LETTER TO SHAREHOLDERS
Dear Shareholder:
During 1994, the bond markets were hurt by a strengthening economy, fears
of rising inflation and a weakening U.S. dollar. As a result, interest rates
have risen much faster than most economists had anticipated. Since the
beginning of this calendar year, long-term municipal bond yields have climbed
by nearly 175 basis points (1.75%), rendering 1994 unprecedented for market
price erosion.
Reflecting this decline in bond prices, the net asset value of Class A
shares in the Series fell by 4.02% for the six-month period ended October 31,
1994. Offsetting this loss were income dividends paid of approximately $.61
per share. This equates to an annualized, tax-free distribution rate per
share of 5.90%, based on the October 31, 1994 closing maximum offering price
per share of $20.51. For the same period, Class B shares also fell 4.02%.
Income dividends of approximately $.55 per share were paid, translating into
an annualized, tax-free distribution rate per share of 5.57%, based on a
closing net asset value of $19.59 per share. All interest income distributed
was exempt from Federal income tax.*
Last year, when it became apparent that the economy was gathering
momentum, we put in place a defensive investment strategy, seeking to reduce
portfolio volatility. We believe that our actions to build cash reserves and
reduce the Series' exposure to more volatile bonds were generally successful.
While we continue to be cautious in our investment strategy, we are
hopeful that the series of Federal Reserve Board moves to tighten interest
rates, begun in February, will start to translate into positive news for the
fixed-income markets. One factor currently working to your Series' advantage
is the municipal market's favorable technical position (i.e., an adequate
demand combined with a sharp reduction in the supply of new issues this
year). We are beginning to view security prices in the municipal market more
favorably than we have in some time, but we are still wary of the strength
exhibited in the economic data. The Federal Reserve's decision in November to
raise the Federal Funds rate another 75 basis points (the sixth rate hike
since February) provides some optimism that we are getting closer to the end
of the tightening. Should a clearer picture emerge, indicating that higher
interest rates are being effective, we are poised to alter our investment
strategy accordingly.
After enjoying a number of years of strong market performance and a
corresponding rise in the value of your Series' portfolio, it is unsettling
to be faced with such an uncertain interest rate environment. Falling prices
earlier this year reduced the value of fixed-income securities, but the level
of tax-free dividends has remained stable.
While the financial press focuses on short-term market swings, we
maintain a longer perspective. We continue to direct our management efforts
towards seeking high current income, free from Federal income tax.
We have included a current Statement of Investments and recent financial
statements for your review. We greatly appreciate your investment in the
Series and look forward to serving your investment needs in the future.
Very truly yours,
(Richard J. Moynihan Signature Logo)
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
November 15, 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, Texas Series
STATEMENT OF INVESTMENTS OCTOBER 31, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS--100.0% AMOUNT VALUE
-------------- --------------
<S> <C> <C>
TEXAS--98.7%
Alliance Airport Authority Inc., Special Facilities Revenue
(American Airlines Inc., Project):
7%, 12/1/2011......................................................... $ 1,550,000 $ 1,446,305
7.50%, 12/1/2029...................................................... 1,000,000 948,090
Amarillo Health Facilities Corp., HR (High Plains Baptist Hospital)
6.562%, 1/3/2022 (Insured; FSA)......................................... 4,500,000 4,366,485
Austin:
