above expense ratios
due to undertakings by
The Dreyfus Corporation
(limited to the expense
limitation provision
of the Management
Agreement) 1.50%(4) 1.50% 1.08% .74% .41% .21% .12%(4) .13%(4) .13%(4)
Portfolio Turnover Rate 31.25%(5)17.16% 27.69% .28% 20.99% 33.18% 33.18% 9.01%(5) 9.01%(5)
Net Assets, end of
period (000's omitted) $1,493 $15,061 $67,416 $177,927 $245,474 $299,775 $5,916 $323,914 $17,393
<FN>
- ----------
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales charge.
(4) Annualized.
(5) Not annualized.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
GEORGIA SERIES
----------------------------------------------------------------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------- -------------- --------------- --------------
Period Ended April 30, Six Month Period Ended
----------------------------- ------------------------------
1993(1) 1993(2) October 31, 1993 (Unaudited)
------ ------ ----------------------------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period $12.50 $12.71 $13.27 $13.27
------ ------ ------ ------
Investment Operations:
Investment income net .51 .20 .37 .33
Net realized and unrealized gain on investments .77 .56 .60 .60
------ ------ ------ ------
Total from Investment Operations 1.28 .76 .97 .93
------ ------ ------ ------
Distributions:
Dividends from investment income net (.51) (.20) (.37) (.33)
------ ------ ------ ------
Net asset value, end of period $13.27 $13.27 $13.87 $13.87
------ ------ ------ ------
------ ------ ------ ------
TOTAL INVESTMENT RETURN(3)(4) 15.91% 20.66% 14.66% 14.12%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(4) -- .50% -- .50%
Ratio of net investment income to average net assets(4) 5.55% 4.60% 5.35% 4.75%
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation(4) 1.46% 1.37% 1.14% 1.15%
Portfolio Turnover Rate(5) 37.79% 37.79% .08% .08%
Net Assets, end of period (000's omitted) $7,304 $6,319 $9,560 $13,653
<FN>
- ----------
(1) From September 3, 1992 (commencement of operations) to April 30, 1993.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales charge.
(4) Annualized.
(5) Not annualized.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
MARYLAND SERIES
------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------------------------------------------- ---------------- -------------- --------------
Year Ended April 30,
-------------------------------------------------- Period Ended Six Month Period Ended
1988(1) 1989 1990 1991 1992 1993 April 30, 1993(2) October 31, 1993 (Unaudited)
------ ------ ------ ------ ------ ------ ---------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of period $12.50 $11.38 $11.72 $11.61 $12.13 $12.43 $12.64 $13.02 $13.02
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from Investment
Operations:
Investment income net .80 .87 .86 .85 .79 .76 .20 .37 .33
Net realized and
unrealized gain (loss)
on investments (1.12) .34 (.09) .53 .35 .68 .38 .43 .43
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Income from
Investment Operations (.32) 1.21 .77 1.38 1.14 1.44 .58 .80 .76
------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions:
Dividends from investment
income net (.80) (.87) (.86) (.85) (.79) (.76) (.20) (.37) (.33)
Dividends from net
realized gain
on investment -- -- (.02) (.0l) (.05) (.09) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (.80) (.87) (.88) (.86) (.84) (.85) (.20) (.37) (.33)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $11.38 $11.72 $11.61 $12.13 $12.43 $13.02 $13.02 $13.45 $13.45
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN(3) (2.50)(4) 11.05% 6.69% 12.24% 9.68% 11.93% 15.74%(4) 12.34%(4) 11.76%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets -- -- -- .21% .53% .69% 1.09%(4) .76%(4) 1.27%(4)
Ratio of net investment
income to average
net assets 7.44%(4) 7.26% 7.12% 6.98% 6.40% 5.93% 4.55%(4) 5.54%(4) 4.79%(4)
Decrease reflected in
above expense ratios
due to undertakings by
The Dreyfus Corporation
(limited to the expense
limitation provision
of the Management
Agreement) 1.50%(4) 1.50% 1.11% .75% .41% .22% .12%(4) .13%(4) .12%(4)
Portfolio Turnover Rate 75.21%(5) 8.67% 30.03% 1.45% 16.21% 17.92% 17.92% 4.03%(5) 4.03%(5)
Net Assets, end of
period (000's omitted) $4,353 $24,383 $85,794 $179,959 $254,240 $337,307 $5,931 $369,025 $24,385
<FN>
- ----------
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15. 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales charge.
(4) Annualized.
(5) Not annualized.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
MASSACHUSETTS SERIES
------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------------------------------------------- ---------------- --------------- --------------
Year Ended April 30,
-------------------------------------------------- Period Ended Six Month Period Ended
1988(1) 1989 1990 1991 1992 1993 April 30, 1993(2) October 31, 1993 (Unaudited)
------ ------ ------ ------ ------ ------ ---------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of period $11.50 $10.54 $10.92 $10.69 $11.05 $11.41 $11.79 $12.13 $12.13
------ ------ ------ ------ ------ ------ ------ ------ ------
Investment Operations:
Investment income net .76 .83 .82 .79 .75 .73 .19 .36 .33
Net realized and
unrealized gain (loss)
on investments (.96) .38 (.23) .37 .36 .73 .34 .34 .33
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations (.20) 1.21 .59 1.16 1.11 1.46 .53 .70 .66
------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions:
Dividends from
investment income net (.76) (.83) (.82) (.79) (.75) (.73) (.19) (.36) (.33)
Dividends from net
realized gain on
investment -- -- -- (.01) -- (.01) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (.76) (.83) (.82) (.80) (.75) (.74) (.19) (.36) (.33)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $10.54 $10.92 $10.69 $11.05 $11.41 $12.13 $12.13 $12.47 $12.46
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT
RETURN(3) (1.67%)(4) 11.91% 5.49% 11.23% 10.32% 13.14% 15.56%(4) 11.60%(4) 10.91%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets -- -- -- .19% .55% .69% 1.15%(4) .79%(4) 1.27%(4)
Ratio of net investment
income to average
net assets 7.63%(4) 7.58% 7.40% 7.21% 6.65% 6.16% 4.92%(4) 5.81%(4) 5.15%(4)
Decrease reflected in
above expense ratios
due to undertakings by
The Dreyfus Corporation,
(limited to the expense
limitation provision
of the Management
Agreement) 1.50%(4) 1.48% 1.11% .78% .41% .24% .13%(4) .15%(4) .14%(4)
Portfolio Turnover Rate 36.11%(5) 17.76% 28.44% 47.07% 24.75% 11.36% 11.36% 10.14%(5) 10.14%(5)
Net Assets, end of
period (000's omitted) $5,174 $21,578 43,375 $57,328 $66,873 $79,701 $1,066 $84,236 $3,020
<FN>
- ----------
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15. 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales charge.
(4) Annualized.
(5) Not annualized.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN SERIES
------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------------------------------------------- ---------------- --------------- --------------
Year Ended April 30,
-------------------------------------------------- Period Ended Six Month Period Ended
1988(1) 1989 1990 1991 1992 1993 April 30, 1993(2) October 31, 1993 (Unaudited)
------ ------ ------ ------ ------ ------ ---------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of period $13.00 $13.45 $14.10 $13.80 $14.34 $14.80 $15.20 $15.65 $15.64
------ ------ ------ ------ ------ ------ ------ ------ ------
Investment Operations:
Investment income net 1.00 1.07 1.05 1.01 .95 .92 .24 .45 .40
Net realized and
unrealized gain (loss)
on investments .45 .65 (.27) .54 .46 .98 .44 .70 .72
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations 1.45 1.72 .78 1.55 1.41 1.90 .68 1.15 1.12
------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions:
Dividends from investment
income net (1.00) (1.07) (1.05) (1.01) (.95) (.92) (.24) (.45) (.40)
Dividends from net
realized gain on
investment -- -- (.03) -- -- (.13) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (1.00) (1.07) (1.08) (1.01) (.95) (1.05) (.24) (.45) (.40)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $13.45 $14.10 $13.80 $14.34 $14.80 $15.65 $15.64 $16.35 $16.36
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN(3) 12.32%(4) 13.25% 5.59% 11.61% 10.12% 13.25% 15.50%(4) 14.80%(4) 14.40%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets -- -- -- .20% .53% .69% 1.18%(4) .78%(4) 1.35%(4)
Ratio of net investment
income to average
net assets 7.97%(4) 7.49% 7.23% 7.07% 6.47% 6.01% 4.85%(4) 5.60%(4) 4.84%(4)
Decrease reflected in
above expense ratios
due to undertakings by
The Dreyfus Corporation
(limited to the expense
limitation provision
of the Management
Agreement) 1.50%(4) 1.50% 1.16% .79% .42% .25% .14%(4) .15%(4) .14%(4)
Portfolio Turnover Rate 48.80%(5) 32.72% 20.23% 27.31% 21.42% 14.99% 14.99% 7.39%(5) 7.39%(5)
Net Assets, end of
period (000's omitted) $1,671 $8,548 $56,699 $111,696 $145,159 $184,138 $3,581 $201,000 $10,355
<FN>
- ----------
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15. 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales charge.
(4) Annualized.
(5) Not annualized.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA SERIES
------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------------------------------------------- ---------------- --------------- --------------
Year Ended April 30,
-------------------------------------------------- Period Ended Six Month Period Ended
1988(1) 1989 1990 1991 1992 1993 April 30, 1993(2) October 31, 1993 (Unaudited)
------ ------ ------ ------ ------ ------ ---------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of period $13.50 $13.37 $13.92 $13.74 $14.28 $14.63 $14.86 $15.31 $15.32
------ ------ ------ ------ ------ ------ ------ ------ ------
Investment Operations:
Investment income net .91 1.07 1.04 1.02 .96 .92 .24 .45 .40
Net realized and
unrealized gain (loss)
on investments (.13) .55 (.13) .56 .36 .77 .46 .50 .52
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations .84 1.62 .91 1.58 1.32 1.69 .70 .95 .92
------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions:
Dividends from investment
income net (.97) (I.07) (1.04) (1.02) (.96) (.92) (.24) (.45) (.40)
------ ------ ------ ------ ------ ------ ------ ------ ------
Dividends from net
realized gain on
investment -- -- (.05) (.02) (.01) (.09) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (.97) (1.07) (1.09) (1.04) (.97) (1.01) (.24) (.45) (.40)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $13.37 $13.92 $13.74 $14.28 $14.63 $15.31 $15.32 $15.81 $15.84
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN(3) 7.01%(4) 12.57% 6.67% 11.89% 9.45% 11.96% 16.32%(4) 12.42%(4) 12.04%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets -- -- -- .20% .53% .69% 1.16%(4) .77%(4) 1.33%(4)
Ratio of net investment
income to average
net assets 7.79%(4) 7.66% 7.25% 7.19% 6.53% 6.13% 4.83%(4) 5.67%(4) 4.91%(4)
Decrease reflected in
above expense ratios
due to undertakings by
The Dreyfus Corporation
(limited to the expense
limitation provision
of the Management
Agreement) 1.50%(4) 1.50% 1.16% .79% .41% .24% .14%(4) .15%(4) .14%(4)
Portfolio Turnover Rate 70.26%(5) 31.64% 23.48% 14.04% 12.32% 23.42% 23.42% 4.83%(5) 4.83%(5)
Net Assets, end of
period (000's omitted $4,331 $13,019 $46,428 $85,066 $122,78 $148,765 $4,633 $163,514 $15,097
<FN>
- ----------
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15. 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales charge.
(4) Annualized.
(5) Not annualized.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
NORTH CAROLINA SERIES
-----------------------------------------------------------------------------------
Class A Shares Class B Shares Class A Shares Class B Shares
---------------------------- ---------------- --------------- --------------
Year Ended April 30,
---------------------------- Period Ended Six Month Period Ended
1992(1) 1993 April 30, 1993(2) October 31, 1993 (Unaudited)
------- ------ ---------------- ----------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period $12.00 $12.39 $12.90 $13.40 $13.39
------ ------ ------ ------ ------
Investment Operations:
Investment income net .62 .78 .20 .38 .34
>
Net realized and unrealized gain on
investments .39 1.02 .49 .58 .58
------ ------ ------ ------ ------
Total from Investment Operations 1.01 1.80 .69 .96 .92
------ ------ ------ ------ ------
Distributions:
Dividends from investment income net (.62) (.78) (.20) (.38) (.34)
Dividends from net realized gain on investment -- (.01) -- -- --
------ ------ ------ ------ ------
Total Distributions (.62) (.79) (.20) (.38) (.34)
------ ------ ------ ------ ------
Net asset value, end of period $12.39 $13.40 $13.39 $13.98 $13.97
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN(3) 11.36%(4) 14.97% 18.53%(4) 14.32%(4) 13.75%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets -- .29% .79% .37%(4) .91%(4)
Ratio of net investment income to average
net assets 6.35%(4) 5.94% 4.47% 5.43%(4) 4.76%(4)
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation 1.14%(4) .76% .56% .55%(4) .54%(4)
Portfolio Turnover Rate 15.01%(5) 5.76% 5.76% 7.95%(5) 7.95%(5)
Net Assets, end of period (000's omitted) $26,387 $56,284 $13,145 $64,678 $34,287
<FN>
- ----------
(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 charge.
(4) Annualized.
(5) Not annualized.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
OHIO SERIES
------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------------------------------------------- ---------------- -------------- --------------
Year Ended April 30,
-------------------------------------------------- Period Ended Six Month Period Ended
1988(1) 1989 1990 1991 1992 1993 April 30, 1993(2) October 31, 1993 (Unaudited)
------ ------ ------ ------ ------ ------ ---------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of period $14.50 $11.18 $11.66 $11.54 $12.00 $12.35 $12.69 $13.09 $13.09
------ ------ ------ ------ ------ ------ ------ ------ ------
Investment Operations:
Investment income net .80 .89 .88 .86 .80 .77 .20 .38 .33
Net realized and
unrealized gain (loss)
on investments (3.32) .48 (.08) .46 .36 .81 .40 .44 .45
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations (2.52) 1.37 .80 1.32 1.16 1.58 .60 .82 .78
------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions:
Dividends from
investment income net (.80) (.89) (.88) (.86) (.80) (.77) (.20) (.38) (.33)
Dividends from net
realized gain on
investment -- -- (.04) -- (.01) (.07) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (.80) (.89) (.92) (.86) (.81) (.84) (.20) (.38) (.33)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $11.18 $11.66 $11.54 $12.00 $12.35 $13.09 $13.09 $13.53 $13.54
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT
RETURN(3) (18.49)(4) 12.72% 6.95% 11.84% 9.97% 13.24% 16.36%(4) 12.50%(4) 12.00%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets -- -- -- .21% .52% .70% 1.17%(4) .79%(4) 1.36%(4)
Ratio of net investment
income to average
net assets 7.79%(4) 7.57% 7.30% 7.20% 6.53% 6.03% 4.62%(4) 5.57%(4) 4.81%(4)
Decrease reflected in
above expense ratios
due to undertakings by
The Dreyfus Corporation
(limited to the expense
limitation provision
of the Management
Agreement) 1.50%(4) 1.50% 1.12% .78% .41% .23% .13%(4) .16%(4) .15%(4)
Portfolio Turnover Rate 11.10%(5) 14.49% 14.58% 3.00% 13.68% 6.08% 6.08% 5.16%(5) 5.16%(5)
Net Assets, end of
period (000's omitted) $8,043 $31,420 $92,864 $176,223 $243,074 $295,564 $8,482 $316,965 $21,802
<FN>
- -----------
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales charge.
(4) Annualized.
(5) Not annualized.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
PENNSYLVANIA SERIES
------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------------------------------------------- ---------------- -------------- --------------
Year Ended April 30,
-------------------------------------------------- Period Ended Six Month Period Ended
1988(1) 1989 1990 1991 1992 1993 April 30, 1993(2) October 31, 1993 (Unaudited)
------ ------ ------ ------ ------ ------ ---------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of period $15.00 $14.23 $14.78 $14.68 $15.21 $15.73 $16.10 $16.61 $16.60
------ ------ ------ ------ ------ ------ ------ ------ ------
Investment Operations:
Investment income net .85 1.13 1.13 1.12 1.06 1.02 .26 .49 .44
Net realized and
unrealized gain (loss)
on investments (.77) .55 (.08) .55 .56 .99 .50 .62 .62
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations .08 1.68 1.05 1.67 1.62 2.01 .76 1.11 1.06
------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions:
Dividends from investment
income net (.85) (1.13) (1.13) (1.12) (1.06) (1.02) (.26) (.49) (.44)
Dividends from net
realized gain on
investment -- -- (.02) (.02) (.04) (.11) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (.85) (1.13) (1.15) (1.14) (1.10) (1.13) (.26) (.49) (.44)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $14.23 $14.78 $14.68 $15.21 $15.73 $16.61 $16.60 $17.23 $17.22
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN(3) .87%(4) 12.21% 7.20% 11.74% 10.97% 13.19% 16.39%(4) 13.37%(4) 12.79%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets -- -- -- .22% .56% .69% 1.14%(4) .76%(4) 1.27%(4)
Ratio of net investment
income to average
net assets 7.08%(4) 7.46% 7.38% 7.32% 6.75% 6.24% 4.90%(4) 5.68%(4) 5.01%(4)
Decrease reflected in
above expense ratios
due to undertakings by
The Dreyfus Corporation
(limited to the expense
limitation provision
of the Management
Agreement) 1.50%(4) 1.50% 1.24% .79% .41% .25% .15%(4) .16%(4) .15%(4)
Portfolio Turnover Rate 67.48%(5) 25.10% 59.15% 25.74% 38.97% 8.64% 8.64% 2.19%(5) 2.19%(5)
Net Assets, end of
period (000's omitted) $2,870 $12,083 $51,418 $113,439 $158,437 $220,920 $14,631 $247,108 $42,526
<FN>
- -----------
(1) From July 30, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(3) Exclusive of sales charge.
(4) Annualized.
(5) Not annualized.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
TEXAS SERIES
------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------------------------------------------- ---------------- --------------- --------------
Year Ended April 30,
-------------------------------------------------- Period Ended Six Month Period Ended
1988(1) 1989 1990 1991 1992 1993 April 30, 1993(2) October 31, 1993 (Unaudited)
------ ------ ------ ------ ------ ------ ---------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of period $15.50 $17.89 $18.64 $18.58 $19.25 $19.89 $20.52 $21.23 $21.23
------ ------ ------ ------ ------ ------ ------ ------ ------
Investment Operations:
Investment income net 1.33 1.45 1.44 1.40 1.36 1.29 .33 .63 .58
Net realized and
unrealized gain (loss)
on investments 2.39 .75 (.05) .67 .69 1.37 .71 .91 .91
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations 3.72 2.20 1.39 2.07 2.05 2.66 1.04 1.54 1.49
------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions:
Dividends from investment
income net (1.33) (1.45) (1.44) (1.40) (1.36) (1.29) (.33) (.63) (.58)
Dividends from net
realized gain on
investment -- -- (.01) -- (.05) (.03) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (1.33) (1.45) (1.45) (1.40) (1.41) (1.32) (.33) (.63) (.58)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $17.89 $18.64 $18.58 $19.25 $19.89 $21.23 $21.23 $22.14 $22.14
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN(3) 26.23%(4) 12.79% 7.55% 11.54% 10.97% 13.80% 17.60%(4) 14.58%(4) 14.02%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets -- -- -- -- .15% .36% .82%(4) .42%(4) .92%(4)
Ratio of net investment
income to average
net assets 7.94%(4) 7.90% 7.50% 7.29% 6.78% 6.18% 4.81%(4) 5.74%(4) 5.10%(4)
Decrease reflected in
above expense ratios
due to undertakings by
The Dreyfus Corporation
(limited to the expense
limitation provision
of the Management
Agreement) 1.50%(4) 1.50% 1.50% 1.27% .88% .62% .49%(4) .55%(4) .54%(4)
Portfolio Turnover Rate 47.85%(4) 6.84% 2.62% 1.95% 7.49% 14.94% 14.94% 1.80%(5) 1.80%(5)
Net Assets, end of
period (000's omitted) $1,553 $2,902 $5,642 $15,139 $37,208 $72,037 $6,373 $82,788 $13,147
<FN>
- -----------
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993 .
(3) Exclusive of sales charge.
(4) Annualized basis.
(5) Not annualized.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
VIRGINIA SERIES
-----------------------------------------------------------------------------------
Class A Shares Class B Shares Class A Shares Class B Shares
---------------------------- ---------------- --------------- --------------
Year Ended April 30,
---------------------------- Period Ended Six Month Period Ended
1992(1) 1993 April 30, 1993(2) October 31, 1993 (Unaudited)
------- ------ ---------------- ----------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period $15.00 $15.50 $16.25 $16.80 $16.80
------ ------ ------ ------ ------
Investment Operations:
Investment income net .78 1.00 .26 .49 .44
Net realized and unrealized gain on investments .50 1.31 .55 .75 .75
------ ------ ------ ------ ------
Total from Investment Operations 1.28 2.31 .81 1.24 1.19
------ ------ ------ ------ ------
Distributions:
Dividends from investment income net (.78) (1.00) (.26) (.49) (.44)
Dividends from net realized gain on investment -- (.01) -- -- --
------ ------ ------ ------ ------
Total Distributions (.78) (1.01) (.26) (.49) (.44)
------ ------ ------ ------ ------
Net asset value, end of period $15.50 $16.80 $16.80 $17.55 $17.55
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN(3) 11.54%(4) 15.32% 17.22%(4) 14.82%(4) 14.22%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets -- .27% .83%(4) .43%(4) .94%(4)
Ratio of net investment income to average
net assets 6.42%(4) 6.02% 4.62%(4) 5.61%(4) 4.92%(4)
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation 1.22%(4) .76% .54%(4) .55%(4) .54%(4)
Portfolio Turnover Rate 5.96%(5) 9.32% 9.32% 6.01%(5) 6.01%(5)
Net Assets, end of period (000's omitted) $23,096 $55,627 $8,402 $66,736 $22,070
<FN>
- -----------
(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 charge.
(4) Annualized.
(5) Not annualized.
</TABLE>
Further information about each Series' performance will be contained in the
Fund's annual report for the fiscal year ending April 30, 1994, which will be
available approximately the end of June 1994 and may be obtained without charge
by writing to the address or calling the number set forth on the cover of this
Prospectus.
ALTERNATIVE PURCHASE METHODS
The Fund offers you two methods of purchasing each Series' shares; you may
choose the Class of shares that best suits your needs, given the amount of your
purchase, the length of time you expect to hold your shares and any other
relevant circumstances. Each Class A and Class B share of a Series represents
an identical pro rata interest in the Series' investment portfolio.
As to each Series, Class A shares are sold at net asset value per share plus
a maximum initial sales charge of 4.50% of the public offering price imposed at
the time of purchase. The initial sales charge may be reduced or waived for
certain purchases. See "How to Buy Fund Shares -- Class A Shares." These shares
are subject to an annual service fee at the rate of .25 of 1% of the value of
the average daily net assets of Class A. See "Distribution Plan and Shareholder
Services Plan -- Shareholder Services Plan."
As to each Series, Class B shares are sold at net asset value per share with
no initial sales charge at the time of purchase; as a result, the entire
purchase price is immediately invested in the Fund. Class B shares are subject
to a maximum 3% contingent deferred sales charge ("CDSC"), which is assessed
only if you redeem Class B shares within the first five years of their
purchase. See "How to Buy Fund Shares -- Class B Shares" and "How to Redeem Fund
Shares -- Contingent Deferred Sales Charge -- Class B Shares." These shares also
are subject
20
<PAGE>
to an annual service fee at the rate of .25 of 1% of the value of
the average daily net assets of Class B. In addition, Class B shares are
subject to an annual distribution fee at the rate of .50 of 1% of the value of
the average daily net assets of Class B. See "Distribution Plan and Shareholder
Services Plan -- Distribution Plan." The distribution fee paid by Class B will
cause such Class to have a higher expense ratio and to pay lower dividends than
Class A. Approximately six years after the date of purchase, Class B shares of
a Series automatically will convert to Class A shares of such Series, based on
the relative net asset values for shares of each Class, and will no longer be
subject to the distribution fee. Class B shares that have been acquired through
the reinvestment of dividends and distributions will be converted on a pro rata
basis together with other Class B shares, in the proportion that a
shareholder's Class B shares converting to Class A shares bears to the total
Class B shares not acquired through the reinvestment of dividends and
distributions.
You should consider whether, during the anticipated life of your investment
in the Fund, the accumulated distribution fee and CDSC on Class B shares prior
to conversion would be less than the initial sales charge on Class A shares
purchased at the same time, and to what extent, if any, such differential would
be offset by the return of Class A. In this regard, generally, Class B shares
may be more appropriate for investors who invest less than $100,000 in Fund
shares. Additionally, investors qualifying for reduced initial sales charges
who expect to maintain their investment for an extended period of time might
consider purchasing Class A shares because the accumulated continuing
distribution fees on Class B shares may exceed the initial sales charge on
Class A shares during the life of the investment. Generally, Class A shares may
be more appropriate for investors who invest $250,000 or more in Fund shares.
DESCRIPTION OF THE FUND
GENERAL
The Fund is a "series fund," which is a mutual fund divided into separate
portfolios. Each portfolio is treated as a separate entity for certain matters
under the Investment Company Act of 1940 and for other purposes, and a
shareholder of one Series is not deemed to be a shareholder of any other
Series. As described below, for certain matters Fund shareholders vote together
as a group; as to others they vote separately by Series. When used herein, the
term "State" refers to the State after which a Series is named.
INVESTMENT OBJECTIVE
The Fund's goal is to maximize current income exempt from Federal income tax
and, where applicable, from State income taxes for residents of the States of
Arizona, Colorado, Connecticut, Florida, Georgia, Maryland, Massachusetts,
Michigan, Minnesota, North Carolina, Ohio, Oregon, Pennsylvania, Texas and
Virginia, without undue risk. To accomplish this goal, each Series invests
primarily in the debt securities of the State after which it is named, such
State's political subdivisions, authorities and corporations, the interest from
which is, in the opinion of bond counsel to the issuer, exempt from Federal and
such State's personal income taxes (collectively, "State Municipal Obligations"
or when the context so requires, "Arizona Municipal Obligations," "Colorado
Municipal Obligations," "Connecticut Municipal Obligations," "Florida Municipal
Obligations," etc.). To the extent acceptable State Municipal Obligations are
at any time unavailable for investment, such Series will invest temporarily in
other debt securities the interest from which is, in the opinion of bond
counsel to the issuer, exempt from Federal income tax. Each Series' investment
objective cannot be changed without approval by the holders of a majority (as
defined in the Investment Company Act of 1940) of such Series' outstanding
voting shares. There can be no assurance that the Series' investment objective
will be achieved.
21
<PAGE>
MUNICIPAL OBLIGATIONS
Debt securities the interest from which is, in the opinion of bond counsel to
the issuer, exempt from Federal income tax ("Municipal Obligations") generally
include debt obligations issued to obtain funds for various public purposes as
well as certain industrial development bonds issued by or on behalf of public
authorities. Municipal Obligations are classified as general obligation bonds,
revenue bonds and notes. General obligation bonds are secured by the issuer's
pledge of its faith, credit and taxing power for the payment of principal and
interest. Revenue bonds are payable from the revenue derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source, but not from the general
taxing power. Tax exempt industrial development bonds, in most cases, are
revenue bonds that do not carry the pledge of the credit of the issuing
municipality, but generally are guaranteed by the corporate entity on whose
behalf they are issued. Notes are short-term instruments which are obligations
of the issuing municipalities or agencies and are sold in anticipation of a
bond sale, collection of taxes or receipt of other revenues. Municipal
Obligations include municipal lease/purchase agreements which are similar to
installment purchase contracts for property or equipment issued by
municipalities. Municipal Obligations bear fixed, floating or variable rates of
interest, which are determined in some instances by formulas under which the
Municipal Obligation's interest rate will change directly or inversely to
changes in interest rates or an index, or multiples thereof, in many cases
subject to a maximum and minimum. Certain Municipal Obligations are subject to
redemption at a date earlier than their stated maturity pursuant to call
options, which may be separated from the related Municipal Obligation and
purchased and sold separately.
MANAGEMENT POLICIES
It is a fundamental policy of the Fund that at least 80% of the value of each
Series' net assets (except when maintaining a temporary defensive position)
will be invested in Municipal Obligations and at least 65% of the value of each
Series' net assets (except when maintaining a temporary defensive position)
will be invested in bonds and debentures. At least 65% of the value of each
Series' net assets will be invested in Municipal Obligations issued by issuers
in such State, as defined above, and the remainder may be invested in
securities that are not State Municipal Obligations and therefore may be
subject to State income taxes. See "Risk Factors -- Investing in State
Municipal Obligations" below, and "Dividends, Distributions and Taxes."
At least 70% of the value of each Series' net assets must consist of Municipal
Obligations which, in the case of bonds, are rated no lower than Baa by Moody's
Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's Corporation
("S&P") or Fitch Investors Service, Inc. ("Fitch"). Each Series may invest up
to 30% of the value of its net assets in Municipal Obligations which, in the
case of bonds, are rated lower than Baa by Moody's and BBB by S&P and Fitch and
as low as the lowest rating assigned by Moody's, S&P or Fitch. Each Series may
invest in short-term Municipal Obligations which are rated in the two highest
rating categories by Moody's, S&P or Fitch. See "Appendix B" in the Statement
of Additional Information. Municipal Obligations rated BBB by S&P or Fitch or
Baa by Moody's are considered investment grade obligations; those rated BBB by
S&P or Fitch are regarded as having an adequate capacity to pay principal and
interest, while those rated Baa by Moody's are considered medium grade
obligations which lack outstanding investment characteristics and have
speculative characteristics. See "Appendix B" in the Statement of Additional
Information. Investments rated Ba or lower by Moody's and BB or lower by S&P
and Fitch ordinarily provide higher yields but involve greater risk because of
their speculative characteristics. Each Series may invest in Municipal
Obligations rated C by Moody's or D by S&P or Fitch, which is the lowest rating
assigned by such rating organizations and indicates that the Municipal
Obligation is in default and interest and/or repayment of principal is in
arrears. See "Risk
22
<PAGE>
Factors -- Lower Rated Bonds" below for a further discussion
of certain risks. Each Series also may invest in securities which, while not
rated, are determined by The Dreyfus Corporation to be of comparable quality to
the rated securities in which the Series may invest; for purposes of the 70%
requirement described in this paragraph, such unrated securities shall be
deemed to have the rating so determined. Each Series also may invest in Taxable
Investments of the quality described below. Under normal market conditions, the
weighted average maturity of each Series' portfolio is expected to exceed ten
years.
In addition to usual investment practices, each Series may use speculative
investment techniques such as short-selling and lending its portfolio
securities. Each Series also may purchase, hold or deal in futures contracts
and options on futures contracts, as permitted by applicable law. See
"Investment Techniques" below, and "Dividends, Distributions and Taxes."
Each Series may invest more than 25% of the value of its total assets in
Municipal Obligations which are related in such a way that an economic,
business or political development or change affecting one such security also
would affect the other securities; for example, securities the interest upon
which is paid from revenues of similar types of projects. As a result, each
Series may be subject to greater risk as compared to a fund that does not
follow this practice.
From time to time, a Series may invest more than 25% of the value of its
total assets in industrial development bonds which, although issued by
industrial development authorities, may be backed only by the assets and
revenues of the non-governmental users. Interest on Municipal Obligations
(including certain industrial development bonds) which are specified private
activity bonds, as defined in the Internal Revenue Code of 1986, as amended
(the "Code"), issued after August 7, 1986, while exempt from Federal income
tax, is a preference item for the purpose of the alternative minimum tax. Where
a regulated investment company receives such interest, a proportionate share of
any exempt-interest dividend paid by the investment company may be treated as
such a preference item to shareholders. Each Series may invest without
limitation in such Municipal Obligations if The Dreyfus Corporation determines
that their purchase is consistent with the Fund's investment objective. See
"Risk Factors -- Other Investment Considerations."
Each Series may purchase floating and variable rate demand notes and bonds,
which are tax exempt obligations ordinarily having stated maturities in excess
of one year, but which permit the holder to demand payment of principal at any
time, or at specified intervals. Variable rate demand notes include master
demand notes which are obligations that permit the Series to invest fluctuating
amounts, which may change daily without penalty, pursuant to direct
arrangements between such Series, as lender, and the borrower. The interest
rates on these obligations fluctuate from time to time. Frequently, such
obligations are secured by letters of credit or other credit support
arrangements provided by banks. Use of letters of credit or other credit
support arrangements will not adversely affect the tax exempt status of these
obligations. Because these obligations are direct lending arrangements between
the lender and borrower, it is not contemplated that such instruments generally
will be traded, and there generally is no established secondary market for
these obligations, although they are redeemable at face value. Accordingly,
where these obligations are not secured by letters of credit or other credit
support arrangements, the Fund's right to redeem is dependent on the ability of
the borrower to pay principal and interest on demand. Each obligation purchased
will meet the quality criteria established for the purchase of Municipal
Obligations. The Dreyfus Corporation, on behalf of the Fund, will consider on
an ongoing basis the creditworthiness of the issuers of the floating and
variable rate demand obligations in each Series' portfolio. No Series will
invest more than 15% of the value of its net assets in floating or variable
rate demand obligations as to which the Series cannot exercise the demand
feature on not more than seven days' notice if there is no secondary market
available for these obligations, and in other illiquid securities.
Each Series may purchase from financial institutions participation interests
in Municipal
23
<PAGE>
Obligations (such as industrial development bonds and municipal
lease/purchase agreements). A participation interest gives the Series an
undivided interest in the Municipal Obligation in the proportion that the
Series' participation interest bears to the total principal amount of the
Municipal Obligation. These instruments have fixed, floating or variable rates
of interest. If the participation interest is unrated, the participation
interest will be backed by an irrevocable letter of credit or guarantee of a
bank that the Board of Trustees has determined meets the prescribed quality
standards for banks set forth below, or the payment obligation otherwise will
be collateralized by U.S. Government securities. For certain participation
interests, the Series will have the right to demand payment, on not more than
seven days' notice, for all or any part of the Series' participation interest
in the Municipal Obligation, plus accrued interest. As to these instruments,
each Series intends to exercise its right to demand payment only upon a default
under the terms of the Municipal Obligation, as needed to provide liquidity to
meet redemptions, or to maintain or improve the quality of its investment
portfolio. No Series will invest more than 15% of the value of its net assets
in participation interests that do not have this demand feature if there is no
secondary market available for such instruments, and in other illiquid
securities.
Each Series may purchase tender option bonds. A tender option bond is a
Municipal Obligation (generally held pursuant to a custodial arrangement)
having a relatively long maturity and bearing interest at a fixed rate
substantially higher than prevailing short-term tax exempt rates, that has been
coupled with the agreement of a third party, such as a bank, broker-dealer or
other financial institution, pursuant to which such institution grants the
security holders the option, at periodic intervals, to tender their securities
to the institution and receive the face value thereof. As consideration for
providing the option, the financial institution receives periodic fees equal to
the difference between the Municipal Obligation's fixed coupon rate and the
rate, as determined by a remarketing or similar agent at or near the
commencement of such period, that would cause the securities, coupled with the
tender option, to trade at par on the date of such determination. Thus, after
payment of this fee, the security holder effectively holds a demand obligation
that bears interest at the prevailing short-term tax exempt rate. The Dreyfus
Corporation, on behalf of the Fund, will consider on an ongoing basis the
creditworthiness of the issuer of the underlying Municipal Obligation, of any
custodian and of the third party provider of the tender option. In certain
instances and for certain tender option bonds, the option may be terminable in
the event of a default in payment of principal or interest on the underlying
Municipal Obligation and for other reasons. No Series will invest more than 15%
of the value of its net assets in illiquid securities, which could include
tender option bonds as to which it cannot exercise the tender feature on not
more than seven days' notice if there is no secondary market available for
these obligations.
Each Series may acquire "stand-by commitments" with respect to Municipal
Obligations held in its portfolio. Under a stand-by commitment, the Fund
obligates a broker, dealer or bank to repurchase, at the Fund's option,
specified securities at a specified price and, in this respect, stand-by
commitments are comparable to put options. The exercise of a stand-by
commitment, therefore, is subject to the ability of the seller to make payment
on demand. The Fund will acquire stand-by commitments solely to facilitate
portfolio liquidity and does not intend to exercise its rights thereunder for
trading purposes. The Fund may pay for stand-by commitments if such action is
deemed necessary, thus increasing to a degree the cost of the underlying
Municipal Obligation and similarly decreasing such security's yield to
investors. Each Series also may acquire call options on specific Municipal
Obligations. A Series generally would purchase these call options to protect
the Series from the issuer of the related Municipal Obligation redeeming, or
other holder of the call option from calling away, the Municipal Obligation
before maturity. The sale by the Series of a call option that it owns on a
specific Municipal Obligation could result in the receipt of taxable income by
such Series.
Each Series may purchase custodial receipts representing the right to receive
certain future
24
<PAGE>
principal and interest payments on Municipal Obligations which
underlie the custodial receipts. A number of different arrangements are
possible. In a typical custodial receipt arrangement, an issuer or a third
party owner of Municipal Obligations deposits such obligations with a custodian
in exchange for two classes of custodial receipts. The two classes have
different characteristics, but, in each case, payments on the two classes are
based on payments received on the underlying Municipal Obligations. One class
has the characteristics of a typical auction rate security, where at specified
intervals its interest rate is adjusted, and ownership changes, based on an
auction mechanism. This class's interest rate generally is expected to be below
the coupon rate of the underlying Municipal Obligations and generally is at a
level comparable to that of a Municipal Obligation of similar quality and
having a maturity equal to the period between interest rate adjustments. The
second class bears interest at a rate that exceeds the interest rate typically
borne by a security of comparable quality and maturity; this rate also is
adjusted, but in this case inversely to changes in the rate of interest of the
first class. If the interest rate on the first class exceeds the coupon rate of
the underlying Municipal Obligations, its interest rate will exceed the rate
paid on the second class. In no event will the aggregate interest paid with
respect to the two classes exceed the interest paid by the underlying Municipal
Obligations. The value of the second class and similar securities should be
expected to fluctuate more than the value of a Municipal Obligation of
comparable quality and maturity and their purchase by a Series should increase
the volatility of its net asset value and, thus, its price per share. These
custodial receipts are sold in private placements. Each Series also may
purchase directly from issuers, and not in a private placement, Municipal
Obligations having characteristics similar to custodial receipts. These
securities may be issued as part of a multi-class offering and the interest
rate on certain classes may be subject to a cap or floor.
Each Series may invest up to 15% of the value of its net assets in securities
as to which a liquid trading market does not exist, provided such investments
are consistent with the Fund's investment objective. Such securities may
include securities that are not readily marketable, such as certain securities
that are subject to legal or contractual restrictions on resale, and repurchase
agreements providing for settlement in more than seven days after notice. As to
these securities, the Series is subject to a risk that should such Series
desire to sell them when a ready buyer is not available at a price that the
Fund deems representative of their value, the value of the Series' net assets
could be adversely affected. However, if a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the Securities Act of
1933, as amended, for certain of these securities held by the Series, the Fund
intends to treat such securities as liquid securities in accordance with
procedures approved by the Fund's Board of Trustees. Because it is not possible
to predict with assurance how the market for restricted securities pursuant to
Rule 144A will develop, the Fund's Board of Trustees has directed The Dreyfus
Corporation to monitor carefully each Series' investments in such securities
with particular regard to trading activity, availability of reliable price
information and other relevant information. To the extent that for a period of
time, qualified institutional buyers cease purchasing such restricted
securities pursuant to Rule 144A, the Series' investing in such securities may
have the effect of increasing the level of illiquidity in the Series' portfolio
during such period.
Each Series may invest in zero coupon securities which are debt securities
issued or sold at a discount from their face value which do not entitle the
holder to any periodic payment of interest prior to maturity or a specified
redemption date (or cash payment date). The amount of the discount varies
depending on the time remaining until maturity or cash payment date, prevailing
interest rates, liquidity of the security and perceived credit quality of the
issuer. Zero coupon securities also may take the form of debt securities that
have been stripped of their unmatured interest coupons, the coupons themselves
and receipts or certificates representing interests in such stripped debt
obligations and coupons. The market prices of zero coupon securities generally
are more volatile than the market prices of interest-bearing securi-
25
<PAGE>
ties and are likely to respond to a greater degree to changes in interest rates
than interest-bearing securities having similar maturities and credit
qualities. Each Series may invest up to 5% of its assets in zero coupon bonds
which are rated below investment grade. See "Risk Factors -- Lower Rated Bonds"
and "Other Investment Considerations" below, and "Investment Objective and
Management Policies -- Risk Factors -- Lower Rated Bonds" and "Dividends,
Distributions and Taxes" in the Statement of Additional Information.
From time to time, on a temporary basis other than for temporary defensive
purposes (but not to exceed 20% of the value of a Series' net assets), or for
temporary defensive purposes, each Series may invest in taxable short-term
investments ("Taxable Investments") consisting of: notes of issuers having, at
the time of purchase, a quality rating within the two highest grades of
Moody's, S&P or Fitch; obligations of the U.S. Government, its agencies or
instrumentalities; commercial paper rated not lower than P-1 by Moody's, A-1 by
S&P or F-1 by Fitch; certificates of deposit of U.S. domestic banks, including
foreign branches of domestic banks, with assets of one billion dollars or more;
time deposits; bankers' acceptances and other short-term bank obligations; and
repurchase agreements in respect of any of the foregoing. Dividends paid by a
Series that are attributable to income earned by the Series from Taxable
Investments will be taxable to investors. See "Dividends, Distributions and
Taxes." Except for temporary defensive purposes, at no time will more than 20%
of the value of a Series' net assets be invested in Taxable Investments. When a
Series has adopted a temporary defensive position, including when acceptable
State Municipal Obligations are unavailable for investment by a Series, in
excess of 35% of such Series' net assets may be invested in securities that are
not exempt from Federal and, where applicable, from State income taxes. Under
normal market conditions, each Series anticipates that not more than 5% of the
value of its total assets will be invested in any one category of Taxable
Investments. In certain states, dividends and distributions paid by a Series
that are attributable to interest income earned by the Series from direct
obligations of the United States may not be subject to state income tax.
Taxable Investments are more fully described in the Statement of Additional
Information, to which reference hereby is made.
INVESTMENT TECHNIQUES
Each Series may employ, among others, the investment techniques described
below to the extent permitted by applicable law. Use of certain of these
techniques may give rise to taxable income.
WHEN-ISSUED SECURITIES
New issues of Municipal Obligations usually are offered on a when-issued
basis, which means that delivery and payment for such Municipal Obligations
ordinarily take place within 45 days after the date of the commitment to
purchase. The payment obligation and the interest rate that will be received on
the Municipal Obligations are fixed at the time the Fund enters into the
commitment. The Fund will make commitments to purchase such Municipal
Obligations only with the intention of actually acquiring the securities, but
the Fund may sell these securities before the settlement date if it is deemed
advisable, although any gain realized on such sale would be taxable. No Series
will accrue income in respect of a when-issued security prior to its stated
delivery date. No additional when-issued commitments will be made for a Series
if more than 20% of the value of such Series' net assets would be so committed.
Municipal Obligations purchased on a when-issued basis and the securities
held in a Series' portfolio are subject to changes in value (both generally
changing in the same way, i.e., appreciating when interest rates decline and
depreciating when interest rates rise) based upon the public's perception of
the creditworthiness of the issuer and changes, real or anticipated, in the
level of interest rates. Municipal Obligations purchased on a when-issued basis
may expose a Series to risk because they may experience such fluctuations prior
to their actual delivery. Purchasing Municipal Obligations on a when-issued
basis can involve the additional
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risk that the yield available in the market when the delivery takes place
actually may be higher than that obtained in the transaction itself. A
segregated account of the Fund consisting of cash, cash equivalents or U.S.
Government securities or other high quality liquid debt securities at least
equal at all times to the amount of the when-issued commitments will be
established and maintained at the Fund's custodian bank. Purchasing Municipal
Obligations on a when-issued basis when a Series is fully or almost fully
invested may result in greater potential fluctuation in the value of such
Series' net assets and its net asset value per share.
FUTURES TRANSACTIONS -- IN GENERAL
Neither the Fund nor any Series is a commodity pool. However, as a substitute
for a comparable market position in the underlying securities and for hedging
purposes, each Series may engage, to the extent permitted by applicable
regulations, in futures and options on futures transactions, including those
relating to indexes, as described below.
A Series' commodities transactions must constitute bona fide hedging or other
permissible transactions pursuant to regulations promulgated by the Commodity
Futures Trading Commission. In addition, the Series may not engage in such
transactions if the sum of the amount of initial margin deposits and premiums
paid for unexpired commodity options, other than for bona fide hedging
transactions, would exceed 5% of the liquidation value of the Series' assets
after taking into account unrealized profits and unrealized losses on such
contracts it has entered into; provided, however, that in the case of an option
that is in-the-money at the time of purchase, the in-the-money amount may be
excluded in calculating the 5%. Pursuant to regulations and/or published
positions of the Securities and Exchange Commission, a Series may be required
to segregate cash or high quality money market instruments in connection with
its commodities transactions in an amount generally equal to the value of the
underlying commodity.
Initially, when purchasing or selling futures contracts the Series will be
required to deposit with the Fund's custodian in the broker's name an amount of
cash or cash equivalents up to approximately 10% of the contract amount. This
amount is subject to change by the exchange or board of trade on which the
contract is traded and members of such exchange or board of trade may impose
their own higher requirements. This amount is known as "initial margin" and is
in the nature of a performance bond or good faith deposit on the contract which
is returned to the Series upon termination of the futures position assuming all
contractual obligations have been satisfied. Subsequent payments, known as
"variation margin," to and from the broker will be made daily as the price of
the index or security underlying the futures contract fluctuates, making the
long and short positions in the futures contract more or less valuable, a
process known as "marking-to-market." At any time prior to the expiration of a
futures contract, the Series may elect to close the position by taking an
opposite position at the then prevailing price, which will operate to terminate
the Series' existing position in the contract.
Although the Fund intends to purchase or sell futures contracts only if there
is an active market for such contracts, no assurance can be given that a liquid
market will exist for any particular contract at any particular time. Many
futures exchanges and boards of trade limit the amount of fluctuation permitted
in futures contract prices during a single trading day. Once the daily limit
has been reached in a particular contract, no trades may be made that day at a
price beyond the limit or trading may be suspended for specified periods during
the trading day. Futures contract prices could move to the limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of futures positions and potentially subjecting the Series to
substantial losses. If it is not possible or the Series determines not to close
a futures position in anticipation of adverse price movements, the Series will
be required to make daily cash payments of variation margin. In such
circumstances, an increase in the value of the portion of the portfolio being
hedged, if any, may offset partially or completely losses on the futures
contract. However, no assurance can be given that the price of
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the securities being hedged will correlate with the price movements in a
futures contract and thus provide an offset to losses on the futures contract.
In addition, to the extent a Series is engaging in a futures transaction as a
hedging device, due to the risk of an imperfect correlation between securities
in a Series' portfolio that are the subject of a hedging transaction and the
futures contract used as a hedging device, it is possible that the hedge will
not be fully effective in that, for example, losses on the portfolio securities
may be in excess of gains on the futures contract or losses on the futures
contract may be in excess of gains on the portfolio securities that were the
subject of the hedge. In futures contracts based on indexes, the risk of
imperfect correlation increases as the composition of a Series' portfolio
varies from the composition of the index. In an effort to compensate for the
imperfect correlation of movements in the price of the securities being hedged
and movements in the price of futures contracts, a Series may buy or sell
futures contracts in a greater or lesser dollar amount than the dollar amount
of the securities being hedged if the historical volatility of the futures
contract has been less or greater than that of the securities. Such "over
hedging" or "under hedging" may adversely affect a Series' net investment
results if market movements are not as anticipated when the hedge is
established.
An option on a futures contract gives the purchaser the right, in return for
the premium paid, to assume a position in a futures contract (a long position
if the option is a call and a short position if the option is a put) at a
specified exercise price at any time during the option exercise period. The
writer of the option is required upon exercise to assume an offsetting futures
position (a short position if the option is a call and a long position if the
option is a put). Upon exercise of the option, the assumption of offsetting
futures positions by the writer and holder of the option will be accompanied by
delivery of the accumulated cash balance in the writer's futures margin account
which represents the amount by which the market price of the futures contract,
at exercise, exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract.
Call options sold by a Series with respect to futures contracts will be
covered by, among other things, entering into a long position in the same
contract at a price no higher than the strike price of the call option, or by
ownership of the instruments underlying, or instruments the prices of which are
expected to move relatively consistently with the instruments underlying, the
futures contract. Put options sold by a Series with respect to futures
contracts will be covered when, among other things, cash or liquid securities
are placed in a segregated account to fulfill the obligation undertaken.
Each Series may utilize municipal bond index futures to protect against
changes in the market value of the Municipal Obligations in the Series'
portfolio or which the Series intends to acquire. Municipal bond index futures
contracts are based on an index of long-term Municipal Obligations. The index
assigns relative values to the Municipal Obligations included in the index, and
fluctuates with changes in the market value of such Municipal Obligations. The
contract is an agreement pursuant to which two parties agree to take or make
delivery of an amount of cash based upon the difference between the value of
the index at the close of the last trading day of the contract and the price at
which the index contract was originally written. The acquisition or sale of a
municipal bond index futures contract enables the Fund to protect a Series'
assets from fluctuations in rates on tax exempt securities without actually
buying or selling such securities.
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE FUTURES CONTRACTS
Each Series may purchase and sell interest rate futures contracts and options
on interest rate futures contracts as a substitute for a comparable market
position and to hedge against adverse movements in interest rates.
To the extent the Series has invested in interest rate futures contracts or
options on interest rate futures contracts as a substitute for a comparable
market position, such Series will be subject to the investment risks of having
purchased the securities underlying the contract.
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Each Series may purchase call options on interest rate futures contracts to
hedge against a decline in interest rates and may purchase put options on
interest rate futures contracts to hedge such Series' portfolio securities
against the risk of rising interest rates.
If a Series has hedged against the possibility of an increase in interest
rates adversely affecting the value of securities held in the Series' portfolio
and rates decrease instead, such Series will lose part or all of the benefit of
the increased value of securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
the Series has insufficient cash, it may have to sell securities to meet daily
variation margin requirements at a time when it may be disadvantageous to do
so. These sales of securities may, but will not necessarily, be at increased
prices which reflect the decline in interest rates.
Each Series may sell call options on interest rate futures contracts to
partially hedge against declining prices of such Series' portfolio securities.
If the futures price at expiration of the option is below the exercise price,
the Series will retain the full amount of the option premium which provides a
partial hedge against any decline that may have occurred in such Series'
portfolio holdings. Each Series may sell put options on interest rate futures
contracts to hedge against increasing prices of the securities which are
deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is higher than the exercise price, the Series will
retain the full amount of the option premium which provides a partial hedge
against any increase in the price of securities which the Series intends to
purchase. If a put or call option sold for such Series is exercised, such
Series will incur a loss which will be reduced by the amount of the premium it
receives. Depending on the degree of correlation between changes in the value
of a Series' portfolio securities and changes in the value of its futures
positions, such Series' losses from existing options on futures may, to some
extent, be reduced or increased by changes in the value of its portfolio
securities.
Each Series also may sell options on interest rate futures contracts as part
of closing purchase transactions to terminate such Series' options positions.
No assurance can be given that such closing transactions can be effected or
that there will be a correlation between price movements in the options on
interest rate futures and price movements in the Series' portfolio securities
which are the subject of the hedge. In addition, the Series' purchase of such
options will be based upon predictions as to anticipated interest rate trends,
which could prove to be inaccurate.
SHORT-SELLING
Each Series may make short sales of securities, which are transactions in
which the Series sells a security it does not own in anticipation of a decline
in the market value of that security. To complete such a transaction, the
Series must borrow the security to make delivery to the buyer. The Series then
is obligated to replace the security borrowed by purchasing it at the market
price at the time of replacement. The price at such time may be more or less
than the price at which the security was sold by the Series. Until the security
is replaced, the Series is required to pay to the lender amounts equal to any
interest which accrues during the period of the loan. To borrow the security,
the Series also may be required to pay a premium, which would increase the cost
of the security sold. The proceeds of the short sale will be retained by the
broker, to the extent necessary to meet margin requirements, until the short
position is closed out.
Until the Series replaces the borrowed security in connection with a short
sale, the Series will: (a) maintain daily a segregated account, containing cash
or U.S. Government securities, at such a level that (i) the amount deposited in
the account plus the amount deposited with the broker as collateral will equal
the current value of the securities sold short and (ii) the amount deposited in
the segregated account plus the amount deposited with the broker as collateral
will not be less than the market value of the security at the time it was sold
short; or (b) otherwise cover its short position.
A Series will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which the
Series replaces the borrowed security. A Series will realize a gain if the
security declines in price between those dates. This
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result is the opposite of what one would expect from a cash purchase of a long
position in a security. The amount of any gain will be decreased, and the
amount of any loss increased, by the amount of any premium or amount in lieu of
interest the Series may be required to pay in connection with a short sale.
The Fund anticipates that the frequency of short sales will vary
substantially in different periods, and it does not intend that any specified
portion of a Series' assets, as a matter of practice, will be invested in short
sales. However, no securities will be sold short if, after effect is given to
any such short sale, the total market value of all securities sold short would
exceed 25% of the value of a Series' net assets. No Series may sell short the
securities of any single issuer listed on a national securities exchange to the
extent to more than 5% of the value of such Series' net assets. No Series may
sell short the securities of any class of an issuer to the extent, at the time
of the transaction, of more than 5% of the outstanding securities of that
class.
In addition to the short sales discussed above, the Series may make short
sales "against the box," a transaction in which a Series enters into a short
sale of a security which such Series owns. The proceeds of the short sale will
be held by a broker until the settlement date at which time the Series delivers
the security to close the short position. The Series receives the net proceeds
from the short sale. At no time will a Series have more than 15% of the value
of its net assets in deposits on short sales against the box.
LENDING PORTFOLIO SECURITIES
From time to time, each Series may lend securities from its portfolio to
brokers, dealers and other financial institutions needing to borrow securities
to complete certain transactions. As to each Series, such loans may not exceed
33-1/3% of the value of the Series' total assets. In connection with such
loans, the Series will receive collateral consisting of cash, U.S. Government
securities or irrevocable letters of credit which will be maintained at all
times in an amount equal to at least 100% of the current market value of the
loaned securities. A Series can increase its income through the investment of
such collateral. However, such income generally would not be tax exempt. The
Series continues to be entitled to payments in amounts equal to the interest or
other distributions payable on the loaned security and receives interest on the
amount of the loan. Such loans will be terminable at any time upon specified
notice. The Series might experience risk of loss if the institution with which
it has engaged in a portfolio loan transaction breaches its agreement with such
Series.
CERTAIN FUNDAMENTAL POLICIES
Each Series may (i) borrow money from banks, but only for temporary or
emergency (not leveraging) purposes in an amount up to 15% of the value of such
Series' total assets (including the amount borrowed) valued at the lesser of
cost or market, less liabilities (not including the amount borrowed) at the
time the borrowing is made. While borrowings exceed 5% of the value of such
Series' total assets, the Series will not make any additional investments; (ii)
pledge, hypothecate, mortgage or otherwise encumber its assets, but only to
secure borrowings for temporary or emergency purposes; and (iii) invest up to
25% of its assets in the securities of issuers in any industry, provided that
there is no such limitation on investments in Municipal Obligations and, for
temporary defensive purposes, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. This paragraph describes
fundamental policies that cannot be changed as to a Series without approval by
the holders of a majority (as defined in the Investment Company Act of 1940) of
such Series' outstanding voting shares. See "Investment Objective and
Management Policies -- Investment Restrictions" in the Statement of Additional
Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICY
Each Series may invest up to 15% of the value of its net assets in repurchase
agreements providing for settlement in more than seven days after notice and in
other illiquid securities (which securities could include participation
interests (including municipal lease/purchase
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agreements) that are not subject to the demand feature described above, and
floating and variable rate demand obligations as to which the Fund cannot
exercise the related demand feature described above and as to which there is no
secondary market). See "Investment Objective and Management Policies --
Investment Restrictions" in the Statement of Additional Information.
RISK FACTORS
INVESTING IN STATE MUNICIPAL OBLIGATIONS
You should consider carefully the special risks inherent in the purchase of
shares of each Series resulting from its purchase of the respective State's
Municipal Obligations. Certain of the States have experienced financial
difficulties, the recurrence of which could result in defaults or declines in
the market values of various Municipal Obligations in which such Series
invests. If there should be a default or other financial crisis relating to a
State or an agency or municipality thereof, the market value and marketability
of outstanding State Municipal Obligations in a Series' portfolio and the
interest income to the Series could be adversely affected. You should obtain
and review a copy of the Statement of Additional Information which more fully
sets forth these and other risk factors.
ARIZONA SERIES
Arizona local governmental entities are subject to certain limitations on
their ability to assess taxes and levies which could affect their ability to
meet their respective financial obligations. Arizona's economy has been
adversely affected by problems in the real estate sector and current and
proposed reductions in Federal military expenditures are expected to cause
additional difficulties with Arizona's economy.
COLORADO SERIES
Since 1985, Colorado's economy has been adversely affected primarily by three
factors: a contraction in the energy sector, a decline caused by over-expansion
in the high technology sector and a general decline in the construction
industry. Recovery began in 1987 and is gradually gaining momentum. Employment
in the service and trade industries represents approximately 50% of the State
work force. Colorado's manufacturing sector, which is concentrated in
defense-related production and employs approximately 9% of the work force, is
expected to lose jobs over the next few quarters as sluggish domestic demand
and slackening defense orders take a toll.
On November 3, 1992, voters in Colorado passed the Bruce Amendment, otherwise
known as the "Taxpayers' Bill of Rights." The Amendment restricts growth of
government spending to the rate of inflation plus the change in demand for
government services (as measured by population, school enrollment, or
construction); limits the issuance of debt to that which is voter approved; and
requires voter approval of all tax increases. Though the Bruce Amendment is not
expected to have an immediate effect on the credit quality of State and local
governments, it will likely reduce the financial flexibility of all levels of
government in Colorado over time. In addition, younger or rapidly growing
municipalities with large infrastructure requirements may have difficulty
finding the revenues needed to finance their growth.
CONNECTICUT SERIES
Connecticut's economy relies in part on activities that may be adversely
affected by cyclical change, and recent declines in defense spending have had a
significant impact on unemployment levels. Although the State recorded General
Fund surpluses in the fiscal years 1985 through 1987, Connecticut reported
deficits from its General Fund operations for the fiscal years 1988 through
1991.Together with the deficit carried forward from the State's 1990 fiscal
year, the total General Fund deficit for the 1991 fiscal year was $965.7
million. The total deficit was funded by the issuance of General Obligation
Economic Recovery Notes. The Comptroller estimated that the State ended the
1993 fiscal year with a General Fund operating surplus of $3.1 million. The
Comptroller, however, estimated the cumulative projected deficit under
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GAAP for
the fiscal year ended June 30, 1993 to have been approximately $494.6 million.
As a result of the recurring budgetary problems, S&P downgraded the State's
general obligation bonds from AA+ to AA in April 1990 and to AA- in September
1991. Moody's and Fitch currently rate Connecticut's bonds Aa and AA +,
respectively.
FLORIDA SERIES
The Florida Constitution and Statutes mandate that the State budget as a
whole, and each separate fund within the State budget, be kept in balance from
currently available revenues each fiscal year. Florida's Constitution permits
issuance of Florida Municipal Obligations pledging the full faith and credit of
the State, with a vote of the electors, to finance or refinance fixed capital
outlay projects authorized by the Legislature, provided that the outstanding
principal does not exceed 50% of the total tax revenues of the State for the
two preceding years. Florida's Constitution also provides that the Legislature
shall appropriate monies sufficient to pay debt service on State bonds pledging
the full faith and credit of the State as the same becomes due. All State tax
revenues, other than trust funds dedicated by Florida's Constitution for other
purposes, would be available for such an appropriation, if required. Revenue
bonds may be issued by the State or its agencies without a vote of Florida's
electors only to finance or refinance the cost of State fixed capital outlay
projects which may be payable solely from funds derived directly from sources
other than State tax revenues. Fiscal year 1992-93 total General Revenue and
Working Capital Funds available are estimated to have been $12.282 billion,
which resulted in estimated unencumbered reserves of $429.4 million at the end
of fiscal 1992-93. The General Revenue and Working Capital Funds ended the
1991-92 fiscal year with unencumbered reserves of $185 million.
GEORGIA SERIES
Georgia's Constitution limits appropriation of funds for any given fiscal
year to the sum of the amount of unappropriated surplus expected to have
accrued at the beginning of the fiscal year and the amount not greater than the
total receipts anticipated, less refunds, as estimated. The State Constitution
provides for supplementary appropriations in accordance with its provisions as
well. Georgia's economy grew rapidly in the 1980's resulting in a general fund
reserve of $428 million in 1989. In 1989 and 1990, however, the State's economy
began to slow and lower than projected growth in income and sales taxes and
increasing expenditure levels resulted in a recorded $413 million operating
deficit for fiscal 1990, which reduced reserves to $55 million. As projections
were made of continued weakness in economically sensitive taxes, a $359 million
shortfall was expected for fiscal 1991. The projected imbalance was corrected
through reductions in expenditures, adjustments to capital, use of reserves and
other one-time measures which raised the State's general fund reserves to the
fiscal 1990 level. During fiscal 1992, Georgia's revenue plus General Fund
reserve approximately equalled appropriations. Revenue estimates for fiscal
1993 indicate that revenue plus the General Fund reserve equalled
appropriations for that year.
MARYLAND SERIES
The public indebtedness of the State of Maryland and its instrumentalities is
divided into three basic types: general obligation bonds for capital
improvements and for various State-sponsored projects to the payment of which
the State ad valorem property tax is exclusively pledged; limited, special
obligation bonds issued by the Maryland Department of Transportation for
transportation purposes, payable primarily from specific, fixed-rate excise
taxes and other revenues related mainly to highway use; and obligations issued
by certain authorities payable solely from specific non-tax, enterprise fund
revenues for which the State has no liability and has given no moral obligation
assurance.
Since at least the end of the Civil War, the State has paid the principal of
and interest on its general obligation bonds when due. There is no general debt
limit imposed by the State Constitution or public general laws, but the
Constitution does require the annual operating
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budget to be in balance with
estimated revenues. When the fiscal year 1993 budget was enacted, it was
estimated that the General Fund surplus on a budgetary basis at June 30, 1993,
would be approximately $10 million. As of May 19, 1993, it was estimated that
the General Fund surplus on a budgetary basis at June 30, 1993, would be
$500,000. When the 1994 budget was enacted, it was estimated that the General
Fund surplus on a budgetary basis at June 30, 1994 would be approximately $76
million, including $50 million mandated to be appropriated in the 1994 session
of the General Assembly to the Revenue Stabilization Account of the State
Reserve Fund.
MASSACHUSETTS SERIES
Massachusetts' economic difficulties and fiscal problems may affect
Massachusetts Municipal Obligations in the Series' portfolio. The persistence
of serious financial difficulties could adversely affect the market values and
marketability of, or result in default in payment on, outstanding State
Municipal Obligations. Massachusetts' expenditures for State programs and
services in each of the fiscal years 1987 through 1991 have exceeded each
year's current revenues. In addition, Massachusetts' tax revenues during this
period repeatedly failed to meet official forecasts. For the budgeted funds,
operating losses in fiscal 1987 and 1988 were covered largely by drawing on
fund balances from prior fiscal years. Massachusetts' operating losses in
fiscal 1989 and 1990, which totalled $672.5 million and $1.251 billion,
respectively, were covered primarily through deficit borrowings. Massachusetts
ended fiscal 1991 with an operating deficit of $21.2 million, but with positive
closing fund balances of $237.1 million, after applying the opening fund
balances created from the proceeds of the fiscal 1990 deficit borrowing. No
deficit borrowing was required to close out fiscal 1991. Massachusetts ended
fiscal 1992 with revenues and other sources exceeding expenditures and other
uses by $312.3 million and with positive fund balances of approximately $549.4
million. Fiscal 1993 is estimated to have ended with a fund balance of
approximately $230 million.
MICHIGAN SERIES
Michigan's economy has been undergoing certain basic changes in its
underlying structure. These changes reflect a diversifying economy which is
less reliant on the automobile industry. As a result, it is anticipated that
the State's economy in the future will be less susceptible to cyclical swings
and more resilient when national downturns occur. The principal sectors of
Michigan's diversifying economy are manufacturing of durable goods (including
automobile and office equipment manufacturing), tourism and agriculture.
Michigan's unemployment rate stood at 16.6% during the last quarter of 1982 and
averaged 8.8% in 1992.
Michigan's Annual Financial Reports for the fiscal years ended September 30,
1987, 1988 and 1989 showed positive balances in the State's general cash
position representing an improvement from the negative cash position of 1982.
The fiscal year l990 budget, however, resulted in a year-end deficit of
approximately $310 million. In 1991, the State was forced to enact major
initiatives to close a $1.847 billion budget gap in the State's 1991 budget
which resulted in a year-end cumulative deficit of approximately $170 million.
This cumulative deficit was eliminated as of the fiscal year ended September
30, 1992.
MINNESOTA SERIES
The structure of Minnesota's economy parallels the structure of the United
States' economy as a whole when viewed at a highly aggregated level of detail
as of 1991. Diversity and a significant natural resource base are two important
characteristics of the State's economy. However, the State of Minnesota
experienced financial difficulties in the early 1980s because of a downturn in
the State's economy resulting from the national recession. Recently, real
growth has been slow due to the current national recession, although the effect
of such recession has been less severe on Minnesota's economy than it has been
on the national economy.
There can be no assurance that the financial prob-
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lems referred to or similar future problems will not affect the market value or
marketability of the Minnesota Municipal Obligations or the ability of the
issuer thereof to pay interest or principal thereon.
NORTH CAROLINA SERIES
The economic profile of the State of North Carolina consists of a combination
of agriculture, industry and tourism, with agriculture as the basic element in
the economy. Tobacco production is the leading source of agricultural income in
the State, accounting for 22% of gross agricultural income.
The North Carolina Constitution requires a balanced budget. In May 1991, the
State revised its revenue estimates to reflect a $729 million revenue shortfall
for the fiscal year ending June 30, 1991. In conjunction with the new revenue
estimates, the Governor ordered a variety of budget balancing measures,
including a hiring freeze on most State positions, a freeze on certain capital
projects and a general reduction in expenditures by State agencies. Pursuant to
this action, the budget for the fiscal year 1990-91 was balanced. Through
January 1992, the State realized revenues at or slightly above amounts
projected and required to support the budget for the fiscal year 1991-92.
OHIO SERIES
Nonmanufacturing industries now employ more than three-fourths of all payroll
employees in Ohio. However, due to the continued importance of manufacturing
industries (including auto-related manufacturing), economic activity in Ohio
tends to be more cyclical than in some other states and in the nation as a
whole. Although Ohio's economy has improved since the 1980-82 national
recession, the State's economic problems and the 1990-91 national recession
produced some significant changes in certain revenue and expenditure levels for
the 1993 fiscal year and have had varying effects on the different geographic
areas of the State and the political subdivisions located within such
geographic areas. Each of the foregoing factors could have an effect on the
market for issuers generally or may have the effect of impairing the ability of
issuers to pay interest on, or repay principal of, Ohio Municipal Obligations.
OREGON SERIES
The Oregon economy generally has outperformed the national economy in recent
years. There is no assurance, however, that this will continue to be the case.
The State forecasts modest acceleration of the economy through 1994 with jobs
increasing at 3.0% per year, and personal income growing at an annual rate of
7.1%. The State's population has been growing, and the growth is expected to
continue. Forest products, housing, agriculture, trade and tourism are
mainstays of the economy. Forest products are forecast to decline, but the
other major areas should be stable or improving. Despite the expectation of
improving conditions, growth is likely to remain subdued as the timber industry
adjusts to the new Federal forest plan and State and local governments downsize
in response to budget cuts.
PENNSYLVANIA SERIES
Pennsylvania has been historically identified as a heavy industry state
although that reputation has recently changed as the coal, steel and railroad
industries declined. A more diversified economy has developed in Pennsylvania
as a long-term shift in jobs, investment and workers away from the northeast
part of the nation took place. The major new sources of growth are in the
service sector, including trade, medical and health services, education and
financial institutions. Pennsylvania is highly urbanized, with approximately
50% of the Commonwealth's total population contained in the metropolitan areas
which include the cities of Philadelphia and Pittsburgh.
Pennsylvania's approved budget for fiscal 1993 authorized $14.046 billion of
spending, an increase of less than .25% over total appropriations for fiscal
1992. The small increase in expenditures resulted from constraints on revenues
as a result of a personal tax rate reduction effective July 1, 1992, a low rate
of economic growth, higher tax refund reserves against adverse
34
<PAGE>
decisions in
pending litigation, and line item vetoes by the Governor. Through March 1993,
revenue collections were approximately .7% above estimates. Pennsylvania's
approved budget for fiscal 1994 calls for no new taxes and an increase in
expenditures over fiscal 1993 of approximately 5%, primarily for education and
welfare.
TEXAS SERIES
Economically and financially the State of Texas suffered during the 1980s
significant damage from the continued depressed price of oil and gas and the
overbuilding in the real estate market. The decline in oil prices, particularly
since 1986, and the recession that followed have had a severe effect on the
Texas banking and savings and loan industries, resulting in a number of
closings among banks and savings and loans. A recurrence of such economic or
financial difficulties could result in defaults or declines in the market
values or marketability of various State Municipal Obligations in which the
Series may invest, which could adversely affect the interest income to the
Series. In fiscal years 1989, 1990, 1991 and 1992, Texas' General Revenue Fund
ended with cash surpluses of $298 million, $768 million, $712.8 million and
$609.2 million, respectively.
VIRGINIA SERIES
Virginia's economy is strongly influenced by Federal government installations
and the growth of suburban communities around Washington, D.C. With Northern
Virginia a part of the Washington, D.C. metropolitan area and Hampton Roads the
home of the nation's largest concentration of military installations, the
Federal government has a greater impact on Virginia relative to its size than
any other state except Alaska and Hawaii. Manufacturing is also an important
segment of the State's economy. The manufacturing industry accounts for over
15% of total nonagricultural employment and ranks fourth behind services,
wholesale and retail trade, and government (Federal, state and local) in the
number of jobs it provides.
Virginia operates on a two-year budget. As a result of an ailing economy and
reduced tax collections, Virginia predicted a budget shortfall for the two
years ended June 30, 1992.
LOWER RATED BONDS
You should carefully consider the relative risks of investing in the higher
yielding (and, therefore, higher risk) debt securities in which each Series may
invest up to 30% of the value of its net assets. These are bonds such as those
rated Ba by Moody's or BB by S&P or Fitch or as low as the lowest rating
assigned by Moody's, S&P or Fitch. They generally are not meant for short-term
investing and may be subject to certain risks with respect to the issuing
entity and to greater market fluctuations than certain lower yielding, higher
rated fixed-income securities. Bonds rated Ba by Moody's are judged to have
speculative elements; their future cannot be considered as well assured and
often the protection of interest and principal payments may be very moderate.
Bonds rated BB by S&P are regarded as having predominantly speculative
characteristics and, while such obligations have less near-term vulnerability
to default than other speculative grade debt, they face major ongoing
uncertainties or exposure to adverse business, financial or economic conditions
which could lead to inadequate capacity to meet timely interest and principal
payments. Bonds rated BB by Fitch are considered speculative and the payment of
principal and interest may be affected at any time by adverse economic changes.
Bonds rated C by Moody's are regarded as having extremely poor prospects of
ever attaining any real investment standing. Bonds rated D by S&P are in
default and the payment of interest and/or repayment of principal is in
arrears. Bonds rated DDD, DD or D by Fitch are in actual or imminent default,
are extremely speculative and should be valued on the basis of their ultimate
recovery value in liquidation or reorganization of the issuer; DDD represents
the highest potential for recovery of such bonds; and D represents the lowest
potential for recovery. Such bonds, though high yielding, are characterized by
great risk. See "Appendix B" in the Statement of Additional Information for a
general description of Moody's, S&P and Fitch ratings of Municipal Obligations.
The ratings of Moody's, S&P and Fitch represent their
35
<PAGE>
opinions as to the quality of the Municipal Obligations which they undertake to
rate. It should be emphasized, however, that ratings are relative and
subjective and, although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market value risk of
these bonds. Therefore, although these ratings may be an initial criterion for
selection of portfolio investments, The Dreyfus Corporation also will evaluate
these securities and the ability of the issuers of such securities to pay
interest and principal. The Fund's ability to achieve its investment objective
may be more dependent on The Dreyfus Corporation's credit analysis than might
be the case for a fund that invested in higher rated securities. Once the
rating of a portfolio security has been changed, the Fund will consider all
circumstances deemed relevant in determining whether to continue to hold the
security.
The market price and yield of bonds rated Ba or lower by Moody's and BB or
lower by S&P and Fitch are more volatile than those of higher rated bonds.
Factors adversely affecting the market price and yield of these securities will
adversely affect the Series' net asset value. In addition, the retail secondary
market for these bonds may be less liquid than that of higher rated bonds;
adverse market conditions could make it difficult at times for the Fund to sell
certain securities or could result in lower prices than those used in
calculating the Series' net asset value.
Each Series may invest up to 5% of the value of its net assets in zero coupon
securities and pay-in-kind bonds (bonds which pay interest through the issuance
of additional bonds) rated Ba or lower by Moody's and BB or lower by S&P and
Fitch. These securities may be subject to greater fluctuations in value due to
changes in interest rates than interest-bearing securities and thus may be
considered more speculative than comparably rated interest-bearing securities.
See "Other Investment Considerations" below, and "Investment Objective and
Management Policies -- Risk Factors -- Lower Rated Bonds" and "Dividends,
Distributions and Taxes" in the Statement of Additional Information.
OTHER INVESTMENT CONSIDERATIONS
Even though interest-bearing securities are investments which promise a
stable stream of income, the prices of such securities are inversely affected
by changes in interest rates and, therefore, are subject to the risk of market
price fluctuations. Certain securities that may be purchased by the Series,
such as those with interest rates that fluctuate directly or indirectly based
on multiples of a stated index, are designed to be highly sensitive to changes
in interest rates and can subject the holders thereof to extreme reductions of
yield and possibly loss of principal. The value of fixed-income securities also
may be affected by changes in the credit rating or financial condition of the
issuing entities. Each Series' net asset value generally will not be stable and
should fluctuate based upon changes in the value of such Series' portfolio
securities. Securities in which a Series invests may earn a higher level of
current income than certain shorter-term or higher quality securities which
generally have greater liquidity, less market risk and less fluctuation in
market value.
Federal income tax law requires the holder of a zero coupon security or of
certain pay-in-kind bonds to take into account annually a portion of the
discount (or deemed discount) at which such securities were issued, prior to
the receipt of cash payments. To maintain its qualification as a regulated
investment company, a Series may be required to distribute such portion of the
discount and may have to dispose of portfolio securities under disadvantageous
circumstances in order to generate cash to satisfy these distribution
requirements.
Certain municipal lease/purchase obligations in which the Series may invest
may contain "non-appropriation" clauses which provide that the municipality has
no obligation to make lease payments in future years unless money is
appropriated for such purpose on a yearly basis. Although "non-appropriation"
lease/purchase obligations are secured by the leased property, disposition of
the leased property in the event of foreclosure might prove difficult. In
evaluating the credit quality of a municipal lease/purchase obligation that is
unrated, The Dreyfus Corporation will consider, on an ongoing basis, a number
of factors including the likelihood that the issuing municipality will
discontinue appropriating funding for the leased property.
36
<PAGE>
Certain provisions in the Code relating to the issuance of Municipal
Obligations may reduce the volume of Municipal Obligations qualifying for
Federal tax exemption. One effect of these provisions could be to increase the
cost of the Municipal Obligations available for purchase by the Series and thus
reduce the available yield. Shareholders should consult their tax advisers
concerning the effect of these provisions on an investment in a Series.
Proposals that may restrict or eliminate the income tax exemption for interest
on Municipal Obligations may be introduced in the future. If any such proposal
were enacted that would reduce the availability of Municipal Obligations for
investment by the Fund so as to adversely affect Fund shareholders, the Fund
would reevaluate its investment objective and policies and submit possible
changes in the Fund's structure to shareholders for their consideration. If
legislation were enacted that would treat a type of Municipal Obligation as
taxable, the Fund would treat such security as a permissible Taxable Investment
within the applicable limits set forth herein.
The Fund's classification as a "non-diversified" investment company means
that the proportion of each Series' assets that may be invested in the
securities of a single issuer is not limited by the Investment Company Act of
1940. A "diversified" investment company is required by the Investment Company
Act of 1940 generally to invest, with respect to 75% of its total assets, not
more than 5% of such assets in the securities of a single issuer. However, each
Series intends to conduct its operations so as to qualify as a "regulated
investment company" for purposes of the Code, which requires that, at the end
of each quarter of its taxable year, (i) at least 50% of the market value of
each Series' total assets be invested in cash, U.S. Government securities, the
securities of other regulated investment companies and other securities, with
such other securities of any one issuer limited for the purposes of this
calculation to an amount not greater than 5% of the value of each Series' total
assets, and (ii) not more than 25% of the value of each Series' total assets be
invested in the securities of any one issuer (other than U.S. Government
securities or the securities of other regulated investment companies). Since a
relatively high percentage of the Fund's assets may be invested in the
obligations of a limited number of issuers, the Fund's portfolio securities may
be more susceptible to any single economic, political or regulatory occurrence
than the portfolio securities of a diversified investment company.
Investment decisions for the Fund are made independently from those of other
investment companies advised by The Dreyfus Corporation. However, if such other
investment companies are prepared to invest in, or desire to dispose of,
Municipal Obligations or Taxable Investments at the same time as the Fund,
available investments or opportunities for sales will be allocated equitably to
each investment company. In some cases, this procedure may adversely affect the
size of the position obtained for or disposed of by the Fund or the price paid
or received by the Fund.
MANAGEMENT OF THE FUND
The Dreyfus Corporation, located at 200 Park Avenue, New York, New York 10166,
was formed in 1947 and serves as the Fund's investment adviser. As of December
31, 1993, The Dreyfus Corporation managed or administered approximately $78
billion in assets for more than 1.9 million investor accounts nationwide.
The Dreyfus Corporation supervises and assists in the overall management of
the Fund's affairs under a Management Agreement with the Fund, subject to the
overall authority of the Fund's Board of Trustees in accordance with
Massachusetts law. The primary investment officer for each of the Arizona
Series and the Georgia Series is Stephen C. Kris, who has held that position
since September 1992. The primary investment officer for each of the Colorado
Series and the Oregon Series will be Stephen C. Kris. Mr. Kris has been
employed by The Dreyfus Corporation since February 1988. The primary investment
officer for each of the Connecticut Series, the Massachusetts Series, the North
Carolina Series and the Virginia Series is Samuel J.
37
<PAGE>
Weinstock, who has held that position with respect to the Connecticut Series
and the Massachusetts Series since August 1987 and with respect to the North
Carolina Series and Virginia Series since August 1991, and has been employed by
The Dreyfus Corporation since March 1987. The primary investment officer for
each of the Florida Series, the Maryland Series, the Michigan Series, the
Minnesota Series, the Ohio Series, the Pennsylvania Series and the Texas Series
is A. Paul Disdier, who has held that position since April 1988 and has been
employed by The Dreyfus Corporation since February 1988. The Fund's other
investment officers are identified under "Management of the Fund" in the Fund's
Statement of Additional Information. The Dreyfus Corporation also provides
research services for the Fund as well as for other funds advised by The
Dreyfus Corporation through a professional staff of portfolio managers and
security analysts.
Under the terms of the Management Agreement, the Fund has agreed to pay The
Dreyfus Corporation a monthly fee at the annual rate of .55 of 1% of the value
of each Series' average daily net assets. From time to time, The Dreyfus
Corporation may waive receipt of its fees and/or voluntarily assume certain
expenses of a Series which would have the effect of lowering the overall
expense ratio of that Series and increasing yield to investors at the time such
amounts are waived or assumed, as the case may be. The Fund will not pay The
Dreyfus Corporation at a later time for any amounts it may waive, nor will the
Fund reimburse The Dreyfus Corporation for any amounts it may assume.
For the fiscal year ended April 30, 1993, the Fund paid The Dreyfus
Corporation a management fee at the effective annual rate set forth below with
respect to Class A of each Series (except the Colorado and Oregon Series which
had not commenced operations) pursuant to undertakings in effect:
Effective Annual Rate
as a Percentage of
Series Average Daily Net Assets
- ---------------- ------------------------
Arizona 0
Connecticut .34 of 1%
Florida .34 of 1%
Georgia 0
Maryland .33 of 1%
Massachusetts .31 of 1%
Michigan .30 of 1%
Minnesota .31 of 1%
North Carolina 0
Ohio .32 of 1%
Pennsylvania .30 of 1%
Texas 0
Virginia 0
For the period from January 15, 1993 (commencement of offering of Class B
shares) through April 30, 1993, the Fund paid The Dreyfus Corporation a
management fee at the effective annual rate set forth below with respect to
each Series (except the Colorado and Oregon Series which had not commenced
operations) pursuant to undertakings in effect:
38
<PAGE>
Effective Annual Rate
as a Percentage of
Series Average Daily Net Assets
- ------------------ ------------------------
Arizona .0
Connecticut .41 of 1%
Florida .41 of 1%
Georgia .0
Maryland .41 of 1%
Massachusetts .40 of 1%
Michigan .39 of 1%
Minnesota .39 of 1%
North Carolina .0
Ohio .40 of 1%
Pennsylvania .38 of 1%
Texas .0
Virginia .0
The Dreyfus Corporation may pay Dreyfus Service Corporation for shareholder
and distribution services from its own monies, including past profits but not
including the management fee paid by the Fund. Dreyfus Service Corporation may
pay part or all of these payments to securities dealers or others for servicing
and distribution.
The Shareholder Services Group, Inc., a subsidiary of First Data Corporation,
P.O. Box 9671, Providence, Rhode Island 02940-9671, is the Fund's Transfer and
Dividend Disbursing Agent (the "Transfer Agent"). The Bank of New York, 110
Washington Street, New York, New York 10286, is the Fund's Custodian.
HOW TO BUY FUND SHARES
The Fund's distributor is Dreyfus Service Corporation, a wholly-owned
subsidiary of The Dreyfus Corporation, located at 200 Park Avenue, New York,
New York 10166. The shares it distributes are not deposits or obligations of
The Dreyfus Security Savings Bank, F.S.B. and therefore are not insured by the
Federal Deposit Insurance Corporation.
Fund shares may be purchased only by clients of certain financial
institutions (which may include banks), securities dealers ("Selected Dealers")
and other industry professionals (collectively, "Service Agents"), except that
full-time or part-time employees of The Dreyfus Corporation or any of its
affiliates or subsidiaries, directors of The Dreyfus Corporation, Board members
of a fund advised by The Dreyfus Corporation, including members of the Fund's
Board, or the spouse or minor child of any of the foregoing may purchase Class
A shares directly through Dreyfus Service Corporation. Subsequent purchases may
be sent directly to the Transfer Agent or to your Service Agent. Service Agents
may receive different levels of compensation for selling different Classes of
shares. Management understands that some Service Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus, and, to the extent permitted by applicable regulatory authority,
may charge their clients a direct fee which would be in addition to any amounts
which might be received under the Shareholder Services Plan. Each Service Agent
has agreed to transmit to its clients a schedule of such fees. You should
consult your Service Agent in this regard.
When purchasing Fund shares, you must specify whether the purchase is for
Class A or Class B shares. Share certificates are issued only upon your written
request. No certificates are issued for fractional shares. It is not
recommended that the Fund be used as a vehicle for Keogh, IRA or other
qualified retirement plans. The Fund reserves the right to reject any purchase
order.
The minimum initial investment is $1,000. Subsequent investments must be at
least $100. The initial investment must be accompanied by the Fund's Account
Application.
39
<PAGE>
You may purchase Fund shares by check or wire, or through the TeleTransfer
Privilege described below. Checks should be made payable to "Premier State
Municipal Bond Fund," and should specify the Series in which you are investing.
Payments to open new accounts which are mailed should be sent to Premier State
Municipal Bond Fund, P.O. Box 9387, Providence, Rhode Island 02940-9387,
together with your Account Application indicating which Class of shares is
being purchased. For subsequent investments, your Fund account number should
appear on the check and an investment slip should be enclosed and sent to
Premier State Municipal Bond Fund, P.O. Box 105, Newark, New Jersey 07101-0105.
Neither initial nor subsequent investments should be made by third party check.
Wire payments may be made if your bank account is in a commercial bank that is
a member of the Federal Reserve System or in any other bank having a
correspondent bank in New York City. Immediately available funds may be
transmitted by wire to The Bank of New York together with the applicable
Series' DDA# as shown below, for purchase of Fund shares in your name:
For Class A shares:
DDA #8900117052/Premier State Municipal Bond Fund/Arizona Series -- Class A
shares
DDA #8900088281/Premier State Municipal Bond Fund/Colorado Series -- Class A
shares
DDA #8900119489/Premier State Municipal Bond Fund/Connecticut Series -- Class
A shares
DDA #8900119381/Premier State Municipal Bond Fund/Florida Series -- Class A
shares
DDA #8900117087/Premier State Municipal Bond Fund/Georgia Series -- Class A
shares
DDA #8900119403/Premier State Municipal Bond Fund/Maryland Series -- Class A
shares
DDA #8900119470/Premier State Municipal Bond Fund/Massachusetts Series --
Class A shares
DDA #8900119411/Premier State Municipal Bond Fund/Michigan Series -- Class A
shares
DDA #8900119438/Premier State Municipal Bond Fund/Minnesota Series -- Class A
shares
DDA #8900208635/Premier State Municipal Bond Fund/North Carolina Series --
Class A shares
DDA #8900119446/Premier State Municipal Bond Fund/Ohio Series -- Class A
shares
DDA #8900088265/Premier State Municipal Bond Fund/Oregon Series -- Class A
shares
DDA #8900119454/Premier State Municipal Bond Fund/Pennsylvania Series --
Class A shares
DDA #8900119462/Premier State Municipal Bond Fund/Texas Series -- Class A
shares
DDA #8900208678/Premier State Municipal Bond Fund/Virginia Series -- Class A
shares
For Class B shares:
DDA #8900115238/Premier State Municipal Bond Fund/Arizona Series -- Class B
shares
DDA #8900115432/Premier State Municipal Bond Fund/Colorado Series -- Class B
shares
DDA #8900115130/Premier State Municipal Bond Fund/Connecticut Series -- Class
B shares
DDA #8900115041/Premier State Municipal Bond Fund/Florida Series -- Class B
shares
DDA #8900115246/Premier State Municipal Bond Fund/Georgia Series -- Class B
shares
DDA #8900115068/Premier State Municipal Bond Fund/Maryland Series -- Class B
shares
DDA #8900115122/Premier State Municipal Bond Fund/Massachusetts Series --
Class B shares
DDA #8900115076/Premier State Municipal Bond Fund/Michigan Series -- Class B
shares
DDA #8900115084/Premier State Municipal Bond Fund/Minnesota Series -- Class B
shares
DDA #8900115149/Premier State Municipal Bond Fund/North Carolina Series --
Class B shares
DDA #8900115092/Premier State Municipal Bond Fund/Ohio Series -- Class B
shares
DDA #8900115424/Premier State Municipal Bond Fund/Oregon Series -- Class B
shares
DDA #8900115106/Premier State Municipal Bond Fund/Pennsylvania Series --
Class B shares
DDA #8900115114/Premier State Municipal Bond Fund/Texas Series -- Class B
shares
DDA #8900115157/Premier State Municipal Bond Fund/Virginia Series -- Class B
shares
The wire must include your Fund account number (for new accounts, your
Taxpayer Identification Number ("TIN") should be included instead), account
registration and dealer number, if applicable. If your initial purchase of Fund
shares is by wire, please call 1-800-645-6561 after completing your wire
payment to obtain your Fund account number. Please include your Fund account
number on the Fund's Account Application and promptly mail the Account
Application to the Fund, as no redemptions will be permitted until the Account
40
<PAGE>
Application is received. You may obtain further information about remitting
funds in this manner from your bank. All payments should be made in U.S.
dollars and, to avoid fees and delays, should be drawn only on U.S. banks. A
charge will be imposed if any check used for investment in your account does
not clear. The Fund makes available to certain large institutions the ability
to issue purchase instructions through compatible computer facilities.
Subsequent investments also may be made by electronic transfer of funds from
an account maintained in a bank or other domestic financial institution that is
an Automated Clearing House member. You must direct the institution to transmit
immediately available funds through the Automated Clearing House to The Bank of
New York with instructions to credit your Fund account. The instructions must
specify your Fund account registration and your Fund account number preceded by
the digits "1111."
Each Series' shares are sold on a continuous basis. Net asset value per share
is determined as of the close of trading on the floor of the New York Stock
Exchange (currently, 4:00 p.m., New York time), on each day the New York Stock
Exchange is open for business. For purposes of determining net asset value,
options and futures contracts will be valued 15 minutes after the close of
trading on the floor of the New York Stock Exchange. Net asset value per share
of each Class is computed by dividing the value of the net assets of each
Series represented by such Class (i.e., the value of its assets less
liabilities) by the total number of shares of such Class outstanding. Each
Series' investments are valued each business day by an independent pricing
service approved by the Board of Trustees and are valued at fair value as
determined by the pricing service. The pricing service's procedures are
reviewed under the general supervision of the Board of Trustees. For further
information regarding the methods employed in valuing the Series' investments,
see "Determination of Net Asset Value" in the Statement of Additional
Information.
Federal regulations require that you provide a certified TIN upon opening or
reopening an account. See "Dividends, Distributions and Taxes" and the Fund's
Account Application for further information concerning this requirement.
Failure to furnish a certified TIN to the Fund could subject you to a $50
penalty imposed by the Internal Revenue Service (the "IRS").
If an order is received by the Transfer Agent by the close of trading on the
floor of the New York Stock Exchange (currently, 4:00 p.m., New York time) on
any business day, Fund shares will be purchased at the public offering price
determined as of the close of trading on the floor of the New York Stock
Exchange on that day. Otherwise, Fund shares will be purchased at the public
offering price determined as of the close of trading on the floor of the New
York Stock Exchange on the next business day, except where shares are purchased
through a dealer as provided below.
Orders for the purchase of Fund shares received by dealers by the close of
trading on the floor of the New York Stock Exchange on any business day and
transmitted to Dreyfus Service Corporation by the close of its business day
(normally 5:15 p.m., New York time) will be based on the public offering price
per share determined as of the close of trading on the floor of the New York
Stock Exchange on that day. Otherwise, the orders will be based on the next
determined public offering price. It is the dealers' responsibility to transmit
orders so that they will be received by Dreyfus Service Corporation before the
close of its business day.
CLASS A SHARES
The public offering price for Class A shares is the net asset value per share
of that Class plus a sales load as shown below:
41
<PAGE>
<TABLE>
<CAPTION>
Sales Load
-----------------------------------
As a % of As a % of Dealers' Reallowance
offering price net asset value as a % of
Amount of Transaction per share per share offering price
-------------- --------------- --------------------
<S> <C> <C> <C>
Less than $50,000.......................... 4.50 4.70 4.25
$50,000 to less than $100,000.............. 4.00 4.20 3.75
$100,000 to less than $250,000............. 3.00 3.10 2.75
$250,000 to less than $500,000............. 2.50 2.60 2.25
$500,000 to less than $1,000,000........... 2.00 2.00 1.75
$1,000,000 to less than $3,000,000......... 1.00 1.00 1.00
$3,000,000 to less than $5,000,000......... .50 .50 .50
$5,000,000 and over........................ .25 .25 .25
</TABLE>
Full-time employees of NASD member firms and full-time employees of other
financial institutions which have entered into an agreement with Dreyfus
Service Corporation pertaining to the sale of Fund shares (or which otherwise
have a brokerage-related or clearing arrangement with an NASD member firm or
other financial institution with respect to sales of Fund shares) may purchase
Class A shares for themselves, directly or pursuant to an employee benefit plan
or other program, or for their spouses or minor children at net asset value,
provided that they have furnished Dreyfus Service Corporation with such
information as it may request from time to time in order to verify eligibility
for this privilege. This privilege also applies to full-time employees of
financial institutions affiliated with NASD member firms whose full-time
employees are eligible to purchase Class A shares at net asset value. In
addition, Class A shares are offered at net asset value to full-time or
part-time employees of The Dreyfus Corporation or any of its affiliates or
subsidiaries, directors of The Dreyfus Corporation, Board members of a fund
advised by The Dreyfus Corporation, including members of the Fund's Board, or
the spouse or minor child of any of the foregoing.
In fiscal 1993, Dreyfus Service Corporation retained $1,085,311 from sales
loads on Class A shares. See "How to Redeem Fund Shares -- Contingent Deferred
Sales Charge -- Class B Shares." The dealer reallowance may be changed from
time to time but will remain the same for all dealers. Dreyfus Service
Corporation, at its own expense, may provide additional promotional incentives
to dealers that sell shares of funds advised by The Dreyfus Corporation which
are sold with a sales load, such as the Fund. In some instances, these
incentives may be offered only to certain dealers who have sold or may sell
significant amounts of such shares.
CLASS B SHARES
The public offering price for Class B shares is the net asset value per share
of that Class. No initial sales charge is imposed at the time of purchase. A
CDSC is imposed, however, on certain redemptions of Class B shares as described
under "How to Redeem Fund Shares." Dreyfus Service Corporation compensates
certain Service Agents for selling Class B shares at the time of purchase from
Dreyfus Service Corporation's own assets. The proceeds of the CDSC and the
distribution fee, in part, are used to defray these expenses. For the period
January 15, 1993 through April 30, 1993, Dreyfus Service Corporation retained
$12,672 from the CDSC imposed on Class B shares.
RIGHT OF ACCUMULATION -- CLASS A SHARES
Reduced sales loads apply to any purchase of Class A shares, shares of other
funds in the Family of Premier Funds, shares of certain other funds purchased
through an exchange from any funds in the Family of Premier Funds and shares of
certain other funds advised by The Dreyfus Corporation which are sold with a
sales load and shares acquired by a previous exchange of shares purchased with
a sales load (hereinafter referred to as "Eligible Funds"), by you and any
related "purchaser" as defined in the Statement of Additional Information,
where the aggregate investment, including such purchase, is $50,000 or more.
If, for example, you previously purchased and still hold Class A shares of the
Fund, or of any other Eligible
42
<PAGE>
Fund or combination thereof, with an aggregate
current market value of $40,000 and subsequently purchase Class A shares of the
Fund or an Eligible Fund having a current value of $20,000, the sales load
applicable to the subsequent purchase would be reduced to 4% of the offering
price. All present holdings of Eligible Funds may be combined to determine the
current offering price of the aggregate investment in ascertaining the sales
load applicable to each subsequent purchase.
To qualify for reduced sales loads, at the time of a purchase you or your
Service Agent must notify Dreyfus Service Corporation if orders are made by
wire, or the Transfer Agent if orders are made by mail. The reduced sales load
is subject to confirmation of your holdings through a check of appropriate
records.
TELETRANSFER PRIVILEGE
You may purchase Fund shares (minimum $500, maximum $150,000 per day) by
telephone if you have checked the appropriate box and supplied the necessary
information on the Fund's Account Application or have filed an Optional
Services Form with the Transfer Agent. The proceeds will be transferred between
the bank account designated in one of these documents and your Fund account.
Only a bank account maintained in a domestic financial institution which is an
Automated Clearing House member may be so designated. The Fund may modify or
terminate this Privilege at any time or charge a service fee upon notice to
shareholders. No such fee currently is contemplated.
If you have selected the TeleTransfer Privilege, you may request a
TeleTransfer purchase of Fund shares by telephoning 1-800-221-4060 or, if you
are calling from overseas, call 1-401-455-3306.
SHAREHOLDER SERVICES
The services and privileges described under this heading may not be available
to clients of certain Service Agents and some Service Agents may impose certain
conditions on their clients which are different from those described in this
Prospectus. You should consult your Service Agent in this regard.
EXCHANGE PRIVILEGE
The Exchange Privilege enables clients of certain Service Agents to purchase,
in exchange for Class A or Class B shares of a Series, shares of the same Class
in one of the other Series, or of the same Class in certain other funds managed
or administered by The Dreyfus Corporation to the extent such shares are
offered for sale in your state of residence. These funds have different
investment objectives which may be of interest to you. If you desire to use
this Privilege, you should consult your Service Agent or Dreyfus Service
Corporation to determine if it is available and whether any conditions are
imposed on its use.
To use this Privilege, your Service Agent acting on your behalf must give
exchange instructions to the Transfer Agent in writing, by wire or by
telephone. If you previously have established the Telephone Exchange Privilege,
you may telephone exchange instructions by calling 1-800-221-4060 or, if you
are calling from overseas, call 1-401-455-3306. See "How to Redeem Fund Shares
- -- Procedures." Before any exchange, you must obtain and should review a copy
of the current prospectus of the fund into which the exchange is being made.
Prospectuses may be obtained from Dreyfus Service Corporation. Except in the
case of Personal Retirement Plans, the shares being exchanged must have a
current value of at least $500; furthermore, when establishing a new account by
exchange, the shares being exchanged must have a value of at least the minimum
initial investment required for the fund into which the exchange is being made.
Telephone exchanges may be made only if the appropriate "YES" box has been
checked on the Account Application, or a separate signed Optional Services Form
is on file with the Transfer Agent. Upon an exchange into a new account, the
following shareholder services and privileges, as applicable and where
available, will be automatically carried over to the fund into which the
exchange is being made: Exchange Privilege, Check Redemption
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Privilege,
TeleTransfer Privilege, and the dividend/capital gain distribution option
(except for the Dividend Sweep Privilege) selected by the investor.
Shares will be exchanged at the next determined net asset value; however, a
sales load may be charged with respect to exchanges of Class A shares into
funds sold with a sales load. No CDSC will be imposed on Class B shares at the
time of an exchange; however, Class B shares acquired through an exchange will
be subject on redemption to the higher CDSC applicable to the exchanged or
acquired shares. The CDSC applicable on redemption of the acquired Class B
shares will be calculated from the date of the initial purchase of the Class B
shares exchanged. If you are exchanging Class A shares into a fund that charges
a sales load, you may qualify for share prices which do not include the sales
load or which reflect a reduced sales load, if the shares of the fund from
which you are exchanging were: (a) purchased with a sales load, (b) acquired by
a previous exchange from shares purchased with a sales load, or (c) acquired
through reinvestment of dividends or distributions paid with respect to the
foregoing categories of shares. To qualify, at the time of your exchange your
Service Agent must notify Dreyfus Service Corporation. Any such qualification
is subject to confirmation of your holdings through a check of appropriate
records. See "Shareholder Services" in the Statement of Additional Information.
No fees currently are charged shareholders directly in connection with
exchanges, although the Fund reserves the right, upon not less than 60 days'
written notice, to charge shareholders a nominal fee in accordance with rules
promulgated by the Securities and Exchange Commission. The Fund reserves the
right to reject any exchange request in whole or in part. The Exchange
Privilege may be modified or terminated at any time upon notice to
shareholders.
The exchange of shares of one fund for shares of another is treated for
Federal income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize a taxable
gain or loss.
AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a semi-monthly,
monthly, quarterly or annual basis) in exchange for Class A or Class B shares
of a Series, in shares of the same Class of one of the other Series, or funds
in the Premier Family of Funds or certain other funds in the Dreyfus Family of
Funds of which you are currently an investor. The amount you designate, which
can be expressed either in terms of a specific dollar or share amount ($100
minimum), will be exchanged automatically on the first and/or fifteenth of the
month according to the schedule you have selected. Shares will be exchanged at
the then-current net asset value; however, a sales load may be charged with
respect to exchanges of Class A shares into funds sold with a sales charge. No
CDSC will be imposed on Class B shares at the time of an exchange; however,
Class B shares acquired through an exchange will be subject on redemption to
the higher CDSC applicable to the exchanged or acquired shares. The CDSC
applicable on redemption of the acquired Class B shares will be calculated from
the date of the initial purchase of the Class B shares exchanged. See
"Shareholder Services" in the Statement of Additional Information. The right to
exercise this Privilege may be modified or cancelled by the Fund or the
Transfer Agent. You may modify or cancel your exercise of this Privilege at any
time by writing to Premier State Municipal Bond Fund, P.O. Box 6587,
Providence, Rhode Island 02940-6587. The Fund may charge a service fee for the
use of this Privilege. No such fee currently is contemplated. The exchange of
shares of one fund for shares of another is treated for Federal income tax
purposes as a sale of the shares given in exchange by the shareholder and,
therefore, an exchanging shareholder may realize a taxable gain or loss. For
more information concerning this Privilege and the funds in the Premier Family
of Funds or Dreyfus Family of Funds eligible to participate in this Privilege,
or to obtain an Auto-Exchange Authorization Form, please call toll free
1-800-645-6561.
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AUTOMATIC ASSET BUILDER
Automatic Asset Builder permits you to purchase Fund shares (minimum of $100
and maximum of $150,000 per transaction) at regular intervals selected by you.
Fund shares are purchased by transferring funds from the bank account
designated by you. At your option, the bank account designated by you will be
debited in the specified amount, and Fund shares will be purchased, once a
month, on either the first or fifteenth day, or twice a month, on both days.
Only an account maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. To establish an Automatic
Asset Builder account, you must file an authorization form with the Transfer
Agent. You may obtain the necessary authorization form from Dreyfus Service
Corporation. You may cancel your participation in this Privilege or change the
amount of purchase at any time by mailing written notification to Premier State
Municipal Bond Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587, and
the notification will be effective three business days following receipt. The
Fund may modify or terminate this Privilege at any time or charge a service
fee. No such fee currently is contemplated.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Government Direct Deposit Privilege enables you to purchase Fund shares
(minimum of $100 and maximum of $50,000 per transaction) by having Federal
salary, Social Security, or certain veterans', military or other payments from
the Federal government automatically deposited into your Fund account. You may
deposit as much of such payments as you elect. To enroll in Government Direct
Deposit, you must file with the Transfer Agent a completed Direct Deposit
Sign-Up Form for each type of payment that you desire to include in this
Privilege. The appropriate form may be obtained from Dreyfus Service
Corporation or your Service Agent. Death or legal incapacity will terminate
your participation in this Privilege. You may elect at any time to terminate
your participation by notifying in writing the appropriate Federal agency.
Further, the Fund may terminate your participation upon 30 days' notice to you.
DIVIDEND SWEEP PRIVILEGE
Dividend Sweep Privilege enables you to invest automatically dividends or
dividends and capital gain distributions, if any, paid by the Fund in shares of
the same class of another fund in the Premier Family of Funds or the Dreyfus
Family of Funds of which you are a shareholder. Shares of the other fund will
be purchased at the then-current net asset value; however, a sales load may be
charged with respect to investments in shares of a fund sold with a sales load.
If you are investing in a fund that charges a sales load, you may qualify for
share prices which do not include the sales load or which reflect a reduced
sales load. If you are investing in a fund that charges a CDSC, the shares
purchased will be subject on redemption to the CDSC, if any, applicable to the
purchased shares. See "Shareholder Services" in the Statement of Additional
Information. For more information concerning this Privilege and the funds in
the Premier Family of Funds or the Dreyfus Family of Funds eligible to
participate in this Privilege, or to request a Dividend Sweep Authorization
Form, please call toll free 1-800-645-6561. You may cancel this Privilege by
mailing written notification to Premier State Municipal Bond Fund, P.O. Box
6527, Providence, Rhode Island 02940-6527. To select a new fund after
cancellation, you must submit a new authorization form. Enrollment in or
cancellation of this Privilege is effective three business days following
receipt. This Privilege is available only for existing accounts and may not be
used to open new accounts. Minimum subsequent investments do not apply. The
Fund may modify or terminate this Privilege at any time or charge a service
fee. No such fee currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly or quarterly basis
if you have a $5,000 minimum account. An application for the Automatic
Withdrawal Plan can be obtained from
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Dreyfus Service Corporation. There is a
service charge of 50 cents for each withdrawal check. The Automatic Withdrawal
Plan may be ended at any time by you, the Fund or the Transfer Agent. Shares for
which certificates have been issued may not be redeemed through the Automatic
Withdrawal Plan.
Class B shares withdrawn pursuant to the Automatic Withdrawal Plan will be
subject to any applicable CDSC. Purchases of additional Class A where the sales
load is imposed concurrently with withdrawals of Class A shares generally are
undesirable.
LETTER OF INTENT -- CLASS A SHARES
By signing a Letter of Intent form, available from Dreyfus Service
Corporation, you become eligible for the reduced sales load applicable to the
total number of Eligible Fund shares purchased in a 13-month period. A minimum
initial purchase of $5,000 is required. To compute the applicable sales load,
the offering price of shares you hold (on the date of submission of the Letter
of Intent) in any Eligible Fund that may be used toward "Right of Accumulation"
benefits described above may be used as a credit toward completion of the
Letter of Intent. However, the reduced sales load will be applied only to new
purchases.
The Transfer Agent will hold in escrow 5% of the amount indicated in the
Letter of Intent for payment of a higher sales load if you do not purchase the
full amount indicated in the Letter of Intent. The escrow will be released when
you fulfill the terms of the Letter of Intent by purchasing the specified
amount. If your purchases qualify for a further sales load reduction, the sales
load will be adjusted to reflect your total purchase at the end of 13 months.
If total purchases are less than the amount specified, you will be requested to
remit an amount equal to the difference between the sales load actually paid
and the sales load applicable to the aggregate purchases actually made. If such
remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will redeem an
appropriate number of Class A shares held in escrow to realize the difference.
Signing a Letter of Intent does not bind you to purchase, or the Fund to sell,
the full amount indicated at the sales load in effect at the time of signing,
but you must complete the intended purchase to obtain the reduced sales load.
At the time you purchase Class A shares, you must indicate your intention to do
so under a Letter of Intent. Purchases pursuant to a Letter of Intent will be
made at the then-current net asset value plus the applicable sales load in
effect at the time such Letter of Intent was executed.
HOW TO REDEEM FUND SHARES
GENERAL
You may request redemption of your Class A or Class B shares at any time.
Redemption requests should be transmitted to the Transfer Agent as described
below. When a request is received in proper form, the Fund will redeem the
shares at the next determined net asset value as described below. If you hold
Fund shares of more than one Class, any request for redemption must specify the
Class of shares being redeemed. If you fail to specify the Class of shares to
be redeemed or if you own fewer shares of the Class than specified to be
redeemed, the redemption request may be delayed until the Transfer Agent
receives further instructions from you or your Service Agent.
The Fund imposes no charges (other than any applicable CDSC with respect to
Class B shares) when shares are redeemed directly through Dreyfus Service
Corporation. Service Agents may charge a nominal fee for effecting redemption
of Fund shares. Any certificates representing shares being redeemed must be
submitted with the redemption request. The value of the shares redeemed may be
more or less than their original cost, depending on the Series' then-current
net asset value.
The Fund ordinarily will make payment for all shares redeemed within seven
days after receipt by the Transfer Agent of a redemption request in proper
form, except as provided by
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<PAGE>
the rules of the Securities and Exchange
Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY CHECK, BY THE
TELETRANSFER PRIVILEGE OR THROUGH AUTOMATIC ASSET BUILDER AND SUBSEQUENTLY
SUBMIT A WRITTEN REQUEST TO THE TRANSFER AGENT, THE REDEMPTION PROCEEDS WILL BE
TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR PURCHASE CHECK,
TELETRANSFER PURCHASE OR AUTOMATIC ASSET BUILDER ORDER, WHICH MAY TAKE UP TO
EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE FUND WILL NOT HONOR REDEMPTION
CHECKS UNDER THE CHECK REDEMPTION PRIVILEGE, AND WILL REJECT REQUESTS TO REDEEM
SHARES PURSUANT TO THE TELETRANSFER PRIVILEGE, FOR A PERIOD OF EIGHT BUSINESS
DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE
TELETRANSFER PURCHASE OR THE AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH
REDEMPTION IS REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE
PURCHASED BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED
BALANCE IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY
REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE PAYABLE,
AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF BENEFICIAL OWNERSHIP.
Fund shares will not be redeemed until the Transfer Agent has received your
Account Application.
The Fund reserves the right to redeem your account at its option upon not
less than 30 days' written notice if your account's net asset value is $500 or
less and remains so during the notice period.
CONTINGENT DEFERRED SALES CHARGE -- CLASS B SHARES
A CDSC payable to Dreyfus Service Corporation is imposed on any redemption of
Class B shares of a Series which reduces the current net asset value of your
Class B shares to an amount which is lower than the dollar amount of all
payments by you for the purchase of Class B shares of such Series held by you
at the time of redemption. No CDSC will be imposed to the extent that the net
asset value of the Class B shares redeemed does not exceed (i) the current net
asset value of Class B shares acquired through reinvestment of dividends or
capital gain distributions, plus (ii) increases in the net asset value of Class
B shares above the dollar amount of all your payments for the purchase of Class
B shares of such Series held by you at the time of redemption.
If the aggregate value of the Class B shares redeemed has declined below
their original cost as a result of the Series' performance, a CDSC may be
applied to the then-current net asset value rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the charge will
depend on the number of years from the time you purchased the Class B shares
until the time of redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the purchase of Class B
shares, all payments during a month will be aggregated and deemed to have been
made on the first day of the month. The following table sets forth the rates of
the CDSC:
<TABLE>
<CAPTION>
Year Since Purchase CDSC as a % of Amount
Payment Was Made Invested or Redemption Proceeds
<S> <C>
First.......................... 3.00
Second......................... 3.00
Third.......................... 2.00
Fourth......................... 2.00
Fifth.......................... 1.00
Sixth.......................... 0.00
</TABLE>
In determining whether a CDSC is applicable to a redemption, the calculation
will be made in a manner that results in the lowest possible rate. It will be
assumed that the redemption is made first of amounts representing shares
acquired pursuant to the reinvestment of dividends and distributions; then of
amounts representing the increase in net asset value of Class B shares above
the total amount of payments for the purchase of Class B shares made during the
preceding five years; then of amounts representing the cost of shares purchased
five years prior to the redemption; and finally, of amounts representing the
cost of shares held for the longest period of time within the applicable
five-year period.
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For example, assume an investor purchased 100 shares at $10 per share for a
cost of $1,000. Subsequently, the shareholder acquired five additional shares
through dividend reinvestment. During the second year after the purchase the
investor decided to redeem $500 of his or her investment. Assuming at the time
of the redemption the net asset value had appreciated to $12 per share, the
value of the investor's shares would be $1,260 (105 shares at $12 per share).
The CDSC would not be applied to the value of the reinvested dividend shares
and the amount which represents appreciation ($260). Therefore, $240 of the
$500 redemption proceeds ($500 minus $260) would be charged at a rate of 3%
(the applicable rate in the second year after purchase) for a total CDSC of
$7.20.
WAIVER OF CDSC
The CDSC will be waived in connection with (a) redemptions made within one
year after the death or disability, as defined in Section 72(m)(7) of the Code,
of the shareholder, (b) redemptions by employees participating in qualified or
non-qualified employee benefit plans or other programs where (i) the employers
or affiliated employers maintaining such plans or programs have a minimum of
250 employees eligible for participation in such plans or programs, or (ii)
such plan's or program's aggregate initial investment in the Dreyfus Family of
Funds or certain other products made available by Dreyfus Service Corporation
exceeds one million dollars, (c) redemptions as a result of a combination of
any investment company with the relevant Series by merger, acquisition of
assets or otherwise, (d) a distribution following retirement under a
tax-deferred retirement plan or upon attaining age 70-1/2 in the case of an IRA
or Keogh plan or custodial account pursuant to Section 403(b) of the Code, and
(e) redemptions by such shareholders as the Securities and Exchange Commission
or its staff may permit. If the Fund's Trustees determine to discontinue the
waiver of the CDSC, the disclosure in the Fund's prospectus will be revised
appropriately. Any Fund shares subject to a CDSC which were purchased prior to
the termination of such waiver will have the CDSC waived as provided in the
Fund's prospectus at the time of the purchase of such shares.
To qualify for a waiver of the CDSC, at the time of redemption you must
notify the Transfer Agent or your Service Agent must notify Dreyfus Service
Corporation. Any such qualification is subject to confirmation of your
entitlement.
PROCEDURES
You may redeem Fund shares by using the regular redemption procedure through
the Transfer Agent, using the Check Redemption Privilege with respect to Class
A shares, through the TeleTransfer Privilege or, if you are a client of a
Selected Dealer, through the Selected Dealer. If you have given your Service
Agent authority to instruct the Transfer Agent to redeem shares and to credit
the proceeds of such redemptions to a designated account at your Service Agent,
you may redeem shares only in this manner and in accordance with the regular
redemption procedure described below. If you wish to use the other redemption
methods described below, you must arrange with your Service Agent for delivery
of the required application(s) to the Transfer Agent. Other redemption
procedures may be in effect for clients of certain Service Agents. The Fund
makes available to certain large institutions the ability to issue redemption
instructions through compatible computer facilities.
Your redemption request may direct that the redemption proceeds be used to
purchase shares of other funds advised or administered by The Dreyfus
Corporation that are not available through the Exchange Privilege. The
applicable CDSC will be charged upon the redemption of Class B shares. Your
redemption proceeds will be invested in shares of the other fund on the next
business day. Before you make such a request, you must obtain and should review
a copy of the current prospectus of the fund being purchased. Prospectuses may
be obtained from Dreyfus Service Corporation. The prospectus will contain
information concerning minimum investment requirements and other conditions
that may apply to your purchase.
48
<PAGE>
You may redeem or exchange Fund shares by telephone if you have checked the
appropriate box on the Fund's Account Application or have filed an Optional
Services Form with the Transfer Agent. If you select the TeleTransfer Privilege
or telephone exchange privilege, you authorize the Transfer Agent to act on
telephone instructions from any person representing himself or herself to be
you, or a representative of your Service Agent, and reasonably believed by the
Transfer Agent to be genuine. The Fund will require the Transfer Agent to
employ reasonable procedures, such as requiring a form of personal
identification, to confirm that instructions are genuine and, if it does not
follow such procedures, the Fund or the Transfer Agent may be liable for any
losses due to unauthorized or fraudulent instructions. Neither the Fund nor the
Transfer Agent will be liable for following telephone instructions reasonably
believed to be genuine.
During times of drastic economic or market conditions, you may experience
difficulty in contacting the Transfer Agent by telephone to request a
TeleTransfer redemption or an exchange of Series shares. In such cases, you
should consider using the other redemption procedures described herein. Use of
these other redemption procedures may result in your redemption request being
processed at a later time than it would have been if TeleTransfer redemption
had been used. During the delay, the Series' net asset value may fluctuate.
REGULAR REDEMPTION
Under the regular redemption procedure, you may redeem shares by written
request mailed to Premier State Municipal Bond Fund, P.O. Box 6587, Providence,
Rhode Island 02940-6587. Written redemption requests must specify the Class of
shares being redeemed. Redemption requests must be signed by each shareholder,
including each owner of a joint account, and each signature must be guaranteed.
The Transfer Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from domestic
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program ("STAMP"), and the
Stock Exchanges Medallion Program.
Redemption proceeds of at least $1,000 will be wired to any member bank of
the Federal Reserve System in accordance with a written signature-guaranteed
request.
CHECK REDEMPTION PRIVILEGE -- CLASS A SHARES
If you hold Class A shares, you may request on the Account Application,
Optional Services Form or by later written request that the Fund provide
Redemption Checks drawn on the Fund's account. Redemption Checks may be made
payable to the order of any person in the amount of $500 or more. Potential
fluctuations in the net asset value of the Class A shares should be considered
in determining the amount of the check. Redemption Checks should not be used to
close your account. Redemption Checks are free, but the Transfer Agent will
impose a fee for stopping payment of a Redemption Check upon your request or if
the Transfer Agent cannot honor the Redemption Check due to insufficient funds
or other valid reason. You should date your Redemption Checks with the current
date when you write them. Please do not postdate your Redemption Checks. If you
do, effective February 1, 1994 the Transfer Agent will honor, upon presentment,
even if presented before the date of the check, all postdated Redemption Checks
which are dated within six months of presentment for payment, if they are
otherwise in good order. Class A shares for which certificates have been issued
may not be redeemed by Redemption Check. This Privilege may be modified or
terminated at any time by the Fund or the Transfer Agent upon notice to holders
of Class A shares.
