LETTER TO SHAREHOLDERS
Dear Shareholder:
Since our last report to shareholders on April 30, 1994, we witnessed a
continuation of the volatility which characterized the trading of all fixed
income vehicles for much of the past year. Early on, as investors gleaned a
sense that economic activity was abating, the markets were buoyed by the
prospects for declining inflationary pressures. This was based on preliminary
data released for the period covering May and early June.
INTEREST RATES AND THE ECONOMY
By July, however, as statistics for job creation, capacity utilization
and industrial production were released, the markets were ill-positioned to
accept the heightened activity indicated. Anxiety levels and long-term
interest rates rose quickly as market participants became obsessed with the
need for another round of monetary tightening by the Federal Reserve Board.
In August, when the Fed did move further along the road toward a more
restrictive policy by raising both the Federal Funds rate and the discount
rate, market participants viewed the moves as decisive and adequate. Such
enthusiasm proved short-lived, however, as investors began to focus on the
Fed's accompanying statement indicating that it had sufficiently removed the
inflationary pressure for the period through the November mid-term elections;
this statement, combined with continued strong growth and surging pressures
on prices, particularly at the intermediate goods level, moved investors to
demand a yield premium on their fixed income securities. This was
compensation for the potential that the Fed's actions were too little, too
late. These factors combined to push most long-term interest rates to their
highest levels in nearly three years.
TAX EXEMPT MARKETS
While municipal securities experienced the same volatility as their
taxable counterparts throughout this period, the rise in tax exempt yields
tended to be a bit more muted due to the formidable technical dynamic they
have enjoyed throughout much of the past year. The rise in individual tax
rates has generated a significant amount of demand for tax exempt income, yet
issuance of municipal bonds has fallen dramatically. Through October of this
year, new issue volume has fallen nationally by more than 40% compared to the
same period in 1993. In the instance of Michigan offerings, a striking
decline of 49% was witnessed. A comparison of the relative movements of
30-year U.S. Treasury yields and municipal yields, as represented by the Bond
Buyer Revenue Bond Index, illustrates this point. At our last communique in
April, Government yields stood at 7.28% and the Revenue Index at 6.42%. At
the close of the six-month period on October 31, 1994, the yield of long-term
Treasuries had increased by 69 basis points (.69%) to 7.97%, while the
Revenue Index advanced by 53 basis points (.53%) to 6.95%.
A DEFENSIVE STRATEGY
As noted in our last letter, your Series' position at the start of this
semi-annual period was defensive in nature. We increased cash reserves and
sought to mute the portfolio's volatility by focusing on those issues
offering higher levels of tax exempt income and stronger qualities of
principal stability. This posture continued to guide our management of the
portfolio throughout much of the past six months. As a result of this
strategy, the Series was able to produce income dividends totaling
approximately $.43 per share for Class A shareholders, representing an
annualized distribution rate of 5.56% per share based on the closing maximum
offering price on October 31, 1994. For Class B shareholders, the Series
produced income dividends totaling approximately $.39 per share, for an
annualized distribution rate of 5.25% per share, based on the closing net asset
value per share on October 31, 1994. All income dividends were exempt from
Federal and Michigan State income taxes.*
OUR OUTLOOK
Moving forward, the current environment for fixed income investments
continues to be clouded by further signs of expanding economic activity and
the likelihood of additional Federal Reserve Board tightening. However, we
believe prevailing economic analysis is beginning to discern the prospects
for an abatement of the expansion and the emergence of a more favorable
foundation for bonds. In the event that firm statistical data lends credence
to this view, we stand prepared to once again assume a more aggressive
posture in managing the Portfolio.
We appreciate your investment in the Premier State Municipal Bond Fund,
Michigan Series, and we want to assure you that we are at all times working
in your Series' best interest.
Very truly yours,
(logo signature)
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
November 14, 1994
New York, N.Y.