Convention Center Revenue:
8.25%, 11/15/2014..................................................... 500,000 565,545
Refunding 6%, 11/15/2005.............................................. 1,000,000 955,660
Utility Systems Revenue, Refunding
5.75%, 5/15/2024 (Insured; FGIC)...................................... 5,000,000 4,329,200
Bexar County:
(Detention Facilities) 5.25%, 6/15/2013................................. 1,975,000 1,650,587
Refunding, Limited Tax 5%, 6/15/2010.................................... 8,000,000 6,790,960
Brazos Higher Education Authority Inc., Student Loan Revenue, Refunding:
5.70%, 6/1/2004......................................................... 3,500,000 3,424,085
6.80%, 12/1/2004........................................................ 850,000 848,087
Brazos River Authority,
PCR (Texas Utilities Electric Company):
7.875%, 3/1/2021...................................................... 500,000 524,945
6.05%, 4/1/2025 (Insured; AMBAC)...................................... 2,500,000 2,225,200
Brazos River Harbor Navigation District, Brazoria County, PCR
(BASF Corp. Project) 6.75%, 2/1/2010.................................... 1,800,000 1,808,262
Chimney Hill Municipal Utility District, Waterworks and Sewer System Revenue,
Refunding 7.75%, 10/1/2011.............................................. 1,000,000 1,026,330
Clear Creek Independent School District,
Unlimited Tax Schoolhouse 5.50%, 2/1/2015............................... 1,300,000 1,123,148
Clint Independent School District, Refunding
7%, 3/1/2015............................................................ 750,000 768,405
Coastal Bend Health Facilities Development Corp.,
(Incarnate Word Health Service) 6%, 11/15/2022.......................... 2,500,000 2,236,625
Colorado River Municipal Water District, Water Revenue
(Water Transmission Facilities Project) 6.625%, 1/1/2021 (Insured; AMBAC) 1,000,000 1,049,540
Dallas-Fort Worth Regional Airport, Joint Revenue
6.625%, 11/1/2021 (Insured; FGIC)....................................... 1,250,000 1,200,775
PREMIER STATE MUNICIPAL BOND FUND, Texas Series
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
TEXAS (CONTINUED)
El Paso Housing Authority, Multi-Family Revenue
(Section 8 Projects) 6.25%, 12/1/2009................................... $ 2,510,000 $ 2,431,337
Fort Bend County Municipal Utility District No. 42, Refunding
8.30%, 4/1/2009......................................................... 300,000 319,821
Grapevine-Colleyville Independent School District,
Refunding 5.125%, 8/15/2022............................................. 2,235,000 1,751,659
Gulf Coast Waste Disposal Authority, SWDR
(Champion International Corp. Project) 7.25%, 4/1/2017.................. 1,000,000 985,760
Harris County, Toll Road Revenue:
Senior Lien
5.30%, 8/15/2013 (Insured; AMBAC)..................................... 2,000,000 1,693,560
Subordinated Lien
6.75%, 8/1/2014....................................................... 750,000 760,260
Harris County Health Facilities Development Corp., Health Care System Revenue
(Sisters of Charity) 7.10%, 7/1/2021.................................... 1,000,000 1,021,890
City of Houston, Airport System Revenue:
6.75%, 7/1/2021 (Insured; FGIC)......................................... 1,000,000 979,300
6.625%, 7/1/2022 (Insured; FGIC)........................................ 1,000,000 979,400
Leon County, PCR, Refunding (Nucor Corp. Project) 7.375%, 8/1/2009.......... 750,000 788,513
Lewisville Independent School District 5.35%, 8/15/2014..................... 2,750,000 2,343,302
Matagorda County Navigation District No. 1, PCR
(Collateralized Houston Lighting and Power) 7.875%, 2/1/2019............ 500,000 534,725
Montgomery County Health Facilities Development Corp., Hospital Mortgage Revenue
(Woodlands Medical Center Project) 8.85%, 8/15/2014..................... 585,000 639,598
North Central Health Facility Development Corp., Revenue (Presbyterian Health Care)
5.90%, 6/1/2021......................................................... 2,300,000 1,959,853