TELETRANSFER PRIVILEGE
You may redeem shares (minimum $500 per day) by telephone if you have checked
the appropriate box and supplied the necessary information on the Fund's
Account Application or have filed an Optional Services Form with the Transfer
Agent. The proceeds will be transferred
49
<PAGE>
between your Fund account and the bank
account designated in one of these documents. Only such an account maintained
in a domestic financial institution which is an Automated Clearing House member
may be so designated. Redemption proceeds will be on deposit in your account at
an Automated Clearing House member bank ordinarily two days after receipt of
the redemption request or, at your request, paid by check (maximum $150,000 per
day) and mailed to your address. Holders of jointly registered Fund or bank
accounts may redeem through the TeleTransfer Privilege for transfer to their
bank account only up to $250,000 within any 30-day period. The Fund reserves
the right to refuse any request made by telephone, including requests made
shortly after a change of address, and may limit the amount involved or the
number of such requests. The Fund may modify or terminate this Privilege at any
time or charge a service fee upon notice to shareholders. No such fee currently
is contemplated.
If you have selected the TeleTransfer Privilege, you may request a
TeleTransfer redemption of Fund shares by telephoning 1-800-221-4060 or, if
you are calling from overseas, call 1-401-455-3306. Shares issued in
certificate form are not eligible for this Privilege.
REDEMPTION THROUGH A SELECTED DEALER
If you are a customer of a Selected Dealer, you may make redemption requests
to your Selected Dealer. If the Selected Dealer transmits the redemption
request so that it is received by the Transfer Agent prior to the close of
trading on the floor of the New York Stock Exchange (currently 4:00 p.m., New
York time), the redemption request will be effective on that day. If a
redemption request is received by the Transfer Agent after the close of trading
on the floor of the New York Stock Exchange, the redemption request will be
effective on the next business day. It is the responsibility of the Selected
Dealer to transmit a request so that it is received in a timely manner. The
proceeds of the redemption are credited to your account with the Selected
Dealer. See "How to Buy Fund Shares" for a discussion of additional conditions
or fees that may be imposed upon redemption.
In addition, Dreyfus Service Corporation will accept orders from Selected
Dealers with which it has sales agreements for the repurchase of shares held by
shareholders. Repurchase orders received by dealers by the close of trading on
the floor of the New York Stock Exchange on any business day and transmitted to
Dreyfus Service Corporation by the close of its business day (normally 5:15
p.m., New York time) are effected at the price determined as of the close of
trading on the floor of the New York Stock Exchange on that day. Otherwise, the
shares will be redeemed at the next determined net asset value. It is the
responsibility of the dealer to transmit orders on a timely basis. The dealer
may charge the shareholder a fee for executing the order. This repurchase
arrangement is discretionary and may be withdrawn at any time.
REINVESTMENT PRIVILEGE -- CLASS A SHARES
Upon written request, you may reinvest up to the number of Class A shares you
have redeemed, within 30 days of redemption, at the then-prevailing net asset
value without a sales load, or reinstate your account for the purpose of
exercising the Exchange Privilege. The Reinvestment Privilege may be exercised
only once.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
Class A and Class B shares are subject to a Shareholder Services Plan and
only the Class B shares are subject to a Distribution Plan.
DISTRIBUTION PLAN
Under the Distribution Plan, adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays Dreyfus Service Corporation for
advertising, marketing and distributing Class B shares of each Series at an
annual rate of .50 of 1% of the value of the average daily net assets of Class
B. Under the Distribution Plan, Dreyfus Service Corporation may make payments
to Service Agents in respect of these services. Dreyfus Service Corporation
determines the amounts to be paid to Service Agents. Service Agents receive
such
50
<PAGE>
fees in respect of the average daily value of the Class B shares owned by
their clients. From time to time, Dreyfus Service Corporation may defer or
waive receipt of fees under the Distribution Plan while retaining the ability
to be paid by the Fund under the Distribution Plan thereafter. The fees payable
to Dreyfus Service Corporation under the Distribution Plan for advertising,
marketing and distributing Class B shares and for payments to Service Agents
are payable without regard to actual expenses incurred.
SHAREHOLDER SERVICES PLAN
Under the Shareholder Services Plan, the Fund pays Dreyfus Service
Corporation for the provision of certain services to the holders of Class A and
Class B shares a fee at the annual rate of .25 of 1% of the value of the
average daily net assets of Class A and Class B. 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.
Dreyfus Service Corporation may make payments to Service Agents in respect of
these services. Dreyfus Service Corporation determines the amounts to be paid
to Service Agents. Each Service Agent is required to disclose to its clients
any compensation payable to it by the Fund pursuant to the Shareholder Services
Plan and any other compensation payable by their clients in connection with the
investment of their assets in Class A or Class B shares.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Each Series of the Fund ordinarily declares dividends from its net investment
income on each day the New York Stock Exchange is open for business. Fund
shares begin earning income dividends on the day immediately available funds
("Federal Funds" (monies of member banks within the Federal Reserve System
which are held on deposit at a Federal Reserve Bank)) are received by the
Transfer Agent in written or telegraphic form. If a purchase order is not
accompanied by remittance in Federal Funds, there may be a delay between the
time the purchase order becomes effective and the time the shares purchased
start earning dividends. If your payment is not made in Federal Funds, it must
be converted into Federal Funds. This usually occurs within one business day of
receipt of a bank wire and within two business days of receipt of a check drawn
on a member bank of the Federal Reserve System. Checks drawn on banks which are
not members of the Federal Reserve System may take considerably longer to
convert into Federal Funds.
Dividends usually are paid on the last calendar day of each month and are
automatically reinvested in additional shares of the Series and the class from
which they were paid at net asset value without a sales load or, at your
option, paid in cash. Each Series' earnings for Saturdays, Sundays and holidays
are declared as dividends on the preceding business day. If you redeem all
shares in your account at any time during the month, all dividends to which you
are entitled will be paid to you along with the proceeds of the redemption.
Distributions by each Series from its net realized securities gains, if any,
generally are declared and paid once a year, but the Series may make
distributions on a more frequent basis to comply with distribution requirements
of the Code, in all events in a manner consistent with the provisions of the
Investment Company Act of 1940. No Series will make distributions from its net
realized securities gains unless capital loss carryovers, if any, have been
utilized or have expired. You may choose whether to receive distributions in
cash or to reinvest in additional shares of the Series and the Class from which
they were paid at net asset value. All expenses are accrued daily and deducted
before declaration of dividends to investors.
Dividends paid by each Class will be calculated at the same time and in the
same manner and will be of the same amount, except that the expenses
attributable solely to Class A or Class B will be borne exclusively by such
Class. Class B will receive lower per share dividends than Class A shares
because of the higher expenses borne by Class B. See "Fee Table."
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FEDERAL TAX TREATMENT
Under the Code, each Series of the Fund is treated as a separate corporation
for purposes of qualification and taxation as a regulated investment company.
Except for dividends from Taxable Investments, the Fund anticipates that
substantially all dividends paid by a Series from net investment income will
not be subject to Federal income tax. Dividends derived from Taxable
Investments, together with distributions from any net realized short-term
securities gain and gains from the sale or other disposition of certain market
discount bonds, are taxable as ordinary income whether or not reinvested.
Distributions from net realized long-term securities gains of a Series
generally are subject to Federal income tax as long-term capital gains if you
are a citizen or resident of the United States. Dividends and distributions
attributable to gains derived from securities transactions and from the use of
certain of the investment techniques described under "Description of the Fund
- -- Investment Techniques," will be subject to Federal income tax. No dividend
paid by any Series will qualify for the dividends received deduction allowable
to certain U.S. corporations. The Code provides that the net capital gain of an
individual generally will not be subject to Federal income tax at a rate in
excess of 28%. Under the Code, interest on indebtedness incurred or continued
to purchase or carry shares of any Series which is deemed to relate to
exempt-interest dividends is not deductible.
The Code provides for the "carryover" of some or all of the sales load
imposed on Class A shares of a Series if you exchange your Class A shares for
shares of another Series or fund advised by The Dreyfus Corporation within 91
days of purchase and such other Series or other fund reduces or eliminates its
otherwise applicable sales load charge for the purpose of the exchange. In this
case, the amount of your sales load charge for Class A shares, up to the amount
of the reduction of the sales load charge on the exchange, is not included in
the basis of your Class A shares for purposes of computing gain or loss on the
exchange, and instead is added to the basis of the other Series or fund shares
received on the exchange.
Although all or a substantial portion of the dividends paid by each Series
may be excluded by shareholders of the Series from their gross income for
Federal income tax purposes, each Series may purchase specified private
activity bonds, the interest from which may be (i) a preference item for
purposes of the alternative minimum tax, (ii) a component of the "adjusted
current earnings" preference item for purposes of the corporate alternative
minimum tax as well as a component in computing the corporate environmental tax
or (iii) a factor in determining the extent to which a shareholder's Social
Security benefits are taxable. If a Series purchases such securities, the
portion of the Series' dividends related thereto will not necessarily be tax
exempt to an investor who is subject to the alternative minimum tax and/or tax
on Social Security benefits and may cause an investor to be subject to such
taxes.
Notice as to the tax status of your dividends and distributions will be
mailed to you annually. You also will receive periodic summaries of your
account which will include information as to dividends and distributions from
securities gains, if any, paid during the year. These statements set forth the
dollar amount of income exempt from Federal tax and the dollar amount, if any,
subject to Federal tax. These dollar amounts will vary depending on the size
and length of time of your investment in a Series. If a Series pays dividends
derived from taxable income, it intends to designate as taxable the same
percentage of the day's dividends as the actual taxable income earned on that
day bears to total income earned on that day. Thus, the percentage of the
dividend designated as taxable, if any, may vary from day to day.
Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of taxable dividends,
distributions from net realized securities gains and the proceeds of any
redemption, regardless of the extent to which gain or loss may be realized,
paid to a shareholder if such shareholder fails to certify either that the TIN
furnished in connection with opening an account is correct, or that such
shareholder has not received notice from the IRS of being subject to backup
withholding as a result of a failure to properly report taxable dividend or
interest income on a Federal income tax return.
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Furthermore, the IRS may notify
the Fund to institute backup withholding if the IRS determines a shareholder's
TIN is incorrect or if a shareholder has failed to properly report taxable
dividend and interest income on a Federal income tax return.
A TIN is either the Social Security number or employer identification number
of the record owner of the account. Any tax withheld as a result of backup
withholding does not constitute an additional tax imposed on the record owner
of the account, and may be claimed as a credit on the record owner's Federal
income tax return.
Management of the Fund believes that each Series (other than the Colorado and
Oregon Series which had not commenced operations) has qualified for the fiscal
year ended April 30, 1993 as a "regulated investment company" under the Code.
It is expected that each of the Colorado and Oregon Series will qualify as a
"regulated investment company" under the Code so long as such qualification is
in the best interests of such Series' shareholders. Each such Series intends to
continue to so qualify, if such qualification is in the best interests of its
shareholders. Qualification as a regulated investment company relieves the
Series of any liability for Federal income taxes to the extent its earnings are
distributed in accordance with applicable provisions of the Code. Each Series
of the Fund is subject to a non-deductible 4% excise tax, measured with respect
to certain undistributed amounts of taxable investment income and capital
gains.
STATE AND LOCAL TAX TREATMENT
Each Series will invest primarily in Municipal Obligations of the State after
which the Series is named. Except to the extent specifically noted below,
dividends by a Series are not subject to a income tax by such State to the
extent that the dividends are attributable to interest on such Municipal
Obligations. However, some or all of the other dividends or distributions by a
Series may be taxable by those States that have income taxes, even if the
dividends or distributions are attributable to income of the Series derived
from obligations of the United States or its agencies or instrumentalities.
The Fund anticipates that a substantial portion of the dividends paid by each
Series will not be subject to income tax of the State after which the Series is
named. However, to the extent that you are obligated to pay State or local
taxes outside of such State, dividends earned by an investment in such Series
may represent taxable income. Also, all or a portion of the dividends paid by a
Series that are not subject to income tax of the State after which the Series
is named may be a preference item for such State's alternative minimum tax
(where imposed). Finally, you should be aware that State and local taxes, other
than those described above, may apply to the dividends, distributions or shares
of a Series.
The paragraphs below discuss the State tax treatment of dividends and
distributions by each Series to residents of the State after which the Series
is named. Investors should consult their own tax advisers regarding specific
questions as to Federal, State and local taxes.
ARIZONA SERIES
Dividends paid by the Series are not subject to Arizona individual and
corporate income taxes to the extent that such dividends are derived from
income received by the Series as interest from Arizona Municipal Obligations,
or from direct obligations of the United States, certain Federal agency
obligations, or obligations issued by the governments of Puerto Rico, Virgin
Islands or Guam. Dividends derived from other sources including distributions
that qualify as capital gain dividends for Federal income tax purposes may be
taxable by Arizona. In addition, any gain realized on the redemption, sale or
exchange of Series shares is subject to Arizona income tax.
Shares of the Arizona Series are not subject to property taxation by the
State of Arizona or its political subdivisions.
COLORADO SERIES
Dividends paid by the Series to a Colorado resident individual, trust or
estate, or corporation doing business in Colorado, will be exempt from Colorado
income tax to the extent that such dividends qualify as exempt-interest
dividends of a regulated investment company under
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Section 852(b)(5) of the Code
that are derived from interest received by the Series from (a) obligations of
Colorado or its political subdivisions issued on or after May 1, 1980, or if
issued before May 1, 1980, to the extent such interest is specifically exempt
from income taxation under the laws of the State of Colorado authorizing the
issuance of such obligations, (b) obligations of the United States or its
possessions to the extent included in Federal taxable income, and (c)
obligations of territories and possessions of the United States to the extent
Federal law exempts interest on such obligations from taxation by the states.
To the extent that Series, dividends and distributions are attributable to
sources not described in the preceding sentence, such as short or long-term
capital gains from investments sold or disposed of by the Series, such
dividends and distributions will not be exempt from Colorado income tax.
The shares of the Colorado Series are not subject to property taxation by
Colorado or its political subdivisions.
CONNECTICUT SERIES
Dividends by the Series that qualify as exempt-interest dividends for Federal
income tax purposes are not subject to the Connecticut income tax on
individuals, trusts and estates, to the extent that such dividends are derived
from income received by the Series as interest from Connecticut Municipal
Obligations or as interest from obligations the interest with respect to which
Connecticut is prohibited by Federal law from taxing. Dividends derived from
other sources, including distributions that qualify as capital gain dividends
for Federal income tax purposes, are taxable by Connecticut. In the case of a
shareholder subject to the Federal alternative minimum tax, the portion of
exempt-interest dividends paid by the Series treated as a preference item for
purposes of such tax may be subject to the net Connecticut minimum tax.
Dividends qualifying as exempt-interest dividends for Federal income tax
purposes that are distributed by the Series to entities taxed as corporations
under the Connecticut corporation business tax are not exempt from that tax.
The shares of the Series are not subject to property taxation by the State of
Connecticut or its political subdivisions.
FLORIDA SERIES
Dividends or distributions by the Fund to a Florida individual resident are
not taxable by Florida. However, Florida imposes an intangible personal
property tax on shares of the Series owned by a Florida resident on January 1
of each year unless such shares qualify for an exemption from the tax.
Dividends qualifying as exempt-interest dividends for Federal income tax
purposes as well as other Federally taxable dividends and distributions that
are distributed by the Series to entities taxed as corporations under Florida
law may not be exempt from the Florida corporate income tax.
The Fund has received a Technical Assistance Advisement from the State of
Florida, Department of Revenue, to the effect that Florida Series' shares owned
by a Florida resident will be exempt from the intangible personal property tax
so long as the Series' portfolio includes only assets, such as notes, bonds,
and other obligations issued by the State of Florida or its municipalities,
counties, and other taxing districts, the United States Government, and its
agencies, Puerto Rico, Guam, and the U.S. Virgin Islands, and other assets
which are exempt from that tax.
GEORGIA SERIES
Dividends and distributions by the Georgia Series to a Georgia resident that
are attributable to interest on Georgia Municipal Obligations or direct
obligations of the United States and its territories and possessions are not
subject to the State of Georgia income tax. Dividends or other distributions by
the Series which are attributable to other sources, including all distributions
that qualify as capital gains dividends for Federal income tax purposes, are
subject to the State of Georgia income tax at the applicable rate.
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There is no specific statutory or regulatory exception that would exempt
shares of a regulated investment company, including regulated investment
companies that only hold Municipal Obligations or other direct obligations of
the United States and its territories and possessions, from the Georgia
intangibles tax. The Georgia Department of Revenue has taken the position that
the fair market value of a regulated investment company's shares are subject to
Georgia's intangibles tax regardless of the tax exempt character of the
obligations in which the Series invests or the tax exempt income generated by
such investments.
MARYLAND SERIES
Dividends and distributions by the Series to a Maryland resident (including
individuals, corporations, estates or trusts who are subject to Maryland state
and local income tax) will not be subject to tax in Maryland to the extent that
such dividends or distributions (a) qualify, for Federal income tax purposes,
as exempt-interest dividends of a regulated investment company and are
attributable to (i) interest on Maryland Municipal Obligations or (ii) interest
on obligations of the United States or an authority, commission,
instrumentality, possession or territory of the United States, or (b) are
attributable to gain realized by the Series from the sale or exchange of
Maryland Municipal Obligations or obligations of the United States or an
authority, commission or instrumentality thereof. To the extent that
distributions by the Series are attributable to sources other than those
described above, such as (x) interest on obligations issued by states other
than Maryland or (y) income from repurchase agreements, such distributions will
not be exempt from Maryland state and local income taxes. In addition, any gain
realized by a shareholder upon a redemption or exchange of Series shares will
be subject to Maryland taxation.
Maryland presently includes in taxable net income items of tax preferences as
defined in the Code. Interest paid on certain private activity bonds
constitutes a tax preference. Accordingly, subject to a threshold amount, 50%
of any distributions by the Series attributable to such private activity bonds
will not be exempt from Maryland state and local income taxes. Interest on
indebtedness incurred (directly or indirectly) by a shareholder of the Series
to purchase or carry shares of the Series will not be deductible for Maryland
state and local income tax purposes to the extent such interest is allocable to
exempt-interest dividends.
In the event the Series fails to qualify as a regulated investment company,
the Series would be subject to corporate Maryland income tax and distributions
would be taxable as ordinary income to the shareholders.
Individuals will not be subject to personal property tax on their shares of
the Maryland Series.
MASSACHUSETTS SERIES
Dividends by the Series to a Massachusetts resident are not subject to the
Massachusetts personal income tax to the extent that the dividends are
attributable to income received by the Series from Massachusetts Municipal
Obligations or direct U.S. Government obligations, and are properly designated
as such. Distributions of capital gain dividends by the Series to a
Massachusetts resident are not subject to the Massachusetts personal income tax
to the extent such distributions are attributable to gain from the sale of
certain Massachusetts Municipal Obligations the gain from which is exempt from
the Massachusetts personal income tax, and the distributions are properly
designated as such. Dividends or distributions by the Series to a Massachusetts
resident that are attributable to most other sources are subject to the
Massachusetts personal income tax. In addition, distributions from the Series
may be included in the net income measure of the corporate excise tax for
corporate shareholders who are subject to the Massachusetts corporate excise
tax. The Series believes that distributions from net realized long-term
securities gains that are taxable by Massachusetts are reportable as long-term
capital gains, irrespective of how long the resident has held shares in the
Series.
The shares of the Series are not subject to property taxation by
Massachusetts or its political subdivisions.
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MICHIGAN SERIES
Dividends by the Series to a Michigan resident individual are not subject to
the Michigan personal income tax and are excluded from the taxable income base
of the Michigan intangibles tax to the extent that the dividends are
attributable to income received by the Series as interest from the Series'
investment in Michigan Municipal Obligations, obligations of U.S. possessions,
as well as direct U.S. Government obligations. Dividends or distributions by
the Series to a Michigan resident that are attributable to most other sources
are subject to both the Michigan personal income tax and are included in the
taxable income base of the Michigan intangibles tax.
For Michigan personal income and intangibles tax purposes, the proportionate
share of dividends from the Series' net investment income from other than
Michigan Municipal Obligations and from distributions from any short-term or
long-term capital gains will be included in Michigan taxable income and will be
included in the taxable income base of the Michigan intangibles tax, except
that dividends from net investment income or distributions from capital gains
reinvested in Series' shares are exempt from such tax. Additionally, for
Michigan personal income tax purposes, any gain or loss realized when the
shareholder sells or exchanges Series' shares will be included in Michigan
taxable income.
Persons engaging in business activities in Michigan may be subject to the
Michigan Single Business Tax and should consult their tax advisers with respect
to the application of such tax in connection with an investment in the Series.
MINNESOTA SERIES
Dividends by the Series to a Minnesota resident are not subject to the
Minnesota personal income tax to the extent that the dividends are attributable
to income received by the Series as interest from Minnesota Municipal
Obligations, but only if the dividends so attributable represent 95% or more of
the exempt-interest dividends that are paid by the Series. However, dividends
paid by the Series to a Minnesota resident are not subject to the Minnesota
personal income tax to the extent that the dividends are attributable to income
received by the Series as interest from a Series' investment in direct U.S.
Government obligations. Dividends and distributions by the Series to a
Minnesota resident that are attributable to most other sources are subject to
the Minnesota personal income tax. Dividends and distributions from the Series
will be included in the determination of taxable net income of corporate
shareholders who are subject to Minnesota income (franchise) taxes. In
addition, dividends attributable to interest received by the Series that is a
preference item for Federal income tax purposes, whether or not such interest
is from a Minnesota Municipal Obligation, may be subject to the Minnesota
alternative minimum tax.
The shares of the Series are not subject to property taxation by Minnesota or
its political subdivisions.
NORTH CAROLINA SERIES
Dividends paid by the North Carolina Series to a North Carolina resident that
are attributable to interest on North Carolina Municipal Obligations or direct
U.S. Government obligations are not subject to the North Carolina income tax.
Dividends or other distributions which are attributable to net realized
securities gains and most other sources are subject to the North Carolina
income tax at the applicable rate. Gain realized by a North Carolina resident
shareholder from the sale or exchange of an interest held in the North Carolina
Series also will be subject to the North Carolina income tax at the applicable
rate.
Shares of the North Carolina Series are not subject to the North Carolina tax
on intangible personal property, provided that at least 80% of the North
Carolina Series' investments are North Carolina Municipal Obligations and the
balance of the investments are direct obligations of the U.S. Government. To
the extent that the investment portfolio of the North Carolina Series does not
meet this test, the portfolio may be partially or wholly subject to the North
Carolina tax on intangible personal property.
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To the extent that dividends and distributions from the North Carolina Series
increase the surplus of a corporate shareholder required to file a North
Carolina franchise tax return, such increase in the surplus will be subject to
the North Carolina franchise tax.
OHIO SERIES
Dividends paid by the Series to an Ohio resident, or to a corporation subject
to the Ohio Corporation Franchise Tax, are not subject to Ohio state and local
income taxes or the net income basis of the Ohio Corporation Franchise Tax to
the extent that such dividends are attributable to income received by the
Series as interest from Ohio Municipal Obligations and direct obligations of
the United States, certain Federal agencies and certain U.S. territories.
Dividends or distributions paid by the Series to an Ohio resident, or to a
corporation subject to the Ohio Corporation Franchise Tax, that are
attributable to most other sources are subject to Ohio state and local income
taxes and are includable in the net income basis of the Ohio Corporation
Franchise Tax. The shares of the Series are not subject to property taxation by
the State of Ohio or its political subdivisions, except when held by a "dealer
in intangibles" (generally, a person in the lending or brokerage business), a
decedent's estate, an Ohio insurance company, or a corporation taxed on the net
worth basis of the Ohio Corporation Franchise Tax.
OREGON SERIES
Dividends paid by the Series to an Oregon resident individual, trust or
estate are exempt from Oregon income tax to the extent that at least 50% of its
assets at the close of each quarter of its taxable year is invested in State,
municipal or other obligations, the interest on which is exempt from Federal
income tax under Section 103(a) of the Code, and such dividends are
attributable to interest on tax-exempt obligations of the State of Oregon and
its political subdivisions and authorities or on obligations issued by the
governments of Puerto Rico, the Virgin Islands, Guam and the Mariana Islands.
To the extent that the Series' dividends and distributions are attributable to
sources not described in the preceding sentence, such as short- or long-term
capital gains from investments sold or disposed of by the Series, such
dividends and distributions will not be exempt from Oregon income tax. In
addition, dividends and distributions paid by the Oregon Series are expected to
be fully includable in income in determining the Oregon excise tax on
corporations.
The shares of the Oregon Series are not subject to property taxation by
Oregon or its political subdivisions.
PENNSYLVANIA SERIES
Dividends by the Series will not be subject to the Pennsylvania personal
income tax or to the Philadelphia School District investment net income tax to
the extent that the dividends are attributable to interest received by the
Series from its investments in Pennsylvania Municipal Obligations and U.S.
Government obligations, including obligations issued by U.S. possessions.
Dividends or distributions by the Series to a Pennsylvania resident that are
attributable to most other sources may be subject to the Pennsylvania personal
income tax and (for residents of Philadelphia) to the Philadelphia School
District investment net income tax.
Dividends paid by the Series which are considered "exempt-interest dividends"
for Federal income tax purposes are not subject to the Pennsylvania Corporate
Net Income Tax, but other dividends or distributions paid by the Series may be
subject to that tax. It is the current position of the Department of Revenue of
the Commonwealth of Pennsylvania that Series shares are not considered exempt
assets for purposes of determining a corporation's capital stock value subject
to the Pennsylvania Capital Stock/Franchise Tax.
Shares of the Series are exempt from Pennsylvania county personal property
taxes and (as to residents of Pittsburgh) from personal property taxes imposed
by the City of Pittsburgh and the School District of Pittsburgh to the extent
that the portfolio of the Series consists of Pennsylvania Municipal Obligations
and U.S. Government obligations, including obligations issued by U.S.
possessions.
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TEXAS SERIES
All dividends and distributions by the Series to Texas resident individuals
are not subject to taxation by Texas. However, Texas recently enacted
significant changes to its franchise tax law for reporting years beginning
January 1, 1992 and thereafter. These changes include the imposition of a tax
measured by earned surplus, in addition to the traditional tax on a
corporation's capital. The Texas franchise tax on earned surplus is applicable
only to the extent that it exceeds the franchise tax on capital. For Texas
franchise tax purposes, earned surplus is computed by reference to Federal
taxable income. Thus, any amounts subject to Federal income tax that are
payable by the Series to corporations doing business in or incorporated in
Texas generally will be included in the earned surplus component of the Texas
franchise tax, to the extent such earned surplus is apportioned to Texas.
Dividends and other distributions not subject to Federal income tax generally
will be excluded from the calculation of the earned surplus component.
Both the capital tax and earned surplus tax components of the Texas franchise
tax are computed by reference to the portion of the corporation's capital or
earned surplus based on the corporation's gross receipts derived from Texas. To
the extent dividend and interest payments are made by a non-Texas entity, such
dividends and payments are not considered to be Texas sourced receipts for
franchise tax appointment purposes.
Dividends and distributions by the Series to corporations doing business in
or incorporated in Texas will not be considered Texas sourced "gross receipts"
for either component of the Texas franchise tax. Effective with franchise tax
reports originally due after January l, 1994 (which are based upon accounting
years ending in 1993), other distributions from the Series to corporations
doing business in or incorporated in Texas (such as the proceeds resulting from
net gain upon the sale of Series bonds) may be allocable to Texas as Texas
sourced gross receipts for the earned surplus component of the franchise tax
if: (l) the activities of the recipient corporation do not have a sufficient
unitary connection with that corporation's other activities conducted within
the state giving rise to the underlying sale of such assets; and (2) the
recipient corporation has its commercial domicile in Texas.
The shares of the Series are not subject to property taxation by Texas or its
political subdivisions.
VIRGINIA SERIES
Dividends paid by the Series to a Virginia resident or a corporation doing
business in Virginia are exempt from Virginia income tax to the extent that the
dividends are attributable to (a) Virginia Municipal Obligations, (b)
obligations of the United States or any authority, commission or
instrumentality of the United States in the exercise of the borrowing power of
the United States and backed by the full faith and credit of the United States,
or (c) obligations issued by particular Federal or Virginia agencies or
political subdivisions whose enabling statute exempts from state taxation
interest or dividends paid on securities of such entity; provided, that the
exempt portion of dividends can be determined with reasonable certainty and
substantiated if taxable income is commingled with exempt income. Other
dividends and distributions, including distributions of net short-term and net
long-term securities gains attributable to the aforementioned obligations, are
subject to Virginia income tax unless specifically exempted by statutory
provisions creating the agency or political subdivisions.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class of shares may be
calculated on several bases, including current yield, tax equivalent yield,
average annual total return and/or total return.
These total return figures reflect changes in the price of the shares and
assume that any income dividends and/or capital gains distributions made by the
Fund during the measuring period were reinvested in shares of the same Class.
Class A total return figures include the
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maximum initial sales charge and Class
B total return figures include any applicable CDSC. These figures also take
into account any applicable service and distribution fees. As a result, at any
given time, the performance of Class B should be expected to be lower than that
of Class A. Performance for each Class will be calculated separately.
Current yield refers to each Series' annualized net investment income per
share over a 30-day period, expressed as a percentage of the maximum offering
price per share in the case of Class A or the net asset value in the case of
Class B at the end of the period. For purposes of calculating current yield,
the amount of net investment income per share during that 30-day period,
computed in accordance with regulatory requirements, is compounded by assuming
that it is reinvested at a constant rate over a six-month period. An identical
result is then assumed to have occurred during a second six-month period which,
when added to the result for the first six months, provides an "annualized"
yield for an entire one-year period. Calculations of each Series' current yield
may reflect absorbed expenses pursuant to any undertaking that may be in
effect. See "Management of the Fund."
Tax equivalent yield is calculated by determining the pre-tax yield which,
after being taxed at a stated rate, would be equivalent to a stated current
yield calculated as described above.
Average annual total return is calculated pursuant to a standardized formula
which assumes that an investment in a Series of the Fund was purchased with an
initial payment of $1,000 and that the investment was redeemed at the end of a
stated period of time, after giving effect to the reinvestment of dividends and
distributions during the period. The return is expressed as a percentage rate
which, if applied on a compounded annual basis, would result in the redeemable
value of the investment at the end of the period. Advertisements of each
Series' performance will include each Series' average annual total return for
Class A and Class B for one, five and ten year periods, or for shorter time
periods depending upon the length of time during which each Series has
operated. Computations of average total return for periods of less than one
year represent an annualization of the Fund's actual total return for the
applicable period. A Series' actual total return for its first full year of
operation cannot be predicted and is therefore likely to be different from any
such annualized computation.
Total return is computed on a per share basis and assumes the reinvestment of
dividends and distributions. Total return generally is expressed as a
percentage rate which is calculated by combining the income and principal
changes for a specified period and dividing by the maximum offering price per
share in the case of Class A or the net asset value in the case of Class B at
the beginning of the period. Advertisements may include the percentage rate of
total return or may include the value of a hypothetical investment at the end
of the period which assumes the application of the percentage rate of total
return. Total return may also be calculated by using the net asset value per
share at the beginning of the period instead of the maximum offering price per
share at the beginning of the period for Class A shares or without giving
effect to any applicable CDSC at the end of the period for Class B shares.
Calculations based on the net asset value per share do not reflect the
deduction of the applicable sales charge which, if reflected, would reduce the
performance quoted.
Performance will vary from time to time and past results are not necessarily
representative of future results. Investors should remember that performance is
a function of portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses. Performance
information, such as that described above, may not provide a basis for
comparison with other investments or other investment companies using a
different method of calculating performance.
Comparative performance information may be used from time to time in
advertising the Fund's shares, including data from Lipper Analytical Services,
Inc., Moody's Bond Survey Bond Index, Lehman Brothers Municipal Bond Index,
Morningstar, Inc. and other industry publications.
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GENERAL INFORMATION
The Fund was organized as an unincorporated business trust under the laws of
the Commonwealth of Massachusetts pursuant to an Agreement and Declaration of
Trust (the "Trust Agreement") dated September 19, 1986. On July 2, 1990, the
Fund's name was changed from Premier State Tax Exempt Bond Fund to Premier
State Municipal Bond Fund. The Fund is authorized to issue an unlimited number
of shares of beneficial interest, par value $.001 per share. The Fund's shares
are classified into two classes -- Class A and Class B. Each share has one vote
and shareholders will vote in the aggregate and not by class except as
otherwise required by law or when class voting is permitted by the Board of
Trustees. Holders of Class A and Class B shares, however, will be entitled to
vote on matters submitted to shareholders pertaining to the Shareholder
Services Plan and only holders of Class B shares will be entitled to vote on
matters submitted to shareholders pertaining to the Distribution Plan.
To date, the Trustees have authorized the creation of fifteen Series of
shares. All consideration received by the Fund for shares of one of the Series
and all assets in which such consideration is invested, will belong to that
Series (subject only to the rights of creditors of the Fund) and will be
subject to the liabilities related thereto. The income attributable to, and the
expenses of, one Series would be treated separately from those of the other
Series.
Rule 18f-2 under the Investment Company Act of 1940 provides that any matter
required to be submitted under the provisions of the Investment Company Act of
1940 or applicable state law or otherwise, to the holders of the outstanding
voting securities of an investment company such as the Fund will not be deemed
to have been effectively acted upon unless approved by the holders of a
majority of the outstanding shares of each Series affected by such matter. Rule
18f-2 further provides that a Series shall be deemed to be affected by a matter
unless it is clear that the interests of each Series in the matter are
identical or that the matter does not affect any interest of such Series.
However, the Rule exempts the selection of independent accountants and the
election of trustees from the separate voting requirements of the Rule.
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Fund. However, the Trust
Agreement disclaims shareholder liability for acts or obligations of the Fund
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund or a Trustee. The
Trust Agreement provides for indemnification from the Fund's property for all
losses and expenses of any shareholder held personally liable for the
obligations of the Fund. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances in which
the Fund itself would be unable to meet its obligations, a possibility which
management believes is remote. Upon payment of any liability incurred by the
Fund, the shareholder paying such liability will be entitled to reimbursement
from the general assets of the Fund. The Trustees intend to conduct the
operations of the Fund in such a way so as to avoid, as far as possible,
ultimate liability of the shareholders for liabilities of the Fund. As
discussed under "Management of the Fund" in the Statement of Additional
Information, the Fund ordinarily will not hold shareholder meetings; however,
shareholders under certain circumstances may have the right to call a meeting
of shareholders for the purpose of voting to remove Trustees.
The Transfer Agent maintains a record of your ownership and sends you
confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUND'S
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
60
PREMIER STATE MUNICIPAL BOND FUND
CLASS A AND CLASS B SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
FEBRUARY 18, 1994
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Premier State Municipal Bond Fund (the "Fund"), dated February 18, 1994,
as it may be revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144.
The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.
Dreyfus Service Corporation (the "Distributor"), a wholly-owned
subsidiary of the Manager, is the distributor of the Fund's shares.
TABLE OF CONTENTS
Page
____
Investment Objective and Management Policies . . . . . . . . . . . . B-2
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . B-10
Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . B-14
Purchase of Fund Shares. . . . . . . . . . . . . . . . . . . . . . . B-16
Distribution Plan and Shareholder Services Plan. . . . . . . . . . . B-19
Redemption of Fund Shares. . . . . . . . . . . . . . . . . . . . . . B-22
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . B-23
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . B-26
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . . B-26
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . B-28
Performance Information. . . . . . . . . . . . . . . . . . . . . . . B-29
Information About the Fund . . . . . . . . . . . . . . . . . . . . . B-34
Custodian, Transfer and Dividend Disbursing Agent,
Counsel and Independent Auditors. . . . . . . . . . . . . B-34
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-35
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-90
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . B-98
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . B-105
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Description
of the Fund."
The average distribution of investments (at value) in Municipal
Obligations by ratings for the fiscal year ended April 30, 1993, computed
on a monthly basis, for each Series (except the Colorado and Oregon Series
which had not commenced operations) was as follows:
<TABLE>
<CAPTION>
Fitch Moody's Standard &
Investors Investors Poor's
Service, Inc. Service, Inc. Corporation Arizona Connecticut Florida Georgia
("Fitch") or ("Moody's") or ("S&P") Series Series Series Series
_____________ ______________ __________________ _______ __________ _______ _______
<S> <S> <S> <C> <C> <C> <C>
AAA Aaa AAA 48.9% 25.5% 36.4% 50.5%
AA Aa AA 27.6 39.0 15.9 16.8
A A A 17.4 15.9 22.8 23.7
BBB Baa BBB 5.1 10.8 16.0 9.0
BB Ba BB - - .1 -
B B B - - - -
F-1 MIG 1 SP-1 - 1.3 1.1 -
F-1 P-1 A-1 - .2 .4 -
Not Rated Not Rated Not Rated 1.0 (1) 7.3 (2) 7.3 (3) -
----- ----- ----- -----
100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
Maryland Massachusetts Michigan Minnesota
Fitch or Moody's or S&P Series Series Series Series
______________ ______________ _________ ________ _____________ _______ _______
<S> <S> <S> <C> <C> <C> <C>
AAA Aaa AAA 22.7% 45.4% 29.0% 30.0%
AA Aa AA 46.1 11.2 37.7 24.2
A A A 17.6 23.8 20.4 27.8
BBB Baa BBB 4.2 12.7 8.4 12.4
BB Ba BB - - - -
B B B - - - -
F-1 MIG 1 SP-1 1.9 .3 - .3
F-1 P-1 A-1 - - .3 -
Not Rated Not Rated Not Rated 7.5 (1) 6.6 (1) 4.2 (4) 5.3 (1)
----- ------ ------ -----
100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
North
Carolina Ohio Pennsylvania Texas
Fitch or Moody's or S&P Series Series Series Series
______ _______ ____ __________ _______ ____________ _______
<S> <S> <S> <C> <C> <C> <C>
AAA Aaa AAA 15.3% 22.9% 16.9% 24.7%
AA Aa AA 31.9 15.9 22.6 32.0
A A A 34.9 26.1 23.6 18.9
BBB Baa BBB 14.5 29.4 22.9 13.8
BB Ba BB - - - .2
B B B - - - -
F-1 MIG 1 SP-1 - .7 1.0 .1
F-1 P-1 A-1 - - 1.1 3.7
Not Rated Not Rated Not Rated 3.4 (1) 5.0 (5) 11.9 (6) 6.6 (7)
----- ----- ----- -----
100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
Virginia
Fitch or Moody's or S&P Series
__________ _________ _____ ________
<S> <S> <S> <C>
AAA Aaa AAA 22.4%
AA Aa AA 30.4
A A A 36.4
BBB Baa BBB 6.2
BB Ba BB -
B B B -
F-1 MIG 1 SP-1 .8
F-1 P-1 A-1 -
Not Rated Not Rated Not Rated 3.8 (8)
___
100.0%
=====
</TABLE>
_________________________
(1) Included in the Not Rated category are securities comprising (Arizona
- 1%, Maryland - 7.0%, Massachusetts - 5.3%, Minnesota 5.3%,
North Carolina - 3.4%) of the Series' net assets which, while Not Rated,
have been determined by the Manager to be of comparable quality to
securities rated Baa/BBB.
(2) Included in the Not Rated category are securities comprising 7.3% of
the Series' net assets which, while Not Rated, have been determined
by the Manager to be of comparable quality to securities in the following
rating categories: Baa/BBB (3.8%) and Ba/BB (3.5%).
(3) Included in the Not Rated category are securities comprising 6.2% of
the Series' net assets which, while Not Rated, have been determined by the
Manager to be of comparable quality to securities in the following rating
categories: A/A (.3%) and Baa/BBB (5.9%).
(4) Included in the Not Rated category are securities comprising 4.2% of
the Series' net assets which, while Not Rated, have been determined by the
Manager to be of comparable quality to securities in the following rating
categories: Aaa/AAA (1.6%), A/A (1.2%) and Baa/BBB (1.4%).
(5) Included in the Not Rated category are securities comprising 5.0% of
the Series' net assets which, while Not Rated, have been determined by the
Manager to be of comparable quality to securities in the following rating
categories: Baa/BBB (4.7%) and D (.3%).
(6) Included in the Not Rated category are securities comprising 11.9% of
the Series' net assets which, while Not Rated, have been determined by the
Manager to be of comparable quality to securities in the following rating
categories: Aaa/AAA (.7%), A/A (2.6%), Baa/BBB (8.4%), Ba/BB (.1%) and A-
1/P-1/F-1 (.1%).
(7) Included under the Not Rated category are securities comprising 6.6%
of the Series' net assets which, while Not Rated, have been determined by
the Manager to be of comparable quality to securities in the following
rating category: Baa/BBB (6.6%).
(8) Included under the Not Rated category are securities comprising 3.8%
of the Series' net assets which, while Not Rated, have been determined by
the Manager to be of comparable quality to securities in the following
rating categories: Aaa/AAA (.4%) and Baa/BBB (3.4%).
Municipal Obligations. The term "Municipal Obligations" generally
includes debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligations may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses and
lending such funds to other public institutions and facilities. In
addition, certain types of industrial development bonds are issued by or on
behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated
housing facilities, sports facilities, convention or trade show facilities,
airport, mass transit, industrial, port or parking facilities, air or water
pollution control facilities and certain local facilities for water supply,
gas, electricity, or sewage or solid waste disposal; the interest paid on
such obligations may be exempt from Federal income tax, although current
tax laws place substantial limitations on the size of such issues. Such
obligations are considered to be Municipal Obligations if the interest paid
thereon qualifies as exempt from Federal income tax in the opinion of bond
counsel to the issuer. There are, of course, variations in the security of
Municipal Obligations, both within a particular classification and between
classifications.
Floating and variable rate demand notes and bonds are tax exempt
obligations ordinarily having stated maturities in excess of one year, but
which permit the holder to demand payment of principal at any time, or at
specified intervals. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon
a specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand obligation is based on a known lending rate,
such as a bank's prime rate, and is adjusted automatically each time such
rate is adjusted. The interest rate on a variable rate demand obligation
is adjusted automatically at specified intervals.
Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such
purpose on a yearly basis. Although "non-appropriation" lease obligations
are secured by the leased property, disposition of the property in the
event of foreclosure might prove difficult. Each Series will seek to
minimize these risks by not investing more than 15% of the value of its net
assets in lease obligations that contain "non-appropriation" clauses, and
by investing only in those "non-appropriation" lease obligations where (1)
the nature of the leased equipment or property is such that its ownership
or use is essential to a governmental function of the municipality, (2) the
lease payments will commence amortization of principal at an early date
resulting in an average life of seven years or less for the lease
obligation, (3) appropriate covenants will be obtained from the municipal
obligor prohibiting the substitution or purchase of similar equipment if
lease payments are not appropriated, (4) the lease obligor has maintained
good market acceptability in the past, (5) the investment is of a size that
will be attractive to institutional investors, and (6) the underlying
leased equipment has elements of portability and/or use that enhance its
marketability in the event foreclosure on the underlying equipment is ever
required. The staff of the Securities and Exchange Commission currently
considers certain lease obligations to be illiquid. Accordingly, no Series
will invest more than 15% of the value of its net assets in lease
obligations that are illiquid and in other illiquid securities. See
"Investment Restriction No. 6" below.
A Series will purchase tender option bonds only when the Fund is
satisfied that the custodial and tender option arrangements, including the
fee payment arrangements, will not adversely affect the tax exempt status
of the underlying Municipal Obligations and that payment of any tender fees
will not have the effect of creating taxable income for the Series. Based
on the tender option bond agreement, the Fund expects to be able to value
the tender option bond at par; however, the value of the instrument will be
monitored to assure that it is valued at fair value.
The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation, and rating of the issue.
The imposition of the Fund's management fee, as well as other operating
expenses, including fees paid under the Fund's Shareholder Services Plan
with respect to Class A and Class B shares and the Distribution Plan with
respect to Class B shares only, will have the effect of reducing the yield
to investors.
Ratings of Municipal Obligations. Subsequent to its purchase by the
Fund, an issue of rated Municipal Obligations may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require the sale of such Municipal Obligations by the
Fund, but the Manager will consider such event in determining whether the
Fund should continue to hold the Municipal Obligations. To the extent that
the ratings given by Moody's, S&P or Fitch for Municipal Obligations may
change as a result of changes in such organizations or their rating
systems, the Fund will attempt to use comparable ratings as standards for
its investments in accordance with the investment policies contained in the
Fund's Prospectus and this Statement of Additional Information. The
ratings of Moody's, S&P and Fitch represent their opinions as to the
quality of the Municipal Obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective and
are not absolute standards of quality. Although these ratings may be an
initial criterion for selection of portfolio investments, the Manager also
will evaluate these securities.
Futures Contracts and Options on Futures Contracts. Upon exercise of
an option on a futures contract, the writer of the option delivers to the
holder of the option the futures position and the accumulated balance in
the writer's futures margin account, which represents the amount by which
the market price of the futures contract exceeds, in the case of a call, or
is less than, in the case of a put, the exercise price of the option on the
futures contract. The potential loss related to the purchase of options on
futures contracts is limited to the premium paid for the option (plus
transaction costs). Because the value of the option is fixed at the time
of sale, there are no daily cash payments to reflect changes in the value
of the underlying contract; however, the value of the option does change
daily and that change would be reflected in the net asset value of the
relevant Series.
Lending Portfolio Securities. To a limited extent, each Series may
lend its portfolio securities to brokers, dealers and other financial
institutions, provided it receives cash collateral which at all times is
maintained in an amount equal to at least 100% of the current market value
of the securities loaned. By lending its portfolio securities, a Series
can increase its income through the investment of the cash collateral. For
purposes of this policy, the Fund considers collateral consisting of U.S.
Government securities or irrevocable letters of credit issued by banks
whose securities meet the standards for investment by the Series to be the
equivalent of cash. Such loans may not exceed 33-1/3% of the value of the
Series' total assets. From time to time, the Series may return to the
borrower or a third party which is unaffiliated with the Series, and which
is acting as a "placing broker," a part of the interest earned from the
investment of collateral received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Series must receive at least 100% cash collateral from the
borrower; (2) the borrower must increase such collateral whenever the
market value of the securities rises above the level of such collateral;
(3) the Series must be able to terminate the loan at any time; (4) the
Series must receive reasonable interest on the loan, as well as any
interest or other distributions payable on the loaned securities, and any
increase in market value; and (5) the Series may pay only reasonable
custodian fees in connection with the loan. These conditions may be
subject to future modification.
Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. Treasury Bills have initial maturities of one year or less;
Treasury Notes have initial maturities of one to ten years; and Treasury
Bonds generally have initial maturities of greater than ten years. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, for example, Government National Mortgage Association
pass-through certificates, are supported by the full faith and credit of
the U.S. Treasury; others, such as those of the Federal Home Loan Banks, by
the right of the issuer to borrow from the U.S. Treasury; others such as
those issued by the Federal National Mortgage Association, by discretionary
authority of the U.S. Government to purchase certain obligations of the
agency or instrumentality; and others, such as those issued by the Student
Loan Marketing Association, only by the credit of the agency or
instrumentality. These securities bear fixed, floating or variable rates
of interest. Principal and interest may fluctuate based on generally
recognized reference rates or the relationship of rates. While the U.S.
Government provides financial support to such U.S. Government- sponsored
agencies or instrumentalities, no assurance can be given that it will
always do so, since it is not so obligated by law. The Fund will invest in
such securities only when it is satisfied that the credit risk with respect
to the issuer is minimal.
Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.
Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified
period of time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate. Investments in time deposits generally
are limited to London branches of domestic banks that have total assets in
excess of one billion dollars. Time deposits which may be held by the Fund
will not benefit from insurance from the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the Federal Deposit Insurance
Corporation.
Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments
reflect the obligation both of the bank and of the drawer to pay the face
amount of the instrument upon maturity. Other short-term bank obligations
may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.
Repurchase agreements involve the acquisition by the Series of an
underlying debt instrument, subject to an obligation of the seller to
repurchase, and the Series to resell, the instrument at a fixed price,
usually not more than one week after its purchase. The Fund's custodian or
sub-custodian will have custody of, and will hold in a segregated account,
securities acquired by the Series under a repurchase agreement. Repurchase
agreements are considered by the staff of the Securities and Exchange
Commission to be loans by the Series which entered into them. In an
attempt to reduce the risk of incurring a loss on a repurchase agreement,
each Series will enter into repurchase agreements only with domestic banks
with total assets in excess of one billion dollars or primary government
securities dealers reporting to the Federal Reserve Bank of New York, with
respect to securities of the type in which such Series may invest, and
will require that additional securities be deposited with it if the value
of the securities purchased should decrease below resale price. The
Manager will monitor on an ongoing basis the value of the collateral to
assure that it always equals or exceeds the repurchase price. Certain
costs may be incurred by the Series in connection with the sale of the
securities if the seller does not repurchase them in accordance with the
repurchase agreement. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the securities, realization on the securities
by the Series may be delayed or limited. The Fund will consider on an
ongoing basis the creditworthiness of the institutions with which it enters
into repurchase agreements.
Risk Factors
Lower Rated Bonds. Each Series is permitted to invest in securities
rated below Baa by Moody's and below BBB by S&P and Fitch. Such bonds,
though higher yielding, are characterized by risk. See "Description of the
Fund--Risk Factors--Lower Rated Bonds" in the Prospectus for a discussion
of certain risks and "Appendix B" for a general description of Moody's, S&P
and Fitch ratings of Municipal Obligations. Although ratings may be useful
in evaluating the safety of interest and principal payments, they do not
evaluate the market value risk of these bonds. The Fund will rely on the
Manager's judgment, analysis and experience in evaluating the
creditworthiness of an issuer. In this evaluation, the Manager will take
into consideration, among other things, the issuer's financial resources,
its sensitivity to economic conditions and trends, the quality of the
issuer's management and regulatory matters. It also is possible that a
rating agency might not timely change the rating on a particular issue to
reflect subsequent events. As stated above, once the rating of a bond in a
Series' portfolio has been changed, the Manager will consider all
circumstances deemed relevant in determining whether such Series should
continue to hold the bond.
Investors should be aware that the market values of many of these
bonds tend to be more sensitive to economic conditions than are higher
rated securities. These bonds generally are considered by S&P, Moody's and
Fitch to be predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation
and generally will involve more credit risk than securities in the higher
rating categories.
Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these bonds does exist, it generally
is not as liquid as the secondary market for higher rated securities. The
lack of a liquid secondary market may have an adverse impact on market
price and yield and the Fund's ability to dispose of particular issues when
necessary to meet the Series' liquidity needs or in response to a specific
economic event such as a deterioration in the creditworthiness of the
issuer. The lack of a liquid secondary market for certain securities also
may make it more difficult for the Fund to obtain accurate market
quotations for purposes of valuing a Series' portfolio and calculating such
Series' net asset value. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the values and
liquidity of these securities. In such cases, judgment may play a greater
role in valuation because less reliable objective data may be available.
These bonds may be particularly susceptible to economic downturns.
It is likely that any economic recession could disrupt severely the market for
such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn
could adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon and increase the incidence of
default for such securities.
The Fund may acquire these bonds during any initial offering. Such
securities may involve special risks because they are new issues. The Fund
has no arrangement with the Distributor or any other persons concerning the
acquisition of such securities, and the Manager will review carefully the
credit and other characteristics pertinent to such new issues.
Lower rated zero coupon securities and pay-in-kind bonds, in which
each Series may invest up to 5% of its net assets, involve special
considerations. The credit risk factors pertaining to lower rated
securities also apply to lower rated zero coupon bonds and pay-in-kind
bonds. Such zero coupon, pay-in-kind or delayed interest bonds carry an
additional risk in that, unlike bonds which pay interest throughout the
period to maturity, the Series will realize no cash until the cash payment
date unless a portion of such securities are sold and, if the issuer
defaults, the Series may obtain no return at all on its investment. See
"Dividends, Distributions and Taxes."
Investing in State Municipal Obligations. Investors should review
the information in "Appendix A," which provides a brief summary of special
investment considerations and risk factors relating to investing in State
Municipal Obligations.
Investment Restrictions. The Fund has adopted investment restrictions
numbered 1 through 5 and 7 through 11 as fundamental policies which will
apply to each Series. These restrictions cannot be changed as to a Series
without approval by the holders of a majority (as defined in the Investment
Company Act of 1940 (the "Act")) of such Series' outstanding voting shares.
Investment restriction number 6 is not a fundamental policy and may be
changed by a vote of a majority of the Trustees at any time. No Series
may:
1. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the Prospectus and
those arising out of transactions in futures and options.
2. Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the Series'
total assets (including the amount borrowed) based on the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time
the borrowing is made. While borrowings exceed 5% of total assets, the
Series will not make any additional investments. Transactions in futures
and options and the entry into short sales transactions do not involve any
borrowing for purposes of this restriction.
3. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to secure borrowings for temporary or emergency purposes. The
deposit of assets in escrow in connection with the writing of covered put
and call options and the purchase of securities on a when-issued or
delayed-delivery basis and collateral arrangements with respect to initial
or variation margin for futures contracts and options on futures contracts
or indexes will not be deemed to be pledges of assets.
4. Purchase securities on margin, but may make margin deposits
in connection with transactions in futures, including those related to
indexes, and options on futures or indexes.
5. Underwrite the securities of other issuers, except that the
Series may bid separately or as part of a group for the purchase of
Municipal Obligations directly from an issuer for its own portfolio to take
advantage of the lower purchase price available, and except to the extent
the Series may be deemed an underwriter under the Securities Act of 1933,
as amended, by virtue of disposing of portfolio securities.
6. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid
(which securities could include participation interests that are not
subject to the demand feature described in the Fund's Prospectus and
floating and variable rate demand obligations as to which the Fund cannot
exercise the demand feature described in the Fund's Prospectus on not more
than seven days' notice if there is no secondary market), if, in the
aggregate, more than 15% of the value of the Series' net assets would be so
invested.
7. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
but this shall not prevent the Fund from investing in Municipal Obligations
secured by real estate or interests therein, or prevent the Fund from
purchasing and selling futures contracts, including those related to
indexes, and options on futures contracts or indexes.
8. Make loans to others except through the purchase of
qualified debt obligations and the entry into repurchase agreements referred to
above and in the Fund's Prospectus; however, the Fund may lend each Series'
portfolio securities in an amount not to exceed 33-1/3% of the value of the
Series' total assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and Exchange
Commission and the Fund's Trustees.
9. Invest more than 25% of its total assets in the securities
of issuers in any single industry; provided that there shall be no such
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
10. Invest in companies for the purpose of exercising control.
11. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or acquisition of
assets.
For purposes of Investment Restriction No. 9, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together
as an "industry." If a percentage restriction is adhered to at the time of
investment, a later increase in percentage resulting from a change in
values or assets will not constitute a violation of such restriction.
The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Series shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interests of a Series and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of such Series in the state
involved.
In addition, although not fundamental policies, the Pennsylvania
Series may vary its portfolio investments only to (i) eliminate unsafe
investments and investments not consistent with the preservation of capital
or the tax status of investments of the Pennsylvania Series; (ii) honor
redemption orders, meet anticipated redemption requirements and negate
gains from discount purchases; (iii) reinvest the earnings from securities
in like securities; or (iv) defray ordinarily administrative expenses.
While not a fundamental policy, the Texas Series will not invest in
real estate limited partnerships.
MANAGEMENT OF THE FUND
Trustees and officers of the Fund, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Trustee who is deemed to be an "interested person"
of the Fund, as defined in the Act, is indicated by an asterisk.
Trustees and Officers of the Fund
CLIFFORD L. ALEXANDER, JR., Trustee. President of Alexander & Associates,
Inc., a management consulting firm. From 1977 to 1981, Mr. Alexander
served as Secretary of the Army and Chairman of the Board of the
Panama Canal Company, and from 1975 to 1977, he was a member of the
Washington, D.C. law firm of Verner, Liipfert, Bernhard, McPherson
and Alexander. He is a director of American Home Products,
Corporation The Dun & Bradstreet Corporation, MCI Communications
Corporation, Mutual of America Life Insurance Company and
Equitable Resources, Inc., a producer and distributor of natural
gas and crude petroleum. His address is 400 C Street, N.E.,
Washington, D.C. 20002.
PEGGY C. DAVIS, Trustee. Professor of Law, New York University School of
Law. Professor Davis has been a member of the New York University
law faculty since 1983. Prior to that time, she served for three
years as a judge in the courts of New York State; was engaged for
eight years in the practice of law, working in both corporate and
non-profit sectors; and served for two years as a criminal justice
administrator in the government of the City of New York. She writes
and teaches in the fields of evidence, constitutional theory, family
law, social sciences and the law, legal process and professional
methodology and training. Her address is c/o New York University
School of Law, 249 Sullivan Street, New York, New York 10012.
ERNEST KAFKA, Trustee. A physician engaged in private practice
specializing in the psychoanalysis of adults and adolescents. Since
1981, he has served as an Instructor at the New York Psychoanalytic
Institute and, prior thereto, held other teaching positions. For
more than the past five years, Dr. Kafka has held numerous
administrative positions and has published many articles on
subjects in the field of psychoanalysis. His address is 23
East 92nd Street, New York, New York 10128.
SAUL B. KLAMAN, Trustee. Chairman and Chief Executive Officer of SBK
Associates, which provides research and consulting services to
financial institutions. Dr. Klaman was President of the National
Association of Mutual Savings Banks until November 1983, President of
the National Council of Savings Institutions until June 1985, Vice
Chairman of Golembe Associates and BEI Golembe, Inc. until 1989 and
Chairman Emeritus of BEI Golembe, Inc. until November 1992. He also
served as an Economist to the Board of Governors of the Federal
Reserve System and on several Presidential Commissions, and has held
numerous consulting and advisory positions in the fields of economics
and housing finance. His address is 431-B Dedham Street, The Gables,
Newton Center, Massachusetts 02159.
NATHAN LEVENTHAL, Trustee. President of Lincoln Center for the Performing
Arts, Inc. Mr. Leventhal was Deputy Mayor for Operations of New York
City from September 1979 until March 1984 and Commissioner of the
Department of Housing Preservation and Development of New York City
from February 1978 to September 1979. Mr. Leventhal was an associate
and then a member of the New York law firm of Poletti Freidin
Prashker Feldman and Gartner from 1974 to 1978. He was
Commissioner of Rent and Housing Maintenance for New York City
from 1972 to 1973. His address is 70 Lincoln Center Plaza,
New York, New York 10023-6583.
*RICHARD J. MOYNIHAN, Trustee, President and Investment Officer. An
employee of the Manager and an officer, director or trustee of other
investment companies advised and administered by the Manager. His
address is 200 Park Avenue, New York, New York 10166.
Each of the "non-interested" Trustees is also a trustee of General
California Municipal Money Market Fund, General New York Municipal Money
Market Fund, Premier California Municipal Bond Fund, Premier GNMA Fund,
Premier Insured Municipal Bond Fund, Premier Municipal Bond Fund and
Premier New York Municipal Bond Fund and a director of Dreyfus Appreciation
Fund, Inc., General California Municipal Bond Fund, Inc., General
Government Securities Money Market Fund, Inc., General Money Market Fund,
Inc., General Municipal Bond Fund, Inc., General Municipal Money Market
Fund, Inc., General New York Municipal Bond Fund, Inc. and Premier Growth
Fund, Inc. Mr. Alexander is also a director of The Dreyfus Socially
Responsible Growth Fund, Inc. and The Dreyfus Third Century Fund, Inc.
For so long as the Fund's plans described in the section captioned
"Distribution Plan" and "Shareholder Services Plan" remain in effect, the
Trustees of the Fund who are not "interested persons" of the Fund, as
defined in the Act, will be selected and nominated by the Trustees who are
not "interested persons" of the Fund.
Ordinarily meetings of shareholders for the purpose of electing
Trustees will not be held unless and until such time as less than a
majority of the Trustees holding office have been elected by shareholders
at which time the Trustees then in office will call a shareholders' meeting
for the election of Trustees. Under the Act, shareholders of record of not
less than two-thirds of the outstanding shares of the Fund may remove a
Trustee through a declaration in writing or by vote cast in person or by
proxy at a meeting called for that purpose. Under the Fund's Agreement and
Declaration of Trust, the Trustees are required to call a meeting of
shareholders for the purpose of voting upon the question of removal of any
such Trustee when requested in writing to do so by the shareholders of
record of not less than 10% of the Fund's outstanding shares.
The Fund does not pay any remuneration to its officers and Trustees
other than fees and expenses to Trustees who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, which totalled $10,310 for the fiscal year ended April 30,
1993 for such Trustees as a group.
Officers of the Fund Not Listed Above
A. PAUL DISDIER, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
KAREN M. HAND, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
STEPHEN C. KRIS, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
L. LAWRENCE TROUTMAN, Vice President and Investment Officer. An employee
of the Manager and an officer of other investment companies advised
and administered by the Manager.
SAMUEL J. WEINSTOCK, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised and
administered by the Manager.
MONICA S. WIEBOLDT, Vice President and Investment Officer. An employee of
the Manager and an officer of other investment companies advised and
administered by the Manager.
JILL C. SHAFFRO, Vice President and Investment Officer. An employee of the
Manager and an officer of other investment companies advised and
administered by the Manager.
DANIEL C. MACLEAN, Vice President. Vice President and General Counsel of
the Manager, Secretary of the Distributor and an officer of other
investment companies advised or administered by the Manager.
JEFFREY N. NACHMAN, Vice President-Financial. Vice President--Mutual Fund
Accounting of the Manager and an officer of other investment
companies advised or administered by the Manager.
MARK N. JACOBS, Secretary. Secretary and Deputy General Counsel of the
Manager and an officer of other investment companies advised or
administered by the Manager.
JOHN J. PYBURN, Treasurer. Assistant Vice President of the Manager and an
officer of other investment companies advised or administered by the
Manager.
GREGORY S. GRUBER, Controller. Senior Accounting Manager in the Fund
Accounting Department of the Manager and an officer of other
investment companies advised or administered by the Manager.
STEVEN F. NEWMAN, Assistant Secretary. Associate General Counsel of the
Manager and an officer of other investment companies advised or
administered by the Manager.
CHRISTINE PAVALOS, Assistant Secretary. Assistant Secretary of the
Manager, the Distributor and other investment companies advised or
administered by the Manager.
The address of each officer of the Fund is 200 Park Avenue, New York,
New York 10166.
Trustees and officers of the Fund, as a group, owned less than 1% of
the Fund's shares of beneficial interest outstanding on January 21, 1994.
As of January 21, 1994, the following persons owned 5% or more of the
outstanding shares of beneficial interest of the Fund's Arizona Series -
Class A and Georgia Series - Class A, respectively: The Dreyfus
Corporation, New York, NY - 13.9% and J. Alexander, New York, NY - 5.5%.
As of January 21, 1994, B. Reed and L.G. Reed, Grafton, MA owned 5.3% of
the outstanding shares of beneficial interest of the Fund's Massachusetts
Series - Class B.
The following persons are also officers and/or directors of the
Manager: Howard Stein, Chairman of the Board and Chief Executive Officer;
Julian M. Smerling, Vice Chairman of the Board of Directors; Joseph S.
DiMartino, President, Chief Operating Officer and a director; Alan M.
Eisner, Vice President and Chief Financial Officer; David W. Burke, Vice
President and Chief Administrative Officer; Robert F. Dubuss, Vice
President; Elie M. Genadry, Vice President-Institutional Sales; Peter A.
Santoriello, Vice President; Robert H. Schmidt, Vice President; Kirk V.
Stumpp, Vice President--New Product Development; Philip L. Toia, Vice
President; Katherine C. Wickham, Assistant Vice President--Human Resources;
Maurice Bendrihem, Controller; and Mandell L. Berman, Alvin E. Friedman,
Lawrence M. Greene, Abigail Q. McCarthy and David B. Truman, directors.
MANAGEMENT AGREEMENT
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."
The Manager provides management services pursuant to the Management
Agreement (the "Agreement") with the Fund dated November 21, 1986, as
amended. As to each Series, the Agreement is subject to annual approval by
(i) the Fund's Board of Trustees or (ii) vote of a majority (as defined in
the Act) of the outstanding voting securities of such Series, provided that
in either event the continuance also is approved by a majority of the
Trustees who are not "interested persons" (as defined in the Act) of the
Fund or the Manager, by vote cast in person at a meeting called for the
purpose of voting on such approval. The Agreement was last approved by the
Fund's Board of Trustees, including a majority of the Trustees who are not
"interested persons" of any party to the Agreement, at a meeting held on
January 26, 1994. The Agreement is terminable without penalty, as to each
Series, on 60 days' notice, by the Fund's Board of Trustees or by vote of
the holders of a majority of such Series' shares, or, on not less than 90
days' notice, by the Manager. The Agreement will terminate automatically,
as to the relevant Series, in the event of its assignment (as defined in
the Act).
The Manager manages each Series' portfolio of investments in
accordance with the stated policies of such Series, subject to the approval
of the Fund's Board of Trustees. The Manager is responsible for investment
decisions, and provides the Fund with Investment Officers who are
authorized by the Board of Trustees to execute purchases and sales of
securities. The Fund's Investment Officers are A. Paul Disdier, Karen M.
Hand, Stephen C. Kris, Richard J. Moynihan, Jill C. Shaffro, L. Lawrence
Troutman, Samuel J. Weinstock and Monica S. Wieboldt. The Manager also
maintains a research department with a professional staff of portfolio
managers and securities analysts who provide research services for the Fund
as well as for other funds advised by the Manager. All purchases and sales
are reported for the Board of Trustees' review at the meeting subsequent to
such transactions.
All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include: taxes, interest, brokerage fees and
commissions, if any, fees of Trustees who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of
the Manager, Securities and Exchange Commission fees, state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of independent
pricing services, costs of maintaining the Fund's existence, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of shareholders' reports and meetings, and
any extraordinary expenses. Class A and Class B shares are subject to an
annual service fee for ongoing personal services relating to shareholder
accounts and services related to the maintenance of shareholder accounts.
In addition, Class B shares are subject to an annual distribution fee for
advertising, marketing and distributing Class B shares pursuant to a
distribution plan adopted in accordance with Rule 12b-1 under the Act. See
"Distribution Plan and Shareholder Services Plan." Expenses attributable
to a particular Series are charged against the assets of that Series; other
expenses of the Fund are allocated among the Series on the basis determined
by the Board of Trustees, including, but not limited to, proportionately in
relation to the net assets of each Series.
The Manager pays the salaries of all officers and employees employed
by both it and the Fund, maintains office facilities, and furnishes
statistical and research data, clerical help, accounting, data processing,
bookkeeping and internal auditing and certain other required services. The
Manager also may make such advertising and promotional expenditures, using
its own resources, as it from time to time deems appropriate.
As compensation for the Manager's services to the Fund, the Fund has
agreed to pay the Manager a monthly management fee at the annual rate of
.55 of 1% of the value of each Series' average daily net assets. For the
fiscal years ended April 30, 1991 and 1992, no management fee was paid by
the Fund pursuant to various undertakings by the Manager in effect during
such years. For the fiscal year ended April 30, 1993, the management fee
paid for each Series (except the Colorado and Oregon Series which had not
commenced operations) was as set forth below:
Series Management Fee Payable Reduction in Fee Net Fee Paid
_______ _______________________ _________________ _____________
Arizona* $ 12,227 $ 12,227 $ -0-
Connecticut 1,780,354 694,635 1,085,719
Florida 1,496,430 589,747 906,683
Georgia* 20,072 20,072 -0-
Maryland 1,634,121 663,156 970,965
Massachusetts 406,583 179,550 227,033
Michigan 910,442 411,882 498,560
Minnesota 745,093 328,657 416,436
North Carolina 228,381 228,381 -0-
Ohio 1,489,944 629,804 860,140
Pennsylvania 1,406,107 472,202 933,905
Texas 301,425 301,425 -0-
Virginia 227,861 227,861 -0-
______________
*For the period from September 3, 1992 (commencement of operations) through
April 30, 1993.
The Manager has agreed that if in any fiscal year the aggregate
expenses of each Series, exclusive of taxes, brokerage, interest on
borrowings and (with the prior written consent of the necessary state
securities commissions) extraordinary expenses, but including the
management fee, exceed the expense limitation of any state having
jurisdiction over such Series, the Fund may deduct from the payment to be
made to the Manager under the Agreement, or the Manager will bear, such
excess expense to the extent required by state law. Such deduction of
payment, if any, will be estimated daily, and reconciled and effected or
paid, as the case may be, on a monthly basis.
The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Series' net assets increases.
PURCHASE OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
The Distributor. The Distributor serves as the Fund's distributor
pursuant to an agreement which is renewable annually. The Distributor also
acts as distributor for the other funds in the Family of Premier Funds, for
the funds in the Dreyfus Family of Funds and for certain other investment
companies.
Sales Loads--Class A. The scale of sales loads applies to purchases
of Class A shares made by any "purchaser," which term includes an
individual and/or spouse purchasing securities for his, her or their own
account or for the account of any minor children, or a trustee or other
fiduciary purchasing securities for a single trust estate or a single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Internal Revenue Code of 1986, as amended (the "Code"), although more than
one beneficiary is involved; or a group of accounts established by or on
behalf of the employees of an employer or affiliated employers pursuant to
an employee benefit plan or other program (including accounts established
pursuant to Sections 403(b), 408(k), and 457 of the Code); or an organized
group which has been in existence for more than six months, provided that
it is not organized for the purpose of buying redeemable securities of a
registered investment company and provided that the purchases are made
through a central administration or a single dealer, or by other means
which result in economy of sales effort or expense.
Using Federal Funds. The Shareholder Services Group, Inc., the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"), or the Fund
may attempt to notify the investor upon receipt of checks drawn on banks
that are not members of the Federal Reserve System as to the possible delay
in conversion into Federal Funds and may attempt to arrange for a better
means of transmitting the money. If the investor is a customer of a
securities dealer ("Selected Dealer") and his order to purchase Fund shares
is paid for other than in Federal Funds, the Selected Dealer, acting on
behalf of its customer, will complete the conversion into, or itself
advance, Federal Funds generally on the business day following receipt of
the customer order. The order is effective only when so converted and
received by the Transfer Agent. An order for the purchase of Fund shares
placed by an investor with sufficient Federal Funds or a cash balance in
his brokerage account with a Selected Dealer will become effective on the
day that the order, including Federal Funds, is received by the Transfer
Agent.
TeleTransfer Privilege. TeleTransfer purchase orders may be made
between the hours of 8:00 a.m. and 4:00 p.m., New York time, on any
business day that the Transfer Agent and the New York Stock Exchange are
open. Such purchases will be credited to the shareholder's Fund account on
the next bank business day. To qualify to use the TeleTransfer Privilege,
the initial payment for the purchase of Fund shares must be drawn on, and
redemption proceeds paid to, the same bank and account as are designated on
the Fund's Account Application or Optional Services Form on file. If the
proceeds of a particular redemption are to be wired to an account at any
other bank, the request must be in writing and signature-guaranteed. See
"Redemption of Fund Shares--TeleTransfer Privilege."
Offering Price. Based upon each Series' net asset value at the close
of business on April 30, 1993 (except Colorado and Oregon which had not
commenced operations), the maximum offering price of each Series' shares
would have been as follows:
<TABLE>
<CAPTION>
Arizona Connecticut Florida Georgia
Series Series Series Series
-------- _____________ ________ _______
<S> <C> <C> <C> <C>
Class A Shares:
NET ASSET VALUE, per share . . . . . . . . . . . . . . . $13.12 $12.26 $15.02 $13.
Sales load for individual sales of shares
aggregating less than $50,000 - 4.5 percent
of offering price
(approximately 4.7 percent of net asset
value per share) . . . . . . . . . . . . . . . . . . . .62 .58 .71 .
------ ------ ------ ----
Offering price to public . . . . . . . . . . . . . . . . $13.74 $12.84 $15.73 $13.
====== ====== ====== ====
Class B shares:
NET ASSET VALUE, redemption price and
offering price to public*. . . . . . . . . . . . . . . $13.12 $12.26 $15.01 $13.
====== ====== ====== ====
______________________________________________
*Class B shares are subject to a contingent deferred sales charge on certain redemptions.
See "How to Redeem Fund Shares" in the Fund's Prospectus.
</TABLE>
<TABLE>
<CAPTION>
Maryland Massachusetts Michigan Minnesota
Series Series Series Series
_________ ______________ __________ ________
<S> <C> <C> <C> <C>
Class A Shares:
NET ASSET VALUE, per share . . . . . . . . . . . . . . . $13.02 $12.13 $15.65 $15.
Sales load for individual sales of shares
aggregating less than $50,000 - 4.5 percent
of offering price
(approximately 4.7 percent of net asset
value per share) . . . . . . . . . . . . . . . . . . . .61 .57 .74 .72
------- ------ ------ ------
Offering price to public . . . . . . . . . . . . . . . . $13.63 $12.70 $16.39 $16.03
====== ====== ====== ======
Class B shares:
NET ASSET VALUE, redemption price and
offering price to public*. . . . . . . . . . . . . . . $13.02 $12.13 $15.64 $15.32
====== ====== ====== ======
____________________________
*Class B shares are subject to a contingent deferred sales charge on certain redemptions.
See "How to Redeem Fund Shares" in the Fund's Prospectus.
</TABLE>
<TABLE>
<CAPTION>
North
Carolina Ohio Pennsylvania Texas
Series Series Series Series
_________ ______ _____________ _______
<S> <C> <C> <C> <C>
Class A Shares:
NET ASSET VALUE, per share . . . . . . . . . . . . . . . $13.40 $13.09 $16.61 $21.23
Sales load for individual sales of shares
aggregating less than $50,000 - 4.5 percent
of offering price
(approximately 4.7 percent of net asset
value per share) . . . . . . . . . . . . . . . . . . . .63 .62 .78 1.00
------- ------ ------ ------
Offering price to public . . . . . . . . . . . . . . . . $14.03 $13.71 $17.39 $22.23
======= ====== ====== ======
Class B shares:
NET ASSET VALUE, redemption price and
offering price to public*. . . . . . . . . . . . . . . $13.39 $13.09 $16.60 $21.23
====== ====== ====== ======
_________________________________
*Class B shares are subject to a contingent deferred sales charge on certain redemptions.
See "How to Redeem Fund Shares" in the Fund's Prospectus.
</TABLE>
Virginia
Series
_________
Class A Shares:
NET ASSET VALUE, per share . . . . . . . . . . . . . . . $16.80
Sales load for individual sales of shares
aggregating less than $50,000 - 4.5 percent
of offering price
(approximately 4.7 percent of net asset
value per share) . . . . . . . . . . . . . . . . . . . .79
------
Offering price to public . . . . . . . . . . . . . . . . $17.59
======
Class B shares:
NET ASSET VALUE, redemption price and
offering price to public*. . . . . . . . . . . . . . . $16.80
======
_________________________________
*Class B shares are subject to a contingent deferred sales charge on certain
redemptions. See "How to Redeem Fund Shares" in the Fund's Prospectus.
Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided the information on the old Account Application is still
applicable.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Distribution Plan and Shareholder Services Plan."
The Class A and Class B shares are subject to a Shareholder Services
Plan and only the Class B shares are subject to a Distribution Plan.
Distribution Plan. Rule 12b-1 (the "Rule") adopted by the Securities
and Exchange Commission under the Act provides, among other things, that an
investment company may bear expenses of distributing its shares only
pursuant to a plan adopted in accordance with the Rule. The Fund's Board
of Trustees has adopted such a plan (the "Distribution Plan") with respect
to the Class B shares of each Series, pursuant to which the Fund pays the
Distributor for advertising, marketing and distributing Class B shares.
Under the Distribution Plan, the Distributor may make payments to certain
securities dealers, financial institutions and other financial industry
professionals (collectively, "Service Agents") in respect of these
services. The Fund's Board of Trustees believes that there is a reasonable
likelihood that the Distribution Plan will benefit the Fund and holders of
each Series' Class B shares. In some states, certain institutions
effecting transactions in Fund shares may be required to register as
dealers pursuant to state law.
A quarterly report of the amounts expended under the Distribution
Plan, and the purposes for which such expenditures were incurred, must be
made to the Trustees for their review. In addition, the Distribution Plan
provides that it may not be amended to increase materially the costs which
holders of the Class B shares may bear for distribution pursuant to the
Plan without the approval of the holders of Class B shares and that other
material amendments of the Distribution Plan must be approved by the Board
of Trustees, and by the Trustees who are not "interested persons" (as
defined in the Act) of the Fund or the Manager and have no direct or
indirect financial interest in the operation of the Distribution Plan or in
any agreements entered into in connection with the Distribution Plan, by
vote of the Trustees cast in person at a meeting called for the purpose of
considering such amendments. The Distribution Plan is subject to annual
approval by such vote of the Trustees cast in person at a meeting called
for the purpose of voting on the Distribution Plan. The Distribution Plan
was last approved by the Fund's Board of Trustees, including a majority of
the Trustees who are not "interested persons" at a meeting held on January
26, 1994. The Distribution Plan is terminable, as to each Series, at any
time by vote of a majority of the Trustees who are not "interested persons"
and have no direct or indirect financial interest in the operation of the
Distribution Plan or in any agreements entered into in connection with the
Distribution Plan, or by vote of the holders of a majority of such Series'
Class B shares.
For the period January 15, 1993 through April 30, 1993, each Series
(except the Colorado and Oregon Series which had not commenced operations)
was charged with respect to Class B the following amounts for advertising,
marketing and distributing Class B shares pursuant to the Distribution
Plan:
Series
Class B Amount Charged
______ _________________________
Arizona $ 906
Connecticut 6,248
Florida 3,885
Georgia 5,350
Maryland 2,921
Massachusetts 777
Michigan 2,181
Minnesota 2,836
North Carolina 7,895
Ohio 5,277
Pennsylvania 8,217
Texas 4,776
Virginia 6,005
Shareholder Services Plan. The Fund has adopted a Shareholder Services
Plan, pursuant to which the Fund pays the Distributor for the provision of
certain services to the holders of Class A and Class B shares.
A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Trustees for their review. In addition, the
Shareholder Services Plan provides that it may not be amended without
approval of the Board of Trustees, and by the Trustees who are not
"interested persons" (as defined in the Act) of the Fund and have no direct
or indirect financial interest in the operation of the Shareholder Services
Plan or in any agreements entered into in connection with the Shareholder
Services Plan, by vote of the Trustees cast in person at a meeting called
for the purpose of considering such amendments. The Shareholder Services
Plan is subject to annual approval by such vote of the Trustees cast in
person at a meeting called for the purpose of voting on the Shareholder
Services Plan. The Shareholder Services Plan was so approved on January 28,
1994. As to each Series, the Shareholder Services Plan is terminable at
any time by vote of a majority of the Trustees who are not "interested
persons" and who have no direct or indirect financial interest in the
operation of the Shareholder Services Plan or in any agreements entered
into in connection with the Shareholder Services Plan.
For the period January 15, 1993 through April 30, 1993, each Series
(except the Colorado and Oregon Series which had not commenced operations)
was charged with respect to Class A and Class B the following amounts
pursuant to the Shareholder Services Plan:
Series Class A Class B
______ _______ ________
Arizona $ 3,291 $ 453
Connecticut 254,931 3,123
Florida 211,601 1,942
Georgia 4,457 2,675
Maryland 236,033 1,461
Massachusetts 56,669 389
Michigan 130,609 1,090
Minnesota 104,828 1,418
North Carolina 36,735 3,947
Ohio 209,003 2,639
Pennsylvania 153,673 4,109
Texas 48,457 2,388
Virginia 37,758 3,003
Prior Rule 12b-1 Plan. On January 15, 1993, the Fund terminated its
then existing Rule 12b-1 plan, which provided for payments to be made to
Service Agents for advertising, marketing and/or distributing Class A
shares and servicing holders of Class A shares.
During the period from May 1, 1992 to January 15, 1993, each Series
(except the Colorado and Oregon Series which had not commenced operations)
was charged with respect to Class A, the following amounts pursuant to such
Rule 12b-1 plan:
<TABLE>
<CAPTION>
For advertising,
marketing and For printing
distributing and distributing
Class A shares prospectuses and Total
and servicing implementing and amount
Series shareholders operating prior plan charged Class A
______ ________________ _____________________ ________________
<S> <C> <C> <C>
Arizona $ 1,814 $ 8 $ 1,822
Connecticut 551,196 8,058 559,254
Florida 466,652 5,926 472,578
Georgia 1,992 306 2,298
Maryland 505,289 6,350 511,639
Massachusetts 127,753 2,544 130,297
Michigan 282,138 4,163 286,301
Minnesota 232,433 3,506 235,939
North Carolina 63,127 1,498 64,625
Ohio 462,822 8,440 471,262
Pennsylvania 317,723 6,857 324,580
Texas 86,166 2,854 89,020
Virginia 62,813 1,730 64,543
</TABLE>
REDEMPTION OF FUND SHARES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Fund Shares."
Check Redemption Privilege - Class A Shares. An investor may
indicate on the Account Application or by later written request that the Fund
provide Redemption Checks ("Checks") with respect to Class A shares, drawn
on the Fund's account. Checks will be sent only to the registered owner(s)
of the account and only to the address of record. The Account Application
or later written request must be manually signed by the registered
owner(s). Checks may be made payable to the order of any person in an
amount of $500 or more. When a Check is presented to the Transfer Agent
for payment, the Transfer Agent, as the investor's agent, will cause the
Fund to redeem a sufficient number of Class A shares in the investor's
account to cover the amount of the Check. Dividends are earned until the
Check clears. After clearance, a copy of the Check will be returned to the
investor. Investors generally will be subject to the same rules and
regulations that apply to checking accounts, although the election of this
Privilege creates only a shareholder-transfer agent relationship with the
Transfer Agent.
If the amount of the Check is greater than the value of the Class A
shares in the investor's account, the Check will be returned marked
insufficient funds. Checks should not be used to close an account.
TeleTransfer Privilege. Investors should be aware that if they have
selected the TeleTransfer Privilege, any request for a TeleTransfer
transaction will be effected through the Automated Clearing House ("ACH")
system unless more prompt transmittal specifically is requested.
Redemption proceeds will be on deposit in the investor's account at an ACH
member bank ordinarily two business days after receipt of the redemption
request. See "Purchase of Fund Shares--TeleTransfer Privilege."
Share Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each owner of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York
Stock Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification.
Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of a Series, limited
in amount during any 90-day period to the lesser of $250,000 or 1% of the
value of such Series' net assets at the beginning of such period. Such
commitment is irrevocable without the prior approval of the Securities and
Exchange Commission. In the case of requests for redemption in excess of
such amount, the Board of Trustees reserves the right to make payments in
whole or in part in securities or other assets in case of an emergency or
any time a cash distribution would impair the liquidity of the Series to
the detriment of the existing shareholders. In this event, the securities
would be valued in the same manner as the Series' portfolio is valued. If
the recipient sold such securities, brokerage charges would be incurred.
In connection with a redemption request where the Fund delivers in-kind
securities instead of a cash to an investors, the in-kind securities will
be readily marketable securities.
Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.
SHAREHOLDER SERVICES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services."
Exchange Privilege. Class A and Class B shares of the Fund may be
exchanged for shares of the respective Class of certain other funds advised
or administered by the Manager. Shares of the same Class of such other
funds purchased by exchange will be purchased on the basis of relative net
asset value per share as follows:
A. Class A shares of funds purchased without a sales load may be
exchanged for Class A shares of other funds sold with a sales
load, and the applicable sales load will be deducted.
B. Class A shares of funds purchased with or without a sales load
may be exchanged without a sales load for Class A shares of
other funds sold without a sales load.
C. Class A shares of funds purchased with a sales load, Class A
shares of funds acquired by a previous exchange from Class A
shares purchased with a sales load, and additional Class A
shares acquired through reinvestment of dividends or
distributions of any such funds (collectively referred to
herein as "Purchased Shares") may be exchanged for Class A
shares of other funds sold with a sales load (referred to
herein as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales load
that could have been imposed in connection with the Purchased
Shares (at the time the Purchased Shares were acquired), without
giving effect to any reduced loads, the difference will be
deducted.
D. Class B shares of any fund may be exchanged for Class B shares
of other funds without a sales load. Class B shares of any fund
exchanged for Class B shares of another fund will be subject to
the higher applicable contingent deferred sales charge ("CDSC")
of the two funds and, for purposes of calculating CDSC rates and
conversion periods, will be deemed to have been held since the
date the shares being exchanged were initially purchased.
To accomplish an exchange under item C above, an investor's Service
Agent must notify the Transfer Agent of the investor's prior ownership of
such Class A shares and the investor's account number.
To use this Privilege, the investor's Service Agent acting on the
investor's behalf must give exchange instructions to the Transfer Agent in
writing, by wire or by telephone. Telephone exchanges may be made only if
the appropriate "YES" box has been checked on the Account Application or a
separate signed Optional Services Form is on file with the Transfer Agent.
By using this Privilege, the investor authorizes the Transfer Agent to act
on telephonic, telegraphic or written exchange instructions from any person
representing himself or herself to be a representative of the investor's
Service Agent, and reasonably believed by the Transfer Agent to be genuine.
Telephone exchanges may be subject to limitations as to the amount involved
or the number of telephone exchanges permitted. Shares issued in
certificate form are not eligible for telephone exchange.
To establish a Personal Retirement Plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment being required for shares of the same class of the fund into
which the exchange is being made. For Dreyfus-sponsored Keogh Plans, IRAs
and SEP-IRAs with only one participant, the minimum initial investment is
$750. To exchange shares held in Corporate Plans, 403(b)(7) Plans and SEP-
IRAs with more than one participant, the minimum initial investment is $100
if the plan has at least $2,500 invested among shares of the same class of
the funds in the Dreyfus Family of Funds. To exchange shares held in
Personal Retirement Plans, the shares exchanged must have a current value
of at least $100.
Auto-Exchange Privilege. Auto-Exchange permits an investor to
purchase, in exchange for Class A or Class B shares of a Series, shares of
the same Class of one of the other Series or another fund in the Premier
Family of Funds or the Dreyfus Family of Funds. This Privilege is
available only for existing accounts. Shares will be exchanged on the
basis of relative net asset value as described above under "Exchange
Privilege." Enrollment in or modification or cancellation of this
Privilege is effective three business days following notification by the
investor. An investor will be notified if his account falls below the
amount designated to be exchanged under this Privilege. In this case, an
investor's account will fall to zero unless additional investments are made
in excess of the designated amount prior to the next Auto-Exchange
transaction. Shares held under IRA and other retirement plans are eligible
for this Privilege. Exchanges of IRA shares may be made between IRA
accounts and from regular accounts to IRA accounts, but not from IRA
accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.
The Exchange Privilege and Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the series or fund
being acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.
Optional Services Forms and prospectuses of the other funds may be
obtained from the Distributor, 144 Glenn Curtiss Boulevard, Uniondale, New
York 11556-0144. The Fund reserves the right to reject any exchange
request in whole or in part. The Exchange Privilege or Auto-Exchange
Privilege may be modified or terminated at any time upon notice to
shareholders.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends
and distributions, the investor's shares will be reduced and eventually may
be depleted. An Automatic Withdrawal Plan may be established by completing
the appropriate application available from the Distributor. There is a
service charge of $.50 for each withdrawal check. Automatic Withdrawal may
be terminated at any time by the investor, the Fund or the Transfer Agent.
Shares for which certificates have been issued may not be redeemed through
the Automatic Withdrawal Plan. Class B shares withdrawn pursuant to the
Automatic Withdrawal Plan will be subject to any applicable CDSC.
Dividend Sweep Privilege. The Dividend Sweep Privilege allows
investors to invest on the payment date their dividends or dividends and
capital gain distributions, if any, from the Fund in shares of the same
Class of another fund in the Premier Family of Funds or the Dreyfus Family
of Funds of which the investor is a shareholder. Shares of the same Class
of other funds purchased pursuant to this Privilege will be purchased on
the basis of relative net asset value per share as follows:
A. Dividends and distributions paid with respect to Class A shares
by a fund may be invested without imposition of a sales load in
Class A shares of other funds that are offered without a sales
load.
B. Dividends and distributions paid with respect to Class A shares
by a fund which does not charge a sales load may be invested in
Class A shares of other funds sold with a sales load, and the
applicable sales load will be deducted.
C. Dividends and distributions paid with respect to Class A shares
by a fund which charges a sales load may be invested in Class A
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales
load charged by the fund from which dividends or
distributions are being swept, without giving effect to any
reduced loads, the difference will be deducted.
D. Dividends and distributions paid with respect to Class B shares
by a fund may be invested without imposition of any applicable
CDSC in Class B shares of other funds and the Class B shares of
such other funds will be subject on redemption to any applicable
CDSC.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Fund Shares."
Valuation of Portfolio Securities. Each Series' investments are
valued each business day by an independent pricing service (the "Service")
approved by the Board of Trustees. When, in the judgment of the Service,
quoted bid prices for investments are readily available and are
representative of the bid side of the market, these investments 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 bonds of
comparable quality, coupon, maturity and type; indications as to values
from dealers; and general market conditions. The Service may employ
electronic data processing techniques and/or a matrix system to determine
valuations. The Service's procedures are reviewed by the Fund's officers
under the general supervision of the Board of Trustees. Expenses and fees,
including the management fee (reduced by the expense limitation, if any)
and, fees pursuant to the Shareholder Services Plan with respect to the
Class A and Class B shares, and fees pursuant to the Distribution Plan,
with respect to the Class B shares only, are accrued daily and taken into
account for the purpose of determining the net asset value of the relevant
Class of each Series' shares. Because of the difference in operating
expenses incurred by each Class, the per share net asset value of each
Class will differ.
New York Stock Exchange Closings. The holidays (as observed) on
which the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."
Management believes that each Series (except the Colorado and Oregon
Series which had not commenced operations) qualified as a "regulated
investment company" under the Code for the fiscal year ended April 30,
1993, and each Series intends to continue to so qualify, so long as such
qualification is in the best interests of its shareholders. As a regulated
investment company, a Series will pay no Federal income tax on net
investment income and net realized capital gains to the extent that such
income and gains are distributed to shareholders in accordance with
applicable provisions of the Code. To qualify as a regulated investment
company, a Series must distribute at least 90% of its net income
(consisting of net investment income from tax exempt obligations and
taxable obligations, if any, and net short-term capital gains to its
shareholders), must derive less than 30% of its annual gross income from
gain on the sale of securities held for less than three months, and must
meet certain asset diversification and other requirements. Accordingly, a
Series may be restricted in the selling of securities held for less than
three months, and in the utilization of certain of the investment
techniques described in the Prospectus under "Description of the Fund-
- -Investment Techniques." The Code, however, allows a Series to net certain
offsetting positions making it easier for the Series to satisfy the 30%
test. The terms "regulated investment company" does not imply the
supervision of management or investment practices or policies by any
government agency.
Any dividend or distribution paid shortly after an investor's purchase
may have the effect of reducing the net asset value of his shares below the
cost of his investment. Such a distribution would be a return on
investment in an economic sense although taxable as stated in "Dividends,
Distributions and Taxes" in the Prospectus. In addition, the Code provides
that if a shareholder has not held his shares for more than six months (or
such shorter period as the Internal Revenue Service may prescribe by
regulation) and has received an exempt-interest dividend with respect to
such shares, any loss incurred on the sale of such shares will be
disallowed to the extent of the exempt-interest dividend received.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as taxable gain or loss. However, all or a portion of the gain
realized from the disposition of certain market discount bonds will be
treated as ordinary income under Section 1276 of the Code. In addition,
all or a portion of the gain realized from engaging in "conversion
transactions" may be treated as ordinary income under Section 1258.
"Conversion transactions" are defined to include certain forward, futures,
option and "straddle" transactions, transactions marketed or sold to
produce capital gains, or transactions described in Treasury regulations to
be issued in the future.
Under Section 1256 of the Code, gain or loss a Series realizes from
certain financial futures and options transactions will be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss.
Gain or loss will arise upon exercise or lapse of such futures and options
as well as from closing transactions. In addition, such futures and
options remaining unexercised at the end of a Series' taxable year will be
treated as sold for their then fair market value, resulting in additional
gain or loss to a Series characterized in the manner described above.
Offsetting positions held by a Series involving certain futures and
options transactions may be considered, for tax purposes, to constitute
"straddles." "Straddles" are defined to include "offsetting positions" in
actively traded personal property. The tax treatment of "straddles" is
governed by Section 1092 of the Code, which, in certain circumstances,
overrides or modifies the provisions of Section 1256. If a Series were
treated as entering into "straddles" by reason of its engaging in certain
futures or options transactions, such "straddles" would be characterized as
"mixed straddles" if the futures or options transactions comprising a part
of such "straddles" were governed by Section 1256. A Series may make one
or more elections with respect to "mixed straddles." Depending on which
election is made, if any, the results to a Series may differ. If no
election is made to the extent the "straddle" rules apply to positions
established by a Series, losses realized by a Series will be deferred to
the extent of unrealized gain in the offsetting position. Moreover, as a
result of the "straddle" rules, short-term capital losses on "straddle"
positions may be recharacterized as long-term capital losses, and long-term
capital gains may be treated as short-term capital gains.
Investment by the Series in securities issued at a discount or
providing for deferred interest or for payment of interest in the form of
additional obligations could, under special tax rules, affect the amount,
timing and character of distributions to shareholders. For example, a
Series could be required to take into account annually a portion of the
discount (or deemed discount) at which such securities were issued and to
distribute such portion in order to maintain its qualification as a
regulated investment company. In such case, a Series may have to dispose
of securities which it might otherwise have continued to hold in order to
generate cash to satisfy these distribution requirements.
PORTFOLIO TRANSACTIONS
Portfolio securities ordinarily are purchased from and sold to parties
acting as either principal or agent. Newly-issued securities ordinarily
are purchased directly from the issuer or from an underwriter; other
purchases and sales usually are placed with those dealers from which it
appears that the best price or execution will be obtained. Usually no
brokerage commissions, as such, are paid by the Fund for such purchases and
sales, although the price paid usually includes an undisclosed compensation
to the dealer acting as agent. The prices paid to underwriters of
newly-issued securities usually include a concession paid by the issuer to
the underwriter, and purchases of after-market securities from dealers
ordinarily are executed at a price between the bid and asked price. No
brokerage commissions have been paid by the Fund to date.
Transactions are allocated to various dealers by the Fund's
Investment Officers in their best judgment. The primary consideration is
prompt and effective execution of orders at the most favorable price.
Subject to that primary consideration, dealers may be selected for research,
statistical or other services to enable the Manager to supplement its own
research and analysis with the views and information of other securities
firms.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses
of its research department.
PERFORMANCE INFORMATION
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Performance
Information."
The current yield for the 30-day period ended October 31, 1993 for
Class A and Class B of each Series (except the Colorado and Oregon Series
which had not commenced operations) was as follows:
<TABLE>
<CAPTION>
Current Net of Absorbed
Series Yield Expenses(1)
______ _______ ___________________
Class A:
_______
<S> <C> <C>
Arizona 5.06% 3.87%
Connecticut 4.25 4.16
Florida 4.41 4.31
Georgia 5.08 4.06
Maryland 4.44 4.34
Massachusetts 4.17 4.05
Michigan 4.38 4.27
Minnesota 4.56 4.45
North Carolina 4.73 4.20
Ohio 4.23 4.10
Pennsylvania 4.55 4.43
Texas 4.89 4.36
Virginia 4.84 4.31
</TABLE>
<TABLE>
<CAPTION>
Class B:
_______
<S> <C> <C>
Arizona 4.76% 3.50%
Connecticut 3.90 3.81
Florida 4.05 3.95
Georgia 4.80 3.73
Maryland 4.04 3.94
Massachusetts 3.86 3.74
Michigan 3.94 3.83
Minnesota 4.18 4.07
North Carolina 4.35 3.80
Ohio 3.81 3.68
Pennsylvania 4.22 4.10
Texas 4.58 4.03
Virginia 4.51 3.96
</TABLE>
____________________________
(1) This column sets forth current yield had expenses not been
absorbed.
Current yield is computed pursuant to a formula which operates as follows:
The amount of each Series' expenses accrued for the 30-day period (net of
reimbursements) is subtracted from the amount of the dividends and interest
earned (computed in accordance with regulatory requirements) by the Series
during the period. That result is then divided by the product of: (a) the
average daily number of shares outstanding during the period that were
entitled to receive dividends, and (b) the net asset value per share on the
last day of the period less any undistributed earned income per share
reasonably expected to be declared as a dividend shortly thereafter. The
quotient is then added to 1, and that sum is raised to the 6th power, after
which 1 is subtracted. The current yield is then arrived at by multiplying
the result by 2.
Based upon the 1993 combined (except where noted) Federal and
applicable State tax rate specified below, the tax equivalent yield for the
30-day period ended October 31, 1993 for Class A and Class B of each Series
(except the Colorado and Oregon Series which had not commenced operations)
was as follows:
<TABLE>
<CAPTION>
Tax Equivalent Net of Absorbed
Series Tax Rate Yield Expenses(1)
_______ ________ _______________ ____________________
Class A:
_______
<S> <C> <C> <C>
Arizona 43.83% 9.01% 6.89%
Connecticut 42.32 7.37 7.21
Florida(2) 39.60 7.30 7.14
Georgia 43.22 8.95 7.15
Maryland(3) 43.22 7.82 7.64
Massachusetts 46.85 7.85 7.62
Michigan 42.38 7.60 7.41
Minnesota 44.73 8.25 8.05
North Carolina 44.28 8.49 7.54
Ohio 44.13 7.57 7.34
Pennsylvania 41.29 7.75 7.55
Texas(2) 39.60 8.10 7.22
Virginia 43.07 8.50 7.57
</TABLE>
<TABLE>
<CAPTION>
Class B:
_______
<S> <C> <C> <C>
Arizona 43.83% 8.47% 6.23%
Connecticut 42.32 6.76 6.61
Florida(2) 39.60 6.71 6.54
Georgia 43.22 8.45 6.57
Maryland(3) 43.22 7.12 6.94
Massachusetts 46.85 7.26 7.04
Michigan 42.38 6.84 6.65
Minnesota 44.73 7.56 7.36
North Carolina 44.28 7.81 6.82
Ohio 44.13 6.82 6.59
Pennsylvania 41.29 7.19 6.98
Texas(2) 39.60 7.58 6.67
Virginia 43.07 7.92 6.96
____________________________
(1) This column sets forth tax equivalent yield had expenses not been absorbed.
(2) Federal tax rate only. No state personal income tax imposed during 1993.
(3) Reflects increase in the maximum Maryland income tax rate from 5% to 6%, effective July 1, 1992.
</TABLE>
Tax equivalent yield is computed by dividing that portion of the current
yield (calculated as described above) which is tax-exempt by 1 minus a
stated tax rate and adding the quotient to that portion, if any, of the
yield of the Series that is not tax-exempt.
The tax equivalent yield noted above represents the application of
the highest marginal personal tax rates in effect during 1993. For Federal
personal income tax purposes, a 39.60% tax rate has been used. The tax
equivalent figure, however, does not include the potential effect of any
local (including, but not limited to, county, district or city) taxes,
including applicable surcharges. In addition, there may be pending
legislation which could affect such stated tax rates or yields. Each
investor should consult its tax adviser, and consider its own factual
circumstances and applicable tax laws, in order to ascertain the relevant
tax equivalent yield.
The average annual total return for the periods indicated for Class A
of each Series (except the Colorado and Oregon Series which had not
commenced operations) was as follows:
<TABLE>
<CAPTION>
1-year period 5-year period 6.430-year period
Series ended October 31, 1993 ended October 31, 1993 ended October 31, 1993
______ ____________________________ _________________________ _____________________
<S> <C> <C> <C>
Arizona 14.53% - % 10.82(1)
Connecticut 11.40 8.82 8.81
Florida 10.14 9.55 11.11
Georgia 15.10 - 11.32(1)
Maryland 9.92 9.10 7.76
Massachusetts 9.52 8.86 7.91
Michigan 11.75 9.43 10.53
Minnesota 9.97 9.24 9.37
North Carolina 13.20 - 11.51(2)
Ohio 10.12 9.48 5.51
Pennsylvania 10.93 9.84 9.17(3)
Texas 12.58 10.19 12.87
Virginia 13.48 - 11.81(2)
</TABLE>
____________________________
(1) For the 1.162 year period ended October 31, 1993.
(2) For the 2.252-year period ended October 31, 1993.
(3) For the 6.258-year period ended October 31, 1993.
The average annual total return for the period January 15, 1993
(commencement of initial offering) through October 31, 1993 for Class B of
each Series (except the Colorado and Oregon Series which had not commenced
operations) was as follows:
Series Series
______ ______
Arizona 13.54% Minnesota 10.28%
Connecticut 10.68 North Carolina 12.32
Florida 9.66 Ohio 10.28
Georgia 13.43 Pennsylvania 10.83
Maryland 9.87 Texas 12.14
Massachusetts 9.87 Virginia 12.13
Michigan 11.27
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result. A Class's
average annual total return figures calculated in accordance with such
formula assume that in the case of Class A the maximum sales load has been
deducted from the hypothetical initial investment at the time of purchase
or in the case of Class B the maximum applicable CDSC has been paid upon
redemption at the end of the period.
The total return for the period May 28, 1987 through October 31, 1993
(except where indicated) for Class A of each Series (except the Colorado
and Oregon Series which had not commenced operations) was as follows:
<TABLE>
<CAPTION>
Based on Maximum Based on Net Asset
Series Offering Price Value per Share
______ ____________________ __________________
Class A:
________
<S> <C> <C>
Arizona(1) 12.68% 18.00%
Connecticut 72.14 80.27
Florida 96.91 106.25
Georgia(1) 13.27 18.62
Maryland 61.74 69.38
Massachusetts 63.12 70.78
Michigan 90.37 99.29
Minnesota 77.89 86.34
North Carolina(2) 27.81 33.88
Ohio 41.22 47.82
Pennsylvania(3) 73.19 81.39
Texas 117.81 128.05
Virginia(2) 28.58 34.66
____________________________
(1) For the period from September 3, 1992 (commencement of operations) through October 31, 1993.
(2) For the period August 1, 1991 to October 31, 1993.
(3) For the period July 30, 1987 to October 31, 1993.
</TABLE>
The total return for the period January 15, 1993 to October 31, 1993
for Class B of each Series (except the Colorado and Oregon Series which had
not commenced operations) was as follows:
<TABLE>
<CAPTION>
Based on Net Asset Based on
Class B: Value per Share CDSC
_______ ____________________ _________
<S> <C> <C>
Arizona 13.62% 10.62%
Connecticut 11.40 8.40
Florida 10.61 7.61
Georgia 13.54 10.54
Maryland 10.77 7.77
Massachusetts 10.27 7.27
Michigan 12.09 9.09
Minnesota 11.09 8.09
North Carolina 12.68 9.68
Ohio 11.09 8.09
Pennsylvania 11.52 8.52
Texas 12.54 9.54
Virginia 12.53 9.53
</TABLE>
Total return is calculated by subtracting the amount of the Series'
maximum offering price per share in the case of Class A or the net asset
value in the case of Class B at the beginning of a stated period from the
net asset value per share at the end of the period (after giving effect to
the reinvestment of dividends and distributions during the period and, in
the case of Class B, any applicable contingent deferred sales charge), and
dividing the result by the maximum offering price per share in the case of
Class A or the net asset value in the case of Class B at the beginning of
the period. Total return also may be calculated based on the net asset
value per share at the beginning of the period instead of the maximum
offering price per share at the beginning of the period for Class A shares
or without giving effect to any applicable CDSC at the end of the period
for Class B shares. In such cases, the calculation would not reflect the
deduction of the sales load with respect to Class A shares or any
applicable CDSC with respect to Class B shares which, if reflected, would
reduce the performance quoted.
From time to time, the Fund may use hypothetical tax equivalent
yields or charts in its advertising. These hypothetical yields or charts
will be used for illustrative purposes only and are not as representative of
the Fund's past or future performance.
From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic conditions, developments and/or
events, including those relating to or arising from actual or proposed tax
legislation. Advertising materials for the Fund may also refer to
statistical or other information concerning trends relating to investment
companies, as compiled by industry associations such as the Investment
Company Institute. From time to time, advertising materials for the Fund, also
may refer to Morningstar ratings and related analyses supporting such ratings.
The Fund may compare its performance, directly as well as against
inflation, with that of other instruments, such as short-term Treasury
bills (which are direct obligations of the U.S. Government), FDIC-insured
bank money market accounts and FDIC-insured fixed-rate certificates of
deposit. In addition, advertising for the Fund may indicate that investors
may consider diversifying their investment portfolios in order to seek
protection of the value of their assets against inflation.
INFORMATION ABOUT THE FUND
The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."
Each Series share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Series' shares have no preemptive or subscription rights
and are freely transferable.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
The Manager's legislative efforts led to the 1976 Congressional
Amendment to the Code permitting an incorporated mutual fund to pass
through tax exempt income to its shareholders. The Manager offered to the
public the first incorporated tax exempt fund and currently manages or
administers over $28 billion in tax exempt assets.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT,
COUNSEL AND INDEPENDENT AUDITORS
The Bank of New York, 110 Washington Street, New York, New York
10286, is the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, P.O. Box 9671, Providence, Rhode
Island 02940-9617, is the Fund's transfer and dividend disbursing agent.
Neither The Bank of New York nor The Shareholder Services Group, Inc. has
any part in determining the investment policies of the Fund or which
securities are to be purchased or sold by the Fund.
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the
shares of beneficial interest being sold pursuant to the Fund's Prospectus.
Ernst & Young, 787 Third Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.
APPENDIX A
RISK FACTORS -- INVESTING
IN STATE MUNICIPAL OBLIGATIONS
The following information constitutes only a brief summary, does not
purport to be a complete description, and is based primarily on information
drawn from official statements relating to securities offerings of the
relevant State available as of the date of this Statement of Additional
Information. While the Fund has not independently verified this
information, it has no reason to believe that such information is not
correct in all material respects.
Arizona Series. . . . . . . . . . . . . . . . . . . . . . . B-35
Colorado Series . . . . . . . . . . . . . . . . . . . . . . B-38
Connecticut Series. . . . . . . . . . . . . . . . . . . . . B-41
Florida Series. . . . . . . . . . . . . . . . . . . . . . . B-43
Georgia Series. . . . . . . . . . . . . . . . . . . . . . . B-47
Maryland Series . . . . . . . . . . . . . . . . . . . . . . B-50
Massachusetts Series. . . . . . . . . . . . . . . . . . . . B-52
Michigan Series . . . . . . . . . . . . . . . . . . . . . . B-56
Minnesota Series. . . . . . . . . . . . . . . . . . . . . . B-59
North Carolina Series . . . . . . . . . . . . . . . . . . . B-63
Ohio Series . . . . . . . . . . . . . . . . . . . . . . . . B-66
Oregon Series . . . . . . . . . . . . . . . . . . . . . . . B-71
Pennsylvania Series . . . . . . . . . . . . . . . . . . . . B-74
Texas Series. . . . . . . . . . . . . . . . . . . . . . . . B-81
Virginia Series . . . . . . . . . . . . . . . . . . . . . . B-86
Arizona Series
Arizona's population increased by approximately 35% during the 10-year
period from 1980 to 1990, ranking Arizona as the third fastest growing
state in the country for the period. Over the past several decades, the
state has outpaced most other regions of the country in other major
categories of growth, including personal income, gross state product and
job creation. The rate of growth, however, has slowed substantially in
recent years.
The State's principal economic sectors include services, trade,
government, manufacturing, tourism, travel, mining, agriculture and the
military. About 65% of total non-agricultural employment comes from
manufacturing, services and trade. While mining and agricultural
employment have diminished over the last twenty-five years, significant job
growth has occurred in aerospace and high technology, construction,
finance, insurance and real estate. Arizona's economy, however, has been
adversely affected by problems in the real estate industry, including an
excessive supply of commercial, residential and retail buildings and severe
problems with Arizona-based savings and loan associations, many of which
have been or are in the process of being liquidated by the Resolution Trust
Corporation. In addition, current and proposed reductions in Federal
military expenditures are expected to cause difficulties with the state's
economy. Defense-related business plays an important role in Arizona's
economy, particularly in the manufacturing sector, and reductions in the
defense budget could adversely affect these businesses. These factors are
expected to negatively impact Arizona's economy for the foreseeable future.
In addition, while Arizona's political climate has stabilized with the
passage in 1992 of a paid state holiday honoring Dr. Martin Luther King,
Jr., Arizona earlier experienced a number of political difficulties,
including the impeachment and removal from office of the state's governor,
and the conviction of several State legislators in connection with alleged
payments for votes to approve legalized gambling.
Arizona's unemployment rate, as of January 1993, was 7.7%, a decrease of
1.0% from 1992. Per capita income levels are less than the United States
average (85% of the United States average in 1991) and Arizona's average
annual growth rate of per capita income has been less than the United
States average for several years. This likely results from the fact that
Arizona has a higher percentage of its employment in the service sector and
a lower percentage of its employment in the manufacturing sector than the
United States average. This slow growth in per capita income, if it
continues, could adversely affect both state and local budgets in the near
future.
Arizona is required by law to maintain a balanced budget. To achieve this
objective, the state, in the past, has used a combination of spending
reductions and tax increases. For the 1990-91 budget, the Arizona
Legislature increased taxes by over $250 million, which led to a citizen's
referendum designed to stop the tax increase until the voters could
consider it at the general election. A court determined that the
referendum could not be used to stop this tax increase, so that tax
increase went into effect. Since then, legislators have been reluctant to
increase taxes, despite heightened demands for services due to the state's
growing population and the general recession. Moreover, in 1992, Arizona
voters adopted an initiative, Proposition 108, which requires a two-thirds
vote by the Legislature for any future tax or fee increase. This makes any
future tax increase more difficult to achieve.
Arizona's budget picture has stabilized in recent years. The 1991-92
budget contained no tax increase, but the Legislature was called into
special session twice to adjust aspects of that budget due to projected
deficits. The 1992-93 budget and the 1993-94 budget both provided tax
decreases, and relied solely on spending cuts to balance the budget. For
the first time in eight years, there was no need for a mid-year correction
to balance the 1992-93 budget, and it appears that revenue will be greater
than was estimated for the 1993-94 budget. The largest part of the
spending cuts for these budget years came from cuts in state aid to
education and in Arizona's Medicaid program.
The largest impact of the tax cuts adopted in 1992 and 1993 will take
place in future years, which could have the effect -- especially in light
of Proposition 108 -- of making it difficult to meet the increased demands
for services for Arizona's growing population even if the Arizona economy
improves. Recent projections by the Joint Legislative Budget Committee
("JLBC") staff suggest that there will be a need for either further
spending cuts or tax increases to balance the budget in each of the next
four fiscal years. These projections show continued growth in school
populations, Medicaid participants and prison beds that could increase at a
rate faster than revenue growth. In fiscal year 1995, for example, the
JLBC staff predicts a deficit of $159,481,800, which must be closed by
spending cuts or tax increases. The most likely budget cut will be the
refusal of the Legislature to fund an otherwise required $100 million
contribution to a Budget Stabilization Fund, which is a "rainy day" fund
designed to accumulate revenues for use in recessionary years.
Arizona law also requires municipalities to maintain balanced budgets.
The slower economy has strained their budgets. For example, the proposed
1992-93 annual budget for the City of Phoenix, for the first time in the
city's history, is less than the current year's budget. Moreover, the
state tax cuts in 1992 and 1993 will have the effect of worsening the
budget picture in future years because municipalities in Arizona rely
heavily on state-shared revenues. It is likely that municipalities in
Arizona will need to either increase taxes or reduce spending to compensate
for this lost state-shared revenue. The budget picture could get worse,
depending on how the legislature treats state shared revenue programs when
setting the future state budgets.
The state general fund is funded primarily by sales and income taxes, with
only a small contribution by property taxes. In fiscal year 1993, the
total general fund revenues were estimated at $3,675,600,000. Of this
amount, 43.9% will be raised by sales taxes, 37.0% will be raised by income
taxes, and 5.3% will be raised by property taxes. Other revenue sources,
such as luxury taxes, the lottery and insurance premium taxes, will
constitute 13.8% of this revenue. These revenue components change little
from year to year. Over half of the general fund is appropriated for K-12
and university education (52% in fiscal year 1993). Other major budget
items include Medicare (12%), social welfare programs (10%) and corrections
(7%). As is the case with other states, Medicare expenditures have been
the fastest growing part of the state budget.
Municipalities also rely on a variety of revenue sources. While
municipalities cannot collect an income tax, they do impose sales and
property taxes. Municipalities also rely on state shared revenues. In
fiscal year 1992, the total state shared sales tax revenue to countries and
cities was $430.7 million. Additionally, cities received $176.1 million in
state shared income tax revenues. School districts are funded by a
combination of local property taxes and state assistance. In fiscal year
1993, state assistance of $809.8 million was appropriated to school
districts.
Arizona has a significant contingent liability. Several lawsuits have
been filed against the State of Arizona asserting that the decision in
Davis v. Michigan Department of Treasury invalidates Arizona's tax
treatment of Federal Retirement Benefits for years prior to 1989. If the
U.S. Supreme Court or the Arizona courts hold that the Davis decision is to
be given retroactive effect, there could be refund liability of over $300
million, but the actual liability could be smaller.
Arizona's Constitution limits the amount of debt that may be contracted by
the state to $350,000. This, as a practical matter, precludes the use of
general revenue bonds for state projects. In recent years, however, the
state has used lease-purchase financing to finance several university,
court and prison building projects. The legislature has not treated these
lease-purchase financing projects as subject to the constitutional debt
limit, and there has been no legal challenge to the use of lease-purchase
financing as a means of financing state capital projects. Additionally,
certain other issuers have the power to issue obligations which affect the
whole or large portions of the state. The debts are not considered debts
of the state because they are secured solely by separate revenue sources.
For example, the Transportation Board of the State of Arizona Department of
Transportation may issue debt for highways that is payable from revenues
generated from state gasoline taxes, motor vehicle registration fees, and
other automobile taxes and fees. The three Arizona universities may issue
debt for university building projects payable from tuition and other fees.
Salt River Project Agricultural & Improvement District, an agricultural
improvement district that operates the Salt River Project (a Federal
reclamation project and an electric system which generates, purchases and
distributes electric power to residential, commercial, industrial and
agricultural power users in a 2,900 square-mile service area around
Phoenix), may issue debt payable from a number of sources.
Arizona's Constitution also restricts the debt of certain of the state's
political subdivisions. No county, city, town, school district or other
municipal corporation of the state may for any purpose become indebted in
any manner in an amount exceeding six percent of the taxable property in
such county, city, town, school district or other municipal corporation
without the assent of a majority of the qualified electors thereof voting
at an election provided by law to be held for that purpose; provided,
however, that (i) under no circumstances may any county or school district
of the state become indebted in an amount exceeding fifteen percent (or
thirty percent in the case of a unified school district) of such taxable
property and (ii) any incorporated city or town of the state with such
assent may be allowed to become indebted in up to a twenty percent
additional amount for (a) supplying such city or town with water,
artificial light or sewers, when the works for supplying such water, light
or sewers are or will be owned and controlled by the municipality and
(b) acquiring and developing land or interests therein for open space
preserves, parks, playgrounds and recreational facilities. Irrigation,
power, electrical, agricultural improvement, drainage, flood control and
tax levying public improvement districts, however, are exempt from such
restrictions of the constitution.
Annual property tax levies for the payment of general obligation bonded
indebtedness of political subdivisions are unlimited as to rate or amount.
Other obligations may be issued by such entities, sometimes without an
election, which are payable from, among other sources, project revenues,
special assessments and excise taxes.
Arizona's local government entities are subject to certain other
limitations on their ability to assess taxes and levies which could affect
their ability to meet their financial obligations. Subject to certain
exceptions, the maximum amount of property taxes levied by any Arizona
county, city, town or community college district for their operations and
maintenance expenditures cannot exceed the amount levied in a preceding
year by more than two percent. Certain taxes are specifically exempt from
this limit, including taxes levied for debt service payments.
Colorado Series
Despite a stagnant national economy, Colorado's economy continued to grow
throughout 1992. Large public works projects, a pickup in the housing
sector and growth in the services industries led to moderate employment
gains. However, certain industries have been impacted by the prolonged
U.S. downturn. The manufacturing sector continued to lose jobs in 1992. A
pickup in the national economy and the resumption of immigration to the
State are expected to lead to stronger growth in Colorado in 1993.
