LETTER TO SHAREHOLDERS
Dear Shareholder:
As the semi-annual reporting period ended on October 31, 1994, the
Series' Class A shares had a net asset value per share of $11.98,
representing a $.62 (4.92%) decline from the closing net asset value per
share on April 30, 1994. During the six-month period, income dividends of
approximately $.38 per share were paid, which translates into an annualized
distribution rate per share of 6.04%, based on the October 31 closing maximum
offering price per share.
Similarly, the Series' Class B shares had a net asset value per share of
$12.00 on October 3l, representing a $.61 (4.84%) per share decline from the
closing net asset value per share on April 30, 1994. For the six-month period
ending October 31, 1994, income dividends of approximately $.35 per share
were paid, which translates into an annualized distribution rate per share of
5.79%, based on the October 31 closing net asset value.
All dividends paid from net investment income on both the Class A and
Class B shares have been exempt from Federal and Arizona State income taxes.*
The municipal market has been turbulent during this six-month period.
Early on, many economic soothsayers were predicting lower interest rates by
year-end 1994. We believed this was unlikely and purchased higher coupon
bonds, seeking to mitigate the impact of a market downdraft. During the
ensuing months, the municipal market steadily deteriorated at an
unprecedented rate -- characterized as the longest sustained decline in the
past 25 years.
Looking forward, it is difficult to predict if higher rates are on the
horizon. We believe the Series is positioned to capitalize on a reversal of
the current trend, when it occurs, by taking advantage of a slightly longer
duration in the portfolio. While it is difficult to forecast this market with
any degree of certainty, sporadic signs of rate stabilization have occurred.
The question is whether or not it is the beginning of a recovery. There are
many ingredients which must be considered, including the impact of the
election results, additional actions taken by the Fed and the market's
perception of these events.
In our opinion, bonds seem to be somewhat undervalued, but the bearish
sentiment continues. Overall, it is too early to expect an immediate drop in
yields because the economy is still showing signs of strong growth, inflation
pressures are rising and we are awaiting further monetary tightening.
Considering these factors, we will maintain our position until a clearer
direction can be ascertained.
We will continue to utilize our best efforts to react prudently to
economic and market factors that could affect your Series' portfolio. We
transact our daily Series business with an eye toward identifying investment
opportunities that we believe can help achieve your Series' investment goal.
A current Statement of Investments and recent financial statements have been
provided 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 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, Arizona Series
STATEMENT OF INVESTMENTS OCTOBER 31, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS--100.0% AMOUNT VALUE
------------- -------------
<S> <C> <C>
ARIZONA--88.9%
Arizona Board of Regents - Arizona State University, System Revenue, Refunding:
6.125%, 7/1/2015........................................................ $ 100,000 $ 94,243
5.50%, 7/1/2019......................................................... 750,000 642,832
Arizona Educational Loan Marketing Corp.,
Educational Loan Revenue 6.375%, 9/1/2005............................... 100,000 101,233
Arizona Health Facilities Authority, Hospital System Revenue, Refunding
(Samaritan Health System) 5.625%, 12/1/2015 (Insured; MBIA)............. 700,000 614,915
Casa Grande Industrial Development Authority, PCR (Frito-Lay, Inc. Pollution Control
Project) 6.60%, 12/1/2010 (Guaranteed; Pepsico)......................... 200,000 194,966
Chandler, Water and Sewer Revenue, Refunding 6.25%, 7/1/2013 (Insured; FGIC) 200,000 195,884
Douglas Industrial Development Authority, IDR, Refunding (KMart Corp. Project)
6%, 1/1/2003............................................................ 460,000 445,998