North Texas Higher Education Authority, Inc., Student Loan Revenue
7.25%, 4/1/2003 (Insured; AMBAC)........................................ 1,000,000 1,061,600
Port Corpus Christi Authority, PCR, Refunding
(Hoechst Celanese Co. Project) 7.50%, 8/1/2012.......................... 395,000 419,091
Red River Authority, PCR
(Hoechst Celanese Corp. Project) 6.875%, 4/1/2017....................... 1,600,000 1,570,304
Sabine River Authority, PCR
(Texas Utility Co. Project) 7.75%, 4/1/2016............................. 500,000 517,420
PREMIER STATE MUNICIPAL BOND FUND, Texas Series
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
-------------- --------------
TEXAS (CONTINUED)
San Antonio:
Electric and Gas Revenue 5.75%, 2/1/2011................................ $ 2,000,000 $ 1,811,520
Refunding 5.75%, 8/1/2013............................................... 3,000,000 2,700,840
Water Revenue (Prior Lien) 7.125%, 5/1/2016............................. 750,000 810,548
San Saba County, Certificates of Obligation 8.625%, 2/15/2019............... 990,000 1,059,953
Texas:
(Veterans Housing Assistance) 6.80%, 12/1/2023.......................... 1,450,000 1,386,388
(Veterans Housing Assistance Fund II) 7%, 12/1/2025..................... 2,500,000 2,456,300
Texas City Independent School District:
5%, 8/15/2011........................................................... 1,030,000 835,309
5%, 8/15/2012........................................................... 940,000 754,388
Texas Health Facilities Development Corp., HR, Refunding
(All Saints Episcopal Hospitals) 6.25%, 8/15/2022 (Insured; MBIA)....... 2,000,000 1,863,200
Texas Higher Education Coordinating Board, College Student Loan Revenue
7.30%, 10/1/2003........................................................ 840,000 835,859
Texas Housing Agency, Revenue:
Mortgage Refunding 7.15%, 9/1/2012...................................... 570,000 573,249
Single Family Mortgage 9.375%, 9/1/2016 (Insured; FHA).................. 555,000 574,386
Texas Municipal Power Agency, Refunding 5.75%, 9/1/2012 (Insured; MBIA)..... 775,000 778,805
Texas National Research Laboratory Commission, Financing Corp., LR
(Superconducting Super Collider) 7.10%, 12/1/2021....................... 1,000,000 1,035,000
Texas Public Property Finance Corp., Revenue
(Mental Health and Retardation) 8.875%, 9/1/2011........................ 560,000 667,022
Texas Water Resources Finance Authority, Revenue 7.625%, 8/15/2008.......... 400,000 421,560
Tomball Hospital Authority, Revenue, Refunding 6%, 7/1/2013................. 5,000,000 4,186,500
Tyler Texas Health Facility Development Corp., HR
(East Texas Medical Center Regional Health) 6.625%, 11/1/2011........... 1,945,000 1,829,078
West Side Calhoun County Navigation District, SWDR
(Union Carbide Chemical and Plastics) 8.20%, 3/15/2021.................. 500,000 530,965
U.S. RELATED--1.3%
Puerto Rico Public Buildings Authority, Guaranteed
Public Education and Health Facilities 6.875%, 7/1/2012................. 1,000,000 1,088,960
-------------
TOTAL INVESTMENTS (cost $87,495,557)........................................ $84,245,457
=============
</TABLE>
<TABLE>
PREMIER STATE MUNICIPAL BOND FUND, Texas Series
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994 (UNAUDITED)
SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation LR Lease Revenue
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
FHA Federal Housing Administration PCR Pollution Control Revenue
FSA Financial Security Assurance SWDR Solid Waste Disposal Revenue
HR Hospital Revenue
</TABLE>
<TABLE>
SUMMARY OF COMBINED RATINGS
FITCH (A) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <C> <C>
AAA Aaa AAA 40.4%
AA Aa AA 33.1
A A A 7.3
BBB Baa BBB 13.0
Not Rated Not Rated Not Rated 6.2
--------
100.0%
=======
</TABLE>
NOTE TO STATEMENT OF INVESTMENTS:
(a) Fitch currently provides creditworthiness information for a limited
number of investments.
See independent accountants' review report and notes to financial statements.