Throughout the 1970's and early 1980's, the Colorado economy expanded at
rates faster than the national economy. However, from 1985 through 1987,
the state economy experienced a significant local economic recession. As a
result, employment growth in Colorado expanded at rates lower than the
national economy. During the past three years, Colorado has rebounded
markedly and is now growing at rates above the national economy. A number
of reasons surfaced to support continued growth above rates of the national
economy. First, the State has a more service-oriented economy. The
reduced reliance on heavy manufacturing industries, such as automobiles,
has insulated the Colorado economy during the national recession. Thus,
problems in the manufacturing sector nationwide have not affected Colorado
to the same extent. Second, the Colorado economy is in a different segment
of the current economic cycle compared to the rest of the nation.
Currently, the national economy is contracting as over-supplied industries
are adjusting to the reduced demand environment. In Colorado, the over-
supply of resources, most notably in the labor and construction markets,
have fallen significantly from the mid-1980s peak levels. In addition,
Coloradans have significantly lower debt levels compared to the rest of the
nation. Finally, a number of major infrastructure projects are underway in
Colorado. Major projects include a new international airport, highway
improvements, and Federal and state prisons. Unlike the rest of the
nation, construction markets have been in a corrective phase for some time
now and already have begun to improve. The economic stimulus from these
projects will continue to generate economic gains in Colorado during the
next two years. However, as one of the top ten states most reliant on
defense contracts and military payroll, Colorado is vulnerable to
reductions in the U.S. defense budget.
Employment. Non-agricultural employment in Colorado increased 0.8%
through the first ten months of 1992 compared to the same months in 1991.
In comparison, employment at the national level increased by 0.6% over the
same period, and the nation's unemployment rate fell to 6.4% from 6.8%.
The labor force in Colorado is expanding slightly faster than the national
rate. Year-to-date growth through October 1992 shows the Colorado labor
force increased 1.2% compared to a 1.0% increase nationally. However, the
growth in the Colorado labor force is significantly slower than it was in
1990 and 1991. The Colorado unemployment rate as of October 1992 was 5.3%
compared to the October 1991 rate of 5.0%. Contrary to the national
economy, the construction sector is proving to be a strength in Colorado.
In 1992, construction employment increased 13.5% over 1991. The bulk of
this growth is attributable to construction of the new Denver Airport.
The Colorado Office of State Planning and Budgeting estimates non-
agricultural wage and salary employment will increase 2.1% in 1993 and 2.0%
in 1994. The manufacturing and mining sectors are expected to experience
continued job losses in 1993 and stabilize in 1994. Construction
employment is expected to decline in 1994 with the completion of the Denver
Airport. The government sector is also expected to contract.
Income Growth. The continued increase in jobs during the next two years
will fuel continued personal income growth. 1992 witnessed a pickup in
real personal income growth, with a 2.2% rate compared to 1.6% for 1991.
The Colorado Office of State Planning and Budgeting estimates growth in
1993 will continue to accelerate at a 2.7% rate. Income growth in 1994 is
expected to return to a more moderate 1.9% rate. The gains in personal
income can be attributed to the growth in the local job market coupled with
the expansion of the national economy during the next two years.
Retail Sales. After falling sharply in 1988, retail sales jumped past the
nation in 1989, 1990, 1991. The pickup in 1992's personal income growth
drove real retail sales up a strong 4.7%, a considerable improvement over
1991's 1.1% growth. The forecast calls for a more moderate growth in the
future. In 1993, real retail trade sales are forecast to increase 3.9%
followed by a gain of 2.5% in 1994. A factor influencing the relatively
strong rebound of consumer spending in Colorado is the low debt levels in
the State.
Real Estate. The housing sector is one of the bright spots in the
Colorado economy. Housing contracts in 1991 were up 15% over 1990. Low
mortgage rates and continued job growth led to 15% growth in housing starts
in 1992. The forecast calls for continued strong growth in housing
activity during 1993 following by a moderate pace in 1994. Housing
contracts are forecast to increase from 21,900 in 1992 to 28,000 in 1993
and 24,200 in 1994.
Because of limitations contained in the State constitution, the State of
Colorado issues no general obligation bonds secured by the full faith and
credit of the State. Consequently, there are no outstanding general
obligation bond ratings for Colorado. Several agencies and
instrumentalities of state government are authorized by statute to issue
bonds secured by revenues from specific projects and activities.
Additionally, the State is authorized to issue short-term revenue
anticipation notes. To the extent the Portfolio holds debt of local units
of government whose revenues may rely in part on distributions from the
State, the fiscal health of the State will have an indirect effect on the
Portfolio. Colorado ended fiscal 1991 (June 30, 1991) with an unreserved
fund balance of $16.3 million, down considerably from the previous year's
balance of $116 million. It was also below the statutorily required
reserve of 3% of expenditures. This decline was the result of
overestimates of individual and corporate income taxes as well as
supplemental Medicaid appropriations. The unreserved fund balance
increased to $72 million at the end of fiscal 1992, still short of the $84
million (3%) required reserve. During the 1992 fiscal year, the State
faced a $92 million funding gap, which was addressed through spending cuts
and revenue adjustments. Revenue estimates for fiscal 1993, which began on
July 1, 1992, are more than $100 million ahead of estimates, largely due to
strong sales and use tax collections. Though the State is expected to end
the year with a $135 million surplus, the Legislature has yet to find a
method of funding the School Finance Act of 1988. This statute, designed
to reduce districts' reliance on property taxes and equalize funding across
the State, could cost the State $300 million in fiscal 1994.
There are approximately 2,000 units of local government in Colorado,
including counties, statutory cities and towns, home rule cities and
counties, charter cities, school districts and a variety of water,
irrigation and other special improvement districts, all with various
constitutional and statutory authority to levy taxes and incur
indebtedness. The major source of revenue for funding the indebtedness is
the ad valorem property tax, which presently is imposed and collected
solely at the local level (although the State is also authorized to levy
the tax), and revenue from special projects. Residential real property is
presently assessed at 14.34% of its actual value. All other property is
assessed at 29% of its actual value except producing mines and oil and gas
properties. Agricultural land is assessed at 29% of its value based on its
ability to produce agricultural crops, and oil and gas properties are
assessed at 87.5%.
The major revenue sources of the State are principally comprised of the
individual income tax, the general sales and use tax, and the corporate
income tax. These taxes represent approximately 53.8%, 30.9% and 4.2%
respectively, of gross revenues budgeted for the state General Fund for
fiscal 1993. (The fiscal year commences July 1 and ends June 30). The
State Constitution requires that expenditures not exceed revenues.
On November 3, 1992, voters in Colorado passed the Bruce Amendment,
otherwise known as the "Taxpayers' Bill of Rights." The Amendment
restricts growth of government spending to the rate of inflation plus the
change in demand for government services (as measured by population, school
enrollment, or construction); limits the issuance of debt to that which is
voter approved; and requires voter approval of all tax increases. Though
the Bruce Amendment is not expected to have an immediate effect on the
credit quality of state and local governments, it will likely reduce the
financial flexibility of all levels of government in Colorado over time.
In addition, younger or rapidly growing municipalities with large
infrastructure requirements may have difficulty finding the revenues needed
to finance their growth.
Connecticut Series
Connecticut's economy is diverse, with manufacturing, services and trade
accounting for approximately 70% of total non-agricultural employment. The
State's manufacturing industry is diversified, but from 1970 to 1991
manufacturing employment declined 26.1%, while service-related employment
increased 68.3%, particularly in the service, trade and finance categories,
resulting in an increase of 33.5% in total growth in non-agricultural
sectors. Defense-related business plays an important role in the
Connecticut economy, and economic activity has been affected by the volume
of defense contracts awarded to Connecticut firms. Connecticut ranked from
fourth to tenth among all states in total defense contract awards,
receiving 4% of all such contracts in 1991. In recent years the Federal
government has reduced the amount of defense-related spending and the
largest defense-related employees in the State have announced substantial
labor force reductions. The future effect of such reductions on the
Connecticut economy cannot be predicted at this time. The annual average
unemployment rate (seasonally adjusted) in Connecticut was 6.1% in 1991
and, as of January 1993, the estimated rate of unemployment (on a
seasonably adjusted basis) in the State was 7.1%.
While the State's General Fund ended fiscal 1984-85, 1985-86 and 1986-87
with operating surpluses of approximately $365.5 million, $250.1 million
and $365.2 million, respectively, the State recorded operating deficits of
$115.6 million, $28 million, $259.5 million and $818.5 million for fiscal
1987-88, 1988-89, 1989-90 and 1990-91, respectively.
Together with the deficit carried forward from fiscal 1989-90, the total
deficit for the fiscal year 1990-91 was $965.7 million. The deficit was a
result of revenue collections which were below original estimates and
expenditures which were above original appropriations. The total deficit
amount was funded by the issuance of General Obligation Economic Recovery
Notes. The Comptroller's annual report for the fiscal year ended June 30,
1992 reflected a General Fund operating surplus of $110.2 million, which
surplus was used to retire a portion of the State's $929.7 million of
Economic Recovery Notes issued in 1991.
Since 1988, the Comptroller's annual report has reported results on the
basis of both the modified cash basis required by State law and the
modified accrual basis used for GAAP financial reporting. The
Comptroller's monthly report for the period ended February 28, 1993
estimated that on a GAAP basis the cumulative deficit is $494.6 million for
fiscal 1992-93. The modified cash basis of accounting used for statutory
financial reporting and the modified accrual basis used for GAAP financial
reporting are different and, as a result, often produce varying financial
results, primarily because of differences in the recognition of revenues
and expenditures.
The budget adopted by the General Assembly for fiscal 1992-93 projected
General Fund expenditures of $7.318 billion and estimated General Fund
revenues of $7.321 billion. The proposed expenditures and estimated
revenues would have resulted in a surplus of $3.7 million. On November 18,
1992 the Office of Policy Management projected that General Fund revenues
for 1992-1993 fiscal year would be $29.3 million less than prior estimates.
The principal changes were an increase of $33.0 million in corporate tax
revenues, a reduction of $47.0 million in personal income tax revenues and
$10.0 million in higher refunds of income taxes paid. In response to these
estimates, the Governor directed the Office of Policy and Management to
reduce State spending to keep the budget in balance and reduce allotments
to State agencies for the remainder of the fiscal year in order to decrease
expenditures to the level of projected revenues. The Comptroller's monthly
report as of February 28, 1993, reflected an operating surplus of $3.1
million.
The Governor's Proposed Budget for fiscal 1993-94 anticipates General Fund
expenditures of $7.656 billion and General Fund revenues of $7.656 billion.
For fiscal 1994-95, the Governor's Proposed Budget anticipates General Fund
expenditures of $8.044 billion and General Fund revenues of $8.044 billion.
In order to achieve this balanced budget, the Governor, after a thorough
review of all State budget programs and functions, has recommended
expenditure reductions from estimated current services of approximately
$600 million in fiscal 1993-94 and an additional $400 million in fiscal
1994-95.
On November 3, 1992, Connecticut voters approved a constitutional
amendment which requires a balanced budget for each year and imposes a cap
on the growth of expenditures. The General Assembly is required by the
constitutional amendment to adopt by three-fifths vote certain spending cap
definitions, which has not yet occurred. Accordingly, the Governor's
Proposed Budget complies with the current statutory spending cap
definitions enacted in 1991. The statutory spending cap limits the growth
of expenditures to either (1) the rolling five-year average annual growth
in personal income, or (2) the increase in the consumer price index for
urban consumers during the preceding twelve-month period, whichever is
greater. Expenditures for the payment of bonds, notes and other evidences
of indebtedness are excluded from the constitutional and statutory
definitions of general budget expenditures. To preclude shifting
expenditures out of the General Fund to other funds, the spending cap
applies to all appropriated funds combined. For fiscal 1993-94 and for
fiscal 1994-95, permitted growth in capped expenditures is 5.82% and 4.49%,
respectively. The Proposed Budget is approximately $35 million under the
spending cap in each year of the biennium.
The State finances its operations primarily through the General Fund. All
tax and most non-tax revenues of the State, except for motor fuels taxes
and other transportation related taxes, fees and revenues, are paid into,
and substantially all expenditures pursuant to legislative appropriations
are made out of, the General Fund. The State derives over 70% of its
revenues from taxes. Miscellaneous fees, receipts, transfers and Federal
grants account for most of the other State revenue. The Sales and Use
Taxes, the corporation business tax and the recently enacted broad based
personal income tax are the major revenue raising taxes.
The State has no constitutional or other organic limit on its power to
issue obligations or incur indebtedness other than that it may only borrow
for public purposes. There are no reported court decisions relating to
State bonded indebtedness other than two cases validating the legislative
determination of the public purpose for improving employment opportunities
and related activities. The State Constitution has never contained
provisions requiring submission of the questions of incurring indebtedness
to a public referendum. Therefore, the authorization and issuance of State
debt, including the purpose, amount and nature thereof, the method and
manner of the incurrence of such debt, the maturity and terms of repayment
thereof, and other related matters are statutory.
The General Assembly has empowered, pursuant to bond acts in effect, the
State Bond Commission to authorize general obligation bonds in the amount
of $8,350,869,254. As of April 1, 1993 the State Bond Commission has
authorized $6,861,790,506 in such bonds and the balance of $1,489,078,748
was available for authorization. From such total authorizations of
$6,861,790,506, bonds in the aggregate of $5,990,223,294.38 have been
issued and the balance of $871,567,211.62 remained authorized but unissued
as of April 1, 1993.
The State has established a program of temporary note issuances to cover
periodic cash flow requirements. The maximum volume of cash flow borrowing
is determined based upon the State's actual cash needs on a daily basis.
As of April 1993, the maximum amount borrowed under the program at any
point in time was $569 million, but no temporary notes under the program
were outstanding as of such date.
General obligation bonds issued by Connecticut municipalities are payable
primarily from ad valorem taxes on property subject to taxation by the
municipality. Certain Connecticut municipalities have experienced severe
fiscal difficulties and have reported operating and accumulated deficits in
recent years. The most notable of these is the City of Bridgeport.
S&P, Moody's and Fitch rate Connecticut's municipal bonds AA-, Aa and AA+,
respectively.
Florida Series
Revenues and Expenditures. Financial operations of the State of Florida
covering all receipts and expenditures are maintained through the use of
three funds - General Revenue Fund, Trust Funds and Working Capital Fund.
The General Revenue Fund receives the majority of State tax revenues. The
Trust Funds consist of monies received by the State which under law or
trust agreement are segregated for a purpose authorized by law. Revenues
in the General Revenue Fund which are in excess of the amount needed to
meet appropriations may be transferred to the Working Capital Fund. The
Florida Constitution and Statutes mandate that the State budget as a whole,
and each separate fund within the State budget, be kept in balance from
currently available revenues each State fiscal year.
Florida ended fiscal years 1990-91 and 1991-92 with General Revenue plus
Working Capital Funds unencumbered reserves of approximately $50 million
and $184.6 million, respectively. Estimated fiscal year 1992-93 General
Revenue plus Working Capital Funds available total $12.282 billion. Total
effective appropriations for the 1992-93 fiscal year are estimated at
$11.843 billion, resulting in estimated unencumbered reserves of $429.4
million at the end of the fiscal year. Estimated fiscal year 1993-94
General Revenue plus Working Capital Funds available total $13.537 billion,
a 10.2% increase over 1992-93. The massive effort to rebuild and replace
destroyed or damaged property in the wake of Hurricane Andrew is
responsible for the substantial positive revenue estimates shown. Most of
the impact is in the sales tax.
In fiscal year 1991-92, the State derived approximately 64% of its total
direct revenues from the General Revenue Fund, Trust Funds and Working
Capital Fund from State taxes. Federal grants and other special revenues
accounted for the remaining revenues. Major sources of tax revenues to the
General Revenue Fund are the sales and use tax, corporate income tax, and
beverage tax, which amounted to 68%, 7% and 5%, respectively, of total
General Revenue Fund receipts.
State expenditures are categorized for budget and appropriation purposes
by type of fund and spending unit, which are further subdivided by line
item. In fiscal year 1991-92, expenditures from the General Revenue Fund
for education, health and welfare and public safety amounted to
approximately 53%, 30% and 13.3%, respectively, of total General Revenues.
Sales and Use Tax. The greatest single source of tax receipts in Florida
is the sales and use tax. The sales tax is 6% of the sales price of
tangible personal property sold at retail in the State. The use tax is 6%
of the cost price of tangible personal property when the same is not sold
but is used, or stored for use, in the State. The use tax also applies to
the use in the State of tangible personal property purchased outside
Florida which would have been subject to the sales tax if purchased from a
Florida dealer. Less than 10% of the sales tax is designated for local
governments and is distributed to the respective counties in which it is
collected for use by such counties and municipalities therein. In addition
to this distribution, local governments may (by referendum) assess a .5% or
1% discretionary sales surtax within their county. Proceeds from this
local option sales tax are earmarked for funding local infrastructure
programs and acquiring land for public recreation or conservation or
protection of natural resources. In addition, non-consolidated counties
with populations in excess of 800,000 may levy a local option sales tax to
fund indigent health care. This tax rate may not exceed .5% and the
combined levy of the indigent health care surtax and the infrastructure
surtax described above may not exceed 1%. Furthermore, charter counties
which adopted a charter prior to June 1, 1976, and each county with a
consolidated county/municipal government, may (by referendum) assess up to
a 1% discretionary sales surtax within their county. Proceeds from this
tax are earmarked for the development, construction, maintenance and
operation of a fixed guideway rapid transit system or may be remitted to an
expressway or transportation authority for use on county roads and bridges,
for a bus system, or to service bonds financing roads and bridges. The two
taxes, sales and use, stand as complements to each other, and taken
together provide a uniform tax upon either the sale at retail or the use of
all tangible personal property irrespective of where it may have been
purchased. This tax also includes a levy on the following: (i) rentals of
tangible personal property, transient lodging and non-residential real
property; (ii) admissions to places of amusements, most sports and
recreation events; (iii) utilities, except those used in homes; and (iv)
restaurant meals. Exemptions include: groceries; medicines; hospital
rooms and meals; fuels used to produce electricity; purchases by religious,
charitable and educational nonprofit institutions; most professional,
insurance and personal service transactions; apartments used as permanent
dwellings; the trade-in value of motor vehicles; and residential utilities.
All receipts of the sales and use tax, with the exemption of the tax on
gasoline and special fuels, are credited to either the General Revenue
Fund, the Solid Waste Management Trust Fund, or counties and cities. For
the State fiscal year which ended June 30, 1992, receipts from this source
were $8.376 billion, an increase of 2.7% from fiscal year 1990-91.
Motor Fuel Tax. The second largest source of State tax receipts is the
tax on motor fuels. Preliminary data show collections from this source in
the State fiscal year ended June 30, 1992, were $1.476 billion. However,
these revenues are almost entirely dedicated trust funds for specific
purposes and are not included in the State General Revenue Fund.
State and local taxes on motor fuels (gasoline and special fuel) include
several distinct fuel taxes: (i) the State sales tax on motor fuels,
levied at 6% of the average retail price per gallon of fuel, not to fall
below 6.9 cents per gallon; (ii) the State excise tax of four cents per
gallon of motor fuel, proceeds distributed to local governments; (iii) the
State Comprehensive Enhanced Transportation System (SCETS) tax, which is
levied at a rate in each county equal to two-thirds of the sum of the
county's local option motor fuel taxes; and (iv) local option motor fuel
taxes, which may range between one cent to seven cents per gallon.
Alcoholic Beverage Tax. Florida's alcoholic beverage tax is an excise tax
on beer, wine, and liquor. This tax is one of the State's major tax
sources, with revenues totalling $435.2 million in State fiscal year ended
June 30, 1992. Alcoholic beverage receipts declined from the previous
year's total. The revenues collected from this tax are deposited into the
State's General Revenue Fund.
The 1990 Legislature established a surcharge on alcoholic beverages. This
charge is levied on alcoholic beverages sold for consumption on premises.
The surcharge is at ten cents per ounce of liquor, ten cents per four
ounces of wine, four cents per twelve ounces of beer. Most of these
proceeds are deposited into the General Revenue Fund. In fiscal 1991-92, a
total of $92.4 million was collected.
Corporate Income Tax. Pursuant to an amendment to the State Constitution,
the State Legislature adopted, effective January 1, 1972, the "Florida
Income Tax Code" imposing a tax upon the net income of corporations,
organizations, associations and other artificial entities for the privilege
of conducting business, deriving income or existing within the State. This
tax does not apply to natural persons who engage in a trade or business or
profession under their own or any fictitious name, whether individually as
proprietorships or in partnerships with others, estates of decedents or
incompetents, or testamentary trusts.
The tax is imposed in an amount equal to 5.5% of the taxpayer's net
corporate income for the taxable year, less a $5,000 exemption, as defined
in such Code. Net income is defined by the Code as that share of a
taxpayer's adjusted Federal income for such year which is apportioned to
the State of Florida. Apportionment is by weighted factors of sales (50%),
property (25%) and payroll (25%). All business income is apportioned and
non-business income is allocated to a single jurisdiction, usually the
state of commercial domicile.
All receipts of the corporate income tax are credited to the General
Revenue Fund. For the fiscal year ended June 30, 1992, receipts from this
source were $801.3 million, an increase of 14.2% from fiscal year 1990-91.
Documentary Stamp Tax. Deeds and other documents relating to realty are
taxed at 70 cents per $100 of consideration, while corporate shares, bonds,
certificates of indebtedness, promissory notes, wage assignments and retail
charge accounts are taxed at 35 cents per $100 of consideration.
Documentary stamp tax collections totalled $472.4 million during fiscal
year 1991-92, posting a .5% increase from the previous fiscal year. The
General Revenue Fund receives approximately 71% of documentary stamp tax
collections.
Gross Receipts Tax. Effective July 1, 1992, the tax rate was increased
from 2.25% to 2.5% of the gross receipts of electric, natural gas and
telecommunications services. All gross receipts utilities collections are
credited to the Public Education Capital Outlay and Debt Service Trust
Fund. In fiscal year 1991-92, gross receipts utilities tax collections
totalled $392.1 million, an increase of 17.6% over the previous fiscal
year.
Intangible Personal Property Tax. This tax is levied on two distinct
bases: (i) stocks, bonds, including bonds secured by Florida realty,
notes, government leaseholds, interests in limited partnerships registered
with the SEC, and other miscellaneous intangible personal property not
secured by liens on Florida realty are taxed annually at a rate of 2 mills,
(ii) mortgages and other obligations secured by liens on Florida realty,
taxed with a non-recurring 2 mill tax.
Of the tax proceeds, 33.5% is distributed to the Municipal Revenue
Sharing Trust Fund. The remainder is distributed to the General Revenue
Fund.
Fiscal year 1991-92 total intangible personal property tax
collections were $586.2 million, a 13% increase over the prior year.
Severance Taxes. The severance tax includes the taxation of oil, gas and
sulfur production and a tax on the severance of primarily phosphate rock
and other solid minerals. Total collections from severance taxes totalled
$67.2 million during fiscal year 1991-92, down 6.9% from the previous
fiscal year.
Lottery. The 1987 Legislature created the Department of the Lottery to
operate the State Lottery and setting forth the allocation of the revenues.
Of the revenues generated by the Lottery, 50% is to be returned to the
public as prizes; at least 38% is to be deposited in the Educational
Enhancement Trust Fund (for public education); and no more than 12% can be
spent on the administrative cost of operating the lottery.
Fiscal year 1991-92 produced ticket sales of $2.19 billion of which
education received approximately $835.4 million.
Georgia Series
Georgia's economy grew rapidly in the 1980s resulting in a general fund
reserve. In fiscal 1989 and 1990, however, the State's economy began to
slow and lower than projected growth in income and sales taxes and
increasing expenditure levels resulted in a reduction of the general fund's
reserve. As projections were made of continued weakness in economically
sensitive taxes, a shortfall of cash receipts and general fund reserves to
allotments was projected for fiscal 1991. The projected imbalance was
corrected through reductions in expenditures, adjustments to capital, use
of reserves and other one-time measures.
During fiscal 1992, revenues plus the general fund reserve approximately
equalled appropriations. Revenue estimates for fiscal 1993 indicate that
revenues (including certain fee increases effective July 1, 1992) will
equal expenditures. Fiscal 1994 estimates indicate that revenues will
slightly exceed expenditures as a result of lottery receipts.
Georgia's unemployment rate is projected to be 6.8% for calendar year
1993, which is an increase of 0.3% over the State's 1992 annual average
unemployment rate. The largest sectors of Georgia's economy are wholesale
and retail trade, services, manufacturing and government. Per capita
income levels are less than the U.S. average (91% of the U.S. average in
1991), but Georgia's average annual growth rate of per capita income has
exceeded that of the United States as a whole since 1960.
Constitutional Provisions
Georgia's Constitution limits the appropriation of funds for any given
fiscal year to the sum of the amount of unappropriated surplus expected to
have accrued at the beginning of the fiscal year and the amount not greater
than the total receipts anticipated, less refunds, as estimated. The State
Constitution provides for supplementary appropriations in accordance with
its provisions as well.
Georgia may incur public debt to supply a temporary deficit due to a delay
in collecting the taxes of that fiscal year. Such debt may not exceed, in
the aggregate, 5% of the total revenue receipts, less refunds, in the
fiscal year immediately preceding the year in which such debt is incurred.
The debt incurred is to be repaid on or before the last day of the fiscal
year in which it is incurred out of taxes levied for that fiscal year. No
such debt may be incurred in any fiscal year under this provision if there
is then outstanding unpaid debt from any previous fiscal year which was
incurred to supply a temporary deficit. No such debt has been incurred
under this provision since its inception.
The State Constitution also provides the State may incur public debt for
three types of public purposes: (1) debt to "repel invasion, suppress
insurrection, and defend the state in time of war"; (2) general obligation
debt and (3) guaranteed revenue debt. General obligation debt may be
incurred to acquire, construct, develop, extend, enlarge or improve land,
waters, property, highways, buildings, structures, equipment or facilities
of the State, its agencies, departments, institutions and certain State
Authorities, to provide educational facilities for county and independent
school systems, to provide public library facilities for county and
independent school systems, counties, municipalities, and boards of
trustees of public libraries or boards of trustees of public library
systems, and to make loans to counties, municipal corporations, political
subdivisions, local authorities and other local government entities for
water or sewerage facilities or systems. Guaranteed revenue debt may be
incurred by guaranteeing the payment of certain revenue obligations issued
by an instrumentality of the State as set forth in its Constitution.
Georgia may not incur debt at any time when the highest aggregate annual
debt service requirements for the then current year or any subsequent year
for outstanding general obligation debt and guaranteed revenue debt,
including the proposed debt, and the highest aggregate annual payments for
the then current year or any subsequent fiscal year of the State under
certain contracts then in force, exceed 10% of the total revenue receipts,
less refunds, of the State treasury in the fiscal year immediately
preceding the year in which any such debt is to be incurred. No general
obligation debt may be incurred at any time when the term of the debt is in
excess of 25 years.
The State Constitution also provides that Georgia countries,
municipalities, and other political subdivisions may not incur debt
(including debt incurred on behalf of any special district) in excess of
10% of the assessed value of all taxable property within such country,
municipality, or political subdivision. However, a separate provision of
the State Constitution permits certain long-term, intergovernmental
contracts for services and facilities. The Georgia Supreme Court has held
that certain categories of intergovernmental contracts give rise to payment
obligations which are not "debts" subject to the 10% debt limitation. It
is possible that the intergovernmental contracts clause could be used by
local governments to justify entering into transactions which increase
their financial obligations, and such transactions could result in
increasing the credit risk associated with debt obligations issued by such
governmental units.
Revenues and Expenditures
Georgia's major revenue sources are its sales tax and its income tax. The
state also receives revenues from its motor fuels tax, from miscellaneous
fees and sales, and from other taxes (such as the intangibles tax, alcohol
taxes, and inheritance tax, and license taxes). Unaudited information from
the Georgia Revenue Department indicates that revenues from these sources
increased 11.5% in fiscal year 1993 from fiscal year 1992, and that these
revenue sources generated the following percentages of total Georgia State
revenue in fiscal year 1993:
Sales tax 39.6%
Income tax 49.5%
Motor Fuels tax 4.5%
Fees and Sales 1.8%
Other taxes 4.6%
-----------------------
TOTAL 100.0%
During fiscal 1994, the Georgia lottery is expected to generate 1.6% state
revenue.
State expenditures are classified by major policy category for budgetary
purposes. In fiscal year 1993, Georgia expenditures for educational
development, human development, protection of persons and property, and
transportation amounted to 51%, 25%, 9.1%, and 5.2%, respectively, of total
budgeted expenditures. Debt service for issued obligations accounted for
4.8% of total budgeted expenditures in fiscal year 1993, and is projected
to account for 4.2% of total budgeted expenditures in fiscal year 1994.
For fiscal years ended June 30, 1975 through June 30, 1993, the aggregate
general obligation debt and guaranteed revenue debt authorized by the State
General Assembly are $5.2 billion and $195 million, respectively. The
aggregate amount of general obligation debt and guaranteed revenue debt
actually issued by the State, as of May 31, 1993, is $5.3 billion and the
aggregate amount of such debt authorized but unissued is $65 million. The
total outstanding principal amount of indebtedness of the State as of May
31, 1993 is $3.08 billion. Of this outstanding debt, 25% is due and
payable on or before August 1, 1998, and 52% is due and payable on or
before August 1, 2003.
Significant Contingent Liabilities
Georgia has three significant contingent liabilities. Several lawsuits
have been filed against the State of Georgia asserting that the decision in
Davis v. Michigan Department of Treasury, invalidates Georgia's tax
treatment of Federal Retirement Benefits for years prior to 1989. Under
Georgia's applicable three year statute of limitation the maximum potential
liability under these suits calculated to December 15, 1992 would appear to
be no greater than $104 million, according to published reports. The
plaintiffs in these suits, however, have requested refunds for a period
from 1980 which could result in a maximum potential liability in the range
of $591 million, according to such reports. Any such liability would be
predicated on a holding by the Georgia court or the U.S. Supreme Court that
the Davis decision is applicable to Georgia's prior method of taxing
Federal Retirement Benefits, that the Davis decision is to be given a
retroactive effect, i.e., that the decision affects prior tax years, and
that a refund remedy is appropriate. A trial court decision in Georgia's
"test case" has held that no refunds are due; the Georgia Supreme Court has
accepted the case for review. In this "test case" the plaintiff has
dropped his claims for 1980-1984 refunds.
Three suits have been filed against the State of Georgia seeking refunds
of alcohol taxes in light of Bacchus Imports, Ltd. v. Dias, under Georgia's
pre-Bacchus statute. In James B. Beam Distilling Co. v. Collins, the U.S.
Supreme Court indicated that Bacchus was retroactive, but only within the
bounds of State statutes of limitations and procedural bars, and left State
courts to determine any remedy in light of reliance interests and other
defenses. Georgia's statute of limitations has run on all pre-Bacchus
claims for refund except five pending claims seeking $31 million in tax
and interest. On remand, the Fulton County Superior Court has ruled that
procedural bars and other defenses bar any recovery by taxpayers on Beam's
claims for refund. Beam has appealed to the Georgia Supreme Court.
Several lawsuits have been filed against the State of Georgia by foreign
producers of alcoholic beverages seeking refunds of alcohol import taxes
imposed under Georgia's post-Bacchus statute, OCGA section 3-4-60. The suits,
as filed, seek refunds in excess of $100 million, which figure represents
refunds of liquor taxes, plus interest and damages.
Maryland Series
Services (including mining), wholesale and retail trade, government, and
manufacturing (primarily printing and publishing, food and kindred
products, instruments and related products, industrial machinery,
electronic equipment, and chemical and allied products) are the leading
areas of employment in the State of Maryland. Total employment in the
State began to decline in June 1990 and began to recover in July 1992. The
unemployment rate for 1992 was 6.8%.
On April 10, 1992, the General Assembly enacted the budget for the 1993
fiscal year.
On September 21, 1992, the Board of Revenue Estimates projected that
General Fund revenues for fiscal year 1993 would be $423 million below the
levels estimated in the 1993 Budget Program. To address this shortfall
and provide reserves to finance potential deficiency appropriations, the
Governor proposed a $450 million cost containment plan.
On September 30, 1992, the Board of Public Works approved the Governor's
proposal to reduce General Fund appropriations by $168 million. At a
November 1992 Special Session, The General Assembly enacted legislation
reducing State aid to local governments by $147 million. The Governor's
cost containment plan proposed $32 million in additional General Fund
reversions. On January 4, 1993, the State Lottery Agency (the "Agency")
introduced a new Keno game. At the time of introduction of Keno, the
Agency estimated $155 million in gross receipts and $50 million in net
(General Fund) receipts from Keno during fiscal year 1993.
When the 1993 Budget was enacted, it was estimated that the General Fund
surplus on a budgetary basis at June 30, 1993, would be approximately $10
million and that there would be $50 million in the Revenue Stabilization
Account of the State Reserve Fund. It is currently estimated that the
General Fund surplus on a budgetary basis at June 30, 1993, will be
$500,000, in addition to which there will be $50.6 million in the Revenue
Stabilization Account of the State Reserve Fund. The estimate of the
amount in the Revenue Stabilization Account reflects a provision of the
legislation increasing the State income tax that directs the Governor to
request a $50 million 1993 deficiency appropriation for that account in the
1994 Budget.
The operating Budget for fiscal year 1994 is to be funded with $6.499
billion in General Funds, $3.221 billion in Special and Higher Education
Funds, and $2.752 billion in Federal Funds.
The State's capital program for fiscal year 1994 is to be funded with $370
million in general obligation bonds, $26.8 million in General Funds
appropriated in the operating budget, $883.9 million in Special and Federal
Funds (of which $747.4 million is appropriated to the Department of
Transportation) $208 million in revenue bonds and $24.7 million in
reappropriated prior year capital appropriations. The general obligation
bond financed program includes, among other projects, $149.6 million for
State facilities, $87.4 million for the construction and renovation of
local elementary and secondary schools, and $30.9 million for water, waste
and blood management programs.
When the 1994 Budget was enacted, it was estimated that the General Fund
Surplus on a budgetary basis on June 30, 1994 would be approximately $76
million. That total includes $50 million which was mandated to be
appropriated in the 1994 session of the General Assembly to the Revenue
Stabilization Account of the State Reserve Fund. There would be $146
million in the Revenue Stabilization Account of the State Reserve Fund at
June 30, 1994, assuming that the $50 million is appropriated as a fiscal
1994 deficiency.
The public indebtedness of Maryland and its instrumentalities is divided
into three basic types. The State issues general obligation bonds, to the
payment of which the State ad valorem property tax is exclusively pledged
for capital improvements and for various State-sponsored projects. The
Maryland Department of Transportation issues limited, special obligation
bonds for transportation purposes payable primarily from specific,
fixed-rate excise taxes and other revenues related mainly to highway use.
Certain authorities issue obligations payable solely from specific non-tax
enterprise fund revenues and for which the State has no liability and has
given no moral obligation assurance.
At least since the end of the Civil War, the State has paid the principal
of and interest on its general obligation bonds when due. There is no
general debt limit imposed by the State Constitution or public general
laws. Although the State has the authority to make short-term borrowings
in anticipation of taxes and other receipts up to a maximum of $100
million, the State in the past has not issued short-term tax anticipation
and bond anticipation notes, or made any other similar short-term
borrowings for cash flow purposes. As of March 31, 1993, the aggregate
principal amount of net tax-supported State debt outstanding was
approximately $422 billion.
As of June 1993, the State's general obligation bonds were rated "Aaa" by
Moody's and "AAA" by S&P and Fitch.
The Maryland Department of Transportation issues Consolidated
Transportation Bonds, which are payable out of specific excise taxes, motor
vehicle taxes and corporate income taxes, and from the general revenues of
the Department. Issued to finance highway, port, transit, rail or aviation
facilities, as of June, 1993, these bonds were rated "Aa" by Moody's and
"AA" by S&P and Fitch. The Maryland Transportation Authority, a unity of
the Department, issues its own revenue bonds for transportation facilities,
which are payable from certain highway, bridge and tunnel tolls. These
bonds were rated "A1" by Moody's and "A+" by S&P as of June 1993.
According to recent available ratings, general obligation bonds of
Montgomery County (abutting Washington, D.C.) are rated "Aaa" by Moody's
and "AAA" by S&P. Prince George's County, also in the Washington, D.C.
suburbs, issues general obligation bonds rated "Aa" by Moody's and "AA-" by
S&P, while Baltimore County, a separate political subdivision surrounding
the City of Baltimore, issues general obligation bonds rated "Aaa" by
Moody's and "AA+" by S&P. The City of Baltimore's general obligation bonds
are rated "A1" by Moody's and "A" by S&P. The other counties in Maryland
which are rated by Moody's all have general obligation bond ratings of "A"
or better from Moody's, except for Allegheny County, the bonds of which are
rated "Baa" by Moody's. The Washington Suburban Sanitary District, a bi-
county agency providing water and sewerage services in Montgomery and
Prince George's Counties, issues general obligation bonds rated "Aa1" by
Moody's and "AA" by S&P as of June 1993. Additionally, some of the large
municipal corporations in Maryland (such as the cities of Rockville and
Annapolis) have issued general obligation bonds. There can be no assurance
that any of the foregoing ratings will continue.
Massachusetts Series
At the present time, the Commonwealth of Massachusetts' economy is
experiencing a slowdown that began in mid-1988. Massachusetts has
undergone recently serious financial difficulties that have adversely
affected Massachusetts' credit standing. Massachusetts' economic
difficulties and fiscal problems could adversely affect the market values
and marketability of, or result in default in payment of, outstanding
Massachusetts municipal obligations. While Massachusetts had benefitted
from an annual job growth rate of approximately 2% since the early 1980s,
by 1989, employment started to decline. Nonagricultural employment
declined 0.7% in 1989 and 4.0% in 1990. A comparison of total
nonagricultural employment in July 1991 with that in July 1992 indicates a
decline of 2.1%. The Commonwealth's unemployment rate in 1992 was 8.5%,
which exceeded the national unemployment rate, and was 6.5% in April 1993,
which was lower than the national unemployment rate, and was 6.5% in April
1993, which was lower than the national unemployment rate. The
construction and manufacturing sectors experienced the highest percentage
loss of jobs. Per capita personal income growth has begun to slow as well,
after several years during which the per capita personal income growth rate
in Massachusetts was among the highest in the nation. Between the third
quarter of 1991 and the third quarter of 1992, total personal income in
Massachusetts increased 3.8% as compared to 4.5% for the nation as a whole.
Massachusetts expenditures for state government programs and services in
each of the fiscal years 1987 through 1991, inclusive, exceeded each fiscal
year's current revenues. In fiscal years 1987 and 1988, largely by drawing
on fund balances from prior years, Massachusetts ended each fiscal year
with budgetary surpluses. However, fiscal years 1989 and 1990 ended with
operating deficits of $672.5 million and $1.25 billion, respectively. The
fiscal 1989 deficit was covered primarily through the issuance of $466.4
million of notes and $244 million of Medicaid-related notes, all of which
matured and were paid on or before January 15, 1991, and by delaying
payments of local aid to cities, towns and regional school districts. The
fiscal 1990 deficit was financed in arrears in the following year by the
issuance of approximately $1.4 billion of Fiscal Recovery Bonds (see
below). Fiscal 1990 ended with a budgetary deficit of $1.104 billion.
Using proceeds of $1.363 billion generated from deficit financings, the
adjusted fiscal 1990 closing balance was $259 million.
In fiscal 1991, total revenues and other sources of the budgeted operating
funds increased by 13.8% over the prior year, to $13.913 billion. This
increase was due chiefly to state tax rate increases enacted in July 1990
and to a substantial Federal reimbursement under the Medicaid program for
uncompensated patient care payments, as well as other factors.
The Commonwealth ended fiscal 1991 with an operating loss of $21.2
million, but with positive closing fund balances of $237.1 million, after
applying the opening fund balances created from proceeds of the fiscal 1990
deficit borrowing. No deficit borrowing was required to close out fiscal
1991.
Budgeted revenues and other sources for fiscal 1992 were $13.728 billion,
including tax revenues of $9.484 billion. Budgeted revenues and other
sources increased by approximately 0.7% from fiscal 1991 to fiscal 1992,
while tax revenues increased by 5.4% for the same period.
Commonwealth expenditures and other uses were approximately $13.420
billion in fiscal 1992, which is $238.7 million, or 1.7% lower than fiscal
1991 budgeted expenditures and other uses. Final fiscal 1992 budgeted
expenditures were approximately $300 million higher than the initial July
1991 estimates of budgetary expenditures. A large portion of the increase
in spending is the result of increases in certain human services programs,
including an increase of $268.7 million for the Medicaid program and $50.0
million for mental retardation consent decree requirements. Fiscal 1992
expenditures for Medicaid were $2.818 billion, or 1.9% higher than fiscal
1991. This increase compares favorably with the 19.25% average annual
growth rate of Medicaid expenditures for fiscal years 1988 through 1991.
Overall, the budgeted operating funds ended fiscal 1992 with an excess of
revenues and other sources over expenditures and other uses of $312.3
million, and with positive fund balances of approximately $549.4 million,
when such excess is added to the fund balances of $237.1 million carried
forward from fiscal 1991. Total fiscal 1992 spending authority continued
into fiscal 1993.
On July 20, 1992 the Governor signed the Commonwealth's budget for fiscal
1993. This budget is based on projected total revenues and other sources
of $14.641 billion, including projected tax revenues of $9.940 billion. As
modified by legislation enacted since July 20, 1992, the fiscal 1993 budget
provides for projected expenditures and other uses of $14.976 billion,
which is $1.556 billion or 11.6% higher than fiscal 1992 budgeted
expenditures. The fiscal 1993 budget sources and expenditures and other
uses are to be provided for by application of $319.4 million of the
estimated $549.4 million beginning fund balance for fiscal year 1993 to
produce an estimated ending fund balance for fiscal 1993 of approximately
$230 million.
Tax revenues for fiscal 1993 are currently estimated to be $9.940 billion,
or approximately $456.4 million greater than tax revenues for fiscal 1992.
This estimate reflects an upward revision from the original fiscal 1993
consensus tax estimate of $9.685 million. This revised estimate, which was
released on January 27, 1993, is based on tax collections through December
31, 1992. Actual fiscal 1993 tax revenues received through January 31,
1993 exceeded the upper end of the year-to-date range established by the
consensus tax estimate by approximately $60 million and were approximately
$230 million or 4.3% above fiscal 1992 collections through January, 1992.
On January 27, 1993, the Governor submitted his fiscal 1994 budget
recommendations which called for budgeted expenditures of approximately
$15.208 billion. This recommended spending level is approximately $232.2
million, or 1.6% over estimated budgeted expenditures for fiscal 1993 of
$14.976 billion. Proposed budgeted revenues for fiscal 1994 would exceed
proposed budgeted expenditures by approximately $20.5 million.
In November 1980, voters in the Commonwealth approved a state-wide tax
limitation initiative petition, commonly known as Proposition 2-1/2, to
constrain levels of property taxation and to limit the charges and fees
imposed on cities and town by certain government entities, including county
governments. The law is not a constitutional provision and accordingly is
subject to amendment or repeal by the legislature. Proposition 2-1/2 limits
the property taxes which a Massachusetts city or town may assess in any
fiscal year to the lesser of (i) 2.5% of the full and fair cash value of
real estate and personal property therein and (ii) 2.5% over the previous
year's levy limit plus any growth in the tax base from certain new
construction and parcel subdivisions. In addition, Proposition 2-1/2 limits
any increase in the charges and fees assessed by certain governmental
entities, including county governments, on cities and towns to the sum of
(i) 2.5% of the total charges and fees imposed in the preceding fiscal
year, and (ii) any increase in charges for services customarily provided
locally or services obtained by the city or town at its option. The law
contains certain override provisions which require a majority vote, or
higher, for approval at a general or special election. Proposition 2-1/2 also
limits any annual increase in the total assessments on cities and towns by
any county, district, authority, the Commonwealth, or any other
governmental entity.
During the 1980s, Massachusetts increased payments to its cities, towns
and regional school districts ("Local Aid") to mitigate the impact of
Proposition 2-1/2 on local programs and services. In fiscal 1993
approximately 27% of Massachusetts' budget is to be allocated to Local Aid.
Direct Local Aid increased from $2.769 billion to $2.961 billion from
fiscal 1988 to 1989 and declined in the past three fiscal years from $2.937
billion in fiscal 1990 to $2.359 billion in fiscal 1992. Fiscal 1993
direct Local Aid expenditures are estimated to be $2.551 billion, an
increase of about 8.1% from fiscal 1992. The additional amount of indirect
Local Aid provided was approximately $1.265 billion in fiscal 1992. It is
estimated that approximately $1.529 billion in indirect Local Aid will be
paid in fiscal 1993.
Voters approved in November 1990 a petition which regulates the
distribution of Local Aid by requiring, subject to appropriation,
distribution to cities and towns of no less than 40% of collections from
personal income taxes, sales and use taxes, corporate excise taxes, and
lottery fund proceeds. The Local Aid distribution to each city or town
would equal no less than 100% of the total Local Aid received for fiscal
1989. Distributions in excess of fiscal 1989 levels would be based on new
formulas that would replace the current Local Aid distribution formulas.
By its terms, the new formula would have called for a substantial increase
in direct Local Aid in fiscal 1992, and would call for such an increase in
fiscal 1993 and in subsequent years. However, Local Aid payments expressly
remain subject to annual appropriation, and fiscal 1992 appropriations for
Local Aid did not meet and fiscal 1993 appropriations for Local Aid do not
meet, the levels set forth in the initiative law.
In recent years, health care related costs have risen dramatically in
Massachusetts and across the nation and the increase in the State's
Medicaid and group health insurance costs reflects this trend. In fiscal
1992, Medicaid was the largest item in Massachusetts' budget and has been
one of the fastest growing budget items. During fiscal years 1988, 1989,
1990 and 1991, Medicaid expenditures were $1.64 billion, $1.83 billion,
$2.12 billion and $2.77 billion, respectively, representing an average
annual increase of 19%. Expenditures for fiscal 1992 were $2.82 billion, a
1.9% increase over fiscal 1991. The Executive Office for Administration
and Finance estimates that fiscal 1993 Medicaid expenditures will total
approximately $3.10 billion, an increase of 9.8% over fiscal 1992
expenditures.
Massachusetts' pension costs have risen dramatically as the State has
appropriated funds to address in part the unfunded liabilities that had
accumulated over several decades. Total pension costs increased at an
average annual rate of 5.8% from $600.2 million in fiscal 1988 to $751.5
million in 1992. The estimated pension costs (inclusive of current
benefits and pension reserves) for fiscal 1993 are $873.8 million, an
increase of 16.2% over fiscal 1992 expenditures.
Payments for debt service on Massachusetts general obligation bonds and
notes have risen at an average annual rate of 18.7%, from $563.7 million in
fiscal 1988 to $942.3 million in fiscal 1991. Debt service payments in
fiscal 1992 were $898.3 million, representing a 4.7% decrease from fiscal
1991. Debt service expenditures are expected to be $1.195 billion for
fiscal 1993 and $1.311 billion in fiscal 1994. In January 1990,
legislation was enacted which imposes a 10% limit on the total
appropriations in any fiscal year that may be expended for payment of
interest and principal on general obligations debt (excluding Fiscal
Recovery Bonds) of Massachusetts.
Massachusetts currently has three types of bond and note liabilities:
general obligation debt, dedicated income tax debt, and special obligation
debt. As of January 1, 1993, the State had approximately $7.890 billion of
long-term general obligation debt outstanding and short-term direct
obligations of the Commonwealth totalled $339 million. In October and
December 1990, Massachusetts issued Fiscal Recovery Bonds in the aggregate
principal amount of $1.416 billion to be repaid no later than December 31,
1997 from funds deposited in a State trust fund.
Certain independent authorities and agencies within the State are
statutorily authorized to issue debt for which Massachusetts is either
directly, in whole or in part, or indirectly liable. The State's
liabilities are either in the form of (i) a direct guaranty, (ii) State
support through contract assistance payments for debt service, or (iii)
indirect obligations. The State is indirectly liable for the debt of
certain authorities through the funding of reserve funds which are pledged
as security for the authorities' debt.
Many factors affect the financial condition of the Commonwealth of
Massachusetts and its cities, towns, and public bodies, such as social,
environmental, and economic conditions, many of which are not within the
control of such entities. As in the case with most urban states, the
continuation of many of Massachusetts' programs, particularly its human
services programs, is in significant part dependent upon continuing Federal
reimbursements which have been steadily declining. The loss of grants to
Massachusetts and its cities and towns could further slow economic
development. To the extent that such factors may exist, they could have an
adverse effect on economic conditions in Massachusetts, although what
effect, if any, such factors would have on Massachusetts Municipal
Obligations cannot be predicted.
Michigan Series
General. Recently, the State's economy has been undergoing certain basic
changes in its underlying structure. These changes reflect a diversifying
economy which is less reliant on the automobile industry. As a result, the
State anticipates that its economy in the future will be less susceptible
to cyclical swings and more resilient when national downturns occur. In
1989, approximately 76% of wage and salary employment was in the State's
non-manufacturing sectors. In 1991, total employment declined to 4,125,000
with manufacturing wage and salary employment totaling 899,000. The motor
vehicle industry, which is still an important component in the State's
economy, employed 267,000 in 1991. The State average unemployment rate for
calendar year 1992 was 8.8%.
The State's general obligation bonds are rated A1 by Moody's, AA by S&P
and AA by Fitch. Because most of the State Municipal Obligations are
revenue or general obligations of local government or authorities, rather
than general obligations of the State of Michigan itself, ratings on such
State Municipal Obligations may be different from those given to the State
of Michigan.
State Constitutional Provisions Affecting Revenues and Expenditures. The
State Constitution provides that proposed expenditures and revenues of any
operating fund must be in balance and that any prior year's surplus or
deficit must be included in the succeeding year's budget for that fund.
In 1978, the State Constitution was amended to limit the amount of total
State revenues raised from taxes and certain other sources. State revenues
(excluding Federal aid and revenues for payment of principal and interest
on general obligation bonds) in any fiscal year are limited to a fixed
percentage of State personal income in the prior calendar year or average
of the prior three calendar years, whichever is greater. The percentage is
fixed by the amendment to equal the ratio of the 1978-79 fiscal year
revenues to total calendar 1977 State personal income.
If in any fiscal year revenues exceed the revenue limitation by 1% or
more, the entire amount of such excess shall be rebated in the following
fiscal year's personal income tax or single business tax. Any excess of
less than 1% may be transferred to the State's Budget Stabilization Fund.
The State may raise taxes in excess of the limit for emergencies when
deemed necessary by the Governor and two-thirds of the members of each
house of the Legislature.
The State Constitution provides that the proportion of State spending paid
to all units of local government to total State spending may not be reduced
below the proportion in effect in the 1978-79 fiscal year. If such
spending does not meet the required level in a given year, an additional
appropriation for local governmental units is required by the following
fiscal year. Spending for local units met this requirement for fiscal
years 1985-86 through 1990-91.
The State has settled litigation with Oakland County, Michigan in which
Oakland County had alleged that the classification of State expenditures
for certain mental health programs as spending for local units was
improper. As part of the settlement, the State agreed to reclassify these
expenditures, beginning in fiscal year 1992-93.
The State Constitution also requires the State to finance any new or
expanded activity of local governments mandated by State law. Any
expenditures required by this provision would be counted as State spending
for local units of government for the purpose of determining compliance
with the provision cited above.
Economic and Fiscal Condition. Legislation requires that the
administration prepare two economic forecasts each year. These are
presented to a Consensus Revenue Estimating Conference in January and May
of each year. The January 1993 forecast is summarized below.
The State's January 1993 economic forecast for calendar year 1993 projects
modest growth. Real GDP is projected to grow 2.8% in 1993, on a calendar
year basis. Car sales are expected to increase to the 8.9 million unit
level in 1993. The forecast assumes lower inflation, accompanied by lower
interest rates, particularly at the short-term level.
The State's forecast for the Michigan economy reflects the above national
outlook. Total wage and salary employment is projected to grow 0.7% in
1993. This growth reflects the ongoing diversification of the Michigan
economy. The unemployment rate is projected to average 8.6% in 1993. This
rate of unemployment is caused primarily by a labor force that is growing
at the same pace as employment. The labor force growth is fostered by
renewed growth in Michigan's population.
The State budget for fiscal year 1992-93 was passed by the Legislature in
July 1992. The budget passed by the Legislature appropriated $8.018
billion General Fund - General Purpose monies (including $4.5 million in
supplemental appropriations passed by the Legislature in the fall of 1992).
In July 1992, the Governor vetoed $34.2 million of appropriations that
lapse to the General Fund. Including supplemental appropriations passed by
the Legislature in the fall of 1992, other anticipated supplemental needs
and lower revenue projections, in late January 1993 the State projected a
cumulative deficit of approximately $373 million for the 1992-93 fiscal
year; however, the administration reached agreement with the leaders of the
Legislature on a deficit reduction package which is expected to eliminate
the 1992-93 fiscal year deficit.
Property Tax Reform Proposals. Two proposed constitutional amendments
pertaining to real property assessments were defeated by the Michigan
electorate in the November 1992 general election. A third proposed
constitutional amendment pertaining to real property assessments, the sales
tax and funding of school district operating expenses was defeated by the
Michigan electorate at a special election on June 2, 1993.
In addition to the foregoing, several other proposals for property tax
reform in Michigan have been suggested and may be considered by the
Michigan Legislature. Some of these proposals would reduce the assessed
value of property for purposes of ad valorem real and personal property
taxation, or the amount the taxes which could be collected, or both. Some
of the proposals, if adopted, could adversely affect either the amount or
timing of ad valorem tax revenues to be received by local governments.
Budget Stabilization Fund. In 1977, the BSF was established to accumulate
balances during years of significant economic growth which may be utilized
in years when the State's economy experiences cyclical downturns or
unforeseen fiscal emergencies. The unreserved ending accrued balance of
the BSF on September 30, 1990 was at $385.1 million, on September 30, 1991
was $182.2 million and on September 30, 1992 was $23.1 million.
State and State-Related Indebtedness. The State Constitution limits State
general obligation debt to (i) short-term debt for State operating
purposes, (ii) short- and long-term debt for the purpose of making loans to
school districts and (iii) voter-approved long-term debt.
Short-term debt for operating purposes is limited to an amount not in
excess of 15% of undedicated revenues received during the preceding fiscal
year and must be issued only to meet obligations incurred pursuant to
appropriation and repaid during the fiscal year in which incurred.
The amount of debt incurred by the State for the purpose of making loans
to school districts is recommended by the Superintendent of Public
Instruction who certifies the amounts necessary for loans to school
districts for the ensuing two calendar years. The bonds may be issued in
whatever amount required without voter approval. All other general
obligation bonds issued by the State must be approved as to amount, purpose
and method of repayment by a two-thirds vote of each house of the
Legislature and by a majority vote of the public at a general election.
There is no limitation as to number or size of such general obligation
issues.
There are also various State authorities and special purpose agencies
created by the State which issue bonds secured by specific revenues. Such
debt is not a general obligation of the State.
The State has issued and outstanding general obligation full faith and
credit bonds for Water Resources, Environmental Protection, Public
Recreation, Vietnam Veteran's Bonus and School Loan purposes. As of
September 30, 1992, the outstanding principal amount of all State general
obligation bonds was $390 million. On December 12, 1992, the State issued
$700 million in short-term general obligation notes in order to meet cash
flow requirements. These notes are matured and were paid on September 30,
1992. On February 25, 1993, the State issued $900 million in short-term
general obligation notes in order to meet cash flow requirements. These
notes are due September 30, 1993. On April 29, 1992, the State issued
$11.8 million in short-term general obligation school loan notes. These
notes are due on October 29, 1993.
As of December 31, 1992, approximately $3.5 billion in principal amount of
"qualified" bonds of local school districts was outstanding. In the past
30 years, the State has been required only once to advance monies from the
State School Bond Loan Fund to make a debt service payment on behalf of a
school district, other than for routine loans. In that case the tax
collections available to the school district for payment of debt service
were escrowed on the due date because of litigation. After the litigation
was completed, the escrowed funds were repaid in full to the State School
Bond Loan Fund.
Minnesota Series
Constitutional and Statutory Provisions Relating to State and Local
Funding. State revenues in Minnesota are generated primarily from
individual and corporate income taxes, sales and use taxes, inheritance and
gift taxes, motor fuel taxes and excise taxes on liquor and tobacco.
County, municipal and certain special purpose districts (such as water,
flood or mosquito control districts) are authorized to levy property taxes
within specified legislative limits. A portion of State revenues is
allocated from State government to other governmental units within the
State, such as municipal and county governments, school districts and State
agencies, through a complex series of appropriations and financial aid
formulas. This financial interdependency of the State government with
other units of government subjects all levels of government, in varying
degrees, to fluctuations in the State's overall economy.
The State's constitutionally prescribed fiscal period is a biennium, and
Minnesota operates on a biennial budget basis, with revenues credited in
the period in which they are collected and expenditures debited in the
period in which the corresponding liabilities are incurred. The current
biennium began on July l, 1991 and will end June 30, 1993.
Minnesota's ability to appropriate funds is limited by the Minnesota
Constitution, which directs that State government shall not in any biennium
appropriate funds in excess of projected tax revenues from all sources.
The State is authorized to levy additional taxes to resolve any inadvertent
shortfalls.
Legislative appropriations for each biennium are prepared and adopted
during the final legislative session of the immediately preceding biennium.
A revenue forecast is normally prepared during the legislative session to
provide the Legislature with updated information for the appropriations
process. During each biennium regular reforecasts or revenues and
expenditures are prepared.
The State's biennial appropriation process relies on revenue forecasting
as the basis for establishing aggregate expenditure levels. Risks are
inherent in the revenue and expenditures forecasts. Assumptions about U.S.
economic activity and Federal tax and expenditure policies underlie these
forecasts. Any Federal law changes that increase federal income taxes or
reduce Federal spending programs may adversely affect these forecasts.
Finally, even if economic and Federal tax assumptions are correct, revenue
forecasts are still subject to some normal level of error. The correctness
of revenue forecasts and the strength of the State's overall economy may
restrict future aid or appropriations from State government to other units
of government.
In February 1991, the Governor submitted a proposed budget to the
Minnesota Legislature for the Current Biennium. The proposed budget was
based on a November 1990 forecast of revenues and expenditures which
indicated an Unrestricted General Fund Balance of a negative $1.2 billion
at the end of the Current Biennium. In March 1991, the Department of
Finance prepared another forecast which provided the basis for revised
Governor's recommendations and legislative action on revenue and spending
measures for the Current Biennium. The March 1991 forecast reflected a
slightly stronger economic outlook accompanied by lower estimates of
expected inflation over the next three years. A slight increase in
projected revenues occurred as a result of changes in the economic outlook
and positive year-to-date revenue collections.
Revenue measures enacted by the 1991 Legislature for the Accounting
General Fund totalled $14.572 billion or the Current Biennium and
appropriation measures provided for expenditures of $14.706 billion and a
reduction of the Budget Reserve Account from $550 million to $400 million.
Following legislative action the Governor exercised line item vetoes to
appropriation measures amounting to $114 million. These vetoes addressed
executive concerns on the overall level of spending and financial
implications beyond the Current Biennium. Giving effect to the Governor's
vetoes, the Unreserved Accounting General Fund balance at June 30, 1993 was
then estimated to be $503 billion, $400 million of which was attributed to
the Budget Reserve Account and the remainder of $103 million to the
Unrestricted Accounting General Fund balance.
The Department of Finance prepared a new forecast of Accounting General
Fund revenues and expenditures for the Current Biennium in February 1992.
The February forecast projected an Unrestricted Accounting General Fund
balance at the end of the Current Biennium of a negative $569 million, and
was the basis for the Governor's March 1992 Current Biennium budget
adjustments and the 1992 Legislature's actions.
As previously indicated, at the end of the 1991 legislative session, the
Department of Finance had estimated an Unrestricted Accounting General Fund
balance for the Current Biennium of $103 million. With the February
forecast, this estimate was revised downward to a negative $569 million.
This downward revision of $672 million was principally attributable to
revenue losses associated with the economic recession and projected
spending increases. The negative Unreserved Accounting General Fund
balance of $569 million was then projected to be a negative $169 million at
June 30, 1993, after deducting the entire $400 million in the Budget
Reserve Account.
Recommendations to balance projected resources and expenditures for the
Current Biennium were presented by the Governor to the Legislature in March
1992, based on the February 1992 forecast of Accounting General Fund
revenues and expenditures.
The 1992 Legislature reduced Accounting General Fund expenditures by $262
million, enacted revenue measures expected to increase revenues by $149
million, and then reduced the Budget Reserve Account by $160 million to
$240 million in order to bring projected Accounting General Fund resources
and expenditures back into balance. The impact of these actions is
currently projected to result in an Unreserved Accounting General Fund
balance at June 30, 1993, of $242 million, $2 million of which is
attributed to the Budget Reserve Account.
Of the $262 million in spending reductions, $183 million was a one-time
reduction to K-12 education aids, reflecting a change in the way schools
account for property tax collections. The change requires schools to
recognize 100% of the school portion of property tax collections as revenue
in the fiscal year in which they receive them, thereby permitting one-time
reduction in state education aids. Reductions to post-secondary education,
State agencies, the Legislature and constitutional officers accounted for
$94 million in budget savings. New spending for crime prevention,
corrections and additional debt service added $15 million to expenditures.
Included in the new revenue raising measures of $149 million was the
extension of a broad-based health care provided tax which was expected to
generate $51 million of additional revenue, removal of the sales tax
exemption for most purchases by cities, counties, towns and townships which
was expected to generate $67 million of additional revenue, and federal tax
conformity which was expected to generate $21 million of additional
revenue. The health care provider tax changes restructured the State's
current provided surcharge program to bring it into compliance with federal
law and Health Care Financing Administration regulations. Other changes
accounted for a $10 million increase in revenues.
There can be no assurance that the financial problems referred to or
similar future problems will not affect the market value or marketability
of the Minnesota Municipal Obligations or the ability of the issuers
thereof to pay the interest or principal of such obligations.
Minnesota general obligation bonds are rated Aa by Moody's and AA+ by S&P
and Fitch.
Statewide Economic and Demographic Factors. Diversity and a significant
natural resource base are two important characteristics of Minnesota's
economy.
When viewed in 1991 at a highly aggregative level of detail, the structure
of the State's economy parallels the structure of the United States economy
as a whole. Minnesota employment in 10 major industrial sectors was
distributed in approximately the same proportions as national employment.
In all sectors, the share of State employment was within 2 percentage
points of national employment share.
The State's employment in 1991 in the durable goods industries was highly
concentrated in industries specializing in the manufacturing of industrial
machinery, fabricated metals, and instruments. This emphasis is partially
explained by the location in the State of Control Data Corporation, Unisys,
Inc., IBM, Cray Research and other computer equipment manufacturers.
The importance of the State's rich natural resource base for overall
employment is apparent in the employment mix in non-durable goods
industries. In 1989, approximately 29.9% of the State's non-durable goods
employment was concentrated in food and kindred industries, and
approximately 19.9% in paper and allied industries. This compares to
approximately 21.4% and 8.8%, respectively, for comparable sectors in the
national economy. Both of these rely heavily on renewable resources in the
State. Over half of the State's acreage is devoted to agricultural
purposes, and nearly one-third to forestry. Printing and publishing are
also relatively more important in the State than in the United States.
Mining is currently a less significant factor in the State economy than it
once was. Mining employment primarily in the iron ore or taconite industry
dropped from 17.3 per thousand in 1979 to 7.9 per thousand in 1991. It is
not expected that mining employment will soon return to 1979 levels.
However, Minnesota retains vast quantities of taconite as well as copper,
nickel, cobalt and peat which may be utilized in the future.
Employment Growth in the State. In spite of a strong manufacturing sector
during the 1980 to 1990 period, total employment in Minnesota increased
17.8% while increasing 20.5% nationally. Most of Minnesota's relatively
slower growth is associated with declining agricultural employment and with
two recessions in the U.S. economy during the early 1980s which were more
severe in Minnesota than nationwide. Minnesota's non-farm employment
growth generally kept pace with the nation in the period after the end of
the 1981-82 recession in late 1982. Employment data through March 1992
indicate the most recent recession which began in July 1990 was less severe
in Minnesota than in the national economy.
Regional Financial Conditions and Trends Affecting the State's Economy.
Since 1980, State per capita personal income has been within three
percentage points of national per capital personal income. The State's per
capita income, which is computed by dividing personal income by total
resident population, has generally remained above the national average in
spite of the early 1980's recessions and some difficult years in
agriculture. In 1991 Minnesota per capita personal income was 100.1% of
its U.S. counterpart.
Comparing the performance of the Minnesota economy relative to the 11
other states in the North Central Region based on total personal income,
population, personal income per capita and non-agricultural employment,
Minnesota ranked second among the twelve states in both 1990 and 1991 in
the level of personal income per capita. During the period 1980 to 1990,
Minnesota ranked first in growth of personal income and fourth during the
period 1990 to 1991.
Over the period 1980 to 1990, Minnesota non-agricultural employment grew
20.3% while the entire North Central Region grew 14.4%. During the 1990-91
period, Minnesota non-agricultural employment increased 0.3% and total
regional employment declined 1.0%.
Personal income in Minnesota grew more rapidly than the North Central
states' average during 1990-91, but slower than the United States average.
Preliminary data suggest the principal reason for slower income growth in
Minnesota is declining farm income. In 1991, Minnesota farm proprietors'
income declined 35%, while declining 17% for the United States. Transfer
payments also contributed by growing more slowly than in the United States.
However, 1991 wage and salary disbursements which constitute some 60% of
total personal income grew 4% in Minnesota as compared to 2.5% for the
United States.
Overall increases in retail sales averaged 7.5% per year, compounded
between 1980 and 1990. This growth, however, was not uniform from year to
year. Retail sales grew only 3.4% in 1982, a recession year, and 3.0% in
1985, while growing 12.1% in 1984 and 10.2% in 1986. 1991 retail sales
data is not currently available.
Another measure of the vitality of the State's economy is its unemployment
rate. During 1990, 1991 and the first three months of 1992, the State's
monthly unemployment rate was generally less than the national unemployment
rate, averaging 5.1% in 1991, as compared to the national average of 6.7%.
North Carolina Series
Economic Characteristics. The economic profile of North Carolina consists
of a combination of agriculture, industry and tourism. Non-agricultural
wage and salary employment accounted for approximately 3.1 million jobs in
1990. The largest segment of jobs was the approximately 862,900 in
manufacturing. In March 1991, according to the North Carolina Employment
Security Commission, the State ranked tenth among the states in non-
agricultural employment and eighth in manufacturing employment. During the
period 1980 to 1990, per capita income in the State grew from $7,999 to
$16,203, an increase of 102.6%. The Employment Security Commission
estimated North Carolina's seasonally adjusted unemployment rate in October
1991 to be 5.3% of the labor force, as compared with an unemployment rate
of 6.8% nationwide.
Agriculture is a basic element in the economy of the State. Gross
agricultural income in 1990 was $4.9 billion, which placed North Carolina
eleventh in the nation in gross agricultural income. Tobacco production is
the leading source of agricultural income in the State, accounting for 22%
of gross agricultural income. The diversity of agriculture in North
Carolina and a continuing push in marketing efforts have protected farm
income from some of the wide variations that have been experienced in other
states where most of the agricultural economy is dependent on a small
number of agricultural commodities. North Carolina's agricultural
industry, including food, fiber and forest, contributes over $36 billion
annually to the State's economy.
During recent years, however, North Carolina's labor force has moved from
an agricultural to a service and goods producing economy. According to the
Employment Security Commission, the labor force has grown from 2.9 million
in 1980 to approximately 3.4 million in 1990, an increase of 19.1%.
Revenue Structure. North Carolina has two major operating funds which
receive revenues and from which monies are expended: the General Fund and
the Highway Fund. In addition, the 1989 General Assembly created the
Highway Trust Fund to provide monies for a major highway construction
program for the State. There are no prohibitions or limitations in the
State Constitution on the State's power to levy taxes except an income tax
rate limitation of 10% and a prohibition against a capitation or "poll"
tax.
North Carolina's tax revenue is generated from individual and corporate
income taxes, sales and use tax, highway use tax, on certain motor vehicle
rentals, corporate franchise tax, taxes on alcoholic beverages, cigarettes
and soft drinks, inheritance taxes, insurance taxes levied on insurance
companies, intangible personal property tax and other taxes. Non-tax
revenue consists of (i) institutional and departmental receipts which are
deposited with the State Treasurer, such as fees, tuition payments, and
Federal funds collected by state agencies and (ii) interest earned by the
State Treasurer on investments of General Fund monies and revenues from the
judicial branch. The proceeds of such taxes and non-tax revenue are
deposited in North Carolina's General Fund.
In addition, revenue is generated from a motor fuels tax, highway use tax
and motor vehicle license tax, which is deposited in the Highway Fund and
Highway Trust Fund. Federal aid is also an important source of revenue for
the Highway Fund and Highway Trust Fund.
State Budget. The North Carolina Constitution requires that the total
expenditures of the State for the fiscal period covered by the budget shall
not exceed the total of receipts during the fiscal period and the surplus
remaining in the State Treasury at the beginning of the period.
The Executive Budget Act, adopted by the General Assembly in 1925, sets
out the procedure by which the State's budget is adopted and administered.
The Act requires the adoption of a balanced budget. Section 143-25 of the
General Statutes of North Carolina provides: "The Director of the Budget
may reduce all of said appropriations, pro rata when necessary to prevent
an overdraft or deficit to the fiscal period for which such appropriations
are made. The purpose and policy of this Article are to provide and insure
that there shall be no overdraft or deficit in the General Fund of the
State at the end of the fiscal period, growing out of appropriations for
maintenance and the Director of the Budget is directed and required to so
administer this Article so as to prevent any such overdraft or deficit.
Prior to taking any action under this section to reduce appropriations pro
rata, the Governor may consult with the Advisory Budget Commission." The
Governor may take less drastic action to reduce expenditures to maintain a
balanced budget before the need for across-the-board appropriations
reductions arises.
In the 1989-90 budget year, North Carolina projected a deficit in the
General Fund of approximately $550 million. To comply with the
constitutional mandate for a balanced budget, several actions were
initiated. The Office of State Budget and Management mandated spending
constraints through reductions in spending authorizations and hiring
restrictions. In addition, $43.3 million of unexpended prior year capital
improvement appropriations were refunded to the General Fund. In June
1990, the General Assembly changed the utility sales tax collections from
quarterly to monthly, thereby creating a one-time windfall of $35.7 million
for the year. The Legislature reclassified $144.4 million of State levied
intangible, personal property, franchise and beverage taxes (collected and
deposited to funds outside the General Fund for distribution in the next
budget year to local governments) as revenues of the General Fund. These
tax proceeds were appropriated to the local government in the 1990-91
budget. The State also delayed the payment of a $164 million June payroll
from June 30 to July 2, 1990 (the first business day of the new budget
year). With these actions, the budgetary fund balance for the year ended
June 30, 1990 was $222.2 million. Total tax and non-tax revenue for the
1989-90 year was $6,980.5 million. After making adjustments for the items
listed above and for the reclassification of $233.6 million of revenues as
General Fund revenues (previously accounted for outside of the General
Fund) and adjusting for all other factors in 1988-89 and 1989-90, the real
growth rate in tax and non-tax revenue collections was 3.8%.
The 1990-91 budget assumed a 7.5% real growth rate in net General Fund
revenues after adjustments for tax law changes. The budget also allowed
for a 6% salary increase for State employees and teachers and major
expansions in the areas of education, corrections, and Medicaid.
In early January 1991, the Office of State Budget and Management revised
the 1990-91 revenue estimates to reflect a $360.8 million revenue
shortfall. In conjunction with the new revenue estimates, the Governor
issued an executive order to institute savings to insure a balanced budget
through a hiring freeze on most state positions. In addition, the Office
of State Budget and Management placed restrictions on purchasing and
travel. These actions, coupled with other savings initiated in August 1990
by the Office of State Budget and Management, generated an estimated
savings in current operations of $133 million. Low priority capital
projects authorized by the General Assembly (subject to the availability of
funds) were frozen, generating an $89 million reduction in the budget. The
additional $141 million necessary to balance the 1990-91 budget was
obtained through the utilization of the newly-established Reserve for
Budget Stabilization (Rainy Day Fund). In early May 1991, the estimated
revenue shortfall was increased to a total of $729 million for the 1990-91
fiscal year. Additional actions were taken including, further hiring and
travel restrictions, freezing additional capital projects and reductions in
compensation related expenses. The actions taken were effective in
balancing the General Fund budget for fiscal year 1990-91. Through January
1992, the State realized revenues at or slightly above amounts projected
and required to support the budget for fiscal year 1991-92.
Highway Fund revenue collections totalled $903.4 million in fiscal year
1990-91, a decline of 0.1% from the prior fiscal year's actual revenues and
$32.5 million below budgeted revenues.
Highway Trust Fund collections for fiscal year 1990-91 totalled $513.9
million, $38.1 million less than the budgeted amount. Total Highway Trust
Fund collections increased by 25.8% in fiscal year 1990-91, the first full
year of Trust Fund operations, over 1989-90. The Highway Trust Fund was
established in August 1989 and collections from the newly established
highway use tax began in October 1989.
The estimated budget, designed to cover the budget for the balance of the
fiscal year ending June 30, 1992, is based upon a multitude of existing and
assumed State and non-State and national economic conditions, international
activity, Federal government policies and legislation, and the activities
of North Carolina's General Assembly. Such factors are subject to change
which may affect the estimated budget.
State Indebtedness. The North Carolina Constitution provides in substance
that the State shall not contract a debt by borrowing money in any biennium
and pledge its faith and credit to the payment thereof for an amount in
excess of two-thirds of the amount by which the outstanding debt of the
State shall have been reduced in the preceding biennium unless the proposed
debt is submitted to and approved by the voters at an election.
The State is authorized by the Constitution to borrow in anticipation of
the collection of taxes due and payable within the current fiscal year to
an amount not exceeding 50% of such taxes.
There are no moral obligation bonds of the State outstanding which
contemplate the appropriation by the General Assembly of such amount as may
be necessary to make up any deficiency in a debt service reserve therefor.
Furthermore, no legislation has been enacted by the General Assembly which
would authorize the issuance of any such bonds.
Ohio Series
State Economy and Budget. Non-manufacturing industries now employ more
than three-fourths of all payroll workers in the State of Ohio. However,
due to the continued importance of manufacturing industries (including
auto-related manufacturing), economic activity in Ohio, as in many other
industrially developed states, tends to be more cyclical than in some other
states and in the nation as a whole. Agriculture also is an important
segment of the Ohio economy. The financial condition of the State has
fluctuated in a pattern related to national economic conditions, with
periods of prolonged stringency characterizing fiscal years 1980 through
1983. While the State's economy has improved since 1983, there has not
been full recovery. Additionally, the 1980-82 recession brought with it a
substantial increase in bankruptcies and foreclosures. Ohio's economic
problems and the 1990-91 national recession have had varying effects on the
political subdivisions located within different geographic areas of the
State.
The State constitution imposes a duty on the Ohio General Assembly to
"provide for raising revenue, sufficient to defray the expenses of the
state, for each year, and also a sufficient sum to pay the principal and
interest as they become due on the state debt." The State is effectively
precluded by law from ending a fiscal year or a biennium in a "deficit"
position. State borrowing to meet casual deficits or failures in revenues
or to meet expenses not otherwise provided for is limited by the
constitution to $750,000.
The State carries out most of its operations through the General Revenue
Fund ("GRF") which receives general State revenues not otherwise dedicated
pursuant to certain constitutional and statutory claims on State revenues.
The GRF sources consist of personal income and sales-use taxes. The GRF
ending (June 30) fund balance is reduced during less-favorable national
economic periods and then increases during more favorable economic periods.
State and national fiscal uncertainties during the biennium ending June
30, 1993 have required several steps and actions to ensure the now-
projected GRF positive ending balance. The Office of Budget and Management
("OBM") projects positive $59.7 million and $271.2 million ending fund and
cash balances, respectively, for the GRF for fiscal year 1993. In
addition, as of June 1, 1993 the Budget Stabilization Fund ("BSF") had a
zero cash balance.
The general appropriations act for the biennium ending June 30, 1993 was
passed on July 11, 1991 and signed by the Governor on July 26, 1991. Based
in part on revised projections of revenues and expenditures and actual
results in the final months of fiscal year 1991, the act appropriated $22.3
billion for GRF purposes compared to $20.9 billion in total adjusted
appropriations for GRF purposes in the 1990-91 biennium. Appropriations
for fiscal year 1992 were approximately 0.42% over those for fiscal year
1991, and for fiscal year 1993 were approximately 5.86% higher than those
for fiscal year 1992. Included in the resources appropriated is $200
million from the BSF which the OBM Director has transferred to the GRF.
Pursuant to December 1992 legislation, the OBM Director is to make a
partial repayment to the BSF after the end of fiscal year 1993 of any GRF
fund balance in excess of $70 million.
The administration and the General Assembly have reviewed the fiscal
situation through the end of the current biennium. As a first step toward
addressing a projected fiscal year 1993 GRF shortfall, estimated by OBM at
approximately $520 million, the Governor ordered, effective July 1, 1992,
selective reductions in fiscal year 1993 GRF appropriations spending, which
totaled $300 million. In addition, cooperative and bipartisan executive
and legislative action taken in December 1992 has provided a balance of GRF
resources and expenditures in the biennium ending June 30, 1993 and has
provided a better base for the appropriations for the biennium ending June
30, 1995. Those December actions included additional appropriations
spending reductions and a new tax on soft drinks. In respect of the new
tax, OBM estimated $68 million in receipts for fiscal year 1993. However,
litigation was filed on February 1, 1993, seeking to declare such new tax
invalid and its collection enjoined. Supplementing the general
authorization for the Governor's December 1992 spending reduction orders,
the biennial appropriations act authorizes the OBM Director to implement up
to a 1% fiscal year reduction in GRF amounts appropriated if, on March 1 of
either fiscal year, receipts for that fiscal year are for any reason more
than $150 million under estimates and the then-estimated GRF ending fund
balance is less than $50 million. This supplemental authorization was not
implemented in either fiscal year 1992 or 1993.
State statutory provisions permit the adjustment of payment schedules and
the use of the Total Operating Fund ("TOF") to manage temporary GRF cash
flow deficiencies. The State has not undertaken external revenue
anticipation borrowing.
TOF includes the total consolidated total cash balances, revenues,
disbursements and transfers of the GRF and several other specified funds.
TOF cash balance at May 31, 1993 was $1.983 billion. These cash balances
are consolidated only for the purpose of meeting cash flow requirements
and, except for the GRF, a positive cash balance must be maintained for
each discrete fund included in the TOF. The GRF is permitted to incur a
temporary cash deficiency by drawing upon the available consolidated cash
balance in the TOF. The amount of that permitted GRF cash deficiency at
any time is limited to 10% of GRF revenues for the then-preceding fiscal
year. As projected by OBM for the fiscal year ending June 30, 1993, cash
flow deficiencies occurred in August 1992 through May 1993, with the
highest deficiency being $768.6 million in December 1992.
In March 1993, the Governor introduced his State budget and appropriations
proposals for the biennium beginning July 1, 1993. In general, the concept
of the proposed budget kept the appropriations in the first fiscal year of
the biennium near fiscal year 1993 levels, with an increase in the second
year of the biennium. However, faced with revenues that are falling below
estimates, the Governor may trim such spending proposals.
State Debt. The Ohio Constitution prohibits the incurrence or assumption
of debt by the State without a popular vote except to (i) cover causal
deficits or failures in revenues limited in amount to $750,000 and
(ii) repel invasion, suppress insurrection or defend the State in war.
At various times from 1921, the voters of Ohio, by twelve specific
constitutional amendments, authorized the incurrence of up to $4.439
billion in State debt to which taxes or excises were pledged for payment.
As of June 1993, excluding Highway Obligations Bonds discussed below,
approximately $2.976 billion had been issued, of which $2.462 billion had
been retired and approximately $513.6 million (all evidenced by bonds)
remained outstanding. The only such debt still authorized to be incurred
is a portion of the Highway Obligations Bonds and Coal Development Bonds as
well as State general obligation bonds for local government infrastructure
projects, described below.
The total voted authorization of State debt includes authorization for
$500 million in Highway Obligations to be outstanding at any one time, with
no more than $100 million to be issued in any one calendar year. As
Highway Obligations are retired, additional Highway Obligations may be
issued so long as the principal amount outstanding does not exceed $500
million. As of June 1, 1993, approximately $1.345 billion in Highway
Obligations had been issued and $330.6 million were outstanding.
A 1985 constitutional amendment authorized up to $100 million in State
full faith and credit obligations for coal research and development to be
outstanding at any one time. In addition, the General Assembly has
authorized the issuance of an additional $35 million of Coal Development
Bonds. As of June 1, 1993, $65 million of Coal Development Bonds were
issued, of which $36 million were outstanding as of June 1991.
A 1987 State constitutional amendment authorizes the issuance of $1.2
billion of State full faith and credit obligations for infrastructure
improvements of which no more than $120 million may be issued in any
calendar year. As of June 1, 1993, $480 million of such obligations were
issued, of which $432.5 million were outstanding.
A constitutional amendment adopted in November 1990, authorizes greater
State and political subdivision participation in the provision of housing
for individuals and families. This supplements the previously
constitutionally authorized loans-for-lenders and other housing assistance
programs, financed in part with State Revenue Bonds. The amendment
authorizes the General Assembly to provide for State assistance for housing
in a variety of manners. The General Assembly could authorize State
borrowing for the purpose, and the issuance of State obligations secured by
a pledge of all or a portion of State revenues or receipts, although the
obligations may not be supported by the State's full faith and credit.
In addition, the State constitution authorizes the issuance, for certain
purposes, of State obligations not secured by a pledge of taxes or excises
to pay principal and interest. Such special obligations include bonds and
notes issued by, among others, the Ohio Public Facilities Commission
("OPFC") and the Ohio Building Authority ("OBA"). As of June 1, 1993, the
OPFC had issued $2.9 billion for higher education facilities, approximately
$1.9 billion of which were outstanding, $887.1 million for mental health
facilities, approximately $484.3 million of which were outstanding and
$145.0 million for parks and recreation facilities, approximately $105.6
million of which were outstanding.
Only a portion of State capital needs can be met by direct GRF
appropriations; therefore, additional State borrowing for capital purposes
has been and will be required. Under present constitutional limitations,
most of that borrowing will be primarily by lease-rental supported
obligations such as those issued by OPFC and OBA.
The general capital appropriations act for the 1993-94 capital
appropriations biennium authorizes additional borrowing. It authorizes
issuance by OPFC of obligations, in addition to those previously authorized
by the General Assembly, in the amounts of $428.9 million for higher
education capital facilities projects (a substantial number of which are
renovations of equipment and improvements to existing facilities), $79.9
million for mental health facilities projects, and $38.5 million for parks
and recreation facilities. It also authorized the OBA to issue
obligations, in addition to those previously authorized by the General
Assembly, in the amounts of $118.4 million for prisons and local jails,
$12.8 million for Department of Youth Services facilities, $112.1 million
for Department of Administrative Services facilities, $34.4 million for
Ohio Arts Facilities Commission facilities, $17.0 million for Department of
Public Safety facilities and $38.3 million for Ohio Department of
Transportation facilities. The Commissioners of the Sinking Fund are in
the process of issuing additional Highway Obligations Bonds and Coal
Development Bonds. OBM currently anticipates that OBA will issue
additional bonds for arts and other facilities in the summer of 1993 and
OPFC will issue higher education facilities bonds in July 1993.
A November 1986 act (the "Rail Act") authorizes the Ohio High-Speed Rail
Authority (the "Rail Authority") to issue obligations to finance the cost
of inter-city high-speed rail service projects within the State, either
directly or by loans to other entities. The Tax Reform Act of 1986
included a special transition provision (which expired October 1, 1990)
exempting up to $2 billion of State obligations from certain of its
provisions. The Rail Authority has considered financing plan options and
the general possibility of issuing bonds or notes. The Rail Act prohibits,
without express approval by joint resolution of the General Assembly, the
collapse of any escrow of financing proceeds for any purpose other than
payment of the original financing, the substitution of any other security,
and the application of any proceeds to loans or grants. The Rail Act
authorizes the Rail Authority, but only with subsequent General Assembly
action, to pledge the faith and credit of the State but not the State's
power to levy and collect taxes (except ad valorem property taxes if
subsequently authorized by the General Assembly) to secure debt service on
any post-escrow obligations and, provided it obtains the annual consent of
the State Controlling Board, to pledge to and use for the payment of debt
service on any such obligations all excises, fees, fines and forfeitures
and other revenues (except highway receipts) of the State after provision
for the payment of certain other State obligations.
Notwithstanding the constitutional provisions prohibiting the incurrence
of certain debt without popular vote, the State and State agencies have
issued revenue bonds that are payable from net revenues of revenue-
producing facilities or categories of facilities, which revenue bonds are
not "debt" within the meaning of such constitutional provisions.
Investment in such bonds carries the risk that the issuing agency or the
specific revenue source may not provide sufficient funds to service the
debt incurred. Certain of these bonds consist of those issued by the Ohio
Turnpike Commission and the State Parking Commission.
The State is a party to various legal proceedings seeking damages or
injunctive relief and generally incidental to its operations. In
particular, litigation contesting the Ohio system of school funding is
pending in two county common pleas courts (with efforts made to move one to
Federal court).
The outstanding State Bonds issued by the OPFC and the OBA are rated A+ by
S&P and A by Moody's. S&P rates certain of the State's general obligations
bonds AA, with AAA ratings on the State's Highway Obligations Bonds.
Moody's rates the State's general obligation debt as Aa.
State Employees and Retirement Systems. The State has established five
public retirement systems to provide retirement, disability retirement and
survivor benefits. Three cover both State and local employees, one State
employees only and one local government employees only. The Public
Employees Retirement System ("PERS"), the largest of the five, covers both
State and local public employees. The State Teachers Retirement System
("STRS") and School Employees Retirement System ("SERS") primarily cover
school district employees and public higher education employees. The
Highway Patrol Retirement System ("HPRS") covers State troopers and the
Police and Fire Pension and Disability System ("PFPDS") covers local safety
forces.
As of June 30, 1991, the unfunded accrued liabilities of STRS and SERS
were $8.015 billion and $2.592 billion, respectively, and as of December
31, 1990, the unfunded accrued liabilities of PERS, HPRS and PFPDS was
$5.244 billion, $70.7 million and $704.7 million, respectively.
State Municipalities. Ohio has a mixture of urban and rural population,
with approximately three-quarters urban. There are approximately 943
incorporated cities and villages (populations under 5,000) in the State;
six cities have populations of over 100,000. A 1979 act established
procedures for identifying and assisting those few cities and villages
experiencing defined "fiscal emergencies."
A commission composed of State and local officials, and private sector
members experienced in business and finance appointed by the Governor, is
to monitor the fiscal affairs of a municipality facing substantial
financial problems. That act requires the municipality to develop, subject
to approval and monitoring by its commission, a financial plan to eliminate
deficits and cure any defaults and otherwise remedy fiscal emergency
conditions, and to take other actions required under its financial plan.
It also provides enhanced protection for the municipality's bonds and notes
and, subject to the act's stated standards and controls, permits the State
to purchase limited amounts of the municipality's short-term obligations
(used only once, in 1980).
In the fourteen years that the act has been in effect, it has been applied
to 11 cities and to 11 villages. The situations in nine cities and seven
villages have been resolved and their commissions terminated. Only the
Cities of East Cleveland and Nelsonville and four of the villages remain
under the procedure.
Summary. Many factors affect or could affect the financial condition of
the State and other issuers of debt obligations, many of which are not
within the control of the State or such issuers. There can be no assurance
that such factors and the resulting impact on State and local governmental
finances will not affect adversely the market value of Ohio Municipal
Obligations held in the portfolio of the Fund or the ability of the
respective obligors to make required payments on such obligations.
Oregon Series
Employment. Oregon's economy has outperformed the nation's economy in
recent years. Oregon employment increased 15.4% between 1987 and 1992;
national employment during the same period increased only 6.1%. However,
in 1990 and 1991 total employment remained relatively flat, and
unemployment increased. In 1992, growth resumed at an annual rate of 1.6%.
The unemployment rate in 1991 was 6.0%, 7.3% in 1992, and has ranged from
7.1% to 7.6% in the first four months of 1993.
As the economy has grown, it has diversified, becoming less dependent on
the forest products industry and expanding the number of high technology
industries. Compared to 1980, 15,500 fewer people worked in lumber and
products manufacturing in 1992, while 7,700 more people worked in high
technology sectors.
Most of the recent job gains have come from nonmanufacturing sectors.
Since 1985, nonmanufacturing employment has increased 27%, led by trade (up
23%), services (up 41%) and construction (up 53%). Nonmanufacturing
sectors now provide more than 83% of total Oregon employment.
State Forecast. In May of 1993, the State of Oregon forecast that the
modest acceleration of the economy which began in the second half of 1992
would continue, peaking in 1994 with jobs increasing at 3.0% per year, and
personal income growing at an annual rate of 7.1%. The rate of growth is
expected to remain below the rate of growth in the late 1980's because of
continued downsizing of the timber industry and layoffs in the utilities
and government sectors.
The State forecasts gradually improving national conditions, continued
strong net in-migration to Oregon, accelerating construction activity, and
continued strength in the State's electronics and office equipment
manufacturing industries. The State's economy has grown faster than the
national average since 1987, and this trend is forecast to continue through
1997, based on forecast competitive cost advantages, in-migration, growth
in Oregon's high technology sector, and expanding exports.
Population.
Oregon's population as of July 1, 1992 was estimated to be 2,930,000.
Since 1960 the State's population has increased almost 61%; between 1980
and 1990, Oregon's population increased approximately 7.7%.
There are four major population areas in Oregon. The City of Portland,
located at the northern end of the Willamette Valley, is the largest city
in the State, and its primary metropolitan statistical area was estimated
to have a population of 1,285,100 in 1991, or 44% of the total State
population. The City of Eugene, located at the southern end of the
Willamette Valley, is the second largest city, with a metropolitan
statistical area of 290,900, or ten percent of the State's total
population. Salem, located in the middle of the Willamette Valley, is the
third largest city, has a metropolitan statistical area of 287,900, or ten
percent of the State's total population. The fourth largest city, Medford,
is located in southwestern Oregon outside the Willamette Valley, and has a
metropolitan statistical area of 151,400. Approximately 70% of the State's
population resides in the Willamette Valley.
Western Oregon consists largely of small coastal communities which focus
on tourism, fishing, agriculture and dairy operations. Central Oregon,
west of the Cascade Mountains, has the Willamette Valley, Oregon's four
largest cities, and the highly economically diversified Portland
metropolitan area. East of the Cascade Mountains communities tend to be
smaller, and economic activity centers on agriculture, forestry and
ranching. A number of small, timber dependent communities throughout the
State have been particularly adversely affected by the recent reductions in
timber and forest products employment. Local economies in Oregon vary
substantially, and respond to different factors; statistical data on
economic activity in the State as a whole may mask significant differences
in local economies.
Housing, Agriculture, Trade, Forest Products and Tourism. Much of the
recent and forecast growth in the Oregon nonmanufacturing sectors can be
traced to population growth. Oregon's quality of life and low housing
costs have always encouraged in-migration. The State's rapid job growth
since 1987 pushed Oregon's population growth above the nation's. The
growth caused Oregon housing starts to increase in 1988, 1989 and 1990,
even though national housing starts declined. In 1990, Oregon housing
starts increased by one percent, compared to a national decline of 12.9%.
In 1991, housing starts declined, but increased again in 1992.
Oregon has a highly diversified agricultural base, with gross farm sales
of over $2.5 billion in 1992, over 84 commodities with sales of $1,000,000
or more, and over 37 commodities with gross sales of $10,000,000 or more.
Agriculture in Oregon follows the national trend of increasing capital
intensity, with employment decreasing as constant dollar output has
increased. Recent agricultural expansion is attributable to use of more
efficient methods and increased use of irrigation. Although every county
in the State is involved in agricultural production, activity is
concentrated in the Willamette Valley.
Oregon's forest products industry consists of several components; lumber
and wood products, paper and allied products, and a small number of workers
in reforestation and other services. Employment for paper and allied
products has remained relatively constant at about 9,000. Reforestation
currently employs about 4,000, and has been growing steadily. Lumber and
wood products, once Oregon's manufacturing mainstay, has experienced
massive, and probably permanent, reductions in employment, with jobs
declining from about 65,000 to about 50,000 during the period from 1988 to
1992.
Oregon is located on the western coast of the United States, where the
Columbia River flows into the Pacific Ocean. International trade and
exports are an important part of the Oregon economy, with much of the trade
occurring through Oregon's 23 port districts. The Port of Portland is most
active, having developed an efficient system for dealing with large numbers
of vessels, including modern grain elevators, cranes, break-bulk and
containerized-cargo facilities, and ship repair and dry dock facilities.
Chief export items include grains, logs, lumber and other forest products,
paper and paper products, vegetables, metal products and chemical/petroleum
products. The value of foreign exports through the Oregon Columbia-Snake
River Customs District, which includes The Port of Portland, was in excess
of $5.9 billion in 1991, and had increased approximately 64% from 1987
levels. Items imported in amounts in excess of $100 million in 1991
include cars, chemical/petroleum products, metals/metal products, food and
headware/flat goods, computing equipment, electronic components, electrical
machinery, general purpose machinery and rubber/plastic. Imports through
the Oregon Columbia-Snake River Customs District increased approximately
fourteen percent over the five year period beginning in 1987, but have
declined an average of 3.6% in the years 1990 and 1991.
Tourism is a rapidly growing segment of the Oregon economy. The state has
major mountain ranges, vast coastal and desert regions, and multi-use and
wilderness forest areas. There are more than 400 miles of seacoast, 47,000
miles of streams, 1,400 lakes and reservoirs, 225 state parks and a
national park in Oregon. 6.8 million people were estimated to visit the
state in 1989-1990. Hotel-Motel occupancies increased approximately 14% in
the 1990 fiscal year, and room tax revenues increased 42% for 1987-89 and
68% for 1989-91.
Recent Development Affecting the Oregon Economy and Creditworthiness of
Oregon Issuers. In November of 1990 the Oregon voters approved an
initiative petition ("Measure Five") amending the Oregon Constitution to
limit property taxes and certain other charges against property. The
measure imposes a maximum tax rate for non-school local governments of
$10/$1,000 of property value, and a declining rate for schools which began
at $15/$1,000 and declines to $5/$1,000 in fiscal year 1995-1996.
Measure Five has an exemption for voter approved general obligation bonds
issued by local governments, and an exemption for general obligation bonds
issued by the State of Oregon. However, Measure Five has an adverse effect
on the financial condition of the State of Oregon and all local governments
which impose ad valorem taxes in areas where the aggregate tax rate exceeds
the measure's limits.
Although the State of Oregon does not currently levy property taxes, the
State is adversely affected because Measure Five requires the State to
contribute State funds to make up tax revenues lost by school districts as
a result of Measure Five. The State's required contribution to the schools
under Measure Five is estimated to be $1.6 billion in the 1993-1995
biennium, or 260% of the State's forecast general fund revenue in the 1993-
1995 biennium.
The Oregon Legislature meets in regular session once every two years, is
currently in session, and is considering major changes to its taxing
system. As of June 2, 1993, the Oregon Legislature had not approved any
such changes. If the legislature approves changes, it is likely that they
would be referred to the Oregon voters for final approval.
Measure Five adversely affects the financial condition of many school
districts, because the total amount of property taxes and State funding
each school district receives is often less than it would have been if
Measure Five had not been enacted. The reduction occurs because the Oregon
Legislature has reduced the portion of its contributions to Oregon schools
which is not mandated by Measure Five, and because State replacement
revenues are distributed proportionally among districts, not based on the
actual losses of individual districts.
Measure Five adversely affects non-school local governments which levy
taxes in areas where the aggregate tax rate exceeds $10/$1,000. Generally,
these areas are population centers.
The Oregon Supreme Court recently held that tax increment, or urban
renewal, revenues collected to pay bonds are subject to Measure Five's
$10/$1,000 limit. Measure Five also limits certain kinds of charges which
are not property taxes. Litigation is pending which, if resolved adversely
to local governments, could limit the ability of municipal utilities to
impose certain kinds of municipal utility and other charges.
Pending litigation and environmental proceedings relating to the logging
of old growth forest and the protection of the Northern Spotted Owl make it
difficult to predict future timber supplies in Oregon. In addition,
proceedings to protect threatened anadromous fish species in the Columbia
River and other Oregon waterways may require changes to the operations of
locks and dams on those waterways. These changes could adversely affect
regional power production and the cost of moving trade goods along these
waterways.
Pennsylvania Series
General. Pennsylvania historically has been identified as a heavy
industry state, although that reputation has changed with the decline of
the coal, steel and railroad industries and the resulting diversification
of Pennsylvania's industrial composition. The major new sources of growth
are in the service sector, including trade, medical and health services,
education and financial institutions. Agriculture continues to be an
important component of the Commonwealth's economic structure, with one-
third of the Commonwealth's total land area devoted to cropland, pasture
and farm woodlands.
Revenues and Expenditures. Pennsylvania utilizes the fund method of
accounting. The General Fund, the Commonwealth's largest and principal
operating fund, receives all tax receipts, revenues, Federal grants and
reimbursements that are not specified by law to be deposited elsewhere.
Debt service on all obligations, except those issued for highway purposes
or for the benefit of other special revenue funds, is payable from the
General Fund.
General revenues in the General Fund include all tax receipts, license and
fee payments, fines, penalties, interest and other revenues not specified
to be deposited elsewhere or not restricted to a specific program or
expenditure. Tax revenues constituted over 98% of General Fund revenues in
fiscal 1992. The major tax sources for the General Fund are the sales tax,
which accounted for $4.5 billion or 31.6% of tax revenues in fiscal 1992,
the personal income tax which accounted for $4.8 billion or 33.7% of tax
revenues, and corporate taxes which together accounted for $2.5 billion or
17.5% of tax revenues. The primary expenditures of the General Fund are
for education (28.6% of total General Fund expenditures in fiscal 1992) and
for public health and welfare (44.4%).
From fiscal 1984, when the Commonwealth first prepared its financial
statements on a GAAP basis, through fiscal 1989, the Commonwealth reported
a positive unreserved-undesignated fund balance for its government fund
types at the fiscal year-end. Reduced revenue growth and increased
expenses contributed to negative unreserved-undesignated fund balances of
the governmental fund types at the end of the 1990 and 1991 fiscal years,
largely due to operating deficits in the General Fund and State Lottery
Fund during those years. Actions taken during fiscal 1992 to bring the
General Fund back into balance, including tax increases and expenditure
restraints, resulted in a $1.1 million reduction to the unreserved-
undesignated fund deficit for combined governmental fund types and a return
to a positive fund balance. At the end of fiscal 1992, the total fund
balance and other credits for the total government fund types was $1.228
billion, an increase of $1.249 billion from the $20.9 million deficit at
the end of fiscal year 1991. During fiscal 1992, total assets for all
governmental fund types increased by $671.8 million to $5.800 billion,
while liabilities decreased $576.9 million to $4.572 billion.
The five year period from fiscal 1988 through fiscal 1992 was a period of
slowing revenue growth and accelerating expenditure increases as the
economy slowed and the national recession brought a halt to economic
growth. Tax revenues during the five year period, led by a 29.2% increase
in fiscal 1992 due to a $2.7 billion increase from enacted rate increases
and base changes, grew at a compounded annual growth rate of 9.3%. The
effect of the economic recession on tax revenue growth is evident in a 2.7%
increase for fiscal 1990 and a 0.5% decline for fiscal 1991, however.
Expenditures for the five year period increased at a compounded annual
growth rate of 13.6%, led by public health and welfare costs, rising from
growing caseloads, expanding client utilization and cost increases, and the
corrections program costs, rising from rapid population increases and
development of new facilities. Debt service expenditures escalated as the
amount of tax anticipation note borrowing increased in response to fiscal
pressures brought about by slow economic growth and the recession.
When adopted in July 1990, the 1991 budget was balanced within estimated
available resources. Estimated revenue receipts in the budget were based
on an economic projection for continued slow, stable economic growth in the
nation and the State. However, national economic activity slowed
throughout the fiscal year eventually resulting in a recession. The
national recession caused economic conditions in the State to decline and
tax and other revenues to fall below their budget estimate. The economic
recession also became evident in trends of expenditures during the fiscal
year. Certain program expenditures experienced sharp above-budget
increases, particularly in the social service areas where program demand
rises in economic downturns. The higher than budgeted expenditures and
lower than estimated revenues during the fiscal year resulted in a $453.6
million budget deficit at fiscal year-end.
The Commonwealth undertook a number of actions throughout the fiscal year
to mitigate the effects of the recession on budget revenues and
expenditures. Actions that were accomplished during the fiscal year,
together with normal appropriation lapses, produced a total of $871 million
in expenditure reductions and revenue increases.
Tax revenues for the 1991 fiscal year were severely affected by the
economic recession. Total corporation tax receipts and sales and use tax
receipts during the fiscal year were below the amounts collected from those
taxes during fiscal 1990. A sharp decline in consumer and business
purchases of durable goods resulted in fiscal 1991 sales and use tax
collections of $4.2 billion, a 0.9% decrease over prior fiscal year
collections and $276.4 million below the budget estimate. Receipts of
corporation taxes were also significantly below the budget estimate due to
the recession's impact on corporate receipts and profits. In aggregate,
corporation, public utility, financial and insurance taxes totaled $2.648
billion, 7.3% below fiscal 1990 collections and $199 million below the
budget estimate. Personal income tax receipts were also affected by the
recession but not to the extent of the other major General Fund taxes.
Receipts for the personal income tax totaled $3.376 billion, $136.6 million
below the budget estimate, representing an increase of 2% over fiscal 1990
collections.
Rising program demands caused by the economic recession, particularly for
the medical assistance and cash assistance programs, produced rapidly
increasing costs during the fiscal year, causing expenditures to exceed
their respective budget estimates. Costs of special education programs and
for corrections facilities and programs also exceeded their budgeted
amounts due to underestimates of their fiscal year costs. Paying these
costs and meeting other budget needs required supplemental appropriation
authority of $374 million to be enacted during the fiscal year. One
consequence of the lower revenues and higher expenditures than budgeted for
in fiscal 1991 has been the need to delay making certain disbursements
against state appropriations. Throughout the fiscal year the Commonwealth
elected to defer certain disbursements of appropriated amounts in order to
assure that sufficient cash was available to meet the highest priority
payments such as debt service, cash assistance and payrolls. The budgetary
basis deficit at June 30, 1991 was carried into the 1992 fiscal year and
funded in the fiscal 1992 budget.
During fiscal 1992 the General Fund recorded a $1.1 billion operating
surplus through tax rate increases and tax base broadening measures enacted
in August 1991 and by controlling expenditures through numerous cost
reduction measures implemented throughout the fiscal year. As a result of
the fiscal 1992 operating surplus, the fund balance increased to $87.5
million and the unreserved/undesignated deficit dropped to $138.6 million
from its fiscal 1991 level of $1.146 billion.
Total revenues for fiscal 1992 were $14,516.8 million, a $2,654.5 million
increase over cash revenues during fiscal 1991. Originally based on
forecasts for an economic recovery, the budget revenue estimates were
revised downward during the fiscal year to reflect continued recessionary
economic activity. Largely due to the tax revisions enacted for the
budget, corporate tax receipts totaled $3.761 billion, up from $2.656
billion in fiscal 1991, sales tax receipts increased by $302.0 million to
$4.4 million, and personal income tax receipts totaled $4,807.4 million, an
increase of $1.444 billion over receipts in fiscal 1991.
As a result of lowered revenue estimates during the fiscal year, increased
emphasis was placed on restraining expenditure growth and reducing
expenditure levels. A number of cost reductions were implemented during
the fiscal year contributed to $296.8 million of appropriation lapses.
These appropriation lapses were responsible for the $8.8 million surplus at
fiscal year-end, after accounting for the required 10% transfer of the
surplus to the Tax Stabilization Reserve Fund.
Spending increases in the fiscal 1992 budget were largely accounted for by
increases for education, social services and corrections programs.
Commonwealth funds for the support of public schools were increased by 9.8%
to provide a $438.0 million increase to $4.9 billion for fiscal 1992. The
fiscal 1992 budget provided additional funds for basic and special
education and included provisions designed to help retrain the annual
increase of special education costs, an area of recent rapid cost
increases. Child welfare appropriations supporting county operated child
welfare programs were increased $67.0 million, more than 31.5% over fiscal
1991. Other social service areas such as medical and cash assistance also
received significant funding increases as costs have risen quickly as a
result of the economic recession and high inflation rates of medical care
costs. The costs of corrections programs, reflecting the marked increase
in prisoner population, increased by 12.0%. Economic development efforts,
largely funded from bond proceeds in fiscal 1991, were continued with
General Fund appropriations for fiscal 1992.
The budget also included the use of several Medicaid pooled financing
transactions. These pooling transactions replaced $35.0 million of
Commonwealth funds, allowing total spending under the budget to increase an
equal amount.
The adopted fiscal 1993 budget authorized $14.046 billion for spending, an
increase of $32.1 million, or less than one quarter of one percent over
fiscal 1992. The small increase in expenditures resulted from constraints
on revenues as a result of a personal tax rate reduction effective July 1,
1992, a low rate of economic growth, higher tax refund reserves against
adverse decisions in pending litigation, and line item vetoes of $71.3
million by the Governor. The adopted 1993 budget eliminated funding for a
number of private educational facilities that normally receive state
appropriations. Also eliminated were grants to the counties to help pay
operating costs of the local judicial systems.
As budgeted, Pennsylvania revenue sources were estimated for fiscal 1993
at $14.587 billion, a $69.9 million increase over actual fiscal 1992
revenues (less than one-half of one percent). Projected low revenue growth
was caused by the Commonwealth's expectation that current weak growth in
employment, consumer income, and retail sales would continue, and by the
reduction in the personal income tax rate from 3.1% on July 1, 1992. In
addition, tax reserves increased $209.0 million to $548.0 for fiscal 1993
to allow for potential tax refunds that might be payable from any adverse
judicial decision in a number of pending tax litigations. In January 1993,
the refund estimate was reduced to $530 million.
Through March 1993, total General Fund revenue collections were $78.4
million (0.7%) above estimate, as collections of corporate taxes, sales
taxes and miscellaneous revenue were higher than their estimates.
The approved budget for fiscal 1994 calls for no new taxes and increased
expenditures of approximately 5% over the fiscal 1993 budget. The General
Assembly did not vote on a $105 million gross receipts tax increase on
electric utilities or a $27 million increase in the capital stock and
transfer tax that would have included dividends received from subsidiaries
or investor by the Governor. Increases are primarily for education, where
approved expenditures are $150.5 million greater than fiscal 1993 and
welfare, with an increase in expenditures of $234.5 million to a total of
$4.98 billion.
Pennsylvania's Constitution requires that all proceeds of motor fuels
taxes, vehicle registration fees, license taxes, operators' license fees
and other excise taxes imposed on products used in motor transportation
shall be used exclusively for construction, reconstruction, maintenance and
repair of and safety on highways and bridges and for the payment of debt
service on obligations incurred for such purposes. The Motor License Fund
is the fund through which such revenues are accounted for and expended.
An unappropriated surplus of $22.1 million on a budgetary basis existed in
the Motor License Fund at the close of fiscal 1992. Total revenues were
$1.471 billion in fiscal 1992, and expenditures totaled $1.528 billion.
The budget for fiscal 1993 projected estimated revenues to remain
approximately the same as fiscal 1992 and authorized expenditures of $1.474
billion.
Commonwealth Debt. The current Constitutional provisions pertaining to
Pennsylvania debt permit the issuance of the following types of debt: (i)
debt to suppress insurrection or rehabilitate areas affected by disaster,
(ii) electorate approved debt, (iii) debt for capital projects subject to
an aggregate debt limit of 1.75 times the annual average tax revenues of
the preceding five fiscal years (this debt need not be approved by the
electorate) and (iv) tax anticipation notes payable in the fiscal year of
issuance. All debt except tax anticipation notes must be amortized in
substantial and regular amounts.
All outstanding general obligation bonds of Pennsylvania are rated AA- by
S&P, Al by Moody's, and AA- by Fitch. See "Appendix B." Outstanding
general obligation debt totalled $4.873 billion on June 30, 1992, an
increase of $86.4 million from June 30, 1991. In its current debt
financing plans, Pennsylvania is emphasizing infrastructure investment to
improve and rehabilitate existing capital facilities, such as water supply
systems, and to construct new facilities, such as roads, prisons and public
buildings. As a result of the emphasis on infrastructure investment,
outstanding non-highway debt increased $179.4 million from June 30, 1991 to
$3.388 billion on June 30, 1992.
Pennsylvania engages in short-term borrowing to fund expenses within a
fiscal year through the sale of tax anticipation notes which must mature
within the fiscal year of issuance. The principal amount issued, when
added to that outstanding, may not exceed in the aggregate 20% of the
revenues estimated to accrue to the appropriate fund in the fiscal year.
The Commonwealth is not permitted to fund deficits between fiscal years
with any form of debt. All year-end deficit balances must be funded within
the succeeding fiscal year's budget.
Pending the issuance of bonds, Pennsylvania may issue bond anticipation
notes subject to the applicable statutory and Constitutional limitations
generally imposed on bonds. The term of such borrowings may not exceed
three years.
State-Related Obligations. Certain state-created agencies have statutory
authorization to incur debt for which no legislation providing for state
appropriations to pay debt service thereon is required. The debt of these
agencies is supported by assets of or revenues derived from the various
projects financed; it is not an obligation of the Commonwealth. Some of
these agencies, however, are indirectly dependent on Commonwealth
appropriations. State-related agencies and their outstanding debt as of
December 31, 1992 include the Delaware River Joint Toll Bridge Commission
($58.4 million), the Delaware River Port Authority ($244.0 million), the
Pennsylvania Economic Development Financing Authority ($352.8 million), the
Pennsylvania Energy Development Authority ($165.0 million), the
Pennsylvania Higher Education Assistance Agency ($1.160 billion), the
Pennsylvania Higher Education Facilities Authority ($1.766 billion), the
State Public School Building Authority ($291.4 million), the Pennsylvania
Turnpike Commission ($1.165 billion), the Pennsylvania Industrial
Development Authority ($278.4 million), and the Pennsylvania Infrastructure
Investment Authority ($142.5 million).
The only obligations of state-created agencies in Pennsylvania which bear
a moral obligation of the Commonwealth are those issued by the (i)
Pennsylvania Housing Finance Agency, a state-created agency which provides
housing for lower and moderate income families in the Commonwealth, which
had $2.249 billion of revenue bonds and notes outstanding as of December
31, 1992, and (ii) the Hospitals and Higher Education Facilities Authority
of Philadelphia.
Litigation. Certain litigation is pending against the Commonwealth that
could adversely affect the ability of the Commonwealth to pay debt service
on its obligations including suits relating to the following matters: (a)
approximately 3,500 tort suits are pending against the Commonwealth
pursuant to a limited waiver of sovereign immunity which permits recovery
of up to $250,000 per person and $1,000 per accident ($17.5 million
appropriated from the Motor License Fund in fiscal 1993 may need to be
increased to as much as $52.0 million due to higher and more numerous
payments resulting from recent decisions by the Pennsylvania Supreme
Court); (b) the ACLU has filed suit in federal court demanding additional
funding for child welfare services (no available estimates of potential
liability), which the Commonwealth is seeking to have dismissed based on,
among other things, the settlement in a similar Commonwealth court action
that provided for more funding in fiscal 1991 as well as a commitment to
pay to counties $30.0 million over 5 years; (c) in 1987, the Supreme Court
of Pennsylvania held that the statutory scheme for county funding of the
judicial system to be in conflict with the constitution of the Commonwealth
but stayed judgment pending enactment by the legislature of funding
consistent with the opinion and the legislature has yet to consider
legislation implementing the judgment; (d) several banks have filed suit
against the Commonwealth contesting the constitutionality of a law enacted
in 1989 imposing a bank shares tax (potential liability estimated at $905.6
million through February 1993); (e) several life insurance companies are
contesting the imposition of retaliatory charges imposed against insurance
firms domiciled outside Pennsylvania contending that settlement of the
retaliatory tax must be made within 12 months rather than within 18 months
(potential liability could exceed $90 million plus interest); (f) in
November 1990, the ACLU brought a class action suit on behalf of the
inmates in thirteen correctional institutions challenging conditions and
including a variety of allegations, and, although no damages are sought, if
injunctive relief is granted the cost to the Commonwealth in capital and
personnel expenses may be substantial; (g) in January 1993, the
Pennsylvania Commonwealth Court ruled that dividends received by a
corporate taxpayer and accounted for under the equity method of accounting
are not included in the tax base for purposes of the capital
stock/franchise tax (the Commonwealth of Pennsylvania had provided reserves
and revenues estimate reductions to fund the potential $30 million annual
loss of revenues in the event of an unfavorable outcome of the Pennsylvania
Supreme Court appeal argued in December 1992); (h) in 1991, a consortium of
public interest law firms filed suit alleging that the Commonwealth had
failed to comply with the 1989 federal mandate with respect to certain
services for Medicaid eligible children under the age of 21, which if the
relief requested were granted, would cost the Commonwealth approximately
($98 million); and (i) litigation has been filed in both state and federal
court by an association of rural and small schools and several individual
school districts and parents challenging the Constitutionality of the
Commonwealth's system for funding local school districts -- the federal
case has been stayed pending resolution of the state case and the state
case is in the pre-trial stage (no available estimate of potential
liability).
Philadelphia. The City of Philadelphia has been experiencing severe
financial difficulties which has impaired its access to public credit
markets, and a long-term solution to the City's financial crisis is still
being sought. Standard & Poor's Corporation and Moody's Investors Service
have lowered the bond rating of the City of Philadelphia to CCC and B,
respectively.
Since August of 1990, the General Fund of the City of Philadelphia has had
a negative balance and payments have been made by the City by borrowing
from capital accounts. These difficulties have caused the City to
undertake various cash conservation measures, including freezes on hiring,
capital improvements and new service contracts as well as postponing
payments to vendors and contractors. For the fiscal year ending June 30,
1991, the City had a cumulative deficit in its General Fund of $153.5
million, and for the fiscal year ending June 30, 1992, a cumulative general
Fund deficit of $224.9 million. The City has no legal authority to issue
deficit reduction bonds on its own behalf, but State legislation has been
enacted to create an Intergovernmental Cooperation Authority to provide
fiscal oversight for Pennsylvania cities (primarily Philadelphia) suffering
recurring financial difficulties. The Authority is broadly empowered to
assist cities in avoiding defaults and eliminating deficits by encouraging
the adoption of sound budgetary practices and issuing bonds. However,
bonds to reduce the City's deficit cannot be issued until the City and the
Authority enter into an intergovernmental cooperation agreement providing
the Authority with certain oversight powers with respect to the fiscal
affairs of the City, and the Authority approves a 5-year financial plan
prepared by the City. The City Council has entered into an
intergovernmental cooperation agreement with the Authority, and the City
has completed a financial plan. In June 1992, PICA issued $474.56 million
of Special Tax Revenue Bonds to provide financial assistance to
Philadelphia and to liquidate its cumulative general Fund balance deficit.
In March 1993, the budget deficit for fiscal 1993 was estimated to be $6.6
million. The fiscal 1994 budget approved by the City Council and PICA
projects no deficit and a balanced budget.
Summary. The foregoing information as to certain Pennsylvania risk
factors has been provided in view of the Fund's policy of concentrating in
Pennsylvania Municipal Securities. This information constitutes only a
brief summary, does not purport to be a complete description of
Pennsylvania risk factors and is principally drawn from official statements
relating to securities offerings of the Commonwealth of Pennsylvania that
have come to the Fund's attention and were available as of the date of this
Statement of Additional Information. The Funds have not independently
verified any of this information but are not aware of any fact which would
render such information inaccurate.
Texas Series
General. Beginning in late 1982, the decline of the State's oil and gas
industry, the devaluation of the Mexican peso and the generally soft
national economy combined to cause a significant reduction in the rate of
growth of State revenues. During late 1985 and early 1986, the price of
oil fell dramatically worldwide. This drop in oil prices created a ripple
that caused other sectors of the State's economy, such as real estate, to
decline. As a result of an increase in non-performing loans in the energy
and real estate sectors, major Texas bank holding companies, individual
banks and savings and loans experienced losses or sharp downturns in
profitabilities and many sought Federal assistance from the FDIC.