*Some income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, Michigan Series
STATEMENT OF INVESTMENTS OCTOBER 31, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-99.4% AMOUNT VALUE
------------- -----------
<S> <C> <C>
MICHIGAN-95.4%
Allendale Public School District 5.875%, 5/1/2014 (Insured; MBIA)........... $ 1,000,000 $ 907,900
Brighton Area School District, Refunding Zero Coupon, 5/1/2014 (Insured; AMBAC) 8,000,000 2,135,040
Capital Region Airport Authority, Airport Revenue
6.70%, 7/1/2021 (Insured; MBIA)......................................... 2,500,000 2,463,050
Chippewa Valley Schools 7%, 5/1/2010........................................ 1,275,000 1,388,169
Detroit:
(Development Area No. 1) 7.60%, 7/1/2010................................ 4,150,000 4,312,016
Sewer Disposal System Revenue:
7.125%, 7/1/2019 ..................................................... 2,735,000 2,963,974
5.70%, 7/1/2023 (Insured; FGIC)....................................... 10,000,000 8,530,800
Refunding 7%, 7/1/2011................................................ 1,325,000 1,359,635
(Unlimited Tax) 6.35%, 4/1/2014......................................... 3,500,000 3,098,025
Water Supply Systems Revenue, Refunding:
8.999%, 7/1/2002 (Insured; FGIC) (a).................................. 3,500,000 3,845,625
8.999%, 7/1/2022 (Insured; FGIC) (a).................................. 1,500,000 1,359,375
Detroit School District (School Building and Site)
(Wayne County) 6.25%, 5/1/2012.......................................... 4,250,000 4,042,047
Dickinson County Economic Development Corp., Solid Waste Disposal Refunding,
Revenue (Champion International Corp. Project) 6.55%, 3/1/2007.......... 4,000,000 3,881,240
East Lansing Building Authority, Refunding 6.90%, 10/1/2011................. 1,375,000 1,420,733
East Lansing School District
(Ingham and Clinton Counties School Building and Site) 6.625%, 5/1/2014. 1,000,000 1,000,960
Flint Michigan Refunding Tax Increment Finance Authority 5.75%, 6/1/2002.... 3,000,000 2,945,490
Grand Rapids Community College 5.90%, 5/1/2022 (Insured; MBIA).............. 4,650,000 4,148,172
Grand Rapids Housing Finance Authority, Multi-Family Revenue, Refunding
7.625%, 9/1/2023 (Collateralized; FNMA)................................. 1,000,000 1,056,930
Grand Rapids Sanitary Sewer Systems, Improvement Revenue, Refunding
7%, 1/1/2016............................................................ 500,000 507,225
Grand Traverse County Hospital Finance Authority, HR (Munson Medical Center)
7.625%, 12/1/2015....................................................... 750,000 806,782
Greater Detroit Resource Recovery Authority, Revenue 9.25%, 12/13/2008...... 1,250,000 1,322,138
Kent Hospital Finance Authority, Hospital Facility Revenue (Butterworth
Hospital)
7.25%, 1/15/2012........................................................ 1,000,000 1,091,820
Lapeer Economic Development Corp., Ltd. Obligation Revenue
(Lapeer Health Services Project) 8.625%, 2/1/2020....................... 2,000,000 2,313,440
Livonia Public Schools, School District Refunding 5.125%, 5/1/2022 (Insured; FGIC) 2,000,000 1,581,540
Michigan Building Authority, Revenue:
6.75%, 10/1/2007 (Insured; AMBAC)....................................... 1,600,000 1,666,128
6.75%, 10/1/2011........................................................ 2,000,000 2,011,800
PREMIER STATE MUNICIPAL BOND FUND, Michigan Series
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -----------
MICHIGAN (CONTINUED)
Michigan Higher Education Student Loan Authority, Student Loan Revenue:
6.875%, 10/1/2007 (Insured; AMBAC)...................................... $ 2,250,000 $ 2,306,993
7.55%, 10/1/2008 (Insured; MBIA)........................................ 1,625,000 1,713,757
Refunding 6%, 9/1/2008.................................................. 2,000,000 1,898,960
Michigan Hospital Finance Authority, HR:
(Crittenton Hospital) 6.70%, 3/1/2007................................... 2,250,000 2,255,400
(Daughters of Charity National Health Systems-Providence Hospital) 7%, 11/1/2021 2,700,000 2,730,483
(Henry Ford Continuing Care) 6.75%, 7/1/2011............................ 1,665,000 1,661,487
(McLaren Obligation Group) 7.50%, 9/15/2021............................. 1,250,000 1,401,688
(Mercy Mount Clemens Corp.) 6.25%, 5/15/2011............................ 2,000,000 1,897,380
Refunding:
(Detroit Medical Center):
8.125%, Series A, 8/15/1998....................................... 810,000 902,575
8.125%, Series B, 8/15/1998....................................... 980,000 1,090,221
8.125%, 8/15/2012................................................. 220,000 237,488
(Middle Michigan Obligation Group) 6.625%, 6/1/2010................... 2,000,000 1,934,880
(Oakwood Obligation Group) 5.625%, 11/1/2018.......................... 2,500,000 2,144,300
(Pontiac Osteopathic Hospital) 6%, 2/1/2014........................... 5,250,000 4,477,410
(Sisters of Mercy Health Corp.) 6.25%, 2/15/2009 (Insured; FSA)....... 1,065,000 1,042,262
(Sisters of Mercy Health Corp.) 7.50%, 2/15/2018........................ 2,250,000 2,500,425
Michigan Housing Development Authority:
(Home Improvement Program) 7.65%, 12/1/2012............................. 2,150,000 2,124,931
Ltd. Obligation Revenue:
(Fraser Woods Project) 6.50%, 9/15/2007 (Insured; FSA)................ 1,810,000 1,805,131
(Green Hill Project) 5.45%, 7/15/2011................................. 1,835,000 1,610,396
MFHR 8.375%, 7/1/2019 (Insured; FGIC)................................... 1,550,000 1,661,057
Rental Housing Revenue:
6.50%, 4/1/2006....................................................... 2,000,000 1,980,580
7.70%, 4/1/2023 (Insured; FSA)........................................ 4,185,000 4,337,836
SFMR:
7.55%, 12/1/2014...................................................... 435,000 439,611
7.50%, 6/1/2015....................................................... 2,355,000 2,406,339
8%, 6/1/2018.......................................................... 290,000 294,753
7.75%, 12/1/2019...................................................... 2,480,000 2,541,231
6.95%, 12/1/2020...................................................... 1,750,000 1,747,498
Michigan Job Development Authority, PCR:
(Chrysler Corp. Project) 5.70%, 11/1/1999............................... 5,000,000 4,955,550
(General Motors Corp.) 5.55%, 4/1/2009.................................. 4,000,000 3,585,480
Michigan Municipal Bond Authority,
Local Government Loan Program Revenue, Refunding 6.50%, 5/1/2016........ 4,000,000 3,882,960
Michigan Public Power Agency, Revenue Refunding (Belle River Project)
5%, 1/1/2019............................................................ 2,500,000 1,942,550
PREMIER STATE MUNICIPAL BOND FUND, Michigan Series
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -----------
MICHIGAN (CONTINUED)
Michigan Strategic Fund:
Ltd. Obligation Revenue:
(Northeastern Community Mental Health Foundation) 8.25%, 1/1/2009..... $ 1,610,000 $ 1,653,534
Refunding:
(Detroit Edison Co. Pollution Control Project)
6.95%, 9/1/2021 (Insured; FGIC)................................. 3,500,000 3,582,425
(Ledyard Association Ltd. Partnership Project)
6.25%, 10/1/2011 (Insured; ITT Lyndon Property Insurance Co.)... 3,075,000 2,951,846
(WMX Technologies Inc. Project) 6%, 12/1/2013......................... 6,000,000 5,466,840
SWDR Refunding
(Genesee Power Station Project) 7.50%, 1/1/2021....................... 3,000,000 2,796,510
Michigan Trunk Line 5.50%, 10/1/2021........................................ 4,995,000 4,176,220
Monroe County:
PCR (Detroit Edison Project):
7.50%, 12/1/2019 (Insured; AMBAC)..................................... 4,650,000 4,896,636
7.875%, 12/1/2019..................................................... 2,720,000 2,913,909