<TABLE>
PREMIER STATE MUNICIPAL BOND FUND, Texas Series
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994, (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $87,495,557)-see statement...................................... $84,245,457
Cash.................................................................... 189,815
Receivable for investment securities sold............................... 1,966,000
Interest receivable..................................................... 1,535,396
Receivable for shares of Beneficial Interest subscribed................. 500
Prepaid expenses........................................................ 6,211
-------------
87,943,379
LIABILITIES:
Due to the Distributor.................................................. $ 26,025
Payable for shares of Beneficial Interest redeemed...................... 339,126
Accrued expenses........................................................ 16,312 381,463
---------- -------------
NET ASSETS ................................................................ $87,561,916
============
REPRESENTED BY:
Paid-in capital......................................................... $90,856,875
Accumulated distributions in excess of net realized gain on investments. (44,859)
Accumulated net unrealized (depreciation) on investments-Note 3......... (3,250,100)
-------------
NET ASSETS at value......................................................... $87,561,916
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 3,642,654
============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 827,120
============
NET ASSET VALUE per share:
Class A Shares
($71,360,737 / 3,642,654 shares)...................................... $19.59
========
Class B Shares
($16,201,179 / 827,120 shares)........................................ $19.59
========
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
PREMIER STATE MUNICIPAL BOND FUND, Texas Series
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1994 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 2,918,142
EXPENSES:
Management fee--Note 2(a)............................................. $ 255,568
Shareholder servicing costs-Note 2(c)................................. 139,014
Distribution fees (Class B shares)-Note 2(b).......................... 41,922
Professional fees..................................................... 7,380
Registration fees..................................................... 6,239
Custodian fees........................................................ 5,639
Prospectus and shareholders' reports.................................. 4,794
Trustees' fees and expenses-Note 2(d)................................. 408
Miscellaneous......................................................... 7,035
------------
467,999
Less-Management fee waived due to
undertaking-Note 2(a)............................................. 255,568
------------
TOTAL EXPENSES.................................................. 212,431
------------
INVESTMENT INCOME--NET.......................................... 2,705,711
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 101,881
Net unrealized (depreciation) on investments............................ (3,782,661)
------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (3,680,780)
------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (975,069)
=============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
PREMIER STATE MUNICIPAL BOND FUND, Texas Series
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1994
1994 (UNAUDITED)
------------- -------------------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 5,213,286 $ 2,705,711
Net realized gain (loss) on investments................................. (9,624) 101,881
Net unrealized (depreciation) on investments for the period............. (3,426,202) (3,782,661)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS... 1,777,460 (975,069)
------------- -------------
DIVIDENDS TO SHAREHOLDERS:
From investment income-net:
Class A shares........................................................ (4,588,600) (2,257,486)
Class B shares........................................................ (624,686) (448,225)
From net realized gain on investments:
Class A shares........................................................ (484,938) ___
Class B shares........................................................ (80,902) ___
In excess of net realized gain on investments:
Class A shares........................................................ (117,512) ___
Class B shares........................................................ (19,605) ___
------------- -------------
TOTAL DIVIDENDS................................................... (5,916,243) (2,705,711)
------------- -------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 15,134,395 1,082,313
Class B shares........................................................ 10,828,176 1,377,827
Dividends reinvested:
Class A shares........................................................ 2,405,249 1,039,214
Class B shares........................................................ 427,887 250,813
Cost of shares redeemed:
Class A shares........................................................ (10,038,595) (4,042,494)
Class B shares........................................................ (873,440) (620,208)
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTIONS................................ 17,883,672 (912,535)
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 13,744,889 (4,593,315)
NET ASSETS:
Beginning of period..................................................... 78,410,342 92,155,231
------------- -------------
End of period........................................................... $92,155,231 $87,561,916
============= ==============
</TABLE>
<TABLE>
SHARES
------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------- -----------------------------------
YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
APRIL 30, OCTOBER 31, 1994 APRIL 30, OCTOBER 31, 1994
1994 (UNAUDITED) 1994 (UNAUDITED)
------------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold........................... 699,480 52,774 498,740 67,265
Shares issued for dividends reinvested 111,346 51,111 19,835 12,345
Shares redeemed....................... (466,348) (199,049) (40,687) (30,616)
------------- ------------ -------------- -------------
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING................... 344,478 (95,164) 477,888 48,994
============= ========= ======== =========
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
PREMIER STATE MUNICIPAL BOND FUND, Texas Series
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each period indicated. This
information has been derived from the Series' financial statements.