As a further result of the drastic drop in the price of oil, the
subsequent loss of jobs and the overbuilding in the real estate markets,
the State experienced deficits for fiscal years ended August 31, 1986 and
1987 of $230 million and $744 million, respectively. The deficits occurred
despite actions to trim the 1987 biennial budget by $582 million and
increasing taxes by $761 million. However, as a result of the budget
trimming and increasing taxes and the improving Texas economy, the State
finished fiscal years 1988, 1989, 1990, 1991 and 1992 with surpluses in the
General Revenue Fund of $114 million, $298 million, $768 million, $712.8
million and $609.2 million, respectively.
The Texas economy bottomed out at the end of 1986 and moved into recovery.
Based upon information gathered by the U.S. Bureau of Labor, the State has
more than doubled the jobs that it lost during the 1986-87 recession. By
December 1990, the Texas unemployment rate had declined to 6.6%. The
unemployment rate, however, began to increase in 1991 and by December 1992
was 7.6%.
Manufacturing employment added about 50,000 jobs in 1987, 1988 and 1989
but has experienced a contraction since late 1990. The slowdown of
consumer demand at the national level resulted in the job losses, which
were more pronounced nationwide. Total employment in Texas continued to
expand. Over the 12 month period ending in April 1992 Texas gained 89,300
jobs, an increase of 1.2 percent. Most of the new jobs have been in
services, with health, business and other miscellaneous sectors adding
58,100 jobs from April 1991 to April 1992. During the 12 month period
ended March 1993, the non-farm employment in Texas increased by 2.8%.
State Debt. Except as specifically authorized, the Texas Constitution
generally prohibits the creation of debt by or on behalf of the State, with
two exceptions: (i) debt created to supply casual deficiencies in revenues
which does not exceed in the aggregate, at any one time, $200,000 and (ii)
debt to repel invasion, suppress insurrection, defend the State in war or
pay existing debt. In addition, the State Constitution prohibits the
Legislature from lending the credit of the State to or in aid of any
person, including municipalities, or pledging the credit of the State in
any manner for the payment of the liabilities of any individual,
association of individuals, corporation or municipality. The limitations
of the State Constitution do not prohibit the issuance of revenue bonds.
Furthermore, obligations which are payable from funds expected to be
available during the current budget period, such as tax and revenue
anticipation notes issued by the State Treasurer, do not constitute "debt"
within the meaning of the Texas Constitution. The State may issue tax and
revenue anticipation notes solely to coordinate the State's cash flow
within a fiscal year and must mature and be paid in full during the
biennium in which the notes were issued.
At various times, State voters, by constitutional amendment, have
authorized the issuance of debt by the State, including general obligation
indebtedness for which the full faith and credit and the taxing power of
the State may be pledged. The total amount of general obligation bonds
that have been authorized by the voters is in excess of $8.28 billion. As
of May 31, 1993, the general obligation and other constitutionally
outstanding bonded indebtedness of the State is designed to be eventually
self-supporting, even though the full faith and credit of the State is
pledged for its payment.
Revenue Sources and Tax Collection. Historically, the primary sources of
the State's revenues have been sales taxes, mineral severance taxes and
Federal grants. Due to the collapse of oil and gas prices and the
resulting enactment by recent State Legislatures of new tax measures,
including those increasing the rates of existing taxes and expanding the
tax base and adding a corporate tax measured by income, there has been a
reordering in the relative importance of the State's taxes in terms of
their contribution to the State's revenue in any year. Sales taxes remain
the State's main source of tax revenue, accounting for approximately 28.9%
of the State's total revenues during fiscal year 1992. Federal grants are
the State's second largest revenue source, accounting for approximately
20.9% of total revenue during fiscal year 1992. Motor fuels taxes, the
State's third largest revenue source, accounted for 6.8% of the State's
total revenues. Licenses, fees and permits, and interest and investment
income, each accounted for 6.3% of the total revenue in fiscal year 1992.
The remainder of the State's revenues are derived primarily from other
excise taxes. The State has no personal or corporate income tax, although
the State does impose a corporate franchise tax based on the greater of a
corporation's capital or net earned surplus. The franchise tax is based
upon net income apportionable to the State, and thus works very much like a
corporate income tax. It is likely to become a substantially larger source
of revenues in future years.
Total net revenues and opening balances for fiscal years 1988, 1989, 1990,
1991 and 1992 amounted to approximately $20.471 billion, $21.657 billion,
$23.622 billion, $26.190 billion, and $29.647 billion, respectively, while
tax collections for the same periods amounted to $12.364 billion, $12.905
billion, $13.632 billion, $14.922 billion and $15.849 billion,
respectively.
The 73rd State Legislative Session convened in January 1993 and before
adjourning passed a budget for the 1994-95 biennium. The 1994-95 budget
provides for appropriations totalling $38.8 billion from general revenue
related funds and $70.1 billion from all fund sources. The 1994-95
biennium budget increases general revenue funding by 10.6%, while funding
from all funds increased by 11.4%. Funding for education has been
increased to $1.4 billion, or 5.8%, while health and human services
increased $4.3 billion, or 22.5%.
Limitations on Taxing Powers. The State Constitution prohibits the State
from levying ad valorem taxes on property for general revenue purposes.
The State Constitution also limits the rate of growth of appropriations
from tax revenues not dedicated by the Constitution during any biennium to
the estimated rate of growth for the State's economy. The Legislature may
avoid the constitutional limitation if it finds, by a majority vote of both
houses, that an emergency exists. The State Constitution authorizes the
Legislature to provide by law for the implementation of this restriction,
and the Legislature, pursuant to such authorization, has defined the
estimated rate of growth in the State's economy to mean the estimated
increase in State personal income.
Petroleum Production and Mining. The Texas economy and the oil and gas
industry have been intricately linked since the discovery of the Spindletop
Field in southeast Texas in 1901. Dramatic increases in the price of oil in
1973-74 and 1979-81 propelled Texas into a leadership position in national
economic growth. This situation, however, has changed rapidly for Texas in
the past decade. The Texas economy reeled in 1982-83 and again in 1986 as
the price of West Texas Intermediate crude oil declined over 50% from $30
per barrel in November 1985 to under $12 per barrel in July 1986. During
the oil-patch recession of 1986-87, employment levels declined as the
effects of the downturn in the energy industry rippled through the rest of
the economy. But since 1987, a general economic rebound led by
manufacturing, service and government has resulted in the gain of over
746,000 jobs by April 1992. However, prices in 1991 led to the loss of
16,000 jobs in 1991 and 5,000 jobs in 1992 in the oil and gas industry.
Financial Institutions. The decline in oil prices, particularly since
January 1986, and the recession that followed have had a severe effect on
the banking and savings and loan industries in Texas. In most cases, major
Texas bank holding companies, individual banks and savings and loans have
experienced losses or sharp downturns in profitability due to the increase
in non-performing loans in the energy and real estate sectors. The
financial difficulties also have led to a number of closings among banks
and savings and loans. Texas bank failures peaked in 1989, reaching 133 or
two-thirds of all bank closings in the nation. Texas bank failures
declined to 103 in 1990, 31 in 1991 and 29 in 1992, of which 20 were
subsidiaries of a single bank holding company.
Some signs of recovery are now appearing. Texas bank profits in 1991 and
1992 were $1.1 billion and $1.9 billion, respectively, substantially more
than the $651 million profit in 1990, which was the first annualized profit
since 1985. Most of the serious loan and foreclosed asset problems appear
to have been "written down" or adequately reserved. Non-performing loans
for Texas banks decreased from $5.2 billion in December 1989 to $2.1
billion in December 1991, and have decreased further to $1.3 billion in
December 1992.
Many Texas banks and banking organizations have consolidated. Texas had
1,121 banks as of the end of 1991 and 1,089 banks as of the end of 1992.
The condition of Texas' thrifts, however, remains a serious problem. No
industry has been more severely affected by the decline in Texas real
estate values than the savings and loan industry. At the end of 1990,
assets of private sector Texas savings associations total $57 billion, down
from the industry high in 1988 of $112.4 billion in assets. Total savings
associations have declined from $7.4 billion in 1989, to $268 million in
1991 and $227 million in 1992.
Property Values and Taxes. Various State laws place limits upon the
amounts of tax that can be levied upon the property subject to ad valorem
taxes within various taxing units, such as cities, counties and the
districts which have ad valorem taxing powers (including [without
limitation] school and hospital districts). Similarly, the amounts of
sales and use taxes which can be levied and the types of property and
services to which sales and use taxes apply are subject to legal
restrictions.
Given the importance of energy-related industries to the Texas economy,
and the over-building which occurred in many residential and commercial
real estate markets, property values throughout the State have experienced
little, if any, appreciation, since late 1985. In some areas property
values have, in fact, declined. Because ad valorem taxes are to be computed
upon the appraised property valuations, and property appraisals are
required to be conducted only every three years, the full impact of such
declines in property values is not immediately reflected in tax
collections. Conversely, if the energy industry should experience a
significant sustained upturn or property values otherwise rebound, there
may be a similar lag-time before such a rise in property values results in
increased ad valorem tax collections. Areas whose tax bases include
substantial oil and gas producing properties are especially adversely
affected by this.
The 1990 total value of taxable property in Texas School Districts
amounted to approximately $632 billion in 1992, according to records
compiled by the Property Tax Division of the Office of the Comptroller
derived from school district data in the State. This total included
approximately $265.5 billion of single-family residences, approximately
$25.5 billion of multi-family residences, $94.3 billion of commercial real
property, $54.8 billion of commercial personal property, $50.7 billion of
industrial real property, $32.4 billion of industrial personal property,
and $46.8 billion for utilities. Total property tax values in 1992
increased approximately $3 billion from the 1991 total of $628 billion.
In addition to any decline in property values and its anticipated effect
on the amount of taxes levied, the actual collectibility of such taxes may
be expected to decrease. The security for any general obligation bond
depends in part on the ability of the taxing authority to collect
delinquent taxes on a timely basis through lawsuits and subsequent
foreclosures in an amount sufficient to service the debt. The taxing
authority's right to collect taxes or enforce the lien through suits and
foreclosure are subject to various bankruptcy, reorganization, and other
such proceedings. Such proceedings are often lengthy and result in the
collection of taxes at a significantly later date.
Litigation. In 1986, a group of school districts in the State with
relatively low ad valorem tax bases filed suit challenging the
constitutionality of Texas' system of financing public education. In June
1987, a final judgment was entered by the District Court in Edgewood v.
Kirby, holding that the Texas School Financing System (implemented in
conjunction with local school district boundaries that contain unequal
taxable property wealth for the financing of public education) is
"unconstitutional and unenforceable" under the Texas Constitution. On
October 2, 1989, the Texas Supreme Court ruled that the State's school
financing system violates the State constitutional requirement that the
State Legislature "establish and make suitable provision for the support
and maintenance of an efficient system of public free schools." The Texas
Supreme Court did not instruct the Legislature as to the specifics of the
legislation it should enact or order the Legislature to raise taxes.
After four special sessions, the Legislature passed a comprehensive school
reform bill (Senate Bill 1) in June 1990. In September 1990 a State
District judge ruled that the school finance section of Senate Bill 1 was
unconstitutional because it continued current inequities in the system and
ordered the state to devise a new system by September 1, 1991. The State
appealed the ruling and the Texas Supreme Court ruled in January 1991 to
enforce the injunction against State funding disbursements until April 1,
1991.
On April 15, 1991 a new school finance reform bill (Senate Bill 351) was
enacted. Under Senate Bill 351, local districts are entitled to a minimum
local property tax rate plus a guaranteed basic State allotment per pupil.
The funding mechanism is predicted upon tax base consolidation and created
188 new taxing units known as County Education Districts (CED's), drawn
largely along county lines. Within each taxing unit, school districts
share the revenue raised by the minimum local property tax. Local school
districts can raise additional monies and enrich programs by levying
additional amounts.
Several school districts challenged the constitutionality of Senate Bill
351 in June 1991. In August 1991, the State District Court held that the
creation of the CED's did not violate the Texas Constitution. In
November 1991 the case was appealed to the Texas Supreme Court. The appeal
was based upon (among others) the claim that the creation of CED's amounted
to a State property tax in contravention of the State constitution. On
January 30, 1992 (the day before property tax payments for 1991 could be
paid without becoming delinquent and incurring penalties) the Texas Supreme
Court reversed the decision of the State District Court. While the Texas
Supreme Court concluded that the CEDs and the taxes they levy are
unconstitutional, the Court allowed the Legislature until June 1, 1993 to
develop a new plan to be put in place by September 1993. In the interim,
the CED's can continue to collect and distribute the school district
property taxes for the 1991 and 1992 years, notwithstanding the fact that
the levy has been declared unconstitutional by the Texas Supreme Court.
In February 1993, the Texas Legislature approved proposed constitutional
amendments that were intended to address the constitutional deficiencies in
the State's system of funding public schools that have been noted by the
courts. At an election held on May 1, 1993, the voters of the State
rejected all of the proposed constitutional amendments.
The 73rd State Legislature enacted in late May 1993 and the Governor
signed on May 31, 1993, Senate Bill 7, which included provisions concerning
the operation of school districts as well as created a whole new funding
system for public education in the State. The legislature is complex and
is presently being studied by many parties, including school district and
the attorney general's office which must approve the issuance of public
debt by school districts. A number of parties also have raised certain
constitutionality issues with respect to the legislation and a lawsuit has
been filed.
Texas Credit-Enhanced Revenue Bonds. Due to the overall economic downturn
in the State, many financial institutions in the State of Texas have been
weakened over the past several years as noted above. A number of revenue
bonds, when issued, had their ratings enhanced by various means, including
letters of credit and other guaranties issued by Texas banks and/or savings
institutions. To the extent that the financial institutions' ability to
make such payments is diminished, the risk of delay or default under such
bonds would be correspondingly increased.
In addition, the downturn in the Texas economy has caused a number of real
estate developers to default on loans from banks and savings and loans.
Bond issues used to fund developer loans could be affected by such
defaults.
Virginia Series
Economic Structure. Virginia's economy is strongly influenced by Federal
government installations and the growth of suburban communities around
Washington, D.C. With Northern Virginia a part of the Washington, D.C.
metropolitan area and Hampton Roads the home of the nation's largest
concentration of military installations, the Federal government has a
greater impact on Virginia relative to its size than any other state except
Alaska and Hawaii. Manufacturing is also an important segment of
Virginia's economy. The manufacturing industry accounts for over 15% of
total nonagricultural employment and ranks fourth behind services,
wholesale and retail trade, and government (Federal, state and local) in
the number of jobs it provides.
Virginia operates on a two-year budget. As a result of an ailing economy
and reduced tax collections, Virginia predicted a budget shortfall for the
two years ended June 30, 1992. The budget shortage could amount to
approximately 15% of planned expenditures over two years from the current
$12.4 billion General Fund, which includes most discretionary spending.
General Fund Revenues and Expenditures. General Fund revenues are
principally composed of direct taxes to support a number of government
functions, primarily education, individual and family services, public
safety and general government and are available for payment of debt service
obligations of Virginia.
In fiscal year 1990, approximately 95% of General Fund tax revenues was
derived from five major taxes imposed by the State: Individual and
Fiduciary Income Taxes (58.1%), Retail Sales and Use Taxes (25.6%),
Corporate Income Taxes (5.9%), Franchise or License Taxes on Public Service
Corporations (1.9%) and Insurance Company License Taxes (3.4%).
General Fund expenditures relate to resources used for those services
traditionally provided by a state government, which are not accounted for
in any other fund. These services include general government, legislative,
public safety, judicial, health and mental health, human resources,
licensing and regulation, and primary and secondary education. In 1990,
General Fund expenditures were allocated approximately as follows: General
Government (6.2%), Education (44.9%), Transportation (0.2%), Resource and
Economic Development (4.3%), Individual and Family Services (24.7%),
Administration of Justice (18.6%) and Capital Projects (1.1%).
The budgetary basis unreserved fund balance for the General Fund decreased
from $376.2 million in 1989 to $166.3 million in 1990 primarily because of
a revenue shortfall. Revenues in 1990 remained nearly even with 1989,
while expenditures increased approximately 8% over 1989.
Non-general Revenues. Non-general revenues consist of all revenues not
formally accounted for in the General Fund. Included in this category are
special taxes and user charges earmarked for specific purposes, the
majority of institutional revenues and revenues from the sale of property
and commodities, plus receipts from the Federal government.
Approximately 50% of the non-general revenues are accounted for by grants
and donations from the Federal government, motor vehicle taxes and
institutional revenues. Institutional revenues consist primarily of fees
and charges collected by institutions of higher education, medical and
mental hospitals and correctional institutions. Motor vehicle related
taxes include the motor vehicle fuel tax, a motor vehicle sales and use
tax, oil excise tax, driver's license, title registration, motor vehicle
registrations and other miscellaneous revenues.
State Budget. Virginia's budget for the biennium beginning on July 1,
1988 provided for a balanced budget without General Fund tax increases.
The budget contained major funding initiatives in all facets of public
education. At the elementary and secondary levels, the addition of $605
million was provided for greater State support of the costs of instruction
in the schools, including an increase in teachers' salaries. In higher
education, significant increases in faculty salaries were approved, as well
as funds to purchase state-of-the-art equipment or replace outmoded
instructional and research equipment in the colleges and universities.
Other major funding initiatives included additional support for programs
in the mental health areas, funds to support day care for children of low-
income working parents, increased funds and positions for new correctional
institutions and local jails, funds for cleanup of the Chesapeake Bay and
improvement of local wastewater treatment facilities, and initiation of a
comprehensive program to address Virginia's housing problems.
Major tax revenues were budgeted to increase at a rate of 8.4% in fiscal
1989 compared to the actual revenues for fiscal 1988 and at a rate of 8.7%
in fiscal 1990 compared to the 1989 forecast. The minor taxes and
miscellaneous revenues were forecast to increase 1.1% and 9.1% year to year
in fiscal 1989 and fiscal 1990, respectively.
Revenues exceeded expectations in fiscal year 1989. The margin was 0.5%
or $27.5 million. In dollar terms, fourteen of twenty revenue sources
essentially met their target, two of the remaining sources were up by $82.8
million, but were offset by four sources falling below expectations by
$58.3 million.
In addition to base adjustments stemming from fiscal year 1989's
performance, economic changes are also represented in the current fiscal
year revenue forecast. These changes include a slower housing market,
particularly in northern Virginia, an outlook for diminishing growth in
national corporate profits, and decelerating growth in purchases of durable
goods by Virginians. Virginia's economy is performing at a slower pace
than in the recent past.
In fiscal year 1990, the amount of corporate and personal income taxes
declined from the prior year's collections. A slower economy, one
bordering on recession, was the most significant factor in reduced tax
revenues. Growth in the number of non-farm jobs in Virginia slowed from
4.2% in fiscal year 1988 to 3.3% in fiscal year 1989. In fiscal year 1990,
job growth was only 3.0%. Because of a lack of inflationary pressure,
diminished job growth produced a concomitant deceleration in income growth.
Slowing income growth coupled with poor corporate profitability hindered
growth in personal and corporate income taxes.
Tax policy changes also affected personal income tax collections. In
fiscal year 1990, individuals were permitted to claim a credit against
their income tax. Changes to the taxation of pension income were also
effective in fiscal year 1990. These two measures reduced income tax
revenue by approximately $145 million.
Revenues flowing to the General Fund were approximately $246 million less
than projected for fiscal 1990, as a result primarily of reductions in the
corporate income tax, in the individual income tax, in the insurance gross
premiums tax, and on interest earnings on State funds.
Due to the projected revenue shortfall for fiscal year 1990, the Governor
took a series of actions including deferring General Fund capital outlay
projects which were not under construction, reducing certain General Fund
operating appropriations by 2%, and using unobligated balances in non-
general fund accounts. In addition, certain obligations were deferred
until fiscal year 1991 and further spending cuts were recommended for the
1990-92 budget.
In order to minimize the impact of these reductions on services to the
public, certain appropriations are exempt from this action, including
selected aid to individuals, aid to localities, debt service, and essential
health and public safety programs, such as prison operations, mental health
hospitals, health care for the poor, and state police.
The 1990-92 biennial budget was constructed against a backdrop of
declining revenue estimates due to an economic slowdown, the enactment of
pension tax reform, increased cost of Federal mandates in Medicaid and
welfare programs, and dramatic growth in the prison population.
The Governor and the General Assembly took four basic actions to bring
revenues and expenditures into balance: (1) reductions in the budgets of
most State agencies, based on agency size, to generate $237 million in
savings; (2) use of lottery revenues for capital projects and certain
programs previously funded in the operating budget, to produce $266
million; (3) delayed implementation of tax policy changes and pre-funding
of cost-of-living increases, to produce $172 million; and (4) amended tax
policy related to individual income taxes and tax relief for retirees, to
produce $173 million.
Resources from these actions were used to fund four major spending
priorities: (1) development of a compensation plan which treats each
employee group equitably in relation to its comparators; (2) creation of a
financing mechanism through which previously approved capital projects
could move forward to construction; (3) distribution of $60.0 million in
recordation taxes as aid to localities; and (4) establishment of a $200
million unappropriated revenue reserve for second year salary increases for
classified employees, college faculty and teachers, as well as to offset
the potential consequences of a continued soft economy.
The original General Fund appropriations for 1990-92 total $13.1 billion,
an increase of $915 million above the current services budget. Over 90% of
this increased appropriation relates directly to public safety
responsibilities at the State level, aid to localities for public education
and transportation (including recordation taxes returned), Federal mandates
for Medicaid and welfare reform, and compensation increases for State
employees and college faculty.
On August 15, 1990, the Governor announced that a revised general fund
revenue projection indicated a further reduction of $1.34 billion for the
1990-92 Biennium. In September 1990, he proposed a plan for addressing
this shortfall, based on (1) a further reduction of $981.6 million in
agency appropriations, including the transfer to the general fund for
operating expenses of $383.2 million in lottery appropriations originally
planned for capital purposes, (2) a reduction of $286.8 million in aid to
localities, such as aid to the public schools and distribution of the
recordation tax, (3) the withholding of the pay increase for state
employees scheduled for December 1, 1990, estimated at $126.1 million, (4)
an improved estimate of investment yield for the state retirement system,
estimated at $198.8 million and (5) the elimination of the state
contribution to various non-state agencies, historic landmarks and other
organizations, estimated at $5.9 million.
On December 17, 1990, the Governor announced a revised estimate of general
fund revenues for the 1990-92 Biennium which projected a decline of $491
million in addition to the $1.3 billion forecast in August. On February 1,
1991, the Governor announced another revision of the general fund revenue
forecast, indicating a further decline of $176.2 million for the remainder
of the biennium.
Litigation. Virginia is named as a party in legal proceedings which occur
in the ordinary course of governmental operations. One lawsuit deemed to
have potential financial impact on Virginia is Davis v. Michigan (decided
March 28, 1989), wherein the United States Supreme Court ruled
unconstitutional Michigan's statute exempting from state income tax the
retirement benefits paid by the state or local governments and not
exempting retirement benefits paid by the Federal government. At the time
of this ruling, Virginia exempted state and local but not Federal
government benefits. Five suits for refunds, some with multiple
plaintiffs, were filed. On February 12, 1990, the Circuit Court of the
City of Alexandria ruled in favor of the Commonwealth and denied refunds to
plaintiffs. On March 1, 1991, the Virginia Supreme Court affirmed the
Circuit Court ruling. Petitions for appeal have been filed in the United
States Supreme Court. The estimated potential financial impact on the
Commonwealth of claims for refunds by all Federal pensioners is
approximately $430.3 million, including interest through December 31, 1990.
APPENDIX B
Description of S&P, Moody's and Fitch ratings:
S&P
Municipal Bond Ratings
An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable, and will
include: (1) likelihood of default-capacity and willingness of the obligor
as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation; (2) nature and provisions of
the obligation; and (3) protection afforded by, and relative position of,
the obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
AAA
Debt rated AAA is the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
A
Principal and interest payments on bonds in this category are regarded
as safe. This rating describes the third strongest capacity for payment of
debt service. It differs from the two higher ratings because:
General Obligations Bonds -- There is some weakness in the local
economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse
circumstances, any one such weakness might impair the ability of the issuer
to meet debt obligations at some future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledge revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.
BBB
Of the investment grade, this is the lowest.
General Obligations Bonds -- Under certain adverse conditions, several
of the above factors could contribute to a lesser capacity for payment of
debt service. The difference between "A" and "BBB" ratings is that the
latter shows more than one fundamental weakness, or one very substantial
fundamental weakness, whereas the former shows only one deficiency among
the factors considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations, with the revenue flow possibly
being subject to erosion over time. Basic security provisions are no more
than adequate. Management performance could be stronger.
BB, B, CCC, CC, C
Debt rated BB, B, CCC, CC or C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal. BB indicates the least degree of speculation and C the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
BB
Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payment.
B
Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC
Debt rated CCC has a current identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions
to meet timely payments of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not
likely to have the capacity to pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
Plus (+) or minus (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within the
major ratings categories.
Municipal Note Ratings
SP-1
The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics are given a plus (+) designation.
SP-2
The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.
SP-3
The issuers of these municipal notes exhibit speculative capacity to
pay principal and interest.
Commercial Paper Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Issues assigned an A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.
A-1
This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign
(+) designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated A-1.
A-3
Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
Moody's
Municipal Bond Ratings
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and therefor not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca
Bonds which are rated Ca present obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and
in the categories below B. The modifier 1 indicates a ranking for the
security in the higher end of a rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates a ranking in the lower end
of a rating category.
Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings
recognize the difference between short-term credit risk and long-term risk.
Factors affecting the liquidity of the borrower and short-term cyclical
elements are critical in short-term ratings, while other factors of major
importance in bond risk, long-term secular trends for example, may be less
important over the short run.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand feature
is not rated, as NR. Short-term ratings on issues with demand features are
differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon periodic demand rather than fixed maturity
dates and payment relying on external liquidity. Additionally, investors
should be alert to the fact that the source of payment may be limited to
the external liquidity with no or limited legal recourse to the issuer in
the event the demand is not met.
Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when Moody's
assigns a MIG or VMIG rating, all categories define an investment grade
situation.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/VMIG 3
This designation denotes favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access
for refinancing is likely to be less well established.
MIG 4/VMIG 4
This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
Commercial Paper Ratings
The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Issuers (or related supporting institutions) rated Prime-3 (P-3) have
an acceptable capacity for repayment of short-term promissory obligations.
The effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and the requirements
for relatively high financial leverage. Adequate alternate liquidity is
maintained.
Fitch
Municipal Bond Ratings
The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonable foreseeable events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment grade
is higher than for bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or
principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual or imminent default of
interest and/or principal payments. Such bonds are extremely speculative
and should be valued on the basis of their ultimate recovery value in
liquidation or reorganization of the obligor. DDD represents the highest
potential for recovery on these bonds and D represents the lowest potential
for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category covering 13-36
months or the DDD, DD, or D categories.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations in
a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the F-1+ and F-1 categories.
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ANNUAL REPORT
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PREMIER STATE
MUNICIPAL BOND FUND
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ARIZONA SERIES
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APRIL 30, 1993
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PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
- ----------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--100.0% AMOUNT VALUE
---------- ----------
<S> <C> <C>
- -----------------------------------------------------------------------------------------
ARIZONA--77.8%
Arizona Board of Regents - Arizona State University, System Revenue, Refunding
6.125%, 7/1/2015....................................................................... $ 100,000 $ 103,158
Arizona Health Facilities Authority, HR, Refunding (Samaritan Health Services)
5.625%, 12/1/2015 (Insured; MBIA)...................................................... 700,000 677,250
Arizona Educational Loan Marketing Corp., Educational Loan Revenue 6.375%, 9/1/2005...... 100,000 103,548
Casa Grande Industrial Development Authority, PCR (Frito-Lay, Inc. Pollution Control
Project)
6.60%, 12/1/2010 (Guaranteed; Pepsico)................................................. 200,000 213,768
Chandler, Water and Sewer Revenue, Refunding 6.25%, 7/1/2013 (Insured; FGIC)............. 200,000 210,496
Town of Gilbert, Water and Wastewater Revenue, Refunding 6.50%, 7/1/2022 (Insured;
FGIC).................................................................................... 100,000 107,238
Glendale Improvement District Number 59 6%, 1/1/2013..................................... 100,000 99,419
Maricopa County Chandler Unified School District Number 80, School Improvement and
Refunding 6.40%, 7/1/2010 (Insured; FGIC).............................................. 300,000 316,833
Maricopa County Hospital District Number 1, Hospital Facilities Refunding:
6.25%, 6/1/2010 (Insured; FGIC)........................................................ 100,000 105,257
6.125%, 6/1/2015 (Insured; FGIC)....................................................... 200,000 207,752
Maricopa County School District Number 6 (Washington Elementary)
6%, 7/1/2009 (Insured; AMBAC).......................................................... 100,000 102,860
Maricopa County School District Number 28 (Kyrene Elementary)
6%, 7/1/2013 (Insured; FGIC)........................................................... 200,000 204,246
Maricopa County Scottsdale Unified School District Number 48, School Improvement
6%, 7/1/2012........................................................................... 100,000 101,863
Maricopa County Tempe Elementary School District Number 3, School Improvement
6%, 7/1/2008........................................................................... 200,000 207,364
Maricopa County Unified School District Number 69, School Improvement (Paradise Valley)
5.875%, 7/1/2012 (Insured; FGIC)....................................................... 200,000 203,726
City of Mesa 5.70%, 7/1/2008 (Insured; MBIA)............................................. 300,000 302,931
City of Phoenix, Refunding:
6.375%, 7/1/2013....................................................................... 200,000 211,018
Street and Highway User Revenue:
6.60%, 7/1/2007...................................................................... 250,000 270,525
6.25%, 7/1/2011 (Insured; FGIC)...................................................... 200,000 208,976
Phoenix Civic Improvement Corp., Wastewater System Lease Revenue 6.125%, 7/1/2014........ 100,000 102,535
Pima County Tuscon Unified School District Number 1, School Improvement
6.10%, 7/1/2010 (Insured; FGIC)........................................................ 100,000 103,889
Salt River Project Agricultural Improvement and Power District, Salt River Project
Electric System Revenue:
6%, 1/1/2013......................................................................... 150,000 151,751
8.10%, 1/1/2028(a,b)................................................................. 500,000 450,625
Refunding 5.75%, 1/1/2013............................................................ 200,000 199,980
City of Scottsdale Municipal Property Corp., Excise Tax Revenue, Refunding
6.25%, 11/1/2014 (Insured; FGIC)....................................................... 100,000 103,399
City of Tempe 6%, 7/1/2009............................................................... 200,000 205,182
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
---------- ----------
- -----------------------------------------------------------------------------------------
ARIZONA (CONTINUED)
<S> <C> <C>
City of Tuscon, Refunding:
6.10%, 7/1/2012 (Insured; FGIC)........................................................ $ 250,000 $ 259,722
Water System Revenue 5.75%, 7/1/2012................................................... 100,000 100,563
University of Arizona Medical Center Corp., HR, Refunding 6.25%, 7/1/2010 (Insured;
MBIA).................................................................................... 200,000 209,480
- -----------------------------------------------------------------------------------------
U.S. RELATED--22.2%
Guam Power Authority, Revenue 6.30%, 10/1/2022........................................... 500,000 515,565
Commonwealth of Puerto Rico, Refunding 6%, 7/1/2014...................................... 400,000 407,668
Puerto Rico Electric Power Authority, Power Revenue 6.25%, 7/1/2017...................... 520,000 538,382
Puerto Rico Highway and Transportation Authority, Highway Revenue 6.50%, 7/1/2022........ 200,000 210,294
----------
TOTAL INVESTMENTS (cost $7,334,247)...................................................... $7,517,263
----------
----------
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <S> <S> <S>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Insurance Association
FGIC Financial Guaranty Insurance Corporation PCR Pollution Control Revenue
HR Hospital Revenue
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
PERCENTAGE OF
FITCH (C) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
[S] [C] [C] [C]
AAA Aaa AAA 40.2%
AA Aa AA 23.1
A A A 25.8
BBB Baa BBB 6.9
Not Rated Not Rated Not Rated 4.0
--------
100.0%
========
[FN]
- --------------------------------------------------------------------------------
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. This security may be resold in a transaction exempt from
registration, normally to qualified institutional buyers. At April 30,
1993, this security is $450,625 or 6.1% of net assets.
(c) Fitch currently provides creditworthiness information for a limited amount
of investments.
(d) At April 30, 1993, 27.4% of the Fund's net assets are insured by FGIC.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $7,334,247)--see statement.......................................................... $7,517,263
Cash........................................................................................ 264,153
Receivable for shares of Beneficial Interest subscribed..................................... 170,618
Interest receivable......................................................................... 142,704
Prepaid expenses............................................................................ 23,493
Due from The Dreyfus Corporation............................................................ 22,553
----------
8,140,784
LIABILITIES:
Payable for investment securities purchased................................................. $ 681,625
Payable for shares of Beneficial Interest redeemed.......................................... 12,205
Accrued expenses............................................................................ 31,239 725,069
--------- ----------
NET ASSETS.................................................................................... $7,415,715
----------
----------
REPRESENTED BY:
Paid-in capital............................................................................. $7,224,533
Accumulated undistributed net realized gain on investments.................................. 8,166
Accumulated net unrealized appreciation on investments--Note 3.............................. 183,016
----------
NET ASSETS at value........................................................................... $7,415,715
----------
----------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)................................... 432,199
----------
----------
Class B Shares
(unlimited number of $.001 par value shares authorized)................................... 132,990
----------
----------
NET ASSET VALUE per share:
Class A Shares
($5,670,517 / 432,199 shares)............................................................. $13.12
------
------
Class B Shares
($1,745,178 / 132,990 shares)............................................................ $13.12
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FROM SEPTEMBER 3, 1992 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME............................................................................. $ 125,858
EXPENSES:
Management fee--Note 2(a)................................................................. $ 12,227
Shareholder servicing costs--Note 2(b,c).................................................. 11,603
Auditing fees............................................................................. 4,401
Prospectus and shareholders' reports--Note 2(b)........................................... 3,541
Organization expenses..................................................................... 3,067
Registration fees......................................................................... 2,556
Distribution fees (Class B shares)--Note 2(b)............................................. 906
Custodian fees............................................................................ 593
Legal fees................................................................................ 104
Trustees' fees and expenses--Note 2(d).................................................... 17
Miscellaneous............................................................................. 3,135
---------
42,150
Less--expense reimbursement from Manager due to
undertakings--Note 2(a)................................................................. 41,244
---------
TOTAL EXPENSES........................................................................ 906
----------
INVESTMENT INCOME--NET................................................................ 124,952
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3.................................................... $ 8,166
Net unrealized appreciation on investments.................................................. 183,016
---------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS....................................... 191,182
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................................... $ 316,134
----------
----------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS FROM SEPTEMBER 3, 1992 (COMMENCEMENT OF
OPERATIONS) TO APRIL 30, 1993
<TABLE>
<S> <C>
OPERATIONS:
Investment income--net.................................................................................. $ 124,952
Net realized gain on investments........................................................................ 8,166
Net unrealized appreciation on investments for the period............................................... 183,016
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................ 316,134
----------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income--net:
Class A shares........................................................................................ (116,608)
Class B shares........................................................................................ (8,344)
----------
(124,952)
----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................................................ 6,156,515
Class B shares........................................................................................ 1,750,002
Dividends reinvested:
Class A shares........................................................................................ 64,484
Class B shares........................................................................................ 2,426
Cost of shares redeemed:
Class A shares........................................................................................ (741,360)
Class B shares........................................................................................ (7,534)
----------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS........................................ 7,224,533
----------
TOTAL INCREASE IN NET ASSETS...................................................................... 7,415,715
NET ASSETS:
Beginning of period..................................................................................... --
----------
End of period........................................................................................... $7,415,715
----------
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
--------------------------
PERIOD ENDED APRIL 30,
1993
--------------------------
CLASS A CLASS B*
---------- ----------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................................... 486,435 133,372
Issued for dividends reinvested........................................................... 5,019 185
Shares redeemed........................................................................... (59,255) (567)
---------- ----------
NET INCREASE IN SHARES OUTSTANDING.................................................... 432,199 132,990
---------- ----------
---------- ----------
<FN>
- ---------------
*From January 15, 1993 (commencement of operations) to April 30, 1993.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
Reference is made to page 8 of the Fund's Prospectus dated February 18, 1994.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA 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 thirteen
series including the Arizona Series (the "Series") which commenced operations
on September 3, 1992. 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.
On September 18, 1992, shareholders approved an amendment to the Fund's
Agreement and Declaration of Trust to provide for the issuance of additional
classes of shares. On September 23, 1992 the Fund's Board of Trustees
classified the Series' existing shares as Class A shares and authorized the
issuance of an unlimited number of $.001 par value Class B shares. The Series
began offering both Class A and Class B shares on January 15, 1993. 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 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, 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.
(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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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. Effective September 18,
1992 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 September 3, 1992 through June 30, 1993 or
until such time as the net assets of the series exceed $25 million, regardless
of whether they remain at that level, to reimburse all fees and expenses of the
Series (excluding 12b-1 distribution plan fee and certain expenses as described
above). The expense reimbursement, pursuant to the undertakings, amounted to
$41,244 for the period ended April 30, 1993.
On September 18, 1992, Series shareholders approved an amendment to the
Agreement changing the expense limitation provision from 1 1/2% to the expense
limitation of any state having jurisdiction over the Series. The amended
Agreement provides that the Series may deduct from the fee to be paid to the
Manager, or the Manager will bear such excess expense, to the extent required
by state law, should the Series' aggregate expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, exceed the
limitation of any state having jurisdiction over the Series.
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 $5,241 during the year ended ended April 30, 1993
from commissions earned on sales of the Series' Class A shares.
The Distributor retained $219 during the period ended April 30, 1993 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, effective January 15, 1993, 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.
Prior to January 15, 1993, the Fund's Service Plan ("prior Service Plan")
provided that the Series pay the Distributor, at an annual rate of .25 of 1% of
the value of the Series' average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing the Series' shares and
for servicing shareholder accounts. The Distributor made payments to one or
more Service Agents based on the value of the Series' shares owned by clients
of the Service Agent. The prior Service Plan also provided for the Series to
bear the costs of preparing, printing and distributing certain of the Series'
prospectuses and statements of additional information and costs associated with
implementing and operating the Plan, not to exceed the greater of $100,000 or
.005 of 1% of the Series' average daily net assets for any full fiscal year.
During the period ended April 30, 1993, $1,822 was charged to the Series
pursuant to the prior Service Plan and $906 was charged to the Series pursuant
to the Class B Distribution Plan.
(C) Under the Shareholder Services Plan, effective January 15, 1993, 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 period ended April 30, 1993,
$3,291 and $453 were charged to the Class A and Class B shares, respectively,
pursuant to the Shareholder Services Plan.
(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. Prior to February 1, 1993, the annual fee
was $1,000.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $7,526,155 and $200,148,
respectively, for the period ended April 30, 1993, and consisted entirely of
municipal bonds and short-term tax exempt investments.
At April 30, 1993, accumulated net unrealized appreciation on investments
was $183,016, consisting of $217,769 gross unrealized appreciation and $34,753
gross unrealized depreciation.
At April 30, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
We have audited the accompanying statement of assets and liabilities of
Premier State Municipal Bond Fund, Arizona Series (one of the Series
constituting the Premier State Municipal Bond Fund), including the statement of
investments, as of April 30, 1993, and the related statement of operations, the
statement of changes in net assets and condensed financial information for the
period from September 3, 1992 (commencement of operations) to April 30, 1993.
These financial statements and condensed financial information are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and condensed financial information based
on our audit.
We conducted our audit 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 condensed
financial information 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, 1993 by correspondence with the custodian and brokers. 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and condensed financial
information referred to above present fairly, in all material respects, the
financial position of Premier State Municipal Bond Fund, Arizona Series at
April 30, 1993, the results of its operations, the changes in its net assets
and the condensed financial information for the period from September 3, 1992
to April 30, 1993, in conformity with generally accepted accounting principles.
Ernst & Young
New York, New York
June 4, 1993
<PAGE>
-----------------
ANNUAL REPORT
-----------------
------------------------------------------
PREMIER STATE
MUNICIPAL BOND FUND
------------------------------------------
----------------------------
CONNECTICUT SERIES
----------------------------
---------------------
APRIL 30, 1993
---------------------
[DREYFUS LION LOGO]
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--98.9% AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
<S> <C> <C>
CONNECTICUT--88.3%
Connecticut:
6.50%, 8/1/2006.................................................................... $ 2,000,000 $ 2,236,700
7.20%, 3/1/2007.................................................................... 1,350,000 1,548,436
6.90%, 3/15/2009................................................................... 3,000,000 3,415,800
Zero Coupon, 11/1/2009............................................................. 1,000,000 386,750
5.50%, 3/15/2010................................................................... 3,000,000 2,976,990
6.875%, 7/15/2010.................................................................. 7,100,000 8,111,324
6.75%, 3/1/2011.................................................................... 3,000,000 3,387,810
Economic Recreation Notes, 5.25%, 6/15/1994........................................ 1,000,000 1,026,230
Special Tax Obligation Revenue (Transportation Infrastructure):
Refunding 6.125%, 2/15/2008...................................................... 8,800,000 9,169,512
Refunding 5.375%, 9/1/2008....................................................... 2,500,000 2,452,450
Refunding 5.40%, 9/1/2009........................................................ 5,000,000 4,893,450
6.80%, 12/1/2009................................................................. 3,000,000 3,432,240
7.125%, 6/1/2010................................................................. 8,400,000 9,771,216
6.75%, 6/1/2011.................................................................. 8,500,000 9,552,640
6.125%, 9/1/2012................................................................. 2,000,000 2,115,520
Connecticut Clean Water Fund, Revenue:
7%, 1/1/2011....................................................................... 6,700,000 7,354,322
Connecticut Development Authority, Revenue:
First Mortgage Gross
(Elim Park Baptist Home Inc. Project) 9%, 12/1/2020.............................. 3,565,000 3,762,644
Health Care:
(Jerome Home Project) 8%, 11/1/2019.............................................. 2,015,000 2,114,682
(Masonic Charity Foundation of Connecticut) 6.50%, 8/1/2020 (Insured; AMBAC)..... 4,400,000 4,643,540
Life Care Facilities
(Seabury Project) 10%, 9/1/2021.................................................. 11,175,000 11,834,213
Pollution Control:
(New England Power Co. Project) 7.25%, 10/15/2015................................ 4,000,000 4,423,200
(Pfizer Inc. Project) 6.55%, 2/15/2013........................................... 2,000,000 2,149,760
Solid Waste and Electric
(Ogden Martin System-Bristol Inc.) 10%, 7/1/2014................................. 2,250,000 2,563,650
Water Facilities, Refunding (Bridgeport Hydraulic Project):
7.75%, 8/1/2019.................................................................. 1,000,000 1,046,060
7.25%, 6/1/2020.................................................................. 1,000,000 1,095,390
Connecticut Health and Educational Facilities Authority, Revenue:
7%, 1/1/2020 (Insured; MBIA)....................................................... 3,000,000 3,337,710
(Bristol Hospital) 7%, 7/1/2020 (Insured; MBIA).................................... 2,850,000 3,176,525
(Cherry Brook Nursing Center Project) 6%, 11/1/2022................................ 4,600,000 4,624,012
(Connecticut College) 6.625%, 7/1/2011 (Insured; MBIA)............................. 1,400,000 1,514,478
(Danbury Hospital) 6.50%, 7/1/2014 (Insured; MBIA)................................. 5,000,000 5,332,800
(Fairfield University) 6.90%, 7/1/2014............................................. 1,500,000 1,611,930
(Hartford University):
6.75%, 7/1/2012.................................................................. 3,500,000 3,635,030
6.80%, 7/1/2022.................................................................. 8,500,000 8,854,705
8%, 7/1/2018..................................................................... 3,190,000 3,871,256
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
CONNECTICUT (CONTINUED)
<S> <C> <C>
Connecticut Health and Educational Facilities Authority, Revenue (continued):
(Hebrew Home and Hospital) 7%, 8/1/2030 (Insured; FHA)............................. $ 865,000 $ 914,815
(Johnson Evergreen Corp.) 8.50%, 7/1/2022.......................................... 4,500,000 4,677,885
(Lawrence and Memorial Hospital):
7%, 7/1/2020 (Insured; MBIA)..................................................... 2,750,000 3,065,068
6.25%, 7/1/2022.................................................................. 3,750,000 3,924,600
(Lutheran General Health Care System) 7.375%, 7/1/2019............................. 1,400,000 1,524,110
(Manchester Memorial Hospital):
7%, 7/1/2010 (Insured; MBIA)..................................................... 1,000,000 1,114,570
5.75%, 7/1/2022 (Insured; MBIA).................................................. 1,100,000 1,106,193
(Mansfield Nursing Center Project) 6%, 11/1/2022................................... 2,700,000 2,714,094
(Middlesex Hospital) 6.25%, 7/1/2022 (Insured; MBIA)............................... 2,500,000 2,616,400
(New Britain Memorial Hospital) 7.75%, 7/1/2022.................................... 16,000,000 17,522,880
(Norwalk Hospital) 6.25%, 7/1/2022 (Insured; MBIA)................................. 3,600,000 3,767,616
(Nursing Home Program-Noble Horizon) 6%, 11/1/2022................................. 1,500,000 1,507,830
(Quinnipiac College):
7.25%, 7/1/2019.................................................................. 2,375,000 2,523,034
7.75%, 7/1/2020.................................................................. 1,000,000 1,115,630
(Refunding-St. Francis Hospital and Medical Center) 6.20%, 7/1/2022
(Insured;MBIA)..................................................................... 1,725,000 1,798,243
(St. Raphael Hospital):
6.20%, Series F, 7/1/2014 (Insured; AMBAC)....................................... 1,100,000 1,151,359
6.20%, Series G, 7/1/2014 (Insured; AMBAC)....................................... 525,000 549,512
6.625%, 7/1/2014 (Insured; AMBAC)................................................ 2,750,000 2,959,357
(Taft School) 7.375%, 7/1/2020..................................................... 1,150,000 1,261,665
(Waterbury Hospital) 7%, 7/1/2020 (Insured; FSA)................................... 4,450,000 4,959,836
(William W. Backus Hospital):
6%, 7/1/2012..................................................................... 1,500,000 1,520,640
6.375%, 7/1/2022................................................................. 2,250,000 2,308,590
(Yale-New Haven Hospital) 7.10%, 7/1/2025 (Insured; MBIA).......................... 10,475,000 11,737,028
(Yale University) 6.375%, 7/1/2013................................................. 820,000 853,120
Connecticut Higher Education, Supplemental Loan Authority, Revenue:
7.375%, 11/15/2005................................................................. 495,000 546,124
7.50%, 11/15/2010.................................................................. 2,085,000 2,304,217
Connecticut Housing Finance Authority (Housing Mortgage Finance Program):
7.20%, 11/15/2008.................................................................. 12,890,000 13,430,349
7.50%, 11/15/2009.................................................................. 3,330,000 3,503,393
7.70%, 11/15/2009.................................................................. 8,000,000 8,498,880
6.70%, 11/15/2022.................................................................. 17,000,000 17,551,140
6.75%, 11/15/2023.................................................................. 6,000,000 6,238,740
Connecticut Municipal Electric Energy Cooperative, Power Supply System Revenue
7%, 1/1/2016 (Insured; AMBAC)...................................................... 1,310,000 1,425,057
Connecticut Resources Recovery Authority:
(Bridgeport Resco Co.) 7.625%, 1/1/2009............................................ 895,000 980,571
(Middle Connecticut System Bonds) 7.875%, 11/15/2012 (Insured;MBIA)................ 2,500,000 2,848,450
(Municipal Service Fee Subordinated Bridgeport) 7.50%, 1/1/2009.................... 2,500,000 2,773,125
(Resources Recovery-American Refunding-Fuel) 8%, 11/15/2015........................ 12,835,000 14,345,680
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
CONNECTICUT (CONTINUED)
<S> <C> <C>
Connecticut Resources Recovery Authority (continued):
(Wallingford Resources Recovery Project)
7.125%, 11/15/2008 (LOC; Industrial Bank of Japan) (a)........................... $ 700,000 $ 741,475
Montville:
6.60%, 6/15/2007................................................................... 575,000 631,154
6.60%, 6/15/2008................................................................... 575,000 625,715
New Haven:
7.40%, 8/15/2011................................................................... 1,500,000 1,635,690
Air Rights Package Facilities Revenue 6.50%, 12/1/2015 (Insured;MBIA).............. 6,410,000 6,860,367
South Central Connecticut Regional Water Authority, Water Systems Revenue:
5.75%, 8/1/2012 (Insured; AMBAC)................................................... 6,000,000 6,078,420
7.125%, 8/1/2012................................................................... 2,480,000 2,769,664
Stamford 6.60%, 1/15/2010............................................................ 2,750,000 3,058,330
Stratford:
7.30%, 3/1/2012.................................................................... 1,130,000 1,234,412
- -------------------------------------------------------------------------------------
U. S. RELATED--10.6%
Commonwealth of Puerto Rico (Public Improvement):
7.70%, 7/1/2020.................................................................... 3,000,000 3,627,870
6.80%, 7/1/2021.................................................................... 6,000,000 6,497,100
Commonwealth of Puerto Rico Aqueduct and Sewer Authority, Revenue
7.875%, 7/1/2017................................................................... 1,860,000 2,108,831
Commonwealth of Puerto Rico Highway and Transportation Authority, Highway Revenue
6.625%, 7/1/2018................................................................... 5,000,000 5,307,900
Puerto Rico Electric Power Authority, Power Revenue 7%, 7/1/2021..................... 10,000,000 10,981,300
Puerto Rico Industrial Medical and Environmental Pollution Control Facilities
Financing Authority,
Revenue (Motorola Inc. Project) 6.75%, 1/1/2014.................................... 2,000,000 2,167,200
Puerto Rico Public Buildings Authority, Guaranteed Public Education and Health
Facilities
7.125%, 7/1/2009................................................................... 4,830,000 5,304,790
Virgin Islands Public Finance Authority, Revenue, Refunding
7.25%, 10/1/2018................................................................... 2,000,000 2,180,020
------------
TOTAL MUNICIPAL BONDS
(cost $327,677,312)................................................................ $354,873,014
------------
------------
- -------------------------------------------------------------------------------------
SHORT-TERM TAX EXEMPT INVESTMENTS--1.1%
Connecticut;
Connecticut Development Authority, VRDN, Health Care Revenue
(Independent Living Project) 2.35% (LOC; Commercial de France) (a,b)
(cost $4,000,000).................................................................. $ 4,000,000 $ 4,000,000
------------
------------
TOTAL INVESTMENTS--100.0%
(cost $331,677,312)................................................................ $358,873,014
------------
------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
FHA Federal Housing Administration MBIA Municipal Bond Insurance Association
FSA Financial Security Association VRDN Variable Rate Demand Notes
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (C) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C>
AAA Aaa AAA 24.4%
AA Aa AA 41.6
A A A 14.6
BBB Baa BBB 11.5
F1 MIG1 SP1 1.1
Not Rated Not Rated Not Rated 6.8
--------
100.0%
<FN> =========
- --------------------------------------------------------------------------------
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(b) 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.
(c) Fitch currently provides creditworthiness information for a limited amount
of investments.
(d) At April 30, 1993 the Series had $103,508,530 (28.01% of net assets)
invested in securities whose payment of principal and interest is dependent
upon revenues generated from health care projects.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $331,677,312)--see statement................................................... $358,873,014
Cash................................................................................... 2,109,768
Interest receivable.................................................................... 7,839,933
Receivable for shares of Beneficial Interest subscribed................................ 1,125,634
Prepaid expenses....................................................................... 27,315
------------
369,975,664
LIABILITIES:
Due to The Dreyfus Corporation......................................................... $ 201,336
Payable for shares of Beneficial Interest redeemed..................................... 196,201
Accrued expenses....................................................................... 65,034 462,571
----------- ------------
NET ASSETS............................................................................... $369,513,093
------------
------------
REPRESENTED BY:
Paid-in capital........................................................................ $341,508,257
Accumulated undistributed net realized gain on investments............................. 809,134
Accumulated net unrealized appreciation on investments--Note 3......................... 27,195,702
------------
NET ASSETS at value...................................................................... $369,513,093
------------
------------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized).............................. 29,366,279
------------
------------
Class B Shares
(unlimited number of $.001 par value shares authorized).............................. 774,534
------------
------------
NET ASSET VALUE per share:
Class A Shares
($360,020,637 / 29,366,279 shares)................................................... $12.26
------
------
Class B Shares
($9,492,456 / 774,534 shares)....................................................... $12.26
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME........................................................................ $ 21,401,500
EXPENSES:
Management fee--Note 2(a)............................................................ $ 1,780,354
Shareholder servicing costs--Note 2(b,c)............................................. 981,173
Prospectus and shareholders' reports--Note 2(b)...................................... 39,414
Custodian fees....................................................................... 33,758
Professional fees.................................................................... 31,501
Registration fees.................................................................... 20,838
Distribution fees (Class B shares)--Note 2(b)........................................ 6,248
Trustees' fees and expenses--Note 2(d)............................................... 1,644
Miscellaneous........................................................................ 50,154
-----------
2,945,084
Less--reduction in management fee due to
undertakings--Note 2(a)............................................................ 694,635
-----------
TOTAL EXPENSES................................................................... 2,250,449
------------
INVESTMENT INCOME--NET........................................................... 19,151,051
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3............................................... $ 1,918,520
Net unrealized appreciation on investments............................................. 19,902,968
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................................. 21,821,488
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................................... $ 40,972,539
------------
------------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
------------------------------
1992 1993
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................................... $ 14,708,332 $ 19,151,051
Net realized gain (loss) on investments.............................................. (1,018,649) 1,918,520
Net unrealized appreciation on investments for the year.............................. 4,083,418 19,902,968
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................. 17,773,101 40,972,539
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares..................................................................... (14,708,332) (19,093,929)
Class B shares..................................................................... -- (57,122)
Net realized gain on investments:
Class A shares..................................................................... -- (43,796)
Class B shares..................................................................... -- --
------------ ------------
TOTAL DIVIDENDS........................................................................ (14,708,332) (19,194,847)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares..................................................................... 108,661,530 70,873,528
Class B shares..................................................................... -- 9,511,115
Dividends reinvested:
Class A shares..................................................................... 7,929,508 10,964,716
Class B shares..................................................................... -- 37,894
Cost of shares redeemed:
Class A shares..................................................................... (23,138,777) (23,878,593)
Class B shares..................................................................... -- (77,889)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS..................... 93,452,261 67,430,771
------------ ------------
TOTAL INCREASE IN NET ASSETS................................................... 96,517,030 89,208,463
NET ASSETS:
Beginning of year.................................................................... 183,787,600 280,304,630
------------ ------------
End of year.......................................................................... $280,304,630 $369,513,093
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------------------
CLASS A CLASS B
------------------------------ ------------
YEAR ENDED APRIL 30, PERIOD ENDED
------------------------------ APRIL 30,
1992 1993 1993*
------------ ------------ ------------
<S> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 9,525,932 5,971,148 777,809
Issued for dividends reinvested...................................... 693,770 919,670 3,098
Shares redeemed...................................................... (2,024,597) (2,009,056) (6,373)
------------ ------------ ------------
NET INCREASE IN SHARES OUTSTANDING................................. 8,195,105 4,881,762 774,534
------------ ------------ ------------
------------ ------------ ------------
<FN>
- ---------------
* From January 15, 1993 (commencement of operations) to April 30, 1993.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
Reference is made to page 9 of the Fund's Prospectus dated February 18, 1994.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT 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 thirteen
series including the Connecticut 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.
On September 18, 1992, shareholders approved an amendment to the Fund's
Agreement and Declaration of Trust to provide for the issuance of additional
classes of shares. On September 23, 1992 the Fund's Board of Trustees
classified the Series' existing shares as Class A shares and authorized the
issuance of an unlimited number of $.001 par value Class B shares. The Series
began offering both Class A and Class B shares on January 15, 1993. 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 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, 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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (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 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 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. Effective September 18,
1992 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, 1992 through January 3, 1993 to reduce
the management fee paid by, or reimburse such excess expenses of the Series, to
the extent that the Series' aggregate expenses (excluding certain expenses as
described above) exceeded an annual rate of .65 of 1% of the Series' average
daily net assets and thereafter, had undertaken through January 14, 1993, 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 15, 1993 through June 30, 1993,
to waive receipt of the management fee payable to it by the Series in excess of
an annual rate of .41 of 1% of the Series' average daily net assets. The
reduction in management fee, pursuant to the undertakings, amounted to $694,635
for the year ended April 30, 1993.
On September 18, 1992, Series shareholders approved an amendment to the
Agreement changing the expense limitation provision from 1 1/2% to the expense
limitation of any state having jurisdiction over the Series. The amended
Agreement provides that the Series may deduct from the fee to be paid to the
Manager, or the Manager will bear such excess expense, to the extent required
by state law, should the Series' aggregate expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, exceed the
limitation of any state having jurisdiction over the Series.
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 $135,408 during the year ended April 30, 1993
from commissions earned on sales of the Series' Class A shares.
The Distributor retained $2,011 during the period ended April 30, 1993
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, effective January 15, 1993, the Series
pays the Distributor at an annual rate of .50 of 1% of the value of the Series'
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
Prior to January 15, 1993, the Fund's Service Plan ("prior Service Plan")
provided that the Series pay the Distributor, at an annual rate of .25 of 1% of
the value of the Series' average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing the Series' shares and
for servicing shareholder accounts. The Distributor made payments to one or
more Service Agents based on the value of the Series' shares owned by clients
of the Service Agent. The prior Service Plan also provided for the Series to
bear the costs of preparing, printing and distributing certain of the Series'
prospectuses and statements of additional information and costs associated with
implementing and operating the Plan, not to exceed the greater of $100,000 or
.005 of 1% of the Series' average daily net assets for any full fiscal year.
During the period ended April 30, 1993, $559,254 was charged to the Series
pursuant to the prior Service Plan and $6,248 was charged to the Series
pursuant to the Class B Distribution Plan.
(C) Under the Shareholder Services Plan, effective January 15, 1993, 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 period ended April 30, 1993,
$254,931 and $3,123 were charged to the Class A and Class B shares,
respectively pursuant to the Shareholder Services Plan.
(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. Prior to February 1, 1993, the annual fee
was $1,000.
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $180,285,484 and
$114,670,671, respectively, for the year ended April 30, 1993, and consisted
entirely of municipal bonds and short-term tax exempt investments.
At April 30, 1993, accumulated net unrealized appreciation on investments
was $27,195,702, consisting of $27,250,723 gross unrealized appreciation and
$55,021 gross unrealized depreciation.
At April 30, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
We have audited the accompanying statement of assets and liabilities of
Premier State Municipal Bond Fund, Connecticut Series (one of the Series
constituting the Premier State Municipal Bond Fund), including the statement of
investments, as of April 30, 1993, 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 condensed financial information for each of
the years indicated therein. These financial statements and condensed financial
information are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and condensed financial
information 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 condensed
financial information 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, 1993 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 condensed financial
information referred to above present fairly, in all material respects, the
financial position of Premier State Municipal Bond Fund, Connecticut Series at
April 30, 1993, 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 condensed financial information for each of the indicated years, in
conformity with generally accepted accounting principles.
Ernst & Young
New York, New York
June 7, 1993
<PAGE>
------------------------
ANNUAL REPORT
------------------------
------------------------------------------------
PREMIER STATE
MUNICIPAL BOND FUND
------------------------------------------------
----------------------
FLORIDA SERIES
----------------------
---------------------
APRIL 30, 1993
---------------------
[DREYFUS LION LOGO]
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--98.0% AMOUNT VALUE
------------ ------------
<S> <C> <C>
- -------------------------------------------------------------------------------------
FLORIDA--89.9%
Alachua County Health Facilities Authority, Health Facilities Revenue:
(Refunding - Santa Fe Healthcare Facilities Project) 7.60%, 11/15/2013............. $ 3,500,000 $ 3,801,980
(Shands Hospital at the University of Florida) 6%, 12/1/2011 (Insured; MBIA)....... 2,250,000 2,336,175
Arcadia, Water and Sewer Revenue 7.75%, 12/1/2021.................................... 2,265,000 2,524,659
Brevard County Housing Finance Authority, SFMR, Refunding 7%, 3/1/2013 (Insured;
FSA)................................................................................. 1,750,000 1,848,630
Broward County, Resources Recovery Revenue:
(Broward Waste Energy Co.-North) 7.95%, 12/1/2008.................................. 3,255,000 3,709,951
(SES Broward Co.-South Project) 7.95%, 12/1/2008................................... 4,715,000 5,374,015
Broward County Educational Facilities Authority, Revenue (Nova University):
8.50%, 4/1/2010.................................................................... 1,000,000 1,136,360
7.50%, 4/1/2017.................................................................... 2,365,000 2,596,273
Broward County Health Facilities Authority, Revenue, Refunding
(Broward County Nursing Home) 7.50%, 8/15/2020 (LOC; Allied Irish Banks) (a)....... 1,000,000 1,081,640
Charlotte County, Revenue:
Health Care Facilities (Charlotte Community Mental Health Project) 9.25%,
7/1/2020........................................................................... 1,680,000 1,849,714
Sewer Industrial Development (West Charlotte Utilities Project) 9.50%, 12/1/2019... 3,800,000 3,496,000
Citrus County, Pollution Control Revenue, Refunding (Florida Power Corp.-Crystal
River)
6.35%, 2/1/2022.................................................................... 1,500,000 1,563,525
Clay County Housing Finance Authority, SFMR:
8.20%, 6/1/2021 (Collateralized; GNMA)............................................. 710,000 748,212
7.45%, 9/1/2023 (Collateralized; GNMA)............................................. 375,000 394,140
Dade County:
Aviation Revenue:
Refunding 5.50%, 10/1/2011....................................................... 3,200,000 3,152,512
6.55%, 10/1/2013 (Insured; MBIA)................................................. 1,750,000 1,884,155
(Seaport) 6.50%, 10/1/2026 (Insured; AMBAC)........................................ 10,000,000 10,583,900
Dade County Educational Facilities Authority, Revenue:
(Florida International University - North Miami Project) 7.10%, 10/1/2016 (Insured;
MBIA).............................................................................. 2,000,000 2,237,080
(St. Thomas University) 7.65%, 1/1/2014 (LOC; Sun Bank) (a)........................ 2,500,000 2,733,375
Dade County Health Facilities Authority, Hospital Revenue
(South Shore Hospital and Medical Center) 7.60%, 8/1/2024.......................... 2,705,000 3,029,898
Dade County Housing Finance Authority:
MFMR, Refunding (Cutler Meadows Apartment) 6.50%, 7/1/2022 (Insured; FHA).......... 1,785,000 1,822,021
SFMR:
Refunding 6.95%, 12/15/2012 (Insured; FSA)....................................... 1,000,000 1,043,780
7.75%, 9/1/2022 (Collateralized; GNMA)........................................... 4,615,000 4,956,556
7.25%, 9/1/2023 (Collateralized; GNMA and FNMA).................................. 1,250,000 1,317,188
Duval County Housing Finance Authority, SFMR:
7.85%, 12/1/2022 (Collateralized; GNMA)............................................ 2,625,000 2,795,572
7.70%, 9/1/2024 (Collateralized; GNMA)............................................. 1,500,000 1,598,835
Escambia County Housing Finance Authority, SFMR 7.80%, 4/1/2022...................... 1,205,000 1,257,237
Florida Keys Aqueduct Authority, Water Revenue, Refunding
5.25%, 9/1/2021 (Insured; AMBAC)................................................... 3,750,000 3,533,850
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
<S> <C> <C>
Florida Board of Education, Capital Outlay:
8.741%, 6/1/2018 (b,c)............................................................. $ 10,500,000 $ 10,683,750
7%, 6/1/2020....................................................................... 4,980,000 5,437,911
Public Education:
6%, 6/1/2022..................................................................... 3,000,000 3,056,580
Refunding 7.25%, 6/1/2023........................................................ 3,250,000 3,628,105
Florida Housing Finance Agency:
Home Ownership Revenue 7.90%, 3/1/2022 (Collateralized; GNMA)...................... 4,155,000 4,366,822
Multi-Family Housing (Driftwood Terrace Project) 7.65%, 12/20/2031 (Collateralized;
GNMA).............................................................................. 3,440,000 3,676,087
SFMR, Zero Coupon, 1/1/2016........................................................ 49,705,000 5,223,996
Florida Turnpike Authority, Turnpike Revenue 7.50%, 7/1/2019......................... 5,685,000 6,465,892
Fort Meade, Electrical System Revenue 6.50%, 1/1/2012 (Insured; MBIA)................ 2,145,000 2,302,293
Gainesville, Utilities Systems Revenue 6.50%, 10/1/2012.............................. 2,000,000 2,136,300
Hernando County, Criminal Justice Revenue 8%, 7/1/2016 (Insured; FGIC)............... 750,000 772,500
Highlands County Health Facilities Authority, Revenue (Adventist Sunbelt Hospital)
7%, 11/15/2014..................................................................... 1,500,000 1,678,455
Hillsborough County, Utility Revenue, Refunding:
6.625%, 8/1/2011................................................................... 4,000,000 4,162,080
7%, 8/1/2014....................................................................... 5,750,000 6,125,130
Hillsborough County Aviation Authority, Revenue, Refunding (Delta Airlines)
7.75%, 1/1/2024.................................................................... 1,500,000 1,580,850
Hillsborough County Port District, Revenue (Tampa Port Authority) 8.25%, 6/1/2009.... 3,000,000 3,398,670
Indian Trace Community Development District, Water and Sewer Revenue 8.50%,
4/1/1997............................................................................. 635,000 680,783
Jackson County, PCR, Refunding (Gulf Power Co. Project) 6.75%, 3/1/2022.............. 3,930,000 4,110,191
Jacksonville Electric Authority, Revenue, Refunding (St. Johns River Power Park)
6%, 10/1/2015...................................................................... 6,000,000 6,031,320
Jacksonville Health Facilities Authority:
Health Facilities Revenue (Daughters Health - St. Vincent's) 7.50%, 11/1/2015...... 1,450,000 1,631,293
Hospital Revenue, Refunding (St. Lukes's Hospital) 7.125%, 11/15/2020.............. 6,700,000 7,370,938
Jupiter, Sales Tax Revenue 7.40%, 9/1/2020........................................... 1,750,000 2,044,420
Leesburg, Hospital Revenue, Refunding and Capital Improvement:
(Leesburg Regional Medical Center Project) 7.375%, 7/1/2011........................ 1,270,000 1,370,317
(Regional Medical Center Project) 8.60%, 7/1/2018.................................. 1,100,000 1,231,703
Leon County Educational Facilities Authority, COP (Southgate Residence Hall Project)
9%, 9/1/2014....................................................................... 5,235,000 5,630,347
Manatee County Housing Finance Authority, SFMR 8.10%, 11/1/2020...................... 645,000 679,836
Nassau County, Pollution Control Revenue, Refunding (ITT Rayonier Project)
7.65%, 6/1/2006.................................................................... 4,500,000 4,960,890
North Miami Health Facilities Authority, Health Facilities Revenue
(Villa Maria Nursing Housing Project) 7.50%, 9/1/2012.............................. 2,870,000 3,175,024
North Palm Beach Heights Water Control District, Refunding (Special Assessment)
6.50%, 10/1/2012 (Insured; MBIA)................................................... 2,000,000 2,155,480
Orange County, Tourist Development Tax Revenue 6.50%, 10/1/2019 (Insured; AMBAC)..... 2,500,000 2,679,050
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
<S> <C> <C>
Orange County Health Facilities Authority:
Health Facilities Revenue (Mental Health Service Project) 9.25%, 7/1/2020.......... $ 3,925,000 $ 4,321,504
Hospital Revenue (Orlando Regional Healthcare - A):
6%, 11/1/2014 (Insured; MBIA).................................................... 2,000,000 2,048,380
6%, 11/1/2024 (Insured; MBIA).................................................... 2,000,000 2,039,960
Orange County Housing Finance Authority, Mortgage Revenue 8.10%, 11/1/2021........... 880,000 925,848
Orlando and Orange County Expressway Authority, Expressway Revenue (Junior Lien)
6.50%, 7/1/2011.................................................................... 5,000,000 5,581,600
Orlando Utilities Commission, Water and Electric Revenue:
6.50%, 10/1/2020................................................................... 3,000,000 3,181,560
7%, 10/1/2023...................................................................... 1,000,000 1,088,580
Osceola County Industrial Development Authority, Revenue (Community Provider Pooled
Loan Program) 7.75%, 7/1/2017...................................................... 5,235,000 5,040,729
Palm Beach County Housing Finance Authority, Single Family Mortgage Purchase Revenue
7.60%, 3/1/2023.................................................................... 3,405,000 3,555,535
Pinellas County, PCR, Refunding (Florida Power Corp.) 7.20%, 12/1/2014............... 3,000,000 3,322,050
Pinellas County Housing Finance Authority, SFMR 7.70%, 8/1/2022...................... 2,810,000 2,935,017
Polk County Housing Finance Authority, SFMR:
8.10%, 9/1/2020.................................................................... 605,000 646,963
7.875%, 9/1/2022................................................................... 1,330,000 1,400,916
St. Lucie County, Solid Waste Disposal Revenue (Florida Power and Light Co. Project)
7.15%, 2/1/2023.................................................................... 4,000,000 4,384,160
Sarasota, Water and Sewer Utility Revenue, Refunding 9.135%, 10/1/2011 (Insured;
FGIC) (b)............................................................................ 6,585,000 7,436,836
South Indian River Water Control District, Refunding 7.50%, 10/1/2006................ 1,000,000 1,066,390
Sunrise, Special Tax District Number 1, Refunding
6.375%, 11/1/2021 (LOC; Bayerische Hypotheken - und Weschel Bank) (a).............. 2,500,000 2,544,950
Tallahassee, Capital Program Revenue 8.25%, 10/1/2021................................ 2,600,000 2,645,500
Tampa:
Allegany Health System Revenue (St. Joseph Hospital):
7.125%, 12/1/2005................................................................ 2,500,000 2,693,325
7.375%, 12/1/2023................................................................ 3,455,000 3,754,859
Water and Sewer Revenue:
9.144%, 10/1/2006 (Insured; FGIC) (b)............................................ 6,100,000 6,945,643
Refunding 6.60%, 10/1/2014 (Insured; FGIC)....................................... 10,000,000 10,798,300
Tarpon Springs Health Facility Authority, Hospital Revenue
(Hellen Ellis Memorial Hospital Project) 7.625%, 5/1/2021.......................... 4,000,000 4,267,520
Volushia County, Sales Tax Improvement Revenue, Refunding 6%, 10/1/2010 (Insured;
MBIA)................................................................................ 4,295,000 4,400,099
Volushia County Health Facilities Authority, Hospital Facilities Revenue
(Memorial Health System Project):
8.125%, 6/1/2008................................................................. 1,970,000 2,191,132
8.25%, 6/1/2020.................................................................. 2,500,000 2,801,250
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
U.S. RELATED 8.1%
<S> <C> <C>
Commonwealth of Puerto Rico:
6.25%, 7/1/2010.................................................................... $ 3,000,000 $ 3,118,530
6.80%, 7/1/2021.................................................................... 2,000,000 2,165,700
Guam Airport Authority, Revenue 6.70%, 10/1/2023..................................... 5,000,000 5,293,050
Puerto Rico Public Buildings Authority, Public Education and Health Facilities
6.875%, 7/1/2012................................................................... 3,000,000 3,251,010
Puerto Rico Municipal Finance Agency 5.875%, 7/1/2006................................ 5,000,000 5,016,500
Puerto Rico Electric Power Authority, Power Revenue 6.25%, 7/1/2017.................. 3,000,000 3,106,050
Virgin Islands Port Authority, Airport Revenue (Cyril E. King Airport Project)
8.10%, 10/1/2005................................................................... 2,500,000 2,742,150
------------
TOTAL MUNICIPAL BONDS (cost $278,054,367)............................................ $299,565,842
------------
------------
- -------------------------------------------------------------------------------------
SHORT-TERM TAX EXEMPT INVESTMENTS--2.0%
Florida Local Government Finance Authority, Revenue, VRDN (Loan Program) 3.75% (d)... $ 2,000,000 $ 2,000,000
Gulf Breeze, Revenue, VRDN (Local Government Loan Program) 2.35% (Insured; FGIC)
(d).................................................................................. 2,100,000 2,100,000
Volushia County Housing Finance Authority, Multi-Family Housing Revenue VRDN
(Mallwood Village Project) 3% (Guaranteed; Household Finance) (d).................. 1,900,000 1,900,000
------------
TOTAL SHORT-TERM TAX EXEMPT INVESTMENTS (cost $6,000,000)............................ $ 6,000,000
------------
------------
TOTAL INVESTMENTS--100.0%
(cost $284,054,367)................................................................ $305,565,842
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <S> <S> <S>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Insurance Association
FGIC Financial Guaranty Insurance Corporation MFMR Multi-Family Mortgage Revenue
FHA Federal Housing Administration PCR Pollution Control Revenue
FNMA Federal National Mortgage Association SFMR Single Family Mortgage Revenue
FSA Financial Security Association VRDN Variable Rate Demand Notes
GNMA Government National Mortgage Association
</TABLE>
<PAGE>
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES--ANNUAL REPORT
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (E) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ ------------
<S> <C> <C> <C>
AAA Aaa AAA 35.3%
AA Aa AA 14.7
A A A 21.8
BBB Baa BBB 14.7
BB Ba BB .5
F1 MIG1 SP1 .7
F1 P1 A1 1.3
Not Rated Not Rated Not Rated 11.0
-------
100.0%
-------
-------
<FN>
- --------------------------------------------------------------------------------
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(b) Inverse floater security - the interest rate is subject to change
periodically.
(c) 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 April 30,
1993, these securities amounted to $10,683,750 or 3.5% of net assets.
(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.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $284,054,367)--see statement.................................................... $305,565,842
Cash.................................................................................... 800,913
Interest receivable..................................................................... 5,185,321
Receivable for shares of Beneficial Interest subscribed................................. 1,352,802
Prepaid expenses........................................................................ 24,466
------------
312,929,344
LIABILITIES:
Due to The Dreyfus Corporation.......................................................... $ 165,266
Payable for investment securities purchased............................................. 6,689,214
Payable for shares of Beneficial Interest redeemed...................................... 311,850
Accrued expenses........................................................................ 71,838 7,238,168
---------- ------------
NET ASSETS................................................................................ $305,691,176
------------
------------
REPRESENTED BY:
Paid-in capital......................................................................... $283,566,026
Accumulated undistributed net realized gain on investments.............................. 613,675
Accumulated net unrealized appreciation on investments--Note 3(b)....................... 21,511,475
------------
NET ASSETS at value....................................................................... $305,691,176
------------
------------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............................... 19,959,144
------------
------------
Class B Shares
(unlimited number of $.001 par value shares authorized)............................... 394,082
------------
------------
NET ASSET VALUE per share:
Class A Shares
($299,775,188 / 19,959,144 shares).................................................... $15.02
------
------
Class B Shares
($5,915,988 / 394,082 shares)........................................................ $15.02
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................................... $ 18,754,360
EXPENSES:
Management fee--Note 2(a)............................................................. $1,496,430
Shareholder servicing costs--Note 2(b,c).............................................. 832,094
Professional fees..................................................................... 31,634
Custodian fees........................................................................ 29,249
Prospectus and shareholders' reports--Note 2(b)....................................... 26,939
Registration fees..................................................................... 15,322
Distribution fees (Class B shares)--Note 2(b)......................................... 3,885
Trustees' fees and expenses--Note 2(d)................................................ 1,607
Miscellaneous......................................................................... 20,736
----------
2,457,896
Less--reduction in management fee due to
undertakings--Note 2(a)............................................................. 589,747
----------
TOTAL EXPENSES.................................................................... 1,868,149
------------
INVESTMENT INCOME--NET............................................................ 16,886,211
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3(a)............................................. $3,089,546
Net realized (loss) on financial futures--Note 3(a)..................................... (139,510)
----------
NET REALIZED GAIN..................................................................... 2,950,036
Net unrealized appreciation on investments.............................................. 12,932,318
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................................... 15,882,354
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $ 32,768,565
------------
------------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
------------------------------
1992 1993
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................................... $ 14,364,240 $ 16,886,211
Net realized gain on investments..................................................... 1,038,425 2,950,036
Net unrealized appreciation on investments for the year.............................. 5,016,327 12,932,318
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................. 20,418,992 32,768,565
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares..................................................................... (14,364,240) (16,848,394)
Class B shares..................................................................... -- (37,817)
Net realized gain on investments:
Class A shares..................................................................... (231,712) (3,177,441)
Class B shares..................................................................... -- --
------------ ------------
TOTAL DIVIDENDS.................................................................. (14,595,952) (20,063,652)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares..................................................................... 76,202,678 66,050,460
Class B shares..................................................................... -- 5,856,989
Dividends reinvested:
Class A shares..................................................................... 5,665,224 7,518,030
Class B shares..................................................................... -- 16,199
Cost of shares redeemed:
Class A shares..................................................................... (20,144,200) (31,929,008)
Class B shares..................................................................... -- (4)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS..................... 61,723,702 47,512,666
------------ ------------
TOTAL INCREASE IN NET ASSETS................................................... 67,546,742 60,217,579
NET ASSETS:
Beginning of year.................................................................... 177,926,855 245,473,597
------------ ------------
End of year.......................................................................... $245,473,597 $305,691,176
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------------------
CLASS A CLASS B
------------------------------ ------------
YEAR ENDED APRIL 30, PERIOD ENDED
------------------------------ APRIL 30,
1992 1993 1993*
------------ ------------ ------------
<S> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 5,376,197 4,488,511 393,001
Issued for dividends reinvested...................................... 398,366 511,735 1,081
Shares redeemed...................................................... (1,416,535) (2,173,234) --
------------ ------------ ------------
NET INCREASE IN SHARES OUTSTANDING................................. 4,358,028 2,827,012 394,082
------------ ------------ ------------
------------ ------------ ------------
<FN>
- ---------------
* From January 15, 1993 (commencement of operations) to April 30, 1993.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
Reference is made to page 10 of the Fund's Prospectus dated February 18,
1994.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA 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 thirteen
series including the Florida 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.
On September 18, 1992, shareholders approved an amendment to the Fund's
Agreement and Declaration of Trust to provide for the issuance of additional
classes of shares. On September 23, 1992 the Fund's Board of Trustees
classified the Series' existing shares as Class A shares and authorized the
issuance of an unlimited number of $.001 par value Class B shares. The Series
began offering both Class A and Class B shares on January 15, 1993. 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 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, 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.
(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. Effective September 18,
1992 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
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
expense limitation of any state having jurisdiction over the Series for any
full fiscal year. However, the Manager had undertaken from May 1, 1992 through
January 3, 1993 to reduce the management fee paid by or reimburse such excess
expense of the Series, to the extent that the Series' aggregate expenses
(excluding certain expenses as described above) exceeded an annual rate of .65
of 1% of the Series' average daily net assets and thereafter, had undertaken
through January 14, 1993, 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 15, 1993
through June 30, 1993, to waive receipt of the management fee payable to it by
the Series in excess of an annual rate of .41 of 1% of the Series' average
daily net assets. The reduction in management fee, pursuant to the
undertakings, amounted to $589,747 for the year ended April 30, 1993.
On September 18, 1992, Series shareholders approved an amendment to the
Agreement changing the expense limitation provision from 1 1/2% to the expense
limitation of any state having jurisdiction over the Series. The amended
Agreement provides that the Series may deduct from the fee to be paid to the
Manager, or the Manager will bear such excess expense, to the extent required
by state law, should the Series' aggregate expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, exceed the
limitation of any state having jurisdiction over the Series.
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 $108,916 during the year ended April 30, 1993
from commissions earned on sales of the Series' Class A shares.
No amounts were retained by the Distributor during the period ended April
30, 1993 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, effective January 15, 1993, 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.
Prior to January 15, 1993, the Fund's Service Plan ("prior Service Plan")
provided that the Series pay the Distributor, at an annual rate of .25 of 1% of
the value of the Series' average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing the Series' shares and
for servicing shareholder accounts. The Distributor made payments to one or
more Service Agents based on the value of the Series' shares owned by clients
of the Service Agent. The prior Service Plan also provided for the Series to
bear the costs of preparing, printing and distributing certain of the Series'
prospectuses and statements of additional information and costs associated with
implementing and operating the Plan, not to exceed the greater of $100,000 or
.005 of 1% of the Series' average daily net assets for any full fiscal year.
During the period ended April 30, 1993, $472,578 was charged to the Series
pursuant to the prior Service Plan and $3,885 was charged to the Series
pursuant to the Class B Distribution Plan.
(C) Under the Shareholder Services Plan, effective January 15, 1993, 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 period ended April 30, 1993,
$211,601 and $1,942 were charged to the Class A and Class B shares,
respectively, pursuant to the Shareholder Services Plan.
(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. Prior to February 1, 1993, the annual fee
was $1,000.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3--SECURITIES TRANSACTIONS:
(A) Purchases and sales of securities amounted to $200,494,309 and
$154,003,848, respectively, for the year ended April 30, 1993, and consisted
entirely of municipal bonds and short-term tax exempt investments.
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 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 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 April 30,
1993, there were no financial futures contracts outstanding.
(B) At April 30, 1993, accumulated net unrealized appreciation on
investments was $21,511,475, consisting of $21,826,867 gross unrealized
appreciation and $315,392 gross unrealized depreciation.
At April 30, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
We have audited the accompanying statement of assets and liabilities of
Premier State Municipal Bond Fund, Florida Series (one of the Series
constituting the Premier State Municipal Bond Fund), including the statement of
investments, as of April 30, 1993, 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 condensed financial information for each of
the years indicated therein. These financial statements and condensed financial
information are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and condensed financial
information 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 condensed
financial information 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, 1993 by correspondence with the custodian and brokers. 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 condensed financial
information referred to above present fairly, in all material respects, the
financial position of Premier State Municipal Bond Fund, Florida Series at
April 30, 1993, 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 condensed financial information for each of the indicated years, in
conformity with generally accepted accounting principles.
Ernst & Young
New York, New York
June 4, 1993
<PAGE>
- ----------------------------------------------------------------------
-----------------------
ANNUAL REPORT
-----------------------
------------------------------------------------
PREMIER STATE
MUNICIPAL BOND FUND
------------------------------------------------
-----------------------
GEORGIA SERIES
-----------------------
--------------------
APRIL 30, 1993
--------------------
[DREYFUS LION LOGO]
PRINTED IN THE U.S.A.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--100.0% AMOUNT VALUE
----------- -----------
<S> <C> <C>
- ---------------------------------------------------------------------------------------
GEORGIA--89.7%
Albany, Sewer System Revenue 6.50%, 7/1/2009 (Insured; MBIA)........................... $ 100,000 $ 107,561
Albany-Dougherty Inner City Authority, Revenue, Refunding 6%, 2/1/2011................. 200,000 201,868
Athens-Clarke County Unified Government, Water and Sewer Revenue Refunding
5.875%, 1/1/2008 (Insured; FGIC)..................................................... 265,000 271,193
Atlanta, Airport Facilities Revenue 6.50%, 1/1/2013.................................... 150,000 158,011
City of Atlanta, COP (Atlanta Pretrial Detention Center Project)
6.25%, 12/1/2011 (Insured; MBIA)..................................................... 300,000 314,091
Atlanta Downtown Development Authority, Revenue Refunding (Underground Atlanta Project)
6.25%, 10/1/2016..................................................................... 200,000 207,596
Bartow County, Water and Sewer Revenue, Refunding 6%, 9/1/2015 (Insured; AMBAC)........ 450,000 463,387
City of Buford, GO School 5.90%, 2/1/2013.............................................. 300,000 307,566
Clarke County Hospital Authority, Revenue Certificates
(Athens Regional Medical Center Project)
5.75%, 1/1/2010 (Insured; MBIA)...................................................... 265,000 266,092
Cobb County Kennestone Hospital Authority, Revenue Certificates
5.50%, 4/1/2017 (Insured; MBIA)...................................................... 300,000 292,581
Columbus, Water and Sewer Revenue, Refunding:
6.25%, 5/1/2011 (Insured; FGIC)...................................................... 155,000 163,727
5.70%, 5/1/2020...................................................................... 500,000 490,540
5.70%, 5/1/2020 (Insured; FGIC)...................................................... 500,000 491,875
Coweta County School System:
6.35%, 8/1/2012...................................................................... 100,000 104,151
Refunding 5.75%, 2/1/2010 (Insured; FGIC)............................................ 200,000 202,022
Dekalb County School District, Refunding 5.60%, 7/1/2010............................... 500,000 499,400
Development Authority of Dekalb County, Revenue (Wesley Homes, Inc-Budd Terrace
Project)
6.75%, 10/1/2013 (LOC; Wachovia Bank of Georgia, N.A.) (a)........................... 200,000 205,444
Development Authority of Monroe County, PCR (Oglethorpe Power Corp. Scherer Project)
6.80%, 1/1/2011...................................................................... 100,000 113,707
Downtown Smyrna Development Authority, Revenue, Refunding 5.50%, 2/1/2012.............. 500,000 494,765
Fulco Hospital Authority, Revenue Anticipation Certificates (Georgia Baptist
Healthcare)
6.25%, 9/1/2013...................................................................... 250,000 253,828
Fulton County, Water and Sewer Revenue, Refunding 6.375%, 1/1/2014 (Insured; FGIC)..... 290,000 319,551
Fulton County Building Authority, Revenue, Refunding (County Government and Health
Facilities Project) 6.125%, 1/1/2011................................................. 300,000 310,728
Fulton County Development Authority, Special Facilities Revenue, Refunding
(Delta Air Lines Inc. Project) 6.95%, 11/1/2012...................................... 245,000 245,921
Fulton County Hospital Authority, Revenue Anticipation Certificates
(Northside Hospital Project) 6.625%, 10/1/2016 (Insured; MBIA)....................... 200,000 215,358
Gainesville, Water and Sewer Revenue, Refunding 6%, 11/15/2012 (Insured; FGIC)......... 300,000 317,445
Georgia 6.30%, 3/1/2008................................................................ 100,000 108,563
Georgia Environmental Facilities Authority, Revenue
(Guaranteed-Water and Sewer Loan Program) 6.125%, 7/1/1996........................... 470,000 503,469
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
----------- -----------
- ---------------------------------------------------------------------------------------
GEORGIA (CONTINUED)
<S> <C> <C>
Georgia Housing and Finance Authority (Home Ownership Opportunity Program)
6.50%, 12/1/2011..................................................................... $ 200,000 $ 204,726
Georgia Municipal Electric Authority, Power Revenue:
10.25%, 1/1/2020..................................................................... 450,000 486,864
Refunding 6.125%, 1/1/2014 (Insured; FGIC)........................................... 300,000 309,435
Gwinnett County School District 6.25%, 2/1/2011........................................ 500,000 518,245
Habersham County Hospital Authority, Revenue Anticipation Certificates
5.60%, 12/1/2013 (Insured; MBIA)..................................................... 500,000 492,760
Henry County and Henry County Water and Sewer Authority, Revenue, Refunding
6.50%, 2/1/2011 (Insured; MBIA)...................................................... 100,000 107,268
Hospital Authority of Columbus, Revenue Certificates (St. Francis Hospital Project)
6.20%, 1/1/2010 (Insured; MBIA)...................................................... 200,000 211,140
Hospital Authority of Hall County and the City of Gainesville,
Revenue Anticipation Certificates (Northeast Georgia Healthcare Project)
6.25%, 10/1/2012 (Insured; MBIA)..................................................... 100,000 104,649
Hospital Authority of Upson County, Revenue Certificates 5.75%, 1/1/2012 (Insured;
MBIA)................................................................................ 350,000 352,030
Metropolitan Atlanta Rapid Transportation Authority, Sales Tax Revenue, Refunding
6.25%, 7/1/2020 (Insured; AMBAC)..................................................... 300,000 323,937
Municipal Electric Authority of Georgia, Special Obligation
(First Crossover-General Resolution) 6.50%, 1/1/2020................................. 100,000 108,356
Putnam County Development Authority, PCR (Georgia Power Co. Plant Branch)
6.20%, 8/1/2022...................................................................... 300,000 305,556
Savannah Economic Development Authority, PCR, Refunding (Union Camp Corp. Project)
6.80%, 2/1/2012...................................................................... 200,000 212,842
Savannah Hospital Authority, Revenue, Refunding:
Improvement (Candler Hospital) 7%, 1/1/2011.......................................... 200,000 206,354
(St. Joseph's Hospital Project) 6.20%, 7/1/2023...................................... 500,000 503,765
Sugar Hill Public Utility, Revenue, Refunding 5.90%, 1/1/2014 (Insured; FSA)........... 500,000 507,105
- ---------------------------------------------------------------------------------------
U.S. RELATED--10.3%
Commonwealth of Puerto Rico, Refunding 6%, 7/1/2014.................................... 600,000 611,502
Commonwealth of Puerto Rico Highway and Transportation Authority, Highway Revenue
6.50%, 7/1/2022...................................................................... 300,000 315,441
Guam Power Authority, Revenue 6.30%, 10/1/2022......................................... 500,000 515,565
-----------
TOTAL INVESTMENTS (cost $13,637,943)................................................... $14,027,980
-----------
-----------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation GO General Obligation
COP Certificate of Participation LOC Letter of Credit
FGIC Financial Guaranty Insurance Corporation MBIA Municipal Bond Insurance Association
FSA Financial Security Association PCR Pollution Control Revenue
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
FITCH (B) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- ---------- ------------------ ------------------ -------------------
<S> <C> <C> <C>
AAA Aaa AAA 49.4%
AA Aa AA 15.5
A A A 28.2
BBB Baa BBB 6.9
--------
100.0%
--------
--------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(b) Fitch currently provides creditworthiness information for a limited amount
of investments.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $13,637,943)--see statement...................................................... $14,027,980
Cash..................................................................................... 784,307
Receivable for shares of Beneficial Interest subscribed.................................. 302,760
Interest receivable...................................................................... 242,493
Prepaid expenses......................................................................... 21,393
Due from The Dreyfus Corporation......................................................... 18,040
-----------
15,396,973
LIABILITIES:
Payable for investment securities purchased.............................................. $1,749,767
Accrued expenses and other liabilities................................................... 23,952 1,773,719
---------- -----------
NET ASSETS................................................................................. $13,623,254
-----------
-----------
REPRESENTED BY:
Paid-in capital.......................................................................... $13,247,892
Accumulated net realized (loss) on investments........................................... (14,675)
Accumulated net unrealized appreciation on investments--Note 3........................... 390,037
-----------
NET ASSETS at value........................................................................ $13,623,254
-----------
-----------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)................................ 550,601
-----------
-----------
Class B Shares
(unlimited number of $.001 par value shares authorized)................................ 476,264
-----------
-----------
NET ASSET VALUE per share:
Class A Shares
($7,303,982 / 550,601 shares).......................................................... $13.27
------
------
Class B Shares
($6,319,272 / 476,264 shares).......................................................... $13.27
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FROM SEPTEMBER 3, 1992 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME.......................................................................... $ 197,779
EXPENSES:
Management fee--Note 2(a).............................................................. $ 20,072
Shareholder servicing costs--Note 2(b,c)............................................... 15,571
Distribution fees (Class B shares)--Note 2(b).......................................... 5,350
Registration fees...................................................................... 4,438
Prospectus and shareholders' reports--Note 2(b)........................................ 4,232
Organization expenses.................................................................. 3,000
Custodian fees......................................................................... 1,022
Auditing fees.......................................................................... 543
Legal fees............................................................................. 92
Trustees' fees and expenses--Note 2(d)................................................. 34
Miscellaneous.......................................................................... 3,460
----------
57,814
Less--expense reimbursement from Manager due to
undertaking--Note 2(a)............................................................... 52,464
----------
TOTAL EXPENSES..................................................................... 5,350
-----------
INVESTMENT INCOME--NET............................................................. 192,429
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments--Note 3............................................... $ (14,675)
Net unrealized appreciation on investments............................................... 390,037
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................................... 375,362
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................................... $ 567,791
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FROM SEPTEMBER 3, 1992 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1993
<TABLE>
<S> <C>
OPERATIONS:
Investment income--net.............................................................................. $ 192,429
Net realized (loss) on investments.................................................................. (14,675)
Net unrealized appreciation on investments for the period........................................... 390,037
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................ 567,791
-----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares.................................................................................... (143,166)
Class B shares.................................................................................... (49,263)
-----------
TOTAL DIVIDENDS................................................................................. (192,429)
-----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares.................................................................................... 9,210,060
Class B shares.................................................................................... 6,237,874
Dividends reinvested:
Class A shares.................................................................................... 103,827
Class B shares.................................................................................... 22,493
Cost of shares redeemed:
Class A shares.................................................................................... (2,301,609)
Class B shares.................................................................................... (24,753)
-----------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.................................... 13,247,892
-----------
TOTAL INCREASE IN NET ASSETS.................................................................. 13,623,254
NET ASSETS:
Beginning of period................................................................................. --
-----------
End of period....................................................................................... $13,623,254
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
-----------------------------
PERIOD ENDED APRIL 30, 1993
-----------------------------
CLASS A CLASS B*
----------- -----------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................................... 722,509 476,432
Issued for dividends reinvested..................................................... 7,993 1,698
Shares redeemed..................................................................... (179,901) (1,866)
----------- -----------
NET INCREASE IN SHARES OUTSTANDING................................................ 550,601 476,264
----------- -----------
----------- -----------
<FN>
- ---------------
* From January 15, 1993 (commencement of operations) to April 30, 1993.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
Reference is made to page 11 of the Fund's Prospectus dated February 18,
1994.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA 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 thirteen
series including the Georgia Series (the "Series") which commenced operations on
September 3, 1992. 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.
On September 18, 1992, shareholders approved an amendment to the Fund's
Agreement and Declaration of Trust to provide for the issuance of additional
classes of shares. On September 23, 1992 the Fund's Board of Trustees classified
the Series' existing shares as Class A shares and authorized the issuance of an
unlimited number of $.001 par value Class B shares. The Series began offering
both Class A and Class B shares on January 15, 1993. 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 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 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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (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 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 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. Effective September 18,
1992 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 September 3, 1992 through June 30, 1993 or until
such time as the assets of the series exceed $25 million, regardless of whether
they remain at that level, to reimburse all fees and expenses of the Series
(excluding 12b-1 distribution plan fee and certain expenses as described above).
The expense reimbursement, pursuant to the undertaking, amounted to $52,464 for
the period ended April 30, 1993.
On September 18, 1992, Series shareholders approved an amendment to the
Agreement changing the expense limitation provision from 1 1/2% to the expense
limitation of any state having jurisdiction over the Series. The amended
Agreement provides that the Series may deduct from the fee to be paid to the
Manager, or the Manager will bear such excess expense, to the extent required by
state law, should the Series' aggregate expenses, exclusive of taxes, brokerage,
interest on borrowings and extraordinary expenses, exceed the limitation of any
state having jurisdiction over the Series.
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 $9,606 during the period ended April 30, 1993 from
commissions earned on sales of the Series' Class A shares.
No amounts were retained by the Distributor during the period ended April
30, 1993 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, effective January 15, 1993, 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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Prior to January 15, 1993, the Fund's Service Plan ("prior Service Plan")
provided that the Series pay the Distributor, at an annual rate of .25 of 1% of
the value of the Series' average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing the Series' shares and
for servicing shareholder accounts. The Distributor made payments to one or more
Service Agents based on the value of the Series' shares owned by clients of the
Service Agent. The prior Service Plan also provided for the Series to bear the
costs of preparing, printing and distributing certain of the Series'
prospectuses and statements of additional information and costs associated with
implementing and operating the Plan, not to exceed the greater of $100,000 or
.005 of 1% of the Series' average daily net assets for any full fiscal year.
During the period ended April 30, 1993, $2,298 was charged to the Series
pursuant to the prior Service Plan and $5,350 was charged to the Series pursuant
to the Class B Distribution Plan.
(C) Under the Shareholder Services Plan, effective January 15, 1993, 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 period ended April 30, 1993,
$4,457 and $2,675 were charged to the Class A and Class B shares, respectively
pursuant to the Shareholder Services Plan.
(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. Prior to February 1, 1993, the annual fee
was $1,000.
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $16,119,287 and $2,458,275,
respectively, for the period ended April 30, 1993, and consisted entirely of
municipal bonds.
At April 30, 1993, accumulated net unrealized appreciation on investments
was $390,037, consisting of $396,208 gross unrealized appreciation and $6,171
gross unrealized depreciation.
At April 30, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
We have audited the accompanying statement of assets and liabilities of
Premier State Municipal Bond Fund, Georgia Series (one of the Series
constituting the Premier State Municipal Bond Fund), including the statement of
investments, as of April 30, 1993, and the related statement of operations, the
statement of changes in net assets and condensed financial information for the
period from September 3, 1992 (commencement of operations) to April 30, 1993.
These financial statements and condensed financial information are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and condensed financial information based
on our audit.
We conducted our audit 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 condensed
financial information 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, 1993 by correspondence with the custodian and brokers. 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and condensed financial
information referred to above present fairly, in all material respects, the
financial position of Premier State Municipal Bond Fund, Georgia Series at April
30, 1993, and the results of its operations, the changes in its net assets and
the condensed financial information for the period from September 3, 1992 to
April 30, 1993, in conformity with generally accepted accounting principles.
ERNST & YOUNG
New York, New York
June 7, 1993
<PAGE>
------------------------
ANNUAL REPORT
------------------------
------------------------------------------------
PREMIER STATE
MUNICIPAL BOND FUND
------------------------------------------------
--------------------------
MARYLAND SERIES
--------------------------
---------------------
APRIL 30, 1993
---------------------
[DREYFUS LION LOGO]
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--97.6% AMOUNT VALUE
------------ ------------
<S> <C> <C>
- ---------------------------------------------------------------------------------------
MARYLAND--92.9%
Anne Arundel County, Consolidated Water and Sewer 7.75%, 3/15/2008..................... $ 1,000,000 $ 1,159,490
Baltimore:
7%, 10/15/2007 (Insured; MBIA)....................................................... 1,500,000 1,742,790
7.15%, 10/15/2008.................................................................... 1,275,000 1,453,309
Port Facilities Revenue (Consolidated Coal Sales) 6.50%, 12/1/2010................... 6,240,000 6,660,014
Project Revenue (City Parking System Facilities) 6.25%, 7/1/2021 (Insured; FGIC)..... 2,000,000 2,088,080
Baltimore City Housing Corp., Multi-Family Housing Revenue, Refunding
7.25%, 7/1/2023 (Collateralized; FNMA)............................................... 3,330,000 3,486,843
Baltimore County:
Mortgage Revenue:
(First Mortgage - Pickersgill) 7.70%, 1/1/2021..................................... 3,000,000 3,216,660
(Refunding - Tindeco Wharf Project) 6.50%, 12/20/2012 (Collateralized; GNMA)....... 1,500,000 1,535,505
(Refunding - County Pension Funding):
5.20%, 4/1/2009.................................................................... 5,000,000 4,893,800
6.70%, 7/1/2016.................................................................... 14,600,000 16,119,276
Baltimore County Authority, Revenue 7.20%, 7/1/2019 (Insured; MBIA).................... 2,395,000 2,710,948
Bel Air, COP:
Parking Facilities Revenue 7.80%, 6/1/2010........................................... 250,000 295,130
Refunding (Bel Air Parking) 5.60%, 6/1/2010.......................................... 1,000,000 980,930
Harford County, Public Improvement 5.90%, 9/1/2011..................................... 2,180,000 2,241,520
Howard County:
COP 8.15%, 2/15/2020................................................................. 605,000 817,670
Consolidated Public Improvement, Refunding 5.25%, 8/15/2012.......................... 1,500,000 1,453,890
Economic Development Revenue, Refunding (M.O.R. XIV Associates Project) 7.75%,
6/1/2012............................................................................. 2,500,000 2,608,300
Howard County Metropolitan District:
6.625%, 2/15/2021.................................................................... 2,090,000 2,330,998
Refunding 6%, 8/15/2019.............................................................. 5,500,000 5,621,770
Kent County, College Revenue, Refunding (Washington College Project) 7.70%, 7/1/2018... 1,750,000 2,008,020
Maryland Community Development Administration, Department of Housing and
Community Development:
Infrastructure Finance 8.50%, 6/1/2018............................................. 100,000 117,106
Multi-Family Housing Revenue:
8%, 5/15/2008.................................................................... 1,000,000 1,039,000
6.50%, 5/15/2013................................................................. 5,000,000 5,138,500
8.892%, 5/15/2013 (a,b).......................................................... 6,100,000 5,871,250
8.875%, 5/15/2021................................................................ 525,000 560,474
7.30%, 5/15/2023................................................................. 2,205,000 2,321,865
7.10%, 5/15/2028................................................................. 2,400,000 2,512,056
7.50%, 5/15/2031................................................................. 100,000 104,970
Zero Coupon, 5/15/2032........................................................... 11,550,000 550,704
6.85%, 5/15/2033................................................................. 5,000,000 5,186,000
Single Family Program:
7.40%, 4/1/2009.................................................................. 1,000,000 1,056,210
6.85%, 4/1/2011.................................................................. 1,500,000 1,570,185
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- ---------------------------------------------------------------------------------------
MARYLAND (CONTINUED)
<S> <C> <C>
Maryland Community Development Administration, Department of Housing and
Community Development (continued):
Single Family Program (continued):
6.95%, 4/1/2011.................................................................. $ 6,450,000 $ 6,771,726
7.125%, 4/1/2014................................................................. 7,000,000 7,425,950
7.70%, 4/1/2015.................................................................. 1,685,000 1,833,499
7.40%, 4/1/2017.................................................................. 800,000 855,984
8.125%, 4/1/2017................................................................. 410,000 443,304
7.375%, 4/1/2026................................................................. 2,000,000 2,127,160
Zero Coupon, 4/1/2029............................................................ 85,075,000 5,259,336
7.625%, 4/1/2029................................................................. 8,000,000 8,533,120
7.45%, 4/1/2032.................................................................. 6,410,000 6,898,122
Maryland Department of Transportation, Consolidated Transportation 6.375%, 9/1/2006.... 5,000,000 5,394,000
Maryland Economic Development Corp., Revenue
(Health and Mental Hygiene Providers Facilities Acquisition Program):
8.375%, 3/1/2013................................................................... 4,675,000 4,786,078
8.75%, 3/1/2017.................................................................... 5,425,000 5,736,721
Maryland Health and Higher Educational Facilities Authority, Revenue:
(Anne Arundel Medical Center) 5.25%, 7/1/2013 (Insured; AMBAC)....................... 3,530,000 3,385,623
(Bon Secours Hospital) 7.375%, 9/1/2017.............................................. 2,575,000 2,960,426
(Francis Scott Key Medical Center) 7%, 7/1/2025...................................... 6,500,000 7,170,800
(Good Samaritan Hospital) 7.50%, 7/1/2021............................................ 4,000,000 4,386,680
(Greater Baltimore Medical Center) 6.75%, 7/1/2019................................... 4,250,000 4,531,222
(Hartford Memorial and Fallston Hospital) 8.50%, 7/1/2014............................ 750,000 830,955
(Howard County General Hospital):
7%, 7/1/2017....................................................................... 1,150,000 1,188,571
8.25%, 7/1/2018.................................................................... 2,600,000 2,881,632
(Kaiser Permanente Medical Program) 9.125%, 7/1/2015................................. 250,000 278,503
(Memorial Hospital of Cumberland):
9.25%, 7/1/2017.................................................................... 3,000,000 3,626,640
Refunding 6.50%, 7/1/2017 (Insured; MBIA).......................................... 3,000,000 3,155,400
(Mercy Medical Center) 8%, 7/1/2020.................................................. 4,675,000 5,568,206
(North Arundel Hospital) 7.875%, 7/1/2021............................................ 500,000 585,715
(Refunding - Church Hospital) 8%, 7/1/2013........................................... 200,000 225,424
(Refunding - Johns Hopkins University) 7.50%, 7/1/2020............................... 1,300,000 1,480,492
(Refunding - Roland Park Project) 7.75%, 7/1/2012.................................... 2,230,000 2,421,735
(Sinai Hospital of Baltimore) 7%, 7/1/2019 (Insured; AMBAC).......................... 5,250,000 5,838,157
(Union Hospital of Cecil County) 6.70%, 7/1/2009..................................... 2,320,000 2,393,753
(University of Maryland Medical Systems) 7%, 7/1/2022 (Insured; FGIC)................ 4,500,000 5,436,990
Maryland Industrial Development Financing Authority, Economic Development Revenue
(Medical Waste Association) 8.625%, 11/15/1999....................................... 2,285,000 1,713,750
Maryland Local Government Insurance Trust, Capitalization Program, COP 7.125%,
8/1/2009............................................................................... 3,250,000 3,670,485
Maryland Stadium Authority, Sports Facility Lease Revenue 7.60%, 12/15/2019............ 5,250,000 5,965,680
Maryland State, COP (Saint Mary's Multiple Service Center Project) 7.875%, 6/1/2013.... 250,000 288,758
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- ---------------------------------------------------------------------------------------
MARYLAND (CONTINUED)
<S> <C> <C>
Maryland Transportation Authority, Transportation Facilities Project Revenue:
9%, 7/1/2015......................................................................... $ 1,790,000 $ 2,034,281
Refunding 5.70%, 7/1/2005............................................................ 3,700,000 3,834,532
Maryland Water Quality Financing Administration, Revolving Loan Fund Revenue:
7.25%, 9/1/2011...................................................................... 2,250,000 2,561,963
7.25%, 9/1/2012...................................................................... 5,500,000 6,262,575
6.70%, 9/1/2013...................................................................... 1,200,000 1,320,576
7.10%, 9/1/2013...................................................................... 600,000 676,242
Montgomery County Housing Opportunities Commission, Revenue:
Multi-Family Housing (4 Corners Senior Project) 8.375%, 12/1/2015.................... 150,000 162,307
Multi-Family Mortgage:
8.25%, 7/1/2019.................................................................... 200,000 213,100
7%, 7/1/2023....................................................................... 1,190,000 1,238,481
7.05%, 7/1/2032.................................................................... 2,485,000 2,596,030
7.375%, 7/1/2032................................................................... 5,500,000 5,757,400
Single Family Mortgage:
7.375%, 7/1/2017................................................................... 2,000,000 2,106,700
7.625%, 7/1/2017................................................................... 500,000 526,500
8.375%, 7/1/2018................................................................... 375,000 398,659
Montgomery County Revenue Authority, Lease Revenue:
(Olney Indoor Swim Center Project) 6.30%, 7/15/2012.................................. 2,110,000 2,189,505
(Western County Swim Facility Project) 7.375%, 10/1/2009............................. 1,500,000 1,679,595
Northeast Waste Disposal Authority, RRR (Hartford County Resource Recovery)
8.60%, 1/1/2008...................................................................... 1,450,000 1,586,633
Prince Georges County:
Consolidated Public Improvement, Refunding:
6.75%, 7/1/2010.................................................................... 2,000,000 2,188,200
5.25%, 10/1/2010................................................................... 1,000,000 974,340
Economic Development Revenue, Refunding (Capitol View II) 9%, 9/1/2002............... 7,506,000 7,992,464
PCR, Refunding (Potomac Electric Project) 6%, 9/1/2022............................... 5,000,000 5,098,400
Stormwater Management 5.50%, 3/15/2013............................................... 2,780,000 2,763,181
Prince Georges County Housing Authority, Mortgage Revenue:
(Chillum Heights Project) Zero Coupon, 12/20/2020.................................... 7,625,000 535,580
(Maryland Garden Apartments Project) 7.70%, 4/20/2021 (Collateralized; GNMA)......... 4,500,000 4,622,130
(Refunding - New Keystone Apartment Project) 6.80%, 7/1/2025 (Insured: FHA and
MBIA)................................................................................ 4,300,000 4,512,334
(Refunding - Stevenson Apartments Project) 6.35%, 7/20/2020 (Collateralized; GNMA)... 3,000,000 3,044,190
(Refunding - Templeton Project) 7.10%, 4/20/2020 (Collateralized; GNMA).............. 1,045,000 1,111,629
Prince Georges County Industrial Development Authority, Lease Revenue
(Upper Marlboro Justice Center) 7%, 6/30/2019 (Insured; MBIA)........................ 2,500,000 2,856,525
Saint Mary's County, Multi-Family Housing Revenue, Refunding (Patuxent Park
Apartments Project) 7.50%, 1/20/2025 (Collateralized; GNMA).......................... 5,200,000 5,439,408
University of Maryland, System Auxiliary Facility and Tuition Revenue:
5.375%, 4/1/2009..................................................................... 3,500,000 3,453,765
6.50%, 4/1/2011...................................................................... 4,990,000 5,326,875
6.50%, 4/1/2012...................................................................... 2,000,000 2,153,720
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- ---------------------------------------------------------------------------------------
MARYLAND (CONTINUED)
<S> <C> <C>
Washington County, Multi-Family Rental Housing Revenue, Refunding
(Youngstown Apartments) 7%, 2/1/2025 (Insured; FHA).................................. $ 3,990,000 $ 4,228,043
Washington Suburban Sanitary District, General Construction:
6.90%, 6/1/2010...................................................................... 1,055,000 1,147,270
6.50%, 12/1/2011..................................................................... 4,820,000 5,296,505
6.50%, 11/1/2014..................................................................... 2,690,000 2,882,443
- ---------------------------------------------------------------------------------------
U. S. RELATED--4.7%
Commonwealth of Puerto Rico:
5.85%, 7/1/2009...................................................................... 5,000,000 5,075,800
Refunding 6.25%, 7/1/2010............................................................ 3,000,000 3,118,530
Guam Airport Authority, Revenue 6.70%, 10/1/2023....................................... 4,000,000 4,234,440
Guam Power Authority, Revenue 6.30%, 10/1/2012......................................... 3,400,000 3,520,122
------------
TOTAL MUNICIPAL BONDS (cost $310,452,279).............................................. $332,224,833
------------
------------
- ---------------------------------------------------------------------------------------
SHORT-TERM TAX EXEMPT INVESTMENTS--2.4%
Maryland
Frederick, General Improvement, VRDN 2.75% (LOC; Fuji Bank) (c,d)...................... $ 4,200,000 $ 4,200,000
Maryland Health and Higher Educational Facilities Authority, Revenue, VRDN
(Pooled Loan Program) 2.60% (LOC; Dai Ichi Kangyo Bank) (c,d)........................ 4,000,000 4,000,000
------------
TOTAL SHORT-TERM TAX EXEMPT INVESTMENTS (cost $8,200,000).............................. $ 8,200,000
------------
------------
TOTAL INVESTMENTS (cost $318,652,279).................................................. $340,424,833
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <S> <S> <S>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Insurance Association
FGIC Financial Guaranty Insurance Corporation PCR Pollution Control Revenue
FHA Federal Housing Administration RRR Resources Recovery Revenue
FNMA Federal National Mortgage Association VRDN Variable Rate Demand Notes
GNMA Government National Mortgage Association
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (E) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C>
AAA Aaa AAA 25.8%
AA Aa AA 44.3
A A A 14.8
BBB Baa BBB 5.1
F1 MIG1 SP1 2.4
Not Rated Not Rated Not Rated 7.6
--------
100.0%
--------
--------
<FN>
- --------------------------------------------------------------------------------
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 April 30,
1993, these securities amounted to $5,871,250 or 1.7% of net assets.
(c) 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.
(d) Secured by letters of credit.
(e) Fitch currently provides creditworthiness information for a limited amount
of investments.
(f) At April 30, 1993, the Fund had $107,691,360 (31.4%) of net assets invested
in securities whose payment of principal and interest is dependent upon
revenues generated from housing projects.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $318,652,279)--see statement.................................................... $340,424,833
Cash.................................................................................... 2,577,703
Interest receivable..................................................................... 5,544,323
Receivable for shares of Beneficial Interest subscribed................................. 1,988,673
Prepaid expenses........................................................................ 28,763
------------
350,564,295
LIABILITIES:
Due to The Dreyfus Corporation.......................................................... $ 185,526
Payable for investment securities purchased............................................. 6,872,425
Payable for shares of Beneficial Interest redeemed...................................... 192,875
Accrued expenses........................................................................ 75,945 7,326,771
---------- ------------
NET ASSETS................................................................................ $343,237,524
------------
------------
REPRESENTED BY:
Paid-in capital......................................................................... $320,669,973
Accumulated undistributed net realized gain on investments.............................. 794,997
Accumulated net unrealized appreciation on investments--Note 3(b)....................... 21,772,554
------------
NET ASSETS at value....................................................................... $343,237,524
------------
------------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............................... 25,911,295
------------
------------
Class B Shares
(unlimited number of $.001 par value shares authorized)............................... 455,614
------------
------------
NET ASSET VALUE per share:
Class A Shares
($337,306,640 / 25,911,295 shares)................................................... $13.02
------
------
Class B Shares
($5,930,884 / 455,614 shares)........................................................ $13.02
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................................... $ 19,655,344
EXPENSES:
Management fee--Note 2(a)............................................................. $1,634,121
Shareholder servicing costs--Note 2(b,c).............................................. 924,982
Custodian fees........................................................................ 31,844
Professional fees..................................................................... 31,740
Prospectus and shareholders' reports--Note 2(b)....................................... 31,249
Registration fees..................................................................... 23,353
Distribution fees (Class B shares)--Note 2(b)......................................... 2,921
Trustees' fees and expenses--Note 2(d)................................................ 1,732
Miscellaneous......................................................................... 21,564
----------
2,703,506
Less--reduction in management fee due to
undertakings--Note 2(a)............................................................. 663,156
----------
TOTAL EXPENSES.................................................................... 2,040,350
------------
INVESTMENT INCOME--NET............................................................ 17,614,994
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3(a)............................................. $2,307,400
Net realized (loss) on financial futures--Note 3(a)..................................... (197,737)
----------
NET REALIZED GAIN..................................................................... 2,109,663
Net unrealized appreciation on investments.............................................. 13,357,793
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................................... 15,467,456
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $ 33,082,450
------------
------------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
------------------------------
1992 1993
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................................... $ 14,079,841 $ 17,614,994
Net realized gain on investments..................................................... 1,587,019 2,109,663
Net unrealized appreciation on investments for the year.............................. 4,471,395 13,357,793
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................. 20,138,255 33,082,450
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares..................................................................... (14,079,841) (17,588,391)
Class B shares..................................................................... -- (26,603)
Net realized gain on investments:
Class A shares..................................................................... (889,634) (2,078,022)
Class B shares..................................................................... -- --
------------ ------------
TOTAL DIVIDENDS.................................................................. (14,969,475) (19,693,016)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares..................................................................... 85,027,489 82,755,870
Class B shares..................................................................... -- 5,905,321
Dividends reinvested:
Class A shares..................................................................... 9,117,105 12,337,374
Class B shares..................................................................... -- 20,196
Cost of shares redeemed:
Class A shares..................................................................... (25,032,703) (25,410,504)
Class B shares..................................................................... -- (276)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS..................... 69,111,891 75,607,981
------------ ------------
TOTAL INCREASE IN NET ASSETS................................................... 74,280,671 88,997,415
NET ASSETS:
Beginning of year.................................................................... 179,959,438 254,240,109
------------ ------------
End of year.......................................................................... $254,240,109 $343,237,524
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------------------
CLASS A CLASS B
------------------------------ ------------
YEAR ENDED APRIL 30, PERIOD ENDED
------------------------------ APRIL 30,
1992 1993 1993*
------------ ------------ ------------
<S> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 6,898,908 6,492,977 454,082
Issued for dividends reinvested...................................... 738,330 967,702 1,553
Shares redeemed...................................................... (2,031,071) (1,996,243) (21)
------------ ------------ ------------
NET INCREASE IN SHARES OUTSTANDING................................. 5,606,167 5,464,436 455,614
------------ ------------ ------------
------------ ------------ ------------
<FN>
- ---------------
*From January 15, 1993 (commencement of operations) to April 30, 1993.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
Reference is made to page 12 of the Fund's Prospectus dated February 18,
1994.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND 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 thirteen
series including the Maryland 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.