7.65%, 9/1/2020 (Insured; FGIC)....................................... 2,250,000 2,386,755
Water Supply Systems (Frenchtown Charter Township Water Treatment
and Distribution Systems) 6.50%, 5/1/2013............................. 2,500,000 2,351,725
Monroe County Economic Development Corp., Ltd. Obligation Refunding, Revenue
(Detroit Edison Co. Project) 6.95%, 9/1/2022 (Insured; FGIC)............ 2,000,000 2,067,600
Northville, Special Assessment (Wayne County) 7.875%, 1/1/2006.............. 1,685,000 1,782,056
Northwestern Michigan College, Community College Improvement Revenue,
Refunding
7%, 7/1/2011............................................................ 1,800,000 1,802,070
Oakland County Economic Development Corp., Ltd. Obligation Revenue
(Pontiac Osteopathic Hospital Project) 9.625%, 1/1/2020................. 1,765,000 2,114,135
Rockford Public Schools, Refunding (Kent County School Building and Site)
7.375%, 5/1/2019........................................................ 2,000,000 2,193,260
Romulus Economic Development Corp., Ltd. Obligation EDR
Refunding (Romulus Hir Ltd. Partnership Project)
7%, 11/1/2015 (Insured; ITT Lyndon Property Insurance Co.).............. 3,700,000 3,648,385
Royal Oak Hospital Finance Authority, HR (William Beaumont Hospital)
7.375%, 1/1/2020........................................................ 2,650,000 2,885,108
Saginaw-Midland Municipal Water Supply Corp. 5.25%, 9/1/2016................ 1,000,000 814,180
Wayne Charter County, Airport Revenue (Detroit Metropolitan Wayne County
Airport):
5.25%, 12/1/2013 (Insured; MBIA)........................................ 1,000,000 835,620
5.25%, 12/1/2021 (Insured; MBIA)........................................ 1,000,000 799,910
6.75%, 12/1/2021 (Insured; MBIA)........................................ 1,600,000 1,584,160
PREMIER STATE MUNICIPAL BOND FUND, Michigan Series
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -----------
U.S. RELATED-4.0%
Puerto Rico Highway and Transportation Authority, Highway Revenue, Refunding
5%, 7/1/2022............................................................ $ 2,000,000 $ 1,521,420
Puerto Rico Housing Finance Corp., MFMR
7.50%, 4/1/2022 (LOC; Government Development Bank) (b).................. 2,510,000 2,552,394
Puerto Rico Public Building Authority, Revenue, Refunding 5.50%, 7/1/2021... 1,565,000 1,302,612
Puerto Rico Telephone Authority, Revenue 5.50%, 1/1/2022.................... 2,000,000 1,675,280
Virgin Islands Port Authority, Airport Revenue (Cyril E. King Airport
Project)
8.10%, 10/1/2005........................................................ 500,000 537,075
------------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $190,468,062)..................................................... $188,963,331
=============
SHORT-TERM MUNICIPAL INVESTMENT-.6%
U.S. RELATED;
Puerto Rico Electric Power Authority, Revenue ARRN 2.79%, (Insured; FSA) (a)
(cost $1,050,000)....................................................... $ 1,050,000 $ 1,050,000
------------
TOTAL INVESTMENTS-100.0%
(cost $191,518,062)..................................................... $190,013,331
=============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
ARRN Adjustable Rate Receipt Notes MBIA Municipal Bond Investors Assurance
EDR Economic Development Revenue MFHR Multi-Family Housing Revenue
FGIC Financial Guaranty Insurance Company MFMR Multi-Family Mortgage Revenue
FNMA Federal National Mortgage Association PCR Pollution Control Revenue
FSA Financial Security Assurance SFMR Single Family Mortgage Revenue
HR Hospital Revenue SWDR Solid Waste Disposal Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- -------- ------- ----------------- -------------------
<S> <C> <S> <C>
AAA Aaa AAA 33.4%
AAA Aa AA 25.1
A A A 20.2
BBB Baa BBB 14.1
Not Rated Not Rated Not Rated 7.2
-----
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Inverse floater security - the interest rate is subject to change
periodically.