CLASS A SHARES CLASS B SHARES
------------------------------------------------------- -----------------------------------
SIX MONTHS SIX MONTHS
ENDED OCTOBER ENDED OCTOBER
YEAR ENDED APRIL 30, 31, 1994 YEAR ENDED APRIL 30 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... $18.64 $18.58 $19.25 $19.89 $21.23 $20.41 $20.52 $21.23 $20.41
------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net... 1.44 1.40 1.36 1.29 1.25 .61 .33 1.13 .55
Net realized and unrealized
gain (loss) on investments (.05) .67 .69 1.37 (.66) (.82) .71 (.66) (.82)
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS........ 1.39 2.07 2.05 2.66 .59 (.21) 1.04 .47 (.27)
------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net............ (1.44) (1.40) (1.36) (1.29) (1.25) (.61) (.33) (1.13) (.55)
Dividends from net
realized gain on investments (.01) __ (.05) (.03) (.13) __ __ (.13) __
Dividends from excess net
realized gain on investments __ __ __ __ (.03) __ __ (.03) __
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS... (1.45) (1.40) (1.41) (1.32) (1.41) (.61) (.33) (1.29) (.55)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $18.58 $19.25 $19.89 $21.23 $20.41 $19.59 $21.23 $20.41 $19.59
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2).. 7.55% 11.54% 10.97% 13.80% 2.62% (2.18%)(3) 17.60%(3) 2.05% (2.76%)(3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets.... __ __ .15% .36% .39% .36%(3) .82%(3) .94% .89%(3)
Ratio of net investment income
to average net assets. 7.50% 7.29% 6.78% 6.18% 5.78% 5.93%(3) 4.81%(3) 5.15% 5.34%(3)
Decrease reflected in above
expense ratios due to
undertakings by the Manager
(limited to the expense
limitation provision of the
management agreement). 1.50% 1.27% .88% .62% .55% .55%(3) .49%(3) .54% .55%(3)
Portfolio Turnover Rate. 2.62% 1.95% 7.49% 14.94% 9.68% 22.27%(4) 14.94% 9.68% 22.27%(4)
Net Assets, end of period
(000's Omitted)....... $5,642 $15,139 $37,208 $72,037 $76,277 $71,361 $6,373 $15,878 $16,201
- ------------------------
(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, 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 fifteen series including the Texas Series (the "Series"). Dreyfus
Service Corporation, until August 24, 1994, acted as the distributor of the
Fund's shares. The 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, Texas 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. The Manager has
undertaken from May 1, 1994 to waive receipt of the management fee payable to
it by the Series until such time as the net assets of the Series exceed $100
million, regardless of whether they remain at that level. The management fee
waived, pursuant to the undertakings, amounted to $255,568 for the six months
ended October 31, 1994.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
Dreyfus Service Corporation retained $2,022 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 $4,981
from contingent deferred sales charges imposed upon redemptions of the
Series' Class B shares.
(B) On August 3, 1994, Series shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series' Class B shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B shares.
Prior to August 24, 1994, the distribution Plan ("prior Class B
Distribution Plan") provided that the Fund pays 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 Agents.
During the six months ended October 31, 1994 $15,812 was charged to the
Series pursuant to the Class B Distribution Plan and $26,110 was charged to
the Series pursuant to the prior Class B Distribution Plan.
PREMIER STATE MUNICIPAL BOND FUND, Texas Series
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(C) Under the Shareholder Service 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 service
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. From May 1,
1994 through August 23, 1994, $60,108 and $13,056 were charged to Class A and
Class B shares, respectively, by Dreyfus Service Corporation. From August
24, 1994 through October 31, 1994, $35,098 and $7,905 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 $35,233,745 and $36,994,111, 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 $3,250,100, consisting of $979,998 gross unrealized
appreciation and $4,230,098 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, Texas Series
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
We have reviewed the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Texas Series (one of the Series constituting the Premier State Municipal Bond
Fund) as of October 31, 1994, and the related statements of operations and
changes in net assets and financial highlights for the six month period ended
October 31, 1994. These financial statements and financial highlights are the
responsibility of the Fund's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements and financial highlights taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modification that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepting
auditing standards, the statement of changes in net assets for the year ended
April 30, 1994 and financial highlights for each of the 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.
(Ernst & Young LLP Signature Logo)
New York, New York
December 6, 1994
PREMIER STATE MUNICIPAL
BOND FUND, TEXAS 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. 061/621SA9410BKR
Semi-Annual Report
Premier State
Municipal Bond Fund
Texas Series
October 31, 1994