On September 18, 1992, shareholders approved an amendment to the Fund's
Agreement and Declaration of Trust to provide for the issuance of additional
classes of shares. On September 23, 1992 the Fund's Board of Trustees
classified the Series' existing shares as Class A shares and authorized the
issuance of an unlimited number of $.001 par value Class B shares. The Series
began offering both Class A and Class B shares on January 15, 1993. 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 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, 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
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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. Effective September 18,
1992 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, 1992 through January 3, 1993 to reduce
the management fee paid by, or reimburse such excess expenses of the Series, to
the extent that the Series' aggregate expenses (excluding certain expenses as
described above) exceeded an annual rate of .65 of 1% of the Series' average
daily net assets and thereafter, had undertaken through January 14, 1993 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 15, 1993 through June 30, 1993,
to waive receipt of the management fee payable to it by the Series in excess of
an annual rate of .41 of 1% of the Series' average daily net assets. The
reduction in management fee, pursuant to the undertakings, amounted to $663,156
for the year ended April 30, 1993.
On September 18, 1992, Series shareholders approved an amendment to the
Agreement changing the expense limitation provision from 1 1/2% to the expense
limitation of any state having jurisdiction over the Series. The amended
Agreement provides that the Series may deduct from the fee to be paid to the
Manager, or the Manager will bear such excess expense, to the extent required
by state law, should the Series' aggregate expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, exceed the
limitation of any state having jurisdiction over the Series.
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 $196,836 during the year ended April 30, 1993
from commissions earned on sales of the Series' Class A shares.
No amounts were retained by the Distributor during the period ended April
30, 1993 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, effective January 15, 1993, 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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Prior to January 15, 1993, the Fund's Service Plan ("prior Service Plan")
provided that the Series pay the Distributor, at an annual rate of .25 of 1% of
the value of the Series' average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing the Series' shares and
for servicing shareholder accounts. The Distributor made payments to one or
more Service Agents based on the value of the Series' shares owned by clients
of the Service Agent. The prior Service Plan also provided for the Series to
bear the costs of preparing, printing and distributing certain of the Series'
prospectuses and statements of additional information and costs associated with
implementing and operating the Plan, not to exceed the greater of $100,000 or
.005 of 1% of the Series' average daily net assets for any full fiscal year.
During the period ended April 30, 1993, $511,639 was charged to the Series
pursuant to the prior Service Plan and $2,921 was charged to the Series
pursuant to the Class B Distribution Plan.
(C) Under the Shareholder Services Plan, effective January 15, 1993, 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 period ended April 30, 1993,
$236,033 and $1,461 were charged to the Class A and Class B shares,
respectively pursuant to the Shareholder Services Plan.
(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. Prior to February 1, 1993, the annual fee
was $1,000.
NOTE 3--SECURITIES TRANSACTIONS:
(A) Purchases and sales of securities amounted to $175,985,883 and
$105,920,783, respectively, for the year ended April 30, 1993, and consisted
entirely of municipal bonds and short-term tax exempt investments.
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 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 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 April 30,
1993, there were no financial futures contracts outstanding.
(B) At April 30, 1993, accumulated net unrealized appreciation on
investments was $21,772,554, consisting of $22,704,163 gross unrealized
appreciation and $931,609 gross unrealized depreciation.
At April 30, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
We have audited the accompanying statement of assets and liabilities of
Premier State Municipal Bond Fund, Maryland Series (one of the Series
constituting the Premier State Municipal Bond Fund), including the statement of
investments, as of April 30, 1993, 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 condensed financial information for each of
the years indicated therein. These financial statements and condensed financial
information are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and condensed financial
information 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 condensed
financial information 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, 1993 by correspondence with the custodian and brokers. 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 condensed financial
information referred to above present fairly, in all material respects, the
financial position of Premier State Municipal Bond Fund, Maryland Series at
April 30, 1993, 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 condensed financial information for each of the indicated years, in
conformity with generally accepted accounting principles.
Ernst & Young
New York, New York
June 1, 1993
<PAGE>
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
-----------------------
ANNUAL REPORT
-----------------------
------------------------------------------------
PREMIER STATE
MUNICIPAL BOND FUND
------------------------------------------------
---------------------------------
MASSACHUSETTS SERIES
---------------------------------
--------------------
APRIL 30, 1993
--------------------
[DREYFUS LION LOGO]
PRINTED IN THE U.S.A.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--100.0% AMOUNT VALUE
----------- -----------
<S> <C> <C>
- ---------------------------------------------------------------------------------------
MASSACHUSETTS--94.0%
Boston Industrial Development Financing Authority, Sewer Facility Revenue
(Harbor Electric Energy Co. Project) 7.375%, 5/15/2015............................... $ 2,500,000 $ 2,715,150
Boston Water and Sewer Commission, Revenue:
7.875%, 11/1/2013.................................................................... 900,000 1,022,571
7.10%, 11/1/2019 (Insured; MBIA)..................................................... 1,000,000 1,153,390
Commonwealth of Massachusetts:
7.25%, 3/1/2000 (Insured; FGIC)...................................................... 650,000 752,869
7.25%, 3/1/2009 (Insured; FGIC)...................................................... 350,000 391,429
7%, 8/1/2012......................................................................... 1,850,000 2,050,318
Leominster 7.50%, 4/1/2009 (Insured; MBIA)............................................. 1,275,000 1,459,773
Lynn Water and Sewer Commission, General Revenue 7.25%, 12/1/2010 (Insured; MBIA)...... 1,000,000 1,137,920
Massachusetts Bay Transportation Authority:
7.625%, 3/1/2009 (Insured; FSA)...................................................... 1,000,000 1,149,080
7.75%, 3/1/2011 (Insured; FSA)....................................................... 1,000,000 1,153,970
7%, 3/1/2021......................................................................... 1,000,000 1,173,970
7.804%, 3/1/2021 (Insured; MBIA) (a,b)............................................... 2,300,000 2,173,500
Massachusetts College Building Authority, Project Revenue 7.80%, 5/1/2016 (Insured;
MBIA).................................................................................. 1,000,000 1,151,170
Massachusetts Education Loan Authority, Education Loan Revenue
7.75%, 1/1/2008 (Insured; MBIA)...................................................... 1,485,000 1,684,584
Massachusetts Health and Educational Facilities Authority, Revenue:
(Berkshire Health Systems):
7.50%, 10/1/2008 (Insured; MBIA)................................................... 1,000,000 1,137,760
6.75%, 10/1/2019 (Insured; MBIA)................................................... 1,750,000 1,828,715
(Brigham and Womens Hospital) 6.75%, 7/1/2024........................................ 1,000,000 1,067,350
(Capital Asset Program) 7.30%, 10/1/2018 (Insured; MBIA)............................. 3,750,000 4,220,063
(Harvard University):
8.875%, 12/1/1995.................................................................. 1,500,000 1,724,235
6.50%, 12/1/2007................................................................... 750,000 811,252
(Lahey Clinic Medical Center) 7.625%, 7/1/2018 (Insured; MBIA)....................... 1,000,000 1,160,520
(Medical Center of Central Massachusetts) 7.10%, 7/1/2021............................ 1,000,000 1,081,770
(New England Deaconess Hospital) 6.875%, 4/1/2022.................................... 4,000,000 4,273,800
(Refunding - Milton Hospital) 7%, 7/1/2016 (Insured; MBIA)........................... 2,050,000 2,262,872
(Salem Hospital) 7.25%, 7/1/2009 (Insured; MBIA)..................................... 370,000 402,249
(South Shore Hospital) 7.50%, 7/1/2020 (Insured; MBIA)............................... 2,000,000 2,307,640
(Tufts University) 8.77%, 8/15/2018 (Insured; FGIC) (a).............................. 2,000,000 2,019,980
(University Hospital) 7.25%, 7/1/2019 (Insured; MBIA)................................ 2,750,000 3,100,405
(Winchester Hospital) 8.125%, 7/1/2014............................................... 1,040,000 1,138,176
Massachusetts Housing Finance Agency, Housing Revenue:
Multiple Family Residential 7.80%, 8/1/2022 (Insured; FHA)........................... 1,500,000 1,607,565
Residential:
6.25%, 11/15/2012 (Collateralized; FNMA)........................................... 1,600,000 1,638,256
8.50%, 8/1/2020.................................................................... 1,225,000 1,284,376
8.40%, 8/1/2021.................................................................... 500,000 519,205
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
----------- -----------
- ---------------------------------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
<S> <C> <C>
Massachusetts Housing Finance Agency, Housing Revenue (continued):
Single Family:
7.80%, 12/1/2005................................................................... $ 1,000,000 $ 1,046,860
7.90%, 6/1/2014.................................................................... 1,000,000 1,070,760
8.10%, 12/1/2021................................................................... 2,400,000 2,552,760
7.95%, 6/1/2023.................................................................... 2,000,000 2,141,220
Massachusetts Industrial Finance Agency, Revenue:
(Brandeis University) 6.80%, 10/1/2019 (Insured; MBIA)............................... 500,000 535,875
(Leonard Morse Hospital) 8%, 10/15/2014.............................................. 1,000,000 1,193,050
(Provider Lease Program) 8.75%, 7/15/2009............................................ 695,000 749,349
(Refunding - Harvard Community Health) 8.125%, 10/1/2017............................. 750,000 841,057
Massachusetts Municipal Wheelhouse Electric Co., Power Supply System Revenue:
8.75%, 7/1/2018...................................................................... 3,445,000 4,111,022
6.125%, 7/1/2019..................................................................... 1,200,000 1,210,692
Massachusetts Port Authority, Special Project Revenue (Harborside Hyatt) 10%,
3/1/2026............................................................................... 3,000,000 3,232,500
Massachusetts Water Resources Authority 7.625%, 4/1/2014............................... 750,000 885,233
New England Education Loan Marketing Corp., Refunding (Student Loan) 5.70%, 7/1/2005... 1,000,000 992,120
Somerville Housing Development Corp., Multiple Family Revenue, Refunding
7.50%, 1/1/2024 (Collateralized; FNMA)............................................... 1,000,000 1,069,230
University of Lowell Building Authority 7.60%, 11/1/2010 (Insured; FSA)................ 750,000 846,570
- ---------------------------------------------------------------------------------------
U. S. RELATED--6.0%
<S> <C> <C>
Commonwealth of Puerto Rico 6.80%, 7/1/2021............................................ 1,000,000 1,082,850
Guam Airport Authority, Revenue 6.70%, 10/1/2023....................................... 1,500,000 1,587,915
Puerto Rico Electric Power Authority, Power Revenue 8%, 7/1/2008....................... 500,000 576,780
Puerto Rico Telephone Authority, Revenue 8%, 1/1/2008.................................. 425,000 430,555
Virgin Islands Public Finance Authority, Revenue, Refunding 7.25%, 10/1/2018........... 1,000,000 1,090,010
-----------
TOTAL INVESTMENTS (cost $73,028,881)................................................... $80,002,291
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <S> <S> <S>
FGIC Financial Guaranty Insurance Corporation FSA Financial Security Association
FNMA Federal National Mortgage Association MBIA Municipal Bond Insurance Association
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (C) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C>
AAA Aaa AAA 47.7%
AA Aa AA 9.9
A A A 21.8
BBB Baa BBB 14.3
Not Rated Not Rated Not Rated 6.3
--------
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 April 30, 1993,
these securities amounted to $2,173,500, or 2.7% of net assets.
(c) Fitch currently provides creditworthiness information for a limited amount
of investments.
(d) At April 30, 1993, the Fund had $24,933,657 (30.9% of net assets) invested
in securities whose payment of principal and interest is dependent upon
revenues generated from health care projects.
(e) At April 30, 1993, 31.8% of the Fund's net assets are insured by MBIA.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $73,028,881)--see statement...................................................... $80,002,291
Cash..................................................................................... 1,707,149
Interest receivable...................................................................... 1,540,886
Receivable for shares of Beneficial Interest subscribed.................................. 30,629
Prepaid expenses......................................................................... 8,886
-----------
83,289,841
LIABILITIES:
Due to The Dreyfus Corporation........................................................... $ 43,314
Payable for investment securities purchased.............................................. 2,259,576
Payable for shares of Beneficial Interest redeemed....................................... 195,850
Accrued expenses......................................................................... 24,198 2,522,938
---------- -----------
NET ASSETS................................................................................. $80,766,903
-----------
-----------
REPRESENTED BY:
Paid-in capital.......................................................................... $73,516,941
Accumulated undistributed net realized gain on investments............................... 276,552
Accumulated net unrealized appreciation on investments--Note 3........................... 6,973,410
-----------
NET ASSETS at value........................................................................ $80,766,903
-----------
-----------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)................................ 6,570,316
-----------
-----------
Class B Shares
(unlimited number of $.001 par value shares authorized)................................ 87,878
-----------
-----------
NET ASSET VALUE per share:
Class A Shares
($79,701,045 / 6,570,316 shares)....................................................... $12.13
------
------
Class B Shares
($1,065,858 / 87,878 shares)........................................................... $12.13
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME.......................................................................... $ 5,064,492
EXPENSES:
Management fee--Note 2(a).............................................................. $ 406,583
Shareholder servicing costs--Note 2(b,c)............................................... 235,361
Prospectus and shareholders' reports--Note 2(b)........................................ 17,429
Professional fees...................................................................... 8,368
Custodian fees......................................................................... 7,768
Registration fees...................................................................... 5,487
Distribution fees (Class B shares)--Note 2(b).......................................... 777
Trustees' fees and expenses--Note 2(d)................................................. 452
Miscellaneous.......................................................................... 5,156
----------
687,381
Less--reduction in management fee due to
undertakings--Note 2(a).............................................................. 179,550
----------
TOTAL EXPENSES..................................................................... 507,831
-----------
INVESTMENT INCOME--NET............................................................. 4,556,661
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3................................................. $ 537,446
Net unrealized appreciation on investments............................................... 4,033,314
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................................... 4,570,760
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................................... $ 9,127,421
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
----------------------------
1992 1993
----------- -----------
<S> <C> <C>
OPERATIONS:
Investment income--net.................................................................. $ 4,095,391 $ 4,556,661
Net realized gain on investments........................................................ 69,045 537,446
Net unrealized appreciation on investments for the year................................. 1,842,468 4,033,314
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................ 6,006,904 9,127,421
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares........................................................................ (4,095,391) (4,549,010)
Class B shares........................................................................ -- (7,651)
Net realized gain on investments:
Class A shares........................................................................ -- (56,938)
Class B shares........................................................................ -- --
----------- -----------
TOTAL DIVIDENDS..................................................................... (4,095,391) (4,613,599)
----------- -----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................................ 14,046,441 12,873,702
Class B shares........................................................................ -- 1,057,732
Dividends reinvested:
Class A shares........................................................................ 2,075,642 2,354,860
Class B shares........................................................................ -- 2,601
Cost of shares redeemed:
Class A shares........................................................................ (8,488,513) (6,908,497)
Class B shares........................................................................ -- (150)
----------- -----------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS........................ 7,633,570 9,380,248
----------- -----------
TOTAL INCREASE IN NET ASSETS...................................................... 9,545,083 13,894,070
NET ASSETS:
Beginning of year....................................................................... 57,327,750 66,872,833
----------- -----------
End of year............................................................................. $66,872,833 $80,766,903
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------------------------
CLASS A CLASS B
---------------------------- ------------
YEAR ENDED APRIL 30, PERIOD ENDED
---------------------------- APRIL 30,
1992 1993 1993*
----------- ----------- ------------
<S> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 1,247,652 1,094,206 87,675
Issued for dividends reinvested......................................... 183,862 199,322 215
Shares redeemed......................................................... (757,419) (586,172) (12 )
----------- ----------- ------------
NET INCREASE IN SHARES OUTSTANDING.................................... 674,095 707,356 87,878
----------- ----------- ------------
----------- ----------- ------------
<FN>
- ---------------
* From January 15, 1993 (commencement of operations) to April 30, 1993.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
Reference is made to page 13 of the Fund's Prospectus dated February 18,
1994.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS 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 thirteen
series including the Massachusetts 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.
On September 18, 1992, shareholders approved an amendment to the Fund's
Agreement and Declaration of Trust to provide for the issuance of additional
classes of shares. On September 23, 1992 the Fund's Board of Trustees classified
the Series' existing shares as Class A shares and authorized the issuance of an
unlimited number of $.001 par value Class B shares. The Series began offering
both Class A and Class B shares on January 15, 1993. 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 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, 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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (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 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 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. Effective September 18,
1992 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, 1992 through January 3, 1993 to reduce the
management fee paid by, or reimburse such excess expenses of the Series, to the
extent that the Series' aggregate expenses (excluding certain expenses as
described above) exceeded an annual rate of .65 of 1% of the Series' average
daily net assets and thereafter, had undertaken through January 14, 1993, 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 15, 1993 through June 30, 1993, to
waive receipt of the management fee payable to it by the Series in excess of an
annual rate of .40 of 1% of the Series' average daily net assets. The reduction
in management fee, pursuant to the undertakings, amounted to $179,550 for the
year ended April 30, 1993.
On September 18, 1992, Series shareholders approved an amendment to the
Agreement changing the expense limitation provision from 1 1/2% to the expense
limitation of any state having jurisdiction over the Series. The amended
Agreement provides that the Series may deduct from the fee to be paid to the
Manager, or the Manager will bear such excess expense, to the extent required by
state law, should the Series' aggregate expenses, exclusive of taxes, brokerage,
interest on borrowings and extraordinary expenses, exceed the limitation of any
state having jurisdiction over the Series.
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 $23,223 during the year ended April 30, 1993 from
commissions earned on sales of the Series' Class A shares.
No amounts were retained by the Distributor during the period ended April
30, 1993 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, effective January 15, 1993, the Series
pays the Distributor at an annual rate of .50 of 1% of the value of the Series'
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
Prior to January 15, 1993, the Fund's Service Plan ("prior Service Plan")
provided that the Series pay the Distributor, at an annual rate of .25 of 1% of
the value of the Series' average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing the Series' shares and
for servicing shareholder accounts. The Distributor made payments to one or more
Service Agents based on the value of the Series' shares owned by clients of the
Service Agent. The prior Service Plan also provided for the Series to bear the
costs of preparing, printing and distributing certain of the Series'
prospectuses and statements of additional information and costs associated with
implementing and operating the Plan, not to exceed the greater of $100,000 or
.005 of 1% of the Series' average daily net assets for any full fiscal year.
During the period ended April 30, 1993, $130,297 was charged to the Series
pursuant to the prior Service Plan and $777 was charged to the Series pursuant
to the Class B Distribution Plan.
(C) Under the Shareholder Services Plan, effective January 15, 1993, 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 period ended April 30, 1993,
$56,669 and $389 were charged to the Class A and Class B shares, respectively
pursuant to the Shareholder Services Plan.
(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. Prior to February 1, 1993, the annual fee
was $1,000.
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $18,985,819 and $8,993,410,
respectively, for the year ended April 30, 1993, and consisted entirely of
municipal bonds and short-term tax exempt investments.
At April 30, 1993, accumulated net unrealized appreciation on investments
was $6,973,410, consisting of $7,023,808 gross unrealized appreciation and
$50,398 gross unrealized depreciation.
At April 30, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
We have audited the accompanying statement of assets and liabilities of
Premier State Municipal Bond Fund, Massachusetts Series (one of the Series
constituting the Premier State Municipal Bond Fund), including the statement of
investments, as of April 30, 1993, 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 condensed financial information for each of
the years indicated therein. These financial statements and condensed financial
information are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and condensed financial
information 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 condensed
financial information 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, 1993 by correspondence with the custodian and brokers. 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 condensed financial
information referred to above present fairly, in all material respects, the
financial position of Premier State Municipal Bond Fund, Massachusetts Series at
April 30, 1993, 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 condensed financial information for each of the indicated years, in
conformity with generally accepted accounting principles.
ERNST & YOUNG
New York, New York
May 28, 1993
<PAGE>
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
-----------------------
ANNUAL REPORT
-----------------------
------------------------------------------------
PREMIER STATE
MUNICIPAL BOND FUND
------------------------------------------------
-------------------------
MICHIGAN SERIES
-------------------------
--------------------
APRIL 30, 1993
--------------------
[DREYFUS LION LOGO]
PRINTED IN THE U.S.A.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--99.7% AMOUNT VALUE
------------ ------------
<S> <C> <C>
- -------------------------------------------------------------------------------------
MICHIGAN--95.2%
Capital Region Airport Authority, Airport Revenue 6.70%, 7/1/2021 (Insured; MBIA).... $ 2,500,000 $ 2,663,750
Chippewa Valley Schools 7%, 5/1/2010................................................. 1,275,000 1,380,302
Detroit:
(Development Area No. 1) 7.60%, 7/1/2010........................................... 4,150,000 4,453,573
Sewer Disposal System Revenue:
7.125%, 7/1/2019................................................................. 2,735,000 3,125,093
Refunding:
7%, 7/1/2011................................................................... 1,325,000 1,429,953
8.734%, 7/1/2023 (Insured; FGIC) (a)........................................... 5,000,000 4,950,000
Water Supply Systems Revenue Refunding 10.083%, 7/1/2022 (Insured; FGIC) (a)....... 5,000,000 5,525,000
Detriot School District (School Building and Site):
7.15%, 5/1/2011.................................................................... 4,250,000 4,632,628
(Wayne County) 6.25%, 5/1/2012..................................................... 4,250,000 4,344,988
Dickinson County Economic Development Corp., Solid Waste Disposal Refunding Revenue
(Champion International Corp. Project) 6.55%, 3/1/2007............................. 4,000,000 4,100,880
East Lansing Building Authority Refunding 6.90%, 10/1/2011........................... 1,375,000 1,465,654
East Lansing School District (Ingham and Clinton Counties School Building and Site)
6.625%, 5/1/2014................................................................... 1,000,000 1,072,140
Fitzgerald Public School District (School Building and Site) 6.375%, 5/1/2016........ 1,150,000 1,206,982
Grand Rapids Housing Finance Authority, Multi-Family Revenue Refunding
7.625%, 9/1/2023 (Collateralized; FNMA)............................................ 1,000,000 1,076,580
Grand Rapids Sanitary Sewer Systems, Improvement Revenue Refunding 7%, 1/1/2016...... 500,000 546,545
Grand Traverse County Hospital Finance Authority, HR (Munson Medical Center)
7.625%, 12/1/2015.................................................................. 750,000 857,573
Greater Detroit Research Recovery Authority, Revenue 9.25%, 12/13/2008............... 1,250,000 1,375,250
Holland School District (Unified School Building and Site) 7.375%, 5/1/2019.......... 2,000,000 2,278,900
Kent Hospital Finance Authority, Hospital Facility Revenue
(Butterworth Hospital) 7.25%, 1/15/2012............................................ 1,000,000 1,096,060
Lapeer Economic Development Corp., Ltd. Obligation Revenue
(Lapeer Health Services Project) 8.625%, 2/1/2020.................................. 2,000,000 2,278,800
Livonia Public School District (School Building and Site) 6.30%, 5/1/2022 (Insured;
FGIC).............................................................................. 2,000,000 2,098,720
Michigan Building Authority, Revenue:
6.75%, 10/1/2007 (Insured; AMBAC).................................................. 1,600,000 1,756,912
6.75%, 10/1/2011................................................................... 2,000,000 2,161,520
Michigan Higher Education Student Loan Authority, Student Loan Revenue:
6.875%, 10/1/2007 (Insured; AMBAC)................................................. 2,250,000 2,462,018
7.55%, 10/1/2008 (Insured; MBIA)................................................... 1,625,000 1,884,057
Refunding 6%, 9/1/2008............................................................. 2,000,000 1,978,080
Michigan Hospital Finance Authority, HR:
(Crittenton Hospital) 6.70%, 3/1/2007.............................................. 2,250,000 2,406,891
(Daughters of Charity National Health Systems-Providence Hospital) 7%, 11/1/2021... 2,700,000 2,925,504
(Henry Ford Continuing Care) 6.75%, 7/1/2011....................................... 1,665,000 1,769,246
(McLaren Obligation Group) 7.50%, 9/15/2021........................................ 1,250,000 1,397,663
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
MICHIGAN (CONTINUED)
<S> <C> <C>
Michigan Hospital Finance Authority, HR (continued):
(Mercy Mount Clemens Corp.) 6.25%, 5/15/2011....................................... $ 2,000,000 $ 2,053,900
(Sisters of Mercy Health Corp.) 7.50%, 2/15/2018................................... 2,250,000 2,488,680
Refunding:
(Detroit Medical Center):
8.125%, 8/15/2008.............................................................. 1,060,000 1,187,984
8.125%, 8/15/2012.............................................................. 1,030,000 1,150,366
(Middle Michigan Obligation Group) 6.625%, 6/1/2010.............................. 2,000,000 2,079,320
(Detroit Medical Center Obligation Group) 6.50%, 8/15/2018....................... 5,000,000 5,183,750
Michigan Housing Development Authority:
(Home Improvement Program) 7.65%, 12/1/2012........................................ 2,150,000 2,237,440
Ltd. Obligation Revenue:
(Fraser Woods Project) 6.50%, 9/15/2007 (Insured; FSA)........................... 1,810,000 1,866,291
(Walled Lake Villa Project) 6%, 4/15/2018 (Insured; FSA)......................... 1,500,000 1,515,495
Multi-Family Housing Revenue 8.375%, 7/1/2019 (Insured; FGIC)...................... 1,550,000 1,639,699
Rental Housing Revenue:
6.50%, 4/1/2006.................................................................. 2,000,000 2,110,360
7.70%, 4/1/2023 (Insured; FSA)................................................... 4,185,000 4,420,448
SFMR:
7.55%, 12/1/2014................................................................. 1,000,000 1,050,520
7.50%, 6/1/2015.................................................................. 2,355,000 2,492,297
8%, 6/1/2018..................................................................... 460,000 487,977
7.75%, 12/1/2019................................................................. 3,090,000 3,295,052
6.95%, 12/1/2020................................................................. 1,750,000 1,823,325
Michigan Municipal Bond Authority, Local Government Loan Program Refunding Revenue
6.50%, 5/1/2016.................................................................. 4,000,000 4,161,040
Michigan State University Board of Trustees, General Revenue 6.125%, 8/15/2010....... 2,705,000 2,770,028
Michigan Strategic Fund, Ltd. Obligation Revenue:
(Northeastern Community Mental Health Foundation) 8.25%, 1/1/2009.................. 1,665,000 1,734,480
Refunding:
(Detroit Edison Co. Pollution Control Project):
7%, 5/1/2021 (Insured; AMBAC).................................................. 4,630,000 5,489,050
6.95%, 9/1/2021 (Insured; FGIC)................................................ 3,500,000 3,811,010
(Ledyard Association Ltd. Partnership Project)
6.25%, 10/1/2011 (Insured; ITT Lyndon Property Insurance Co.).................. 3,075,000 3,139,883
Michigan Trunk Line 7%, 8/15/2017.................................................... 3,945,000 4,513,711
Monroe County:
PCR (Detriot Edison Project):
7.50%, 12/1/2019 (Insured; AMBAC)................................................ 4,650,000 5,246,921
7.875%, 12/1/2019................................................................ 2,720,000 3,010,251
7.65%, 9/1/2020 (Insured; FGIC).................................................. 2,250,000 2,579,062
Water Supply Systems (Frenchtown Charter Township Water Treatment and
Distribution Systems) 6.50%, 5/1/2013............................................ 2,500,000 2,550,650
Monroe County Economic Development Corp., Ltd. Obligation Refunding Revenue
(Detroit Edison Co. Project) 6.95%, 9/1/2022 (Insured; FGIC)....................... 2,000,000 2,376,700
Northville, Special Assessment (Wayne County) 7.875%, 1/1/2006....................... 1,685,000 1,824,198
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
MICHIGAN (CONTINUED)
<S> <C> <C>
Northwestern Michigan College, Community College Improvement Revenue Refunding
7%, 7/1/2011..................................................................... $ 1,800,000 $ 1,909,836
Oakland County Economic Development Corp., Ltd. Obligation Revenue
(Pontiac Osteopathic Hospital Project) 9.625%, 1/1/2020............................ 1,765,000 1,879,090
Okemos Public School District (Ingham County School Building and Site) 6.90%,
5/1/2011........................................................................... 4,000,000 4,358,720
Regents of University of Michigan, HR 6.375%, 12/1/2024.............................. 2,500,000 2,557,825
Rockford Public Schools, Refunding (Kent County School Building and Site) 7.375%,
5/1/2019........................................................................... 2,000,000 2,314,800
Romulus Community Schools (Wayne County School Building and Site)
6.75%, 5/1/2020 (Insured; FSA)................................................... 1,150,000 1,305,871
Romulus Economic Development Corp., Ltd. Obligation Economic Development Revenue
Refunding (Romulus Hir Ltd. Partnership Project)
7%, 11/1/2015 (Insured; ITT Lydon Property Insurance Co.).......................... 3,700,000 3,823,469
Royal Oak Hospital Finance Authority, HR (William Beaumont Hospital) 7.375%,
1/1/2020........................................................................... 2,650,000 2,880,523
Wayne Charter County, Airport Revenue (Detriot Metropolitan Wayne County Airport)
6.75%, 12/1/2021 (Insured; MBIA)................................................... 1,600,000 1,712,320
- -------------------------------------------------------------------------------------
U.S. RELATED--4.5%
<S> <C> <C>
Commonwealth of Puerto Rico Aqueduct and Sewer Authority, Revenue 7.875%, 7/1/2017... 2,000,000 2,267,560
Commonwealth of Puerto Rico, Public Improvement 8.962%, 7/1/2018 (Insured; AMBAC)
(a,b).............................................................................. 2,000,000 2,145,000
Puerto Rico Housing Finance Corp., MFMR 7.50%, 4/1/2022
(LOC; Government Development Bank)(c).............................................. 2,990,000 3,207,702
Virgin Islands Port Authority, Airport Revenue (Cyril E. King Airport Project) 8.10%,
10/1/2005.......................................................................... 500,000 548,430
------------
TOTAL MUNICIPAL BONDS
(cost $167,728,030)................................................................ $181,902,296
------------
------------
- -------------------------------------------------------------------------------------
SHORT-TERM TAX EXEMPT INVESTMENT--.3%
<S> <C> <C>
Michigan;
Monroe County Economic Development Corp., Ltd. Obligation Refunding Revenue, VRDN
(Detroit Edison Co. Pollution Control Project) 2.15% (LOC; Barclay Bank) (c,d)
(cost $500,000).................................................................... $ 500,000 $ 500,000
------------
------------
TOTAL INVESTMENTS--100.0%
(cost $168,228,030)................................................................ $182,402,296
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <S> <S> <S>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
FGIC Financial Guaranty Insurance Corporation MBIA Municipal Bond Insurance Association
FNMA Federal National Mortgage Association MFMR Multi-Family Mortgage Revenue
FSA Financial Security Association PCR Pollution Control Revenue
HR Hospital Revenue SFMR Single Family Mortgage Revenue
VRDN Variable Rate Demand Notes
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (E) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C>
AAA Aaa AAA 33.9%
AA Aa AA 32.0
A A A 20.8
BBB Baa BBB 8.5
F1 MIG1 SP1 .3
Not Rated Not Rated Not Rated 4.5
--------
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 April 30, 1993,
these securities amounted to $2,145,000 or 1.1% of net assets.
(c) Secured by letters of credit.
(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.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $168,228,030)--see statement.................................................... $182,402,296
Cash.................................................................................... 1,102,741
Interest receivable..................................................................... 3,698,509
Receivable for shares of Beneficial Interest subscribed................................. 755,300
Prepaid expenses........................................................................ 22,220
------------
187,981,066
LIABILITIES:
Due to The Dreyfus Corporation.......................................................... $ 98,522
Payable for shares of Beneficial Interest redeemed...................................... 119,746
Accrued expenses........................................................................ 43,904 262,172
---------- ------------
NET ASSETS................................................................................ $187,718,894
------------
------------
REPRESENTED BY:
Paid-in capital......................................................................... $172,958,249
Accumulated undistributed net realized gain on investments.............................. 586,379
Accumulated net unrealized appreciation on investments--Note 3.......................... 14,174,266
------------
NET ASSETS at value....................................................................... $187,718,894
------------
------------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............................... 11,767,787
------------
------------
Class B Shares
(unlimited number of $.001 par value shares authorized)............................... 228,927
------------
------------
NET ASSET VALUE per share:
Class A Shares
($184,137,629 / 11,767,787 shares).................................................... $15.65
------
------
Class B Shares
($3,581,265 / 228,927 shares)......................................................... $15.64
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................................... $ 11,090,504
EXPENSES:
Management fee--Note 2(a)............................................................. $ 910,442
Shareholder servicing costs--Note 2(b,c).............................................. 538,514
Professional fees..................................................................... 25,692
Prospectus and shareholders' reports--Note 2(b)....................................... 24,898
Custodian fees........................................................................ 18,040
Registration fees..................................................................... 12,442
Distribution fees (Class B shares)--Note 2(b)......................................... 2,181
Trustees' fees and expenses--Note 2(d)................................................ 865
Miscellaneous......................................................................... 20,065
----------
1,553,139
Less--reduction in management fee due to
undertakings--Note 2(a)............................................................. 411,882
----------
TOTAL EXPENSES.................................................................... 1,141,257
------------
INVESTMENT INCOME--NET............................................................ 9,949,247
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3................................................ $1,302,815
Net unrealized appreciation on investments.............................................. 9,138,903
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................................... 10,441,718
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $ 20,390,965
------------
------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
------------------------------
1992 1993
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income--net................................................................ $ 8,556,883 $ 9,949,247
Net realized gain on investments...................................................... 1,061,578 1,302,815
Net unrealized appreciation on investments for the year............................... 3,029,599 9,138,903
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............................. 12,648,060 20,390,965
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares...................................................................... (8,556,883) (9,928,078)
Class B shares...................................................................... -- (21,169)
Net realized gain on investments:
Class A shares...................................................................... -- (1,407,206)
Class B shares...................................................................... -- --
------------ ------------
TOTAL DIVIDENDS................................................................... (8,556,883) (11,356,453)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares...................................................................... 39,588,263 40,524,594
Class B shares...................................................................... -- 3,563,317
Dividends reinvested:
Class A shares...................................................................... 4,385,685 6,122,861
Class B shares...................................................................... -- 13,575
Cost of shares redeemed:
Class A shares...................................................................... (14,602,265) (16,698,726)
Class B shares...................................................................... -- (84)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...................... 29,371,683 33,525,537
------------ ------------
TOTAL INCREASE IN NET ASSETS.................................................... 33,462,860 42,560,049
NET ASSETS:
Beginning of year..................................................................... 111,695,985 145,158,845
------------ ------------
End of year........................................................................... $145,158,845 $187,718,894
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------------------
CLASS A CLASS B
------------------------------ ------------
YEAR ENDED APRIL 30, PERIOD ENDED
------------------------------ APRIL 30,
1992 1993 1993*
------------ ------------ ------------
<S> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 2,716,192 2,650,957 228,063
Issued for dividends reinvested...................................... 298,991 400,476 869
Shares redeemed...................................................... (996,352) (1,093,531) (5)
------------ ------------ ------------
NET INCREASE IN SHARES OUTSTANDING................................. 2,018,831 1,957,902 228,927
------------ ------------ ------------
------------ ------------ ------------
<FN>
- ---------------
* From January 15, 1993 (commencement of operations) to April 30, 1993.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
Reference is made to page 14 of the Fund's Prospectus dated February 18,
1994.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN 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 thirteen
series including the Michigan 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.
On September 18, 1992, shareholders approved an amendment to the Fund's
Agreement and Declaration of Trust to provide for the issuance of additional
classes of shares. On September 23, 1992 the Fund's Board of Trustees classified
the Series' existing shares as Class A shares and authorized the issuance of an
unlimited number of $.001 par value Class B shares. The Series began offering
both Class A and Class B shares on January 15, 1993. 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 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, 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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (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 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 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. Effective September 18,
1992 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, 1992 through January 2, 1993 to reduce the
management fee paid by, or reimburse such excess expenses of the Series, to the
extent that the Series' aggregate expenses (excluding certain expenses as
described above) exceeded an annual rate of .65 of 1% of the Series' average
daily net assets and thereafter, had undertaken through January 14, 1993, 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 15, 1993 through June 30, 1993, to
waive receipt of the management fee payable to it by the Series in excess of an
annual rate of .39 of 1% of the Series' average daily net assets. The reduction
in management fee, pursuant to the undertakings, amounted to $411,882 for the
year ended April 30, 1993.
On September 18, 1992, Series shareholders approved an amendment to the
Agreement changing the expense limitation provision from 1 1/2% to the expense
limitation of any state having jurisdiction over the Series. The amended
Agreement provides that the Series may deduct from the fee to be paid to the
Manager, or the Manager will bear such excess expense, to the extent required by
state law, should the Series' aggregate expenses, exclusive of taxes, brokerage,
interest on borrowings and extraordinary expenses, exceed the limitation of any
state having jurisdiction over the Series.
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 $97,331 during the year ended ended April 30, 1993
from commissions earned on sales of the Series' Class A shares.
No amounts were retained by the Distributor during the period ended April
30, 1993 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, effective January 15, 1993, the Series
pays the Distributor at an annual rate of .50 of 1% of the value of the Series'
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
Prior to January 15, 1993, the Fund's Service Plan ("prior Service Plan")
provided that the Series pay the Distributor, at an annual rate of .25 of 1% of
the value of the Series' average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing the Series' shares and
for servicing shareholder accounts. The Distributor made payments to one or more
Service Agents based on the value of the Series' shares owned by clients of the
Service Agent. The prior Service Plan also provided for the Series to bear the
costs of preparing, printing and distributing certain of the Series'
prospectuses and statements of additional information and costs associated with
implementing and operating the Plan, not to exceed the greater of $100,000 or
.005 of 1% of the Series' average daily net assets for any full fiscal year.
During the period ended April 30, 1993, $286,301 was charged to the Series
pursuant to the prior Service Plan and $2,181 was charged to the Series pursuant
to the Class B Distribution Plan.
(C) Under the Shareholder Services Plan, effective January 15, 1993, 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 period ended April 30, 1993,
$130,609 and $1,090 were charged to the Class A and Class B shares,
respectively, pursuant to the Shareholder Services Plan.
(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. Prior to February 1, 1993, the annual fee
was $1,000.
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $83,181,293 and $54,699,363,
respectively, for the year ended April 30, 1993, and consisted entirely of
municipal bonds and short-term tax exempt investments.
At April 30, 1993, accumulated net unrealized appreciation on investments
was $14,174,266, consisting of $14,235,906 gross unrealized appreciation and
$61,640 gross unrealized depreciation.
At April 30, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
We have audited the accompanying statement of assets and liabilities of
Premier State Municipal Bond Fund, Michigan Series (one of the Series
constituting the Premier Municipal Bond Fund), including the statement of
investments, as of April 30, 1993, 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 condensed financial information for each of
the years indicated therein. These financial statements and condensed financial
information are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and condensed financial
information 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 condensed
financial information 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, 1993 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 condensed financial
information referred to above present fairly, in all material respects, the
financial position of Premier State Municipal Bond Fund, Michigan Series at
April 30, 1993, 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 condensed financial information for each of the indicated years, in
conformity with generally accepted accounting principles.
ERNST & YOUNG
New York, New York
May 28, 1993
<PAGE>
------------------------
ANNUAL REPORT
------------------------
------------------------------------------------
PREMIER STATE
MUNICIPAL BOND FUND
------------------------------------------------
----------------------------
MINNESOTA SERIES
----------------------------
---------------------
APRIL 30, 1993
---------------------
[DREYFUS LION LOGO]
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--99.7% AMOUNT VALUE
------------ ------------
<S> <C> <C>
- -------------------------------------------------------------------------------------
MINNESOTA--95.6%
Anoka County:
Research Recovery Revenue (Northern State Power Co.) 7.15%, 12/1/2008.............. $ 1,150,000 $ 1,282,526
Solid Waste Disposal Revenue (United Power Association Project)
6.95%, 12/1/2008 (Guaranteed; National Rural Utilities Cooperative Finance
Corp.)........................................................................... 3,825,000 4,126,066
City of Becker, PCR Refunding (Northern States Power Co.) 6.80%, 4/1/2007............ 1,000,000 1,082,010
Burnsville, Multi-Family Housing Revenue Refunding (Coventry Court Apartments)
7.50%, 9/1/2027 (Insured; FHA)..................................................... 2,250,000 2,393,932
Columbia Heights, IDR (Land O Lakes-Medronics Project) 7.40%, 6/1/2009............... 1,390,000 1,421,762
Dakota County Housing and Redevelopment Authority, South-St. Paul Revenue Refunding
(Single Family-GNMA Program) 8.10%, 9/1/2012....................................... 285,000 302,268
City of Detriot Lakes, Health Care Facilities Revenue (Benedictine Health Systems
St. Mary's Regional Health Center) 6%, 2/15/2019 (Guaranteed; Connie Lee).......... 3,000,000 3,029,880
Duluth Economic Development Authority, Health Care Facilities Revenue
(Benedictine Health-St. Mary's Project) 8.375%, 2/15/2020.......................... 2,500,000 3,022,150
Eagan, Multi-Family Housing Revenue Refunding (Forest Ridge Apartments)
7.50%, 9/1/2017 (Insured; FHA)..................................................... 1,000,000 1,056,100
Eden Prairie, Multi-Family Housing Revenue Refunding:
(Eden Investments Project) 7.40%, 8/1/2025 (Insured; FHA).......................... 500,000 542,535
(Welsh Parkway Apartments) 8%, 7/1/2026 (Insured; FHA)............................. 2,975,000 3,143,593
Edina:
Hospital Systems Revenue (Fairview Hospital) 7.125%, 7/1/2006...................... 1,000,000 1,078,580
Housing Development Revenue Refunding (Edina Park Plaza Project)
7.70%, 12/1/2028 (Insured; FHA).................................................. 2,500,000 2,657,625
Hubbard County, Solid Waste Disposal Revenue (Potlatch Corp. Project) 7.375%,
8/1/2013............................................................................. 1,000,000 1,089,750
City of Mankato, Hospital Facilities First Mortgage Revenue
(Immanuel-St. Joseph's Hospital of Mankato, Inc. Project) 6.30%, 8/1/2022.......... 2,000,000 2,054,960
Metropolitan Council, Minneapolis-St. Paul Metropolitan Area Sports Facilities
Revenue
Refunding (Hubert H. Humphrey Metrodome) 6%, 10/1/2009............................. 2,500,000 2,570,600
Minneapolis:
Home Ownership Program 7.10%, 6/1/2021............................................. 1,200,000 1,260,708
HR:
(Fairview Hospital and Healthcare Services) 6.50%, 1/1/2011 (Insured; MBIA)...... 2,500,000 2,697,375
(Lifespan Inc.-Abbot Hospital) 7%, 12/1/2014..................................... 1,500,000 1,600,425
(Lifespan Inc.-Minneapolis Children's Medical Center Project):
8.125%, 8/1/2017............................................................... 1,500,000 1,695,465
7%, 12/1/2020.................................................................. 5,650,000 6,094,598
Multi-Family Housing Revenue Refunding (Churchill Apartments Project)
7.05%, 10/1/2022 (Insured; FHA).................................................. 4,000,000 4,192,880
MFMR (Seward Towers Project) 7.375%, 12/20/2030 (Collateralized; GNMA)............. 2,350,000 2,527,284
Sales Tax Refunding 6.25%, 4/1/2012................................................ 1,700,000 1,804,941
Minneapolis Community Development Agency, Ltd. Tax Support Development Revenue:
8.375%, 6/1/2007................................................................... 2,500,000 2,747,000
8%, 12/1/2009...................................................................... 300,000 318,255
7.75%, 12/1/2019................................................................... 2,965,000 3,209,316
7.40%, 12/1/2021................................................................... 2,000,000 2,160,140
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
MINNESOTA (CONTINUED)
<S> <C> <C>
Minneapolis-St. Paul Housing Finance Board, SFMR:
8.875%, 11/1/2018 (Collateralized; GNMA)........................................... $ 220,000 $ 235,189
8.30%, 8/1/2021 (Collateralized; GNMA)............................................. 490,000 520,047
7.30%, 8/1/2031 (Collateralized; GNMA)............................................. 7,025,000 7,441,231
Minneapolis-St. Paul Housing and Redevelopment Authority, Health Care Systems
Revenue:
8%, 8/15/2014...................................................................... 3,000,000 3,407,790
(Group Health Plan Inc., Project) 6.75%, 12/1/2013................................. 2,750,000 2,903,753
Minneapolis-St. Paul Metropolitan Apartments Community 7.80%, 1/1/2014............... 3,000,000 3,412,140
Minnesota Agricultural and Economic Development Board,
Minnesota Small Business Development Loan Revenue:
9%, Series B, 8/1/2008........................................................... 75,000 80,989
9%, Series C, 8/1/2008........................................................... 245,000 264,563
8.125%, Lot 1, 8/1/2009.......................................................... 765,000 824,899
8.125%, Lot 2, 8/1/2009.......................................................... 500,000 539,150
8.125%, Lot 3, 8/1/2009.......................................................... 815,000 878,815
8.20%, 8/1/2009.................................................................. 655,000 715,705
8.375%, 8/1/2010................................................................. 1,385,000 1,462,948
Minnesota Higher Education Facilities Authority, Mortgage Revenue (University St.
Thomas)
7.125%, 9/1/2014................................................................... 2,095,000 2,297,461
Minnesota Housing Finance Agency:
Housing Development 6.90%, 8/1/2012................................................ 3,000,000 3,143,430
Residential Mortgage Revenue 10%, 7/1/2016......................................... 305,000 323,453
Single Family Mortgage:
7.35%, 7/1/2016.................................................................. 1,930,000 2,042,480
7.30%, 1/1/2017.................................................................. 1,245,000 1,313,649
7.90%, 7/1/2019.................................................................. 1,745,000 1,870,466
7.45%, 7/1/2022.................................................................. 2,920,000 3,130,269
7.95%, 7/1/2022.................................................................. 2,420,000 2,596,878
6.15%, 1/1/2026.................................................................. 2,000,000 2,021,960
8%, 7/1/2029..................................................................... 210,000 222,905
State Assisted Home Improvement 7.30%, 8/1/2006.................................... 1,880,000 1,998,233
Minnesota Public Facilities Authority, Water Pollution Control Revenue:
7.10%, 3/1/2012.................................................................... 2,350,000 2,617,735
6.95%, 3/1/2013.................................................................... 3,000,000 3,288,180
Northern Municipal Power Agency, Electric System Revenue Refunding 7.25%, 1/1/2016... 3,500,000 3,878,455
City of Red Wing, Health Care Facilities Refunding Revenue (River Region Obligation
Group)
6.50%, 9/1/2022.................................................................... 3,445,000 3,511,695
City of Rochester, Health Care Facilities Revenue (Mayo Foundation/Mayo Medical
Center)
9.14%, 11/15/2014 (a).............................................................. 3,000,000 3,299,730
St. Cloud, Hospital Facilities Revenue (Saint Cloud Hospital) 7%, 7/1/2020 (Insured;
AMBAC)............................................................................... 1,000,000 1,117,400
St. Paul Housing and Redevelopment Authority, SFMR Refunding 6.90%, 12/1/2021........ 3,000,000 3,144,450
St. Paul Port Authority, IDR Refunding (Hampden Building Project) 9.25%, 6/1/2011.... 1,065,000 1,113,319
Sartell, PCR Refunding (Champion International Corp. Project) 6.95%, 10/1/2012....... 5,000,000 5,383,950
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
MINNESOTA (CONTINUED)
<S> <C> <C>
Seaway Port Authority of Duluth,
Industrial Development Dock and Wharf Revenues Refunding (Cargill Inc. Project)
6.80%, 5/1/2012.................................................................... $ 3,000,000 $ 3,178,860
Southern Minnesota Municipal Power Agency, Power Supply System Revenue:
5%, 1/1/2009....................................................................... 2,500,000 2,352,125
8.561%, 1/1/2018 (Insured; MBIA)(a,b).............................................. 4,400,000 4,411,000
- -------------------------------------------------------------------------------------
U.S. RELATED--4.1%
Commonwealth of Puerto Rico, Public Improvement
8.962%, 7/1/2018 (Insured; AMBAC) (a,b)............................................ 2,000,000 2,145,000
Puerto Rico Electric Power Authority, Power Revenue 6.25%, 7/1/2017.................. 2,250,000 2,329,538
Puerto Rico Public Buildings Authority Revenue
6.60%, 7/1/2004 (Guaranteed; Commonwealth of Puerto Rico).......................... 1,485,000 1,598,112
------------
TOTAL MUNICIPAL BONDS
(cost $138,193,549)................................................................ $148,180,676
------------
------------
- -------------------------------------------------------------------------------------
SHORT-TERM TAX EXEMPT INVESTMENT--.3%
Minnesota;
Golden Valley Industrial Development Revenue Refunding, VRDN
(Graco Incorporated Project) 2.625% (LOC; Fuji Bank)(c,d)
(cost $500,000).................................................................... $ 500,000 $ 500,000
------------
------------
TOTAL INVESTMENTS--100.0%
(cost $138,693,549)................................................................ $148,680,676
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <S> <S> <S>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Insurance Association
FHA Federal Housing Administration MFMR Multi-Family Mortgage Revenue
GNMA Government National Mortgage Association PCR Pollution Control Revenue
HR Hospital Revenue SFMR Single Family Mortgage Revenue
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
LOC Letter of Credit
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (E) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C>
AAA Aaa AAA 30.5%
AA Aa AA 23.6
A A A 27.0
BBB Baa BBB 13.7
F1 MIG1 SP1 .3
Not Rated Not Rated Not Rated 4.9
--------
100.0%
--------
--------
<FN>
- --------------------------------------------------------------------------------
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 April 30,
1993, these securities amounted to $6,556,000 or 4.3% of net assets.
(c) Secured by letters of credit.
(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, 1993, the Fund had $46,820,857 (30.5% of net assets) invested
in securities whose payment of principal and interest is dependent upon
revenues generated from housing projects.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $138,693,549)--see statement.................................................... $148,680,676
Cash.................................................................................... 990,634
Interest receivable..................................................................... 3,031,299
Receivable for shares of Beneficial Interest subscribed................................. 824,055
Prepaid expenses........................................................................ 16,773
------------
153,543,437
LIABILITIES:
Due to The Dreyfus Corporation.......................................................... $ 80,834
Payable for shares of Beneficial Interest redeemed...................................... 31,789
Accrued expenses........................................................................ 33,033 145,656
---------- ------------
NET ASSETS................................................................................ $153,397,781
------------
------------
REPRESENTED BY:
Paid-in capital......................................................................... $143,017,481
Accumulated undistributed net realized gain on investments.............................. 393,173
Accumulated net unrealized appreciation on investments--Note 3(b)....................... 9,987,127
------------
NET ASSETS at value....................................................................... $153,397,781
------------
------------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............................... 9,718,655
------------
------------
Class B Shares
(unlimited number of $.001 par value shares authorized)............................... 302,339
------------
------------
NET ASSET VALUE per share:
Class A Shares
($148,764,651 / 9,718,655 shares).................................................... $15.31
------
------
Class B Shares
($4,633,130 / 302,339 shares)........................................................ $15.32
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................................... $ 9,238,630
EXPENSES:
Management fee--Note 2(a)............................................................. $ 745,093
Shareholder servicing costs--Note 2(b,c).............................................. 430,661
Professional fees..................................................................... 22,426
Prospectus and shareholders' reports--Note 2(b)....................................... 20,068
Custodian fees........................................................................ 14,799
Registration fees..................................................................... 8,212
Distribution fees (Class B shares)--Note 2(b)......................................... 2,836
Trustees' fees and expenses--Note 2(d)................................................ 706
Miscellaneous......................................................................... 26,281
----------
1,271,082
Less--reduction in management fee due to
undertakings--Note 2(a)............................................................. 328,657
----------
TOTAL EXPENSES.................................................................... 942,425
------------
INVESTMENT INCOME--NET............................................................ 8,296,205
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3(a)............................................. $1,175,235
Net realized (loss) on financial futures--Note 3(a)..................................... (99,650)
----------
NET REALIZED GAIN..................................................................... 1,075,585
Net unrealized appreciation on investments.............................................. 5,892,386
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................................... 6,967,971
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $ 15,264,176
------------
------------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
------------------------------
1992 1993
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................................... $ 7,084,954 $ 8,296,205
Net realized gain on investments..................................................... 195,743 1,075,585
Net unrealized appreciation on investments for the year.............................. 2,377,736 5,892,386
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................. 9,658,433 15,264,176
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares..................................................................... (7,084,954) (8,268,796)
Class B shares..................................................................... -- (27,409)
Net realized gain on investments:
Class A shares..................................................................... (50,009) (852,977)
Class B shares..................................................................... -- --
------------ ------------
TOTAL DIVIDENDS.................................................................. (7,134,963) (9,149,182)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares..................................................................... 41,161,607 25,401,147
Class B shares..................................................................... -- 4,621,831
Dividends reinvested:
Class A shares..................................................................... 4,445,388 6,085,409
Class B shares..................................................................... -- 16,522
Cost of shares redeemed:
Class A shares..................................................................... (10,414,723) (11,616,007)
Class B shares..................................................................... -- (8,019)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS..................... 35,192,272 24,500,883
------------ ------------
TOTAL INCREASE IN NET ASSETS........................................................... 37,715,742 30,615,877
NET ASSETS:
Beginning of year.................................................................... 85,066,162 122,781,904
------------ ------------
End of year.......................................................................... $122,781,904 $153,397,781
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------------------
CLASS A CLASS B
------------------------------ ------------
YEAR ENDED APRIL 30, PERIOD ENDED
------------------------------ APRIL 30,
1992 1993 1993*
------------ ------------ ------------
<S> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 2,847,167 1,693,647 301,781
Issued for dividends reinvested...................................... 305,765 406,070 1,081
Shares redeemed...................................................... (715,759) (774,416) (523)
------------ ------------ ------------
NET INCREASE IN SHARES OUTSTANDING................................. 2,437,173 1,325,301 302,339
------------ ------------ ------------
------------ ------------ ------------
<FN>
- ---------------
* From January 15, 1993 (commencement of operations) to April 30, 1993.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
Reference is made to page 15 of the Fund's Prospectus dated February 18,
1994.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA 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 thirteen
series including the Minnesota 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.
On September 18, 1992, shareholders approved an amendment to the Fund's
Agreement and Declaration of Trust to provide for the issuance of additional
classes of shares. On September 23, 1992 the Fund's Board of Trustees
classified the Series' existing shares as Class A shares and authorized the
issuance of an unlimited number of $.001 par value Class B shares. The Series
began offering both Class A and Class B shares on January 15, 1993. 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 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, 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
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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. Effective September 18,
1992 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, 1992 through January 1, 1993 to reduce
the management fee paid by, or reimburse such excess expenses of the Series, to
the extent that the Series' aggregate expenses (excluding certain expenses as
described above) exceeded an annual rate of .65 of 1% of the Series' average
daily net assets and thereafter, had undertaken through January 14, 1993, 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 15, 1993 through June 30, 1993,
to waive receipt of the management fee payable to it by the Series in excess of
an annual rate of .39 of 1% of the Series' average daily net assets. The
reduction in management fee, pursuant to the undertakings, amounted to $328,657
for the year ended April 30, 1993.
On September 18, 1992, Series shareholders approved an amendment to the
Agreement changing the expense limitation provision from 1 1/2% to the expense
limitation of any state having jurisdiction over the Series. The amended
Agreement provides that the Series may deduct from the fee to be paid to the
Manager, or the Manager will bear such excess expense, to the extent required
by state law, should the Series' aggregate expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, exceed the
limitation of any state having jurisdiction over the Series.
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 $58,089 during the year ended ended April 30,
1993 from commissions earned on sales of the Series' Class A shares.
The Distributor retained $237 during the period ended April 30, 1993 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, effective January 15, 1993, 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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Prior to January 15, 1993, the Fund's Service Plan ("prior Service Plan")
provided that the Series pay the Distributor, at an annual rate of .25 of 1% of
the value of the Series' average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing the Series' shares and
for servicing shareholder accounts. The Distributor made payments to one or
more Service Agents based on the value of the Series' shares owned by clients
of the Service Agent. The prior Service Plan also provided for the Series to
bear the costs of preparing, printing and distributing certain of the Series'
prospectuses and statements of additional information and costs associated with
implementing and operating the Plan, not to exceed the greater of $100,000 or
.005 of 1% of the Series' average daily net assets for any full fiscal year.
During the period ended April 30, 1993, $235,939 was charged to the Series
pursuant to the prior Service Plan and $2,836 was charged to the Series
pursuant to the Class B Distribution Plan.
(C) Under the Shareholder Services Plan, effective January 15, 1993, 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 period ended April 30, 1993,
$104,828 and $1,418 were charged to the Class A and Class B shares,
respectively pursuant to the Shareholder Services Plan.
(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. Prior to February 1, 1993, the annual fee
was $1,000.
NOTE 3--SECURITIES TRANSACTIONS:
(A) Purchases and sales of securities amounted to $79,093,088 and
$57,583,218, respectively, for the year ended April 30, 1993, and consisted
entirely of municipal bonds and short-term tax exempt investments.
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 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 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 April 30,
1993, there were no financial futures contracts outstanding.
(B) At April 30, 1993, accumulated net unrealized appreciation on
investments was $9,987,127 consisting of $10,063,218 gross unrealized
appreciation and $76,091 gross unrealized depreciation.
At April 30, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
We have audited the accompanying statement of assets and liabilities of
Premier State Municipal Bond Fund, Minnesota Series (one of the Series
constituting the Premier State Municipal Bond Fund), including the statement of
investments, as of April 30, 1993, 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 condensed financial information for each of
the years indicated therein. These financial statements and condensed financial
information are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and condensed financial
information 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 condensed
financial information 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, 1993 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 condensed financial
information referred to above present fairly, in all material respects, the
financial position of Premier State Municipal Bond Fund, Minnesota Series at
April 30, 1993, 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 condensed financial information for each of the indicated years, in
conformity with generally accepted accounting principles.
Ernst & Young
New York, New York
May 27, 1993
<PAGE>
------------------------
ANNUAL REPORT
------------------------
------------------------------------------------
PREMIER STATE
MUNICIPAL BOND FUND
------------------------------------------------
-----------------------------------
NORTH CAROLINA SERIES
-----------------------------------
---------------------
APRIL 30, 1993
---------------------
[DREYFUS LION LOGO]
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--100.0% AMOUNT VALUE
----------- -----------
<S> <C> <C>
- ---------------------------------------------------------------------------------------
NORTH CAROLINA--84.2%
Anson County 6.20%, 4/1/2010 (Insured; MBIA)........................................... $ 300,000 $ 315,042
Asheville, COP, Refunding 6.50%, 2/1/2008.............................................. 500,000 526,015
Board of Governors of the University of North Carolina, Revenue
(University of North Carolina Hospitals - Chapel Hill) 6%, 2/15/2024................. 3,000,000 3,076,320
Buncombe County Metropolitan Sewage District, Sewage System Revenue 6.75%, 7/1/2022.... 500,000 539,445
Charlotte, COP (Convention Facility Project) 6.75%, 12/1/2021 (Insured; AMBAC)......... 1,000,000 1,084,190
Charlotte-Mecklenberg Hospital Authority, Health Care System Revenue:
5.75%, 1/1/2012...................................................................... 1,285,000 1,294,034
6.25%, 1/1/2020...................................................................... 500,000 520,080
6%, 1/1/2022......................................................................... 500,000 511,415
Clemmons County, Sanitary Sewer 6.60%, 2/1/2008........................................ 175,000 188,144
Cleveland County, Sanitary District, Water 6.75%, 3/1/2015 (Insured; FGIC)............. 290,000 315,421
Coastal Regional Solid Waste Management Authority, Solid Waste Disposal System Revenue
6.50%, 6/1/2008...................................................................... 1,000,000 1,034,250
Craven County Industrial Facilities and Pollution Control Financing Authority, PCR,
Refunding (Weyerhaeuser Co. Project) 6.35%, 1/1/2010................................. 2,000,000 2,097,120
Cumberland County, Hospital Facilities Revenue (Cumberland County Hospital System)
6%, 10/1/2021 (Insured; MBIA)........................................................ 450,000 457,394
Dare County, COP 6.60%, 5/1/2006 (Insured; MBIA)....................................... 400,000 439,572
Durham County, COP (Jail Facilities and Computer Equipment Project) 6.625%, 5/1/2014... 850,000 887,562
Fayetteville Public Works Commission, Revenue, Refunding 6.50%, 3/1/2014 (Insured;
FGIC).................................................................................. 350,000 370,181
Forsyth County, COP (1991 Allied Health Technologies Building Project) 6.50%,
6/1/2012............................................................................... 300,000 311,433
Greensboro, COP (1991 Greensboro Coliseum Arena Expansion Project) 6.25%, 12/1/2011.... 500,000 514,585
Haywood County, Industrial Facilities and PCR, Refunding (Champion International
Corp. Project) 6.85%, 5/1/2014....................................................... 500,000 518,020
Martin County Industrial Facilities and Pollution Control Financing Authority, Revenue
(Solid Waste Disposal - Weyerhaeuser Project) 7.25%, 9/1/2014........................ 400,000 450,148
North Carolina Eastern Municipal Power Agency, Power System Revenue, Refunding:
6.00%, 1/1/2013...................................................................... 2,500,000 2,516,400
6.50%, 1/1/2017...................................................................... 1,000,000 1,038,070
8.297%, 1/1/2019 (Insured; FSA)(a,b)................................................. 3,400,000 3,361,750
North Carolina Educational Facilities Finance Agency, Revenue:
(Duke University Project) 6.75%, 10/1/2021........................................... 500,000 528,700
Refunding (Elon College Project) 6.375%, 1/1/2007 (Insured; Connie Lee).............. 830,000 889,337
North Carolina Housing Finance Agency:
Multi-Family Revenue, Refunding 6.90%, 7/1/2024 (Insured; FHA)....................... 500,000 519,260
Single Family Revenue 7.05%, 9/1/2020................................................ 1,500,000 1,566,825
North Carolina Medical Care Commission, HR:
(Annie Penn Memorial Hospital Project) 7.50%, 8/15/2021.............................. 4,500,000 4,950,900
(Carolina Medicorp. Project) 6%, 5/1/2021............................................ 2,250,000 2,285,662
(Duke University Hospital Project) 7%, 6/1/2021...................................... 3,000,000 3,273,450
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
----------- -----------
- ---------------------------------------------------------------------------------------
NORTH CAROLINA (CONTINUED)
<S> <C> <C>
North Carolina Medical Care Commission, HR (continued):
(Presbyterian Hospital Project) 7.375%, 10/1/2020.................................... $ 250,000 $ 277,200
(Rex Hospital Project) 6.25%, 6/1/2017............................................... 2,000,000 2,082,560
Refunding:
(Carolina Medicorp. Project) 5.50%, 5/1/2015....................................... 500,000 485,715
(Mercy Hospital Project) 6.50%, 8/1/2015........................................... 1,000,000 1,024,790
(North Carolina Baptist Hospitals Project) 6%, 6/1/2022............................ 1,000,000 1,019,400
(Southeastern General Hospital Project) Zero Coupon, 6/1/2006 (Insured; FSA)....... 1,000,000 476,840
(Wilson Memorial Hospital Project) 6.50%, 11/1/2020 (Insured; AMBAC)............... 500,000 530,165
North Carolina Municipal Power Agency, Number 1 Catawba Electric Revenue:
5.00%, 1/1/2015...................................................................... 1,000,000 901,940
5.75%, 1/1/2015...................................................................... 4,500,000 4,417,605
7%, 1/1/2018......................................................................... 200,000 210,436
5.75%, 1/1/2020 (Insured; MBIA)...................................................... 2,500,000 2,489,625
7.375%, 1/1/2020..................................................................... 395,000 404,373
Piedmont Triad Airport Authority, Airport Revenue, Refunding
6.75%, 7/1/2010 (Insured; MBIA)...................................................... 350,000 378,385
Pitt County, Revenue (Pitt County Memorial Hospital) 6.90%, 12/1/2021.................. 540,000 582,471
Randolph County 6.50%, 4/1/2007........................................................ 350,000 377,464
Surry County Northern Hospital District, Health Care Facilities Revenue, Refunding
7.875%, 10/1/2021.................................................................... 1,000,000 1,110,910
Union County, Water and Sewer 6.50%, 4/1/2010.......................................... 100,000 106,449
Vance County 6.70%, 2/1/2010 (Insured; AMBAC).......................................... 50,000 54,298
Wake County Industrial Facilities and Pollution Control Financing Authority, Revenue
(Carolina Power and Light) 6.90%, 4/1/2009........................................... 2,000,000 2,151,900
- ---------------------------------------------------------------------------------------
U.S. RELATED--15.8%
Guam Airport Authority, Revenue 6.70%, 10/1/2023....................................... 2,000,000 2,117,220
Commonwealth of Puerto Rico:
7.70%, 7/1/2020...................................................................... 1,000,000 1,209,290
Public Improvement 6.80%, 7/1/2021................................................... 600,000 649,710
Commonwealth of Puerto Rico Highway and Transportation Authority, Highway Revenue
6.625%, 7/1/2018..................................................................... 3,600,000 3,821,688
Puerto Rico Electric Power Authority, Power Revenue 7%, 7/1/2021....................... 450,000 494,158
Puerto Rico Public Buildings Authority, Guaranteed Public Education and Health
Facilities,
Refunding 6%, 7/1/2012............................................................... 500,000 505,285
Virgin Islands Public Finance Authority, Revenue, Refunding, Matching Fund Loan Notes
7.25%, 10/1/2018..................................................................... 1,500,000 1,635,015
-----------
TOTAL INVESTMENTS (cost $62,769,490)................................................... $65,895,617
-----------
-----------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <S> <S> <S>
AMBAC American Municipal Bond Assurance Corporation FSA Financial Security Association
COP Certificate of Participation HR Hospital Revenue
FGIC Financial Guaranty Insurance Corporation MBIA Municipal Bond Insurance Association
FHA Federal Housing Administration PCR Pollution Control Revenue
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (C) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C>
AAA Aaa AAA 18.8%
AA Aa AA 25.9
A A A 39.6
BBB Baa BBB 13.2
Not Rated Not Rated Not Rated 2.5
------
100.0%
------
------
<FN>
- --------------------------------------------------------------------------------
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 April 30,
1993, these securities amounted to $3,361,750 or 4.8% of net assets.
(c) Fitch currently provides creditworthiness information for a limited amount
of investments.
(d) At April 30, 1993, the Fund had $23,959,305 (34.5% of net assets) invested
in securities whose payment of principal and interest is dependent upon
revenues generated from health care.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $62,769,490)--see statement...................................................... $65,895,617
Cash..................................................................................... 7,293,805
Interest receivable...................................................................... 1,312,341
Receivable for shares of Beneficial Interest subscribed.................................. 1,083,699
Prepaid expenses......................................................................... 20,039
-----------
75,605,501
LIABILITIES:
Due to The Dreyfus Corporation........................................................... $ 17,627
Payable for investment securities purchased.............................................. 6,083,633
Payable for shares of Beneficial Interest redeemed....................................... 58,585
Accrued expenses......................................................................... 17,095 6,176,940
---------- -----------
NET ASSETS................................................................................. $69,428,561
-----------
-----------
REPRESENTED BY:
Paid-in capital.......................................................................... $66,304,263
Accumulated net realized (loss) on investments........................................... (1,829)
Accumulated net unrealized appreciation on investments--Note 3........................... 3,126,127
-----------
NET ASSETS at value........................................................................ $69,428,561
-----------
-----------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)................................ 4,200,980
-----------
-----------
Class B Shares
(unlimited number of $.001 par value shares authorized)................................ 981,923
-----------
-----------
NET ASSET VALUE per share:
Class A Shares
($56,283,982 / 4,200,980 shares)....................................................... $13.40
------
------
Class B Shares
($13,144,579 / 981,923 shares)........................................................ $13.39
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME.......................................................................... $ 2,571,464
EXPENSES:
Management fee--Note 2(a).............................................................. $ 228,381
Shareholder servicing costs--Note 2(b,c)............................................... 141,011
Prospectus and shareholders' reports--Note 2(b)........................................ 18,724
Registration fees...................................................................... 14,104
Distribution fees (Class B shares)--Note 2(b).......................................... 7,895
Professional fees...................................................................... 7,122
Custodian fees......................................................................... 3,989
Trustees' fees and expenses--Note 2(d)................................................. 270
Miscellaneous.......................................................................... 17,758
----------
439,254
Less--expense reimbursement from Manager due to
undertakings--Note 2(a).............................................................. 310,907
----------
TOTAL EXPENSES..................................................................... 128,347
-----------
INVESTMENT INCOME--NET............................................................. 2,443,117
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3................................................. $ 10,197
Net unrealized appreciation on investments............................................... 3,030,017
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................................... 3,040,214
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................................... $ 5,483,331
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
----------------------------
1992(1) 1993
----------- -----------
<S> <C> <C>
OPERATIONS:
Investment income--net.................................................................. $ 673,107 $ 2,443,117
Net realized gain on investments........................................................ 25,713 10,197
Net unrealized appreciation on investments for the year................................. 96,110 3,030,017
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................ 794,930 5,483,331
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares........................................................................ (673,107) (2,372,476)
Class B shares........................................................................ -- (70,641)
Net realized gain on investments:
Class A shares........................................................................ -- (37,739)
Class B shares........................................................................ -- --
----------- -----------
TOTAL DIVIDENDS..................................................................... (673,107) (2,480,856)
----------- -----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................................ 26,437,073 32,335,443
Class B shares........................................................................ -- 13,061,498
Dividends reinvested:
Class A shares........................................................................ 325,576 1,256,832
Class B shares........................................................................ -- 42,120
Cost of shares redeemed:
Class A shares........................................................................ (497,078) (6,651,984)
Class B shares........................................................................ -- (5,217)
----------- -----------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS........................ 26,265,571 40,038,692
----------- -----------
TOTAL INCREASE IN NET ASSETS...................................................... 26,387,394 43,041,167
NET ASSETS:
Beginning of year....................................................................... -- 26,387,394
----------- -----------
End of year............................................................................. $26,387,394 $69,428,561
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------------------------------------------
CLASS A CLASS B
---------------------------- -----------
PERIOD
YEAR ENDED APRIL 30, ENDED
---------------------------- APRIL 30,
1992(1) 1993 1993(2)
----------- ----------- -----------
<S> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 2,143,852 2,489,831 979,159
Issued for dividends reinvested......................................... 26,288 96,623 3,152
Shares redeemed......................................................... (40,232) (515,382) (388)
----------- ----------- -----------
NET INCREASE IN SHARES OUTSTANDING.................................... 2,129,908 2,071,072 981,923
----------- ----------- -----------
----------- ----------- -----------
<FN>
- ---------------
(1) From August 1, 1991 (commencement of operations) to April 30, 1992.
(2) From January 15, 1993 (commencement of operations) to April 30, 1993.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
Reference is made to page 16 of the Fund's Prospectus dated February 18,
1994.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA 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 thirteen
series including the North Carolina 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.
On September 18, 1992, shareholders approved an amendment to the Fund's
Agreement and Declaration of Trust to provide for the issuance of additional
classes of shares. On September 23, 1992 the Fund's Board of Trustees
classified the Series' existing shares as Class A shares and authorized the
issuance of an unlimited number of $.001 par value Class B shares. The Series
began offering both Class A and Class B shares on January 15, 1993. 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 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, 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.
(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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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. Effective September 18,
1992 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, 1992 through February 17, 1993 to waive
receipt of the management fee payable to it by the Series, to the extent that
the Series' aggregate expenses (excluding certain expenses as described above)
exceeded an annual rate of .25 of 1% of the Series' average daily net assets
and thereafter, had undertaken through March 8, 1993, 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, until such time as the net assets of the Series exceed $100 Million,
to waive receipt of the management fee payable to it by the Series. The expense
reimbursement, pursuant to the undertakings, amounted to $310,907 for the year
ended April 30, 1993.
On September 18, 1992, Series shareholders approved an amendment to the
Agreement changing the expense limitation provision from 1 1/2% to the expense
limitation of any state having jurisdiction over the Series. The amended
Agreement provides that the Series may deduct from the fee to be paid to the
Manager, or the Manager will bear such excess expense, to the extent required
by state law, should the Series' aggregate expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, exceed the
limitation of any state having jurisdiction over the Series.
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 $50,729 during the year ended ended April 30,
1993 from commissions earned on sales of the Series' Class A shares.
The Distributor retained $150 during the period ended April 30, 1993 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, effective January 15, 1993, 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.
Prior to January 15, 1993, the Fund's Service Plan ("prior Service Plan")
provided that the Series pay the Distributor, at an annual rate of .25 of 1% of
the value of the Series' average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing the Series' shares and
for servicing shareholder accounts. The Distributor made payments to one or
more Service Agents based on the value of the Series' shares owned by clients
of the Service Agent. The prior Service Plan also provided for the Series to
bear the costs of preparing, printing and distributing certain of the Series'
prospectuses and statements of additional information and costs associated with
implementing and operating the Plan, not to exceed the greater of $100,000 or
.005 of 1% of the Series' average daily net assets for any full fiscal year.
During the period ended April 30, 1993, $64,625 was charged to the Series
pursuant to the prior Service Plan and $7,895 was charged to the Series
pursuant to the Class B Distribution Plan.
(C) Under the Shareholder Services Plan, effective January 15, 1993, 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 period ended April 30, 1993,
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
$36,735 and $3,947 were charged to the Class A and Class B shares,
respectively, pursuant to the Shareholder Services Plan.
(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. Prior to February 1, 1993, the annual fee
was $1,000.
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $39,573,201 and $2,370,250,
respectively, for the year ended April 30, 1993, and consisted entirely of
municipal bonds.
At April 30, 1993, accumulated net unrealized appreciation on investments
was $3,126,127, consisting of $3,168,705 gross unrealized appreciation and
$42,578 gross unrealized depreciation.
At April 30, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
We have audited the accompanying statement of assets and liabilities of
Premier State Municipal Bond Fund, North Carolina Series, (one of the Series
constituting the Premier State Municipal Bond Fund) including the statement of
investments, as of April 30, 1993, and the related statement of operations for
the year then ended, the statement of changes in net assets for the period from
August 1, 1991 (commencement of operations) to April 30, 1992 and for the year
ended April 30, 1993, and condensed financial information for each of the
periods indicated therein. These financial statements and condensed financial
information are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and condensed financial
information 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 condensed
financial information 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, 1993 by correspondence with the custodian and brokers. 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 condensed financial
information referred to above present fairly, in all material respects, the
financial position of Premier State Municipal Bond Fund, North Carolina Series
at April 30, 1993, the results of its operations for the year then ended, the
changes in its net assets for the period from August 1, 1991 to April 30, 1992
and for the year ended April 30, 1993, and the condensed financial information
for each of the indicated periods, in conformity with generally accepted
accounting principles.
Ernst & Young
New York, New York
June 3, 1993
<PAGE>
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
-----------------------
ANNUAL REPORT
-----------------------
------------------------------------------------
PREMIER STATE
MUNICIPAL BOND FUND
------------------------------------------------
------------------
OHIO SERIES
------------------
--------------------
APRIL 30, 1993
--------------------
[DREYFUS LION LOGO]
PRINTED IN THE U.S.A.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--98.6% AMOUNT VALUE
------------ ------------
<S> <C> <C>
- -------------------------------------------------------------------------------------
OHIO--91.9%
Akron Bath Copley Joint Township Hospital District, Revenue:
(Akron Children's Hospital Medical Center) 7.70%, 11/15/2005....................... $ 500,000 $ 549,700
(Akron City Hospital Project) 8.875%, 11/15/2007................................... 500,000 604,465
Akron-Wilbeth Housing Development Corp., First Mortgage Revenue,
7.90%, 8/1/2003(Insured; FHA)...................................................... 1,805,000 1,932,144
Allen County, Industrial First Mortgage Revenue Refunding
6.75%, 11/15/2008 (Guaranteed; Kmart Corp.)........................................ 1,280,000 1,357,914
City of Barberton, Hospital Facilities Revenue (The Barberton Citizens
Hospital Co. Project) 7.25%, 1/1/2012.............................................. 2,400,000 2,618,712
Berea:
7.50%, 12/1/2005................................................................... 425,000 477,853
7.55%, 12/1/2006................................................................... 455,000 513,094
7.55%, 12/1/2007................................................................... 320,000 360,858
Butler County, Hospital Facilities Revenue Refunding and Improvement
(Fort Hamilton Hughes Hospital) 7.25%, 1/1/2001.................................... 4,000,000 4,195,280
City of Cambridge, Hospital Revenue Refunding (Guernsey Memorial Hospital Project)
8%, 12/1/2006...................................................................... 2,000,000 2,246,860
Canton 7.875%, 12/1/2008............................................................. 1,000,000 1,183,730
Clermont County, Hospital Facilities Revenue Refunding (Mercy Health Systems):
5.875%, 1/1/2015 (Insured; MBIA)................................................... 3,500,000 3,536,470
7.50%, 9/1/2019 (Insured; AMBAC)................................................... 1,000,000 1,172,720
City of Cleveland:
6.75%, 7/1/2004 (Insured; MBIA).................................................... 1,500,000 1,695,780
5.375%, 9/1/2009 (Insured; AMBAC).................................................. 2,000,000 1,981,600
5.375%, 9/1/2010 (Insured; AMBAC).................................................. 1,000,000 983,860
COP (Motor Vehicle, Motorized and Communication Equipment) 7.10%, 7/1/2002......... 2,000,000 2,073,720
Parking Facility Improvement Revenue 8%, 9/15/2012................................. 5,000,000 5,427,950
Public Power System, Revenue (First Mortgage Improvement):
7%, Series A, 11/15/2017......................................................... 1,125,000 1,187,437
7%, Series B, 11/15/2017......................................................... 8,675,000 9,252,755
Waterworks Improvement First Mortgage Revenue:
6.50%, 1/1/2011 (Insured; AMBAC)................................................. 2,000,000 2,141,260
6.25%, 1/1/2015 (Insured; AMBAC)................................................. 3,000,000 3,154,740
7.875%, 1/1/2016................................................................. 650,000 741,312
Cleveland City School District:
8%, 12/1/2001...................................................................... 1,675,000 1,969,683
5.875%, 12/1/2011 (Insured; FGIC).................................................. 1,000,000 1,020,570
City of Columbus, Sewer Systems Revenue Refunding 6.25%, 6/1/2008.................... 1,750,000 1,857,730
Columbus City School District, School Building Renovation and Improvement
6.65%, 12/1/2012 (Insured; FGIC)................................................... 2,250,000 2,546,820
Cuyahoga County:
Health Care Facilities Revenue (Judson Retirement Community) 8.875%, 11/15/2019.... 3,500,000 3,925,075
HR:
(Fairview General Hospital) 7.375%, 8/1/2019..................................... 4,000,000 4,335,800
(Meridia Health Systems) 7%, 8/15/2023........................................... 1,750,000 1,878,537
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
OHIO (CONTINUED)
<S> <C> <C>
Cuyahoga County (continued):
HR (continued):
Refunding:
(Deaconess Hospital) 7.45%, 10/1/2018.......................................... $ 5,000,000 $ 5,563,700
(Meridia Health Systems) 7.25%, 8/15/2019...................................... 4,715,000 5,125,441
Jail Facilities, 7%, 10/1/2013..................................................... 6,125,000 7,038,911
Refunding:
(Cleveland Clinic Foundation) 8%, 12/1/2015...................................... 1,000,000 1,126,900
(Mount Sinai Medical Center) 8.125%, 11/15/2014.................................. 1,000,000 1,124,120
Erie County, Hospital Improvement Revenue Refunding
(Firelands Community Hospital) 8.875%, 1/1/2015.................................... 700,000 821,898
Euclid City School District 7.10%, 12/1/2011......................................... 1,000,000 1,120,800
Village of Evendale, IDR Refunding (Ashland Oil, Inc. Project) 6.90%, 11/1/2010...... 2,000,000 2,122,980
Fairlawn, Health Care Facilities Revenue (Village at St. Edward Project)
8.75%, 10/1/2019................................................................... 2,420,000 2,604,017
Franklin County:
6.375%, 12/1/2012.................................................................. 1,635,000 1,832,443
Refunding 5.375%, 12/1/2020........................................................ 2,000,000 1,926,180
Hospital Improvement Revenue (The Children's Hospital Project) 6.60%, 11/1/2011.... 1,500,000 1,583,730
HR:
(Holy Cross Health Systems Corp.-Mount Carmel Health) 6.75%, 6/1/2019............ 2,500,000 2,664,625
Refunding Improvement:
(The Children's Hospital Project) 6.60%, 5/1/2013.............................. 4,000,000 4,197,280
(Riverside United Hospital) 7.60%, 5/15/2020................................... 5,300,000 6,243,082
(Worthington Christian Village Congregate Care Project):
10.25%, 8/1/2015............................................................. 910,000 970,670
7.80%, 2/1/2017 (Insured; FHA)............................................... 5,690,000 6,328,304
Gallia County, Local School District 7.375%, 12/1/2004............................... 570,000 665,800
Greater Cleveland Gateway Economic Development Corp.:
Senior Lien Excise Tax Revenue 6.875%, 9/1/2005 (Insured; FSA)..................... 1,500,000 1,680,015
Stadium Revenue 7.50%, 9/1/2005.................................................... 5,675,000 6,456,334
Hamilton County:
Electric Systems Mortgage Revenue Refunding 8%, 10/15/2022 (Insured; FGIC)......... 750,000 889,935
Hospital Facilities Improvement Revenue, Refunding (Deaconess Hospital) 7%,
1/1/2012......................................................................... 2,570,000 2,801,660
Hospital Facilities Refunding, Revenue:
(The Christ Hospital) 5.50%, 1/1/2005............................................ 2,225,000 2,245,537
(Episcopal Retirement Homes, Inc.) 6.80%, 1/1/2008 (LOC; The Fifth Third Bank)
(a)............................................................................. 2,450,000 2,571,765
IDR (Provident Association Participation) 9%, 12/1/2008 (b)........................ 1,405,000 774,506
Mortgage Revenue (Judson Care Center) 7.80%, 8/1/2019 (Insured; FHA)............... 3,970,000 4,449,258
Sewer Systems Improvement Revenue, Refunding 6.70%, 12/1/2013...................... 2,000,000 2,266,340
Hilliard School District 6.30%, 12/1/2014............................................ 2,000,000 2,079,760
Kirtland Local School District 7.50%, 12/1/2009...................................... 760,000 854,058
Knox County, IDR (Weyerhaeuser Co. Project) 9%, 10/1/2007............................ 1,000,000 1,312,250
City of Lorain, Hospital Refunding, Revenue (Lakeland Community Hospital Inc.)
6.50%, 11/15/2012.................................................................. 1,500,000 1,541,640
Lowellville, Sanitary Sewer Systems Revenue (Browning-Ferris Industries Inc.)
7.25%, 6/1/2006.................................................................... 1,500,000 1,576,845
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
OHIO (CONTINUED)
<S> <C> <C>
Mahoning County, Health Care Facilities Revenue (Youngstown Osteopathic Hospital
Project)
7.60%, 8/1/2010 (LOC; Marine Midland Bank) (a)..................................... $ 3,775,000 $ 4,170,507
Marion County, Health Care Facility Revenue (United Church Homes Inc.)
8.875%, 12/1/2012.................................................................. 2,305,000 2,551,013
Miami County, Hospital Facilities Revenue Refunding (Upper Valley Medical Center)
8.375%, 5/1/2013................................................................... 525,000 584,530
Muskingum County, Revenue Refunding (Franciscan Health Advisory Services)
7.50%, 3/1/2012.................................................................... 3,185,000 3,390,815
Newark 6%, 12/1/2018 (Insured; AMBAC)................................................ 1,000,000 1,032,980
Northeast Regional Sewer District, Wastewater Improvement Revenue
6.50%, 11/15/2016 (Insured; AMBAC)................................................. 2,000,000 2,133,280
State of Ohio:
Economic Development Revenue:
Ohio Enterprise Bond Fund (VSM Corp. Project) 7.375%, 12/1/2011.................. 885,000 942,950
(Sponge Inc. Project) 8.375%, 6/1/2014........................................... 1,735,000 1,991,103
Mortgage Revenue (Odd Fellows Home Ohio Inc. Project) 8.15%, 8/1/2017 (Insured;
FHA)............................................................................. 350,000 392,129
PCR (Standard Oil Co. Project) 6.75%, 12/1/2015 (Guaranteed; British
Petroleum Co. p.l.c.)............................................................ 1,350,000 1,536,192
Ohio Air Quality Development Authority, Revenue:
Pollution Control:
(Cincinnati Gas and Electric) 10.125%, 12/1/2015................................. 900,000 1,032,462
(Pennsylvania Power Co. Project) 8.10%, 9/1/2018................................. 1,000,000 1,088,710
Refunding:
(Cleveland Electric Illuminating Co. Project) 6.85%, 7/1/2023.................. 5,250,000 5,400,727
(Ohio Edison) 7.45%, 3/1/2016 (Insured; FGIC).................................. 3,500,000 4,007,990
Refunding (Ohio Power Co. Project) 7.40%, 8/1/2009................................. 1,500,000 1,627,470
Ohio Building Authotity:
State Correctional Facilities 8%, 8/1/2006......................................... 400,000 467,424
State Facilities (Columbus State Building Project):
7.35%, 10/1/2005................................................................. 1,795,000 2,035,602
7.75%, 10/1/2008................................................................. 500,000 569,625
Ohio Capital Corp. for Housing, Multi-Family Housing Revenue Refunding
7.60%, 11/1/2023 (Collateralized; FNMA)............................................ 1,250,000 1,336,700
Ohio Higher Educational Facility Community, Revenue:
(Case Western Reserve Project) 7.70%, 10/1/2018.................................... 500,000 563,600
(Oberlin College) 7.375%, 10/1/2014................................................ 400,000 441,020
Ohio Housing Finance Agency:
Mortgage Revenue (St. Francis Court Apartment Project) 8%, 10/1/2026 (Insured;
FHA)............................................................................. 695,000 737,242
SFMR (GNMA Mortgage Backed Securities Program):
8.25%, 12/15/2019................................................................ 295,000 313,789
8.125%, 3/1/2020................................................................. 650,000 698,672
Zero Coupon, 9/1/2021............................................................ 21,240,000 2,369,322
7.85%, 9/1/2021.................................................................. 2,220,000 2,368,629
7.65%, 3/1/2029.................................................................. 6,215,000 6,549,616
7.80%, 3/1/2030.................................................................. 4,930,000 5,268,444
Ohio Public Facilities Community, Higher Education Facilities 7.25%, 5/1/2004........ 1,300,000 1,450,709
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
OHIO (CONTINUED)
<S> <C> <C>
Ohio Water Development Authority:
Pollution Control Facilities Revenue:
(Cleveland Electric Illuminating Project) 8%, 10/1/2023.......................... $ 5,800,000 $ 6,418,686
(Ohio Edison) 8.10%, 10/1/2023................................................... 3,700,000 4,103,189
(Pennsylvania Power Co. Project) 8.10%, 9/1/2018................................. 2,000,000 2,213,580
Refunding:
(Ohio Edison) 7.625%, 7/1/2023................................................. 9,390,000 10,289,186
(Toledo Edison Co.):
7.55%, 6/1/2023.............................................................. 2,000,000 2,191,560
8%, 10/1/2023................................................................ 3,635,000 4,022,745
Pure Water Revenue 7.75%, 6/1/2014................................................. 500,000 575,465
Ottawa County, Sanitary Sewer Systems Special Assessment
(Portage-Catawba Island Sewer Project) 7%, 9/1/2011 (Insured: AMBAC)............... 1,000,000 1,120,420
Reynoldsburg City School District, School Building Construction and Improvement
6.55%, 12/1/2017 (Insured; FGIC)................................................... 2,000,000 2,155,780
Ross County, HR (Medical Center Hospital Project) 7.50%, 12/1/2014................... 2,000,000 2,171,820
Shelby County, Hospital Facilities Revenue Refunding and Improvement
(The Shelby County Memorial Hospital Association) 7.70%, 9/1/2018.................. 2,500,000 2,757,600
South Euclid, Recreation Facilities 7%, 12/1/2011.................................... 2,285,000 2,515,785
Student Loan Funding Corp., Student Loan Revenue Refunding 7.20%, 8/1/2003........... 3,150,000 3,340,228
Trumbull County, Hospital Refunding and Improvement Revenue
(Trumbull Memorial Hospital Project) 6.90%, 11/15/2012 (Insured; FGIC)............. 1,250,000 1,368,413
University of Cincinnati, COP 6.75%, 12/1/2009 (Insured; MBIA)....................... 750,000 822,840
University of Ohio:
General Receipts 5.875%, 12/1/2012................................................. 3,000,000 3,023,610
Revenue 7.15%, 12/1/2009........................................................... 6,000,000 6,880,500
University of Toledo, General Receipts 5.75%, 12/1/2012 (Insured; FGIC).............. 2,000,000 2,025,180
Warren 7.75%, 11/1/2010.............................................................. 2,785,000 3,101,209
City of Westerville, Water Systems Refunding and Improvement 6.45%, 12/1/2011........ 2,590,000 2,713,698
City of Westerville School District 6.25%, 12/1/2009................................. 1,610,000 1,705,843
- -------------------------------------------------------------------------------------
U.S. RELATED--6.7%
Commonwealth of Puerto Rico Aqueduct and Sewer Authority, Revenue 7%, 7/1/2019....... 6,675,000 7,246,714
Guam Airport Authority, Revenue 6.70%, 10/1/2023..................................... 3,000,000 3,175,830
Virgin Islands Public Finance Authority, Revenue Refunding Matching Fund Loan Notes,
7.25%, 10/1/2018................................................................... 5,200,000 5,668,052
Virgin Islands Water and Power Authority, Electric Systems Revenue 7.40%, 7/1/2011... 3,450,000 3,719,859
------------
TOTAL MUNICIPAL BONDS
(cost $269,072,417)................................................................ $293,866,257
------------
------------
<PAGE>
</TABLE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
SHORT-TERM TAX EXEMPT INVESTMENTS--1.4% AMOUNT VALUE
------------ ------------
<S> <C> <C>
Ohio:
City of Columbus, Sewer Systems Revenue, VRDN 2.35% (LOC: Sanwa Bank) (a,c).......... $ 2,200,000 $ 2,200,000
Greater Cleveland Gateway Economic Development Corp., Stadium Revenue VRDN
2.75% (LOC; Fuji Bank) (a,c)....................................................... 2,000,000 2,000,000
------------
TOTAL SHORT-TERM TAX EXEMPT INVESTMENTS
(cost $4,200,000).................................................................. $ 4,200,000
------------
------------
TOTAL INVESTMENTS--100.0%
(cost $273,272,417)................................................................ $298,066,257
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <S> <S> <S>
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 PCR Pollution Control Revenue
FSA Financial Security Association SFMR Single Family Mortgage Revenue
GNMA Government National Mortgage Association VRDN Variable Rate Demand Notes
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (D) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C>
AAA Aaa AAA 23.6%
AA Aa AA 13.9
A A A 24.8
BBB Baa BBB 32.9
F1 MIG1 SP1 1.4
Not Rated Not Rated Not Rated 3.4
--------
100.0%
--------
--------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(b) Non-income accruing security. The valuation of this security has been
determined in good faith under the direction of the Board of Directors.
(c) 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.
(d) Fitch currently provides creditworthiness information for a limited amount
of investments.
(e) At April 30, 1993, the Fund had $94,414,072 (31.05% 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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $273,272,417)--see statement.................................................... $298,066,257
Cash.................................................................................... 985,320
Interest receivable..................................................................... 5,656,953
Receivable for shares of Beneficial Interest subscribed................................. 1,479,089
Prepaid expenses........................................................................ 69,208
------------
306,256,827
LIABILITIES:
Due to The Dreyfus Corporation.......................................................... $ 162,989
Payable for investment securities purchased............................................. 1,940,041
Payable for shares of Beneficial Interest redeemed...................................... 44,535
Accrued expenses........................................................................ 63,743 2,211,308
---------- ------------
NET ASSETS................................................................................ $304,045,519
------------
------------
REPRESENTED BY:
Paid-in capital......................................................................... $279,045,458
Accumulated undistributed net realized gain on investments.............................. 206,221
Accumulated net unrealized appreciation on investments--Note 3(b)....................... 24,793,840
------------
NET ASSETS at value....................................................................... $304,045,519
------------
------------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............................... 22,586,922
------------
------------
Class B Shares
(unlimited number of $.001 par value shares authorized)............................... 647,898
------------
------------
NET ASSET VALUE per share:
Class A Shares
($295,563,560 / 22,586,922 shares).................................................... $13.09
------
------
Class B Shares
($8,481,959 / 647,898 shares)......................................................... $13.09
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................................... $ 18,215,703
EXPENSES:
Management fee--Note 2(a)............................................................. $1,489,944
Shareholder servicing costs--Note 2(b,c).............................................. 854,649
Professional fees..................................................................... 73,549
Prospectus and shareholders' reports--Note 2(b)....................................... 29,423
Custodian fees........................................................................ 28,564
Registration fees..................................................................... 13,384
Distribution fees (Class B shares)--Note 2(b)......................................... 5,277
Trustees' fees and expenses--Note 2(d)................................................ 1,390
Miscellaneous......................................................................... 26,075
----------
2,522,255
Less--reduction in management fee due to
undertakings--Note 2(a)............................................................. 629,804
----------
TOTAL EXPENSES.................................................................... 1,892,451
------------
INVESTMENT INCOME--NET............................................................ 16,323,252
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3(a)............................................. $1,130,467
Net realized (loss) on financial futures--Note 3(a)..................................... (197,737)
----------
NET REALIZED GAIN..................................................................... 932,730
Net unrealized appreciation on investments (including $7,500 net
unrealized (depreciation) on financial futures)....................................... 16,202,120
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................................... 17,134,850
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $ 33,458,102
------------
------------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
------------------------------
1992 1993
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income--net................................................................ $ 14,110,634 $ 16,323,252
Net realized gain on investments...................................................... 1,068,737 932,730
Net unrealized appreciation on investments for the year............................... 5,097,516 16,202,120
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............................. 20,276,887 33,458,102
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares...................................................................... (14,110,634) (16,274,444)
Class B shares...................................................................... -- (48,808)
Net realized gain on investments:
Class A shares...................................................................... (186,613) (1,587,530)
Class B shares...................................................................... -- --
------------ ------------
TOTAL DIVIDENDS................................................................... (14,297,247) (17,910,782)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares...................................................................... 70,771,835 44,655,966
Class B shares...................................................................... -- 8,694,588
Dividends reinvested:
Class A shares...................................................................... 9,402,663 11,923,897
Class B shares...................................................................... -- 36,975
Cost of shares redeemed:
Class A shares...................................................................... (19,302,878) (19,590,383)
Class B shares...................................................................... -- (297,015)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...................... 60,871,620 45,424,028
------------ ------------
TOTAL INCREASE IN NET ASSETS.................................................... 66,851,260 60,971,348
NET ASSETS:
Beginning of year..................................................................... 176,222,911 243,074,171
------------ ------------
End of year........................................................................... $243,074,171 $304,045,519
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------------------
CLASS A CLASS B
------------------------------ ------------
YEAR ENDED APRIL 30, PERIOD ENDED
------------------------------ APRIL 30,
1992 1993 1993*
------------ ------------ ------------
<S> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 5,807,729 3,501,210 667,842
Issued for dividends reinvested...................................... 767,876 933,913 2,832
Shares redeemed...................................................... (1,575,532) (1,536,483) (22,776)
------------ ------------ ------------
NET INCREASE IN SHARES OUTSTANDING................................. 5,000,073 2,898,640 647,898
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
- ---------------
* From January 15, 1993 (commencement of operations) to April 30, 1993.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
Reference is made to page 17 of the Fund's Prospectus dated February 18,
1994.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
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 thirteen
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.
On September 18, 1992, shareholders approved an amendment to the Fund's
Agreement and Declaration of Trust to provide for the issuance of additional
classes of shares. On September 23, 1992 the Fund's Board of Trustees classified
the Series' existing shares as Class A shares and authorized the issuance of an
unlimited number of $.001 par value Class B shares. The Series began offering
both Class A and Class B shares on January 15, 1993. 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 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, 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
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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. Effective September 18,
1992 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, 1992 through January 14, 1993, to reduce the
management fee paid by, or reimburse such excess expenses of 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 15, 1993
through June 30, 1993, to waive receipt of the management fee payable to it by
the Series in excess of an annual rate of .40 of 1% of the Series' average daily
net assets. The reduction in management fee, pursuant to the undertakings,
amounted to $629,804 for the year ended April 30, 1993.
On September 18, 1992, Series shareholders approved an amendment to the
Agreement changing the expense limitation provision from 1 1/2% to the expense
limitation of any state having jurisdiction over the Series. The amended
Agreement provides that the Series may deduct from the fee to be paid to the
Manager, or the Manager will bear such excess expense, to the extent required by
state law, should the Series' aggregate expenses, exclusive of taxes, brokerage,
interest on borrowings and extraordinary expenses, exceed the limitation of any
state having jurisdiction over the Series.
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 $117,333 during the year ended April 30, 1993 from
commissions earned on sales of the Series' Class A shares.
The Distributor retained $8,771 during the period ended April 30, 1993 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, effective January 15, 1993, 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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Prior to January 15, 1993, the Fund's Service Plan ("prior Service Plan")
provided that the Series pay the Distributor, at an annual rate of .25 of 1% of
the value of the Series' average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing the Series' shares and
for servicing shareholder accounts. The Distributor made payments to one or more
Service Agents based on the value of the Series' shares owned by clients of the
Service Agent. The prior Service Plan also provided for the Series to bear the
costs of preparing, printing and distributing certain of the Series'
prospectuses and statements of additional information and costs associated with
implementing and operating the Plan, not to exceed the greater of $100,000 or
.005 of 1% of the Series' average daily net assets for any full fiscal year.
During the period ended April 30, 1993, $471,262 was charged to the Series
pursuant to the prior Service Plan and $5,277 was charged to the Series pursuant
to the Class B Distribution Plan.
(C) Under the Shareholder Services Plan, effective January 15, 1993, 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 period ended April 30, 1993,
$209,003 and $2,639 were charged to the Class A and Class B shares,
respectively, pursuant to the Shareholder Services Plan.
(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. Prior to February 1, 1993, the annual fee
was $1,000.
NOTE 3--SECURITIES TRANSACTIONS:
(A) Purchases and sales of securities amounted to $92,985,101 and
$50,251,970, respectively, for the year ended April 30, 1993, and consisted
entirely of municipal bonds and short-term tax exempt investments.
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 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 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 April 30, 1993, there were no
financial futures contracts outstanding.
(B) At April 30, 1993, accumulated net unrealized appreciation on
investments was $24,793,840, consisting of $25,484,374 gross unrealized
appreciation and $690,534 gross unrealized depreciation.
At April 30, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
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, 1993, 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 condensed financial information for each of the years
indicated therein. These financial statements and condensed financial
information are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and condensed financial
information 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 condensed
financial information 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, 1993 by correspondence with the custodian and brokers. 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 condensed financial
information referred to above present fairly, in all material respects, the
financial position of Premier State Municipal Bond Fund, Ohio Series at April
30, 1993, 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
condensed financial information for each of the indicated years, in conformity
with generally accepted accounting principles.
ERNST & YOUNG
New York, New York
May 28, 1993
<PAGE>
------------------------
ANNUAL REPORT
------------------------
------------------------------------------------
PREMIER STATE
MUNICIPAL BOND FUND
------------------------------------------------
--------------------------------
PENNSYLVANIA SERIES
--------------------------------
---------------------
APRIL 30, 1993
---------------------
[DREYFUS LION LOGO]
<PAGE>
- --------------------------------------------------------------------------------
PRESIDENT'S LETTER
Dear Shareholder:
We are pleased to provide you with the performance of the Premier State
Municipal Bond Fund, Pennsylvania Series for the 12-month period ended April 30,
1993. During this time, Class A shares paid tax-free income dividends of
approximately $1.02 per share, equivalent to a tax-free distribution rate per
share of 5.81%, based on the April 30 maximum closing offering price of $17.39
per share (adjusted for capital gain distributions). Furthermore, the net asset
value of each share increased by 6.30% (adjusted for capital gain
distributions). All income generated by your Fund was free from Federal,
Pennsylvania State and certain local personal income taxes.*
Strong investor demand continues to support the financial markets, albeit
not at the torrid pace exhibited during the early weeks of this year. With money
market yields still at the lowest levels in memory for many investors, and long-
term bond yields more than twice the level of short-term rates, individual
investors continue to invest in bond mutual funds.
This phenomenon is particularly acute in the municipal market where demand
continues to be bolstered by the retirement of previously refunded bonds, large
coupon payments, and the expectation of higher tax rates. The consensus of
interest rate forecasts is still constructive for the long-term bond markets
despite a recent resurgence of inflation worries. Renewed inflation concerns
caused the bond markets to retreat from the lofty price levels attained
previously. Still, on balance, bond yields stand at levels not seen in many
years.
Somewhat surprisingly, this dramatic movement to lower rates is occurring
during a period of record-high municipal bond issuance. If interest rates can
stay at current levels or move even lower, the calendar of new municipal issues
should remain full. The ability to advance-refund high coupon debt at today's
current rate levels and the need to finance long-delayed infrastructure plans
should provide enough impetus for issuers to continue to bring more debt issues
to market.
The course of the budget debate and the strength of the economy and
inflation will merit careful watching, and should influence investor demand for
fixed-income securities. Market hopes have been raised by the anticipation of a
sizable long-term reduction in the deficit, while near-term economic growth and
inflation expectations are still low. For the investor in municipal bonds, the
course of events at local, State and national levels certainly merits close
monitoring. A slow recovery should further depress State and local revenues,
thereby further impinging on credit quality.
In the final analysis, the municipal market could continue to face more
volatility in the months ahead. However, for the reasons cited, we believe that
municipal bonds may still offer favorable returns for investors.
We look forward to continuing to serve your investment needs in the months
ahead.
Very truly yours,
Richard J. Moynihan
President
May 17, 1993
New York, N.Y.
*Some income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders. Capital gains, if any, are generally subject to Federal,
State and local taxes.
<PAGE>
- --------------------------------------------------------------------------------
PRESIDENT'S LETTER
Dear Shareholder:
The Premier State Municipal Bond Fund, Pennsylvania Series began offering
Class B shares on January 15, 1993. We are pleased to provide you with the
performance of the Fund for the period ended April 30, 1993. Since the
commencement of operations, Class B shares paid tax-free income dividends of
approximately $.26 per share, equivalent to an annualized tax-free distribution
rate per share of 5.45%, based on the April 30 closing net asset value of $16.60
per share. Furthermore, the value of each share increased by 3.11%. All income
generated by your Fund was free from Federal, Pennsylvania State and certain
local personal income taxes.*
Strong investor demand continues to support the financial markets, albeit
not at the torrid pace exhibited during the early weeks of this year. With money
market yields still at the lowest levels in memory for many investors, and long-
term bond yields more than twice the level of short-term rates, individual
investors continue to invest in bond mutual funds.
This phenomenon is particularly acute in the municipal market where demand
continues to be bolstered by the retirement of previously refunded bonds, large
coupon payments, and the expectation of higher tax rates. The consensus of
interest rate forecasts is still constructive for the long-term bond markets
despite a recent resurgence of inflation worries. Renewed inflation concerns
caused the bond markets to retreat from the lofty price levels attained
previously. Still, on balance, bond yields stand at levels not seen in many
years.
Somewhat surprisingly, this dramatic movement to lower rates is occurring
during a period of record-high municipal bond issuance. If interest rates can
stay at current levels or move even lower, the calendar of new municipal issues
should remain full. The ability to advance-refund high coupon debt at today's
current rate levels and the need to finance long-delayed infrastructure plans
should provide enough impetus for issuers to continue to bring more debt issues
to market.
The course of the budget debate and the strength of the economy and
inflation will merit careful watching, and should influence investor demand for
fixed-income securities. Market hopes have been raised by the anticipation of a
sizable long-term reduction in the deficit, while near-term economic growth and
inflation expectations are still low. For the investor in municipal bonds, the
course of events at local, State and national levels certainly merits close
monitoring. A slow recovery should further depress State and local revenues,
thereby further impinging on credit quality.
In the final analysis, the municipal market could continue to face more
volatility in the months ahead. However, for the reasons cited, we believe that
municipal bonds may still offer favorable returns for investors.
We look forward to continuing to serve your investment needs in the months
ahead.
Very truly yours,
Richard J. Moynihan
President
May 17, 1993
New York, N.Y.
*Some income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--96.3% AMOUNT VALUE
------------ ------------
<S> <C> <C>
- -------------------------------------------------------------------------------------
PENNSYLVANIA--94.3%
Allegheny County Hospital Development Authority, Revenue, Refunding
(Health Center Presbyterian Hospital) 6%, 11/1/2023 (Insured; MBIA)................ $ 2,000,000 $ 2,024,840
Allegheny County Industrial Development Authority, Revenue:
Commercial Development, Refunding
(Kaufmann Medical Office Building) 6.80%, 3/1/2015 (Insured; FHA)................ 3,500,000 3,778,285
Specialized Enterprise
(Baldwin Health Center) 8.35%, 2/1/2016 (Insured; FHA)........................... 4,825,000 5,276,427
Allegheny County Residential Finance Authority, SFMR:
8.25%, 12/1/2019................................................................... 175,000 185,666
7.40%, 12/1/2022................................................................... 1,945,000 2,083,251
7.95%, 6/1/2023.................................................................... 1,500,000 1,611,150
7.10%, 5/1/2024.................................................................... 2,000,000 2,096,140
Allentown:
Guaranteed Sewer Improvement 5.65%, 7/15/2010 (Insured; AMBAC)..................... 645,000 641,420
Refunding 5.65%, 7/15/2010 (Insured; AMBAC)........................................ 1,525,000 1,516,536
Beaver County Industrial Development Authority, PCR, Refunding
(Ohio Edison Project) 7.75%,9/1/2024............................................... 3,150,000 3,477,159
(Pennsylvania Power Company Mansfield Project) 7.15%,9/1/2021...................... 3,000,000 3,197,730
Berks County Municipal Authority, Revenue
(Phoebe Berks Village Inc. Project) 8.25%, 5/15/2022............................... 2,445,000 2,493,435
Blair County Hospital Authority, Revenue, (Altoona Hospital)
9.269%, 7/1/2013 (Insured; AMBAC) (a).............................................. 5,000,000 5,679,000
Butler County Hospital Authority, Revenue, Refunding;
Health Center (St. Francis Health Care Project) 6%, 5/1/2008....................... 1,860,000 1,867,273
Hospital (Butler Memorial Hospital) 8%, 7/1/2016................................... 2,000,000 2,179,960
Cambria County Hospital Development Authority, HR, Refunding
(Conemaugh Valley Hospital) 6.375% 7/1/2018........................................ 3,100,000 3,215,320
Cambria County Industrial Development Authority, RRR
(Cambria Cogen Project):
7.75%, 9/1/2019, Series F-1 (LOC; Fuji Bank) (b)................................. 1,750,000 1,877,820
7.75%, 9/1/2019, Series F-2 (LOC; Fuji Bank) (b)................................. 2,750,000 2,954,490
Chester County 5.65%, 12/15/2011..................................................... 3,500,000 3,479,805
Delaware County, Refunding 6%, 11/15/2022............................................ 1,770,000 1,796,869
Delaware County Authority, Revenue (Elwyn Inc. Project) 8.35%, 6/1/2015.............. 4,300,000 4,834,103
Delaware County Industrial Development Authority, PCR
(Philadelphia Electricity Co. Project) 7.375%, 4/1/2021............................ 2,000,000 2,156,560
Erie County Industrial Development Authority, First Mortgage Revenue
(Senior Living Services Inc. Project) 8.625%, 6/1/2019............................. 1,650,000 1,744,628
Erie Higher Educational Building Authority, College Revenue
(Mercyhurst College Project) 7.85%, 9/15/2019...................................... 1,000,000 1,098,670
Greene County General Facilities Authority, Lease Revenue 7%, 7/1/2011............... 3,000,000 3,225,540
Huntingdon 7.50%, 12/1/2017.......................................................... 750,000 788,782
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
PENNSYLVANIA (CONTINUED)
<S> <C> <C>
Lancaster County Hospital Authority, Revenue
(Health Center-United Church Homes Project) 9.125%, 10/1/2014...................... $ 1,500,000 $ 1,633,485
Lancaster County Solid Waste Managment Authority,
Resource Recovery System Revenue 8.50%, 12/15/2010................................. 1,145,000 1,275,725
Langhorne Manor Borough Higher Educational and Health Authority, HR:
(Lower Bucks Hospital) 7%, 7/1/2005................................................ 2,375,000 2,499,141
(Woods Schools) 8.75%, 11/15/2014.................................................. 1,000,000 1,250,850
Lehigh County General Purpose Authority, Revenue (Wiley House):
8.75%, 11/1/2014 (LOC; Northeastern Bank of Pennsylvania) (b)...................... 3,785,000 3,983,750
9.50%, 11/1/2016................................................................... 2,000,000 2,205,440
Luzerne County Industrial Development Authority, Exempt Facilities Revenue, Refunding
(Pennsylvania Gas and Water Co. Project):
7.20%, 10/1/2017................................................................. 4,500,000 4,718,160
7.125%, 12/1/2022................................................................ 4,000,000 4,171,680
Lycoming County Authority, Hospital Lease Revenue (Divine Providence Sisters)
7.75%, 7/1/2016.................................................................... 2,000,000 2,217,000
Montgomery County Higher Educational and Health Authority, Revenue:
First Mortgage (Montgomery Income Project) 10.50%, 9/1/2020........................ 3,000,000 3,205,560
Hospital Refunding (Bryn Mawr Hospital Project) 7.375%, 12/1/2019.................. 1,870,000 2,049,464
(Northwestern Corporation) 8.375%, 6/1/2009........................................ 2,685,000 2,818,981
Montgomery County Industrial Development Authority,
PCR, Refunding, (Philadelphia Electricity Co.) 7.60%, 4/1/2021..................... 3,250,000 3,548,967
RRR 7.50%, 1/1/2012 (LOC; Banque Paribas) (b)...................................... 5,000,000 5,662,100
Northampton County Industrial Development Authority, Revenue, Refunding
(Moravian Hall Square Project) 7.45%, 6/1/2014 (LOC; Meridian Bank) (b)............ 1,800,000 1,925,010
Northeastern Hospital Authority, HR:
(Nesbitt Memorial Hospital) 7.50%, 7/1/2007........................................ 1,250,000 1,374,975
(Wilkes-Barre General Hospital) 7.65%, 7/1/2010.................................... 1,000,000 1,081,640
Pennsylvania Convention Center Authority, Revenue 6.70%, 9/1/2016 (Insured; FGIC).... 4,000,000 4,585,880
Pennsylvania Finance Authority, Revenue, Refunding
(Municipal Capital Improvements Program) 6.60%, 11/1/2009.......................... 5,000,000 5,184,700
Pennsylvania Higher Education Assistance Agency, Student Loan Revenue:
7.05%, 10/1/2016 (Insured; AMBAC).................................................. 2,500,000 2,694,950
7.15%, 9/1/2021.................................................................... 3,030,000 3,284,308
Pennsylvania Higher Educational Facilities Authority, Revenue
Refunding (Drexel University) 6.375%, 5/1/2017..................................... 2,300,000 2,314,329
(Thomas Jefferson University):
7.30%, 7/1/2015.................................................................. 1,500,000 1,662,615
6%, 7/1/2019..................................................................... 3,555,000 3,561,399
Pennsylvania Housing Finance Agency:
9.48%, 4/1/2025(a)................................................................. 3,000,000 3,022,500
Multi-Family Development
8.25%, 12/15/2019................................................................ 1,537,000 1,652,413
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
PENNSYLVANIA (CONTINUED)
<S> <C> <C>
Pennsylvania Housing Finance Agency (continued):
Single Family Mortgage:
8.25%, 4/1/2014.................................................................. $ 500,000 $ 531,910
6.90%, 4/1/2017.................................................................. 2,250,000 2,340,833
8.125%, 10/1/2019................................................................ 450,000 479,088
7.875%, 10/1/2020................................................................ 1,435,000 1,547,490
8.15%, 10/1/2021................................................................. 1,475,000 1,614,594
7.65%, 10/1/2023................................................................. 5,000,000 5,349,050
7%, 4/1/2024..................................................................... 2,000,000 2,099,500
8.15%, 4/1/2024.................................................................. 1,480,000 1,608,908
Pennsylvania Industrial Development Authority, Economic Development Revenue
7%, 1/1/2011....................................................................... 4,000,000 4,322,880
Pennsylvania Infrastructure Investment Authority, Revenue
(Pennvest Pool Loan Program) 6.80%, 9/1/2010....................................... 2,500,000 2,675,125
Pennsylvania University, Refunding:
5.60%, 8/15/2008................................................................... 2,000,000 2,001,440
7%, 7/1/2016....................................................................... 3,000,000 3,445,620
5.50%, 8/15/2016................................................................... 5,180,000 5,040,244
City of Philadelphia, Revenue:
Gas Works:
6.375%, 7/1/2014................................................................. 4,345,000 4,432,943
7.70%, 6/15/2021................................................................. 2,000,000 2,393,980
Water and Sewer:
7.10%, 4/1/2000.................................................................. 2,000,000 2,118,500
7.35%, 9/1/2004.................................................................. 2,615,000 2,896,296
Philadelphia Hospital and Higher Education Facilities Authority:
HR:
(Albert Einstein Medical Center) 7%, 10/1/21..................................... 1,500,000 1,588,620
(Children's Seashore House) 7%, 8/15/2022........................................ 2,355,000 2,476,777
(Graduate Health System Obligation) 7.25%, 7/1/2018.............................. 3,250,000 3,496,155
Revenue:
(Northwestern Corporation) 8.375%, 6/1/2009...................................... 1,885,000 1,980,324
Refunding (Philadelphia MR Project) 5.875%, 8/1/2007............................. 4,620,000 4,469,065
Philadelphia Municipal Authority, Revenue (Justice Lease)
7.10%, 11/15/2011 (Insured; FGIC).................................................. 1,500,000 1,685,025
Pittsburgh Urban Redevelopment Authority:
Mortgage Revenue 7.05%, 4/1/2023................................................... 2,750,000 2,862,970
Single Family Mortgage:
7.625%, 12/1/2021................................................................ 610,000 649,815
7.40%, 4/1/2024.................................................................. 1,200,000 1,257,396
Ridley Park Hospital Authority, Revenue (Taylor Hospital) 8.625%, 12/1/2020.......... 3,185,000 3,607,777
Schuylkill County Industrial Development Authority, First Mortgage Revenue, Refunding
(Valley Health Concerns) 8.75%, 3/1/2012........................................... 1,000,000 1,055,410
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
PENNSYLVANIA (CONTINUED)
<S> <C> <C>
Scranton - Lackawanna Health and Welfare Authority, Revenue
(University of Scranton Project):
7.25%, 6/15/2005................................................................. $ 1,310,000 $ 1,519,272
7.50%, 6/15/2006................................................................. 3,400,000 3,987,112
Sewickley Valley Hospital Authority, Revenue
(Allegheny County-Sewickley Valley Hospital Project):
7.50%, 10/1/2014................................................................. 850,000 935,357
7.375%, 10/1/2016................................................................ 1,500,000 1,640,730
Washington County Industrial Development Authority, Revenue, Refunding
(Presbyterian Medical Center) 6.75%, 1/15/2023 (Insured; FHA)...................... 2,000,000 2,114,140
West Donegal Township Authority, Sewer Revenue 8.15%, 11/15/2017..................... 450,000 523,309
York County Hospital Authority, Revenue
(Health Center-Village at Sprenkle Drive) 7.75%, 4/1/2022.......................... 1,205,000 1,273,275
- -------------------------------------------------------------------------------------
U.S. RELATED--2.0%
Guam Airport Authority, Revenue 6.70%, 10/1/2023..................................... 4,500,000 4,763,745
------------
TOTAL MUNICIPAL BONDS (cost $209,261,138)............................................ $225,650,556
------------
------------
- -------------------------------------------------------------------------------------
SHORT-TERM TAX EXEMPT INVESTMENTS--3.7%
Pennsylvania:
Allegheny County Higher Education Building Authority, VRDN
(University of Pittsburgh Project) 2.375%, (LOC; Fuji Bank)(b,c)................... 1,000,000 1,000,000
Cambria County Industrial Development Authority, RRR, VRDN
(Cambria Cogen Project) 2.75% (LOC; Fuji Bank)(b,c)................................ 3,000,000 3,000,000
Philadelphia Hospitals and Higher Education Facilities Authority, HR, VRDN
(Children's Hospital of Philadelphia Project) 2.30% (c)............................ 2,700,000 2,700,000
University of Pittsburgh Higher Education, VRDN
(University Capital Project) 2.375%, (LOC; Fuji Bank)(b,c)......................... 2,000,000 2,000,000
------------
TOTAL SHORT-TERM TAX EXEMPT INVESTMENT (cost $8,700,000)............................. $ 8,700,000
------------
------------
TOTAL INVESTMENTS--100% (cost $217,961,138).......................................... $234,350,556
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <S> <S> <S>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Insurance Association
FGIC Financial Guaranty Insurance Corporation PCR Pollution Control Revenue
FHA Federal Housing Administration RRR Resources Recovery Revenue
HR Hospital Revenue SFMR Single Family Mortgage Revenue
LOC Letter of Credit VRDN Variable Rate Demand Notes
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (D) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C>
AAA Aaa AAA 15.8%
AA Aa AA 21.7
A A A 17.4
BBB Baa BBB 25.2
F1 MIG1 SP1 3.7
F1 P1 A1 2.4
Not Rated Not Rated Not Rated 13.8
------
100.0%
------
------
<FN>
- --------------------------------------------------------------------------------
NOTES TO STATEMENT OF INVESTMENTS:
(a) Inverse floater security -- the interest rate is subject to change
periodically.