(b) Secured by letters of credit.
(c) Fitch currently provides creditworthiness information for a limited
number 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, 1994 (UNAUDITED)
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $191,518,062)-see statement.................................... $190,013,331
Interest receivable..................................................... 3,624,534
Receivable for shares of Beneficial Interest subscribed................. 113,663
Prepaid expenses........................................................ 9,776
------------
193,761,304
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 91,481
Due to the Distributor.................................................. 48,109
Due to Custodian........................................................ 181,183
Payable for shares of Beneficial Interest redeemed...................... 548,307
Accrued expenses........................................................ 32,495 901,575
---------- ------------
NET ASSETS ................................................................ $192,859,729
============
REPRESENTED BY:
Paid-in capital......................................................... $191,332,436
Accumulated undistributed net realized gain on investments.............. 3,032,024
Accumulated net unrealized (depreciation) on investments-Note 3......... (1,504,731)
------------
NET ASSETS at value......................................................... $192,859,729
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 12,106,176
============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 1,024,999
============
NET ASSET VALUE per share:
Class A Shares
($177,806,848 / 12,106,176 shares).................................... $14.69
======
Class B Shares
($15,052,881 / 1,024,999 shares)...................................... $14.69
======
See independent accountants' review report and notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, Michigan Series
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1994 (UNAUDITED)
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 6,612,526
EXPENSES:
Management fee-Note 2(a)............................................. $ 557,702
Shareholder servicing costs-Note 2(c)................................. 327,475
Distribution fees (Class B shares)-Note 2(b).......................... 38,365
Professional fees..................................................... 13,641
Custodian fees........................................................ 10,951
Prospectus and shareholders' reports.................................. 9,347
Registration fees..................................................... 2,210
Trustees' fees and expenses-Note 2(d)................................. 772
Miscellaneous......................................................... 20,690
-------------
981,153
Less-reduction in management fee due to
undertakings-Note 2(a)............................................ 18,112
-------------
TOTAL EXPENSES.................................................. 963,041
-------------
INVESTMENT INCOME-NET.......................................... 5,649,485
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain on investments-Note 3................................ $ 1,140,594
Net unrealized (depreciation) on investments............................ (8,783,722)
-------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (7,643,128)
-------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (1,993,643)
===============
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, 1994
1994 (UNAUDITED)
------------ --------------
OPERATIONS:
<S> <C> <C>
Investment income-net................................................. $ 11,313,866 $ 5,649,485
Net realized gain on investments....................................... 2,315,880 1,140,594
Net unrealized (depreciation) on investments for the period............ (6,895,275) (8,783,722)
------------ --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.. 6,734,471 (1,993,643)
------------ --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares....................................................... (10,845,933) (5,263,196)
Class B shares....................................................... (467,933) (386,289)
Net realized gain on investments:
Class A shares....................................................... (956,415) --
Class B shares....................................................... (54,414) --
------------ --------------
TOTAL DIVIDENDS.................................................. (12,324,695) (5,649,485)
------------ --------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares....................................................... 24,628,252 7,028,809
Class B shares....................................................... 11,297,694 3,130,046
Dividends reinvested:
Class A shares....................................................... 6,427,971 2,903,193
Class B shares....................................................... 347,542 242,887
Cost of shares redeemed:
Class A shares....................................................... (22,803,586) (12,494,127)
Class B shares....................................................... (760,491) (1,574,003)
------------ --------------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 19,137,382 (763,195)
------------ --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........................ 13,547,158 (8,406,323)
NET ASSETS:
Beginning of period.................................................... 187,718,894 201,266,052
------------ --------------
End of period.......................................................... $201,266,052 $192,859,729
============= ==============
</TABLE>
<TABLE>
<CAPTION>
SHARES
-----------------------------------------------------------------
CLASS A CLASS B
-------------------------------- ----------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1994 APRIL 30, OCTOBER 31, 1994
1994 (UNAUDITED) 1994 (UNAUDITED)
---------- ----------- --------- ----------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold......................... 1,535,330 462,032 706,062 205,575
Shares issued for dividends reinvested 401,916 191,328 21,767 16,009
Shares redeemed..................... (1,430,077) (822,140) (48,928) (104,413)
---------- ----------- --------- ----------
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING.......... 507,169 (168,780) 678,901 117,171
============ =========== ======= ===========
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, Michigan Series
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each period indicated. This
information has been derived from the Series' financial statements.