(b) Secured by letters of credit.
(c) 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.
(d) Fitch currently provides creditworthiness information for a limited amount
of investments.
(e) At April 30,1993, the Series had $73,907,494 (31.38% of net assets)
invested in securities whose payment of principal and interest is dependent
upon revenue generated from health care projects.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $217,961,138)--see statement................................................... $234,350,556
Cash................................................................................... 1,273,319
Interest receivable.................................................................... 4,058,115
Receivable for shares of Beneficial Interest subscribed................................ 1,778,495
Prepaid expenses....................................................................... 24,692
------------
241,485,177
LIABILITIES:
Due to The Dreyfus Corporation......................................................... $ 122,198
Payable for investment securities purchased............................................ 5,660,270
Payable for shares of Beneficial Interest redeemed..................................... 103,998
Accrued expenses....................................................................... 47,764 5,934,230
----------- ------------
NET ASSETS............................................................................... $235,550,947
------------
------------
REPRESENTED BY:
Paid-in capital........................................................................ $218,661,566
Accumulated undistributed net realized gain on investments............................. 499,963
Accumulated net unrealized appreciation on investments--Note 3......................... 16,389,418
------------
NET ASSETS at value...................................................................... $235,550,947
------------
------------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized).............................. 13,303,188
------------
------------
Class B Shares
(unlimited number of $.001 par value shares authorized).............................. 881,207
------------
------------
NET ASSET VALUE per share:
Class A Shares
($220,920,304 / 13,303,188 shares)................................................... $16.61
------
------
Class B Shares
($14,630,643 / 881,207 shares)...................................................... $16.60
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME........................................................................ $ 13,168,168
EXPENSES:
Management fee--Note 2(a)............................................................ $ 1,046,107
Shareholder servicing costs--Note 2(b,c)............................................. 629,630
Prospectus and shareholders' reports--Note 2(b)...................................... 29,887
Registration fees.................................................................... 21,723
Custodian fees....................................................................... 21,087
Professional fees.................................................................... 16,148
Distribution fees (Class B shares)--Note 2(b)........................................ 8,217
Trustees' fees and expenses--Note 2(d)............................................... 1,004
Miscellaneous........................................................................ 18,721
-----------
1,792,524
Less--reduction in management fee due to
undertakings--Note 2(a)............................................................ 472,202
-----------
TOTAL EXPENSES................................................................... 1,320,322
------------
INVESTMENT INCOME--NET........................................................... 11,847,846
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3............................................... $ 595,471
Net unrealized appreciation on investments............................................. 10,916,698
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................................. 11,512,169
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................................... $ 23,360,015
------------
------------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
------------------------------
1992 1993
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................................... $ 9,369,223 $ 11,847,846
Net realized gain on investments..................................................... 1,419,805 595,471
Net unrealized appreciation on investments for the year.............................. 3,584,414 10,916,698
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................. 14,373,442 23,360,015
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares..................................................................... (9,369,223) (11,767,382)
Class B shares..................................................................... -- (80,464)
------------ ------------
Net realized gain on investments:
Class A shares..................................................................... (394,659) (1,308,117)
Class B shares..................................................................... -- --
------------ ------------
TOTAL DIVIDENDS.................................................................. (9,763,882) (13,155,963)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares..................................................................... 49,997,362 61,710,489
Class B shares..................................................................... -- 14,569,844
Dividends reinvested:
Class A shares..................................................................... 4,665,899 6,496,038
Class B shares..................................................................... -- 47,658
Cost of shares redeemed:
Class A shares..................................................................... (14,275,634) (15,870,806)
Class B shares..................................................................... -- (42,861)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS..................... 40,387,627 66,910,362
------------ ------------
TOTAL INCREASE IN NET ASSETS................................................... 44,997,187 77,114,414
NET ASSETS:
Beginning of year.................................................................... 113,439,346 158,436,533
------------ ------------
End of year.......................................................................... $158,436,533 $235,550,947
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------------------------------------------------
CLASS A CLASS B
------------------------------ ------------
YEAR ENDED APRIL 30, PERIOD ENDED
------------------------------ APRIL 30,
1992 1993 1993*
------------ ------------ ------------
<S> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................................... 3,230,045 3,810,707 880,939
Issued for dividends reinvested...................................... 299,888 401,112 2,877
Shares redeemed...................................................... (918,639) (980,220) (2,609)
------------ ------------ ------------
NET INCREASE IN SHARES OUTSTANDING................................. 2,611,294 3,231,599 881,207
------------ ------------ ------------
------------ ------------ ------------
<FN>
- ---------------
*From January 15, 1993 (commencement of operations) to April 30, 1993.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
Reference is made to page 18 of the Fund's Prospectus dated February 18,
1994.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA 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 thirteen
series including the Pennsylvania 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.
On September 18, 1992, shareholders approved an amendment to the Fund's
Agreement and Declaration of Trust to provide for the issuance of additional
classes of shares. On September 23, 1992 the Fund's Board of Trustees
classified the Series' existing shares as Class A shares and authorized the
issuance of an unlimited number of $.001 par value Class B shares. The Series
began offering both Class A and Class B shares on January 15, 1993. 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 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, 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.
(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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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. Effective September 18,
1992 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, 1992 through January 1, 1993 to reduce
the management fee paid by, or reimburse such excess expenses, of the Series,
to the extent that the Series' aggregate expenses (excluding certain expenses as
described above) exceeded an annual rate of .65 of 1% of the Series average
daily net assets and thereafter, had undertaken through January 14, 1993 to
reduce the management fee paid by, or reimburse such excess expenses of 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 15, 1993 through June 30, 1993, to waive receipt of the management fee
payable to it by the Series in excess of an annual rate of .38 of 1% of the
Series' average daily net assets. The reduction in management fee, pursuant to
the undertakings, amounted to $472,202 for the year ended April 30, 1993.
On September 18, 1992, Series shareholders approved an amendment to the
Agreement changing the expense limitation provision from 1 1/2% to the expense
limitation of any state having jurisdiction over the Series. The amended
Agreement provides that the Series may deduct from the fee to be paid to the
Manager, or the Manager will bear such excess expense, to the extent required
by state law, should the Series' aggregate expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, exceed the
limitation of any state having jurisdiction over the Series.
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 $156,066 during the year ended April 30, 1993
from commissions earned on sales of the Series' Class A shares.
The Distributor retained $836 during the period ended April 30, 1993 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, effective January 15, 1993, 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.
Prior to January 15, 1993, the Fund's Service Plan ("prior Service Plan")
provided that the Series pay the Distributor, at an annual rate of .25 of 1% of
the value of the Series' average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing the Series' shares and
for servicing shareholder accounts. The Distributor made payments to one or
more Service Agents based on the value of the Series' shares owned by clients
of the Service Agent. The prior Service Plan also provided for the Series to
bear the costs of preparing, printing and distributing certain of the Series'
prospectuses and statements of additional information and costs associated with
implementing and operating the Plan, not to exceed the greater of $100,000 or
.005 of 1% of the Series' average daily net assets for any full fiscal year.
During the period ended April 30, 1993, $324,580 was charged to the Series
pursuant to the prior Service Plan and $8,217 was charged to the Series
pursuant to the Class B Distribution Plan.
(C) Under the Shareholder Services Plan, effective January 15, 1993, 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 period ended April 30, 1993,
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
$153,673 and $4,109 were charged to the Class A and Class B shares,
respectively pursuant to the Shareholder Services Plan.
(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. Prior to February 1, 1993, the annual fee
was $1,000.
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $128,157,791 and
$59,526,408, respectively, for the year ended April 30, 1993, and consisted
entirely of municipal bonds and short-term tax exempt investments.
At April 30, 1993, accumulated net unrealized appreciation on investments
was $16,389,418, consisting of $16,480,754 gross unrealized appreciation and
$91,336 gross unrealized depreciation.
At April 30, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
We have audited the accompanying statement of assets and liabilities of
Premier State Municipal Bond Fund, Pennsylvania Series (one of the Series
constituting the Premier State Municipal Bond Fund), including the statement of
investments, as of April 30, 1993, 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 condensed financial information for each of
the years indicated therein. These financial statements and condensed financial
information are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and condensed financial
information 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 condensed
financial information 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, 1993 by correspondence with the custodian and brokers. 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 condensed financial
information referred to above present fairly, in all material respects, the
financial position of Premier State Municipal Bond Fund, Pennsylvania Series at
April 30, 1993, 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 condensed financial information for each of the indicated years, in
conformity with generally accepted accounting principles.
Ernst & Young
New York, New York
June 7, 1993
<PAGE>
------------------------
ANNUAL REPORT
------------------------
------------------------------------------------
PREMIER STATE
MUNICIPAL BOND FUND
------------------------------------------------
--------------------
TEXAS SERIES
--------------------
---------------------
APRIL 30, 1993
---------------------
[DREYFUS LION LOGO]
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--100.0% AMOUNT VALUE
----------- -----------
<S> <C> <C>
- ---------------------------------------------------------------------------------------
TEXAS--96.6%
Alliance Airport Authority Inc., Special Facilities Revenue
(American Airlines Inc. Project):
7%, 12/1/2011...................................................................... $ 1,550,000 $ 1,567,344
7.50%, 12/1/2029................................................................... 1,000,000 1,035,980
Amarillo Health Facilities Corp., HR (High Plains Baptist Hospital)
10.257%, 1/3/2022 (Insured; FSA) (a)................................................. 2,250,000 2,505,938
Austin :
Convention Center Revenue 8.25%, 11/15/2014.......................................... 500,000 550,195
(Public Improvement) 6.75%, 9/1/2010................................................. 500,000 528,610
Bexar County, Refunding, Limited Tax 5%, 6/15/2010..................................... 8,000,000 7,416,960
Bexar County Health Facilities Development Corp., HR, Refunding
(St. Luke's Lutheran Hospital Project) 7%, 5/1/2021.................................. 1,000,000 1,029,730
Brazos County Health Facility Development Corp., Franciscan Services Corporate Revenue
(St. Joseph's Hospital and Health Center):
7.75%, 1/1/2019.................................................................... 300,000 330,828
Refunding 8.875%, 1/1/2015......................................................... 50,000 56,458
Brazos Higher Education Authority Inc., Student Loan Revenue, Refunding
6.80%, 12/1/2004..................................................................... 850,000 876,749
Brazos River Authority:
PCR (Texas Utilities Electric Company):
9.25%, 3/1/2018 (Insured; FGIC).................................................... 100,000 117,727
7.875%, 3/1/2021................................................................... 500,000 558,345
Water Revenue (Upper Navasota Project) 7%, 7/15/2004................................. 95,000 95,453
Brazos River Harbor Navigation District, Brazoria County, PCR
(BASF Corp. Project) 6.75%, 2/1/2010................................................. 1,800,000 1,919,502
Chimney Hill Municipal Utility District, Waterworks and Sewer System Revenue, Refunding
7.75%, 10/1/2011..................................................................... 1,000,000 1,065,670
Clint Independent School District, Refunding
7%, 3/1/2015......................................................................... 750,000 792,802
Colorado River Municipal Water District, Water Revenue
(Water Transmission Facilities Project) 6.625%, 1/1/2021 (Insured; AMBAC)............ 1,000,000 1,048,480
Dallas-Fort Worth Regional Airport, Joint Revenue
6.625%, 11/1/2021 (Insured; FGIC).................................................... 1,250,000 1,333,925
Dallas Housing Finance Corp., SFMR
(GNMA Mortgage Securities Program) 7.95%, 12/1/2023.................................. 165,000 176,725
El Paso Health Facilities Development Corp., Revenue
(West Texas Pooled Health Care Loan Program) 8.375%, 12/1/2025....................... 100,000 110,259
El Paso Housing Authority, Multi-Family Revenue
(Section 8 Projects) 6.25%, 12/1/2009................................................ 2,510,000 2,523,529
Fort Bend County Municipal Utility District No.42, Refunding
8.30%, 4/1/2009...................................................................... 300,000 316,341
Fort Worth Housing Finance Corp., SFMR
(GNMA Mortgage Securities Program) 8.25%, 12/1/2011 (Insured; GNMA).................. 75,000 78,086
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
----------- -----------
- ---------------------------------------------------------------------------------------
TEXAS (CONTINUED)
<S> <C> <C>
Gulf Coast Waste Disposal Authority, Solid Waste Disposal Revenue
(Champion International Corp. Project) 7.25%, 4/1/2017............................... $ 1,000,000 $ 1,067,890
Harris County, Toll Road Multi-Mode, Senior Lien Revenue:
6.75%, 8/1/2014...................................................................... 750,000 808,597
8.125%, 8/15/2017.................................................................... 250,000 296,738
Harris County Health Facilities Development Corp., Health Care System Revenue
(Sisters of Charity) 7.10%, 7/1/2021................................................. 1,000,000 1,105,720
Harris County Industrial Development Corp., Marine Terminal Revenue, Refunding
(GATX Terminal Corp. Project) 6.95%, 2/1/2022........................................ 750,000 792,802
City of Houston, Airport System Revenue:
6.75%, 7/1/2021 (Insured; FGIC)...................................................... 1,000,000 1,057,140
6.625%, 7/1/2022 (Insured; FGIC)..................................................... 1,000,000 1,058,650
Houston Housing Finance Corp., SFMR 10%, 9/15/2014..................................... 100,000 103,585
Leon County, PCR, Refunding (Nucor Corp. Project) 7.375%, 8/1/2009..................... 750,000 845,663
Lewisville Independent School District 5.35%, 8/15/2014................................ 2,750,000 2,625,370
Lower Colorado River Authority, Revenue:
6.875%, 1/1/2010 (Insured; BIGI)..................................................... 150,000 158,568
8.375%, 1/1/2015..................................................................... 50,000 56,792
Matagorda County Navigation District No. 1, PCR
(Collateralized Houston Lighting and Power) 7.875%, 2/1/2019......................... 500,000 550,770
Montgomery County Health Facilities Development Corp. Hospital Mortgage Revenue
(Woodlands Medical Center Project) 8.85%, 8/15/2014.................................. 600,000 668,124
North Central Health Facility Development Corp., Revenue (Presbyterian Health Care):
6%, 6/1/2013......................................................................... 1,000,000 1,010,130
5.90%, 6/1/2021 (b).................................................................. 2,300,000 2,296,688
North Texas Higher Education Authority, Inc., Student Loan Revenue
7.25%, 4/1/2003 (Insured; AMBAC)..................................................... 1,000,000 1,100,480
Port Corpus Christi Authority, PCR, Refunding
(Hoechst Celanese Co. Project) 7.50%, 8/1/2012....................................... 395,000 438,332
Red River Authority, PCR:
(Hoechst Celanese Corp. Project) 6.875%, 4/1/2017.................................... 2,000,000 2,118,020
(West Texas Public Service Company, Oklahoma Power and Lighting Co. Project)
7.875%, 9/15/2014.................................................................. 100,000 111,423
Rio Grande Valley Health Facilities Development Corp., Retirement Facility Revenue
(Golden Palms) 9.264%, 8/1/2015 (Insured; MBIA) (a).................................. 2,000,000 2,195,280
Rusk County Health Facilities Corp., HR
(Henderson Memorial Hospital Project) 10.25%, 4/1/2013............................... 95,000 97,783
Sabine River Authority, PCR
(Texas Utility Co. Project) 7.75%, 4/1/2016.......................................... 500,000 539,980
Sam Rayburn Municipal Power Agency, Power Supply System Revenue, Refunding:
6.125%, 10/1/2013.................................................................... 2,790,000 2,755,069
6.25%, 10/1/2017..................................................................... 1,250,000 1,245,913
City of San Antonio:
Electric and Gas Revenue:
8%, 2/1/2010....................................................................... 50,000 53,092
5.75%, 2/1/2011.................................................................... 2,000,000 1,984,400
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
----------- -----------
- ---------------------------------------------------------------------------------------
TEXAS (CONTINUED)
<S> <C> <C>
City of San Antonio (continued):
General Improvement (Bexar County-Limited Tax) 7.875%, 8/1/2012...................... $ 100,000 $ 114,125
Refunding 5.75%, 8/1/2013............................................................ 3,000,000 3,006,090
Water Revenue (Prior Lien) 7.125%, 5/1/2016.......................................... 750,000 857,333
San Saba County, Certificates of Obligation 8.625%, 2/15/2019.......................... 990,000 1,061,547
Southeast Housing Finance Corp., SFMR
8.375%, 6/1/2008 (Collateralized; GNMA Pass-Through Certificates).................... 30,000 31,520
State of Texas, Refunding:
6%, 10/1/2009........................................................................ 2,000,000 2,071,960
(Superconducting Super Collider Project) 6%, 4/1/2012................................ 1,500,000 1,527,555
Texas City Independent School District:
5%, 8/15/2011........................................................................ 1,030,000 946,457
5%, 8/15/2012........................................................................ 940,000 858,380
Texas Health Facilities Development Corp., HR, Refunding
(All Saints Episcopal Hospitals) 6.25%, 8/15/2022 (Insured; MBIA).................... 2,000,000 2,064,760
Texas Higher Education Coordinating Board, College Student Loan Revenue
7.30%, 10/1/2003..................................................................... 905,000 944,485
Texas Housing Agency, Revenue:
Mortgage Refunding 7.15%, 9/1/2012................................................... 830,000 883,543
Single Family Mortgage:
9.375%, 9/1/2016 (Insured; FHA).................................................... 670,000 718,186
8.25%, 3/1/2017.................................................................... 100,000 106,093
7.50%, 9/1/2017.................................................................... 200,000 208,320
Texas Municipal Power Agency, Refunding 5.75%, 9/1/2012 (Insured; MBIA)................ 2,000,000 1,981,400
Texas National Research Laboratory Commission, Financing Corp., Lease Revenue
(Superconducting Super Collider) 7.10%, 12/1/2021.................................... 1,000,000 1,027,610
Texas Public Property Finance Corp., Revenue
(Mental Health and Retardation) 8.875%, 9/1/2011..................................... 560,000 596,126
Texas Veterans Housing Assistance 6.80%, 12/1/2023..................................... 1,500,000 1,551,180
Texas Water Resources Finance Authority, Revenue 7.625%, 8/15/2008..................... 400,000 431,640
Trinity River Authority, Texas Project Revenue
(Regional Wastewater System) 7.70%, 8/1/2006 (Insured; FGIC)......................... 100,000 111,720
Tyler Texas Health Facility Development Corp., HR
(East Texas Medical Center Regional Health) 6.625%, 11/1/2011........................ 2,000,000 1,975,620
West Side Calhoun County Navigation District, Solid Waste Disposal Revenue
(Union Carbide Chemical and Plastics) 8.20%, 3/15/2021............................... 500,000 565,855
- ---------------------------------------------------------------------------------------
U.S. RELATED--3.4%
Puerto Rico Electric Power Authority, Power Revenue
6.25%, 7/1/2017...................................................................... 1,020,000 1,056,057
Puerto Rico Public Buildings Authority Guaranteed
Public Education and Health Facilities:
6.875%, 7/1/2012................................................................... 1,000,000 1,083,670
7.25%, 7/1/2017.................................................................... 500,000 551,945
-----------
TOTAL INVESTMENTS
(cost $75,553,049)................................................................... $79,511,812
-----------
-----------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <S> <S> <S>
AMBAC American Municipal Bond Assurance Corporation GNMA Government National Mortgage Association
BIGI Bond Investors Guaranty Insurance HR Hospital Revenue
FGIC Financial Guaranty Insurance Corporation MBIA Municipal Bond Insurance Association
FHA Federal Housing Administration PCR Pollution Control Revenue
FSA Financial Security Association SFMR Single Family Mortgage Revenue
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (C) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C>
AAA Aaa AAA 24.8%
AA Aa AA 40.7
A A A 13.1
BBB Baa BBB 15.9
BB Ba BB .1
Not Rated Not Rated Not Rated 5.4
------
100.0%
------
------
<FN>
- --------------------------------------------------------------------------------
NOTES TO STATEMENT OF INVESTMENTS:
(a) Inverse floater security--the interest rate is subject to change
periodically.
(b) Purchased on a when-issued basis.
(c) Fitch currently provides creditworthiness information for a limited amount
of investments.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $75,553,049)--see statement...................................................... $79,511,812
Interest receivable...................................................................... 1,169,748
Receivable for shares of Beneficial Interest subscribed.................................. 446,394
Prepaid expenses......................................................................... 18,892
-----------
81,146,846
LIABILITIES:
Due to The Dreyfus Corporation........................................................... $ 18,334
Due to Custodian......................................................................... 314,236
Payable for investment securities purchased.............................................. 2,282,750
Payable for shares of Beneficial Interest redeemed....................................... 100,297
Accrued expenses and other liabilities................................................... 20,887 2,736,504
---------- -----------
NET ASSETS................................................................................. $78,410,342
-----------
-----------
REPRESENTED BY:
Paid-in capital.......................................................................... $73,885,738
Accumulated undistributed net realized gain on investments............................... 565,841
Accumulated net unrealized appreciation on investments--Note 3(b)........................ 3,958,763
-----------
NET ASSETS at value........................................................................ $78,410,342
-----------
-----------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)................................ 3,393,340
-----------
-----------
Class B Shares
(unlimited number of $.001 par value shares authorized)................................ 300,238
-----------
-----------
NET ASSET VALUE per share:
Class A Shares
($72,037,180 / 3,393,340 shares)....................................................... $21.23
------
------
Class B Shares
($6,373,162 / 300,238 shares)......................................................... $21.23
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME.......................................................................... $ 3,575,906
EXPENSES:
Management fee--Note 2(a).............................................................. $ 301,425
Shareholder servicing costs--Note 2(b,c)............................................... 168,971
Registration fees...................................................................... 27,440
Prospectus and shareholders' reports--Note 2(b)........................................ 11,580
Professional fees...................................................................... 8,573
Custodian fees......................................................................... 7,282
Distribution fees (Class B shares)--Note 2(b).......................................... 4,776
Trustees' fees and expenses--Note 2(d)................................................. 326
Miscellaneous.......................................................................... 5,616
----------
535,989
Less--expense reimbursement from Manager due to
undertakings--Note 2(a).............................................................. 336,172
----------
TOTAL EXPENSES..................................................................... 199,817
-----------
INVESTMENT INCOME--NET............................................................. 3,376,089
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3(a).............................................. $ 692,635
Net realized (loss) on financial futures--Note 3(a)...................................... (59,790)
----------
NET REALIZED GAIN...................................................................... 632,845
Net unrealized appreciation on investments............................................... 2,824,040
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................................... 3,456,885
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................................... $ 6,832,974
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
----------------------------
1992 1993
----------- -----------
<S> <C> <C>
OPERATIONS:
Investment income--net.................................................................. $ 1,846,658 $ 3,376,089
Net realized gain on investments........................................................ 95,875 632,845
Net unrealized appreciation on investments for the year................................. 790,051 2,824,040
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................ 2,732,584 6,832,974
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares........................................................................ (1,846,658) (3,330,129)
Class B shares........................................................................ -- (45,960)
Net realized gain on investments:
Class A shares........................................................................ (84,480) (80,058)
Class B shares........................................................................ -- --
----------- -----------
TOTAL DIVIDENDS..................................................................... (1,931,138) (3,456,147)
----------- -----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................................ 21,891,507 34,547,838
Class B shares........................................................................ -- 6,338,141
Dividends reinvested:
Class A shares........................................................................ 1,100,163 1,766,600
Class B shares........................................................................ -- 27,102
Cost of shares redeemed:
Class A shares........................................................................ (1,724,465) (4,843,723)
Class B shares........................................................................ -- (10,314)
----------- -----------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS........................ 21,267,205 37,825,644
----------- -----------
TOTAL INCREASE IN NET ASSETS...................................................... 22,068,651 41,202,471
NET ASSETS:
Beginning of year....................................................................... 15,139,220 37,207,871
----------- -----------
End of year............................................................................. $37,207,871 $78,410,342
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------------------------
CLASS A CLASS B
---------------------------- ------------
YEAR ENDED APRIL 30, PERIOD ENDED
---------------------------- APRIL 30,
1992 1993 1993*
----------- ----------- ------------
<S> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................ 1,116,669 1,670,668 299,440
Issued for dividends reinvested........................................ 55,703 85,533 1,281
Shares redeemed........................................................ (87,968) (233,702) (483 )
----------- ----------- ------------
NET INCREASE IN SHARES OUTSTANDING................................... 1,084,404 1,522,499 300,238
----------- ----------- ------------
----------- ----------- ------------
<FN>
- ---------------
* From January 15, 1993 (commencement of operations) to April 30, 1993.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
Reference is made to page 19 of the Fund's Prospectus dated February 18,
1994.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS 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 thirteen
series including the Texas 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.
On September 18, 1992, shareholders approved an amendment to the Fund's
Agreement and Declaration of Trust to provide for the issuance of additional
classes of shares. On September 23, 1992 the Fund's Board of Trustees
classified the Series' existing shares as Class A shares and authorized the
issuance of an unlimited number of $.001 par value Class B shares. The Series
began offering both Class A and Class B shares on January 15, 1993. 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 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, 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.
(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. Effective
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 18, 1992 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, 1992 through September
13, 1992 to assume all expenses of the Series in excess of an annual rate of
.25 of 1% of the Series' average daily net assets and thereafter, had
undertaken through October 12, 1992, to reduce the management fee paid by and
reimburse such expenses of 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, until such time as the net assets of the Series exceed
$100 million, to waive receipt of the management fee payable to it by the
Series. The expense reimbursement, pursuant to the undertakings, amounted to
$336,172 for the year ended April 30, 1993.
On September 18, 1992, Series shareholders approved an amendment to the
Agreement changing the expense limitation provision from 1 1/2% to the expense
limitation of any state having jurisdiction over the Series. The amended
Agreement provides that the Series may deduct from the fee to be paid to the
Manager, or the Manager will bear such excess expense, to the extent required
by state law, should the Series' aggregate expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, exceed the
limitation of any state having jurisdiction over the Series.
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 $70,181 during the year ended April 30, 1993 from
commissions earned on sales of the Series' Class A shares.
The Distributor retained $300 during the period ended April 30, 1993 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, effective January 15, 1993, 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.
Prior to January 15, 1993, the Fund's Service Plan ("prior Service Plan")
provided that the Series pay the Distributor, at an annual rate of .25 of 1% of
the value of the Series' average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing the Series' shares and
for servicing shareholder accounts. The Distributor made payments to one or
more Service Agents based on the value of the Series' shares owned by clients
of the Service Agent. The prior Service Plan also provided for the Series to
bear the costs of preparing, printing and distributing certain of the Series'
prospectuses and statements of additional information and costs associated with
implementing and operating the Plan, not to exceed the greater of $100,000 or
.005 of 1% of the Series' average daily net assets for any full fiscal year.
During the period ended April 30, 1993, $89,020 was charged to the Series
pursuant to the prior Service Plan and $4,776 was charged to the Series
pursuant to the Class B Distribution Plan.
(C) Under the Shareholder Services Plan, effective January 15, 1993, 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 period ended April 30, 1993,
$48,457 and $2,388 were charged to the Class A and Class B shares,
respectively, pursuant to the Shareholder Services Plan.
(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. Prior to February 1, 1993, the annual fee
was $1,000.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3--SECURITIES TRANSACTIONS:
(A) Purchases and sales of securities amounted to $84,389,542 and
$44,409,154, respectively, for the year ended April 30, 1993, and consisted
entirely of municipal bonds and short-term tax exempt investments.
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 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 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 April 30,
1993, there were no financial futures contracts outstanding.
(B) At April 30, 1993, accumulated net unrealized appreciation on
investments was $3,958,763, consisting of $4,084,454 gross unrealized
appreciation and $125,691 gross unrealized depreciation.
At April 30, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
We have audited the accompanying statement of assets and liabilities of
Premier State Municipal Bond Fund, Texas Series (one of the Series constituting
the Premier State Municipal Bond Fund), including the statement of investments,
as of April 30, 1993, 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 condensed financial information for each of the years
indicated therein. These financial statements and condensed financial
information are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and condensed financial
information 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 condensed
financial information 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, 1993 by correspondence with the custodian and brokers. 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 condensed financial
information referred to above present fairly, in all material respects, the
financial position of Premier State Municipal Bond Fund, Texas Series at April
30, 1993, 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
condensed financial information for each of the indicated years, in conformity
with generally accepted accounting principles.
Ernst & Young
New York, New York
June 2, 1993
<PAGE>
------------------------
ANNUAL REPORT
------------------------
------------------------------------------------
PREMIER STATE
MUNICIPAL BOND FUND
------------------------------------------------
-----------------------
VIRGINIA SERIES
-----------------------
---------------------
APRIL 30, 1993
---------------------
[DREYFUS LION LOGO]
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--100.0% AMOUNT VALUE
----------- -----------
<S> <C> <C>
- ---------------------------------------------------------------------------------------
VIRGINIA--83.2%
Arlington County Industrial Development Authority,
Hospital Facility Revenue (Arlington Hospital) 7.125%, 9/1/2021...................... $ 200,000 $ 221,466
Augusta County Industrial Development Authority, HR
(Augusta Hospital Corp. Project) 7%, 9/1/2021........................................ 2,750,000 2,978,607
Chesapeake, Water and Sewer System Revenue, Refunding 6.50%, 7/1/2012.................. 1,000,000 1,050,540
Chesapeake Bay Bridge and Tunnel Commission District, Revenue,
Refunding-General Resolution 6.375%, 7/1/2022 (Insured; MBIA)........................ 1,500,000 1,573,620
Chesapeake Hospital Authority, Hospital Facility Revenue, Refunding
(Chesapeake General Hospital) 5.25%, 7/1/2018 (Insured; MBIA)........................ 1,000,000 940,140
Covington-Alleghany County Industrial Development Authority,
Hospital Facility Revenue (Alleghany Regional Hospital) 6.875%, 4/1/2022............. 1,000,000 1,063,540
Fairfax County Water Authority, Water Revenue:
6.125%, 1/1/2029..................................................................... 2,000,000 2,157,820
8.297%, 4/1/2029 (a,b)............................................................... 2,000,000 1,920,000
Franklin 6.40%, 1/15/2012.............................................................. 1,000,000 1,048,130
Fredericksburg Industrial Development Authority, Hospital Facility Revenue, Refunding
(MWH Medicorp Obligation Group) 6.70%, 8/15/2009 (Insured; FGIC)..................... 195,000 210,315
Giles County Industrial Development Authority,
Solid Waste Disposal Facility Revenue (Hoechst Celanese Corp. Project)
6.625%, 12/1/2022.................................................................... 1,500,000 1,563,345
Hampton Roads Medical College, General Revenue, Refunding 6.875%, 11/15/2016........... 500,000 544,940
Harrisonburg Redevelopment and Housing Authority,
Multi-Family Housing Revenue, Refunding:
(Battery Heights Project) 7.375%, 11/20/2028....................................... 500,000 525,575
(Hanover Crossing Apartments Project) 6.35%, 3/1/2023.............................. 2,000,000 2,016,340
Henrico County 6.90%, 10/1/2009........................................................ 300,000 321,714
Industrial Development Authority of Albermarle County,
Health Services Revenue (The University of Virginia Health Services Foundation)
6.50%, 10/1/2022..................................................................... 1,125,000 1,173,735
Industrial Development Authority of the City of Williamsburg,
Hospital Facility Revenue (Williamsburg Community Hospital) 5.75%, 10/1/2022......... 2,000,000 1,938,840
Mecklenburg County Industrial Development Authority, Revenue
(Exempt Facility-Mecklenburg Cogeneration) 7.35%, 5/1/2008 (LOC; Fuji Bank) (c)...... 500,000 542,965
Nelson County Service Authority, Water and Sewer Revenue, Refunding
5.50%, 7/1/2018 (Insured; FGIC)...................................................... 1,750,000 1,710,223
Newport News Redevelopment and Housing Authority, Mortgage Revenue, Refunding
(FHA-West Apartments-Section 8) 6.55%, 7/1/2024...................................... 1,500,000 1,559,685
Norfolk Industrial Development Authority, HR
(Sentara Hospital-Norfolk Project) 7%, 11/1/2020..................................... 150,000 164,604
Peninsula Ports Authority, Health System Revenue, Refunding
(Riverside Health System Project) 6.625%, 7/1/2018................................... 500,000 535,210
Prince William County Service Authority, Water and Sewer System Revenue
6%, 7/1/2029 (Insured; FGIC)......................................................... 2,000,000 2,032,040
Richmond, Refunding 6.25%, 1/15/2018................................................... 500,000 520,985
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
----------- -----------
- ---------------------------------------------------------------------------------------
VIRGINIA (CONTINUED)
<S> <C> <C>
Richmond Industrial Development Authority, Revenue Hospital (Retreat Hospital)
7.35%, 7/1/2021...................................................................... $ 1,900,000 $ 2,025,685
Richmond Metropolitan Authority, Expressway Revenue, Refunding
6.375%, 7/15/2016 (Insured; FGIC).................................................... 1,500,000 1,577,760
South Boston Industrial Development Authority, HR
(Halifax Community Hospital Inc. Project) 7.375%, 9/1/2011........................... 500,000 555,360
Southeastern Public Service Authority, Revenue
(Regional Solid Waste System):
10.50%, 7/1/1995................................................................... 250,000 291,558
6%, 7/1/2013....................................................................... 1,250,000 1,231,900
6%, 7/1/2017....................................................................... 1,750,000 1,727,828
Upper Occoquan Sewer Authority, Regional Sewer Revenue
6.50%, 7/1/2017 (Insured; MBIA)...................................................... 1,000,000 1,058,610
Commonwealth of Virginia, Higher Educational Institution 6.60%, 6/1/2009............... 300,000 318,585
Virginia Beach Development Authority:
Hospital Facility Revenue (Sentara Bayside Hospital) 6.30%, 11/1/2021................ 2,000,000 2,076,220
Nursing Home Revenue (Sentara Life Care Corp.) 7.75%, 11/1/2021...................... 1,000,000 1,098,220
Virginia College Building Authority, Educational Facilities Revenue:
(Hampton University Project) 6.50%, 4/1/2008......................................... 350,000 370,468
(Randolph-Macon College Project) 6.625%, 5/1/2013.................................... 1,000,000 1,064,730
(Refunding-Washington and Lee University Project) 6.40%, 1/1/2012.................... 500,000 522,750
Virginia Housing Development Authority:
Commonwealth Mortgage:
6.95%, 1/1/2010.................................................................... 2,500,000 2,629,100
6.85%, 1/1/2027.................................................................... 2,000,000 2,082,680
Multi-Family 7.10%, 5/1/2013......................................................... 500,000 532,020
Virginia Public Building Authority, Building Revenue 5.75%, 8/1/2012................... 1,000,000 1,000,700
Virginia Resources Authority, Water and Sewer System Revenue:
(Lot 7-Rapidan Service Authority) 7.125%, 10/1/2016.................................. 250,000 276,888
(Lot 9-Frederick County) 6%, 10/1/2012............................................... 500,000 505,325
(Lot 11-Rapidan Service Authority) 5.50%, 10/1/2019.................................. 1,250,000 1,212,512
Virginia Transportation Board, Transportation Contract Revenue, Refunding
(Route 28 Project) 6.50%, 4/1/2018................................................... 2,000,000 2,123,580
Washington County Industrial Development Authority,
Hospital Facility Revenue (First Mortgage - Johnston Memorial Hospital) 7%,
7/1/2022............................................................................. 750,000 807,787
York County, COP 6.625%, 3/1/2012...................................................... 500,000 529,130
- ---------------------------------------------------------------------------------------
U. S. RELATED--16.8%
<S> <C> <C>
Commonwealth of Puerto Rico:
(Public Improvement):
7.70%, 7/1/2020.................................................................... 1,000,000 1,209,290
6.80%, 7/1/2021.................................................................... 1,000,000 1,082,850
Refunding 6%, 7/1/2014............................................................... 2,000,000 2,038,340
Commonwealth of Puerto Rico Highway and Transportation Authority, Highway Revenue
6.625%, 7/1/2018..................................................................... 2,000,000 2,123,160
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
----------- -----------
- ---------------------------------------------------------------------------------------
U.S. RELATED (CONTINUED)
<S> <C> <C>
Guam Airport Authority, Revenue 6.70%,10/1/2023........................................ $ 2,000,000 $ 2,117,220
Puerto Rico Electric Power Authority, Power Revenue 7%, 7/1/2021....................... 325,000 356,892
Puerto Rico Public Building Authority,
Guaranteed Public Education and Health Facilities, Refunding 6%, 7/1/2012............ 350,000 353,700
Virgin Islands Public Finance Authority, Revenue, Refunding, Matching Fund Loan Notes
7.25%, 10/1/2018..................................................................... 1,500,000 1,635,015
-----------
TOTAL INVESTMENTS (cost $61,707,970)................................................... $64,850,242
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <S> <S> <S>
COP Certificate of Participation LOC Letter of Credit
FGIC Financial Guaranty Insurance Corporation MBIA Municipal Bond Insurance Association
HR Hospital Revenue
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (D) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C>
AAA Aaa AAA 23.9%
AA Aa AA 29.8
A A A 34.3
BBB Baa BBB 6.4
Not Rated Not Rated Not Rated 5.6
------
100.0%
------
------
<FN>
- --------------------------------------------------------------------------------
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 April 30, 1993,
these securities amounted to $1,920,000 or 3.0% of net assets.
(c) Secured by letters of credit.
(d) Fitch currently provides creditworthiness information for a limited amount
of investments.
(e) At April 30, 1993, the Fund had $18,366,710 (28.7% of net assets) invested
in securities whose payment of principal and interest is dependent upon
revenues generated from health care projects.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1993
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $61,707,970)--see statement...................................................... $64,850,242
Cash..................................................................................... 194,525
Interest receivable...................................................................... 1,091,003
Receivable for shares of Beneficial Interest subscribed.................................. 886,337
Prepaid expenses......................................................................... 17,337
-----------
67,039,444
LIABILITIES:
Due to The Dreyfus Corporation........................................................... $ 13,845
Payable for investment securities purchased.............................................. 2,957,875
Payable for shares of Beneficial Interest redeemed....................................... 5,828
Accrued expenses......................................................................... 32,421 3,009,969
---------- -----------
NET ASSETS................................................................................. $64,029,475
-----------
-----------
REPRESENTED BY:
Paid-in capital.......................................................................... $60,822,380
Accumulated undistributed net realized gain on investments............................... 64,823
Accumulated net unrealized appreciation on investments--Note 3........................... 3,142,272
-----------
NET ASSETS at value........................................................................ $64,029,475
-----------
-----------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)................................ 3,311,545
-----------
-----------
Class B Shares
(unlimited number of $.001 par value shares authorized)................................ 500,264
-----------
-----------
NET ASSET VALUE per share:
Class A Shares
($55,627,204 / 3,311,545 shares)....................................................... $16.80
------
------
Class B Shares
($8,407,271 / 500,264 shares).......................................................... $16.80
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1993
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME.......................................................................... $ 2,595,953
EXPENSES:
Management fee--Note 2(a).............................................................. $ 227,861
Shareholder servicing costs--Note 2(b,c)............................................... 142,929
Prospectus and shareholders' reports--Note 2(b)........................................ 15,544
Registration fees...................................................................... 13,821
Distribution fees (Class B shares)--Note 2(b).......................................... 6,005
Professional fees...................................................................... 5,438
Custodian fees......................................................................... 4,890
Trustees' fees and expenses--Note 2(d)................................................. 263
Miscellaneous.......................................................................... 16,083
----------
432,834
Less--expense reimbursement from Manager due to
undertakings--Note 2(a).............................................................. 313,555
----------
TOTAL EXPENSES..................................................................... 119,279
-----------
INVESTMENT INCOME--NET............................................................. 2,476,674
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3................................................. $ 96,550
Net unrealized appreciation on investments............................................... 3,042,530
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................................... 3,139,080
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................................... $ 5,615,754
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
----------------------------
1992(1) 1993
----------- -----------
<S> <C> <C>
OPERATIONS:
Investment income--net.................................................................. $ 544,560 $ 2,476,674
Net realized gain on investments........................................................ 3,743 96,550
Net unrealized appreciation on investments for the year................................. 99,742 3,042,530
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................ 648,045 5,615,754
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares........................................................................ (544,560) (2,421,216)
Class B shares........................................................................ -- (55,458)
Net realized gain on investments:
Class A shares........................................................................ -- (35,470)
Class B shares........................................................................ -- --
----------- -----------
TOTAL DIVIDENDS..................................................................... (544,560) (2,512,144)
----------- -----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................................ 22,978,881 33,039,306
Class B shares........................................................................ -- 8,333,034
Dividends reinvested:
Class A shares........................................................................ 328,359 1,389,831
Class B shares........................................................................ -- 34,621
Cost of shares redeemed:
Class A shares........................................................................ (315,107) (4,961,334)
Class B shares........................................................................ -- (5,211)
----------- -----------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS........................ 22,992,133 37,830,247
----------- -----------
TOTAL INCREASE IN NET ASSETS...................................................... 23,095,618 40,933,857
NET ASSETS:
Beginning of year....................................................................... -- 23,095,618
----------- -----------
End of year............................................................................. $23,095,618 $64,029,475
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------------------------
CLASS A CLASS B
---------------------------- ------------
YEAR ENDED APRIL 30, PERIOD ENDED
---------------------------- APRIL 30,
1992(1) 1993 1993(2)
----------- ----------- ------------
<S> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................ 1,489,400 2,040,550 498,506
Issued for dividends reinvested........................................ 21,201 85,167 2,067
Shares redeemed........................................................ (20,262) (304,511) (309)
----------- ----------- ------------
NET INCREASE IN SHARES OUTSTANDING................................... 1,490,339 1,821,206 500,264
----------- ----------- ------------
----------- ----------- ------------
<FN>
- ---------------
(1) From August 1, 1991 (commencement of operations) to April 30, 1992.
(2) From January 15, 1993 (commencement of operations) to April 30, 1993.
</TABLE>
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
Reference is made to page 20 of the Fund's Prospectus dated February 18,
1994.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA 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 thirteen
series including the Virginia 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.
On September 18, 1992, shareholders approved an amendment to the Fund's
Agreement and Declaration of Trust to provide for the issuance of additional
classes of shares. On September 23, 1992 the Fund's Board of Trustees classified
the Series' existing shares as Class A shares and authorized the issuance of an
unlimited number of $.001 par value Class B shares. The Series began offering
both Class A and Class B shares on January 15, 1993. 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 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, 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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (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 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 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. Effective September 18,
1992 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, 1992 through May 19, 1992 to reimburse all
fees and expenses of the Series, and thereafter had undertaken through March 10,
1993, to reduce the management fee paid by, and reimburse such excess expenses
of 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 until
such time as the net assets of the Series exceed $100 million, to waive receipt
of the management fee payable to it by the Series. The expense reimbursement,
pursuant to the undertakings, amounted to $313,555 for the year ended April 30,
1993.
On September 18, 1992, Series shareholders approved an amendment to the
Agreement changing the expense limitation provision from 1 1/2% to the expense
limitation of any state having jurisdiction over the Series. The amended
Agreement provides that the Series may deduct from the fee to be paid to the
Manager, or the Manager will bear such excess expense, to the extent required by
state law, should the Series' aggregate expenses, exclusive of taxes, brokerage,
interest on borrowings and extraordinary expenses, exceed the limitation of any
state having jurisdiction over the Series.
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 $56,995 during the year ended April 30, 1993 from
commissions earned on sales of the Series' Class A shares.
The Distributor retained $148 during the period ended April 30, 1993 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, effective January 15, 1993, 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
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
dealer, financial institution, or other industry professional) based on the
value of the Series' Class B shares owned by clients of the Service Agent.
Prior to January 15, 1993, the Fund's Service Plan ("prior Service Plan")
provided that the Series pay the Distributor, at an annual rate of .25 of 1% of
the value of the Series' average daily net assets, for costs and expenses in
connection with advertising, marketing and distributing the Series' shares and
for servicing shareholder accounts. The Distributor made payments to one or more
Service Agents based on the value of the Series' shares owned by clients of the
Service Agent. The prior Service Plan also provided for the Series to bear the
costs of preparing, printing and distributing certain of the Series'
prospectuses and statements of additional information and costs associated with
implementing and operating the Plan, not to exceed the greater of $100,000 or
.005 of 1% of the Series' average daily net assets for any full fiscal year.
During the period ended April 30, 1993, $64,543 was charged to the Series
pursuant to the prior Service Plan and $6,005 was charged to the Series pursuant
to the Class B Distribution Plan.
(C) Under the Shareholder Services Plan, effective January 15, 1993, 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 period ended April 30, 1993,
$37,758 and $3,003 were charged to the Class A and Class B shares, respectively,
pursuant to the Shareholder Services Plan.
(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. Prior to February 1, 1993, the annual fee
was $1,000.
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $46,227,213 and $6,826,448,
respectively, for the year ended April 30, 1993, and consisted entirely of
municipal bonds and short-term tax exempt investments.
At April 30, 1993, accumulated net unrealized appreciation on investments
was $3,142,272, consisting of $3,273,965 gross unrealized appreciation and
$131,693 gross unrealized depreciation.
At April 30, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
We have audited the accompanying statement of assets and liabilities of
Premier State Municipal Bond Fund, Virginia Series (one of the Series
constituting the Premier State Municipal Bond Fund), including the statement of
investments, as of April 30, 1993, and the related statement of operations for
the year then ended, the statement of changes in net assets for the period from
August 1, 1991 (commencement of operations) to April 30, 1992 and for the year
ended April 30, 1993 and condensed financial information for each of the periods
indicated therein. These financial statements and condensed financial
information are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and condensed financial
information 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 condensed
financial information 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, 1993 by correspondence with the custodian and brokers. 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 condensed financial
information referred to above present fairly, in all material respects, the
financial position of Premier State Municipal Bond Fund, Virginia Series at
April 30, 1993, the results of its operations for the year then ended, the
changes in its net assets for the period from August 1, 1991 to April 30, 1992
and for the year ended April 30, 1993, and the condensed financial information
for each of the indicated periods, in conformity with generally accepted
accounting principles.
Ernst & Young
New York, New York
June 3, 1993
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF INVESTMENTS OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS-100.0% AMOUNT VALUE
------------ ------------
<S> <C> <C>
ARIZONA-83.2%
Arizona Board of Regents - Arizona State University, System Revenue, Refunding:
6.125%, 7/1/2015................................................................... $ 100,000 $ 107,977
5.50%, 7/1/2019.................................................................... 750,000 758,347
Arizona Educational Loan Marketing Corp., Educational Loan Revenue 6.375%, 9/1/2005.... 100,000 108,203
Arizona Health Facilities Authority, Hospital System Revenue, Refunding
(Samaritan Health System) 5.625%, 12/1/2015 (Insured; MBIA)........................ 700,000 719,439
Arizona Power Authority, Power Resources Revenue, Refunding (Hoover Uprating Project)
5.375%, 10/1/2013 (Insured; MBIA).................................................. 250,000 252,508
Casa Grande Industrial Development Authority, PCR (Frito-Lay, Inc. Pollution Control
Project) 6.60% 12/1/2010 (Guaranteed; Pepsico)..................................... 200,000 221,354
Chandler, Water and Sewer Revenue, Refunding 6.25%, 7/1/2013 (Insured; FGIC)........... 200,000 217,492
Town of Gilbert, Water and Wastewater Revenue, Refunding
6.50%, 7/1/2022 (Insured; FGIC).................................................... 100,000 111,768
Glendale Improvement District Number 59 6%, 1/1/2013................................... 100,000 102,776
Maricopa County Chandler Unified School District Number 80, School Improvement and
Refunding 6.40%, 7/1/2010 (Insured; FGIC).......................................... 300,000 326,718
Maricopa County Hospital District Number 1, Hospital Facilities Refunding:
6.25%, 6/1/2010 (Insured; FGIC).................................................... 100,000 108,955
6.125%, 6/1/2015 (Insured; FGIC)................................................... 200,000 215,390
Maricopa County Industrial Development Authority, Health Facility Revenue
(Catholic Healthcare West) 5.50%, 7/1/2010 (Insured; MBIA)......................... 500,000 513,840
Maricopa County Pollution Control Corp., PCR, Refunding (Public Service Co. - Palo Verde)
6.375%, 8/15/2023.................................................................. 1,000,000 1,015,200
Maricopa County School District Number 6 (Washington Elementary)
6%, 7/1/2009 (Insured; AMBAC)...................................................... 100,000 106,158
Maricopa County School District Number 28 (Kyrene Elementary)
6%, 7/1/2013 (Insured; FGIC)....................................................... 200,000 213,648
Maricopa County Scottsdale Unified School District Number 48, School Improvement
6%, 7/1/2012....................................................................... 100,000 106,231
Maricopa County Tempe Elementary School District Number 3, School Improvement
6%, 7/1/2008....................................................................... 200,000 217,410
Maricopa County Unified School District Number 69, School Improvement
(Paradise Valley) 5.875%, 7/1/2012 (Insured; FGIC)................................. 200,000 210,428
City of Mesa 5.70%, 7/1/2008 (Insured; MBIA)........................................... 300,000 321,585
Navajo County Pollution Control Corp., PCR, Refunding (Arizona Public Service Co.)
5.875%, 8/15/2028 (Insured; AMBAC)................................................. 1,000,000 1,010,440
City of Phoenix, Refunding:
5.10%, 7/1/2013.................................................................... 750,000 736,245
6.375%, 7/1/2013................................................................... 200,000 219,220
Street and Highway User Revenue:
6.60%, 7/1/2007................................................................ 250,000 281,290
6.25%, 7/1/2011 (Insured; FGIC)................................................ 200,000 217,492
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
ARIZONA (CONTINUED)
Phoenix Civic Improvement Corp., Wastewater System Lease Revenue:
6.125%, 7/1/2014................................................................... $ 100,000 $ 112,742
6.125%, 7/1/2023................................................................... 500,000 566,650
Pima County Tucson Unified School District Number 1, School Improvement
6.10%, 7/1/2010 (Insured; FGIC).................................................... 100,000 108,399
Salt River Project Agricultural Improvement and Power District, Salt River Project
Electric System Revenue:
6%, 1/1/2013................................................................... 150,000 158,765
7.987%, 1/1/2028 (a,b)......................................................... 500,000 491,875
Refunding 5.75%, 1/1/2013...................................................... 200,000 210,078
City of Scottsdale Municipal Property Corp., Excise Tax Revenue, Refunding
6.25%, 11/1/2014 (Insured; FGIC)................................................... 100,000 107,623
City of Tempe 6%, 7/1/2009............................................................. 200,000 213,196
City of Tucson, Refunding:
6.10%, 7/1/2012 (Insured; FGIC).................................................... 250,000 270,572
Water System Revenue:
5.75%, 7/1/2012................................................................ 100,000 105,037
5.75%, 7/1/2018................................................................ 500,000 518,935
University of Arizona Medical Center Corp., HR, Refunding
6.25%, 7/1/2010 (Insured; MBIA).................................................... 200,000 217,640
U.S. RELATED-16.8%
Guam Power Authority, Revenue 6.30%, 10/1/2022......................................... 500,000 532,815
Commonwealth of Puerto Rico, Refunding 6%, 7/1/2014.................................... 400,000 419,908
Puerto Rico Electric Power Authority, Power Revenue:
6%, 7/1/2010....................................................................... 550,000 574,079
6.25%, 7/1/2017.................................................................... 520,000 569,322
Puerto Rico Highway and Transportation Authority, Highway Revenue 6.50%, 7/1/2022...... 200,000 233,660
------------
TOTAL INVESTMENTS (cost $13,134,673)................................................... $ 13,831,410
============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
SUMMARY OF ABBREVIATIONS
<S> <S> <S> <S>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Insurance Association
FGIC Financial Guaranty Insurance Corporation PCR Pollution Control Revenue
HR Hospital Revenue
</TABLE>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- ------- ----------------- -------------------
AAA Aaa AAA 30.6%
AA Aa AA 24.1
A A A 26.8
BBB Baa BBB 11.2
BB Ba BB 7.3
------
100.0%
======
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. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At October 31, 1993, this
security amounted to $491,875 or 3.4% of net assets.
(c) Fitch currently provides creditworthiness information for a limited
amount of investments.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1993 (UNAUDITED)
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $13,134,673)-see statement............................................... $ 13,831,410
Cash............................................................................... 510,490
Interest receivable................................................................ 257,857
Receivable for shares of Beneficial Interest subscribed............................ 122,137
Prepaid expenses................................................................... 19,947
Due from The Dreyfus Corporation................................................... 25,908
------------
14,767,749
LIABILITIES:
Payable for shares of Beneficial Interest redeemed................................. $104,330
Accrued expenses................................................................... 34,480 138,810
-------- ------------
NET ASSETS............................................................................. $ 14,628,939
============
REPRESENTED BY:
Paid-in capital.................................................................... $ 13,924,036
Accumulated undistributed net realized gain on investments......................... 8,166
Accumulated net unrealized appreciation on investments-Note 3...................... 696,737
------------
NET ASSETS at value.................................................................... $ 14,628,939
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)........................ 710,807
============
Class B Shares
(unlimited number of $.001 par value shares authorized)........................ 350,462
============
NET ASSET VALUE per share:
Class A Shares
($9,796,304 / 710,807 shares).................................................. $13.78
======
Class B Shares
($4,832,635 / 350,462 shares).................................................. $13.79
======
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1993 (UNAUDITED)
INVESTMENT INCOME:
INTEREST INCOME.................................................................... $ 295,464
EXPENSES:
Management fee-Note 2(a)....................................................... $ 29,580
Shareholder servicing costs-Note 2(c).......................................... 21,889
Distribution fees (Class B shares)-Note 2(b)................................... 7,831
Prospectus and shareholders' reports........................................... 6,251
Legal fees..................................................................... 5,711
Registration fees.............................................................. 3,577
Auditing fees.................................................................. 2,887
Organization expenses.......................................................... 2,300
Custodian fees................................................................. 889
Trustees' fees and expenses-Note 2(d).......................................... 48
Miscellaneous.................................................................. 3,633
--------
84,596
Less-expense reimbursement from Manager due to
undertakings-Note 2(a)..................................................... 76,765
--------
TOTAL EXPENSES......................................................... 7,831
------------
INVESTMENT INCOME-NET.................................................................. 287,633
NET UNREALIZED GAIN ON INVESTMENTS..................................................... 513,721
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... $ 801,354
============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993
1993(1) (UNAUDITED)
------------ ------------
OPERATIONS:
<S> <C> <C>
Investment income-net.............................................................. $ 124,952 $ 287,633
Net realized gain on investments................................................... 8,166 --
Net unrealized appreciation on investments for the period.......................... 183,016 513,721
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... 316,134 801,354
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares................................................................. (116,608) (210,887)
Class B shares................................................................. (8,344) (76,746)
------------ ------------
TOTAL DIVIDENDS............................................................ (124,952) (287,633)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares................................................................. 6,156,515 3,846,360
Class B shares................................................................. 1,750,002 3,031,378
Dividends reinvested:
Class A shares................................................................. 64,484 105,984
Class B shares................................................................. 2,426 28,535
Cost of shares redeemed:
Class A shares................................................................. (741,360) (198,174)
Class B shares................................................................. (7,534) (114,580)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS............... 7,224,533 6,699,503
------------ ------------
TOTAL INCREASE IN NET ASSETS........................................... 7,415,715 7,213,224
NET ASSETS:
Beginning of period................................................................ -- 7,415,715
------------ ------------
End of period...................................................................... $ 7,415,715 $ 14,628,939
============ ============
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------------------------------------------------------
CLASS A CLASS B
--------------------------- ---------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993 APRIL 30, OCTOBER 31, 1993
1993(1) (UNAUDITED) 1993(2) (UNAUDITED)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................................... 486,435 285,498 133,372 223,697
Shares issued for dividends reinvested............... 5,019 7,824 185 2,101
Shares redeemed...................................... (59,255) (14,714) (567) (8,326)
------------ ------------ ------------ ------------
NET INCREASE IN SHARES OUTSTANDING........... 432,199 278,608 132,990 217,472
============ ============ ============ ============
- --------------------------
(1) From September 3, 1992 (commencement of operations) to April 30, 1993.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
See independent accountants' review report and notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 8 of the Fund's Prospectus dated February 18, 1994.
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA 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 thirteen series including the Arizona 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
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, 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, ARIZONA SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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
has undertaken from May 1, 1993 through January 1, 1994 or until such time as
the net assets of the Series exceed $25 million, regardless of whether they
remain at that level, to reimburse all fees and expenses of the Series
(excluding 12b-1 distribution plan fees and certain expenses as described
above). The expense reimbursement, pursuant to the undertakings, amounted to
$76,765 for the six months ended October 31, 1993.
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 $8,933 during the six months ended October 31,
1993 from commissions earned on sales of the Series' Class A shares.
The Distributor retained $299 during the six months ended October 31, 1993
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 six months ended October 31, 1993, $7,831 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 six months ended October 31, 1993, $9,530 and $3,916 were
charged to the Class A and Class B shares, respectively, pursuant to the
Shareholder Services Plan.
(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.
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 3-SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $8,301,878 and $2,500,000,
respectively, for the six months ended October 31, 1993, and consisted
entirely of municipal bonds and short-term municipal investments.
At October 31, 1993, accumulated net unrealized appreciation on
investments was $696,737, consisting of $701,933 gross unrealized appreciation
and $5,196 gross unrealized depreciation.
At October 31, 1993, 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).
<PAGE>
- ----------------------------------------------------------------------
---------------------------------
SEMI-ANNUAL REPORT
---------------------------------
------------------------------------------------
PREMIER STATE
MUNICIPAL BOND FUND
------------------------------------------------
------------------------------
CONNECTICUT SERIES
------------------------------
-------------------------
OCTOBER 31, 1993
-------------------------
[LION]
PRINTED IN THE U.S.A. 064/623SA9310
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--99.5% AMOUNT VALUE
------------ ------------
<S> <C> <C>
- -------------------------------------------------------------------------------------
CONNECTICUT--84.5%
Connecticut:
6.50%, 8/1/2006.................................................................... $ 2,000,000 $ 2,272,600
7.20%, 3/1/2007.................................................................... 1,350,000 1,574,734
6.90%, 3/15/2009................................................................... 3,000,000 3,506,730
Zero Coupon, 11/1/2009............................................................. 1,000,000 441,760
5.50%, 3/15/2010................................................................... 3,000,000 3,155,850
6.875%, 7/15/2010.................................................................. 7,100,000 8,272,778
6.75%, 3/1/2011.................................................................... 3,000,000 3,506,190
Economic Recreation Notes, 5.25%, 6/15/1994........................................ 1,000,000 1,015,220
Special Tax Obligation Revenue (Transportation Infrastructure):
Refunding 6.125%, 2/15/2008...................................................... 8,800,000 9,550,112
Refunding 5.375%, 9/1/2008....................................................... 2,500,000 2,586,550
6.80%, 12/1/2009................................................................. 3,000,000 3,455,820
7.125%, 6/1/2010................................................................. 8,400,000 10,288,236
6.75%, 6/1/2011.................................................................. 8,500,000 9,952,395
6.125%, 9/1/2012................................................................. 2,000,000 2,246,140
Connecticut Clean Water Fund, Revenue
7%, 1/1/2011....................................................................... 6,700,000 7,631,970
Connecticut Development Authority, Revenue:
First Mortgage Gross
(Elim Park Baptist Home Inc. Project) 9%, 12/1/2020.............................. 3,565,000 3,886,634
Health Care:
(Jerome Home Project) 8%, 11/1/2019.............................................. 2,015,000 2,182,285
(Masonic Charity Foundation of Connecticut) 6.50%, 8/1/2020 (Insured; AMBAC)..... 4,400,000 4,813,468
Life Care Facilities
(Seabury Project) 10%, 9/1/2021.................................................. 11,175,000 11,983,846
Pollution Control:
(New England Power Co. Project) 7.25%, 10/15/2015................................ 4,000,000 4,605,800
(Pfizer Inc. Project) 6.55%, 2/15/2013........................................... 2,000,000 2,229,100
Solid Waste and Electric
(Ogden Martin System-Bristol Inc.) 10%, 7/1/2014................................. 2,250,000 2,540,385
Water Facilities, Refunding:
(Bridgeport Hydraulic Project):
7.75%, 8/1/2019................................................................ 1,000,000 1,033,040
7.25%, 6/1/2020................................................................ 1,000,000 1,134,250
5.60%, 6/1/2028 (Insured; MBIA)................................................ 2,800,000 2,867,004
(Stamford Water Company Project) 5.30%, 9/1/2028................................. 1,000,000 1,004,900
Connecticut Health and Educational Facilities Authority, Revenue:
7%, 1/1/2020 (Insured; MBIA)....................................................... 3,000,000 3,473,670
(Bristol Hospital) 7%, 7/1/2020 (Insured; MBIA).................................... 2,850,000 3,279,181
(Cherry Brook Nursing Center Project) 6%, 11/1/2022................................ 4,600,000 4,887,500
(Connecticut College) 6.625%, 7/1/2011 (Insured; MBIA)............................. 1,400,000 1,577,842
(Danbury Hospital) 6.50%, 7/1/2014 (Insured; MBIA)................................. 5,000,000 5,551,200
(Fairfield University) 6.90%, 7/1/2014............................................. 1,500,000 1,662,555
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
CONNECTICUT (CONTINUED)
<S> <C> <C>
Connecticut Health and Educational Facilities Authority, Revenue (continued):
(Hartford University):
6.75%, 7/1/2012.................................................................. $ 3,500,000 $ 3,805,060
6.80%, 7/1/2022.................................................................. 8,500,000 9,251,485
8%, 7/1/2018..................................................................... 3,175,000 4,032,663
(Hebrew Home and Hospital) 7%, 8/1/2030 (Insured; FHA)............................. 865,000 935,757
(Johnson Evergreen Corp.) 8.50%, 7/1/2022.......................................... 4,500,000 4,866,840
(Lawrence and Memorial Hospital):
7%, 7/1/2020 (Insured; MBIA)..................................................... 2,750,000 3,164,122
6.25%, 7/1/2022.................................................................. 3,750,000 4,089,038
(Lutheran General Health Care System) 7.375%, 7/1/2019............................. 1,400,000 1,660,694
(Manchester Memorial Hospital):
7%, 7/1/2010 (Insured; MBIA)..................................................... 1,000,000 1,152,460
5.75%, 7/1/2022 (Insured; MBIA).................................................. 1,100,000 1,143,483
(Mansfield Nursing Center Project) 6%, 11/1/2022................................... 2,700,000 2,868,750
(Middlesex Hospital) 6.25%, 7/1/2022 (Insured; MBIA)............................... 2,500,000 2,726,025
(New Britain Memorial Hospital) 7.75%, 7/1/2022.................................... 16,000,000 18,213,920
(Norwalk Hospital) 6.25%, 7/1/2022 (Insured; MBIA)................................. 3,600,000 3,925,476
(Nursing Home Program-Noble Horizon) 6%, 11/1/2022................................. 1,500,000 1,593,750
(Quinnipiac College):
6%, 7/1/2013..................................................................... 4,550,000 4,648,189
7.25%, 7/1/2019.................................................................. 2,375,000 2,770,366
7.75%, 7/1/2020.................................................................. 1,000,000 1,210,890
(Refunding-Saint Francis Hospital and Medical Center)
6.20%, 7/1/2022 (Insured; MBIA).................................................. 1,725,000 1,874,972
(Saint Raphael Hospital):
6.20%, Series F, 7/1/2014 (Insured; AMBAC)....................................... 1,100,000 1,196,041
6.20%, Series G, 7/1/2014 (Insured; AMBAC)....................................... 525,000 570,838
6.625%, 7/1/2014 (Insured; AMBAC)................................................ 2,750,000 3,082,338
(Taft School) 7.375%, 7/1/2020..................................................... 1,150,000 1,367,787
(Waterbury Hospital) 7%, 7/1/2020 (Insured; FSA)................................... 4,450,000 5,120,125
(William W. Backus Hospital):
6%, 7/1/2012..................................................................... 1,500,000 1,577,490
6.375%, 7/1/2022................................................................. 2,250,000 2,403,000
(Yale-New Haven Hospital) 7.10%, 7/1/2025 (Insured; MBIA).......................... 10,475,000 12,118,527
(Yale University) 6.375%, 7/1/2013................................................. 820,000 889,725
Connecticut Higher Education Supplemental Loan Authority, Revenue:
7.375%, 11/15/2005................................................................. 485,000 549,379
7.50%, 11/15/2010.................................................................. 2,050,000 2,316,726
Connecticut Housing Finance Authority (Housing Mortgage Finance Program):
7.20%, 11/15/2008.................................................................. 12,880,000 13,653,702
7.50%, 11/15/2009.................................................................. 3,140,000 3,401,436
7.70%, 11/15/2009.................................................................. 8,000,000 8,814,000
6.70%, 11/15/2022.................................................................. 17,000,000 18,148,350
6.75%, 11/15/2023.................................................................. 6,000,000 6,444,600
6.05%, 11/15/2025.................................................................. 11,280,000 11,721,725
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
CONNECTICUT (CONTINUED)
<S> <C> <C>
Connecticut Municipal Electric Energy Cooperative, Power Supply System Revenue
7%, 1/1/2016 (Insured; AMBAC)...................................................... $ 1,310,000 $ 1,420,656
Connecticut Resources Recovery Authority:
(Bridgeport Resco Co.) 7.625%, 1/1/2009............................................ 895,000 996,932
(Middle Connecticut System Bonds) 7.875%, 11/15/2012 (Insured; MBIA)............... 2,500,000 2,857,075
(Municipal Service Fee Subordinated Bridgeport) 7.50%, 1/1/2009.................... 2,500,000 2,831,475
(Resources Recovery-American Refunding-Fuel) 8%, 11/15/2015........................ 12,835,000 15,034,406
(Wallingford Resources Recovery Project)
7.125%, 11/15/2008 (LOC; Industrial Bank of Japan) (a)........................... 700,000 757,344
Montville:
6.60%, 6/15/2007................................................................... 575,000 665,701
6.60%, 6/15/2008................................................................... 575,000 664,401
New Haven:
7.40%, 8/15/2011................................................................... 1,500,000 1,694,820
Air Rights Package Facilities Revenue 6.50%, 12/1/2015 (Insured; MBIA)............. 6,410,000 7,165,290
South Central Connecticut Regional Water Authority, Water Systems Revenue:
5.75%, 8/1/2012 (Insured; AMBAC)................................................... 6,000,000 6,303,120
7.125%, 8/1/2012................................................................... 2,480,000 2,745,211
Stamford 6.60%, 1/15/2010............................................................ 2,750,000 3,258,283
Stratford 7.30%, 3/1/2012............................................................ 1,130,000 1,250,774
- -------------------------------------------------------------------------------------
U.S. RELATED--15.0%
Guam Government 5.40%, 11/15/2018.................................................... 2,000,000 1,949,400
Puerto Rico:
(Public Improvement):
7.70%, 7/1/2020.................................................................. 3,000,000 3,653,370
6.80%, 7/1/2021.................................................................. 6,000,000 7,138,860
Refunding 5.50%, 7/1/2013.......................................................... 8,000,000 8,094,720
Puerto Rico Aqueduct and Sewer Authority, Revenue
7.875%, 7/1/2017................................................................... 1,860,000 2,160,092
Puerto Rico Electric Power Authority, Power Revenue 7%, 7/1/2021..................... 10,000,000 11,485,000
Puerto Rico Highway and Transportation Authority, Highway Revenue
6.625%, 7/1/2018................................................................... 5,000,000 5,862,550
Puerto Rico Industrial Medical and Environmental Pollution Control Facilities
Financing
Authority, Revenue (Motorola Inc. Project) 6.75%, 1/1/2014......................... 2,000,000 2,300,140
Puerto Rico Ports Authority, Special Facilities Revenue (American Airlines) 6.30%,
6/1/2023............................................................................. 2,000,000 2,081,560
Puerto Rico Public Buildings Authority, Guaranteed Public Education and Health
Facilities:
7.125%, 7/1/2009................................................................... 4,830,000 5,547,641
Refunding 5.75%, 7/1/2015.......................................................... 8,000,000 8,224,560
Virgin Islands Public Finance Authority, Revenue, Refunding
7.25%, 10/1/2018................................................................... 2,000,000 2,293,160
------------
TOTAL MUNICIPAL BONDS (cost $361,652,470)............................................ $403,916,015
------------
------------
<PAGE>
</TABLE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
SHORT-TERM MUNICIPAL INVESTMENT--.5% AMOUNT VALUE
------------ ------------
Connecticut;
<S> <C> <C>
Connecticut Development Authority, Health Care Revenue, VRDN
(Independent Living Project) 2.45% (LOC; Commercial de France) (a,b)
(cost $2,000,000).................................................................. $ 2,000,000 $ 2,000,000
------------
TOTAL INVESTMENTS--100.0%
(cost $363,652,470)................................................................ $405,916,015
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <S> <S> <S>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
FHA Federal Housing Administration MBIA Municipal Bond Insurance Association
FSA Financial Security Assurance VRDN Variable Rate Demand Notes
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (C) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C>
AAA Aaa AAA 26.8%
AA Aa AA 36.4
A A A 17.4
BBB Baa BBB 12.7
F1 MIG1 SP1 .5
Not Rated Not Rated Not Rated 6.2
--------
100.0%
--------
--------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(b) 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.
(c) Fitch currently provides creditworthiness information for a limited amount
of investments.
(d) At October 31, 1993 the Series had $107,345,678 (25.80% of net assets)
invested in securities whose payment of principal and interest is dependent
upon revenues generated from health care projects.
See independent accountants' review report and notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $363,652,470)--see statement................................................... $405,916,015
Cash................................................................................... 878,828
Interest receivable.................................................................... 8,740,052
Receivable for shares of Beneficial Interest subscribed................................ 1,042,224
Prepaid expenses....................................................................... 47,713
------------
416,624,832
LIABILITIES:
Due to The Dreyfus Corporation......................................................... $ 259,545
Payable for shares of Beneficial Interest redeemed..................................... 229,015
Accrued expenses....................................................................... 44,730 533,290
----------- ------------
NET ASSETS............................................................................... $416,091,542
------------
------------
REPRESENTED BY:
Paid-in capital........................................................................ $373,224,116
Accumulated undistributed net realized gain on investments............................. 603,881
Accumulated net unrealized appreciation on investments--Note 3......................... 42,263,545
------------
NET ASSETS at value...................................................................... $416,091,542
------------
------------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized).............................. 30,786,774
------------
------------
Class B Shares
(unlimited number of $.001 par value shares authorized).............................. 1,883,500
------------
------------
NET ASSET VALUE per share:
Class A Shares
($392,109,127 / 30,786,774 shares)................................................... $12.74
------
------
Class B Shares
($23,982,415 / 1,883,500 shares)..................................................... $12.73
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME........................................................................ $ 12,379,937
EXPENSES:
Management fee--Note 2(a)............................................................ $ 1,094,174
Shareholder servicing costs--Note 2(c)............................................... 566,987
Professional fees.................................................................... 43,855
Distribution fees (Class B shares)--Note 2(b)........................................ 41,398
Custodian fees....................................................................... 20,345
Prospectus and shareholders' reports................................................. 20,002
Registration fees.................................................................... 8,642
Trustees' fees and expenses--Note 2(d)............................................... 1,656
Miscellaneous........................................................................ 43,684
-----------
1,840,743
Less--reduction in management fee due to
undertakings--Note 2(a)............................................................ 250,918
-----------
TOTAL EXPENSES................................................................... 1,589,825
------------
INVESTMENT INCOME--NET........................................................... 10,790,112
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments--Note 3............................................. $ (205,253)
Net unrealized appreciation on investments............................................. 15,067,843
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................................. 14,862,590
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................................... $ 25,652,702
------------
------------
</TABLE>
See independent accountants' review report and notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED)
------------ ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................................ $19,151,051 $ 10,790,112
Net realized gain (loss) on investments........................................... 1,918,520 (205,253)
Net unrealized appreciation on investments for the period......................... 19,902,968 15,067,843
------------ ----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................... 40,972,539 25,652,702
------------ ----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares.................................................................. (19,093,929) (10,395,915)
Class B shares.................................................................. (57,122) (394,197)
Net realized gain on investments:
Class A shares.................................................................. (43,796) --
Class B shares.................................................................. -- --
------------ ----------------
TOTAL DIVIDENDS............................................................... (19,194,847) (10,790,112)
------------ ----------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares.................................................................. 70,873,528 26,034,973
Class B shares.................................................................. 9,511,115 13,889,169
Dividends reinvested:
Class A shares.................................................................. 10,964,716 5,893,209
Class B shares.................................................................. 37,894 297,237
Cost of shares redeemed:
Class A shares.................................................................. (23,878,593) (14,148,004)
Class B shares.................................................................. (77,889) (250,725)
------------ ----------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.................. 67,430,771 31,715,859
------------ ----------------
TOTAL INCREASE IN NET ASSETS................................................ 89,208,463 46,578,449
NET ASSETS:
Beginning of period............................................................... 280,304,630 369,513,093
------------ ----------------
End of period..................................................................... $369,513,093 $416,091,542
------------ ----------------
------------ ----------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------------------------------------------------
CLASS A CLASS B
-------------------------------- --------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993 APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED) 1993* (UNAUDITED)
---------- ---------------- ---------- ----------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold...................................... 5,971,148 2,077,271 777,809 1,105,405
Shares issued for dividends reinvested........... 919,670 468,672 3,098 23,584
Shares redeemed.................................. (2,009,056) (1,125,448) (6,373) (20,023)
---------- ---------------- ---------- ----------------
NET INCREASE IN SHARES OUTSTANDING............. 4,881,762 1,420,495 774,534 1,108,966
---------- ---------------- ---------- ----------------
---------- ---------------- ---------- ----------------
<FN>
- ---------------
* From January 15, 1993 (commencement of initial offering) to April 30, 1993.
</TABLE>
See independent accountants' review report and notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Reference is made to page 9 of the Fund's Prospectus dated February 18, 1994.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT 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 thirteen
series including the Connecticut 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 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, 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.
(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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 October 12, 1993 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 October 13, 1993 through January 1, 1994, to waive receipt of
the management fee payable to it by the Series in excess of an annual rate of
.47 of 1% of the Series' average daily net assets. The reduction in management
fee, pursuant to the undertakings, amounted to $250,918 for the six months ended
October 31, 1993.
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 $62,848 during the six months ended October 31,
1993 from commissions earned on sales of the Series' Class A shares.
The Distributor retained $4,327 during the six months ended October 31,
1993 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 six months ended October 31, 1993, $41,398 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 six months ended October 31, 1993, $476,653 and $20,698 were
charged to the Class A and Class B shares, respectively, pursuant to the
Shareholder Services Plan.
(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.
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $70,007,506 and $37,767,800,
respectively, for the six months ended October 31, 1993, and consisted entirely
of municipal bonds and short-term municipal investments.
At October 31, 1993, accumulated net unrealized appreciation on investments
was $42,263,545, consisting of $42,294,187 gross unrealized appreciation and
$30,642 gross unrealized depreciation.
At October 31, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--99.7% AMOUNT VALUE
------------ ------------
<S> <C> <C>
- -------------------------------------------------------------------------------------
FLORIDA--91.9%
Alachua County Health Facilities Authority, Health Facilities Revenue:
(Refunding - Santa Fe Healthcare Facilities Project):
6%, 11/15/2009................................................................... $ 2,500,000 $ 2,507,550
7.60%, 11/15/2013................................................................ 3,500,000 3,917,690
(Shands Hospital at the University of Florida) 6%, 12/1/2011 (Insured; MBIA)....... 2,250,000 2,395,688
Arcadia, Water and Sewer Revenue 7.75%, 12/1/2021.................................... 2,265,000 2,624,773
Brevard County Health Facilities Authority, HR
(Holmes Regional Medical Center Project) 5.70%, 10/1/2008.......................... 4,585,000 4,733,050
Brevard County Housing Finance Authority, SFMR, Refunding 7%, 3/1/2013 (Insured;
FSA)................................................................................. 1,640,000 1,780,089
Broward County, RRR (SES Broward County-South Project) 7.95%, 12/1/2008.............. 2,000,000 2,295,840
Broward County Educational Facilities Authority, Revenue (Nova University):
8.50%, 4/1/2010.................................................................... 1,000,000 1,153,860
7.50%, 4/1/2017.................................................................... 2,365,000 2,672,757
Broward County Health Facilities Authority, Revenue, Refunding
(Broward County Nursing Home) 7.50%, 8/15/2020 (LOC; Allied Irish Bank) (a)........ 1,000,000 1,110,070
Charlotte County, Revenue:
Health Care Facilities (Charlotte Community Mental Health Project)
9.25%, 7/1/2020.................................................................. 1,665,000 1,895,786
Sewer Industrial Development (West Charlotte Utilities Project)
9.50%, 12/1/2019 (b)............................................................. 3,800,000 3,496,000
Citrus County, PCR, Refunding (Florida Power Corporation - Crystal River) 6.35%,
2/1/2022............................................................................. 1,500,000 1,644,645
Clay County Housing Finance Authority, SFMR:
8.20%, 6/1/2021 (Collateralized; GNMA)............................................. 710,000 752,479
7.45%, 9/1/2023 (Collateralized; GNMA)............................................. 375,000 406,586
Dade County:
Aviation Revenue, 6.55%, 10/1/2013 (Insured; MBIA)................................. 1,750,000 1,990,223
(Seaport) 6.50%, 10/1/2026 (Insured; AMBAC)........................................ 10,000,000 11,066,000
Dade County Educational Facilities Authority, Revenue:
(Florida International University - North Miami Project)
7.10%, 10/1/2016 (Insured; MBIA)................................................. 2,000,000 2,374,280
(Saint Thomas University) 7.65%, 1/1/2014 (LOC; Sun Bank) (a)...................... 2,500,000 2,810,400
Dade County Health Facilities Authority, HR
(South Shore Hospital and Medical Center) 7.60%, 8/1/2024.......................... 2,660,000 3,015,110
Dade County Housing Finance Authority:
MFMR, Refunding (Cutler Meadows Apartment) 6.50%, 7/1/2022 (Insured; FHA).......... 1,785,000 1,865,111
SFMR:
7.75%, 9/1/2022 (Collateralized; GNMA)........................................... 4,615,000 5,098,929
7.25%, 9/1/2023 (Collateralized; FNMA and GNMA).................................. 300,000 326,595
Refunding 6.95%, 12/15/2012 (Insured; FSA)....................................... 1,000,000 1,076,730
Dunes Community Development District, Revenue, Refunding (Intracoastal Waterway
Bridge)
5.50%, 10/1/2007................................................................... 4,645,000 4,798,703
Duval County Housing Finance Authority, SFMR:
7.85%, 12/1/2022 (Collateralized; GNMA)............................................ 2,625,000 2,864,426
7.70%, 9/1/2024 (Collateralized; GNMA)............................................. 1,500,000 1,645,350
Escambia County Housing Finance Authority, SFMR 7.80%, 4/1/2022...................... 1,205,000 1,292,037
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
<S> <C> <C>
Florida Board of Education, Capital Outlay:
8.19%, 6/1/2018 (c,d).............................................................. $ 10,500,000 $ 11,366,250
7%, 6/1/2020....................................................................... 4,980,000 5,686,463
Public Education:
6%, 6/1/2022..................................................................... 3,000,000 3,176,910
Refunding 7.25%, 6/1/2023........................................................ 3,250,000 3,740,588
Florida Housing Finance Agency:
Home Ownership Revenue 7.90%, 3/1/2022 (Collateralized; GNMA)...................... 4,155,000 4,551,719
Multi-Family Housing (Driftwood Terrace Project)
7.65%, 12/20/2031 (Collateralized; GNMA)......................................... 3,440,000 3,765,321
SFMR, Zero Coupon, 1/1/2016........................................................ 45,270,000 4,169,820
Florida Municipal Power Agency, Revenue, Refunding (Stanton II Project)
4.50%, 10/1/2027 (Insured; AMBAC).................................................. 7,000,000 6,172,110
Florida Turnpike Authority, Turnpike Revenue 7.50%, 7/1/2019......................... 5,685,000 6,721,944
Fort Meade, Electrical System Revenue 6.50%, 1/1/2012 (Insured; MBIA)................ 2,145,000 2,376,424
Gainesville, Utilities Systems Revenue 6.50%, 10/1/2012.............................. 2,000,000 2,244,060
Greater Orlando Aviation Authority, Airport Facilities Revenue, Refunding
5.50%, 10/1/2008 (Insured; AMBAC).................................................. 5,940,000 6,171,482
Highlands County Health Facilities Authority, Revenue (Adventist Sunbelt Hospital)
7%, 11/15/2014..................................................................... 1,500,000 1,723,710
Hillsborough County, Utility Revenue, Refunding:
7%, 8/1/2001....................................................................... 985,000 1,158,892
6.625%, 8/1/2011................................................................... 4,000,000 4,356,400
7%, 8/1/2014....................................................................... 4,765,000 5,282,193
Hillsborough County Aviation Authority, Revenue, Refunding:
(Delta Airlines) 7.75%, 1/1/2024................................................... 1,500,000 1,636,890
(Tampa International Airport) 5.375%, 10/1/2008 (Insured; FGIC).................... 2,000,000 2,072,120
Hillsborough County Port District, Revenue (Tampa Port Authority) 8.25%, 6/1/2009.... 3,000,000 3,566,130
Indian Trace Community Development District, Water and Sewer Revenue 8.50%,
4/1/1997............................................................................. 635,000 702,748
Jackson County, PCR, Refunding (Gulf Power Co. Project) 6.75%, 3/1/2022.............. 3,930,000 4,215,436
Jacksonville Electric Authority, Revenue, Refunding (Saint Johns River Power Park)
6%, 10/1/2015...................................................................... 6,000,000 6,226,200
Jacksonville Health Facilities Authority:
Health Facilities Revenue (Daughters Health - Saint Vincent's) 7.50%, 11/1/2015.... 1,450,000 1,737,883
HR, Refunding (Saint Luke's Hospital) 7.125%, 11/15/2020........................... 6,700,000 7,585,606
Jupiter, Sales Tax Revenue 7.40%, 9/1/2020........................................... 1,750,000 2,097,111
Lake County, Resource Recovery Industrial Development Revenue, Refunding
(NRG/Recovery Group) 5.85%, 10/1/2009.............................................. 6,000,000 6,024,840
Leesburg, HR, Refunding:
Capital Improvement:
(Leesburg Regional Medical Center Project - A) 7.375%, 7/1/2011.................. 1,270,000 1,553,185
(Regional Medical Center Project - B) 8.60%, 7/1/2018............................ 1,100,000 1,254,880
(Leesburg Regional Medical Center Project - A) 6.25%, 7/1/2009..................... 1,850,000 1,919,540
(Leesburg Regional Medical Center Project - B) 5.65%, 7/1/2008..................... 2,000,000 1,987,120
Leon County Educational Facilities Authority, COP (Southgate Residence Hall Project)
9%, 9/1/2014 (b,e)................................................................. 5,235,000 3,664,500
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
<S> <C> <C>
Manatee County Housing Finance Authority, SFMR 8.10% 11/1/2020....................... $ 635,000 $ 685,724
Nassau County, PCR, Refunding (ITT Rayonier Inc. Project):
7.65%, 6/1/2006.................................................................... 4,500,000 5,062,635
6.20%, 7/1/2015.................................................................... 1,420,000 1,496,950
North Miami Health Facilities Authority, Health Facilities Revenue
(Villa Maria Nursing Housing Project) 7.50%, 9/1/2012.............................. 2,800,000 3,167,864
North Palm Beach Heights Water Control District, Refunding (Special Assessment)
6.50%, 10/1/2012 (Insured; MBIA)................................................... 2,000,000 2,258,800
Orange County, Revenue:
Sales Tax 5.375%, 1/1/2024......................................................... 4,000,000 3,961,320
Tourist Development Tax 6.50%, 10/1/2019 (Insured; AMBAC).......................... 2,500,000 2,834,225
Orange County Health Facilities Authority:
Health Facilities Revenue (Mental Health Service Project) 9.25%, 7/1/2020.......... 3,925,000 4,469,044
HR (Orlando Regional Healthcare - A) 6%, 11/1/2014 (Insured; MBIA)................. 2,000,000 2,153,640
Orange County Housing Finance Authority, Mortgage Revenue 8.10%, 11/1/2021........... 875,000 945,096
Orlando and Orange County Expressway Authority, Expressway Revenue:
(Junior Lien) 6.50%, 7/1/2011...................................................... 5,000,000 5,801,950
Refunding (Senior Lien) 5.375%, 7/1/2009 (Insured; AMBAC).......................... 2,000,000 2,053,080
Orlando Utilities Commission, Water and Electric Revenue:
6.50%, 10/1/2020................................................................... 3,000,000 3,290,370
7%, 10/1/2023...................................................................... 1,000,000 1,166,790
Osceola County Industrial Development Authority, Revenue
(Community Provider Pooled Loan Program) 7.75%, 7/1/2017........................... 5,235,000 5,424,926
Palm Beach County Housing Finance Authority, Single Family Mortgage Purchase Revenue
7.60%, 3/1/2023.................................................................... 3,405,000 3,698,341
Pinellas County, PCR, Refunding (Florida Power Corp.) 7.20%, 12/1/2014............... 3,000,000 3,408,630
Pinellas County Health Facilities Authority, Revenue
(Hospital - Morton Plant Health Systems Project) 5.50%, 11/15/2009 (Insured;
MBIA).............................................................................. 2,000,000 2,069,440
Pinellas County Housing Finance Authority, SFMR 7.70%, 8/1/2022...................... 2,810,000 3,039,830
Polk County Housing Finance Authority, SFMR:
8.10%, 9/1/2020.................................................................... 605,000 663,050
7.875%, 9/1/2022................................................................... 1,330,000 1,444,380
St. Lucie County, Solid Waste Disposal Revenue (Florida Power and Light Co. Project)
7.15%, 2/1/2023.................................................................... 4,000,000 4,469,440
Sarasota, Water and Sewer Utility Revenue, Refunding
9.115%, 10/1/2011 (c).............................................................. 6,585,000 7,777,675
South Indian River Water Control District, Refunding 7.50%, 10/1/2006................ 1,000,000 1,097,330
Sunrise, Special Tax District Number 1, Refunding
6.375%, 11/1/2021 (LOC; Bayerische Hypotheken-und Weschel Bank) (a)................ 2,500,000 2,666,600
Tampa:
Allegany Health System Revenue (Saint Joseph Hospital):
7.125%, 12/1/2005................................................................ 2,500,000 2,780,675
7.375%, 12/1/2023................................................................ 3,455,000 3,881,623
Water and Sewer Revenue:
8.665%, 10/1/2006 (c)............................................................ 6,100,000 7,369,044
Refunding 6.60%, 10/1/2014 (Insured; FGIC)....................................... 10,000,000 11,563,900
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
<S> <C> <C>
Tarpon Springs Health Facilities Authority, HR
(Hellen Ellis Memorial Hospital Project) 7.625%, 5/1/2021.......................... $ 4,000,000 $ 4,442,960
Volushia County, Sales Tax Improvement Revenue, Refunding
6%, 10/1/2010 (Insured; MBIA)...................................................... 4,295,000 4,521,261
Volushia County Health Facilities Authority, Hospital Facilities Revenue
(Memorial Health System Project):
8.125%, 6/1/2008................................................................. 1,970,000 2,270,011
8.25%, 6/1/2020.................................................................. 2,500,000 2,897,750
- -------------------------------------------------------------------------------------
U.S. RELATED--7.8%
Commonwealth of Puerto Rico:
6.25%, 7/1/2010.................................................................... 3,000,000 3,284,550
6.80%, 7/1/2021.................................................................... 2,000,000 2,379,620
Guam Airport Authority, Revenue 6.70%, 10/1/2023..................................... 5,000,000 5,503,500
Puerto Rico Electric Power Authority, Power Revenue 6.25%, 7/1/2017.................. 3,000,000 3,284,550
Puerto Rico Municipal Finance Agency 5.875%, 7/1/2006................................ 5,000,000 5,306,800
Puerto Rico Public Buildings Authority, Public Education and Health Facilities
6.875%, 7/1/2012................................................................... 3,000,000 3,563,610
Virgin Islands Port Authority, Airport Revenue (Cyril E. King Airport Project)
8.10%, 10/1/2005................................................................... 2,500,000 2,829,325
------------
TOTAL MUNICIPAL BONDS (cost $303,286,369)............................................ $333,505,541
------------
------------
- -------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL INVESTMENTS--.3%
Florida;
Volushia County Housing Finance Authority, MFHR, VRDN
(Mallwood Village Project) 3.125% (Guaranteed; Household Finance) (f)
(cost $1,000,000).................................................................. $ 1,000,000 $ 1,000,000
------------
------------
TOTAL INVESTMENTS--100.0%
(cost $304,286,369)................................................................ $334,505,541
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <S> <S> <S>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Insurance Association
FGIC Financial Guaranty Insurance Corporation MFHR Multi-Family Housing Revenue
FHA Federal Housing Administration MFMR Multi-Family Mortgage Revenue
FNMA Federal National Mortgage Association PCR Pollution Control Revenue
FSA Financial Security Assurance RRR Resources Recovery Revenue
GNMA Government National Mortgage Association SFMR Single Family Mortgage Revenue
HR Hospital Revenue VRDN Variable Rate Demand Notes
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (G) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C>
AAA Aaa AAA 36.4%
AA Aa AA 17.2
A A A 19.4
BBB Baa BBB 17.3
BB Ba BB .5
F1 P1 A1 .3
Not Rated Not Rated Not Rated 8.9
------
100.0%
------
------
<FN>
- --------------------------------------------------------------------------------
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(b) Non-income producing security.
(c) Inverse floater security - the interest rate is subject to change
periodically.
(d) 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,
1993, this security amounted to $11,366,250 or 3.3% of net assets.
(e) The valuation of this security has been determined in good faith under the
direction of the Board of Trustees.
(f) Security payable on demand. The interest rate, which is subject to change,
is based upon bank prime rates or an index of market interest rates.
(g) Fitch currently provides creditworthiness information for a limited amount
of investments.
</TABLE>
See independent accountants' review report and notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $304,286,369)--see statement.................................................... $334,505,541
Cash.................................................................................... 398,381
Interest receivable..................................................................... 5,312,565
Receivable for shares of Beneficial Interest subscribed................................. 1,572,827
Prepaid expenses........................................................................ 30,890
------------
341,820,204
LIABILITIES:
Due to The Dreyfus Corporation.......................................................... $ 209,354
Payable for shares of Beneficial Interest redeemed...................................... 249,110
Accrued expenses........................................................................ 55,125 513,589
---------- ------------
NET ASSETS................................................................................ $341,306,615
------------
------------
REPRESENTED BY:
Paid-in capital......................................................................... $309,389,104
Accumulated undistributed net realized gain on investments.............................. 1,698,339
Accumulated net unrealized appreciation on investments--Note 3.......................... 30,219,172
------------
NET ASSETS at value....................................................................... $341,306,615
------------
------------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............................... 20,918,744
------------
Class B Shares ------------
(unlimited number of $.001 par value shares authorized).............................. 1,123,634
------------
------------
NET ASSET VALUE per share:
Class A Shares
($323,914,015 / 20,918,744 shares).................................................... $15.48
------
------
Class B Shares
($17,392,600 / 1,123,634 shares)...................................................... $15.48
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................................... $ 10,473,614
EXPENSES:
Management fee--Note 2(a)............................................................. $ 902,800
Shareholder servicing costs--Note 2(c)................................................ 472,378
Distribution fees (Class B shares)--Note 2(b)......................................... 29,889
Prospectus and shareholders' reports.................................................. 23,148
Professional fees..................................................................... 17,908
Custodian fees........................................................................ 17,779
Registration fees..................................................................... 7,637
Trustees' fees and expenses--Note 2(d)................................................ 1,362
Miscellaneous......................................................................... 16,328
----------
1,489,229
Less--reduction in management fee due to
undertakings--Note 2(a)............................................................... 218,322
----------
TOTAL EXPENSES............................................................................ 1,270,907
------------
INVESTMENT INCOME--NET.................................................................... 9,202,707
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3................................................ $1,084,664
Net unrealized appreciation on investments.............................................. 8,707,697
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS........................................... 9,792,361
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $ 18,995,068
------------
------------
</TABLE>
See independent accountants' review report and notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED)
------------ ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................................ $16,886,211 $ 9,202,707
Net realized gain on investments.................................................. 2,950,036 1,084,664
Net unrealized appreciation on investments for the period......................... 12,932,318 8,707,697
------------ ----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................ 32,768,565 18,995,068
------------ ----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares.................................................................. (16,848,394 ) (8,911,191)
Class B shares.................................................................. (37,817 ) (291,516)
Net realized gain on investments:
Class A shares.................................................................. (3,177,441 ) --
Class B shares.................................................................. -- --
------------ ----------------
TOTAL DIVIDENDS..................................................................... (20,063,652 ) (9,202,707)
------------ ----------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares.................................................................. 66,050,460 27,171,061
Class B shares.................................................................. 5,856,989 11,155,170
Dividends reinvested:
Class A shares.................................................................. 7,518,030 3,127,487
Class B shares.................................................................. 16,199 132,773
Cost of shares redeemed:
Class A shares.................................................................. (31,929,008 ) (15,632,155)
Class B shares.................................................................. (4 ) (131,258)
------------ ----------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS........................ 47,512,666 25,823,078
------------ ----------------
TOTAL INCREASE IN NET ASSETS........................................................ 60,217,579 35,615,439
NET ASSETS:
Beginning of period............................................................... 245,473,597 305,691,176
------------ ----------------
End of period..................................................................... $305,691,176 $341,306,615
------------ ----------------
------------ ----------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------------------------------------------------
CLASS A CLASS B
-------------------------------- --------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993 APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED) 1993* (UNAUDITED)
---------- ---------------- ---------- ----------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold...................................... 4,488,511 1,775,886 393,001 729,415
Shares issued for dividends reinvested........... 511,735 204,092 1,081 8,640
Shares redeemed.................................. (2,173,234) (1,020,378) -- (8,503)
---------- ---------------- ---------- ----------------
NET INCREASE IN SHARES OUTSTANDING............ 2,827,012 959,600 394,082 729,552
---------- ---------------- ---------- ----------------
---------- ---------------- ---------- ----------------
<FN>
- ---------------
* From January 15, 1993 (commencement of initial offering) to April 30, 1993.
</TABLE>
See independent accountants' review report and notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Reference is made to page 10 of the Fund's Prospectus dated February 18, 1994.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA 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 thirteen
series including the Florida 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 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, 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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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 October 12, 1993, 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 October 13, 1993 through January 1, 1994, to waive receipt of
the management fee payable to it by the Series in excess of an annual rate of
.46 of 1% of the Series' average daily net assets. The reduction in management
fee, pursuant to the undertakings, amounted to $218,322 for the six months ended
October 31, 1993.
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 $56,755 during the six months ended October 31,
1993 from commissions earned on sales of the Series' Class A shares.
The Distributor retained $2,946 during the six months ended October 31,
1993 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 six months ended October 31, 1993, $29,889 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 six months ended October 31, 1993, $395,419 and $14,944 were
charged to the Class A and Class B shares, respectively, pursuant to the
Shareholder Services Plan.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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.
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $85,639,718 and $66,721,014,
respectively, for the six months ended October 31, 1993, and consisted entirely
of municipal bonds and short-term municipal investments.
At October 31, 1993, accumulated net unrealized appreciation on investments
was $30,219,172, consisting of $32,521,369 gross unrealized appreciation and
$2,302,197 gross unrealized depreciation.
At October 31, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF INVESTMENTS OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS-100.0% AMOUNT VALUE
------------ ------------
GEORGIA-93.5%
<S> <C> <C>
Albany, Sewer System Revenue 6.50%, 7/1/2009 (Insured; MBIA)................... $ 100,000 $ 113,108
Albany-Dougherty Inner City Authority, Revenue, Refunding 6%, 2/1/2011......... 200,000 209,656
Athens-Clarke County Unified Government, Water and Sewer Revenue Refunding
5.875%, 1/1/2008 (Insured; FGIC)........................................... 265,000 283,728
Atlanta:
Airport Facilities Revenue 6.50%, 1/1/2013................................. 150,000 162,576
COP (Atlanta Pretrial Detention Center Project)
6.25%, 12/1/2011 (Insured; MBIA)....................................... 300,000 325,482
School Improvement:
5.60%, 12/1/2012....................................................... 1,000,000 1,038,930
5.60%, 12/1/2018....................................................... 1,000,000 1,041,340
Atlanta Downtown Development Authority, Revenue, Refunding
(Underground Atlanta Project) 6.25%, 10/1/2016............................. 200,000 215,764
Bartow County, Water and Sewer Revenue, Refunding 6%, 9/1/2015 (Insured; AMBAC) 450,000 484,528
Buford, GO School 5.90%, 2/1/2013.............................................. 300,000 321,849
Clarke County Hospital Authority, Revenue Certificates
(Athens Regional Medical Center Project) 5.75%, 1/1/2010 (Insured; MBIA)... 265,000 278,353
Cobb County Kennestone Hospital Authority, Revenue Certificates
5.50%, 4/1/2017 (Insured; MBIA)............................................ 300,000 303,306
Columbia County, Water and Sewerage Revenue, Refunding
5.55%, 12/1/2008 (Insured; AMBAC).......................................... 650,000 677,450
Columbus, Water and Sewer Revenue, Refunding:
6.25%, 5/1/2011 (Insured; FGIC)............................................ 155,000 170,777
5.70%, 5/1/2020............................................................ 500,000 520,295
5.70%, 5/1/2020 (Insured; FGIC)............................................ 500,000 518,040
Coweta County School System:
6.35%, 8/1/2012............................................................ 100,000 108,680
Refunding 5.75%, 2/1/2010 (Insured; FGIC).................................. 200,000 209,958
Dade County Water and Sewer Authority, Revenue, Refunding and Improvement
5.375%, 7/1/2018 (Insured; FGIC)........................................... 1,135,000 1,141,265
Dekalb County School District, Refunding 5.60%, 7/1/2010....................... 500,000 520,400
Development Authority of Dekalb County, Revenue
(Wesley Homes, Inc-Budd Terrace Project) 6.75%, 10/1/2013
(LOC; Wachovia Bank of Georgia, N.A.) (a).................................. 200,000 212,838
Development Authority of Monroe County, PCR (Oglethorpe Power Corp. Scherer Project)
6.80%, 1/1/2011............................................................ 100,000 116,889
Development Authority of Wayne County, PCR (ITT Rayonier Inc. Project)
6.10%, 11/1/2007........................................................... 750,000 793,792
Downtown Savannah Authority, Revenue, Refunding
(Chatham County Projects) 5%, 1/1/2011..................................... 1,000,000 979,600
Downtown Smyrna Development Authority, Revenue, Refunding 5.50%, 2/1/2012...... 500,000 511,750
Fulco Hospital Authority, Revenue Anticipation Certificates
(Georgia Baptist Healthcare) 6.25%, 9/1/2013............................... 250,000 266,183
Fulton County, Water and Sewer Revenue, Refunding
6.375%, 1/1/2014 (Insured; FGIC)........................................... 290,000 333,027
Fulton County Building Authority, Revenue, Refunding (County Government and Health
Facilities Project) 6.125%, 1/1/2011....................................... 300,000 323,001
Fulton County Development Authority, Special Facilities Revenue, Refunding
(Delta Air Lines Inc. Project) 6.95%, 11/1/2012............................ 245,000 259,702
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
GEORGIA (CONTINUED)
Fulton County Hospital Authority, Revenue Anticipation Certificates
(Northside Hospital Project) 6.625%, 10/1/2016 (Insured; MBIA)............. $ 200,000 $ 228,846
Fulton Dekalb Hospital Authority, HR, Refunding Certificates
5.50%, 1/1/2012 (Insured; MBIA)............................................ 1,000,000 1,018,890
Gainesville, Water and Sewer Revenue, Refunding 6%, 11/15/2012 (Insured; FGIC). 300,000 330,318
Georgia 6.30%, 3/1/2008........................................................ 100,000 114,570
Georgia Environmental Facilities Authority, Revenue
(Guaranteed-Water and Sewer Loan Program) 6.125%, 7/1/1996................. 470,000 501,180
Georgia Housing and Finance Authority, Revenue:
(Home Ownership Opportunity Program) 6.50%, 12/1/2011...................... 185,000 195,623
Single Family Mortgage 5.20%, 12/1/2013 (Insured; FHA)..................... 1,000,000 985,240
Georgia Municipal Electric Authority, Power Revenue:
10.25%, 1/1/2020........................................................... 450,000 469,283
Refunding 6.125%, 1/1/2014 (Insured; FGIC)................................. 300,000 325,119
Gwinnett County School District 6.25%, 2/1/2011................................ 500,000 532,170
Habersham County Hospital Authority, Revenue Anticipation Certificates
5.60%, 12/1/2013 (Insured; MBIA)........................................... 500,000 518,665
Henry County and Henry County Water and Sewer Authority, Revenue, Refunding
6.50%, 2/1/2011 (Insured; MBIA)............................................ 100,000 111,652
Hospital Authority of Columbus, Revenue Certificates (Saint Francis Hospital Project)
6.20%, 1/1/2010 (Insured; MBIA)............................................ 200,000 215,970
Hospital Authority of Hall County and the City of Gainesville,
Revenue Anticipation Certificates (Northeast Georgia Healthcare Project)
6.25%, 10/1/2012 (Insured; MBIA)........................................... 100,000 109,507
Hospital Authority of Upson County, Revenue Certificates
5.75%, 1/1/2012 (Insured; MBIA)............................................ 350,000 365,691
Metropolitan Atlanta Rapid Transportation Authority, Sales Tax Revenue, Refunding
6.25%, 7/1/2020 (Insured; AMBAC)........................................... 300,000 340,884
Municipal Electric Authority of Georgia, Special Obligation
(First Crossover-General Resolution) 6.50%, 1/1/2020....................... 100,000 114,692
Private Colleges and Universities Authority, Revenue
(Agnes Scott College Projects) 5.50%, 6/1/2013............................. 1,000,000 1,021,430
Putnam County Development Authority, PCR (Georgia Power Co. Plant Branch)
6.20%, 8/1/2022............................................................ 300,000 318,732
Savannah Economic Development Authority, PCR, Refunding (Union Camp Corp. Project)
6.80%, 2/1/2012............................................................ 200,000 220,864
Savannah Hospital Authority, Revenue, Refunding:
Improvement (Candler Hospital) 7%, 1/1/2011................................ 200,000 216,588
(Saint Joseph's Hospital Project) 6.20%, 7/1/2023.......................... 500,000 524,305
Sugar Hill Public Utility, Revenue, Refunding 5.90%, 1/1/2014 (Insured; FSA)... 500,000 530,205
U.S. RELATED-6.5%
Guam Power Authority, Revenue 6.30%, 10/1/2022................................. 500,000 532,815
Puerto Rico, Refunding 6%, 7/1/2014............................................ 600,000 629,862
Puerto Rico Highway and Transportation Authority, Highway Revenue
6.50%, 7/1/2022............................................................ 300,000 350,490
------------
TOTAL INVESTMENTS (cost $22,069,713)........................................... $ 23,265,858
============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
SUMMARY OF ABBREVIATIONS
<S> <S> <S> <S>
AMBAC American Municipal Bond Assurance Corporation GO General Obligation
COP Certificate of Participation HR Hospital Revenue
FGIC Financial Guaranty Insurance Corporation LOC Letter of Credit
FHA Federal Housing Administration MBIA Municipal Bond Insurance Association
FSA Financial Security Assurance PCR Pollution Control Revenue
</TABLE>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (B) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- ------- ----------------- -------------------
AAA Aaa AAA 43.1
AA Aa AA 31.4
A A A 21.2
BBB Baa BBB 3.2
BB Ba BB 1.1
------
100.0%
======
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(b) Fitch currently provides creditworthiness information for a limited amount
of investments.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1993 (UNAUDITED)
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $22,069,713)-see statement....................................... $ 23,265,858
Cash....................................................................... 148,465
Interest receivable........................................................ 425,761
Receivable for shares of Beneficial Interest subscribed.................... 355,761
Prepaid expenses........................................................... 19,836
Due from The Dreyfus Corporation........................................... 25,457
------------
24,241,138
LIABILITIES:
Payable for investment securities purchased................................ $990,011
Payable for shares of Beneficial Interest redeemed......................... 11,169
Accrued expenses........................................................... 26,947 1,028,127
-------- ------------
NET ASSETS..................................................................... $ 23,213,011
============
REPRESENTED BY:
Paid-in capital............................................................ $ 22,031,503
Accumulated net realized (loss) on investments............................. (14,637)
Accumulated net unrealized appreciation on investments-Note 3.............. 1,196,145
------------
NET ASSETS at value $ 23,213,011
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)................ 689,243
============
Class B Shares
(unlimited number of $.001 par value shares authorized)................ 984,105
============
NET ASSET VALUE per share:
Class A Shares
($9,559,830 / 689,243 shares).......................................... $13.87
======
Class B Shares
($13,653,181 / 984,105 shares)......................................... $13.87
======
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1993 (UNAUDITED)
INVESTMENT INCOME:
INTEREST INCOME............................................................ $ 493,396
EXPENSES:
Management fee-Note 2(a)............................................... $ 51,280
Shareholder servicing costs-Note 2(c).................................. 33,632
Distribution fees (Class B shares)-Note 2(b)........................... 25,184
Prospectus and shareholders' reports................................... 9,459
Registration fees...................................................... 2,962
Organization expenses.................................................. 2,250
Auditing fees.......................................................... 1,340
Custodian fees......................................................... 1,190
Legal fees............................................................. 192
Trustees' fees and expenses-Note 2(d).................................. 85
Miscellaneous.......................................................... 4,799
--------
132,373
Less-expense reimbursement from Manager due to
undertaking-Note 2(a).............................................. 107,189
--------
TOTAL EXPENSES................................................. 25,184
------------
INVESTMENT INCOME-NET.......................................... 468,212
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3.................................... $ 38
Net unrealized appreciation on investments................................. 806,108
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................ 806,146
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $ 1,274,358
============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993
1993(1) (UNAUDITED)
------------ ------------
OPERATIONS:
<S> <C> <C>
Investment income-net...................................................... $ 192,429 $ 468,212
Net realized gain (loss) on investments.................................... (14,675) 38
Net unrealized appreciation on investments for the period.................. 390,037 806,108
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 567,791 1,274,358
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares......................................................... (143,166) (229,147)
Class B shares......................................................... (49,263) (239,065)
------------ ------------
TOTAL DIVIDENDS.................................................... (192,429) (468,212)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares......................................................... 9,210,060 1,976,654
Class B shares......................................................... 6,237,874 7,020,981
Dividends reinvested:
Class A shares......................................................... 103,827 163,824
Class B shares......................................................... 22,493 128,676
Cost of shares redeemed:
Class A shares......................................................... (2,301,609) (259,922)
Class B shares......................................................... (24,753) (246,602)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS....... 13,247,892 8,783,611
------------ ------------
TOTAL INCREASE IN NET ASSETS................................... 13,623,254 9,589,757
NET ASSETS:
Beginning of period........................................................ -- 13,623,254
------------ ------------
End of period.............................................................. $ 13,623,254 $ 23,213,011
============= ============
SHARES
---------------------------------------------------------
CLASS A CLASS B
--------------------------- ---------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993 APRIL 30, OCTOBER 31, 1993
1993(1) (UNAUDITED) 1993(2) (UNAUDITED)
------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold.................................. 722,509 146,117 476,432 516,344
Shares issued for dividends reinvested....... 7,993 12,014 1,698 9,415
Shares redeemed.............................. (179,901) (19,489) (1,866) (17,918)
------------ ------------ ------------ ------------
NET INCREASE IN SHARES OUTSTANDING... 550,601 138,642 476,264 507,841
============ ============ ============ ============
(1) From September 3, 1992 (commencement of operations) to April 30, 1993.
(2) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
See independent accountants' review report and notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 11 of the Fund's Prospectus dated February 18, 1994.
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA 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 thirteen series including the Georgia 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
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 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.
(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.
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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, 1993 through January 1, 1994 or until such time as
the assets of the series exceed $25 million, regardless of whether they remain
at that level, to reimburse all fees and expenses of the Series (excluding
12b-1 distribution plan fees and certain expenses as described above). The
expense reimbursement, pursuant to the undertaking, amounted to $107,189 for
the six months ended October 31, 1993.
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 $4,978 during the six months ended October 31,
1993 from commissions earned on sales of the Series' Class A shares.
The Distributor retained $5,723 during the six months ended October 31,
1993 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 six months ended October 31, 1993, $25,184 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 six months ended October 31, 1993, $10,717 and $12,592 were
charged to the Class A and Class B shares, respectively, pursuant to the
Shareholder Services Plan.
(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.
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 3-SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $8,470,437 and $15,000,
respectively, for the six months ended October 31, 1993, and consisted
entirely of municipal bonds.
At October 31, 1993, accumulated net unrealized appreciation on
investments was $1,196,145, consisting of $1,209,045 gross unrealized
appreciation and $12,900 gross unrealized depreciation.
At October 31, 1993, 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).
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS-99.6% AMOUNT VALUE
------------ ------------
<S> <C> <C>
MARYLAND-92.9%
Anne Arundel County:
Consolidated Water and Sewer 7.75%, 3/15/2008.............................. $ 1,000,000 $ 1,164,660
Mortgage Revenue, Refunding (Mill Pond Apartments)
5.875%, 7/1/2011 (Insured; MBIA)....................................... 1,610,000 1,655,740
Baltimore:
7%, 10/15/2007 (Insured; MBIA)............................................. 1,500,000 1,814,070
7.15%, 10/15/2008.......................................................... 1,275,000 1,601,566
City Parking System Facilities Revenue, Refunding:
4.65%, 7/1/2006........................................................ 1,735,000 1,710,363
4.75%, 7/1/2007........................................................ 1,820,000 1,810,827
4.70%, 7/1/2008........................................................ 2,105,000 2,061,153
Port Facilities Revenue (Consolidated Coal Sales) 6.50%, 12/1/2010......... 6,240,000 6,990,422
Project Revenue (City Parking System Facilities)
6.25%, 7/1/2021 (Insured; FGIC)........................................ 2,000,000 2,179,320
Revenue, Refunding (Water Projects) 8.45%, 7/1/2020 (Insured; MBIA) (a).... 5,750,000 6,339,375
PCR (General Motors Corp.) 5.35%, 4/1/2008................................. 5,000,000 5,032,250
Baltimore City Housing Corp., MFHR, Refunding
7.25%, 7/1/2023 (Collateralized; FNMA)..................................... 3,315,000 3,548,277
Baltimore County:
Mortgage Revenue:
(First Mortgage - Pickersgill) 7.70%, 1/1/2021......................... 3,000,000 3,301,260
(Refunding - Tindeco Wharf Project)
6.50%, 12/20/2012 (Collateralized; GNMA)........................... 1,500,000 1,584,870
(Refunding - County Pension Funding):
5.20%, 4/1/2009........................................................ 3,500,000 3,573,255
6.70%, 7/1/2016........................................................ 14,600,000 16,399,596
Baltimore County Revenue Authority, Revenue:
7.20%, 7/1/1999 (Insured; MBIA)............................................ 2,175,000 2,536,659
7.20%, 7/1/2019 (Insured; MBIA)............................................ 220,000 250,466
Bel Air, COP:
Parking Facilities Revenue 7.80%, 6/1/2010................................. 250,000 298,190
Refunding (Bel Air Parking) 5.60%, 6/1/2010................................ 1,000,000 1,037,960
Frederick Mortgage Revenue, Refunding (Carrollton Apartments)
5.80%, 9/1/2024 (Insured; FHA). 1,530,000 1,543,525
Harford County, Public Improvement 5.90%, 9/1/2011............................. 2,180,000 2,331,161
Howard County:
COP 8.15%, 2/15/2020....................................................... 605,000 842,547
Consolidated Public Improvement, Refunding 5.25%, 8/15/2012................ 1,500,000 1,518,300
Economic Development Revenue, Refunding (M.O.R. XIV Associates Project)
7.75%, 6/1/2012........................................................ 2,500,000 2,760,525
Howard County Metropolitan District:
6.625%, 2/15/2021.......................................................... 2,090,000 2,385,819
Refunding 6%, 8/15/2019.................................................... 5,500,000 5,767,685
Kent County, College Revenue, Refunding (Washington College Project)
7.70%, 7/1/2018............................................................ 1,750,000 2,032,345
Maryland Community Development Administration, Department of Housing
and Community Development:
Infrastructure Finance 8.50%, 6/1/2018................................. 100,000 117,729
MFHR:
5.45%, 5/15/2013 (Insured; FHA).................................... 1,750,000 1,763,370
6.50%, 5/15/2013................................................... 5,000,000 5,312,950
8.332%, 5/15/2013 (a,b)............................................ 6,100,000 6,199,125
8.875%, 5/15/2021.................................................. 525,000 565,399
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
<S> <C> <C>
MARYLAND (CONTINUED)
Maryland Community Development Administration, Department of Housing
and Community Development (continued):
MFHR (continued):
7.30%, 5/15/2023................................................... $ 2,205,000 $ 2,419,106
7.10%, 5/15/2028................................................... 2,400,000 2,621,088
7.50%, 5/15/2031................................................... 100,000 108,029
Zero Coupon, 5/15/2032............................................. 11,550,000 601,640
6.85%, 5/15/2033................................................... 5,000,000 5,356,600
Single Family Program:
7.40%, 4/1/2009.................................................... 1,000,000 1,075,540
6.85%, 4/1/2011.................................................... 1,500,000 1,614,120
6.95%, 4/1/2011.................................................... 6,450,000 6,976,449
7.125%, 4/1/2014................................................... 7,000,000 7,652,960
7.70%, 4/1/2015.................................................... 1,685,000 1,869,204
7.40%, 4/1/2017.................................................... 800,000 872,456
8.125%, 4/1/2017................................................... 345,000 382,619
7.375%, 4/1/2026................................................... 2,000,000 2,142,080
Zero Coupon, 4/1/2029.............................................. 85,075,000 5,539,233
7.625%, 4/1/2029................................................... 8,000,000 8,521,920
7.45%, 4/1/2032.................................................... 6,410,000 7,058,628
Maryland Department of Transportation, Consolidated Transportation
6.375%, 9/1/2006........................................................... 5,000,000 5,548,000
Maryland Economic Development Corp., Revenue
(Health and Mental Hygiene Providers Facilities Acquisition Program):
8.375%, 3/1/2013....................................................... 4,675,000 5,019,501
8.75%, 3/1/2017........................................................ 5,425,000 5,941,135
Maryland Health and Higher Educational Facilities Authority, Revenue:
(Anne Arundel Medical Center) 5.25%, 7/1/2013 (Insured; AMBAC)............. 3,530,000 3,532,753
(Bon Secours Hospital) 7.375%, 9/1/2017.................................... 2,575,000 3,037,959
(Francis Scott Key Medical Center) 7%, 7/1/2025............................ 6,500,000 7,610,070
(Good Samaritan Hospital):
5.70%, 7/1/2009........................................................ 3,140,000 3,275,711
7.50%, 7/1/2021........................................................ 4,000,000 4,725,160
(Greater Baltimore Medical Center) 6.75%, 7/1/2019......................... 4,250,000 4,957,880
(Hartford Memorial and Fallston Hospital) 8.50%, 7/1/2014.................. 750,000 847,102
(Howard County General Hospital):
7%, 7/1/2017........................................................... 1,150,000 1,272,739
8.25%, 7/1/2018........................................................ 2,600,000 2,955,056
(Kaiser Permanente Medical Program) 9.125%, 7/1/2015....................... 250,000 276,603
(Memorial Hospital of Cumberland):
9.25%, 7/1/2017........................................................ 3,000,000 3,603,960
Refunding 6.50%, 7/1/2017 (Insured; MBIA).............................. 3,000,000 3,292,140
(Mercy Medical Center) 8%, 7/1/2020........................................ 4,675,000 5,668,578
(North Arundel Hospital) 7.875%, 7/1/2021.................................. 500,000 591,740
(Refunding - Church Hospital) 8%, 7/1/2013................................. 200,000 229,502
(Refunding - Johns Hopkins Hospital) 5%, 7/1/2023.......................... 2,000,000 1,907,720
(Refunding - Johns Hopkins University) 7.50%, 7/1/2020..................... 1,300,000 1,496,183
(Refunding - Roland Park Project) 7.75%, 7/1/2012.......................... 2,230,000 2,493,720
(Sinai Hospital of Baltimore):
7%, 7/1/2019 (Insured; AMBAC).......................................... 5,250,000 6,163,342
Refunding 5.50%, 7/1/2007 (Insured; AMBAC)............................. 1,000,000 1,053,690
(Union Hospital of Cecil County) 6.70%, 7/1/2009........................... 2,320,000 2,519,868
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
<S> <C> <C>
MARYLAND (CONTINUED)
Maryland Health and Higher Educational Facilities Authority, Revenue (continued):
(University of Maryland Medical Systems):
7%, 7/1/2022 (Insured; FGIC)........................................... $ 4,500,000 $ 5,780,385
Refunding:
5.40%, 7/1/2007 (Insured; FGIC).................................... 1,000,000 1,048,500
5.40%, 7/1/2008 (Insured; FGIC).................................... 2,625,000 2,728,556
Maryland Industrial Development Financing Authority, Economic Development Revenue
(Medical Waste Association) 8.625%, 11/15/1999............................. 2,285,000 1,713,750
Maryland Local Government Insurance Trust, Capitalization Program, COP
7.125%, 8/1/2009 3,250,000 3,736,525
Maryland Stadium Authority, Sports Facility Lease Revenue 7.60%, 12/15/2019.... 5,250,000 6,134,047
Maryland State, COP (Saint Mary's Multi-Service Center Project)
7.875%, 6/1/2013........................................................... 250,000 288,967
Maryland Transportation Authority, Transportation Facilities Project Revenue:
9%, 7/1/2015............................................................... 1,790,000 1,985,593
Refunding 5.70%, 7/1/2005.................................................. 3,700,000 3,998,035
Maryland Water Quality Financing Administration, Revolving Loan Fund Revenue:
7.25%, 9/1/2011............................................................ 2,250,000 2,616,210
7.25%, 9/1/2012............................................................ 5,500,000 6,377,635
6.70%, 9/1/2013............................................................ 1,200,000 1,364,772
7.10%, 9/1/2013............................................................ 600,000 698,346
Montgomery County Housing Opportunities Commission, Revenue:
Multi-Family Housing (4 Corners Senior Project) 8.375%, 12/1/2015.......... 150,000 164,742
Multi-Family Mortgage:
8.25%, 7/1/2019........................................................ 200,000 212,272
7%, 7/1/2023........................................................... 1,190,000 1,265,279
7.05%, 7/1/2032........................................................ 2,485,000 2,659,820
7.375%, 7/1/2032....................................................... 5,500,000 5,926,415
Single Family Mortgage:
7.375%, 7/1/2017....................................................... 2,000,000 2,157,900
7.625%, 7/1/2017....................................................... 500,000 539,560
8.375%, 7/1/2018....................................................... 375,000 407,509
Montgomery County Revenue Authority, Lease Revenue:
(Olney Indoor Swim Center Project) 6.30%, 7/15/2012........................ 2,110,000 2,279,180
(Western County Swim Facility Project) 7.375%, 10/1/2009................... 1,500,000 1,688,130
Northeast Waste Disposal Authority, RRR (Harford County Resource Recovery)
8.60%, 1/1/2008............................................................ 1,450,000 1,562,419
Prince Georges County:
Consolidated Public Improvement, Refunding:
6.75%, 7/1/2001........................................................ 830,000 974,794
6.75%, 7/1/2010........................................................ 1,170,000 1,323,867
5.25%, 10/1/2010....................................................... 1,000,000 1,008,890
Economic Development Revenue, Refunding (Capitol View II) 9%, 9/1/2002..... 7,506,000 8,134,477
PCR, Refunding (Potomac Electric Project) 6%, 9/1/2022..................... 5,000,000 5,359,950
Solid Waste Management System Revenue 5.25%, 6/15/2013..................... 3,800,000 3,749,346
Stormwater Management 5.50%, 3/15/2013..................................... 2,780,000 2,817,335
Prince Georges County Housing Authority, Mortgage Revenue, Refunding:
(New Keystone Apartment Project) 6.80%, 7/1/2025 (Insured: FHA and MBIA)... 4,300,000 4,653,546
(Stevenson Apartments Project) 6.35%, 7/20/2020 (Collateralized; GNMA)..... 3,000,000 3,143,940
(Templeton Project) 7.10%, 4/20/2020 (Collateralized; GNMA)................ 1,045,000 1,138,831
(Timber Ridge/Cypress Creek) 5.625%, 12/20/2013 (Collateralized; GNMA)..... 5,355,000 5,396,608
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
<S> <C> <C>
MARYLAND (CONTINUED)
Prince Georges County Industrial Development Authority, Lease Revenue
(Upper Marlboro Justice Center) 7%, 6/30/2019 (Insured; MBIA).............. $ 2,500,000 $ 2,902,975
University of Maryland, System Auxiliary Facility and Tuition Revenue:
5.375%, 4/1/2009........................................................... 3,500,000 3,603,740
6.50%, 4/1/2011............................................................ 4,990,000 5,694,239
6.50%, 4/1/2012............................................................ 2,000,000 2,279,920
Refunding 5%, 10/1/2010.................................................... 3,000,000 2,932,890
Washington County, Multi-Family Rental Housing Revenue, Refunding
(Youngstown Apartments) 7%, 2/1/2025 (Insured; FHA)........................ 3,990,000 4,355,843
Washington Suburban Sanitary District, General Construction:
6.90%, 6/1/2010............................................................ 1,055,000 1,209,895
6.50%, 12/1/2011........................................................... 4,820,000 5,377,047
6.50%, 11/1/2014........................................................... 2,690,000 3,029,693
U. S. RELATED-6.7%
Commonwealth of Puerto Rico:
5.85%, 7/1/2009............................................................ 5,000,000 5,242,350
Refunding 6.25%, 7/1/2010.................................................. 3,000,000 3,284,550
Commonwealth of Puerto Rico Highway and Transportion Authority, Highway Revenue
7.392%, 7/1/2006 (a)....................................................... 5,500,000 5,706,250
Puerto Rico Public Buildings Authority, Revenue, Refunding 5.70%, 7/1/2009..... 3,500,000 3,652,460
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................... 4,000,000 4,402,800
Guam Power Authority, Revenue 6.30%, 10/1/2012................................. 3,400,000 3,620,286
------------
TOTAL MUNICIPAL BONDS (cost $349,548,882)...................................... $383,193,612
============
SHORT-TERM MUNICIPAL INVESTMENTS-.4%
MARYLAND;
Prince Georges County Housing Authority, Mortgage Revenue, VRDN
(Laurel Oxford) 2.625% (LOC; Bankers Trust Co.) (c,d)
(cost $1,500,000).......................................................... $ 1,500,000 $ 1,500,000
------------
TOTAL INVESTMENTS -- 100.0%
(cost $351,048,882)........................................................ $384,693,612
============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
SUMMARY OF ABBREVIATIONS
<S> <S> <S> <S>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Insurance Association
FGIC Financial Guaranty Insurance Corporation MFHR Multi-Family Housing Revenue
FHA Federal Housing Administration PCR Pollution Control Revenue
FNMA Federal National Mortgage Association RRR Resource Recovery Revenue
GNMA Government National Mortgage Association VRDN Variable Rate Demand Notes
</TABLE>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------- ------- ----------------- -------------------
AAA Aaa AAA 27.1%
AA Aa AA 40.4
A A A 19.3
BBB Baa BBB 5.9
F1 MIG1 SP1 .4
Not Rated Not Rated Not Rated 6.9
------
100.0%
======
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, 1993, this security amounted to $6,199,125 or 1.6% of net
assets.
(c) Secured by letters of credit.
(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 October 31, 1993, the Fund had $109,124,920 (27.7%) of net assets
invested in securities whose payment of principal and interest is dependent
upon revenues generated from housing projects.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1993 (UNAUDITED)
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $351,048,882)-see statement...................................... $384,693,612
Cash....................................................................... 1,584,744
Interest receivable........................................................ 6,504,049
Receivable for shares of Beneficial Interest subscribed.................... 1,023,405
Prepaid expenses........................................................... 52,197
------------
393,858,007
LIABILITIES:
Due to The Dreyfus Corporation............................................. $ 243,550
Payable for shares of Beneficial Interest redeemed......................... 168,821
Accrued expenses........................................................... 35,705 448,076
------------ ------------
NET ASSETS..................................................................... $393,409,931
============
REPRESENTED BY:
Paid-in capital............................................................ $358,970,823
Accumulated undistributed net realized gain on investments................. 794,378
Accumulated net unrealized appreciation on investments-Note 3.............. 33,644,730
------------
NET ASSETS at value............................................................ $393,409,931
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)................ 27,437,919
============
Class B Shares
(unlimited number of $.001 par value shares authorized)................ 1,813,296
============
NET ASSET VALUE per share:
Class A Shares
($369,024,944 / 27,437,919 shares)..................................... $13.45
======
Class B Shares
($24,384,987 / 1,813,296 shares)....................................... $13.45
======
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1993 (UNAUDITED)
INVESTMENT INCOME:
INTEREST INCOME............................................................ $ 11,718,896
EXPENSES:
Management fee-Note 2(a)............................................... $ 1,024,799
Shareholder servicing costs-Note 2(c).................................. 537,696
Distribution fees (Class B shares)-Note 2(b)........................... 38,393
Prospectus and shareholders' reports................................... 23,656
Professional fees...................................................... 23,522
Custodian fees......................................................... 20,118
Registration fees...................................................... 11,572
Trustees' fees and expenses-Note 2(d).................................. 1,351
Miscellaneous.......................................................... 18,870
------------
1,699,977
Less-reduction in management fee due to undertakings-Note 2(a)......... 247,637
------------
TOTAL EXPENSES................................................. 1,452,340
------------
INVESTMENT INCOME-NET.......................................... 10,266,556
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3.................................. $ (619)
Net unrealized appreciation on investments................................. 11,872,176
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................ 11,871,557
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $ 22,138,113
============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED)
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income-net...................................................... $ 17,614,994 $ 10,266,556
Net realized gain (loss) on investments.................................... 2,109,663 (619)
Net unrealized appreciation on investments for the period.................. 13,357,793 11,872,176
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... 33,082,450 22,138,113
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares......................................................... (17,588,391) (9,898,580)
Class B shares......................................................... (26,603) (367,976)
Net realized gain on investments:
Class A shares......................................................... (2,078,022) --
Class B shares......................................................... -- --
------------ ------------
TOTAL DIVIDENDS...................................................... (19,693,016) (10,266,556)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares......................................................... 82,755,870 28,266,015
Class B shares......................................................... 5,905,321 18,097,351
Dividends reinvested:
Class A shares......................................................... 12,337,374 6,196,050
Class B shares......................................................... 20,196 256,547
Cost of shares redeemed:
Class A shares......................................................... (25,410,504) (14,190,376)
Class B shares......................................................... (276) (324,737)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS....... 75,607,981 38,300,850
------------ ------------
TOTAL INCREASE IN NET ASSETS................................... 88,997,415 50,172,407
NET ASSETS:
Beginning of period........................................................ 254,240,109 343,237,524
------------ ------------
End of period.............................................................. $343,237,524 $393,409,931
============ ============
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------------------------------------------
CLASS A CLASS B
------------------------------ ------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993 APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED) 1993* (UNAUDITED)
---------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.................................... 6,492,977 2,129,112 454,082 1,362,564
Shares issued for dividends reinvested......... 967,702 465,791 1,553 19,214
Shares redeemed................................ (1,996,243) (1,068,279) (21) (24,096)
---------- ----------- --------- -----------
NET INCREASE IN SHARES OUTSTANDING..... 5,464,436 1,526,624 455,614 1,357,682
========== =========== ========= ===========
- -----------------------
* From January 15, 1993 (commencement of initial offering) to April 30, 1993.
See independent accountants' review report and notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 12 of the Fund's Prospectus dated February 18, 1994.
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND 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 thirteen series including the Maryland 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
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, 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.
(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.
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 October 12, 1993 to waive receipt of
the management fee payable to it 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 October 13, 1993 through
January 1, 1994, to waive receipt of the management fee payable to it by the
Series in excess of an annual rate of .46 of 1% of the Series' average daily
net assets. The reduction in management fee, pursuant to the undertakings,
amounted to $247,637 for the six months ended October 31, 1993.
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 $64,507 during the six months ended October 31,
1993 from commissions earned on sales of the Series' Class A shares.
The Distributor retained $7,650 during the six months ended October 31,
1993 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 six months ended October 31, 1993, $38,393 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 six months ended October 31,
1993, $446,621 and $19,197 were charged to the Class A and Class B shares,
respectively, pursuant to the Shareholder Services Plan.
(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.
NOTE 3-SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $100,669,881 and
$68,463,415, respectively, for the six months ended October 31, 1993, and
consisted entirely of municipal bonds and short-term municipal investments.
At October 31, 1993, accumulated net unrealized appreciation on
investments was $33,644,730, consisting of $34,298,901 gross unrealized
appreciation and $654,171 gross unrealized depreciation.
At October 31, 1993, 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).
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF INVESTMENTS OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS-100.0% AMOUNT VALUE
----------- -----------
MASSACHUSETTS-92.1%
<S> <C> <C>
Boston, Revenue, Refunding (Boston City Hospital)
5.75%, 2/15/2023 (Insured; FHA)............................................ $ 1,500,000 $ 1,511,160
Boston Industrial Development Financing Authority, Sewer Facility Revenue
(Harbor Electric Energy Co. Project) 7.375%, 5/15/2015..................... 2,500,000 2,822,375
Boston Water and Sewer Commission, Revenue:
7.875%, 11/1/1996.......................................................... 295,000 336,371
7.875%, 11/1/2013.......................................................... 605,000 685,937
7.10%, 11/1/2019 (Insured; MBIA)........................................... 1,000,000 1,165,780
Commonwealth of Massachusetts:
7.25%, 3/1/2000 (Insured; FGIC)............................................ 650,000 772,064
7.25%, 3/1/2009 (Insured; FGIC)............................................ 350,000 414,652
7%, 8/1/2012............................................................... 1,850,000 2,098,954
Leominster 7.50%, 4/1/2009 (Insured; MBIA)..................................... 1,275,000 1,499,897
Lynn Water and Sewer Commission, General Revenue
7.25%, 12/1/2010 (Insured; MBIA)........................................... 1,000,000 1,198,110
Massachusetts Bay Transportation Authority:
7.625%, 3/1/2009 (Insured; FSA)............................................ 1,000,000 1,166,390
7.75%, 3/1/2011 (Insured; FSA)............................................. 1,000,000 1,168,710
7%, 3/1/2021............................................................... 1,000,000 1,209,120
7.837%, 3/1/2021 (a,b)..................................................... 2,300,000 2,331,625
Massachusetts College Building Authority, Project Revenue
7.80%, 5/1/2016 (Insured; MBIA)............................................ 1,000,000 1,153,130
Massachusetts Education Loan Authority, Education Loan Revenue
7.75%, 1/1/2008 (Insured; MBIA)............................................ 1,410,000 1,534,531
Massachusetts Health and Educational Facilities Authority, Revenue:
(Berkshire Health Systems):
7.50%, 10/1/2008 (Insured; MBIA)....................................... 1,000,000 1,151,470
6.75%, 10/1/2019 (Insured; MBIA)....................................... 1,750,000 1,890,770
(Brigham and Womens Hospital) 6.75%, 7/1/2024.............................. 1,000,000 1,110,420
(Capital Asset Program) 7.30%, 10/1/2018 (Insured; MBIA)................... 3,750,000 4,365,525
(Harvard University):
8.875%, 12/1/1995...................................................... 1,500,000 1,684,140
6.50%, 12/1/2007....................................................... 750,000 841,343
(Lahey Clinic Medical Center) 7.625%, 7/1/2018 (Insured; MBIA)............. 1,000,000 1,171,970
(Medical Center of Central Massachusetts) 7.10%, 7/1/2021.................. 1,000,000 1,125,540
(New England Deaconess Hospital) 6.875%, 4/1/2022.......................... 4,000,000 4,480,560
(Refunding - Milton Hospital) 7%, 7/1/2016 (Insured; MBIA)................. 2,050,000 2,358,709
(Salem Hospital) 7.25%, 7/1/2009 (Insured; MBIA)........................... 370,000 408,931
(South Shore Hospital) 7.50%, 7/1/2020 (Insured; MBIA)..................... 2,000,000 2,408,120
(University Hospital) 7.25%, 7/1/2019 (Insured; MBIA)...................... 2,750,000 3,206,720
(Winchester Hospital) 8.125%, 7/1/2014..................................... 1,040,000 1,138,561
Massachusetts Housing Finance Agency, Housing Revenue:
Multiple Family Residential 7.80%, 8/1/2022 (Insured; FHA)................. 1,500,000 1,626,450
Residential:
6.25%, 11/15/2012 (Collateralized; FNMA)............................... 1,600,000 1,688,768
8.50%, 8/1/2020........................................................ 1,225,000 1,311,608
8.40%, 8/1/2021........................................................ 500,000 526,115
Single Family:
7.80%, 12/1/2005....................................................... 1,000,000 1,073,450
7.90%, 6/1/2014........................................................ 1,000,000 1,096,690
8.10%, 12/1/2021....................................................... 2,400,000 2,614,920
7.95%, 6/1/2023........................................................ 2,000,000 2,190,740
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
----------- -----------
MASSACHUSETTS (CONTINUED)
Massachusetts Industrial Finance Agency, Revenue:
(Brandeis University) 6.80%, 10/1/2019 (Insured; MBIA)..................... $ 500,000 $ 556,070
(Brooks School) 5.95%, 7/1/2023............................................ 1,000,000 1,045,310
(Leonard Morse Hospital) 8%, 10/15/2014.................................... 1,000,000 1,226,040
(Provider Lease Program) 8.75%, 7/15/2009.................................. 695,000 735,428
(Refunding - Harvard Community Health) 8.125%, 10/1/2017................... 750,000 856,605
Massachusetts Municipal Wheelhouse Electric Co., Power Supply Systems Revenue:
8.75%, 7/1/2018............................................................ 3,440,000 4,032,678
6.125%, 7/1/2019........................................................... 1,200,000 1,251,984
Massachusetts Port Authority, Special Project Revenue
(Harborside Hyatt) 10%, 3/1/2026........................................... 3,000,000 3,371,550
Massachusetts Water Resources Authority 7.625%, 4/1/2014....................... 750,000 903,787
New England Education Loan Marketing Corp., Refunding
(Student Loan) 5.70%, 7/1/2005............................................. 1,000,000 1,024,770
Somerville Housing Development Corp., Multiple Family Revenue, Refunding
7.50%, 1/1/2024 (Collateralized; FNMA)..................................... 1,000,000 1,091,690
University of Lowell Building Authority 7.60%, 11/1/2010 (Insured; FSA)........ 750,000 855,503
U. S. RELATED-7.9%
Commonwealth of Puerto Rico 6.80%, 7/1/2021.................................... 1,000,000 1,189,810
Commonwealth of Puerto Rico Highway and Transportation Authority, Highway Revenue:
7.636%, 7/1/2009 (a)....................................................... 1,000,000 1,037,500
7.736%, 7/1/2010 (a)....................................................... 1,000,000 1,030,000
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................... 1,500,000 1,651,050
Puerto Rico Electric Power Authority, Power Revenue 8%, 7/1/2008............... 500,000 584,440
Virgin Islands Public Finance Authority, Revenue, Refunding 7.25%, 10/1/2018... 1,000,000 1,146,580
-----------
TOTAL INVESTMENTS (cost $74,914,297)........................................... $84,131,121
===========
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <S> <S> <S>
FGIC Financial Guaranty Insurance Corporation FSA Financial Security Assurance
FHA Federal Housing Administration MBIA Municipal Bond Insurance Association
FNMA Federal National Mortgage Association
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- ------- ----------------- -------------------
<S> <S> <S> <C>
AAA Aaa AAA 44.0%
AA Aa AA 11.4
A A A 23.8
BBB Baa BBB 13.1
Not Rated Not Rated Not Rated 7.7
------
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,
1993, this security amounted to $2,331,625 or 2.7% of net assets.
(c) Fitch currently provides creditworthiness information for a limited amount
of investments.
(d) At October 31, 1993, the Fund had $27,285,561 (31.3% of net assets)
invested in securities whose payment of principal and interest is dependent
upon revenues generated from health care projects.
(e) At October 31, 1993, 27.6% of the Fund's net assets are insured by MBIA.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1993 (UNAUDITED)
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $74,914,297)-see statement....................................... $84,131,121
Cash 1,666,153
Interest receivable........................................................ 1,533,444
Receivable for shares of Beneficial Interest subscribed.................... 28,656
Prepaid expenses........................................................... 14,339
-----------
87,373,713
LIABILITIES:
Due to The Dreyfus Corporation............................................. $ 51,370
Payable for shares of Beneficial Interest redeemed......................... 48,671
Accrued expenses........................................................... 17,267 117,308
----------- -----------
NET ASSETS..................................................................... $87,256,405
===========
REPRESENTED BY:
Paid-in capital............................................................ $77,715,794
Accumulated undistributed net realized gain on investments................. 323,787
Accumulated gross unrealized appreciation on investments................... 9,216,824
-----------
NET ASSETS at value............................................................ $87,256,405
===========
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)................ 6,755,762
===========
Class B Shares
(unlimited number of $.001 par value shares authorized)................ 242,328
===========
NET ASSET VALUE per share:
Class A Shares
($84,236,663 / 6,755,762 shares)....................................... $12.47
======
Class B Shares
($3,019,742 / 242,328 shares).......................................... $12.46
======
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1993 (UNAUDITED)
INVESTMENT INCOME:
INTEREST INCOME............................................................ $ 2,788,419
EXPENSES:
Management fee-Note 2(a)............................................... $ 232,533
Shareholder servicing costs-Note 2(c).................................. 126,638
Prospectus and shareholders' reports................................... 14,269
Custodian fees......................................................... 4,787
Distribution fees (Class B shares)-Note 2(b)........................... 4,375
Professional fees...................................................... 3,608
Registration fees...................................................... 3,210
Trustees' fees and expenses-Note 2(d).................................. 308
Miscellaneous.......................................................... 10,389
-----------
400,117
Less-reduction in management fee due to
undertakings-Note 2(a)............................................. 63,350
-----------
TOTAL EXPENSES................................................. 336,767
-----------
INVESTMENT INCOME-NET.......................................... 2,451,652
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3.................................... $ 47,235
Net unrealized appreciation on investments................................. 2,243,414
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................ 2,290,649
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $ 4,742,301
===========
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED)
----------- -----------
OPERATIONS:
<S> <C> <C>
Investment income-net...................................................... $ 4,556,661 $ 2,451,652
Net realized gain on investments........................................... 537,446 47,235
Net unrealized appreciation on investments for the period.................. 4,033,314 2,243,414
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 9,127,421 4,742,301
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares......................................................... (4,549,010) (2,406,523)
Class B shares......................................................... (7,651) (45,129)
Net realized gain on investments:
Class A shares......................................................... (56,938) _-
Class B shares......................................................... _- _-
----------- -----------
TOTAL DIVIDENDS.................................................... (4,613,599) (2,451,652)
----------- -----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares......................................................... 12,873,702 3,785,643
Class B shares......................................................... 1,057,732 1,939,779
Dividends reinvested:
Class A shares......................................................... 2,354,860 1,217,886
Class B shares......................................................... 2,601 16,441
Cost of shares redeemed:
Class A shares......................................................... (6,908,497) (2,720,531)
Class B shares......................................................... (150) (40,365)
----------- -----------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS....... 9,380,248 4,198,853
----------- -----------
TOTAL INCREASE IN NET ASSETS................................... 13,894,070 6,489,502
NET ASSETS:
Beginning of period........................................................ 66,872,833 80,766,903
----------- -----------
End of period.............................................................. $80,766,903 $87,256,405
=========== ===========
SHARES
-----------------------------------------------------------------------
CLASS A CLASS B
--------------------------------- --------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993 APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED) 1993* (UNAUDITED)
------------ ---------------- ----------- ----------------
CAPITAL SHARE TRANSACTIONS:
Shares sold.............................. 1,094,206 308,074 87,675 156,388
Shares issued for dividends reinvested... 199,322 98,688 215 1,326
Shares redeemed.......................... (586,172) (221,316) (12) (3,264)
------------ ----------- ----------- -----------
NET INCREASE IN SHARES OUTSTANDING. 707,356 185,446 87,878 154,450
============ =========== =========== ===========
- -----------------------
* From January 15, 1993 (commencement of initial offering) to April 30, 1993.
See independent accountants' review report and notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 13 of the Fund's Prospectus dated February 18, 1994.
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS 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 thirteen series including the Massachusetts 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
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, 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.
(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.
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 October 12, 1993 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 October 13, 1993 through January 1, 1994, to waive
receipt of the management fee payable to it by the Series in excess of an
annual rate of .44 of 1% of the Series' average daily net assets. The
reduction in management fee, pursuant to the undertakings, amounted to $63,350
for the six months ended October 31, 1993.
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 $8,606 during the six months ended October 31,
1993 from commissions earned on sales of the Series' Class A shares.
The Distributor retained $155 during the six months ended October 31, 1993
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 six months ended October 31, 1993, $4,375 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 six months ended October 31, 1993, $103,509 and $2,188 were
charged to the Class A and Class B shares, respectively, pursuant to the
Shareholder Services Plan.
(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.
NOTE 3-SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $10,336,050 and $8,453,500,
respectively, for the six months ended October 31, 1993, and consisted
entirely of municipal bonds.
At October 31, 1993, 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).
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF INVESTMENTS OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS-100.0% AMOUNT VALUE
------------ ------------
<S> <C> <C>
MICHIGAN-95.9%
Capital Region Airport Authority, Airport Revenue 6.70%, 7/1/2021 (Insured; MBIA)........ $ 2,500,000 $ 2,813,325
Chippewa Valley Schools 7%, 5/1/2010..................................................... 1,275,000 1,428,370
Detroit:
(Development Area No. 1) 7.60%, 7/1/2010............................................. 4,150,000 4,706,183
Sewer Disposal System Revenue:
7.125%, 7/1/2019................................................................. 2,735,000 3,176,265
Refunding:
7%, 7/1/2011................................................................. 1,325,000 1,456,533
8.43%, 7/1/2023 (Insured; FGIC) (a).......................................... 5,000,000 5,331,250
Water Supply Systems Revenue, Refunding 9.83%, 7/1/2022 (Insured; FGIC) (a).......... 5,000,000 6,075,000
Detroit School District (School Building and Site):
7.15%, 5/1/2011...................................................................... 4,250,000 5,039,480
(Wayne County) 6.25%, 5/1/2012....................................................... 4,250,000 4,595,993
Dickinson County Economic Development Corp.:
PCR (Champion International Corp. Project) 5.85%, 10/1/2018.......................... 3,000,000 3,030,090
Solid Waste Disposal Refunding Revenue
(Champion International Corp. Project) 6.55%, 3/1/2007........................... 4,000,000 4,268,880
East Lansing Building Authority, Refunding 6.90%, 10/1/2011.............................. 1,375,000 1,506,409
East Lansing School District (Ingham and Clinton Counties School Building and Site)
6.625%, 5/1/2014..................................................................... 1,000,000 1,110,460
Fitzgerald Public School District (School Building and Site) 6.375%, 5/1/2016............ 1,150,000 1,256,387
Flint Michigan Refunding Tax Increment Finance Authority 5.75%, 6/1/2002................. 3,000,000 3,156,480
Grand Rapids Housing Finance Authority, Multi-Family Revenue, Refunding
7.625%, 9/1/2023 (Collateralized; FNMA).............................................. 1,000,000 1,235,570
Grand Rapids Sanitary Sewer Systems, Improvement Revenue, Refunding 7%, 1/1/2016......... 500,000 565,000
Grand Traverse County Hospital Finance Authority, HR (Munson Medical Center)
7.625%, 12/1/2015.................................................................... 750,000 849,720
Greater Detroit Research Recovery Authority, Revenue 9.25%, 12/13/2008................... 1,250,000 1,389,175
Holland School District (Unified School Building and Site) 7.375%, 5/1/2019.............. 2,000,000 2,305,280
Kent Hospital Finance Authority, Hospital Facility Revenue
(Butterworth Hospital) 7.25%, 1/15/2012.............................................. 1,000,000 1,174,570
Lapeer Economic Development Corp., Ltd. Obligation Revenue
(Lapeer Health Services Project) 8.625%, 2/1/2020.................................... 2,000,000 2,505,480
Michigan Building Authority, Revenue:
6.75%, 10/1/2007 (Insured; AMBAC).................................................... 1,600,000 1,824,352
6.75%, 10/1/2011..................................................................... 2,000,000 2,240,960
Michigan Higher Education Student Loan Authority, Student Loan Revenue:
6.875%, 10/1/2007 (Insured; AMBAC)................................................... 2,250,000 2,555,933
7.55%, 10/1/2008 (Insured; MBIA)..................................................... 1,625,000 1,909,911
Refunding 6%, 9/1/2008............................................................... 2,000,000 2,072,380
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
MICHIGAN (CONTINUED)
Michigan Hospital Finance Authority, HR:
(Crittenton Hospital) 6.70%, 3/1/2007................................................ $ 2,250,000 $ 2,488,207
(Daughters of Charity National Health Systems-Providence Hospital) 7%, 11/1/2021..... 2,700,000 3,046,950
(Henry Ford Continuing Care) 6.75%, 7/1/2011......................................... 1,665,000 1,843,272
(McLaren Obligation Group) 7.50%, 9/15/2021.......................................... 1,250,000 1,519,613
(Mercy Mount Clemens Corp.) 6.25%, 5/15/2011......................................... 2,000,000 2,175,100
Refunding:
(Detroit Medical Center):
8.125%, 8/15/2008............................................................ 1,060,000 1,220,198
8.125%, 8/15/2012............................................................ 1,030,000 1,178,042
(Detroit Medical Center Obligation Group) 6.50%, 8/15/2018....................... 5,000,000 5,415,550
(Middle Michigan Obligation Group) 6.625%, 6/1/2010.............................. 2,000,000 2,146,780
(Sisters of Mercy Health Corp.) 7.50%, 2/15/2018..................................... 2,250,000 2,565,652
Michigan Housing Development Authority:
(Home Improvement Program) 7.65%, 12/1/2012.......................................... 2,150,000 2,267,519
Ltd. Obligation Revenue:
(Fraser Woods Project) 6.50%, 9/15/2007 (Insured; FSA)........................... 1,810,000 1,950,673
(Walled Lake Villa Project) 6%, 4/15/2018 (Insured; FSA)......................... 1,500,000 1,563,345
MFHR 8.375%, 7/1/2019 (Insured; FGIC)................................................ 1,550,000 1,680,650
Rental Housing Revenue:
6.50%, 4/1/2006.................................................................. 2,000,000 2,156,960
7.70%, 4/1/2023 (Insured; FSA)................................................... 4,185,000 4,545,370
SFMR:
7.55%, 12/1/2014................................................................. 885,000 944,702
7.50%, 6/1/2015.................................................................. 2,355,000 2,563,417
8%, 6/1/2018..................................................................... 400,000 433,124
7.75%, 12/1/2019................................................................. 3,000,000 3,323,100
6.95%, 12/1/2020................................................................. 1,750,000 1,875,598
Michigan Job Development Authority, PCR:
(Chrysler Corp. Project) 5.70%, 11/1/1999............................................ 5,000,000 5,153,150
(General Motors Corp.) 5.55%, 4/1/2009............................................... 4,000,000 4,042,880
Michigan Municipal Bond Authority, Local Government Loan Program Refunding, Revenue
6.50%, 5/1/2016...................................................................... 4,000,000 4,402,200
Michigan State University Board of Trustees, General Revenue 6.125%, 8/15/2010........... 2,705,000 2,882,935
Michigan Strategic Fund, Ltd. Obligation Revenue:
(Consumers Power Co. Project) 5.80%, 6/15/2010
(Insured; Capital Market Insurance Corp.)........................................ 4,000,000 4,221,480
(Northeastern Community Mental Health Foundation) 8.25%, 1/1/2009.................... 1,665,000 1,788,093
Refunding:
(Detroit Edison Co. Pollution Control Project):
7%, 5/1/2021 (Insured; AMBAC)................................................ 4,630,000 5,770,647
6.95%, 9/1/2021 (Insured; FGIC).............................................. 3,500,000 4,002,530
(Ledyard Association Ltd. Partnership Project)
6.25%, 10/1/2011 (Insured; ITT Lyndon Property Insurance Co.)................ 3,075,000 3,407,223
Michigan Trunk Line 7%, 8/15/2017........................................................ 3,945,000 4,593,242
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
MICHIGAN (CONTINUED)
Monroe County:
PCR (Detroit Edison Project):
7.50%, 12/1/2019 (Insured; AMBAC)................................................ $ 4,650,000 $ 5,434,594
7.875%, 12/1/2019................................................................ 2,720,000 3,143,422
7.65%, 9/1/2020 (Insured; FGIC).................................................. 2,250,000 2,656,710
Water Supply Systems (Frenchtown Charter Township Water Treatment
and Distribution Systems) 6.50%, 5/1/2013........................................ 2,500,000 2,651,200
Monroe County Economic Development Corp., Ltd. Obligation Refunding, Revenue
(Detroit Edison Co. Project) 6.95%, 9/1/2022 (Insured; FGIC)......................... 2,000,000 2,488,160
Northville, Special Assessment (Wayne County) 7.875%, 1/1/2006........................... 1,685,000 1,879,550
Northwestern Michigan College, Community College Improvement Revenue, Refunding
7%, 7/1/2011......................................................................... 1,800,000 1,997,622
Oakland County Economic Development Corp., Ltd. Obligation Revenue
(Pontiac Osteopathic Hospital Project) 9.625%, 1/1/2020.............................. 1,765,000 1,937,476
Okemos Public School District, (Ingham County School Building and Site)
6.90%, 5/1/2011...................................................................... 4,000,000 4,671,400
Regents of University of Michigan, HR 6.375%, 12/1/2024.................................. 2,500,000 2,637,300
Rockford Public Schools, Refunding (Kent County School Building and Site)
7.375%, 5/1/2019..................................................................... 2,000,000 2,370,140
Romulus Economic Development Corp., Ltd. Obligation EDR,
Refunding (Romulus Hir Ltd. Partnership Project)
7%, 11/1/2015 (Insured; ITT Lydon Property Insurance Co.)............................ 3,700,000 4,060,528
Royal Oak Hospital Finance Authority, HR (William Beaumont Hospital) 7.375%, 1/1/2020.... 2,650,000 2,984,854
Wayne Charter County, Airport Revenue (Detroit Metropolitain Wayne County Airport)
6.75%, 12/1/2021 (Insured; MBIA)..................................................... 1,600,000 1,784,208
U.S. RELATED-4.1%
Commonwealth of Puerto Rico Aqueduct and Sewer Authority, Revenue 7.875%, 7/1/2017....... 2,000,000 2,322,680
Commonwealth of Puerto Rico, Public Improvement
8.516%, 7/1/2018 (a,b)............................................................... 2,000,000 2,220,000
Puerto Rico Housing Finance Corp., MFMR
7.50%, 4/1/2022 (LOC; Government Development Bank) (c)............................... 2,990,000 3,256,289
Virgin Islands Port Authority, Airport Revenue (Cyril E. King Airport Project)
8.10%, 10/1/2005..................................................................... 500,000 565,865
------------
TOTAL INVESTMENTS
(cost $183,310,377).................................................................. $205,809,636
============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
SUMMARY OF ABBREVIATIONS
<S> <S> <S> <S>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
EDR Economic Development Revenue MBIA Municipal Bond Insurance Association
FGIC Financial Guaranty Insurance Corporation MFHR Multi-Family Housing Revenue
FNMA Federal National Mortgage Association MFMR Multi-Family Mortgage Revenue
FSA Financial Security Assurance PCR Pollution Control Revenue
HR Hospital Revenue SFMR Single Family Mortgage Revenue
</TABLE>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------- ------- ----------------- -------------------
AAA Aaa AAA 31.8%
AA Aa AA 29.6
A A A 19.2
BBB Baa BBB 12.8
Not Rated Not Rated Not Rated 6.6
------
100.0%
======
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, 1993, this security amounted to $2,220,000 or 1.1%
of net assets.
(c) Secured by letters of credit.
(d) Fitch currently provides creditworthiness information for a limited
amount of investments.
See independent accountants' review report and notes to financial
statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1993 (UNAUDITED)
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $183,310,377)-see statement................................................ $205,809,636
Cash................................................................................. 1,025,926
Interest receivable.................................................................. 3,934,431
Receivable for shares of Beneficial Interest subscribed.............................. 890,149
Prepaid expenses..................................................................... 27,497
------------
211,687,639
LIABILITIES:
Due to The Dreyfus Corporation....................................................... $ 127,760
Payable for shares of Beneficial Interest redeemed................................... 197,319
Accrued expenses..................................................................... 27,080 352,159
---------- ------------
NET ASSETS............................................................................... $211,335,480
============
REPRESENTED BY:
Paid-in capital...................................................................... $187,826,378
Accumulated undistributed net realized gain on investments........................... 1,009,843
Accumulated gross unrealized appreciation on investments............................. 22,499,259
------------
NET ASSETS at value...................................................................... $211,335,480
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized).......................... 12,289,977
============
Class B Shares
(unlimited number of $.001 par value shares authorized).......................... 631,879
============
NET ASSET VALUE per share:
Class A Shares
($201,000,132 / 12,289,977 shares)............................................... $16.35
======
Class B Shares
($10,335,348 / 631,879 shares)................................................... $16.36
======
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1993
(UNAUDITED)
INVESTMENT INCOME:
INTEREST INCOME...................................................................... $ 6,404,305
EXPENSES:
Management fee-Note 2(a)......................................................... $ 553,225
Shareholder servicing costs-Note 2(c)............................................ 307,726
Prospectus and shareholders' reports............................................. 20,799
Professional fees................................................................ 18,612
Distribution fees (Class B shares)-Note 2(b)..................................... 17,269
Custodian fees................................................................... 10,628
Registration fees................................................................ 4,967
Trustees' fees and expenses-Note 2(d)............................................ 851
Miscellaneous.................................................................... 12,768
-----------
946,845
Less-reduction in management fee due to
undertakings-Note 2(a)....................................................... 146,190
-------
TOTAL EXPENSES........................................................... 800,655
------------
INVESTMENT INCOME-NET.................................................... 5,603,650
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3.............................................. $ 423,464
Net unrealized appreciation on investments........................................... 8,324,993
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.......................... 8,748,457
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................................... $ 14,352,107
============
See independent accountants' review report and notes to financial
statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED)
------------ ------------
OPERATIONS:
<S> <C> <C>
Investment income-net................................................................ $ 9,949,247 $ 5,603,650
Net realized gain on investments..................................................... 1,302,815 423,464
Net unrealized appreciation on investments for the period............................ 9,138,903 8,324,993
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS......................... 20,390,965 14,352,107
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares................................................................... (9,928,078) (5,436,549)
Class B shares................................................................... (21,169) (167,101)
Net realized gain on investments:
Class A shares................................................................... (1,407,206) --
Class B shares................................................................... -- --
------------ ------------
TOTAL DIVIDENDS.............................................................. (11,356,453) (5,603,650)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares................................................................... 40,524,594 15,486,793
Class B shares................................................................... 3,563,317 6,415,822
Dividends reinvested:
Class A shares................................................................... 6,122,861 2,894,623
Class B shares................................................................... 13,575 107,871
Cost of shares redeemed:
Class A shares................................................................... (16,698,726) (9,979,303)
Class B shares................................................................... (84) (57,677)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS................. 33,525,537 14,868,129
------------ ------------
TOTAL INCREASE IN NET ASSETS............................................. 42,560,049 23,616,586
NET ASSETS:
Beginning of period.................................................................. 145,158,845 187,718,894
------------ ------------
End of period........................................................................ $187,718,894 $211,335,480
============ ============
SHARES
------------------------------------------------------------------
CLASS A CLASS B
------------------------------ --------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993 APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED) 1993* (UNAUDITED)
---------- ----------------- ---------- -----------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................ 2,650,957 963,775 228,063 399,851
Shares issued for dividends reinvested................. 400,476 179,984 869 6,683
Shares redeemed........................................ (1,093,531) (621,569) (5) (3,582)
---------- ----------- --------- ----------
NET INCREASE IN SHARES OUTSTANDING............. 1,957,902 522,190 228,927 402,952
========== =========== ========= ==========
___________-
* From January 15, 1993 (commencement of initial offering) to April 30, 1993.
See independent accountants' review report and notes to financial
statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 14 of the Fund's Prospectus dated February 18, 1994.
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN 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 thirteen series including the Michigan 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 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, 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.
(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.
See independent accountants' review report and notes to financial
statements.
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 October 6, 1993 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 October 7, 1993 through January 1, 1994, to waive receipt of the
management fee payable to it by the Series in excess of an annual rate of
.45 of 1% of the Series' average daily net assets. The reduction in
management fee, pursuant to the undertakings, amounted to $146,190 for
the six months ended October 31, 1993.
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 $33,863 during the six months ended October
31, 1993 from commissions earned on sales of the Series' Class A shares.
The Distributor retained $1,066 during the six months ended October
31, 1993 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 six months ended October 31, 1993, $17,269 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
six months ended October 31, 1993, $244,818 and $8,719 were charged to
the Class A and Class B shares, respectively, pursuant to the Shareholder
Services Plan.
(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.
NOTE 3-SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $43,544,439 and
$28,885,906, respectively, for the six months ended October 31, 1993, and
consisted entirely of municipal bonds and short-term municipal
investments.
At October 31, 1993, 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).
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF INVESTMENTS OCTOBER 31, 1993(UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS-97.8% AMOUNT VALUE
------------ ------------
<S> <C> <C>
MINNESOTA-92.2%
Anoka County:
Resources Recovery Revenue (Northern States Power Co.) 7.15%, 12/1/2008............... $ 1,150,000 $ 1,302,502
Solid Waste Disposal Revenue (United Power Association Project)
6.95%, 12/1/2008 (Guaranteed; National Rural Utilities Cooperative Finance Corp.). 3,825,000 4,221,538
Anoka-Hennepin, Independent School District Number 11, Refunding (School District Credit
Enhancement Program)
4.875%, 2/1/2007 (Insured; FGIC)...................................................... 3,310,000 3,276,271
City of Becker, PCR Refunding (Northern States Power Co.) 6.80%, 4/1/2007................. 1,000,000 1,116,000
Burnsville, Multi-Family Housing Revenue Refunding (Coventry Court Apartments)
7.50%, 9/1/2027 (Insured; FHA)........................................................ 2,250,000 2,443,388
Dakota County Housing and Redevelopment Authority, South-Saint Paul Revenue Refunding
(Single Family-GNMA Program) 8.10%, 9/1/2012.......................................... 285,000 307,250
City of Detroit Lakes, Health Care Facilities Revenue (Benedictine Health Systems
Saint Mary's Regional Health Center) 6%, 2/15/2019 (Guaranteed; Connie Lee)........... 3,000,000 3,217,890
Duluth Economic Development Authority, Health Care Facilities Revenue
(Benedictine Health-Saint Mary's Project) 8.375%, 2/15/2020........................... 2,500,000 3,094,575
Eagan, Multi-Family Housing Revenue Refunding (Forest Ridge Apartments)
7.50%, 9/1/2017 (Insured; FHA)........................................................ 1,000,000 1,081,840
Eden Prairie, Multi-Family Housing Revenue Refunding:
(Eden Investments Project) 7.40%, 8/1/2025 (Insured; FHA)............................. 500,000 557,330
(Welsh Parkway Apartments) 8%, 7/1/2026 (Insured; FHA)................................ 2,965,000 3,219,101
Edina:
Hospital Systems Revenue (Fairview Hospital) 7.125%, 7/1/2006......................... 1,000,000 1,111,490
Housing Development Revenue Refunding (Edina Park Plaza Project)
7.70%, 12/1/2028 (Insured; FHA) 2,500,000 2,735,350
Hubbard County, Solid Waste Disposal Revenue (Potlatch Corp. Project) 7.375%, 8/1/2013.... 1,000,000 1,113,240
Lakeville, Independent School District Number 194 5.40%, 2/1/2013
(Insured; FGIC)....................................................................... 2,250,000 2,297,835
City of Mankato, Hospital Facilities First Mortgage Revenue
(Immanuel-Saint Joseph's Hospital of Mankato, Inc. Project) 6.30%, 8/1/2022........... 2,000,000 2,121,380
Metropolitan Council, Minneapolis-Saint Paul Metropolitan Area Sports Facilities Revenue
Refunding (Hubert H. Humphrey Metrodome) 6%, 10/1/2009................................ 2,500,000 2,667,050
Minneapolis:
5.125%, 12/1/2015..................................................................... 2,810,000 2,804,324
Home Ownership Program 7.10%, 6/1/2021................................................ 1,200,000 1,314,012
HR:
(Fairview Hospital and Healthcare Services) 6.50%, 1/1/2011 (Insured; MBIA)....... 2,500,000 2,785,800
(Lifespan Inc.-Abbot Hospital) 7%, 12/1/2014...................................... 1,500,000 1,658,730
(Lifespan Inc.-Minneapolis Children's Medical Center Project):
8.125%, 8/1/2017.............................................................. 1,500,000 1,721,130
7%, 12/1/2020................................................................. 5,650,000 6,334,384
Multi-Family Housing Revenue Refunding (Churchill Apartments Project)
7.05%, 10/1/2022 (Insured; FHA)................................................... 4,000,000 4,350,640
MFMR (Seward Towers Project) 7.375%, 12/20/2030 (Collateralized; GNMA)................ 2,350,000 2,592,661
Sales Tax Refunding 6.25%, 4/1/2012................................................... 1,700,000 1,868,181
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993(UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS-97.8% AMOUNT VALUE
------------ ------------
<S> <C> <C>
MINNESOTA (CONTINUED)
Minneapolis Community Development Agency, Ltd. Tax Support Development Revenue:
8.375%, 6/1/2007...................................................................... $ 2,500,000 $ 2,832,825
8%, 12/1/2009......................................................................... 300,000 324,771
7.75%, 12/1/2019...................................................................... 2,965,000 3,344,668
7.40%, 12/1/2021...................................................................... 2,000,000 2,260,060
Minneapolis-Saint Paul Housing Finance Board, SFMR:
8.875%, 11/1/2018 (Collateralized; GNMA).............................................. 220,000 238,531
8.30%, 8/1/2021 (Collateralized; GNMA)................................................ 490,000 529,509
7.30%, 8/1/2031 (Collateralized; GNMA)................................................ 7,025,000 7,669,403
Minneapolis-Saint Paul Housing and Redevelopment Authority, Health Care Systems Revenue:
8%, 8/15/2014......................................................................... 3,000,000 3,517,590
(Group Health Plan Inc., Project) 6.75%, 12/1/2013.................................... 2,750,000 3,035,037
Minneapolis-Saint Paul Metropolitan Apartments Community, 7.80%, 1/1/2014................. 3,000,000 3,478,530
Minnesota Agricultural and Economic Development Board,
Minnesota Small Business Development Loan Revenue:
9%, Series B, 8/1/2008............................................................ 75,000 82,801
9%, Series C, 8/1/2008............................................................ 245,000 270,485
8.125%, Lot 1, 8/1/2009........................................................... 765,000 839,297
8.125%, Lot 2, 8/1/2009........................................................... 500,000 548,560
8.125%, Lot 3, 8/1/2009........................................................... 815,000 894,153
8.20%, 8/1/2009................................................................... 655,000 724,358
8.375%, 8/1/2010.................................................................. 1,385,000 1,521,035
Minnesota Higher Education Facilities Authority, Mortgage Revenue (University Saint Thomas)
7.125%, 9/1/2014...................................................................... 2,095,000 2,383,167
Minnesota Housing Finance Agency:
Housing Development 6.90%, 8/1/2012................................................... 3,000,000 3,244,800
Rental Housing 6.10%, 8/1/2009........................................................ 2,585,000 2,641,069
Residential Mortgage Revenue 10%, 7/1/2016............................................ 195,000 205,138
Single Family Mortgage:
7.35%, 7/1/2016................................................................... 1,930,000 2,093,181
7.30%, 1/1/2017................................................................... 1,245,000 1,338,250
7.90%, 7/1/2019................................................................... 1,745,000 1,912,782
7.45%, 7/1/2022................................................................... 2,920,000 3,224,147
7.95%, 7/1/2022................................................................... 2,420,000 2,641,527
6.15%, 1/1/2026................................................................... 2,000,000 2,070,580
8%, 7/1/2029...................................................................... 210,000 227,793
State Assisted Home Improvement 7.30%, 8/1/2006....................................... 1,445,000 1,548,245
Minnesota Public Facilities Authority, Water Pollution Control Revenue:
7.10%, 3/1/2012....................................................................... 2,350,000 2,690,303
6.95%, 3/1/2013....................................................................... 3,000,000 3,455,820
Northern Municipal Power Agency, Electric System Revenue Refunding 7.25%, 1/1/2016........ 3,500,000 3,932,775
City of Red Wing, Health Care Facilities Refunding Revenue (River Region Obligation Group)
6.50%, 9/1/2022....................................................................... 3,445,000 3,681,706
City of Rochester, Health Care Facilities Revenue (Mayo Foundation/Mayo Medical Center)
9.12%, 11/15/2014 (a)................................................................. 3,000,000 3,537,480
Saint Cloud, Hospital Facilities Revenue (Saint Cloud Hospital) 7%, 7/1/2020
(Insured; AMBAC)...................................................................... 1,000,000 1,150,820
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993(UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
<S> <C> <C>
MINNESOTA (CONTINUED)
Saint Louis Park, Health Care Facilities Revenue (Health Systems Obligated Group)
5.20%, 7/1/2023 (Insured; AMBAC)...................................................... $ 2,500,000 $ 2,473,675
Saint Paul Housing and Redevelopment Authority:
HR (Saint Paul Ramsey Medical Center Project) 5.50%, 5/15/2013 (Insured; AMBAC)....... 2,000,000 2,048,020
SFMR Refunding 6.90%, 12/1/2021....................................................... 3,000,000 3,247,890
Saint Paul Port Authority:
First Lien Tax Increment Refunding (Energy Park Project) 5%, 2/1/2008
(Insured; AGIC)................................................................... 5,495,000 5,333,942
IDR Refunding (Hampden Building Project) 9.25%, 6/1/2011.............................. 1,065,000 1,137,164
Sartell, PCR Refunding (Champion International Corp. Project) 6.95%, 10/1/2012............ 5,000,000 5,512,000
Seaway Port Authority of Duluth,
Industrial Development Dock and Wharf Revenues Refunding (Cargill Inc. Project)
6.80%, 5/1/2012....................................................................... 3,000,000 3,280,560
Southern Minnesota Municipal Power Agency, Power Supply System Revenue
7.997%, 1/1/2018 (a,b)................................................................ 4,400,000 4,609,000
U.S. RELATED-5.6%
Commonwealth of Puerto Rico, Public Improvement Refunding 8.516%, 7/1/2018 (a,b).......... 2,000,000 2,220,000
Puerto Rico Electric Power Authority, Power Revenue 6.25%, 7/1/2017....................... 2,250,000 2,463,412
Puerto Rico Highway and Transportation Authority, Highway Revenue 7.692%, 7/1/2010 (a).... 3,450,000 3,553,500
Puerto Rico Public Buildings Authority Revenue,
6.60%, 7/1/2004 (Guaranteed; Commonwealth of Puerto Rico)............................. 1,485,000 1,734,807
------------
TOTAL MUNICIPAL BONDS
(cost $157,994,537)................................................................... $173,019,058
============
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM MUNICIPAL INVESTMENTS-2.2%
<S> <C> <C>
MINNESOTA:
Cloquet, PCR, VRDN (Potlatch Corp. Project) 2.35% (LOC; Mitsubishi Bank)(c,d)............. $ 2,900,000 $ 2,900,000
Golden Valley IDR Refunding, VRDN (Graco Inc. Project) 2.75% (LOC; Fuji Bank)(c,d)........ 1,000,000 1,000,000
------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $3,900,000)..................................................................... $ 3,900,000
============
TOTAL INVESTMENTS-100.0%
(cost $161,894,537)................................................................... $176,919,058
============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <S> <S> <S>
AGIC Asset Guaranty Insurance Company LOC Letter of Credit
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Insurance Association
FGIC Financial Guaranty Insurance Corporation MFMR Multi-Family Mortgage Revenue
FHA Federal Housing Administration PCR Pollution Control Revenue
GNMA Government National Mortgage Association SFMR Single Family Mortgage Revenue
HR Hospital Revenue VRDN Variable Rate Demand Notes
IDR Industrial Development Revenue
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- ------- ----------------- -------------------
AAA Aaa AAA 37.2%
AA Aa AA 23.4
A A A 25.3
BBB Baa BBB 10.1
F1 MIG1 SP1 .6
Not Rated Not Rated Not Rated 3.4
------
100.0%
======
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, 1993, these securities amounted to $6,829,000 or 3.8% of net
assets.
(c) Secured by letters of credit.
(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 October 31, 1993, the Series had $50,120,404 (28.1% of net assets)
invested in securities whose payment of principal and interest is dependent
upon revenues generated from housing projects.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1993 (UNAUDITED)
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $161,894,537)-see statement................................................. $176,919,058
Cash.................................................................................. 1,149,787
Interest receivable................................................................... 3,272,442
Receivable for shares of Beneficial Interest subscribed............................... 798,096
Prepaid expenses...................................................................... 19,803
------------
182,159,186
LIABILITIES:
Due to The Dreyfus Corporation........................................................ $ 110,302
Payable for investment securities purchased........................................... 3,308,482
Payable for shares of Beneficial Interest redeemed.................................... 106,526
Accrued expenses...................................................................... 22,250 3,547,560
----------- ------------
NET ASSETS................................................................................ $178,611,626
============
REPRESENTED BY:
Paid-in capital....................................................................... $162,911,540
Accumulated undistributed net realized gain on investments............................ 675,565
Accumulated net unrealized appreciation on investments-Note 3......................... 15,024,521
------------
NET ASSETS at value....................................................................... $178,611,626
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)........................... 10,339,897
============
Class B Shares
(unlimited number of $.001 par value shares authorized)........................... 953,331
============
NET ASSET VALUE per share:
Class A Shares
($163,514,350 / 10,339,897 shares)................................................ $15.81
======
Class B Shares
($15,097,276 / 953,331 shares).................................................... $15.84
======
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1993 (UNAUDITED)
INVESTMENT INCOME:
INTEREST INCOME....................................................................... $ 5,360,043
EXPENSES:
Management fee-Note 2(a).......................................................... $ 458,221
Shareholder servicing costs-Note 2(c)............................................. 251,739
Distribution fees (Class B shares)-Note 2(b)...................................... 23,384
Professional fees................................................................. 19,052
Prospectus and shareholders' reports.............................................. 17,329
Custodian fees.................................................................... 8,844
Registration fees................................................................. 5,764
Trustees' fees and expenses-Note 2(d)............................................. 698
Miscellaneous..................................................................... 6,085
-----------
791,116
Less-reduction in management fee due to undertakings-Note 2(a).................... 120,932
-----------
TOTAL EXPENSES............................................................ 670,184
------------
INVESTMENT INCOME-NET..................................................... 4,689,859
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3............................................... $ 282,392
Net unrealized appreciation on investments............................................ 5,037,394
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS........................... 5,319,786
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $ 10,009,645
============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED)
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................................. $ 8,296,205 $ 4,689,859
Net realized gain on investments...................................................... 1,075,585 282,392
Net unrealized appreciation on investments for the period............................. 5,892,386 5,037,394
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................... 15,264,176 10,009,645
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares.................................................................... (8,268,796) (4,460,416)
Class B shares.................................................................... (27,409) (229,443)
Net realized gain on investments:
Class A shares.................................................................... (852,977) --
Class B shares.................................................................... -- --
____________ ____________
TOTAL DIVIDENDS............................................................... (9,149,182) (4,689,859)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares.................................................................... 25,401,147 12,276,227
Class B shares.................................................................... 4,621,831 10,407,149
Dividends reinvested:
Class A shares.................................................................... 6,085,409 2,972,825
Class B shares.................................................................... 16,522 151,261
Cost of shares redeemed:
Class A shares.................................................................... (11,616,007) (5,549,298)
Class B shares.................................................................... (8,019) (364,105)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.................. 24,500,883 19,894,059
------------ ------------
TOTAL INCREASE IN NET ASSETS.............................................. 30,615,877 25,213,845
NET ASSETS:
Beginning of period................................................................... 122,781,904 153,397,781
------------ ------------
End of period......................................................................... $153,397,781 $178,611,626
============ ============
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------------------------------------------------------
CLASS A CLASS B
--------------------------- ---------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993 APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED) 1993* (UNAUDITED)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................. 1,693,647 786,271 301,781 664,357
Shares issued for dividends reinvested.................. 406,070 190,363 1,081 9,633
Shares redeemed......................................... (774,416) (355,392) (523) (22,998)
------------ ------------ ------------ ------------
NET INCREASE IN SHARES OUTSTANDING.............. 1,325,301 621,242 302,339 650,992
============ ============ ============ ============
- -----------------------
* From January 15, 1993 (commencement of initial offering) to April 30, 1993.
See independent accountants' review report and notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 15 of the Fund's Prospectus dated February 18, 1994.
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA 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 thirteen series including the Minnesota 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
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, 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.
(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.
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 October 6, 1993 to reduce the
management fee paid by, or reimburse such excess expenses of 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 October 7, 1993
through January 1, 1994, to waive receipt of the management fee payable to it
by the Series in excess of an annual rate of .45 of 1% of the Series' average
daily net assets. The reduction in management fee, pursuant to the
undertakings, amounted to $120,932 for the six months ended October 31, 1993.
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 $27,963 during the six months ended October 31,
1993 from commissions earned on sales of the Series' Class A shares.
The Distributor retained $1,066 during the six months ended October 31,
1993 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 six months ended October 31, 1993, $23,384 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 six months ended October 31, 1993, $196,590 and $11,692 were
charged to the Class A and Class B shares, respectively, pursuant to the
Shareholder Services Plan.
(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.
NOTE 3-SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $40,713,896 and $17,796,523,
respectively, for the six months ended October 31, 1993, and consisted
entirely of municipal bonds and short-term municipal investments.
At October 31, 1993, accumulated net unrealized appreciation on
investments was $15,024,521, consisting of $15,106,724 gross unrealized
appreciation and $82,203 gross unrealized depreciation.
At October 31, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF INVESTMENTS OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--100.0% AMOUNT VALUE
------------ ------------
<S> <C> <C>
- -------------------------------------------------------------------------------------
NORTH CAROLINA--73.4%
Anson County 6.20%, 4/1/2010 (Insured; MBIA)......................................... $ 300,000 $ 325,650
Asheville, COP, Refunding 6.50%, 2/1/2008............................................ 500,000 543,330
Board of Governors of the University of North Carolina, Revenue
(University of North Carolina Hospitals - Chapel Hill) 6%, 2/15/2024............... 3,000,000 3,203,940
Buncombe County Metropolitan Sewage District, Sewage System Revenue:
6.75%., 7/1/2022................................................................... 500,000 584,000
Refunding 5.50%, 7/1/2022 (Insured; FGIC).......................................... 1,125,000 1,151,190
Charlotte, COP (Convention Facility Project):
6.75%, 12/1/2021 (Insured; AMBAC).................................................. 1,000,000 1,168,760
Refunding 5.25%, 12/1/2020 (Insured; AMBAC)........................................ 5,490,000 5,388,490
Charlotte-Mecklenberg Hospital Authority, Health Care System Revenue:
5.75%, 1/1/2012.................................................................... 1,285,000 1,329,898
6.25%, 1/1/2020.................................................................... 500,000 538,150
6%, 1/1/2022....................................................................... 500,000 525,595
Clemmons County, Sanitary Sewer 6.60%, 2/1/2008...................................... 175,000 194,859
Cleveland County, Sanitary District, Water 6.75%, 3/1/2015 (Insured; FGIC)........... 290,000 328,895
Coastal Regional Solid Waste Management Authority, Solid Waste Disposal System
Revenue
6.50%, 6/1/2008.................................................................... 1,000,000 1,088,840
Craven County Industrial Facilities and Pollution Control Financing Authority, PCR,
Refunding (Weyerhaeuser Co. Project) 6.35%, 1/1/2010............................... 2,000,000 2,158,900
Craven Regional Medical Authority, Health Care Facilities Revenue, Refunding
5.625%, 10/1/2017 (Insured; MBIA).................................................. 1,000,000 1,029,290
Cumberland County, Hospital Facilities Revenue (Cumberland County Hospital System)
6%, 10/1/2021 (Insured; MBIA)...................................................... 450,000 471,029
Dare County, COP 6.60%, 5/1/2006 (Insured; MBIA)..................................... 400,000 455,440
Durham County, COP (Jail Facilities and Computer Equipment Project) 6.625%,
5/1/2014............................................................................. 850,000 920,006
Fayetteville Public Works Commission, Revenue, Refunding
6.50%, 3/1/2014 (Insured; FGIC).................................................... 350,000 383,509
Forsyth County, COP (1991 Allied Health Technologies Building Project) 6.50%,
6/1/2012............................................................................. 300,000 324,501
Greensboro, COP (1991 Greensboro Coliseum Arena Expansion Project) 6.25%,
12/1/2011............................................................................ 500,000 535,100
Haywood County, Industrial Facilities and PCR, Refunding
(Champion International Corp. Project) 6.85%, 5/1/2014............................. 500,000 540,500
Martin County Industrial Facilities and Pollution Control Financing Authority,
Revenue
(Solid Waste Disposal - Weyerhaeuser Project) 7.25%, 9/1/2014...................... 400,000 459,940
North Carolina Eastern Municipal Power Agency, Power System Revenue, Refunding:
5.875%, 1/1/2013................................................................... 2,000,000 2,045,020
6.00%, 1/1/2013.................................................................... 2,500,000 2,575,675
6.50%, 1/1/2017.................................................................... 1,000,000 1,077,810
North Carolina Educational Facilities Finance Agency, Revenue:
(Duke University Project) 6.75%, 10/1/2021......................................... 500,000 548,205
Refunding (Elon College Project) 6.375%, 1/1/2007 (Insured; Connie Lee)............ 830,000 916,884
North Carolina Housing Finance Agency:
Multi-Family Revenue:
5.90%, 7/1/2026.................................................................. 1,250,000 1,292,250
Refunding 6.90%, 7/1/2024 (Insured: FHA)......................................... 500,000 535,845
Single Family Revenue 7.05%, 9/1/2020.............................................. 1,500,000 1,623,405
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
NORTH CAROLINA (CONTINUED)
<S> <C> <C>
North Carolina Medical Care Commission, HR:
(Annie Penn Memorial Hospital Project) 7.50%, 8/15/2021............................ $ 4,500,000 $ 5,157,945
(Carolina Medicorp. Project) 6%, 5/1/2021.......................................... 2,250,000 2,359,215
(Duke University Hospital Project) 7%, 6/1/2021.................................... 3,000,000 3,546,090
(Presbyterian Hospital Project) 7.375%, 10/1/2020.................................. 250,000 300,485
Refunding:
(Carolina Medicorp. Project) 5.50%, 5/1/2015..................................... 500,000 506,760
(Memorial Mission Hospital Project) 5.50%, 10/1/2011 (Insured; MBIA)............. 1,000,000 1,021,000
(Mercy Hospital Project) 6.50%, 8/1/2015......................................... 1,000,000 1,069,190
(North Carolina Baptist Hospitals Project) 6%, 6/1/2022.......................... 1,000,000 1,062,770
(Presbyterian Health Services Project) 5.50%, 10/1/2020.......................... 2,400,000 2,420,760
(Southeastern General Hospital Project) Zero Coupon, 6/1/2006 (Insured; FSA)..... 1,000,000 529,820
(Wilson Memorial Hospital Project) 6.50%, 11/1/2020 (Insured; AMBAC)............. 500,000 547,825
(Rex Hospital Project) 6.25%, 6/1/2017............................................. 2,000,000 2,161,040
North Carolina Municipal Power Agency, Number 1 Catawba Electric Revenue:
7%, 1/1/1996....................................................................... 200,000 216,182
5.00%, 1/1/2015.................................................................... 1,000,000 959,550
5.75%, 1/1/2015.................................................................... 6,250,000 6,378,813
5.75%, 1/1/2020 (Insured; MBIA).................................................... 2,500,000 2,573,350
Piedmont Triad Airport Authority, Airport Revenue, Refunding
6.75%, 7/1/2010 (Insured; MBIA).................................................... 350,000 392,357
Pitt County, Revenue (Pitt County Memorial Hospital) 6.90%, 12/1/2021................ 540,000 606,317
Randolph County 6.50%, 4/1/2007...................................................... 350,000 390,288
Surry County Northern Hospital District, Health Care Facilities Revenue, Refunding
7.875%, 10/1/2021.................................................................. 1,000,000 1,160,030
Union County, Water and Sewer 6.50%, 4/1/2010........................................ 100,000 110,192
Vance County 6.70%, 2/1/2010 (Insured; AMBAC)........................................ 50,000 56,565
Wake County, Hospital System Revenue, Refunding:
Zero Coupon, 10/1/2010 (Insured; MBIA)............................................. 2,200,000 901,802
5.125%, 10/1/2026 (Insured; MBIA).................................................. 3,250,000 3,146,975
Wake County Industrial Facilities and Pollution Control Financing Authority, Revenue
(Carolina Power and Light) 6.90%, 4/1/2009......................................... 2,000,000 2,204,200
- -------------------------------------------------------------------------------------
U.S. RELATED--26.6%
Guam Airport Authority, Revenue 6.70%, 10/1/2023..................................... 2,000,000 2,201,400
Guam Government 5.40%, 11/15/2018.................................................... 2,000,000 1,949,400
Commonwealth of Puerto Rico:
7.70%, 7/1/2020.................................................................... 1,000,000 1,217,790
Public Improvement 6.80%, 7/1/2021................................................. 600,000 713,886
Refunding 5.50%, 7/1/2013.......................................................... 5,000,000 5,059,200
Commonwealth of Puerto Rico Highway and Transportation Authority, Highway Revenue
6.625%, 7/1/2018................................................................... 3,600,000 4,221,036
Puerto Rico Electric Power Authority, Power Revenue 7%, 7/1/2021..................... 450,000 516,825
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
U.S. RELATED (CONTINUED)
<S> <C> <C>
Puerto Rico Ports Authority, Special Facilities Revenue
(American Airlines, Inc. Project) 6.30%, 6/1/2023.................................. $ 1,500,000 $ 1,561,170
Puerto Rico Public Buildings Authority, Guaranteed Public Education and Health
Facilities, Refunding:
6%, 7/1/2012..................................................................... 500,000 516,190
5.75%, 7/1/2015.................................................................. 7,000,000 7,196,490
Virgin Islands Public Finance Authority, Revenue, Refunding, Matching Fund Loan Notes
7.25%, 10/1/2018................................................................... 1,500,000 1,719,870
------------
TOTAL INVESTMENTS
(cost $93,916,654)................................................................. $100,917,684
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation FSA Financial Security Assurance
COP Certificate of Participation HR Hospital Revenue
FGIC Financial Guaranty Insurance Corporation MBIA Municipal Bond Insurance Association
FHA Federal Housing Administration PCR Pollution Control Revenue
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (A) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C> <C> <C>
AAA Aaa AAA 22.1%
AA Aa AA 21.0
A A A 42.7
BBB Baa BBB 12.5
Not Rated Not Rated Not Rated 1.7
--------
100.0%
--------
--------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO STATEMENT OF INVESTMENTS:
(a) Fitch currently provides creditworthiness information for a limited amount
of investments.
(b) At October 31, 1993, the Series had $34,888,175 (35.3% of net assets)
invested in securities whose payment of principal and interest is dependent
upon revenues generated from health care projects.
See independent accountants' review report and notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $93,916,654)--see statement..................................................... $100,917,684
Interest receivable..................................................................... 1,683,345
Receivable for shares of Beneficial Interest subscribed................................. 493,850
Prepaid expenses........................................................................ 19,113
------------
103,113,992
LIABILITIES:
Due to The Dreyfus Corporation.......................................................... $ 35,246
Due to Custodian........................................................................ 1,528,880
Payable for investment securities purchased............................................. 2,420,628
Payable for shares of Beneficial Interest redeemed...................................... 147,781
Accrued expenses........................................................................ 16,708 4,149,243
---------- ------------
NET ASSETS................................................................................ $ 98,964,749
------------
------------
REPRESENTED BY:
Paid-in capital......................................................................... $ 92,190,206
Accumulated net realized (loss) on investments.......................................... (226,487)
Accumulated net unrealized appreciation on investments--Note 3.......................... 7,001,030
------------
NET ASSETS at value....................................................................... $ 98,964,749
------------
------------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............................... 4,624,818
------------
------------
Class B Shares
(unlimited number of $.001 par value shares authorized)............................... 2,453,574
------------
------------
NET ASSET VALUE per share:
Class A Shares
($64,677,725 / 4,624,818 shares)...................................................... $13.98
------
------
Class B Shares
($34,287,024 / 2,453,574 shares)...................................................... $13.97
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................................... $ 2,515,235
EXPENSES:
Management fee--Note 2(a)............................................................. $ 239,992
Shareholder servicing costs--Note 2(c)................................................ 138,010
Distribution fees (Class B shares)--Note 2(b)......................................... 65,047
Professional fees..................................................................... 9,981
Prospectus and shareholders' reports.................................................. 8,821
Registration fees..................................................................... 8,057
Organization expenses................................................................. 2,600
Trustees' fees and expenses--Note 2(d)................................................ 364
----------
472,872
Less--expense reimbursement from Manager due to
undertaking--Note 2(a).............................................................. 239,992
----------
TOTAL EXPENSES.................................................................... 232,880
------------
INVESTMENT INCOME--NET............................................................ 2,282,355
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments--Note 3.............................................. $ (224,658)
Net unrealized appreciation on investments.............................................. 3,874,903
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................................... 3,650,245
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $ 5,932,600
------------
------------
</TABLE>
See independent accountants' review report and notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED)
------------ ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................................ $ 2,443,117 $ 2,282,355
Net realized gain (loss) on investments........................................... 10,197 (224,658)
Net unrealized appreciation on investments for the period......................... 3,030,017 3,874,903
------------ ----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................... 5,483,331 5,932,600
------------ ----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares.................................................................. (2,372,476) (1,662,740)
Class B shares.................................................................. (70,641) (619,615)
Net realized gain on investments:
Class A shares.................................................................. (37,739) --
Class B shares.................................................................. -- --
------------ ----------------
TOTAL DIVIDENDS............................................................... (2,480,856) (2,282,355)
------------ ----------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares.................................................................. 32,335,443 9,026,996
Class B shares.................................................................. 13,061,498 19,984,028
Dividends reinvested:
Class A shares.................................................................. 1,256,832 863,452
Class B shares.................................................................. 42,120 384,257
Cost of shares redeemed:
Class A shares.................................................................. (6,651,984) (4,088,790)
Class B shares.................................................................. (5,217) (284,000)
------------ ----------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.................. 40,038,692 25,885,943
------------ ----------------
TOTAL INCREASE IN NET ASSETS................................................ 43,041,167 29,536,188
NET ASSETS:
Beginning of period............................................................... 26,387,394 69,428,561
------------ ----------------
End of period..................................................................... $69,428,561 $ 98,964,749
------------ ----------------
------------ ----------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------------------------------------------------
CLASS A CLASS B
-------------------------------- --------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993 APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED) 1993* (UNAUDITED)
---------- ---------------- ---------- ----------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold...................................... 2,489,831 658,813 979,159 1,464,333
Shares issued for dividends reinvested........... 96,623 62,733 3,152 27,863
Shares redeemed.................................. (515,382) (297,708) (388) (20,545)
---------- ---------------- ---------- ----------------
NET INCREASE IN SHARES OUTSTANDING........... 2,071,072 423,838 981,923 1,471,651
---------- ---------------- ---------- ----------------
---------- ---------------- ---------- ----------------
</TABLE>
- ---------------
* From January 15, 1993 (commencement of initial offering) to April 30, 1993.
See independent accountants' review report and notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Reference is made to page 16 of the Fund's Prospectus dated February 18, 1994.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA 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 thirteen
series including the North Carolina 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 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, 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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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. The Manager has
undertaken from May 1, 1993, until such time as the net assets of the Series
exceed $100 Million, to waive receipt of the management fee payable to it by the
Series. The expense reimbursement, pursuant to the undertaking, amounted to
$239,992 for the six months ended October 31, 1993.
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 $22,934 during the six months ended October 31,
1993 from commissions earned on sales of the Series' Class A shares.
The Distributor retained $5,257 during the six months ended October 31,
1993 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 six months ended October 31, 1993, $65,047 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 six months ended October 31, 1993, $76,564 and $32,524 were
charged to the Class A and Class B shares, respectively, pursuant to the
Shareholder Services Plan.
(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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $41,143,651 and $9,781,400,
respectively, for the six months ended October 31, 1993, and consisted entirely
of municipal bonds and short-term municipal investments.
At October 31, 1993, accumulated net unrealized appreciation on investments
was $7,001,030, consisting of $7,031,672 gross unrealized appreciation and
$30,642 gross unrealized depreciation.
At October 31, 1993, 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).
<PAGE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS-99.3% AMOUNT VALUE
------------ ------------
<S> <C> <C>
OHIO-89.6%
Akron Bath Copley Joint Township Hospital District, Revenue:
(Akron Children's Hospital Medical Center) 7.70%, 11/15/2005............... $ 500,000 $ 565,985
(Akron City Hospital Project) 8.875%, 11/15/2007........................... 500,000 602,450
(Summa Health Systems) 5.75%, 11/15/2008................................... 5,000,000 5,108,850
Akron-Wilbeth Housing Development Corp., First Mortgage Revenue
7.90%, 8/1/2003 (Insured; FHA)............................................. 1,805,000 2,240,980
Allen County, Industrial First Mortgage Revenue Refunding
6.75%, 11/15/2008 (Guaranteed; Kmart Corp.)................................ 1,280,000 1,400,589
City of Barberton, Hospital Facilities Revenue (The Barberton Citizens
Hospital Co. Project) 7.25%, 1/1/2012...................................... 2,400,000 2,724,432
Berea:
7.50%, 12/1/2005........................................................... 425,000 503,710
7.55%, 12/1/2006........................................................... 455,000 540,472
7.55%, 12/1/2007........................................................... 320,000 380,112
Butler County, Hospital Facilities Revenue Refunding and Improvement
(Fort Hamilton Hughes Hospital) 7.25%, 1/1/2001............................ 4,000,000 4,326,560
City of Cambridge, HR Refunding (Guernsey Memorial Hospital Project)
8%, 12/1/2006.............................................................. 2,000,000 2,317,420
Canton 7.875%, 12/1/2008 1,000,000 1,195,090
Clermont County, Hospital Facilities Revenue Refunding (Mercy Health Systems)
7.50%, 9/1/2019 (Insured; AMBAC)........................................... 1,000,000 1,169,570
City of Cleveland:
6.75%, 7/1/2004 (Insured; MBIA)............................................ 1,500,000 1,724,715
COP (Motor Vehicle Motorized and Communication Equipment) 7.10%, 7/1/2002.. 2,000,000 2,132,380
Parking Facility Improvement Revenue 8%, 9/15/2012......................... 5,000,000 5,625,000
Public Power System Revenue (First Mortgage Improvement):
7%, Series A, 11/15/2017............................................... 1,125,000 1,223,246
7%, Series B, 11/15/2017............................................... 8,675,000 9,432,588
Waterworks Improvement First Mortgage Revenue:
6.50%, 1/1/2011 (Insured; AMBAC)....................................... 2,000,000 2,217,200
6.25%, 1/1/2015 (Insured; AMBAC)....................................... 3,000,000 3,255,090
7.875%, 1/1/2016....................................................... 650,000 741,409
Cleveland City School District:
8%, 12/1/2001.............................................................. 1,675,000 2,004,590
5.875%, 12/1/2011 (Insured; FGIC).......................................... 1,000,000 1,058,000
Cleveland State University, General Receipts 5.375%, 6/1/2008 (Insured; AMBAC). 2,000,000 2,079,540
City of Columbus, Sewer Systems Revenue Refunding 6.25%, 6/1/2008.............. 1,750,000 1,912,452
Columbus City School District, School Building Renovation and Improvement
6.65%, 12/1/2012 (Insured; FGIC)........................................... 2,250,000 2,659,770
Cuyahoga County:
Health Care Facilities Revenue (Judson Retirement Community)
8.875%, 11/15/2019..................................................... 3,500,000 4,045,685
HR:
(Fairview General Hospital) 7.375%, 8/1/2019........................... 4,000,000 4,478,560
(Meridia Health Systems) 7%, 8/15/2023................................. 1,750,000 1,957,445
Refunding:
(Deaconess Hospital) 7.45%, 10/1/2018.............................. 5,000,000 5,770,850
(Meridia Health Systems) 7.25%, 8/15/2019.......................... 4,715,000 5,310,929
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
OHIO (CONTINUED)
Cuyahoga County (continued):
Jail Facilities 7%, 10/1/2013.............................................. $ 6,125,000 $ 7,321,641
Refunding:
(Cleveland Clinic Foundation) 8%, 12/1/2015............................ 1,000,000 1,149,100
(Mount Sinai Medical Center) 8.125%, 11/15/2014........................ 1,000,000 1,144,140
Eaton, IDR Refunding (Baxter International Inc. Project) 6.50%, 12/1/2012...... 1,500,000 1,606,455
Erie County, Hospital Improvement Revenue Refunding
(Firelands Community Hospital) 8.875%, 1/1/2015............................ 700,000 813,876
Euclid City School District 7.10%, 12/1/2011................................... 1,000,000 1,176,580
Village of Evendale, IDR Refunding (Ashland Oil, Inc. Project) 6.90%, 11/1/2010 2,000,000 2,195,480
Fairlawn, Health Care Facilities Revenue (Village at Saint Edward Project)
8.75%, 10/1/2019........................................................... 2,420,000 2,685,474
Franklin County:
6.375%, 12/1/2012.......................................................... 1,635,000 1,889,030
Hospital Facilities Revenue Refunding Improvement (Doctors Hospital Project)
5.875%, 12/1/2013 2,750,000 2,815,615
Hospital Improvement Revenue (The Children's Hospital Project)
6.60%, 11/1/2011....................................................... 1,500,000 1,668,495
HR:
(Holy Cross Health Systems Corp.-Mount Carmel Health) 6.75%, 6/1/2019.. 2,500,000 2,786,600
Refunding Improvement:
(The Children's Hospital Project) 6.60%, 5/1/2013.................. 4,000,000 4,379,240
(Riverside United Hospital) 7.60%, 5/15/2020....................... 5,300,000 6,379,875
(Worthington Christian Village Congregate Care Project):
10.25%, 8/1/2015............................................... 895,000 984,598
7.80%, 2/1/2017 (Insured; FHA)................................. 5,690,000 6,489,673
Refunding 5.375%, 12/1/2020................................................ 2,000,000 2,062,120
Gallia County, Local School District 7.375%, 12/1/2004......................... 570,000 694,237
Greater Cleveland Gateway Economic Development Corp
Senior Lien Excise Tax Revenue 6.875%, 9/1/2005 (Insured; FSA)............. 1,500,000 1,716,570
Stadium Revenue 7.50%, 9/1/2005............................................ 5,675,000 6,593,783
Hamilton County:
Electric Systems Mortgage Revenue Refunding 8%, 10/15/2022 (Insured; FGIC). 750,000 899,842
Hospital Facilities Improvement Revenue Refunding (Deaconess Hospital)
7%, 1/1/2012........................................................... 2,570,000 2,910,705
Hospital Facilities Refunding Revenue (Episcopal Retirement Homes, Inc.)
6.80%, 1/1/2008 (LOC; The Fifth Third Bank) (a)........................ 2,450,000 2,732,779
IDR (Provident Association Partnership) 9%, 12/1/2008 (b).................. 1,405,000 774,506
Mortgage Revenue (Judson Care Center) 7.80%, 8/1/2019 (Insured; FHA)....... 3,970,000 4,610,877
Sewer Systems Improvement Revenue Refunding 6.70%, 12/1/2013............... 2,000,000 2,336,860
Hilliard School District 6.30%, 12/1/2014...................................... 2,000,000 2,168,640
Kirtland Local School District 7.50%, 12/1/2009................................ 760,000 880,323
Knox County, IDR (Weyerhaeuser Co. Project) 9%, 10/1/2007...................... 1,000,000 1,353,600
Lowellville, Sanitary Sewer Systems Revenue (Browning-Ferris Industries Inc.)
7.25%, 6/1/2006............................................................ 1,400,000 1,532,496
Mahoning County, Health Care Facilities Revenue (Youngstown Osteopathic Hospital Project)
7.60%, 8/1/2010 (LOC; Marine Midland Bank) (a)............................. 3,775,000 4,274,319
Marion County, Health Care Facility Revenue (United Church Homes Inc.)
8.875%, 12/1/2012.......................................................... 2,305,000 2,608,084
Miami County, Hospital Facilities Revenue Refunding
(Upper Valley Medical Center) 8.375%, 5/1/2013............................. 525,000 599,555
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
OHIO (CONTINUED)
Montgomery County, Refunding:
5.45%, 9/1/2010............................................................ $ 1,000,000 $ 1,031,300
Water Revenue (Greater Moraine-Beaver Creek Sewer District)
5.30%, 11/15/2007 (Insured; AMBAC)..................................... 1,890,000 1,969,966
Muskingum County, Revenue Refunding (Franciscan Health Advisory Services)
7.50%, 3/1/2012............................................................ 3,185,000 3,500,156
Newark 6%, 12/1/2018 (Insured; AMBAC).......................................... 1,000,000 1,089,850
Northeast Regional Sewer District, Wastewater Improvement Revenue
6.50%, 11/15/2016 (Insured; AMBAC)......................................... 2,000,000 2,226,940
State of Ohio:
Economic Development Revenue:
Ohio Enterprise Bond Fund (VSM Corp. Project) 7.375%, 12/1/2011........ 885,000 980,943
(Sponge Inc. Project) 8.375%, 6/1/2014 1,705,000 2,002,727
Mortgage Revenue (Odd Fellows Home Ohio Inc. Project)
8.15%, 8/1/2017 (Insured; FHA)......................................... 350,000 399,672
Ohio Building Authority, Workers' Compensation Facilities (William Green Building)
4.90%, 4/1/2007 4,375,000 4,315,544
PCR (Standard Oil Co. Project)
6.75%, 12/1/2015 (Guaranteed; British Petroleum Co. p.l.c.)............ 1,350,000 1,628,856
Ohio Air Quality Development Authority, Revenue:
Pollution Control:
(Cincinnati Gas and Electric) 10.125%, 12/1/2015....................... 900,000 1,031,238
(Pennsylvania Power Co. Project) 8.10%, 9/1/2018....................... 1,000,000 1,123,450
Refunding:
(Cleveland Electric Illuminating Co. Project) 6.85%, 7/1/2023...... 5,250,000 5,736,202
(Ohio Edison) 7.45%, 3/1/2016 (Insured; FGIC)...................... 3,500,000 4,084,675
Refunding (Ohio Power Co. Project) 7.40%, 8/1/2009......................... 1,500,000 1,678,755
Ohio Building Authority:
State Correctional Facilities 8%, 8/1/2006................................. 400,000 472,216
State Facilities (Columbus State Building Project):
7.35%, 10/1/2005....................................................... 1,795,000 2,086,849
7.75%, 10/1/2008....................................................... 500,000 578,550
Ohio Capital Corp. for Housing, MFHR Refunding
7.60%, 11/1/2023 (Collateralized; FNMA).................................... 1,250,000 1,365,575
Ohio Higher Educational Facility Community, Revenue:
(Case Western Reserve Project) 7.70%, 10/1/2018............................ 500,000 568,805
(Oberlin College) 7.375%, 10/1/2014........................................ 400,000 472,812
Ohio Housing Finance Agency:
Mortgage Revenue (Saint Francis Court Apartment Project)
8%, 10/1/2026 (Insured; FHA)........................................... 695,000 755,340
SFMR (GNMA Mortgage Backed Securities Program):
8.25%, 12/15/2019...................................................... 270,000 283,192
8.125%, 3/1/2020....................................................... 605,000 654,199
Zero Coupon, 9/1/2021.................................................. 21,235,000 2,624,009
7.85%, 9/1/2021........................................................ 2,220,000 2,363,878
7.65%, 3/1/2029........................................................ 6,070,000 6,444,458
7.80%, 3/1/2030........................................................ 4,675,000 5,114,123
Ohio Public Facilities Community, Higher Education Facilities 7.25%, 5/1/2004.. 1,300,000 1,507,480
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
OHIO (CONTINUED)
Ohio Water Development Authority:
Pollution Control Facilities Revenue:
(Cleveland Electric Illuminating Project) 8%, 10/1/2023................ $ 5,800,000 $ 6,613,508
(Ohio Edison) 8.10%, 10/1/2023......................................... 3,700,000 4,253,668
(Pennsylvania Power Co. Project) 8.10%, 9/1/2018....................... 2,000,000 2,257,380
Refunding:
(Ohio Edison) 7.625%, 7/1/2023..................................... 9,390,000 10,560,745
(Toledo Edison Co.):
7.55%, 6/1/2023................................................ 2,000,000 2,253,340
8%, 10/1/2023.................................................. 3,635,000 4,144,845
Pure Water Revenue 7.75%, 6/1/2014......................................... 500,000 574,045
Ottawa County, Sanitary Sewer Systems Special Assessment
(Portage-Catawba Island Sewer Project) 7%, 9/1/2011 (Insured; AMBAC)....... 1,000,000 1,164,600
Reynoldsburg City School District, School Building Construction and Improvement
6.55%, 12/1/2017 (Insured; FGIC)........................................... 2,000,000 2,282,820
Ross County, HR (Medical Center Hospital Project) 7.50%, 12/1/2014............. 2,000,000 2,318,840
Shelby County, Hospital Facilities Revenue Refunding and Improvement
(The Shelby County Memorial Hospital Association) 7.70%, 9/1/2018.......... 2,500,000 2,879,225
South Euclid, Recreation Facilities 7%, 12/1/2011.............................. 2,285,000 2,614,817
Student Loan Funding Corp.:
Student Loan Revenue Refunding 7.20%, 8/1/2003............................. 3,150,000 3,500,784
Student Loan Senior Subordinated Revenue 6.15%, 8/1/2010................... 6,775,000 7,092,883
University of Cincinnati, COP 6.75%, 12/1/2009 (Insured; MBIA)................. 750,000 856,170
University of Ohio:
General Receipts 5.875%, 12/1/2012......................................... 3,000,000 3,171,420
Revenue 7.15%, 12/1/2009................................................... 6,000,000 6,957,240
University of Toledo, General Reciepts 5.75%, 12/1/2012 (Insured; FGIC)........ 2,000,000 2,088,280
Warren 7.75%, 11/1/2010 2,785,000 3,143,235
City of Westerville, Water Systems Refunding and Improvement 6.45%, 12/1/2011.. 2,590,000 2,836,620
City of Westerville School District 6.25%, 12/1/2009........................... 1,610,000 1,806,742
U.S. RELATED-9.7%
Commonwealth of Puerto Rico Aqueduct and Sewer Authority, Revenue 7%, 7/1/2019. 6,675,000 7,430,143
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................... 3,000,000 3,302,100
Puerto Rico Highway and Transportation Authority, Highway Revenue Refunding
7.536%, 7/1/2007 (c)....................................................... 7,750,000 8,079,375
Puerto Rico Public Buildings Authority, Public Education and Health Facilities
Refunding (Guaranteed; Commonwealth of Puerto Rico) 5.70%, 7/1/2009........ 3,430,000 3,579,411
Virgin Islands Public Finance Authority, Revenue Refunding
Matching Fund Loan Notes 7.25%, 10/1/2018.................................. 5,200,000 5,962,216
Virgin Islands Water and Power Authority, Electric Systems Revenue
7.40%, 7/1/2011............................................................ 3,450,000 3,832,709
------------
TOTAL MUNICIPAL BONDS
(cost $293,498,525)........................................................ $328,589,758
============
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
PRINCIPAL
SHORT-TERM MUNICIPAL INVESTMENT--.7% AMOUNT VALUE
------------ ------------
OHIO;
Student Loan Funding Corp., Cincinnati Student Loan Revenue VRDN
2.55% (LOC; Sumitomo Bank) (a,d) (cost $2,200,000)......................... $ 2,200,000 $ 2,200,000
============ ============
TOTAL INVESTMENTS-100.0%
(cost $295,698,525)........................................................ $330,789,758
============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <S> <S> <S>
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>
SUMMARY OF COMBINED RATINGS
FITCH (E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- ------- ----------------- -------------------
AAA Aaa AAA 20.4%
AA Aa AA 9.1
A A A 32.5
BBB Baa BBB 29.9
F1 MIG1 SP1 .7
Not Rated Not Rated Not Rated 7.4
------
100.0%
======
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) Inverse floater 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 October 31, 1993, the Series had $96,509,634 (28.5%) of net assets
invested in securities whose payment of principal and interest is dependent
upon revenues generated from health care projects.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1993 (UNAUDITED)
ASSETS: <C> <C>
<S>
Investments in securities, at value
(cost $295,698,525)-see statement...................................... $330,789,758
Cash....................................................................... 1,355,059
Interest receivable........................................................ 6,164,553
Receivable for shares of Beneficial Interest subscribed.................... 916,763
Prepaid expenses........................................................... 45,625
------------
339,271,758
LIABILITIES:
Due to The Dreyfus Corporation............................................. $ 202,135
Payable for shares of Beneficial Interest redeemed......................... 234,459
Accrued expenses........................................................... 68,023 504,617
------------ ------------
NET ASSETS..................................................................... $338,767,141
============
REPRESENTED BY:
Paid-in capital............................................................ $303,013,161
Accumulated undistributed net realized gain on investments................. 662,747
Accumulated net unrealized appreciation on investments-Note 3.............. 35,091,233
------------
NET ASSETS at value............................................................ $338,767,141
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)................ 23,423,124
============
Class B Shares
(unlimited number of $.001 par value shares authorized)................ 1,610,259
============
NET ASSET VALUE per share:
Class A Shares
($316,964,768 / 23,423,124 shares)..................................... $13.53
======
Class B Shares
($21,802,373 / 1,610,259 shares)....................................... $13.54
======
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1993 (UNAUDITED)
INVESTMENT INCOME:
INTEREST INCOME............................................................ $ 10,327,637
EXPENSES:
Management fee-Note 2(a)............................................... $ 893,710
Shareholder servicing costs-Note 2(c).................................. 485,692
Legal fees............................................................. 67,388
Distribution fees (Class B shares)-Note 2(b)........................... 38,251
Prospectus and shareholders' reports................................... 27,781
Auditing fees.......................................................... 26,186
Custodian fees......................................................... 17,051
Registration fees...................................................... 6,207
Trustees' fees and expenses-Note 2(d).................................. 1,368
Miscellaneous.......................................................... 17,340
------------
1,580,974
Less-reduction in management fee due to
undertakings-Note 2(a)............................................. 253,211
------------
TOTAL EXPENSES................................................. 1,327,763
------------
INVESTMENT INCOME-NET.......................................... 8,999,874
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3.................................... $ 456,526
Net unrealized appreciation on investments................................. 10,297,393
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................ 10,753,919
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $ 19,753,793
============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED)
------------ ------------
<S> <C> <C>
OPERATIONS:
Investment income-net...................................................... $ 16,323,252 $ 8,999,874
Net realized gain on investments........................................... 932,730 456,526
Net unrealized appreciation on investments for the period.................. 16,202,120 10,297,393
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 33,458,102 19,753,793
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares......................................................... (16,274,444) (8,631,936)
Class B shares......................................................... (48,808) (367,938)
Net realized gain on investments:
Class A shares......................................................... (1,587,530) --
Class B shares......................................................... -- --
------------ ------------
TOTAL DIVIDENDS.................................................... (17,910,782) (8,999,874)
------------ ------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares......................................................... 44,655,966 17,977,759
Class B shares......................................................... 8,694,588 12,667,732
Dividends reinvested:
Class A shares......................................................... 11,923,897 5,597,815
Class B shares......................................................... 36,975 272,507
Cost of shares redeemed:
Class A shares......................................................... (19,590,383) (12,448,989)
Class B shares......................................................... (297,015) (99,121)
------------ ------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS....... 45,424,028 23,967,703
------------ ------------
TOTAL INCREASE IN NET ASSETS................................... 60,971,348 34,721,622
NET ASSETS:
Beginning of period........................................................ 243,074,171 304,045,519
------------ ------------
End of period.............................................................. $304,045,519 $338,767,141
============ ============
</TABLE>
<TABLE>
<CAPTION>
SHARES
--------------------------------------------------------------
CLASS A CLASS B
------------------------------ ------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993 APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED) 1993* (UNAUDITED)
------------ ---------------- ------------ ----------------
<S> <S> <S> <S> <S>
CAPITAL SHARE TRANSACTIONS:
Shares sold.................................... 3,501,210 1,348,778 667,842 949,427
Shares issued for dividends reinvested......... 933,913 418,919 2,832 20,339
Shares redeemed................................ (1,536,483) (931,495) (22,776) (7,405)
------------ ------------ ------------ ------------
NET INCREASE IN SHARES OUTSTANDING..... 2,898,640 836,202 647,898 962,361
============ ============ ============ ============
- -----------------------
* From January 15, 1993 (commencement of initial offering) to April 30, 1993.
See independent accountants' review report and notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 17 of the Fund's Prospectus dated February 18, 1994.
PREMIER STATE MUNICIPAL BOND FUND, OHIO 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 thirteen 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
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, 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.
(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.
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 October 6, 1993, 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 October 7, 1993 through January 1, 1994, to waive
receipt of the management fee payable to it by the Series in excess of an
annual rate of .43 of 1% of the Series' average daily net assets. The
reduction in management fee, pursuant to the undertakings, amounted to
$253,211 for the six months ended October 31, 1993.
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 $44,045 during the six months ended October 31,
1993 from commissions earned on sales of the Series' Class A shares.
The Distributor retained $2,387 during the six months ended October 31,
1993 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 six months ended October 31, 1993, $38,251 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 six months ended October 31, 1993, $387,107 and $19,125 were
charged to the Class A and Class B shares, respectively, pursuant to the
Shareholder Services Plan.
(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.
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 3-SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $75,517,960 and $53,632,467,
respectively, for the six months ended October 31, 1993, and consisted
entirely of municipal bonds and short-term municipal investments.
At October 31, 1993, accumulated net unrealized appreciation on
investments was $35,091,233, consisting of $35,793,111 gross unrealized
appreciation and $701,878 gross unrealized depreciation.
At October 31, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--96.8% AMOUNT VALUE
------------ ------------
<S> <C> <C>
- -------------------------------------------------------------------------------------
PENNSYLVANIA--91.9%
Allegheny County, Airport Revenue, Refunding
(Pittsburgh International Airport):
5.60%, 1/1/2007 (Insured; MBIA).................................................. $ 2,430,000 $ 2,536,483
5.75%, 1/1/2008 (Insured; FSA)................................................... 2,005,000 2,092,177
Allegheny County Hospital Development Authority, Revenue, Refunding
(Health Center Presbyterian Hospital) 6%, 11/1/2023................................ 2,000,000 2,129,320
7.797%, 10/1/2020 (a,b)............................................................ 3,000,000 3,067,500
Allegheny County Industrial Development Authority, Revenue:
Commercial Development, Refunding
(Kaufmann Medical Office Building) 6.80%, 3/1/2015 (Insured; FHA)................ 3,500,000 3,939,320
Specialized Enterprise
(Baldwin Health Center) 8.35%, 2/1/2016 (Insured; FHA)........................... 4,780,000 5,359,479
Allegheny County Residential Finance Authority, SFMR:
8.25%, 12/1/2019................................................................... 175,000 189,175
7.40%, 12/1/2022................................................................... 1,945,000 2,147,513
7.95%, 6/1/2023.................................................................... 1,420,000 1,560,197
Allentown:
Guaranteed Sewer Improvement 5.65%, 7/15/2010 (Insured; AMBAC)..................... 645,000 689,028
Refunding 5.65%, 7/15/2010 (Insured; AMBAC)........................................ 1,525,000 1,629,097
Beaver County Industrial Development Authority, PCR, Refunding:
(Ohio Edison Project) 7.75%, 9/1/2024.............................................. 3,150,000 3,580,510
(Pennsylvania Power Company Mansfield Project) 7.15%, 9/1/2021..................... 3,000,000 3,329,880
Berks County Municipal Authority:
Revenue (Phoebe Berks Village Inc. Project) 8.25%, 5/15/2022....................... 2,445,000 2,595,147
HR (Reading Hospital Medical Center Project) 5.50%, 10/1/2008 (Insured; MBIA)...... 3,500,000 3,644,865
Blair County Hospital Authority, Revenue, (Altoona Hospital)
8.79%, 7/1/2013 (Insured; AMBAC) (a)............................................... 5,000,000 6,053,150
Butler County Hospital Authority, Revenue, Refunding:
Health Center (Saint Francis Health Care Project) 6%, 5/1/2008..................... 1,860,000 1,952,089
Hospital (Butler Memorial Hospital) 8%, 7/1/2016................................... 2,000,000 2,240,180
Cambria County Hospital Development Authority, HR, Refunding
(Conemaugh Valley Hospital) 6.375%, 7/1/2018....................................... 3,100,000 3,371,188
Cambria County Industrial Development Authority, RRR
(Cambria Cogeneration Project):
7.75%, 9/1/2019, Series F-1 (LOC; Fuji Bank) (c)................................. 1,750,000 1,901,778
7.75%, 9/1/2019, Series F-2 (LOC; Fuji Bank) (c)................................. 2,750,000 2,988,507
Chester County 5.65%, 12/15/2011..................................................... 3,500,000 3,642,065
Delaware County, Refunding 6%, 11/15/2022............................................ 1,770,000 1,885,510
Delaware County Authority, Revenue (Elwyn Inc. Project) 8.35%, 6/1/2015.............. 4,300,000 5,007,952
Delaware County Industrial Development Authority, PCR
(Philadelphia Electricity Co. Project) 7.375%, 4/1/2021............................ 2,000,000 2,262,900
Erie County Industrial Development Authority, First Mortgage Revenue
(Senior Living Services Inc. Project) 8.625%, 6/1/2019............................. 1,650,000 1,237,500
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
PENNSYLVANIA (CONTINUED)
<S> <C> <C>
Erie Higher Educational Building Authority, College Revenue
(Mercyhurst College Project) 7.85%, 9/15/2019...................................... $ 1,000,000 $ 1,190,930
Greene County General Facilities Authority, LR 7%, 7/1/2011.......................... 3,000,000 3,393,510
Huntingdon 7.50%, 12/1/2017.......................................................... 750,000 807,803
Lancaster County Hospital Authority, Revenue
(Health Center - United Church Homes Project) 9.125%, 10/1/2014.................... 1,500,000 1,686,900
Lancaster County Solid Waste Management Authority,
Resource Recovery System Revenue 8.50%, 12/15/2010................................. 1,145,000 1,285,366
Langhorne Manor Borough Higher Educational and Health Authority, HR:
(Lower Bucks Hospital) 7%, 7/1/2005................................................ 2,375,000 2,600,031
(Woods Schools) 8.75%, 11/15/2014.................................................. 1,000,000 1,267,270
Lehigh County General Purpose Authority, Revenue (Wiley House):
8.75%, 11/1/2014 (LOC; Northeastern Bank of Pennsylvania) (c)...................... 3,785,000 4,108,693
9.50%, 11/1/2016................................................................... 2,000,000 2,295,320
Luzerne County Industrial Development Authority, Exempt Facilities Revenue, Refunding
(Pennsylvania Gas and Water Company Project):
7.20%, 10/1/2017................................................................. 4,500,000 5,079,780
7.125%, 12/1/2022................................................................ 4,000,000 4,497,280
Lycoming County Authority, Hospital Lease Revenue (Divine Providence Sisters)
7.75%, 7/1/2016.................................................................... 2,000,000 2,290,020
Montgomery County Higher Educational and Health Authority, Revenue:
First Mortgage (Montgomery Income Project) 10.50%, 9/1/2020........................ 3,000,000 3,301,890
Hospital Refunding (Bryn Mawr Hospital Project) 7.375%, 12/1/2019.................. 1,870,000 2,113,474
(Northwestern Corporation) 8.375%, 6/1/2009........................................ 2,685,000 2,926,999
Montgomery County Industrial Development Authority,
PCR, Refunding, (Philadelphia Electricity Company) 7.60%, 4/1/2021................. 3,250,000 3,710,687
RRR 7.50%, 1/1/2012 (LOC; Banque Paribas) (c)...................................... 5,000,000 5,574,900
Northampton County Industrial Development Authority, Revenue, Refunding
(Moravian Hall Square Project) 7.45%, 6/1/2014 (LOC; Meridian Bank) (c)............ 1,800,000 1,976,022
Northeastern Hospital Authority, HR:
(Nesbitt Memorial Hospital) 7.50%, 7/1/2007........................................ 1,250,000 1,413,963
(Wilkes - Barre General Hospital) 7.65%, 7/1/2010.................................. 965,000 1,075,483
Pennsylvania 5.25%, 6/15/2012........................................................ 5,000,000 5,004,250
Pennsylvania Convention Center Authority, Revenue 6.70%, 9/1/2016 (Insured; FGIC).... 4,000,000 4,778,120
Pennsylvania Finance Authority, Revenue, Refunding
(Municipal Capital Improvements Program) 6.60%, 11/1/2009.......................... 5,000,000 5,412,950
Pennsylvania Higher Education Assistance Agency, Student Loan Revenue:
7.05%, 10/1/2016 (Insured; AMBAC).................................................. 2,500,000 2,766,600
7.15%, 9/1/2021.................................................................... 3,030,000 3,400,660
Pennsylvania Higher Educational Facilities Authority, Revenue
Refunding (Drexel University) 6.375%, 5/1/2017..................................... 2,300,000 2,405,455
(Thomas Jefferson University):
7.30%, 7/1/2015.................................................................. 1,500,000 1,761,930
6%, 7/1/2019..................................................................... 3,555,000 3,655,713
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
PENNSYLVANIA (CONTINUED)
<S> <C> <C>
Pennsylvania Housing Finance Agency:
9.175%, 4/1/2025 (a)............................................................... $ 3,000,000 $ 3,202,500
Multi-Family Development
8.25%, 12/15/2019................................................................ 1,530,000 1,656,194
Single Family Mortgage:
8.25%, 4/1/2014.................................................................. 500,000 542,125
6.90%, 4/1/2017.................................................................. 2,250,000 2,423,137
8.125%, 10/1/2019................................................................ 450,000 486,468
7.875%, 10/1/2020................................................................ 1,435,000 1,589,822
8.15%, 10/1/2021................................................................. 1,475,000 1,671,057
7.65%, 10/1/2023................................................................. 4,780,000 5,193,757
7%, 4/1/2024..................................................................... 2,000,000 2,164,460
8.15%, 4/1/2024.................................................................. 1,470,000 1,619,102
Pennsylvania Industrial Development Authority, Economic Development Revenue
7%, 1/1/2011....................................................................... 4,000,000 4,453,040
Pennsylvania Infrastructure Investment Authority, Revenue
(Pennvest Pool Loan Program) 6.80%, 9/1/2010....................................... 2,500,000 2,806,375
Pennsylvania University, Refunding:
5.60%, 8/15/2008................................................................... 6,605,000 6,842,648
7%, 7/1/2016....................................................................... 3,000,000 3,572,100
5.50%, 8/15/2016................................................................... 5,930,000 5,982,303
Philadelphia, Revenue:
Gas Works:
6.375%, 7/1/2014................................................................. 4,345,000 4,591,579
7.70%, 6/15/2021................................................................. 2,000,000 2,455,920
Water and Sewer:
7.10%, 4/1/2000.................................................................. 2,000,000 2,131,940
7.35%, 9/1/2004.................................................................. 2,615,000 3,097,677
Water and Wastewater 5.625%, 6/15/2008............................................. 5,000,000 5,140,200
Philadelphia Hospital and Higher Education Facilities Authority:
HR:
(Albert Einstein Medical Center) 7%, 10/1/2021................................... 1,500,000 1,651,140
(Children's Seashore House) 7%, 8/15/2022........................................ 2,355,000 2,587,862
(Graduate Health System Obligation) 7.25%, 7/1/2018.............................. 3,250,000 3,624,465
Revenue:
(Northwestern Corporation) 8.375%, 6/1/2009...................................... 1,885,000 2,040,324
Refunding (Philadelphia MR Project) 5.875%, 8/1/2007............................. 4,620,000 4,722,795
Philadelphia Industrial Development Authority, IDR, Refunding
(Ashland Oil Inc. Project) 5.70%, 6/1/2005......................................... 2,500,000 2,575,500
Philadelphia Municipal Authority, Revenue:
Justice Lease 7.10%, 11/15/2011 (Insured; FGIC).................................... 1,500,000 1,800,915
Lease, Refunding 5.60%, 11/15/2009 (Insured; FGIC)................................. 2,100,000 2,185,869
Pittsburgh School District, Refunding 5.50%, 9/1/2013 (Insured; FGIC)................ 3,000,000 3,068,370
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
------------ ------------
- -------------------------------------------------------------------------------------
PENNSYLVANIA (CONTINUED)
<S> <C> <C>
Pittsburgh Urban Redevelopment Authority:
Mortgage Revenue 7.05%, 4/1/2023................................................... $ 2,750,000 $ 2,921,105
Single Family Mortgage:
7.625%, 12/1/2021................................................................ 610,000 661,252
7.40%, 4/1/2024.................................................................. 1,200,000 1,293,840
Ridley Park Hospital Authority, Revenue (Taylor Hospital) 8.625%, 12/1/2020.......... 3,185,000 4,068,169
Schuylkill County Industrial Development Authority, Refunding
RRR (Schuylkill Energy Resources Inc.) 6.50%, 1/1/2010............................. 4,000,000 4,000,000
First Mortgage Revenue (Valley Health Concerns) 8.75%, 3/1/2012.................... 1,000,000 1,085,010
Scranton - Lackawanna Health and Welfare Authority, Revenue
(University of Scranton Project):
7.25%, 6/15/2005................................................................. 1,310,000 1,548,263
7.50%, 6/15/2006................................................................. 3,400,000 4,080,000
Sewickley Valley Hospital Authority, Revenue
(Allegheny County-Sewickley Valley Hospital Project):
7.50%, 10/1/2014................................................................. 850,000 963,365
7.375%, 10/1/2016................................................................ 1,500,000 1,690,605
Washington County Industrial Development Authority, Revenue, Refunding
(Presbyterian Medical Center) 6.75%, 1/15/2023 (Insured; FHA)...................... 2,000,000 2,203,320
West Donegal Township Authority, Sewer Revenue 8.15%, 11/15/2017..................... 450,000 522,913
York County Hospital Authority, Revenue
(Health Center - Village at Sprenkle Drive) 7.75%, 4/1/2022........................ 1,205,000 1,323,066
- -------------------------------------------------------------------------------------
U.S. RELATED--4.9%
Guam Airport Authority, Revenue 6.70%, 10/1/2023..................................... 4,500,000 4,953,150
Guam Government 5.375%, 11/15/2013................................................... 4,000,000 3,936,040
Puerto Rico Highway and Transportation Authority,
Highway Revenue 7.392%, 7/1/2016 (a)............................................... 5,000,000 5,187,500
------------
TOTAL MUNICIPAL BONDS (cost $253,346,309)............................................ $279,131,751
------------
------------
- -------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL INVESTMENTS--3.2%
Pennsylvania:
Pennsylvania Higher Educational Assistance Agency, Student Loan Revenue,
VRDN (Student Loan Marketing Association) 2.40% (d)................................ $ 4,500,000 $ 4,500,000
Pennsylvania Higher Educational Facilities Authority,
College and University Revenue, VRDN (Temple University)
2.70% (LOC; Morgan Guaranty Trust Company) (c,d)................................... 3,700,000 3,700,000
Schuylkill Industrial Development Authority, RRR, VRDN
(Northeastern Power Co. Project) 2.70% (LOC; Sumitomo Bank) (c,d).................. 1,000,000 1,000,000
------------
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $9,200,000)............................. $ 9,200,000
------------
------------
TOTAL INVESTMENTS--100.0% (cost $262,546,309)........................................ $288,331,751
------------
------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
FGIC Financial Guaranty Insurance Corporation MBIA Municipal Bond Insurance Association
FHA Federal Housing Administration PCR Pollution Control Revenue
FSA Financial Security Assurance RRR Resources Recovery Revenue
HR Hospital Revenue SFMR Single Family Mortgage Revenue
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
LR Lease Revenue
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (E) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C> <C> <C>
AAA Aaa AAA 19.1%
AA Aa AA 19.4
A A A 20.0
BBB Baa BBB 27.0
F1 MIG1 SP1 1.3
F1 P1 A1 1.9
Not Rated Not Rated Not Rated 11.3
--------
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,
1993, these securities amounted to $3,067,500 or 1.1% of net assets.
(c) Secured by letters of credit.
(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 October 31, 1993, the Series had $83,229,960 (28.7% of net assets)
invested in securities whose payment of principal and interest is dependent
upon revenue generated from health care projects.
See independant accountants' review report and notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $262,546,309)--see statement.................................................... $288,331,751
Interest receivable..................................................................... 4,906,771
Receivable for shares of Beneficial Interest subscribed................................. 964,723
Prepaid expenses........................................................................ 46,265
------------
294,249,510
LIABILITIES:
Due to The Dreyfus Corporation.......................................................... $ 183,127
Payable for investment securities purchased............................................. 4,000,000
Payable for shares of Beneficial Interest redeemed...................................... 197,087
Accrued expenses and other liabilities.................................................. 235,664 4,615,878
---------- ------------
NET ASSETS................................................................................ $289,633,632
------------
------------
REPRESENTED BY:
Paid-in capital......................................................................... $263,263,081
Accumulated undistributed net realized gain on investments.............................. 585,109
Accumulated net unrealized appreciation on investments--Note 3.......................... 25,785,442
------------
NET ASSETS at value....................................................................... $289,633,632
------------
------------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............................... 14,343,183
------------
------------
Class B Shares
(unlimited number of $.001 par value shares authorized)............................... 2,469,003
------------
------------
NET ASSET VALUE per share:
Class A Shares
($247,108,078 / 14,343,183 shares).................................................... $17.23
------
------
Class B Shares
($42,525,554 / 2,469,003 shares)...................................................... $17.22
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................................... $ 8,527,118
EXPENSES:
Management fee--Note 2(a)............................................................. $ 730,373
Shareholder servicing costs--Note 2(c)................................................ 403,073
Distribution fees (Class B shares)--Note 2(b)......................................... 72,513
Professional fees..................................................................... 29,966
Prospectus and shareholders' reports.................................................. 23,353
Custodian fees........................................................................ 14,103
Registration fees..................................................................... 13,328
Trustees' fees and expenses--Note 2(d)................................................ 1,116
Miscellaneous......................................................................... 3,191
----------
1,291,016
Less--reduction in management fee due to
undertakings--Note 2(a)............................................................. 206,849
----------
TOTAL EXPENSES.................................................................... 1,084,167
------------
INVESTMENT INCOME--NET............................................................ 7,442,951
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3................................................ $ 85,146
Net unrealized appreciation on investments.............................................. 9,396,024
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................................... 9,481,170
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $ 16,924,121
------------
------------
</TABLE>
See independent accountants' review report and notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED)
------------ ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................................ $11,847,846 $ 7,442,951
Net realized gain on investments.................................................. 595,471 85,146
Net unrealized appreciation on investments for the period......................... 10,916,698 9,396,024
------------ ----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................... 23,360,015 16,924,121
------------ ----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares.................................................................. (11,767,382) (6,716,781)
Class B shares.................................................................. (80,464) (726,170)
Net realized gain on investments:
Class A shares.................................................................. (1,308,117) --
Class B shares.................................................................. -- --
------------ ----------------
TOTAL DIVIDENDS............................................................... (13,155,963) (7,442,951)
------------ ----------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares.................................................................. 61,710,489 22,956,958
Class B shares.................................................................. 14,569,844 26,788,379
Dividends reinvested:
Class A shares.................................................................. 6,496,038 3,326,034
Class B shares.................................................................. 47,658 431,659
Cost of shares redeemed:
Class A shares.................................................................. (15,870,806) (8,623,007)
Class B shares.................................................................. (42,861) (278,508)
------------ ----------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.................. 66,910,362 44,601,515
------------ ----------------
TOTAL INCREASE IN NET ASSETS................................................ 77,114,414 54,082,685
NET ASSETS:
Beginning of period............................................................... 158,436,533 235,550,947
------------ ----------------
End of period..................................................................... $235,550,947 $289,633,632
------------ ----------------
------------ ----------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A CLASS B
-------------------------------- --------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993 APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED) 1993* (UNAUDITED)
---------- ---------------- ---------- ----------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold...................................... 3,810,707 1,352,526 880,939 1,579,026
Shares issued for dividends reinvested........... 401,112 195,625 2,877 25,314
Shares redeemed.................................. (980,220) (508,156) (2,609) (16,544)
---------- ---------------- ---------- ----------------
NET INCREASE IN SHARES OUTSTANDING........... 3,231,599 1,039,995 881,207 1,587,796
---------- ---------------- ---------- ----------------
---------- ---------------- ---------- ----------------
<FN>
- ---------------
* From January 15, 1993 (commencement of initial offering) to April 30, 1993.
</TABLE>
See independent accountants' review report and notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Reference is made to page 18 of the Fund's Prospectus dated February 18, 1994.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA 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 thirteen
series including the Pennsylvania 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 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, 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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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 October 12, 1993 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 October 13, 1993 through January 1, 1994, to waive receipt of
the management fee payable to it by the Series in excess of an annual rate of
.44 of 1% of the Series' average daily net assets. The reduction in management
fee, pursuant to the undertakings, amounted to $206,849 for the six months ended
October 31, 1993.
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 $56,219 during the six months ended October 31,
1993 from commissions earned on sales of the Series' Class A shares.
The Distributor retained $3,760 during the six months ended October 31,
1993 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 six months ended October 31, 1993, $72,513 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 six months ended October 31, 1993, $295,732 and $36,256 were
charged to the Class A and Class B shares, respectively, pursuant to the
Shareholder Services Plan.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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.
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $86,971,110 and $42,479,578,
respectively, for the six months ended October 31, 1993, and consisted entirely
of municipal bonds and short-term municipal investments.
At October 31, 1993, accumulated net unrealized appreciation on investments
was $25,785,442, consisting of $26,147,743 gross unrealized appreciation and
$362,301 gross unrealized depreciation.
At October 31, 1993, 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).