CLASS A SHARES CLASS B SHARES
-------------------------------------------------------- --------------------------------
YEAR ENDED APRIL 30, SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED
------------------------------------------OCTOBER 31,1994 APRIL 30, OCTOBER 31, 1994
PER SHARE DATA: 1990 1991 1992 1993 1994 (UNAUDITED) 1993(1) 1994 (UNAUDITED)
----- ----- ------ ------ ------ -------- ------ ------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period... $14.10 $13.80 $14.34 $14.80 $15.65 $15.27 $15.20 $15.64 $15.27
----- ----- ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net... 1.05 1.01 .95 .92 .89 .43 .24 .80 .39
Net realized and unrealized
gain (loss) on investments (.27) .54 .46 .98 (.30) (.58) .44 (.29) (.58)
----- ----- ------ ------ ------ ------ ------ ------ ------
TOTAL
FROM INVESTMENT
OPERATIONS........ .78 1.55 1.41 1.90 .59 (.15) .68 .51 (.19)
----- ----- ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net........... (1.05) (1.01) (.95) (.92) (.89) (.43) (.24) (.80) (.39)
Dividends from net realized
gain on investments... (.03) -- -- (.13) (.08) -- -- (.08) --
----- ----- ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS... (1.08) (1.01) (.95) (1.05) (.97) (.43) (.24) (.88) (.39)
----- ----- ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $13.80 $14.34 $14.80 $15.65 $15.27 $14.69 $15.64 $15.27 $14.69
====== ====== ====== ===== ====== ===== ====== ====== =======
TOTAL INVESTMENT RETURN (2) 5.59% 11.61% 10.12% 13.25% 3.65% (2.04%)(3) 15.50%(3) 3.11% (2.60%)(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets............ -- .20% .53% .69% .81% .91%(3) 1.18%(3) 1.38% 1.45%(3)
Ratio of net investment income
to average net assets. 7.23% 7.07% 6.47% 6.01% 5.56% 5.62%(3) 4.85%(3) 4.88% 5.03%(3)
Decrease reflected in above
expense ratios due to
undertakings by the Manager 1.16% .79% .42% .25% .11% .02%(3) .14%(3) .09% .02%(3)
Portfolio Turnover Rate. 20.23% 27.31% 21.42% 14.99% 19.96% 18.16%(4) 14.99% 19.96% 18.16%(4)
Net Assets, end of period
(000's Omitted)....... $56,699 $111,696 $145,159 $184,138 $187,405 $177,807 $3,581 $13,861 $15,053
- --------------------
(1) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(2) Exclusive of sales load.
(3) Annualized.
(4) Not annualized.
See independent accountants' review report and notes to financial statements.
</TABLE>
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 fifteen series including the Michigan Series (the "Series"). Dreyfus
Service Corporation, until August 24, 1994, acted as the distributor of the
Fund's shares. Dreyfus Service Corporation is a wholly-owned subsidiary of
The Dreyfus Corporation ("Manager"). Effective August 24, 1994, the Manager
became a direct subsidiary of Mellon Bank, N.A.
On August 24, 1994, Premier Mutual Fund Services, Inc. (the
"Distributor") was engaged as the Fund's distributor. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of Institutional Administration Services, Inc., a provider of
mutual fund administration services, the parent company of which is Boston
Institutional Group, Inc.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series offers both Class A and Class B shares. Class A shares are
subject to a sales charge imposed at the time of purchase and Class B shares
are subject to a contingent deferred sales charge imposed at the time of
redemption on redemptions made within five years of purchase. Other
differences between the two Classes include the services offered to and the
expenses borne by each Class and certain voting rights.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service, are valued at the mean between the quoted bid
prices (as obtained by the Service from dealers in such securities) and asked
prices (as calculated by the Service based upon its evaluation of the market
for such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the Series.
PREMIER STATE MUNICIPAL BOND FUND, Michigan Series
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
had undertaken from May 1, 1994 through June 30, 1994 to waive receipt of the
management fee payable to it by the Series in excess of an annual rate of .50
of 1% (excluding certain expenses as described above) of the Series' average
daily net assets and thereafter, had undertaken from July 1, 1994 through
July 7, 1994 to reduce the management fee paid by the Series, to the extent
that the Series' aggregate expenses (excluding certain expenses as described
above) exceeded specified annual percentages of the Series' average daily net
assets. The reduction in management fee, pursuant to the undertakings,
amounted to $18,112 for the six months ended October 31, 1994.
Dreyfus Service Corporation retained $10,722 during the six months ended
October 31, 1994 from commissions earned on sales of the Series' Class A
shares.
Prior to August 24, 1994, Dreyfus Service Corporation retained $17,687
from contingent deferred sales charges imposed upon redemptions of the
Series' Class B shares.
(B) On August 3, 1994, the Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series' Class B shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Series pay Dreyfus Service Corporation
at an annual rate of .50 of 1% of the value of the Series' Class B shares
average daily net assets, for the costs and expenses in connection with
advertising, marketing and distributing the Series' Class B shares. Dreyfus
Service Corporation made payments to one or more Service Agents based on the
value of the Series' Class B shares owned by clients of the Service Agent.
During the six months ended October 31, 1994, $14,602 was charged to the
Series pursuant to the Class B Distribution Plan and $23,763 was charged to
the Series pursuant to the prior Class B Distribution Plan.
PREMIER STATE MUNICIPAL BOND FUND, Michigan Series
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(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. From May 1, 1994 through August 23,
1994, $147,668 and $11,774 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
October 31, 1994, $86,650 and $7,409 were charged to Class A and Class B
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
(D) Prior to August 24, 1994 certain officers and trustees of the Fund
were "affiliated persons," as defined in the Act, of the Manager and/or
Dreyfus Service Corporation. Each trustee who is not an "affiliated person"
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $76,011,244 and $75,218,133, respectively, for the six months
ended October 31, 1994, and consisted entirely of long-term and short-term
municipal investments.
At October 31, 1994, accumulated net unrealized depreciation on
investments was $1,504,731, consisting of $4,954,229 gross unrealized
appreciation and $6,458,960 gross unrealized depreciation.
At October 31, 1994, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
PREMIER STATE MUNICIPAL BOND FUND, Michigan Series
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
We have reviewed the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Michigan Series (one of the Series constituting the Premier State Municipal
Bond Fund) as of October 31, 1994, and the related statements of operations
and changes in net assets and financial highlights for the six month period
ended October 31, 1994. These financial statements and financial highlights
are the responsibility of the Fund's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements and financial highlights taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets for the year ended
April 30, 1994 and financial highlights for each of the five years in the
period ended April 30, 1994 and in our report dated June 7, 1994, we
expressed an unqualified opinion on such statement of changes in net assets
and financial highlights.
New York, New York Ernst & Young Signature Logo
December 6, 1994
PREMIER STATE MUNICIPAL
BOND FUND, MICHIGAN SERIES
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 053/617SA9410
Semi-Annual Report
Premier State
Municipal Bond Fund
Michigan Series
October 31, 1994