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS--100.0% AMOUNT VALUE
----------- -----------
<S> <C> <C>
- ---------------------------------------------------------------------------------------
TEXAS--94.0%
Alliance Airport Authority Inc., Special Facilities Revenue
(American Airlines Inc., Project):
7%, 12/1/2011...................................................................... $ 1,550,000 $ 1,725,258
7.50%, 12/1/2029................................................................... 1,000,000 1,079,490
Amarillo Health Facilities Corp., HR (High Plains Baptist Hospital)
9.799%, 1/3/2022 (Insured; FSA) (a).................................................. 2,250,000 2,708,438
Austin:
Convention Center Revenue 8.25%, 11/15/2014.......................................... 500,000 553,990
(Public Improvement) 6.75%, 9/1/2010................................................. 500,000 552,850
Bexar County, Refunding, Limited Tax 5%, 6/15/2010..................................... 8,000,000 7,919,360
Bexar County Health Facilities Development Corp., HR, Refunding
(Saint Luke's Lutheran Hospital Project) 7%, 5/1/2021................................ 1,000,000 1,052,720
Brazos County Health Facility Development Corp., Franciscan Services Corporate Revenue
(Saint Joseph's Hospital and Health Center):
7.75%, 1/1/2019.................................................................... 300,000 357,249
Refunding 8.875%, 1/1/2015......................................................... 50,000 60,253
Brazos Higher Education Authority Inc., Student Loan Revenue, Refunding:
5.70%, 6/1/2004...................................................................... 3,500,000 3,544,205
6.80%, 12/1/2004..................................................................... 850,000 886,915
Brazos River Authority:
PCR (Texas Utilities Electric Company):
9.25%, 3/1/2018 (Insured; FGIC).................................................... 100,000 118,513
7.875%, 3/1/2021................................................................... 500,000 587,470
Water Revenue (Upper Navasota Project) 7%, 7/15/2004................................. 90,000 90,896
Brazos River Harbor Navigation District, Brazoria County, PCR
(BASF Corp.Project) 6.75%, 2/1/2010.................................................. 1,800,000 2,054,178
Chimney Hill Municipal Utility District, Waterworks and Sewer System Revenue, Refunding
7.75%, 10/1/2011..................................................................... 1,000,000 1,079,340
Clint Independent School District, Refunding
7%, 3/1/2015......................................................................... 750,000 834,653
Colorado River Municipal Water District, Water Revenue
(Water Transmission Facilities Project) 6.625%, 1/1/2021 (Insured; AMBAC)............ 1,000,000 1,132,220
Dallas-Fort Worth Regional Airport, Joint Revenue
6.625%, 11/1/2021 (Insured; FGIC).................................................... 1,250,000 1,366,275
Dallas Housing Finance Corp., SFMR
(GNMA Mortgage Securities Program) 7.95%, 12/1/2023.................................. 165,000 181,607
El Paso Health Facilities Development Corp., Revenue
(West Texas Pooled Health Care Loan Program) 8.375%, 12/1/2025....................... 100,000 113,345
El Paso Housing Authority, Multi-Family Revenue
(Section 8 Projects) 6.25%, 12/1/2009................................................ 2,510,000 2,607,714
Fort Bend County Municipal Utility District No. 42, Refunding
8.30%, 4/1/2009...................................................................... 300,000 326,165
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
----------- -----------
- ---------------------------------------------------------------------------------------
TEXAS (CONTINUED)
<S> <C> <C>
Fort Worth Housing Finance Corp., SFMR
(GNMA Mortgage Securities Program) 8.25%, 12/1/2011 (Insured; GNMA).................. $ 65,000 $ 67,909
Gulf Coast Waste Disposal Authority, Solid Waste Disposal Revenue
(Champion International Corp. Project) 7.25%, 4/1/2017............................... 1,000,000 1,108,220
Harris County, Toll Road Multi-Mode, Senior Lien Revenue:
6.75%, 8/1/2014...................................................................... 750,000 839,550
8.125%, 8/15/2017.................................................................... 250,000 298,605
Harris County Health Facilities Development Corp., Health Care System Revenue
(Sisters of Charity) 7.10%, 7/1/2021................................................. 1,000,000 1,138,480
Harris County Industrial Development Corp., Marine Terminal Revenue, Refunding
(GATX Terminal Corp. Project) 6.95%, 2/1/2022........................................ 750,000 826,980
City of Houston, Airport System Revenue:
6.75%, 7/1/2021 (Insured; FGIC)...................................................... 1,000,000 1,101,060
6.625%, 7/1/2022 (Insured; FGIC)..................................................... 1,000,000 1,103,930
Houston Housing Finance Corp., SFMR 10%, 9/15/2014..................................... 95,000 98,456
Leon County, PCR, Refunding (Nucor Corp. Project) 7.375%, 8/1/2009..................... 750,000 869,378
Lewisville Independent School District 5.35%, 8/15/2014................................ 2,750,000 2,773,788
Lower Colorado River Authority, Revenue:
6.875%, 1/1/2010 (Insured; BIGI)..................................................... 150,000 164,558
8.375%, 1/1/2015..................................................................... 50,000 56,002
Matagorda County Navigation District No. 1, PCR
(Collateralized Houston Lighting and Power) 7.875%, 2/1/2019......................... 500,000 561,100
Montgomery County Health Facilities Development Corp., Hospital Mortgage Revenue
(Woodlands Medical Center Project) 8.85%, 8/15/2014.................................. 600,000 687,246
North Central Health Facility Development Corp., Revenue (Presbyterian Health Care):
6%, 6/1/2013......................................................................... 1,000,000 1,040,050
5.90%, 6/1/2021...................................................................... 2,300,000 2,377,924
North Texas Higher Education Authority, Inc., Student Loan Revenue
7.25%, 4/1/2003 (Insured; AMBAC)..................................................... 1,000,000 1,097,380
Port Corpus Christi Authority, PCR, Refunding
(Hoechst Celanese Co. Project) 7.50%, 8/1/2012....................................... 395,000 460,459
Red River Authority, PCR:
(Hoechst Celanese Corp. Project) 6.875%, 4/1/2017.................................... 2,000,000 2,228,680
(West Texas Public Service Company, Oklahoma Power and Lighting Co. Project)
7.875%, 9/15/2014.................................................................. 100,000 113,134
Rio Grande Valley Health Facilities Development Corp., Retirement Facility Revenue
(Golden Palms) 8.786%, 8/1/2015 (Insured; MBIA) (a).................................. 2,000,000 2,352,840
Rusk County Health Facilities Corp., HR
(Henderson Memorial Hospital Project) 10.25%, 4/1/2013............................... 95,000 97,591
Sabine River Authority, PCR
(Texas Utility Co. Project) 7.75%, 4/1/2016.......................................... 500,000 548,655
Sam Rayburn Municipal Power Agency, Power Supply System Revenue, Refunding:
6.125%, 10/1/2013.................................................................... 3,790,000 3,845,561
6.25%, 10/1/2017..................................................................... 1,250,000 1,256,425
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
----------- -----------
- ---------------------------------------------------------------------------------------
TEXAS (CONTINUED)
<S> <C> <C>
San Antonio:
Electric and Gas Revenue:
8%, 2/1/2010....................................................................... $ 50,000 $ 51,425
5.75%, 2/1/2011.................................................................... 2,000,000 2,081,300
General Improvement (Bexar County-Limited Tax) 7.875%, 8/1/2012...................... 100,000 114,014
Refunding 5.75%, 8/1/2013............................................................ 3,000,000 3,084,840
Water Revenue (Prior Lien) 7.125%, 5/1/2016.......................................... 750,000 872,205
San Saba County, Certificates of Obligation 8.625%, 2/15/2019.......................... 990,000 1,094,554
Southeast Housing Finance Corp., SFMR
8.375%, 6/1/2008 (Collateralized; GNMA Pass-Through Certificates).................... 30,000 31,628
Texas, Refunding:
6%, 10/1/2009........................................................................ 2,000,000 2,217,680
(Superconducting Super Collider Project) 6%, 4/1/2012................................ 1,500,000 1,584,390
Texas City Independent School District:
5%, 8/15/2011........................................................................ 1,030,000 993,445
5%, 8/15/2012........................................................................ 940,000 901,225
Texas Health Facilities Development Corp., HR, Refunding
(All Saints Episcopal Hospitals) 6.25%, 8/15/2022 (Insured; MBIA).................... 2,000,000 2,170,320
Texas Higher Education Coordinating Board, College Student Loan Revenue
7.30%, 10/1/2003..................................................................... 905,000 971,635
Texas Housing Agency, Revenue:
Mortgage Refunding 7.15%, 9/1/2012................................................... 720,000 790,610
Single Family Mortgage:
9.375%, 9/1/2016 (Insured; FHA).................................................... 610,000 626,238
8.25%, 3/1/2017.................................................................... 95,000 97,863
7.50%, 9/1/2017.................................................................... 190,000 195,381
Texas Municipal Power Agency, Refunding 5.75%, 9/1/2012 (Insured; MBIA)................ 775,000 804,272
Texas National Research Laboratory Commission, Financing Corp., LR
(Superconducting Super Collider Project) 7.10%, 12/1/2021............................ 1,000,000 1,010,000
Texas Public Property Finance Corp., Revenue
(Mental Health and Retardation) 8.875%, 9/1/2011..................................... 560,000 621,566
Texas Veterans Housing Assistance 6.80%, 12/1/2023..................................... 1,500,000 1,600,680
Texas Water Resources Finance Authority, Revenue 7.625%, 8/15/2008..................... 400,000 446,676
Tomball Hospital Authority, Revenue, Refunding 6%, 7/1/2013............................ 5,000,000 4,893,650
Trinity River Authority, Texas Project Revenue
(Regional Wastewater System) 7.70%, 8/1/2006 (Insured; FGIC)......................... 100,000 110,516
Tyler Texas Health Facility Development Corp., HR
(East Texas Medical Center Regional Health) 6.625%, 11/1/2011........................ 2,000,000 2,067,640
West Side Calhoun County Navigation District, Solid Waste Disposal Revenue
(Union Carbide Chemical and Plastics) 8.20%, 3/15/2021............................... 500,000 586,555
</TABLE>
<PAGE>
-------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
----------- -----------
<S> <C> <C>
- ---------------------------------------------------------------------------------------
U.S. RELATED--6.0%
Puerto Rico, Refunding 5.50%, 7/1/2013................................................. $ 2,750,000 $ 2,782,560
Puerto Rico Electric Power Authority, Power Revenue
6.25%, 7/1/2017...................................................................... 1,020,000 1,116,747
Puerto Rico Public Buildings Authority, Guaranteed
Public Education and Health Facilities:
6.875%, 7/1/2012................................................................... 1,000,000 1,187,870
7.25%, 7/1/2017.................................................................... 500,000 576,940
-----------
TOTAL INVESTMENTS
(cost $86,253,342)................................................................... $93,731,490
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF ABBREVIATIONS
<TABLE>
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation HR Hospital Revenue
BIGI Bond Investors Guaranty Insurance LR Lease Revenue
FGIC Financial Guaranty Insurance Corporation MBIA Municipal Bond Insurance Association
FHA Federal Housing Administration PCR Pollution Control Revenue
FSA Financial Security Assurance SFMR Single Family Mortage Revenue
GNMA Government National Mortgage Association
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF COMBINED RATINGS
<TABLE>
<CAPTION>
PERCENTAGE OF
FITCH (B) OR MOODY'S OR STANDARD & POOR'S VALUE
- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C> <C> <C>
AAA Aaa AAA 24.5%
AA Aa AA 35.9
A A A 14.5
BBB Baa BBB 20.3
BB Ba BB .1
Not Rated Not Rated Not Rated 4.7
--------
100.0%
--------
--------
<FN>
- --------------------------------------------------------------------------------
NOTES TO STATEMENT OF INVESTMENTS:
(a) Inverse floater security - the interest rate is subject to change
periodically.
(b) Fitch currently provides creditworthiness information for a limited amount
of investments.
</TABLE>
See independent accountants' review report and notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $86,253,342)--see statement...................................................... $93,731,490
Cash..................................................................................... 193,074
Interest receivable...................................................................... 1,602,777
Receivable for shares of Beneficial Interest subscribed.................................. 438,243
Prepaid expenses......................................................................... 17,278
-----------
95,982,862
LIABILITIES:
Due to The Dreyfus Corporation........................................................... $ 25,699
Payable for shares of Beneficial Interest redeemed....................................... 10,989
Accrued expenses......................................................................... 11,006 47,694
---------- -----------
NET ASSETS................................................................................. $95,935,168
-----------
-----------
REPRESENTED BY:
Paid-in capital.......................................................................... $87,754,841
Accumulated undistributed net realized gain on investments............................... 702,179
Accumulated net unrealized appreciation on investments--Note 3........................... 7,478,148
-----------
NET ASSETS at value........................................................................ $95,935,168
-----------
-----------
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)................................ 3,738,531
-----------
-----------
Class B Shares
(unlimited number of $.001 par value shares authorized)................................ 593,714
-----------
-----------
NET ASSET VALUE per share:
Class A Shares
($82,788,235 / 3,738,531 shares)....................................................... $22.14
------
------
Class B Shares
($13,146,933 / 593,714 shares)......................................................... $22.14
------
------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1993 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME.......................................................................... $ 2,724,669
EXPENSES:
Management fee--Note 2(a).............................................................. $ 243,720
Shareholder servicing costs--Note 2(c)................................................. 126,688
Distribution fees (Class B shares)--Note 2(b).......................................... 24,005
Professional fees...................................................................... 17,157
Registration fees...................................................................... 16,067
Prospectus and shareholders' reports................................................... 9,693
Custodian fees......................................................................... 5,025
Trustees' fees and expenses--Note 2(d)................................................. 376
Miscellaneous.......................................................................... 9,284
----------
452,015
Less--expense reimbursement from the Manager due to
undertaking--Note 2(a)............................................................... 243,720
----------
TOTAL EXPENSES..................................................................... 208,295
-----------
INVESTMENT INCOME--NET............................................................. 2,516,374
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments--Note 3................................................. $ 136,338
Net unrealized appreciation on investments............................................... 3,519,385
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................................... 3,655,723
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................................... $ 6,172,097
-----------
-----------
</TABLE>
See independent accountants' review report and notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED)
------------ ----------------
<S> <C> <C>
OPERATIONS:
Investment income--net............................................................ $ 3,376,089 $ 2,516,374
Net realized gain on investments.................................................. 632,845 136,338
Net unrealized appreciation on investments for the period......................... 2,824,040 3,519,385
------------ ----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................... 6,832,974 6,172,097
------------ ----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares.................................................................. (3,330,129 ) (2,271,404)
Class B shares.................................................................. (45,960 ) (244,970)
Net realized gain on investments:
Class A shares.................................................................. (80,058 ) --
Class B shares.................................................................. -- --
------------ ----------------
TOTAL DIVIDENDS............................................................... (3,456,147 ) (2,516,374)
------------ ----------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares.................................................................. 34,547,838 9,933,297
Class B shares.................................................................. 6,338,141 6,528,814
Dividends reinvested:
Class A shares.................................................................. 1,766,600 995,334
Class B shares.................................................................. 27,102 142,063
Cost of shares redeemed:
Class A shares.................................................................. (4,843,723 ) (3,461,192)
Class B shares.................................................................. (10,314 ) (269,213)
------------ ----------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.................. 37,825,644 13,869,103
------------ ----------------
TOTAL INCREASE IN NET ASSETS................................................ 41,202,471 17,524,826
NET ASSETS:
Beginning of period............................................................... 37,207,871 78,410,342
------------ ----------------
End of period..................................................................... $78,410,342 $ 95,935,168
------------ ----------------
------------ ----------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------------------------------------------------
CLASS A CLASS B
-------------------------------- --------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993 APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED) 1993* (UNAUDITED)
---------- ---------------- ---------- ----------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold...................................... 1,670,668 458,148 299,440 299,124
Shares issued for dividends reinvested........... 85,533 45,624 1,281 6,502
Shares redeemed.................................. (233,702 ) (158,581) (483) (12,150)
---------- ---------------- ---------- ----------------
NET INCREASE IN SHARES OUTSTANDING........... 1,522,499 345,191 300,238 293,476
---------- ---------------- ---------- ----------------
---------- ---------------- ---------- ----------------
<FN>
- ---------------
* From January 15, 1993 (commencement of initial offering) to April 30, 1993.
</TABLE>
See independent accountants' review report and notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Reference is made to page 19 of the Fund's Prospectus dated February 18, 1994.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS 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 thirteen
series including the Texas 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 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, 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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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 has
undertaken from May 1, 1993 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. The expense reimbursement, pursuant to the undertaking, amounted to
$243,720 for the six months ended October 31, 1993.
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 $19,801 during the six months ended October 31,
1993 from commissions earned on sales of the Series' Class A shares.
The Distributor retained $1,538 during the six months ended October 31,
1993 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 six months ended October 31, 1993, $24,005 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 six months ended October 31, 1993, $98,779 and $12,002 were
charged to the Class A and Class B shares, respectively, pursuant to the
Shareholder Services Plan.
(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.
<PAGE>
- --------------------------------------------------------------------------------
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 3--SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $22,190,935 and $11,643,864,
respectively, for the six months ended October 31, 1993, and consisted entirely
of municipal bonds and short-term municipal investments.
At October 31, 1993, accumulated net unrealized appreciation on investments
was $7,478,148, consisting of $7,504,429 gross unrealized appreciation and
$26,281 gross unrealized depreciation.
At October 31, 1993, 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).
<PAGE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF INVESTMENTS OCTOBER 31,1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS-100.0% AMOUNT VALUE
----------- -------------
<S> <C> <C>
VIRGINIA-84.5%
Arlington County Industrial Development Authority,
Hospital Facility Revenue (Arlington Hospital):
7.125%, 9/1/2021....................................................... $ 200,000 $ 236,722
Refunding 5%, 9/1/2021................................................. 2,750,000 2,551,285
Augusta County Industrial Development Authority, HR
(Augusta Hospital Corp. Project) 7%, 9/1/2021.............................. 2,750,000 3,086,710
Chesapeake, Water and Sewer System Revenue, Refunding 6.50%, 7/1/2012.......... 1,000,000 1,100,310
Chesapeake Bay Bridge and Tunnel Commission District, Revenue,
Refunding-General Resolution 6.375%, 7/1/2022 (Insured; MBIA).............. 1,500,000 1,632,420
Chesapeake Hospital Authority, Hospital Facility Revenue, Refunding
(Chesapeake General Hospital) 5.25%, 7/1/2018 (Insured; MBIA).............. 1,000,000 982,940
Commonwealth Transportation Board, Transportation Revenue
(Northern Virginia Transportation District Program) 5.50%, 5/15/2015....... 2,500,000 2,544,850
Covington-Alleghany County Industrial Development Authority,
Hospital Facility Revenue (Alleghany Regional Hospital) 6.875%, 4/1/2022... 1,000,000 1,103,670
Fairfax County Water Authority, Water Revenue:
6.125%, 1/1/2029........................................................... 2,000,000 2,215,840
8.329%, 4/1/2029 (a,b)..................................................... 2,000,000 2,060,000
Franklin 6.40%, 1/15/2012...................................................... 1,000,000 1,090,370
Fredericksburg Industrial Development Authority, Hospital Facility Revenue,
Refunding (MWH Medicorp Obligation Group) 6.70%, 8/15/2009 (Insured; FGIC). 195,000 219,625
Giles County Industrial Development Authority,
Solid Waste Disposal Facility Revenue (Hoechst Celanese Corp. Project)
6.625%, 12/1/2022.......................................................... 1,500,000 1,610,220
Hampton Roads Medical College, General Revenue, Refunding 6.875%, 11/15/2016... 500,000 558,335
Harrisonburg Redevelopment and Housing Authority,
Multi-Family Housing Revenue, Refunding:
(Battery Heights Project) 7.375%, 11/20/2028........................... 500,000 540,035
(Hanover Crossing Apartments Project) 6.35%, 3/1/2023.................. 2,000,000 2,084,800
Henrico County 6.90%, 10/1/2009................................................ 300,000 343,605
Industrial Development Authority of Albermarle County, Revenue:
Health Services (The University of Virginia Health Services Foundation)
6.50%, 10/1/2022....................................................... 1,125,000 1,222,886
Hospital Refunding (Martha Jefferson Hospital) 5.50%, 10/1/2020............ 1,500,000 1,493,640
Industrial Development Authority of the City of Lynchburg,
Educational Facilities Revenue (Randolph-Macon Woman's College)
5.875%, 9/1/2013........................................................... 500,000 523,955
Industrial Development Authority of the City of Williamsburg,
Hospital Facility Revenue (Williamsburg Community Hospital) 5.75%, 10/1/2022 2,000,000 2,049,700
Industrial Development Authority of the County of Prince William,
HR Refunding ( Prince William Hospital):
5.625%, 4/1/2012....................................................... 1,000,000 1,012,980
5.25%, 4/1/2019........................................................ 1,000,000 961,970
Mecklenburg County Industrial Development Authority, Revenue
(Exempt Facility-Mecklenburg Cogeneration) 7.35%, 5/1/2008 (LOC; Fuji Bank) (c) 500,000 557,665
Nelson County Service Authority, Water and Sewer Revenue, Refunding
5.50%, 7/1/2018 (Insured; FGIC)............................................ 1,750,000 1,776,985
Newport News Redevelopment and Housing Authority, Mortgage Revenue, Refunding
(FHA-West Apartments-Section 8) 6.55%, 7/1/2024.......................... 1,500,000 1,610,985
</TABLE>
<TABLE>
<CAPTION>
STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31,1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
----------- -------------
<S> <C> <C>
VIRGINIA (CONTINUED)
Norfolk Industrial Development Authority, HR
(Sentara Hospital-Norfolk Project) 7%, 11/1/2020........................... $ 150,000 $ 170,145
Peninsula Ports Authority, Health System Revenue, Refunding
(Riverside Health System Project) 6.625%, 7/1/2018......................... 500,000 560,820
Prince William County Service Authority, Water and Sewer System Revenue
6%, 7/1/2029 (Insured; FGIC)............................................... 2,000,000 2,090,960
Rector and Visitors of the University of Virginia, General Revenue Pledge
5.375%, 6/1/2020........................................................... 4,370,000 4,409,112
Richmond, Refunding 6.25%, 1/15/2018........................................... 500,000 539,970
Richmond Industrial Development Authority, HR (Retreat Hospital)
7.35%, 7/1/2021............................................................ 1,900,000 2,099,386
Richmond Metropolitan Authority, Expressway Revenue, Refunding
6.375%, 7/15/2016 (Insured; FGIC).......................................... 1,500,000 1,643,445
South Boston Industrial Development Authority, HR
(Halifax Community Hospital Inc. Project) 7.375%, 9/1/2011................. 500,000 578,085
Southeastern Public Service Authority, Revenue:
5.125%, 7/1/2013 (Insured; MBIA)........................................... 7,850,000 7,710,976
(Regional Solid Waste System):
10.50%, 7/1/1995....................................................... 250,000 283,315
6%, 7/1/2013........................................................... 1,250,000 1,295,562
6%, 7/1/2017........................................................... 1,750,000 1,804,688
Upper Occoquan Sewer Authority, Regional Sewer Revenue
6.50%, 7/1/2017 (Insured; MBIA)............................................ 1,000,000 1,106,170
Virginia, Higher Educational Institution 6.60%, 6/1/2009....................... 300,000 324,873
Virginia Beach Development Authority:
Hospital Facility Revenue (Sentara Bayside Hospital) 6.30%, 11/1/2021...... 2,000,000 2,141,700
Nursing Home Revenue (Sentara Life Care Corp.) 7.75%, 11/1/2021............ 1,000,000 1,152,250
Virginia College Building Authority Educational Facilities Revenue:
(Hampton University Project) 6.50%, 4/1/2008............................... 350,000 385,259
(Randolph- Macon College Project) 6.625%, 5/1/2013......................... 1,000,000 1,104,100
(Refunding- Washington and Lee University Project) 6.40%, 1/1/2012......... 500,000 545,360
Virginia Housing Development Authority:
Commonwealth Mortgage:
6.95%, 1/1/2010........................................................ 2,500,000 2,679,500
6.85%, 1/1/2027........................................................ 2,000,000 2,147,500
Multi-Family:
7.10%, 5/1/2013........................................................ 500,000 547,850
Refunding 5.90%, 11/1/2017............................................. 2,000,000 2,080,320
Virginia Public Building Authority, Building Revenue 5.75%, 8/1/2012........... 1,000,000 1,042,270
Virginia Resources Authority, Water and Sewer System Revenue:
(Lot 7-Rapidan Service Authority) 7.125%, 10/1/2016........................ 250,000 281,640
(Lot 9-Frederick County) 6%, 10/1/2012..................................... 500,000 526,285
(Lot 11-Rapidan Service Authority) 5.50%, 10/1/2019........................ 1,250,000 1,261,300
Virginia Transportation Board, Transportation Contract Revenue, Refunding:
(Route 28 Project) 6.50%, 4/1/2018......................................... 2,000,000 2,204,240
(United States Route 58 Corridor Program) 5.25%, 5/15/2012................. 250,000 250,205
Washington County Industrial Development Authority,
Hospital Facilty Revenue (First Mortgage - Johnston Memorial Hospital)
7%, 7/1/2022........................................................... 750,000 842,977
York County, COP 6.625%, 3/1/2012.............................................. 500,000 544,380
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31,1993 (UNAUDITED)
PRINCIPAL
MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE
----------- -------------
<S> <C> <C>
U. S. RELATED-15.5%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................... $ 2,000,000 $ 2,201,400
Puerto Rico:
(Public Improvement):
7.70%, 7/1/2020........................................................ 1,000,000 1,217,790
6.80%, 7/1/2021........................................................ 1,000,000 1,189,810
Refunding 6%, 7/1/2021..................................................... 2,000,000 2,099,540
Puerto Rico Highway and Transportation Authority, Highway Revenue :
6.625%, 7/1/2018........................................................... 2,000,000 2,345,020
7.637%, 7/1/2009(a)........................................................ 2,950,000 3,060,625
Puerto Rico Electric Power Authority, Power Revenue 7%, 7/1/2021............... 325,000 373,263
Puerto Rico Public Building Authority,
Guaranteed Public Education and Health Facilities, Refunding 6%, 7/1/2012.. 350,000 361,333
Virgin Islands Public Finance Authority, Revenue, Refunding, Matching Fund Loan
Notes 7.25%, 10/1/2018..................................................... 1,500,000 1,719,870
-------------
TOTAL INVESTMENTS (cost $87,724,961)........................................... $ 94,095,797
=============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <S> <S> <S>
COP Certificate of Participation LOC Letter of Credit
FGIC Financial Guaranty Insurance Corporation MBIA Municipal Bond Insurance Association
HR Hospital Revenue
</TABLE>
SUMMARY OF COMBINED RATINGS
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- ------- ----------------- -------------------
AAA Aaa AAA 25.2%
AA Aa AA 30.6
A A A 35.6
BBB Baa BBB 4.6
Not Rated Not Rated Not Rated 4.0
------
100.0%
======
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, 1993, this security amounted to $2,060,000 or 2.3% of net
assets.
(c) Secured by letters of credit.
(d) Fitch currently provides creditworthiness information for a limited
amount of investments.
(e) At October 31, 1993, the Fund had $25,116,786 (28.3% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from health care projects.
See independent accountants' review report and notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1993 (UNAUDITED)
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $87,724,961)-see statement....................................... $94,095,797
Cash....................................................................... 584,341
Interest receivable........................................................ 1,511,935
Receivable for shares of Beneficial Interest subscribed.................... 403,682
Prepaid expenses........................................................... 21,952
-----------
96,617,707
LIABILITIES:
Due to The Dreyfus Corporation............................................. $ 27,694
Payable for investment securities purchased................................ 7,720,066
Payable for shares of Beneficial Interest redeemed......................... 40,669
Accrued expenses........................................................... 23,080 7,811,509
---------- -----------
NET ASSETS..................................................................... $88,806,198
===========
REPRESENTED BY:
Paid-in capital............................................................ $82,277,334
Accumulated undistributed net realized gain on investments................. 158,028
Accumulated gross unrealized appreciation on investments................... 6,370,836
-----------
NET ASSETS at value............................................................ $88,806,198
===========
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)................ 3,801,988
===========
Class B Shares
(unlimited number of $.001 par value shares authorized)................ 1,257,415
===========
NET ASSET VALUE per share:
Class A Shares
($66,736,384 / 3,801,988 shares)....................................... $17.55
======
Class B Shares
($22,069,814 / 1,257,415 shares)....................................... $17.55
======
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1993 (UNAUDITED)
INVESTMENT INCOME:
<S> <C> <C>
INTEREST INCOME............................................................ $ 2,341,808
EXPENSES:
Management fee-Note 2(a)............................................... $ 214,516
Shareholder servicing costs-Note 2(c).................................. 120,560
Distribution fees (Class B shares)-Note 2(b)........................... 39,472
Prospectus and shareholders' reports................................... 11,080
Registration fees...................................................... 6,877
Professional fees...................................................... 5,978
Custodian fees......................................................... 4,380
Trustees' fees and expenses-Note 2(d).................................. 334
Miscellaneous.......................................................... 18,700
----------
421,897
Less-expense reimbursement from Manager due to
undertaking-Note 2(a).............................................. 214,516
----------
TOTAL EXPENSES................................................. 207,381
-----------
INVESTMENT INCOME-NET.......................................... 2,134,427
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3.................................... $ 93,205
Net unrealized appreciation on investments................................. 3,228,564
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................ 3,321,769
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $ 5,456,196
===========
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED)
----------- -----------
<S> <C> <C>
OPERATIONS:
Investment income-net...................................................... $ 2,476,674 $ 2,134,427
Net realized gain on investments........................................... 96,550 93,205
Net unrealized appreciation on investments for the period.................. 3,042,530 3,228,564
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... 5,615,754 5,456,196
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares......................................................... (2,421,216) (1,746,016)
Class B shares......................................................... (55,458) (388,411)
Net realized gain on investments:
Class A shares......................................................... (35,470) --
Class B shares......................................................... -- --
----------- -----------
TOTAL DIVIDENDS.................................................... (2,512,144) (2,134,427)
----------- -----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares......................................................... 33,039,306 9,850,383
Class B shares......................................................... 8,333,034 13,141,962
Dividends reinvested:
Class A shares......................................................... 1,389,831 979,025
Class B shares......................................................... 34,621 218,019
Cost of shares redeemed:
Class A shares......................................................... (4,961,334) (2,400,128)
Class B shares......................................................... (5,211) (334,307)
----------- -----------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS....... 37,830,247 21,454,954
----------- -----------
TOTAL INCREASE IN NET ASSETS................................... 40,933,857 24,776,723
NET ASSETS:
Beginning of period........................................................ 23,095,618 64,029,475
----------- -----------
End of period.............................................................. $64,029,475 $88,806,198
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
SHARES
-----------------------------------------------------------------
CLASS A CLASS B
------------------------------ --------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1993 APRIL 30, OCTOBER 31, 1993
1993 (UNAUDITED) 1993* (UNAUDITED)
---------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold................................ 2,040,550 572,779 498,506 763,929
Shares issued for dividends reinvested..... 85,167 56,689 2,067 12,589
Shares redeemed............................ (304,511) (139,025) (309) (19,367)
---------- ------------- ----------- ------------
NET INCREASE IN SHARES OUTSTANDING. 1,821,206 490,443 500,264 757,151
=========== ============= =========== ============
- ----------------
* From January 15, 1993 (commencement of initial offering) to April 30, 1993.
See independent accountants' review report and notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 20 of the Fund's Prospectus dated February 18, 1994.
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 thirteen series including the Virginia 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
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, 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 carry
overs, 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 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.
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 currently undertaken until such time as the net assets of the Series
exceed $100 million, to waive receipt of the management fee payable to it by
the Series. The expense reimbursement, pursuant to the undertaking, amounted
to $214,516 for the six months ended October 31, 1993.
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 $23,337 during the six months ended October 31,
1993 from commissions earned on sales of the Series' Class A shares.
The Distributor retained $5,884 during the six months ended October 31,
1993 from contingent deferred sales charges imposed upon redemptions of the
Series' Class B shares.
(B) Under the Distribution Plan ("Class B Distribution Plan") adopted pur
suant to Rule 12b-1 under the Act, the Series pays the Distributor at an annu
al 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, market
ing and distributing the Series' Class B shares. The Distributor may make pay
ments 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 six months ended October 31, 1993, $39,472 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 six months ended October 31, 1993, $77,771 and $19,737 were
charged to the Class A and Class B shares, respectively, pursuant to the
Shareholder Services Plan.
(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.
NOTE 3-SECURITIES TRANSACTIONS:
Purchases and sales of securities amounted to $30,657,464 and $4,730,313,
respectively, for the six months ended October 31, 1993, and consisted entire
ly of municipal bonds.
At October 31, 1993, 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
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information --
For the period from May 28, 1987 (commencement of
operations) to April 30, 1988, and for each of the five
years ended April 30, 1993 (audited) and for the six
months ended October 31, 1993 (unaudited) for all
Series except (i) the Pennsylvania Series for the
period July 30, 1987 (commencement of operations) to
April 30, 1988, and for each of the five years ended
April 30, 1993 (audited) and for the six months ended
October 31, 1993 (unaudited), (ii) the North Carolina
Series and Virginia Series for the period from August
1, 1991 (commencement of operations) to April 30, 1992
and for the fiscal year ended April 30, 1993 (audited)
and for the six months ended October 31, 1993
unaudited) and (iii) the Arizona Series and Georgia
Series for the period from September 3, 1992
(commencement of operations) to April 30, 1993 and for
the six months ended October 31, 1993 (unaudited).
Included in Part B of the Registration Statement:
Statement of Investments -- April 30, 1993 (audited)
and October 31, 1993 (unaudited) (for each respective
Series).
Statement of Assets and Liabilities -- April 30, 1993
(audited) and October 31, 1993 (unaudited) (for each
respective Series).
Statement of Operations -- year ended April 30, 1993
(audited) and six months ended October 31, 1993
(unaudited) for each Series except the Arizona and
Georgia Series for the period September 3, 1992
(commencement of operations) to April 30, 1993
(audited) and for the six months ended October 31, 1993
(unaudited).
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
Statement of Changes in Net Assets -- for the years
ended April 30, 1992 and 1993 (audited) and for the six
months ended October 31, 1993 (unaudited) (for each
respective Series) except (i) the North Carolina Series
and Virginia Series for the period August 1, 1991
(commencement of operations) to April 30, 1992
(audited) and for the year ended April 30, 1993
(audited) and for the six months ended October 31, 1993
(unaudited) and (ii) the Arizona Series and Georgia
Series for the period September 3, 1992 (commencement
of operations) to April 30, 1993 (audited) and for the
six months ended October 31, 1993 (unaudited).
Notes to Financial Statements
Report of Ernst & Young, Independent Auditors, dated
June 7, 1993.
Schedules No. I through VII and other financial statement information, for
which provision is made in the applicable accounting regulations of the
Securities and Exchange Commission, are either omitted because they are not
required under the related instructions, they are inapplicable, or the
required information is presented in the financial statements or notes
thereto which are included in Part B of the Registration Statement.
(b) Exhibits:
(1) Registrant's Amended and Restated Agreement and Declaration of
Trust is incorporated by reference to Exhibit (1)(b) of
Post-Effective Amendment No. 12 to the Registration Statement
on Form N-1A, filed on June 30, 1992.
(2) Registrant's By-Laws are incorporated by reference to Exhibit (2)
of Pre-Effective Amendment No. 2 to the Registration Statement on
Form N-1A, filed on March 26, 1987.
(5) Management Agreement between the Registrant and The Dreyfus
Corporation.
(6)(a) Distribution Agreement between the Registrant and Dreyfus Service
Corporation.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(6)(b) Forms of Service Agreements are incorporated by reference to
Exhibit 6(b) of Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A, filed on October 30, 1992.
(6)(c) Forms of Distribution Plan Agreements are incorporated by
reference to Exhibit 6(c) of Post-Effective Amendment No. 9 to
the Registration Statement on Form N-1A, filed on October 30,
1992.
(8)(a) Registrant's Custody Agreement is incorporated by reference to
Exhibit 8(a) of Post-Effective Amendment No. 8 to the
Registration Statement on Form N-1A, filed on August 23, 1990.
(8)(b) Registrant's Sub-Custodian Agreements are incorporated by
reference to Exhibit 8(b) of Post-Effective Amendment No. 8 to
the Registration Statement on Form N-1A, filed on August 23,
1990.
(9) Shareholder Services Plan.
(10) Opinions and consents of Registrant's counsel are incorporated by
reference to Exhibit (10) to Post-Effective Amendment No. 2 to
the Registration Statement on Form N-1A, filed on July 16, 1987.
(11) Consent of Independent Auditors.
(15) Distribution Plan.
(16) Registrant's Schedules of Computation of Performance Data are
incorporated by reference to Exhibit 16 to Post-Effective
Amendment No. 17 to the Registration Statement on Form N-1A,
filed on June 30, 1993.
Other Exhibits
______________
(a) Powers of Attorney of the Registrant's Trustees and
Officers are incorporated by reference to Other
Exhibits (a) of Post-Effective Amendment No. 10 to the
Registration Statement on Form N-1A, filed on June 28,
1991.
(b) The Certificate of Corporate Secretary is incorporated
by reference to Other Exhibits (b) of Post-Effective
Amendment No. 10 to the Registration Statement on Form
N-1A, filed on June 28, 1991.
Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 26. Number of Holders of Securities.
_______ ________________________________
(1) (2)
Number of Record
Title of Class Holders as of January 21, 1994
______________ ______________________________
Shares of beneficial interest,
par value $.001 per share:
Arizona Series- 798
Colorado Series- -
Connecticut Series- 8,518
Florida Series- 6,579
Georgia Series- 703
Maryland Series- 8,994
Massachusetts Series- 1,958
Michigan Series- 5,566
Minnesota Series- 4,452
North Carolina Series- 2,696
Ohio Series- 8,545
Oregon Series- -
Pennsylvania Series- 9,552
Texas Series- 1,605
Virginia Series- 2,589
Item 27. Indemnification
_______ _______________
The Statement as to the general effect of any contract,
arrangements or statute under which a trustee, officer,
underwriter or affiliated person of the Registrant is indemnified
is incorporated by reference to Item 27 of Part C of
Post-Effective Amendment No. 2 to the Registration Statement on
Form N-1A, filed on July 16, 1987.
Reference is also made to the Distribution Agreement filed as
Exhibit (6)(a) hereto.
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business
consists primarily of providing investment management services
as the investment adviser, manager and distributor for
sponsored investment companies registered under the Investment
Company Act of 1940 and as an investment adviser to
institutional and individual accounts. Dreyfus also serves as
sub-investment adviser to and/or administrator of other
investment companies. Dreyfus Service Corporation, a
wholly-owned subsidiary of Dreyfus, serves primarily as
distributor of shares of investment companies sponsored by
Dreyfus and of other investment companies for which Dreyfus
acts as investment adviser, sub-investment adviser or
administrator. Dreyfus Management, Inc., another wholly-owned
subsidiary, provides investment management services to various
pension plans, institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees of
Skillman Foundation.
Member of The Board of Vintners Intl.
ALVIN E. FRIEDMAN Senior Adviser to Dillon, Read & Co. Inc.
Director 535 Madison Avenue
New York, New York 10022;
Director and member of the Executive
Committee of Avnet, Inc.**
ABIGAIL Q. McCARTHY Author, lecturer, columnist and educational
Director consultant
2126 Connecticut Avenue
Washington, D.C. 20008
DAVID B. TRUMAN Educational consultant;
Director Past President of the Russell Sage Foundation
230 Park Avenue
New York, New York 10017;
Past President of Mount Holyoke College
South Hadley, Massachusetts 01075;
Former Director:
Student Loan Marketing Association
1055 Thomas Jefferson Street, N.W.
Washington, D.C. 20006;
Former Trustee:
College Retirement Equities Fund
730 Third Avenue
New York, New York 10017
HOWARD STEIN Chairman of the Board, President and Investment
Chairman of the Board and Officer:
Chief Executive Officer Dreyfus Capital Growth Fund (A Premier
Fund)++;
Chairman of the Board and Investment Officer:
The Dreyfus Fund Incorporated++;
Dreyfus New Leaders Fund, Inc.++;
The Dreyfus Socially Responsible Growth
Fund, Inc. ++;
The Dreyfus Third Century Fund, Inc.++;
Chairman of the Board:
Dreyfus Acquisition Corporation*;
Dreyfus America Fund++++;
The Dreyfus Consumer Credit Corporation*;
HOWARD STEIN Dreyfus Land Development Corporation*;
(cont'd) Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Chairman of the Board and Chief Executive
Officer:
Major Trading Corporation*;
President, Managing General Partner and
Investment Officer:
Dreyfus Global Growth, L.P. (A Strategic
Fund)++;
Dreyfus Strategic Growth, L.P. ++;
Director, President and Investment Officer:
Dreyfus Appreciation Fund, Inc.++;
Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus Capital Value Fund (A Premier
Fund)++;
Dreyfus Focus Funds, Inc.++;
Dreyfus Global Investing++;
Dreyfus Growth Opportunity Fund, Inc.++;
Premier Growth Fund, Inc.++;
Dreyfus Growth Allocation Fund, Inc.++
Director and Investment Officer:
Dreyfus Growth and Income Fund, Inc.++;
President:
Dreyfus Consumer Life Insurance Company*;
Director:
Avnet, Inc.**;
Comstock Partners Strategy Fund, Inc.***;
Dreyfus A Bonds Plus, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
The Dreyfus Fund International
Limited++++++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus Partnership Management,
Inc.*;
Dreyfus Personal Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Realty Advisors, Inc.+++;
Dreyfus Service Organization, Inc.*;
Dreyfus Strategic Governments Income,
Inc.++;
The Dreyfus Trust Company++;
General Government Securities Money Market
Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
FN Network Tax Free Money Market Fund,
Inc.++;
Seven Six Seven Agency, Inc.*;
HOWARD STEIN World Balanced Fund++++;
(cont'd) Trustee and Investment Officer:
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Strategic Investing++;
Dreyfus Variable Investment Fund++;
Trustee:
Corporate Property Investors
New York, New York;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Institutional Money Market Fund++;
Dreyfus Institutional Short Term Treasury
Fund++;
Dreyfus Investors GNMA Fund++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund++;
Dreyfus 100% U.S. Treasury Long Term
Fund++;
Dreyfus 100% U.S. Treasury Money Market
Fund++;
Dreyfus 100% U.S. Treasury Short Term
Fund++;
Dreyfus Strategic Income++
JULIAN M. SMERLING Director and Executive Vice President:
Vice Chairman of the Dreyfus Service Corporation*;
Board of Directors Director and Vice President:
Dreyfus Consumer Life Insurance Company*;
Dreyfus Service Organization, Inc.*;
Vice Chairman and Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Director:
The Dreyfus Consumer Credit Corporation*;
Dreyfus Partnership Management, Inc.*;
Seven Six Seven Agency, Inc.*
JOSEPH S. DiMARTINO Director and Chairman of the Board:
President, Chief Operating The Dreyfus Trust Company++;
Officer and Director Director, President and Investment Officer:
Dreyfus Cash Management Plus, Inc.++;
Dreyfus International Equity Fund, Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
General Government Securities Money Market
Fund, Inc.++;
General Money Market Fund, Inc.++;
Director and President:
Dreyfus Acquisition Corporation*;
The Dreyfus Consumer Credit Corporation*;
Dreyfus Edison Electric Index Fund,
Inc.++;
JOSEPH S. DiMARTINO Dreyfus Life and Annuity Index Fund,
(cont'd) Inc.++;
Dreyfus Partnership Management, Inc.*;
The Dreyfus Trust Company (N.J.)++;
Dreyfus-Wilshire Target Funds, Inc.++;
First Prairie Tax Exempt Bond Fund,
Inc. ++;
Peoples Index Fund, Inc.++;
Peoples S&P MidCap Index Fund, Inc.++;
Trustee, President and Investment Officer:
Dreyfus Cash Management++;
Dreyfus Government Cash Management++;
Dreyfus Institutional Money Market Fund++;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus Variable Investment Fund++;
Premier GNMA Fund++;
Trustee and President:
First Prairie Cash Management++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Municipal Money Market
Fund++;
First Prairie U.S. Government Income
Fund++;
First Prairie U.S. Treasury Securities
Cash Management++;
Trustee, Vice President and Investment Officer:
Dreyfus Institutional Short Term
Treasury Fund++;
Trustee and Investment Officer:
Premier GNMA Fund++;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director, Vice President and Investment
Officer:
Dreyfus Balanced Fund, Inc.++;
Director and Vice President:
Dreyfus Service Organization, Inc.*;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
Director and Investment Officer:
Dreyfus A Bonds Plus, Inc.++;
Dreyfus Appreciation Fund, Inc.++;
Dreyfus Short-Term Income Fund, Inc.++;
Premier Growth Fund, Inc.++;
Director and Corporate Member:
Muscular Dystrophy Association
810 Seventh Avenue
New York, New York 10019;
JOSEPH S. DiMARTINO Director:
(cont'd) Dreyfus Management, Inc.*;
Dreyfus Personal Management, Inc.*;
Noel Group, Inc.
667 Madison Avenue
New York, New York 10021;
Trustee:
Bucknell University
Lewisburg, Pennsylvania 17837;
President and Investment Officer:
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Vice President:
Dreyfus Consumer Life Insurance Company*;
Investment Officer:
The Dreyfus Fund Incorporated++;
Dreyfus Investors GNMA Fund++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund++;
Dreyfus 100% U.S. Treasury Long Term
Fund++;
Dreyfus 100% U.S. Treasury Money Market
Fund++;
Dreyfus 100% U.S. Treasury Short Term
Fund++;
President, Chief Operating Officer and
Director:
Major Trading Corporation*
LAWRENCE M. GREENE Chairman of the Board:
Legal Consultant and The Dreyfus Security Savings
Director Bank, F.S.B.+;
Director and Executive Vice President:
Dreyfus Service Corporation*;
Director and Vice President:
Dreyfus Acquisition Corporation*;
Dreyfus Consumer Life Insurance Company*;
Dreyfus Service Organization, Inc.*;
Director:
Dreyfus America Fund++++;
Dreyfus BASIC Municipal Money Market Fund,
Inc.++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
Dreyfus Capital Value Fund (A Premier
Fund)++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus-Lincoln, Inc.*;
Dreyfus Management, Inc.*;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
LAWRENCE M. GREENE Dreyfus New Leaders Fund, Inc.++;
(cont'd) Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus Precious Metals, Inc.*;
Dreyfus Thrift & Commerce+++;
The Dreyfus Trust Company (N.J.)++;
Seven Six Seven Agency, Inc.*;
Vice President:
Dreyfus Growth Opportunity Fund, Inc.++;
Trustee:
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Investment Officer:
The Dreyfus Fund Incorporated++
ROBERT F. DUBUSS Director and Treasurer:
Vice President Major Trading Corporation*;
Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Vice President:
Dreyfus Consumer Life Insurance Company*;
Treasurer:
Dreyfus Management, Inc.*;
Dreyfus Precious Metals, Inc.*;
Dreyfus Service Corporation*;
Assistant Treasurer:
The Dreyfus Fund Incorporated++;
Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Dreyfus Thrift & Commerce****
ALAN M. EISNER Director and President:
Vice President and Chief The Truepenny Corporation*;
Financial Officer Vice President and Chief Financial Officer:
Dreyfus Acquisition Corporation*;
Dreyfus Consumer Life Insurance Company*;
Treasurer:
Dreyfus Realty Advisors, Inc.+++;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
Director:
Dreyfus Thrift & Commerce****;
Vice President and Director:
The Dreyfus Consumer Credit Corporation*
DAVID W. BURKE Vice President and Director:
Vice President and Chief The Dreyfus Trust Company++;
Administrative Officer Formerly, President:
CBS News, a division of CBS, Inc.
524 West 57th Street
New York, New York 10019
Director:
Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC Municipal Money Market
Fund, Inc.++;
Dreyfus California Municipal
Income, Inc.++;
Dreyfus California Tax Exempt Bond
Fund, Inc.++;
Dreyfus Capital Value Fund (A Premier
Fund)++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
The Dreyfus Fund Incorporated++;
Dreyfus Growth Allocation Fund, Inc.++;
Dreyfus Insured Municipal Bond
Fund, Inc.++;
Dreyfus Intermediate Municipal Bond
Fund, Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Income, Inc.++;
Dreyfus Municipal Money Market
Fund, Inc.++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
Dreyfus New York Municipal Income, Inc.++;
Dreyfus New York Tax Exempt Bond
Fund, Inc.++;
Dreyfus Ohio Municipal Money Market
Fund, Inc.++;
Dreyfus Short-Term Income Fund, Inc.++;
Dreyfus Strategic Governments Income,
Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Strategic Municipal Bond
Fund, Inc.++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
Trustee:
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Intermediate Municipal
Bond Fund++;
Dreyfus California Tax Exempt Money
Market Fund++;
Dreyfus Connecticut Intermediate Municipal
Bond Fund++;
DAVID W. BURKE Dreyfus Institutional Short Term
(cont'd) Treasury Fund++;
Dreyfus Massachusetts Intermediate
Municipal Bond Fund++;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt
Bond Fund++;
Dreyfus New Jersey Intermediate Municipal
Bond Fund++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus Pennsylvania Intermediate
Municipal Bond Fund++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Short-Intermediate Government
Fund++
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
ELIE M. GENADRY President:
Vice President - Institutional Services Division of Dreyfus
Institutional Sales Service Corporation*;
Broker-Dealer Division of Dreyfus Service
Corporation*;
Group Retirement Plans Division of Dreyfus
Service Corporation;
Executive Vice President:
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.*;
Senior Vice President:
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Edison Electric Index Fund,
Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Institutional Short Term
Treasury Fund++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus Tax Exempt Cash Management++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus-Wilshire Target Funds, Inc.++;
Peoples Index Fund, Inc.++;
Peoples S&P MidCap Index Fund, Inc.++;
Vice President:
The Dreyfus Trust Company++;
Premier Insured Municipal Bond Fund++;
Premier California Municipal Bond Fund++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
Vice President-Sales:
The Dreyfus Trust Company (N.J.)++;
ELLEN M. GENADRY Treasurer:
(cont'd) Pacific American Fund+++++
DANIEL C. MACLEAN Director, Vice President and Secretary:
Vice President and General Dreyfus Precious Metals, Inc.*;
Counsel Director and Vice President:
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company (N.J.)++;
Director and Secretary:
Dreyfus Partnership Management, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation+;
Director:
Dreyfus America Fund++++;
Dreyfus Consumer Life Insurance Company*;
The Dreyfus Trust Company++;
Vice President:
Dreyfus Appreciation Fund, Inc.++;
Dreyfus BASIC Municipal Money Market Fund,
Inc.++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Capital Value Fund (A Premier
Fund)++;
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
Dreyfus Edison Electric Index Fund,
Inc.++;
Dreyfus Florida Intermediate Municipal
Bond Fund++;
Dreyfus Focus Funds, Inc.++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Growth and Income Fund, Inc.++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus Institutional Short Term
Treasury Fund++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus Investors GNMA Fund++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
DANIEL C. MACLEAN Dreyfus New York Insured Tax Exempt Bond
(cont'd) Fund++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Short-Intermediate Municipal Bond
Fund++;
The Dreyfus Socially Responsible Growth
Fund, Inc.++;
Dreyfus Tax Exempt Cash Management++;
The Dreyfus Third Century Fund, Inc.++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus-Wilshire Target Funds, Inc.++;
First Prairie Cash Management++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Municipal Money Market
Fund++;
First Prairie Tax Exempt Bond Fund,
Inc. ++;
First Prairie U.S. Government Income
Fund++;
First Prairie U.S. Treasury Securities
Cash Management++;
FN Network Tax Free Money Market Fund,
Inc.++;
General California Municipal Money Market
Fund++;
General Government Securities Money Market
Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
General New York Municipal Bond Fund,
Inc.++;
General New York Municipal Money Market
Fund++;
Peoples Index Fund, Inc.++;
Peoples S&P MidCap Index Fund, Inc.++;
Premier Insured Municipal Bond Fund++;
Premier California Municipal Bond Fund++;
Premier GNMA Fund++;
Premier Growth Fund, Inc.++;
Premier Municipal Bond Fund++;
DANIEL C. MACLEAN Premier New York Municipal Bond Fund++;
(cont'd) Premier State Municipal Bond Fund++;
Secretary:
Dreyfus A Bonds Plus, Inc.++;
Dreyfus Acquisition Corporation*;
Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus Balanced Fund, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Intermediate Municipal
Bond Fund++;
Dreyfus California Municipal Income,
Inc.++;
Dreyfus Capital Growth Fund (A Premier
Fund)++;
Dreyfus Connecticut Intermediate Municipal
Bond Fund++;
Dreyfus Florida Municipal Money Market
Fund++;
The Dreyfus Fund Incorporated++;
Dreyfus Global Growth, L.P. (A Strategic
Fund)++;
Dreyfus Global Investing++;
Dreyfus Growth Allocation Fund, Inc.++;
Dreyfus Institutional Money Market Fund++;
Dreyfus International Equity Fund, Inc.++;
Dreyfus Massachusetts Intermediate
Municipal Bond Fund++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Income, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
Dreyfus New Jersey Intermediate Municipal
Bond Fund++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus New York Municipal Income, Inc.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund++;
Dreyfus 100% U.S. Treasury Long Term
Fund++;
Dreyfus 100% U.S. Treasury Money Market
Fund++;
Dreyfus 100% U.S. Treasury Short Term
Fund++;
Dreyfus Pennsylvania Intermediate
Municipal Bond Fund++;
Dreyfus Service Corporation*;
Dreyfus Service Organization, Inc.*;
Dreyfus Short-Term Income Fund, Inc.++;
Dreyfus Strategic Governments Income,
Inc.++;
Dreyfus Strategic Growth, L.P.++;
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
DANIEL C. MACLEAN Dreyfus Strategic Municipal Bond Fund,
(cont'd) Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Variable Investment Fund++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
General California Municipal Bond Fund,
Inc.++;
Seven Six Seven Agency, Inc.*;
Director and Assistant Secretary:
The Dreyfus Fund International
Limited++++++
JEFFREY N. NACHMAN Vice President-Financial:
Vice President - Mutual Dreyfus A Bonds Plus, Inc.++;
Fund Accounting Dreyfus Appreciation Fund, Inc.++;
Dreyfus California Municipal Income,
Inc.++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Capital Growth Fund (A Premier
Fund)++;
Dreyfus Capital Value Fund (A Premier
Fund)++;
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
The Dreyfus Fund Incorporated++;
Dreyfus Global Growth, L.P. (A Strategic
Fund)++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus Institutional Money Market Fund++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus Investors GNMA Fund++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus Municipal Income, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
JEFFREY N. NACHMAN Dreyfus New Jersey Municipal Bond Fund,
(cont'd) Inc.++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
Dreyfus New York Insured Tax Exempt Bond
Fund++;
Dreyfus New York Municipal Income, Inc.++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund++;
Dreyfus 100% U.S. Treasury Long Term
Fund++;
Dreyfus 100% U.S. Treasury Money Market
Fund++;
Dreyfus 100% U.S. Treasury Short Term
Fund++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Short-Intermediate Municipal Bond
Fund++;
Dreyfus Strategic Governments Income,
Inc.++;
Dreyfus Strategic Growth, L.P.++;
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
Dreyfus Strategic Municipal Bond Fund,
Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Tax Exempt Cash Management++;
The Dreyfus Third Century Fund, Inc.++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus Variable Investment Fund++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Municipal Money Market
Fund++;
First Prairie Tax Exempt Bond Fund,
Inc.++;
FN Network Tax Free Money Market Fund,
Inc.++;
General California Municipal Bond Fund,
Inc.++;
General California Municipal Money Market
Fund++;
JEFFREY N. NACHMAN General Government Securities Money Market
(cont'd) Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
General New York Municipal Bond Fund,
Inc.++;
General New York Municipal Money Market
Fund++;
Peoples Index Fund, Inc.++;
Premier California Municipal Bond Fund++;
Premier GNMA Fund++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
Premier State Municipal Bond Fund++;
Vice President and Treasurer:
Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus Balanced Fund, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC Municipal Money Market Fund,
Inc.++;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Intermediate Municipal
Bond Fund++;
Dreyfus Connecticut Intermediate Municipal
Bond Fund++;
Dreyfus Edison Electric Index Fund,
Inc.++;
Dreyfus Florida Intermediate Municipal
Bond Fund++;
Dreyfus Florida Municipal Money Market
Fund++;
Dreyfus Focus Funds, Inc.++;
Dreyfus Global Investing++;
Dreyfus Growth Allocation Fund,
Inc.++;
Dreyfus Growth and Income Fund, Inc.++;
Dreyfus Institutional Short Term
Treasury Fund++;
Dreyfus International Equity Fund, Inc.++;
Dreyfus Massachusetts Intermediate
Municipal Bond Fund++;
Dreyfus New Jersey Intermediate Municipal
Bond Fund++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus Pennsylvania Intermediate
Municipal Bond Fund++;
Dreyfus Short-Term Income Fund, Inc.++;
The Dreyfus Socially Responsible Growth
Fund, Inc.++;
Dreyfus-Wilshire Target Funds, Inc.++;
First Prairie Cash Management++;
First Prairie U.S. Government Income
Fund++;
JEFFREY N. NACHMAN First Prairie U.S. Treasury Securities
(cont'd) Cash Management++;
Peoples S&P MidCap Index Fund, Inc.++;
Premier Growth Fund, Inc.++;
Premier Insured Municipal Bond Fund++;
Assistant Treasurer:
Pacific American Fund+++++
PETER A. SANTORIELLO Director, President and Investment
Vice President Officer:
Dreyfus Balanced Fund, Inc.++;
Director and President:
Dreyfus Management, Inc.*;
Vice President:
Dreyfus Personal Management, Inc.*
ROBERT H. SCHMIDT President and Director:
Vice President Dreyfus Service Corporation*;
Seven Six Seven Agency, Inc.*;
Formerly, Chairman and Chief Executive
Officer:
Levine, Huntley, Schmidt & Beaver
250 Park Avenue
New York, New York 10017
KIRK V. STUMPP Senior Vice President and
Vice President - Director of Marketing:
New Product Development Dreyfus Service Corporation*
PHILIP L. TOIA Chairman of the Board and Vice President:
Vice President and Dreyfus Thrift & Commerce****;
Director of Fixed- Director:
Income Research The Dreyfus Security Savings Bank F.S.B.+;
Senior Loan Officer and Director:
The Dreyfus Trust Company++;
Vice President:
The Dreyfus Consumer Credit Corporation*;
President and Director:
Dreyfus Personal Management, Inc.*;
Director:
Dreyfus Realty Advisors, Inc.+++;
Formerly, Senior Vice President:
The Chase Manhattan Bank, N.A. and
The Chase Manhattan Capital Markets
Corporation
One Chase Manhattan Plaza
New York, New York 10081
KATHERINE C. WICKHAM Vice President:
Assistant Vice President - Dreyfus Consumer Life Insurance
Human Resources Company++;
Formerly, Assistant Commissioner:
Department of Parks and Recreation of the
City of New York
830 Fifth Avenue
New York, New York 10022
JOHN J. PYBURN Treasurer and Assistant Secretary:
Assistant Vice President The Dreyfus Fund International
Limited++++++;
Treasurer:
Dreyfus A Bonds Plus, Inc.++;
Dreyfus Appreciation Fund, Inc.++;
Dreyfus California Municipal Income,
Inc.++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Capital Growth Fund (A Premier
Fund)++;
Dreyfus Capital Value Fund (A Premier
Fund)++;
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
The Dreyfus Fund Incorporated++;
Dreyfus Global Growth, L.P. (A Strategic
Fund)++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus Institutional Money Market Fund++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus Investors GNMA Fund++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus Municipal Income, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
Dreyfus New York Insured Tax Exempt Bond
Fund++;
Dreyfus New York Municipal Income, Inc.++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
JOHN J. PYBURN Dreyfus New York Tax Exempt Intermediate
(cont'd) Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund++;
Dreyfus 100% U.S. Treasury Long Term
Fund++;
Dreyfus 100% U.S. Treasury Money Market
Fund++;
Dreyfus 100% U.S. Treasury Short Term
Fund++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Short-Intermediate Municipal Bond
Fund++;
Dreyfus Strategic Governments Income,
Inc.++;
Dreyfus Strategic Growth, L.P.++;
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
Dreyfus Strategic Municipal Bond Fund,
Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Tax Exempt Cash Management++;
The Dreyfus Third Century Fund, Inc.++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus Variable Investment Fund++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Municipal Money Market
Fund++;
First Prairie Tax Exempt Bond Fund,
Inc. ++;
FN Network Tax Free Money Market Fund,
Inc.++;
General California Municipal Bond Fund,
Inc.++;
General California Municipal Money Market
Fund++;
General Government Securities Money Market
Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
General New York Municipal Bond Fund,
Inc.++;
General New York Municipal Money Market
Fund++;
Peoples Index Fund, Inc.++;
JOHN J. PYBURN Premier California Municipal Bond Fund++;
(cont'd) Premier GNMA Fund++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
Premier State Municipal Bond Fund++
MAURICE BENDRIHEM Treasurer:
Controller Dreyfus Consumer Life Insurance Company*;
Dreyfus Partnership Management, Inc.*;
Dreyfus Service Organization, Inc.*;
Seven Six Seven Agency, Inc.*;
The Truepenny Corporation*;
Controller:
Dreyfus Acquisition Corporation*;
The Dreyfus Trust Company++;
The Dreyfus Trust Company (N.J.)++;
The Dreyfus Consumer Credit Corporation*;
Assistant Treasurer:
Dreyfus Precious Metals*
Formerly, Vice President-Financial Planning,
Administration and Tax:
Showtime/The Movie Channel, Inc.
1633 Broadway
New York, New York 10019
MARK N. JACOBS Vice President:
Secretary and Deputy Dreyfus A Bonds Plus, Inc.++;
General Counsel Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus Balanced Fund, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Intermediate Municipal
Bond Fund++;
Dreyfus Capital Growth Fund (A Premier
Fund)++;
Dreyfus Connecticut Intermediate Municipal
Bond Fund++;
Dreyfus Edison Electric Index Fund,
Inc.++;
Dreyfus Florida Municipal Money Market
Fund++;
Dreyfus Focus Funds, Inc.++;
The Dreyfus Fund Incorporated++;
Dreyfus Global Growth, L.P. (A Strategic
Fund)++;
Dreyfus Global Investing++;
Dreyfus Growth Allocation Fund,
Inc.++;
Dreyfus Institutional Money Market Fund++;
Dreyfus International Equity Fund, Inc.++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Massachusetts Intermediate
Municipal Bond Fund++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
MARK N. JACOBS Dreyfus Municipal Money Market Fund,
(cont'd) Inc.++;
Dreyfus New Jersey Intermediate Municipal
Bond Fund++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund++;
Dreyfus 100% U.S. Treasury Long Term
Fund++;
Dreyfus 100% U.S. Treasury Money Market
Fund++;
Dreyfus 100% U.S. Treasury Short Term
Fund++;
Dreyfus Pennsylvania Intermediate
Municipal Bond Fund++;
Dreyfus Short-Term Income Fund, Inc.++;
Dreyfus Strategic Growth, L.P.++;
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
Dreyfus Strategic Municipal Bond Fund,
Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Variable Investment Fund++;
Dreyfus-Wilshire Target Funds, Inc.++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
General California Municipal Bond Fund,
Inc.++;
Peoples Index Fund, Inc.++;
Peoples S&P MidCap Index Fund, Inc.++;
Director:
World Balanced Fund++++;
Secretary:
Dreyfus Appreciation Fund, Inc.++;
Dreyfus BASIC Municipal Money Market Fund,
Inc.++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Capital Value Fund (A Premier
Fund)++;
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
The Dreyfus Consumer Credit Corporation*;
Dreyfus Consumer Life Insurance Company*;
Dreyfus Florida Intermediate Municipal
Bond Fund++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Growth and Income Fund, Inc.++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus Institutional Short Term
Treasury Fund++;
MARK N. JACOBS Dreyfus Insured Municipal Bond Fund,
(cont'd) Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus Investors GNMA Fund++;
Dreyfus Management, Inc.*;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
Dreyfus New York Insured Tax Exempt Bond
Fund++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
Dreyfus New York Tax Exempt Money Market
Fund++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Short-Intermediate Municipal Bond
Fund++;
The Dreyfus Socially Responsible Growth
Fund, Inc.++;
Dreyfus Tax Exempt Cash Management++;
The Dreyfus Third Century Fund, Inc.++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
First Prairie Cash Management++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Municipal Money Market
Fund++;
First Prairie Tax Exempt Bond Fund,
Inc. ++;
First Prairie U.S. Government Income
Fund++;
First Prairie U.S. Treasury Securities
Cash Management++;
FN Network Tax Free Money Market Fund,
Inc.++;
General California Municipal Money Market
Fund++;
MARK N. JACOBS General Government Securities Money Market
(cont'd) Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
General New York Municipal Bond Fund,
Inc.++;
General New York Municipal Money Market
Fund++;
Pacific American Fund+++++;
Premier Insured Municipal Bond Fund++;
Premier California Municipal Bond Fund++;
Premier GNMA Fund++;
Premier Growth Fund, Inc.++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
Premier State Municipal Bond Fund++;
Assistant Secretary:
Dreyfus Service Organization, Inc.*;
Major Trading Corporation*;
The Truepenny Corporation*
CHRISTINE PAVALOS Assistant Secretary:
Assistant Secretary Dreyfus A Bonds Plus, Inc.++;
Dreyfus Acquisition Corporation*;
Dreyfus Appreciation Fund, Inc.++;
Dreyfus Asset Allocation Fund, Inc.++;
Dreyfus Balanced Fund, Inc.++;
Dreyfus BASIC Money Market Fund, Inc.++;
Dreyfus BASIC Municipal Money Market Fund,
Inc.++;
Dreyfus BASIC U.S. Government Money Market
Fund++;
Dreyfus California Intermediate Municipal
Bond Fund++;
Dreyfus California Municipal Income,
Inc.++;
Dreyfus California Tax Exempt Bond Fund,
Inc.++;
Dreyfus California Tax Exempt Money Market
Fund++;
Dreyfus Capital Growth Fund (A Premier
Fund)++;
Dreyfus Capital Value Fund, (A Premier
Fund)++;
Dreyfus Cash Management++;
Dreyfus Cash Management Plus, Inc.++;
Dreyfus Connecticut Intermediate
Municipal Bond Fund++;
Dreyfus Connecticut Municipal Money Market
Fund, Inc.++;
Dreyfus Edison Electric Index Fund,
Inc.++;
CHRISTINE PAVALOS Dreyfus Florida Intermediate Municipal
(cont'd) Bond Fund++;
Dreyfus Florida Municipal Money Market
Fund++;
Dreyfus Focus Funds, Inc.++;
The Dreyfus Fund Incorporated++;
Dreyfus Global Growth, L.P. (A Strategic
Fund)++;
Dreyfus Global Investing++;
Dreyfus GNMA Fund, Inc.++;
Dreyfus Government Cash Management++;
Dreyfus Growth Allocation Fund,
Inc.++;
Dreyfus Growth and Income, Inc.++;
Dreyfus Growth Opportunity Fund, Inc.++;
Dreyfus Institutional Money Market Fund++;
Dreyfus Institutional Short Term
Treasury Fund++;
Dreyfus Insured Municipal Bond Fund,
Inc.++;
Dreyfus Intermediate Municipal Bond Fund,
Inc.++;
Dreyfus International Equity Fund, Inc.++;
Dreyfus Investors GNMA Fund++;
Dreyfus Life and Annuity Index Fund,
Inc.++;
Dreyfus Liquid Assets, Inc.++;
Dreyfus Management, Inc.*;
Dreyfus Massachusetts Intermediate
Municipal Bond Fund++;
Dreyfus Massachusetts Municipal Money
Market Fund++;
Dreyfus Massachusetts Tax Exempt Bond
Fund++;
Dreyfus Michigan Municipal Money Market
Fund, Inc.++;
Dreyfus Money Market Instruments, Inc.++;
Dreyfus Municipal Bond Fund, Inc.++;
Dreyfus Municipal Cash Management Plus++;
Dreyfus Municipal Income, Inc.++;
Dreyfus Municipal Money Market Fund,
Inc.++;
Dreyfus New Jersey Intermediate Municipal
Bond Fund++;
Dreyfus New Jersey Municipal Bond Fund,
Inc.++;
Dreyfus New Jersey Municipal Money Market
Fund, Inc.++;
Dreyfus New Leaders Fund, Inc.++;
Dreyfus New York Insured Tax Exempt Bond
Fund++;
Dreyfus New York Municipal Cash
Management++;
Dreyfus New York Municipal Income, Inc.++;
Dreyfus New York Tax Exempt Bond Fund,
Inc.++;
Dreyfus New York Tax Exempt Intermediate
Bond Fund++;
CHRISTINE PAVALOS Dreyfus New York Tax Exempt Money Market
(cont'd) Fund++;
Dreyfus Ohio Municipal Money Market Fund,
Inc.++;
Dreyfus 100% U.S. Treasury Intermediate
Term Fund++;
Dreyfus 100% U.S. Treasury Long Term
Fund++;
Dreyfus 100% U.S. Treasury Money Market
Fund++;
Dreyfus 100% U.S. Treasury Short Term
Fund++;
Dreyfus Pennsylvania Intermediate
Municipal Bond Fund++;
Dreyfus Pennsylvania Municipal Money
Market Fund++;
Dreyfus Service Corporation*;
Dreyfus Short-Intermediate Government
Fund++;
Dreyfus Short-Intermediate Municipal Bond
Fund++;
Dreyfus Short-Term Income Fund, Inc.++;
The Dreyfus Socially Responsible Growth
Fund, Inc.++;
Dreyfus Strategic Governments Income,
Inc.++;
Dreyfus Strategic Growth, L.P.++;
Dreyfus Strategic Income++;
Dreyfus Strategic Investing++;
Dreyfus Strategic Municipal Bond Fund,
Inc.++;
Dreyfus Strategic Municipals, Inc.++;
Dreyfus Tax Exempt Cash Management++;
The Dreyfus Third Century Fund, Inc.++;
Dreyfus Treasury Cash Management++;
Dreyfus Treasury Prime Cash Management++;
Dreyfus Variable Investment Fund++;
Dreyfus-Wilshire Target Funds, Inc.++;
Dreyfus Worldwide Dollar Money Market
Fund, Inc.++;
First Prairie Cash Management++;
First Prairie Diversified Asset Fund++;
First Prairie Money Market Fund++;
First Prairie Tax Exempt Bond Fund,
Inc. ++;
First Prairie Municipal Money Market
Fund++;
First Prairie U.S. Government Income
Fund++;
First Prairie U.S. Treasury Securities
Cash Management++;
FN Network Tax Free Money Market Fund,
Inc.++;
General California Municipal Bond Fund,
Inc.++;
General California Municipal Money Market
Fund++;
CHRISTINE PAVALOS General Government Securities Money Market
(cont'd) Fund, Inc.++;
General Money Market Fund, Inc.++;
General Municipal Bond Fund, Inc.++;
General Municipal Money Market Fund,
Inc.++;
General New York Municipal Bond Fund,
Inc.++;
General New York Municipal Money Market
Fund++;
Peoples Index Fund, Inc.++;
Peoples S&P MidCap Index Fund, Inc.++;
Premier Insured Municipal Bond Fund++;
Premier California Municipal Bond Fund++;
Premier GNMA Fund++;
Premier Growth Fund, Inc.++;
Premier Municipal Bond Fund++;
Premier New York Municipal Bond Fund++;
Premier State Municipal Bond Fund++;
The Truepenny Corporation*
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 80 Cutter Mill Road,
Great Neck, New York 11021.
*** The address of the business so indicated is 45 Broadway, New York,
New York 10006.
**** The address of the business so indicated is Five Triad Center, Salt
Lake City, Utah 84180.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is One Rockefeller Plaza,
New York, New York 10020.
++++ The address of the business so indicated is 2 Boulevard Royal,
Luxembourg.
+++++ The address of the business so indicated is 800 West Sixth Street,
Suite 1000, Los Angeles, California 90017.
++++++ The address of the business so indicated is Nassau, Bahama Islands.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Strategy Fund, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC Money Market Fund, Inc.
7) Dreyfus BASIC Municipal Money Market Fund, Inc.
8) Dreyfus BASIC U.S. Government Money Market Fund
9) Dreyfus California Intermediate Municipal Bond Fund
10) Dreyfus California Tax Exempt Bond Fund, Inc.
11) Dreyfus California Tax Exempt Money Market Fund
12) Dreyfus Capital Value Fund, Inc.
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) The Dreyfus Convertible Securities Fund, Inc.
18) Dreyfus Edison Electric Index Fund, Inc.
19) Dreyfus Florida Intermediate Municipal Bond Fund
20) Dreyfus Florida Municipal Money Market Fund
21) Dreyfus Focus Funds, Inc.
22) The Dreyfus Fund Incorporated
23) Dreyfus Global Growth, L.P. (A Strategic Fund)
24) Dreyfus Global Investing, Inc.
25) Dreyfus GNMA Fund, Inc.
26) Dreyfus Government Cash Management
27) Dreyfus Growth and Income Fund, Inc.
28) Dreyfus Growth Opportunity Fund, Inc.
29) Dreyfus Institutional Money Market Fund
30) Dreyfus Institutional Short Term Treasury Fund
31) Dreyfus Insured Municipal Bond Fund, Inc.
32) Dreyfus Intermediate Municipal Bond Fund, Inc.
33) Dreyfus International Equity Fund, Inc.
34) Dreyfus Investors GNMA Fund
35) The Dreyfus Leverage Fund, Inc.
36) Dreyfus Life and Annuity Index Fund, Inc.
37) Dreyfus Liquid Assets, Inc.
38) Dreyfus Massachusetts Intermediate Municipal Bond Fund
39) Dreyfus Massachusetts Municipal Money Market Fund
40) Dreyfus Massachusetts Tax Exempt Bond Fund
41) Dreyfus Michigan Municipal Money Market Fund, Inc.
42) Dreyfus Money Market Instruments, Inc.
43) Dreyfus Municipal Bond Fund, Inc.
44) Dreyfus Municipal Cash Management Plus
45) Dreyfus Municipal Money Market Fund, Inc.
46) Dreyfus New Jersey Intermediate Municipal Bond Fund
47) Dreyfus New Jersey Municipal Bond Fund, Inc.
48) Dreyfus New Jersey Municipal Money Market Fund, Inc.
49) Dreyfus New Leaders Fund, Inc.
50) Dreyfus New York Insured Tax Exempt Bond Fund
51) Dreyfus New York Municipal Cash Management
52) Dreyfus New York Tax Exempt Bond Fund, Inc.
53) Dreyfus New York Tax Exempt Intermediate Bond Fund
54) Dreyfus New York Tax Exempt Money Market Fund
55) Dreyfus Ohio Municipal Money Market Fund, Inc.
56) Dreyfus 100% U.S. Treasury Intermediate Term Fund
57) Dreyfus 100% U.S. Treasury Long Term Fund
58) Dreyfus 100% U.S. Treasury Money Market Fund
59) Dreyfus 100% U.S. Treasury Short Term Fund
60) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
61) Dreyfus Pennsylvania Municipal Money Market Fund
62) Dreyfus Short-Intermediate Government Fund
63) Dreyfus Short-Intermediate Municipal Bond Fund
64) Dreyfus Short-Term Income Fund, Inc.
65) The Dreyfus Socially Responsible Growth Fund, Inc.
66) Dreyfus Strategic Growth, L.P.
67) Dreyfus Strategic Income
68) Dreyfus Strategic Investing
69) Dreyfus Tax Exempt Cash Management
70) The Dreyfus Third Century Fund, Inc.
71) Dreyfus Treasury Cash Management
72) Dreyfus Treasury Prime Cash Management
73) Dreyfus Variable Investment Fund
74) Dreyfus-Wilshire Target Funds, Inc.
75) Dreyfus Worldwide Dollar Money Market Fund, Inc.
76) First Prairie Cash Management
77) First Prairie Diversified Asset Fund
78) First Prairie Money Market Fund
79) First Prairie Municipal Bond Fund
80) First Prairie Municipal Money Market Fund
81) First Prairie U.S. Government Income Fund
82) First Prairie U.S. Treasury Securities Cash Management
83) FN Network Tax Free Money Market Fund, Inc.
84) General California Municipal Bond Fund, Inc.
85) General California Municipal Money Market Fund
86) General Government Securities Money Market Fund, Inc.
87) General Money Market Fund, Inc.
88) General Municipal Bond Fund, Inc.
89) General Municipal Money Market Fund, Inc.
90) General New York Municipal Bond Fund, Inc.
91) General New York Municipal Money Market Fund
92) Pacific American Fund
93) Peoples Index Fund, Inc.
94) Peoples S&P MidCap Index Fund, Inc.
95) Premier Insured Municipal Bond Fund
96) Premier California Municipal Bond Fund
97) Premier GNMA Fund
98) Premier Growth Fund, Inc.
99) Premier Municipal Bond Fund
100) Premier New York Municipal Bond Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address Dreyfus Service Corporation Registrant
__________________ ___________________________ _____________
Howard Stein* Chairman of the Board None
Robert H. Schmidt* President and Director None
Joseph S. DiMartino* Executive Vice President and Director None
Lawrence M. Greene* Executive Vice President and Director None
Julian M. Smerling* Executive Vice President and Director None
Elie M. Genadry* Executive Vice President None
Hank Gottmann* Executive Vice President None
Donald A. Nanfeldt* Executive Vice President None
Kevin Flood* Senior Vice President None
Roy Gross* Senior Vice President None
Irene Papadoulis** Senior Vice President None
Kirk Stumpp* Senior Vice President None
and Director of Marketing
Diane M. Coffey* Vice President None
Walter T. Harris* Vice President None
William Harvey* Vice President None
William V. Healey* Vice President/Legal Counsel None
Adwick Pinnock** Vice President None
George Pirrone* Vice President/Trading None
Karen Rubin Waldmann* Vice President None
Peter D. Schwab* Vice President/New Products None
Michael Anderson* Assistant Vice President None
Carolyn Sobering* Assistant Vice President-Trading None
Daniel C. Maclean* Secretary Vice
President
Robert F. Dubuss* Treasurer None
Maurice Bendrihem* Controller None
Michael J. Dolitsky* Assistant Controller None
Susan Verbil Goldgraben* Assistant Treasurer None
Christine Pavalos* Assistant Secretary Assistant
Secretary
Broker-Dealer Division of Dreyfus Service Corporation
=====================================================
Positions and offices with Positions and
Name and principal Broker-Dealer Division of offices with
business address Dreyfus Service Corporation Registrant
__________________ ___________________________ _____________
Elie M. Genadry* President Vice
President
Craig E. Smith* Executive Vice President None
Peter Moeller* Vice President and Sales Manager None
Kristina Williams
Pomano Beach, FL Vice President-Administration None
Edward Donley
Latham, NY Regional Vice President None
Glenn Farinacci* Regional Vice President None
Peter S. Ferrentino
San Francisco, CA Regional Vice President None
William Frey
Hoffman Estates, IL Regional Vice President None
Suzanne Haley
Tampa, FL Regional Vice President None
Philip Jochem
Warrington, PA Regional Vice President None
Fred Lanier
Atlanta, GA Regional Vice President None
Beth Presson
Colchester, VT Regional Vice President None
Joseph Reaves
New Orleans, LA Regional Vice President None
Christian Renninger
Germantown, MD Regional Vice President None
Kurt Wiessner
Minneapolis, MN Regional Vice President None
Mary Rogers** Assistant Vice President None
Institutional Services Division of Dreyfus Service Corporation
==============================================================
Positions and offices with Positions and
Name and principal Institutional Services Division offices with
business address of Dreyfus Service Corporation Registrant
__________________ _______________________________ _____________
Elie M. Genadry* President None
Donald A. Nanfeldt* Executive Vice President None
Charles Cardona** Senior Vice President None
Stacy Alexander* Vice President None
Eric Almquist* Vice President None
James E. Baskin+++++++ Vice President None
Kenneth Bernstein
Boca Raton, FL Vice President-Institutional Sales None
Stephen Burke* Vice President None
Laurel A. Diedrick
Burrows*** Vice President None
Daniel L. Clawson++++ Vice President None
Michael Caraboolad
Gates Mills, OH Vice President-Institutional Sales None
Laura Caudillo++ Vice President-Institutional Sales None
Steven Faticone***** Vice-President-Institutional Sales None
William E. Findley**** Vice President None
Mary Genet***** Vice President None
Melinda Miller Gordon* Vice President None
Christina Haydt++ Vice President-Institutional Sales None
Carol Anne Kelty* Vice President-Institutional Sales None
Gwenn Kessler***** Vice President-Institutional Sales None
Nancy Knee++++ Vice President-Institutional Sales None
Bradford Lange* Vice President-Institutional Sales None
Kathleen McIntyre
Lewis++ Vice President None
Eva Machek***** Vice President-Institutional Sales None
Mary McCabe*** Vice President-Institutional Sales None
James McNamara***** Vice President-Institutional Sales None
James Neiland* Vice President None
Susan M. O'Connor* Vice President-Institutional
Seminars None
Andrew Pearson+++ Vice President-Institutional Sales None
Jean Heitzman Penny***** Vice President-Institutional Sales None
Dwight Pierce+ Vice President None
Lorianne Pinto* Vice President-Institutional Sales None
Douglas Rentschler
Grosse Point Park, MI Vice President-Institutional Sales None
Leah Ryan**** Vice President-Institutional Sales None
Emil Samman* Vice President-Institutional
Marketing None
Edward Sands* Vice President-Institutional
Administration None
William Schalda* Vice President None
Sue Ann Seefeld++++ Vice President-Institutional Sales None
Elizabeth Biordi Vice President-Institutional
Wieland* Administration None
Jeanne Butler* Assistant Vice President-
Institutional Operations None
Roberta Hall***** Assistant Vice President-
Institutional Servicing None
Tracy Hopkins** Assistant Vice President-
Institutional Operations None
Lois Paterson* Assistant Vice President-
Institutional Operations None
Karen Markovic
Shpall++++++ Assistant Vice President None
Patrick Synan** Assistant Vice President-
Institutional Support None
Emilie Tongalson** Assistant Vice President-
Institutional Servicing None
Carolyn Warren++ Assistant Vice President-
Institutional Servicing None
Tonda Watson**** Assistant Vice President-
Institutional Sales None
Group Retirement Plans Division of Dreyfus Service Corporation
==============================================================
Positions and offices with Positions and
Name and principal Group Retirement Plans Division offices with
business address of Dreyfus Service Corporation Registrant
__________________ _______________________________ _____________
Elie M. Genadry* President Vice
President
Robert W. Stone* Executive Vice President None
Paul Allen* Executive Vice President-
National Sales None
Leonard Larrabee* Vice President and Senior Counsel None
George Anastasakos* Vice President None
Bart Ballinger++ Vice President-Sales None
Paula Cleary* Vice President-Marketing None
Ellen S. Dinas* Vice President-Marketing/Communications None
Wendy Holcomb++ Vice President-Sales None
William Gallagher* Vice President-Sales None
Brent Glading* Vice President-Sales None
Gerald Goz* Vice President-Sales None
Jeffrey Lejune
Dallas, TX Vice President-Sales None
Samuel Mancino** Vice President-Installation None
Joanna Morris* Vice President-Sales None
Joseph Pickert++ Vice President-Sales None
Alison Saunders** Vice President-Enrollment None
Scott Zeleznik* Vice President-Sales None
Alana Zion* Vice President-Sales None
Jeffrey Blake* Assistant Vice President-Sales None
_____________________________________________________
* The address of the offices so indicated is 200 Park Avenue, New
York, New York 10166
** The address of the offices so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
*** The address of the offices so indicated is 580 California Street,
San Francisco, California 94104.
**** The address of the offices so indicated is 3384 Peachtree Road,
Suite 100, Atlanta, Georgia 30326-1106.
***** The address of the offices so indicated is 190 South LaSalle
Street, Suite 2850, Chicago, Illinois 60603.
+ The address of the offices so indicated is P.O. Box 1657, Duxbury,
Massachusetts 02331.
++ The address of the offices so indicated is 800 West Sixth Street,
Suite 1000, Los Angeles, California 90017.
+++ The address of the offices so indicated is 11 Berwick Lane,
Edgewood, Rhode Island 02905.
++++ The address of the offices so indicated is 1700 Lincoln Street,
Suite 3940, Denver, Colorado 80203.
+++++ The address of the offices so indicated is 6767 Forest Hill
Avenue, Richmond, Virginia 23225.
++++++ The address of the offices so indicated is 2117 Diamond Street,
San Diego, California 92109.
+++++++ The address of the offices so indicated is P.O. Box 757,
Holliston, Massachusetts 01746.
Item 30. Location of Accounts and Records
________________________________
1. The Shareholder Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
110 Washington Street
New York, New York 10286
3. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) With respect to the Colorado and Oregon Series, to file a post-
effective amendment, using financial statements which need not
be certified, within four to six months from the effective date
of this Registration Statement.
(2) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a trustee or trustees when requested
in writing to do so by the holders of at least 10% of the
Registrant's outstanding shares of beneficial interest and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
(3) To furnish each person to whom a prospectus is delivered with a
copy of its latest annual report to shareholders upon request and
without charge beginning with the annual report to shareholders
for the fiscal year ending April 30, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New
York, and State of New York on the 14th day of February, 1994.
PREMIER STATE MUNICIPAL BOND FUND
(Registrant)
BY: /s/Richard J. Moynihan*
RICHARD J. MOYNIHAN, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to the Registration Statement
has been signed below by the following persons in the capacities and on the
date indicated.
Signatures Title Date
___________________________ ______________________________ ___________
/s/Richard J. Moynihan* President (Principal Executive 2/14/94
Richard J. Moynihan Officer) and Trustee
/s/John J. Pyburn* Treasurer (Principal Financial 2/14/94
John J. Pyburn Officer)
/s/Clifford L. Alexander Jr.* Controller (Principal Accounting 2/14/94
Clifford L. Alexander Jr. Officer)
/s/Peggy C. Davis* Trustee 2/14/94
Peggy C. Davis
/s/Ernest Kafka* Trustee 2/14/94
Ernest Kafka
/s/Saul B. Klaman* Trustee 2/14/94
Saul B. Klaman
/s/Nathan Leventhal* Trustee 2/14/94
Nathan Leventhal
BY:/s/Robert R. Mullery
__________________________ *
Robert R. Mullery,
Attorney-in-Fact
INDEX OF EXHIBITS Page
(5) Management Agreement between the Registrant and
The Dreyfus Corporation . . . . . . . . . . . . . .
(6)(a) Distribution Agreement between the
Registrant and Dreyfus Service Corporation. . . . .
(9) Shareholder Services Plan . . . . . . . . . . . . .
(11) Consent of Independent Auditors . . . . . . . . . .
(15) Distribution Plan . . . . . . . . . . . . . . . . .
Exhibit (5)
MANAGEMENT AGREEMENT
PREMIER STATE MUNICIPAL BOND FUND
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
November 21, 1986
As Amended, January 26, 1994
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
Premier State Municipal Bond Fund, a Massachusetts business trust
(the "Fund") consisting of the series named on Schedule 1 hereto, as such
Schedule may be revised from time to time (each, a "Series"), herewith
confirms its agreement with you as follows:
The Fund desires to employ its capital by investing and
reinvesting the same in investments of the type and in accordance with the
limitations specified in its Declaration of Trust and in its Prospectus and
Statement of Additional Information as from time to time in effect, copies
of which have been or will be submitted to you, and in such manner and to
such extent as from time to time may be approved by the Fund's Trustees.
The Fund desires to employ you to act as its investment adviser.
In this connection it is understood that from time to time you
will employ or associate with yourself such person or persons as you may
believe to be particularly fitted to assist you in the performance of this
Agreement. Such person or persons may be officers or employees who are
employed by both you and the Fund. The compensation of such person or
persons shall be paid by you and no obligation may be incurred on the Fund's
behalf in any such respect.
Subject to the supervision and approval of the Fund's Trustees,
you will provide investment management of each Series' portfolio in
accordance with such Series' investment objectives and policies as stated in
the Fund's Prospectus and Statement of Additional Information as from time
to time in effect. In connection therewith, you will obtain and provide
investment research and will supervise each Series' investments and conduct
a continuous program of investment, evaluation and, if appropriate, sale and
reinvestment of the Fund's assets. You will furnish to the Fund such
statistical information, with respect to the investments which each Series
may hold or contemplate purchasing, as the Fund may reasonably request. The
Fund wishes to be informed of important developments materially affecting
any Series' portfolio and shall expect you, on your own initiative, to
furnish to the Fund from time to time such information as you may believe
appropriate for this purpose.
In addition, you will supply office facilities (which may be in
your own offices), data processing services, clerical, accounting and
bookkeeping services, internal auditing and legal services, internal
executive and administrative services, and stationery and office supplies;
prepare reports to each Series' shareholders, tax returns, reports to and
filings with the Securities and Exchange Commission and state Blue Sky
authorities; calculate the net asset value of each Series' shares; and
generally assist in all aspects of the Fund's operations.
You shall exercise your best judgment in rendering the services to
be provided hereunder and the Fund agrees as an inducement to your
undertaking the same that you shall not be liable hereunder for any error of
judgment or mistake of law or for any loss suffered by one or more Series,
provided that nothing herein shall be deemed to protect or purport to
protect you against any liability to a Series or to its security holders to
which you would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties hereunder, or by
reason of your reckless disregard of your obligations and duties hereunder.
In consideration of services rendered pursuant to this Agreement,
the Fund will pay you on the first business day of each month a fee at the
rate set forth opposite each Series' name on Schedule 1 hereto. Net asset
value shall be computed on such days and at such time or times as described
in the Fund's then-current Prospectus and Statement of Additional
Information. The fee for the period from the date of the commencement of
the initial public sale of a Series' shares to the end of the month during
which such sale shall have been commenced shall be pro-rated according to
the proportion which such period bears to the full monthly period, and upon
any termination of this Agreement before the end of any month, the fee for
such part of a month shall be pro-rated according to the proportion which
such period bears to the full monthly period and shall be payable upon the
date of termination of this Agreement.
For the purpose of determining fees payable to you, the value of
each Series' net assets shall be computed in the manner specified in the
Fund's Declaration of Trust for the computation of the value of each Series'
net assets.
You will bear all expenses in connection with the performance of
your services under this Agreement. All other expenses to be incurred in
the operation of the Fund will be borne by the Fund, except to the extent
specifically assumed by you. The expenses to be borne by the Fund include,
without limitation, the following: taxes, interest, brokerage fees and
commissions, if any, fees of Trustees who are not your officers, directors
or employees or holders of 5% or more of your outstanding voting securities,
Securities and Exchange Commission fees and state Blue Sky qualification
fees, advisory fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, costs of independent pricing
services, costs of maintaining the Fund's existence, costs attributable to
investor services (including, without limitation, telephone and personnel
expenses), costs of preparing, printing and distributing certain
prospectuses and statements of additional information, costs of
shareholders' reports and meetings, and any extraordinary expenses.
As to each Series, if in any fiscal year the aggregate expenses of
the Series (including fees pursuant to this Agreement, but excluding
interest, taxes, brokerage and, with the prior written consent of the
necessary state securities commissions, extraordinary expenses) exceed the
expense limitation of any state having jurisdiction over the Series, the
Fund may deduct from the fees to be paid hereunder, or you will bear, such
excess expense to the extent required by state law. Your obligation
pursuant hereto will be limited to the amount of your fees hereunder. Such
deduction or payment, if any, will be estimated daily, and reconciled and
effected or paid, as the case may be, on a monthly basis.
The Fund understands that you now act, and that from time to time
hereafter you may act, as investment adviser to one or more other investment
companies and fiduciary or other managed accounts, and the Fund has no
objection to your so acting, provided that when purchase or sale of
securities of the same issuer is suitable for the investment objectives of
two or more companies or accounts managed by you which have available funds
for investment, the available securities will be allocated in a manner
believed by you to be equitable to each company or account. It is
recognized that in some cases this procedure may adversely affect the price
paid or received by one or more Series or the size of the position
obtainable for or disposed of by one or more Series.
In addition, it is understood that the persons employed by you to
assist in the performance of your duties hereunder will not devote their
full time to such service and nothing contained herein shall be deemed to
limit or restrict your right or the right of any of your affiliates to
engage in and devote time and attention to other businesses or to render
services of whatever kind or nature.
You shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to
which this Agreement relates, except for a loss resulting from willful
misfeasance, bad faith or gross negligence on your part in the performance
of your duties or from reckless disregard by you of your obligations and
duties under this Agreement. Any person, even though also your officer,
director, partner, employee or agent, who may be or become an officer,
Trustee, employee or agent of the Fund, shall be deemed, when rendering
services to the Fund or acting on any business of the Fund, to be rendering
such services to or acting solely for the Fund and not as your officer,
director, partner, employee, or agent or one under your control or direction
even though paid by you.
As to each Series, this Agreement shall continue until the date
set forth opposite such Series' name on Schedule 1 hereto (the "Reapproval
Date") and thereafter shall continue automatically for successive annual
periods ending on the day of each year set forth opposite the Series' name
on Schedule 1 hereto (the "Reapproval Day"), provided such continuance is
specifically approved at least annually by (i) the Fund's Board of Trustees
or (ii) vote of a majority (as defined in the Investment Company Act of
1940) of such Series' outstanding voting securities, provided that in either
event its continuance also is approved by a majority of the Fund's Trustees
who are not "interested persons" (as defined in said Act) of any party to
this Agreement, by vote cast in person at a meeting called for the purpose
of voting on such approval. As to each Series, this Agreement is terminable
without penalty, on 60 days' notice, by the Fund's Board of Trustees or by
vote of holders of a majority of such Series' shares or, upon not less than
90 days' notice, by you. This Agreement also will terminate automatically,
as to the relevant Series, in the event of its assignment (as defined in
said Act).
This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of the Fund.
The obligations of this Agreement shall only be binding upon the assets and
property of the Fund and shall not be binding upon any Trustee, officer or
shareholder of the Fund individually.
If the foregoing is in accordance with your understanding, will
you kindly so indicate by signing and returning to us the enclosed copy
hereof.
Very truly yours,
PREMIER STATE MUNICIPAL
BOND FUND
By:________________________
Accepted:
THE DREYFUS CORPORATION
By:__________________________ SCHEDULE 1
Annual Fee as
a Percentage
of Average
Daily Net
Name of Series Assets Reapproval Date Reapproval Day
Arizona Series .55 of 1% September 5, 1993 September 5
Colorado Series .55 of 1% September 5, 1995 September 5
Connecticut Series .55 of 1% September 5, 1988 September 5
Georgia Series .55 of 1% September 5, 1993 September 5
Florida Series .55 of 1% September 5, 1988 September 5
Maryland Series .55 of 1% September 5, 1988 September 5
Massachusetts Series .55 of 1% September 5, 1988 September 5
Michigan Series .55 of 1% September 5, 1988 September 5
Minnesota Series .55 of 1% September 5, 1988 September 5
New Jersey Series .55 of 1% September 5, 1988 September 5
North Carolina Series .55 of 1% September 5, 1992 September 5
Ohio Series .55 of 1% September 5, 1988 September 5
Oregon Series .55 of 1% September 5, 1995 September 5
Pennsylvania Series .55 of 1% September 5, 1988 September 5
Texas Series .55 of 1% September 5, 1988 September 5
Virginia Series .55 of 1% September 5, 1992 September 5
Exhibit (6)(a)
DISTRIBUTION AGREEMENT
PREMIER STATE MUNICIPAL BOND FUND
144 Glenn Curtiss Boulevard
Uniondale, New York 11556-0144
October 19, 1992
Effective, January 15, 1993
As Amended, January 26, 1994
Dreyfus Service Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, Premier State Municipal Bond Fund, a
Massachusetts business trust (the "Fund"), has agreed that you shall be, for
the period of this Agreement, the distributor of shares of beneficial
interest of each series of the Fund set forth on Exhibit A hereto, as such
Exhibit may be revised from time to time (each, a "Series").
1. Services as Distributor
1.1 You will act as agent for the distribution of shares of
each Series covered by, and in accordance with, the registration statement
and prospectus then in effect under the Securities Act of 1933, as amended,
and will transmit promptly any orders received by you for purchase or
redemption of shares of each Series to the Transfer and Dividend Disbursing
Agent for the Fund of which the Fund has notified you in writing.
1.2 You agree to use your best efforts to solicit orders
for the sale of shares of each Series. It is contemplated that you will
enter into sales or servicing agreements with securities dealers, financial
institutions and other industry professionals, such as investment advisers,
accountants and estate planning firms, and in so doing you will act only on
your own behalf as principal.
1.3 You shall act as distributor of each Series' shares in
compliance with all applicable laws, rules and regulations, including,
without limitation, all rules and regulations made or adopted pursuant to
the Investment Company Act of 1940, as amended, by the Securities and Ex-
change Commission or any securities association registered under the Securi-
ties Exchange Act of 1934, as amended.
1.4 Whenever in their judgment such action is warranted by
market, economic or political conditions, or by abnormal circumstances of
any kind, the Fund's officers may decline to accept any orders for, or make
any sales of, any Series' shares until such time as they deem it advisable
to accept such orders and to make such sales and the Fund shall advise you
promptly of such determination.
1.5 The Fund agrees to pay all costs and expenses in
connection with the registration of the Fund's shares under the Securities
Act of 1933, as amended, and all expenses in connection with maintaining
facilities for the issue and transfer of a Series' shares and for supplying
information, prices and other data to be furnished by the Fund hereunder,
and the expenses in connection with preparing and printing the Fund's
prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders.
1.6 The Fund agrees to execute any and all documents and to
furnish any and all information and otherwise to take all actions which may
be reasonably necessary in the discretion of the Fund's officers in connec-
tion with the qualification of the Fund's shares for sale in such states as
you may designate to the Fund and the Fund may approve, and the Fund agrees
to pay all expenses which may be incurred in connection with such
qualification. You shall pay all expenses connected with your own
qualification as a dealer under state or Federal laws and, except as
otherwise specifically provided in this agreement, all other expenses
incurred by you in connection with the sale of the Fund's shares as
contemplated in this agreement.
1.7 The Fund shall furnish you from time to time, for use
in connection with the sale of each Series' shares, such information with
respect to such Series and its shares as you may reasonably request, all of
which shall be signed by one or more of the Fund's duly authorized officers;
and the Fund warrants that the statements contained in any such information,
when so signed by the Fund's officers, shall be true and correct. The Fund
also shall furnish you upon request with: (a) semi-annual reports and
annual audited reports of the Fund's books and accounts made by independent
public accountants regularly retained by the Fund, (b) quarterly earnings
statements prepared by the Fund, (c) a monthly itemized list of the
securities in each Series' portfolio, (d) monthly balance sheets as soon as
practicable after the end of each month, and (e) from time to time such
additional information regarding the Fund's financial condition as you may
reasonably request.
1.8 The Fund represents to you that all registration state-
ments and prospectuses filed by the Fund with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to the
Series' shares have been carefully prepared in conformity with the
requirements of said Act and rules and regulations of the Securities and Ex-
change Commission thereunder. As used in this agreement the terms "regis-
tration statement" and "prospectus" shall mean any registration statement
and prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and Exchange
Commission and any amendments and supplements thereto which at any time
shall have been filed with said Commission. The Fund represents and
warrants to you that any registration statement and prospectus, when such
registration statement becomes effective, will contain all statements
required to be stated therein in conformity with said Act and the rules and
regulations of said Commission; that all statements of fact contained in any
such registration statement and prospectus will be true and correct when
such registration statement becomes effective; and that neither any regis-
tration statement nor any prospectus when such registration statement
becomes effective will include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Fund may but shall not be
obligated to propose from time to time such amendment or amendments to any
registration statement and such supplement or supplements to any prospectus
as, in the light of future developments, may, in the opinion of the Fund's
counsel, be necessary or advisable. If the Fund shall not propose such
amendment or amendments and/or supplement or supplements within fifteen days
after receipt by the Fund of a written request from you to do so, you may,
at your option, terminate this agreement or decline to make offers of the
Fund's securities until such amendments are made. The Fund shall not file
any amendment to any registration statement or supplement to any prospectus
without giving you reasonable notice thereof in advance; provided, however,
that nothing contained in this agreement shall in any way limit the Fund's
right to file at any time such amendments to any registration statement
and/or supplements to any prospectus, of whatever character, as the Fund may
deem advisable, such right being in all respects absolute and unconditional.
1.9 The Fund authorizes you to use any prospectus in the
form furnished to you from time to time, in connection with the sale of each
Series' shares. The Fund agrees to indemnify, defend and hold you, your
several officers and directors, and any person who controls you within the
meaning of Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection there-
with) which you, your officers and directors, or any such controlling
person, may incur under the Securities Act of 1933, as amended, or under
common law or otherwise, arising out of or based upon any untrue statement,
or alleged untrue statement, of a material fact contained in any registra-
tion statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be
stated in either any registration statement or any prospectus or necessary
to make the statements in either thereof not misleading; provided, however,
that the Fund's agreement to indemnify you, your officers or directors, and
any such controlling person shall not be deemed to cover any claims,
demands, liabilities or expenses arising out of any untrue statement or
alleged untrue statement or omission or alleged omission made in any
registration statement or prospectus in reliance upon and in conformity with
written information furnished to the Fund by you specifically for use in the
preparation thereof. The Fund's agreement to indemnify you, your officers
and directors, and any such controlling person, as aforesaid, is expressly
conditioned upon the Fund's being notified of any action brought against
you, your officers or directors, or any such controlling person, such
notification to be given by letter or by telegram addressed to the Fund at
its office in Uniondale, New York within ten days after the summons or other
first legal process shall have been served. The failure so to notify the
Fund of any such action shall not relieve the Fund from any liability which
the Fund may have to the person against whom such action is brought by
reason of any such untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of the Fund's indemnity agree-
ment contained in this paragraph 1.9. The Fund will be entitled to assume
the defense of any suit brought to enforce any such claim, demand or
liability, but, in such case, such defense shall be conducted by counsel of
good standing chosen by the Fund and approved by you. In the event the Fund
elects to assume the defense of any such suit and retain counsel of good
standing approved by you, the defendant or defendants in such suit shall
bear the fees and expenses of any additional counsel retained by any of
them; but in case the Fund does not elect to assume the defense of any such
suit, or in case you do not approve of counsel chosen by the Fund, the Fund
will reimburse you, your officers and directors, or the controlling person
or persons named as defendant or defendants in such suit, for the fees and
expenses of any counsel retained by you or them. The Fund's indemnification
agreement contained in this paragraph 1.9 and the Fund's representations and
warranties in this agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of you, your
officers and directors, or any controlling person, and shall survive the
delivery of any Series' shares. This agreement of indemnity will inure
exclusively to your benefit, to the benefit of your several officers and
directors, and their respective estates, and to the benefit of any control-
ling persons and their successors. The Fund agrees promptly to notify you
of the commencement of any litigation or proceedings against the Fund or any
of its officers or trustees in connection with the issue and sale of any
Series' shares.
1.10 You agree to indemnify, defend and hold the Fund, its
several officers and trustees, and any person who controls the Fund within
the meaning of Section 15 of the Securities Act of 1933, as amended, free
and harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection there-
with) which the Fund, its officers or trustees, or any such controlling
person, may incur under the Securities Act of 1933, as amended, or under
common law or otherwise, but only to the extent that such liability or
expense incurred by the Fund, its officers or trustees, or such controlling
person resulting from such claims or demands, shall arise out of or be based
upon any untrue, or alleged untrue, statement of a material fact contained
in information furnished in writing by you to the Fund specifically for use
in the Fund's registration statement and used in the answers to any of the
items of the registration statement or in the corresponding statements made
in the prospectus, or shall arise out of or be based upon any omission, or
alleged omission, to state a material fact in connection with such
information furnished in writing by you to the Fund and required to be
stated in such answers or necessary to make such information not misleading.
Your agreement to indemnify the Fund, its officers and trustees, and any
such controlling person, as aforesaid, is expressly conditioned upon your
being notified of any action brought against the Fund, its officers or
trustees, or any such controlling person, such notification to be given by
letter or telegram addressed to you at your principal office in New York,
New York within ten days after the summons or other first legal process
shall have been served. You shall have the right to control the defense of
such action, with counsel of your own choosing, satisfactory to the Fund, if
such action is based solely upon such alleged misstatement or omission on
your part, and in any other event the Fund, its officers or trustees, or
such controlling person shall each have the right to participate in the
defense or preparation of the defense of any such action. The failure so to
notify you of any such action shall not relieve you from any liability which
you may have to the Fund, its officers or trustees, or to such controlling
person by reason of any such untrue, or alleged untrue, statement or
omission, or alleged omission, otherwise than on account of your indemnity
agreement contained in this paragraph 1.10.
1.11 No shares of a Series shall be offered by either you
or the Fund under any of the provisions of this agreement and no orders for
the purchase or sale of such shares hereunder shall be accepted by the Fund
if and so long as the effectiveness of the registration statement then in
effect or any necessary amendments thereto shall be suspended under any of
the provisions of the Securities Act of 1933, as amended, or if and so long
as a current prospectus as required by Section 10 of said Act, as amended,
is not on file with the Securities and Exchange Commission; provided,
however, that nothing contained in this paragraph 1.11 shall in any way
restrict or have an application to or bearing upon the Fund's obligation to
repurchase any Series' shares from any shareholder in accordance with the
provisions of the Fund's prospectus or Declaration of Trust.
1.12 The Fund agrees to advise you immediately in writing:
(a) of any request by the Securities and Exchange Com-
mission for amendments to the registration statement or pro-
spectus then in effect or for additional information;
(b) in the event of the issuance by the Securities and
Exchange Commission of any stop order suspending the effectiveness of the
registration statement or prospectus then in effect or the initiation of any
proceeding for that purpose;
(c) of the happening of any event which makes
untrue any statement of a material fact made in the regis-
tration statement or prospectus then in effect or which
requires the making of a change in such registration statement or prospectus
in order to make the statements therein not misleading; and
(d) of all actions of the Securities and
Exchange Commission with respect to any amendments to any
registration statement or prospectus which may from time to time be filed
with the Securities and Exchange Commission.
2. Sales Load; CDSC
Class A shares of each Series offered for sale by you shall
be offered for sale at a price per share (the "offering price")
approximately equal to (a) their net asset value (determined in the manner
set forth in the Fund's Agreement and Declaration of Trust) plus, except to
those persons set forth in the then-current prospectus, (b) a sales charge
which shall be the percentage of the offering price of such shares as set
forth in the Fund's then-current prospectus. The offering price, if not an
exact multiple of one cent, shall be adjusted to the nearest cent. Class B
shares of each Series offered for sale by you shall be offered for sale at
the price per share set forth in clause (a) above, subject to a contingent
deferred sales charge as set forth in the Fund's then-current prospectus.
3. Term
As to each Series, this Agreement shall continue until the
date set forth opposite such Series' name on Exhibit A hereto (the
"Reapproval Date") and thereafter shall continue automatically for
successive annual periods ending on the day of the year set forth opposite
the Series' name on Exhibit A hereto (the "Reapproval Day"), provided such
continuance is specifically approved at least annually by (i) the Fund's
Board of Trustees or (ii) vote of a majority (as defined in the Investment
Company Act of 1940) of such Series' outstanding voting securities, provided
that in either event its continuance also is approved by a majority of the
Fund's Trustees who are not "interested persons" (as defined in said Act) of
any party to this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. As to each Series, this Agreement
is terminable without penalty, on 60 days' notice, by the Fund's Board of
Trustees, by vote of holders of a majority of such Series' shares, or by
you. This Agreement also will terminate automatically, as to the relevant
Series, in the event of its assignment (as defined in said Act).
4. Miscellaneous
This Agreement has been executed on behalf of the Fund by
the undersigned officer of the Fund in his capacity as an officer of the
Fund. The obligations of this Agreement shall only be binding upon the
assets and property of the Fund and shall not be binding upon any trustee,
officer or shareholder of the Fund individually.
Please confirm that the foregoing is in accordance with your
understanding and indicate your acceptance hereof by signing below,
whereupon it shall become a binding agreement between us.
Very truly yours,
PREMIER STATE MUNICIPAL BOND FUND
By:
Accepted:
DREYFUS SERVICE CORPORATION
By:________________________
EXHIBIT A
Name of Series Reapproval Date Reapproval Day
Arizona Series September 5, 1993 September 5
Colorado Series September 5, 1995 September 5
Connecticut Series September 5, 1988 September 5
Florida Series September 5, 1988 September 5
Georgia Series September 5, 1993 September 5
Maryland Series September 5, 1988 September 5
Massachusetts Series September 5, 1988 September 5
Michigan Series September 5, 1988 September 5
Minnesota Series September 5, 1988 September 5
New Jersey Series September 5, 1988 September 5
North Carolina Series September 5, 1992 September 5
Ohio Series September 5, 1988 September 5
Oregon Series September 5, 1995 September 5
Pennsylvania Series September 5, 1988 September 5
Texas Series September 5, 1988 September 5
Virginia Series September 5, 1992 September 5
Exhibit (9)
PREMIER STATE MUNICIPAL BOND FUND
SHAREHOLDER SERVICES PLAN
Introduction: It has been proposed that the above-captioned
investment company (the "Fund") adopt a Shareholder Services Plan (the
"Plan") under which the Fund, in respect of the series named on Schedule 1
hereto, as such Schedule may be revised from time to time (each, a
"Series"), would pay the Fund's distributor, Dreyfus Service Corporation
(the "Distributor"), for providing personal service and/or maintaining
shareholder accounts. The Distributor would be permitted to pay certain
financial institutions, securities dealers and other industry professionals
(collectively, "Service Agents") in respect of these services. The Plan is
not to be adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "Act"), and the fee under the Plan is intended to be a
"service fee" as defined in Article III, Section 26, of the NASD Rules of
Fair Practice.
The Fund's Board, in considering whether the Fund should implement
a written plan, has requested and evaluated such information as it deemed
necessary to an informed determination as to whether a written plan should
be implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of each Series for
such purposes.
In voting to approve the implementation of such a plan, the Board
has concluded, in the exercise of its reasonable business judgment and in
light of applicable fiduciary duties, that there is a reasonable likelihood
that the plan set forth below will benefit each Series and its shareholders.
The Plan: The material aspects of this Plan are as follows:
1. The Fund shall pay to the Distributor a fee at an annual rate
of .25 of 1% of the value of each Series' average daily net assets
attributable to each class of Series' shares, in respect of the provision of
personal services to shareholders and/or the maintenance of shareholder
accounts. The Distributor shall determine the amounts to be paid to Service
Agents and the basis on which such payments will be made. Payments to a
Service Agent are subject to compliance by the Service Agent with the terms
of any related Plan agreement between the Service Agent and the Distributor.
2. For the purpose of determining the fees payable under this
Plan, the value of the net assets attributable to each class of Series'
shares shall be computed in the manner specified in the Fund's Declaration
of Trust for the computation of the value of the Series' net assets
attributable to such class.
3. The Board shall be provided, at least quarterly, with a
written report of all amounts expended pursuant to this Plan. The report
shall state the purpose for which the amounts were expended.
4. This Plan will become effective immediately with respect to
each Series upon approval by a majority of the Board members, including a
majority of the Board members who are not "interested persons" (as defined
in the Act) of the Fund and have no direct or indirect financial interest in
the operation of this Plan or in any agreements entered into in connection
with this Plan, pursuant to a vote cast in person at a meeting called for
the purpose of voting on the approval of this Plan.
5. This Plan shall continue for a period of one year from its
effective date with respect to each Series, unless earlier terminated in
accordance with its terms, and thereafter shall continue automatically for
successive annual periods, provided such continuance is approved at least
annually in the manner provided in paragraph 4 hereof.
6. This Plan may be amended at any time by the Board, provided
that any material amendments of the terms of this Plan shall become
effective only upon approval as provided in paragraph 4 hereof.
7. This Plan is terminable without penalty with respect to each
Series at any time by vote of a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and have no direct
or indirect financial interest in the operation of this Plan or in any
agreements entered into in connection with this Plan.
8. The obligations hereunder and under any related Plan
agreement shall only be binding upon the assets and property of the Fund and
shall not be binding upon any Trustee, officer or shareholder of the Fund
individually.
Dated: October 19, 1992
Effective: January 15, 1993
Amended: January 26, 1994 SCHEDULE 1
Name of Series
Arizona Series
Colorado Series
Connecticut Series
Florida Series
Georgia Series
Maryland Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
North Carolina Series
Ohio Series
Oregon Series
Pennsylvania Series
Texas Series
Virginia Series
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors" and to the use of our reports
date June 7, 1993 in this Registration Statement (Form N-1A No.
33-10238) of Premier State Municipal Bond Fund.
ERNST & YOUNG
New York, New York
February 14, 1994
Exhibit (15)
PREMIER STATE MUNICIPAL BOND FUND
DISTRIBUTION PLAN
Introduction: It has been proposed that the above-captioned
investment company (the "Fund") adopt a Distribution Plan (the "Plan")
relating to its Class B shares in accordance with Rule 12b-1 promulgated
under the Investment Company Act of 1940, as amended (the "Act"), in respect
of each of the series named on Schedule 1 hereto, as such Schedule may be
revised from time to time (each, a "Series"). Under the Plan, the Fund
would pay the Fund's distributor, Dreyfus Service Corporation (the
"Distributor"), for advertising, marketing and distributing the Series'
Class B shares. The Distributor would be permitted to pay certain financial
institutions, securities dealers and other industry professionals
(collectively, "Service Agents") in respect of these services. If the
proposal is to be implemented, the Act and Rule 12b-1 require that a written
plan describing all material aspects of the proposed financing be adopted by
the Fund with respect to each Series.
The Fund's Board, in considering whether the Fund should implement
a written plan, has requested and evaluated such information as it deemed
necessary to an informed determination as to whether a written plan should
be implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets attributable to the
Class B shares of each Series for such purposes.
In voting to approve the implementation of such a plan, the Board
has concluded, in the exercise of its reasonable business judgment and in
light of applicable fiduciary duties, that there is a reasonable likelihood
that the plan set forth below will benefit each Series and its Class B
shareholders.
The Plan: The material aspects of this Plan are as follows:
1. The Fund shall pay to the Distributor a fee at an annual rate
of .50 of 1% of the value of each Series' average daily net assets
attributable to Class B for advertising, marketing and distributing the
Series' Class B shares. The Distributor may pay one or more Service Agents
a fee in respect of these services. The Distributor shall determine the
amounts to be paid to Service Agents and the basis on which such payments
will be made. Payments to a Service Agent are subject to compliance by the
Service Agent with the terms of any related Plan agreement between the
Service Agent and the Distributor.
2. For the purposes of determining the fees payable under this
Plan, the value of the net assets attributable to Class B of each Series
shall be computed in the manner specified in the Fund's Declaration of Trust
for the computation of the value of each Series' net assets attributable to
such class.
3. The Board shall be provided, at least quarterly, with a
written report of all amounts expended pursuant to this Plan. The report
shall state the purpose for which the amounts were expended.
4. This Plan will become effective immediately with respect to
each Series upon approval by (a) holders of a majority of such Series'
outstanding Class B shares, and (b) a majority of the Board members,
including a majority of the Board members who are not "interested persons"
(as defined in the Act) of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreements entered into in
connection with this Plan, pursuant to a vote cast in person at a meeting
called for the purpose of voting on the approval of this Plan.
5. This Plan shall continue for a period of one year from its
effective date with respect to each Series, unless earlier terminated in
accordance with its terms, and thereafter shall continue automatically for
successive annual periods ending September 5th, provided such continuance is
approved at least annually in the manner provided in paragraph 4(b) hereof.
6. This Plan may be amended at any time by the Board, provided
that (a) any amendment to increase materially the costs which a Series may
bear pursuant to this Plan shall be effective only upon approval by a vote
of holders of a majority of such Series' outstanding Class B shares, and
(b) any material amendments of the terms of this Plan shall become effective
only upon approval as provided in paragraph 4 hereof.
7. This Plan is terminable without penalty with respect to each
Series at any time by (a) vote of a majority of the Board members who are
not "interested persons" (as defined in the Act) of the Fund and have no
direct or indirect financial interest in the operation of this Plan or in
any agreements entered into in connection with this Plan, or (b) vote of
holders of a majority of such Series' outstanding Class B shares.
8. The obligations hereunder and under any related Plan
agreement shall only be binding upon the assets and property of the Fund and
shall not be binding upon any Trustee, officer or shareholder of the Fund
individually.
Dated: October 19, 1992
Effective: January 15, 1993
Amended: January 26, 1994 SCHEDULE 1
Name of Series
Arizona Series
Colorado Series
Connecticut Series
Florida Series
Georgia Series
Maryland Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
North Carolina Series
Ohio Series
Oregon Series
Pennsylvania Series
Texas Series
Virginia Series