Glendale Improvement District Number 59 6%, 1/1/2013........................ 100,000 92,795
Maricopa County Chandler Unified School District Number 80, School Improvement
and Refunding 6.40%, 7/1/2010 (Insured; FGIC)........................... 300,000 299,670
Maricopa County Hospital District Number 1, Hospital Facilities Refunding:
6.25%, 6/1/2010 (Insured; FGIC)......................................... 100,000 98,045
6.125%, 6/1/2015 (Insured; FGIC)........................................ 200,000 189,158
Maricopa County Industrial Development Authority:
Health Facility Revenue (Catholic Healthcare West)
5.50%, 7/1/2010 (Insured; MBIA)....................................... 500,000 446,295
MFHR, Refunding (Laguna Private Apartments Project) 6.75%, 7/1/2019..... 1,000,000 967,260
Maricopa County Pollution Control Corp., PCR, Refunding
(Public Service Co. - Palo Verde) 6.375%, 8/15/2023..................... 1,000,000 860,580
Maricopa County School District Number 6 (Washington Elementary)
6%, 7/1/2009 (Insured; AMBAC)........................................... 100,000 96,588
Maricopa County School District Number 28 (Kyrene Elementary)
6%, 7/1/2001 (Insured; FGIC)............................................ 175,000 178,930
Maricopa County Stadium District, Revenue 5.50%, 7/1/2013 (Insured; MBIA)... 1,000,000 882,820
Maricopa County Tempe Elementary School District Number 3, School Improvement
6%, 7/1/2008............................................................ 200,000 198,162
Maricopa County Unified School District, School Improvement:
Gilbert, Refunding, Zero Coupon, 7/1/2005............................... 1,860,000 963,740
Scottsdale 6%, 7/1/2012 (Prerefunded 7/1/2002) (a)...................... 100,000 102,708
Maricopa County Unified School District Number 69, School Improvement
(Paradise Valley) 5.875%, 7/1/2012 (Insured; FGIC)...................... 200,000 184,788
City of Mesa 5.70%, 7/1/2008 (Insured; MBIA)................................ 300,000 284,163
Navajo County Pollution Control Corp., PCR, Refunding (Arizona Public Service Co.)
5.875%, 8/15/2028 (Insured; AMBAC)...................................... 1,000,000 824,100
PREMIER STATE MUNICIPAL BOND FUND, Arizona Series
STATEMENT OF INVESTMENTS (CONTINUED) OCTOBER 31, 1994 (UNAUDITED)
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- -------------
ARIZONA (CONTINUED)
City of Phoenix, Refunding:
5.10%, 7/1/2013......................................................... $ 750,000 $ 621,075
Street and Highway User Revenue:
6.60%, 7/1/2007....................................................... 250,000 259,185
6.25%, 7/1/2011 (Insured; FGIC)....................................... 200,000 197,736
Phoenix Civic Improvement Corp., Wastewater System Lease Revenue:
6.125%, 7/1/2014 (Prerefunded 7/1/2003) (a)............................. 100,000 103,622
6.125%, 7/1/2023 (Prerefunded 7/1/2003) (a)............................. 500,000 518,110
Phoenix Civic Improvement Corp., Water Systems Revenue 5.40%, 7/1/2014...... 1,000,000 859,930
Pima County Tuscon Unified School District Number 1, School Improvement:
6.10%, 7/1/2010 (Insured; FGIC)......................................... 100,000 98,211
5.875%, 7/1/2014 (Insured; FGIC)........................................ 1,000,000 915,540
Pima and Maricopa Counties Industrial Development Authority, Multi-Family Revenue
5.875%, 1/1/2029 (Insured; FNMA)........................................ 500,000 427,810
Salt River Project Agricultural Improvement and Power District, Salt River
Project
Electric System Revenue:
6%, 1/1/2013.......................................................... 150,000 141,143
5.50%, 1/1/2028....................................................... 1,000,000 828,400
Refunding 5.75%, 1/1/2013............................................. 200,000 182,928
City of Scottsdale Municipal Property Corp., Excise Tax Revenue, Refunding
6.25%, 11/1/2014 (Insured; FGIC)........................................ 100,000 97,006
City of Tempe 6%, 7/1/2009.................................................. 200,000 194,662
City of Tucson, Refunding:
6.10%, 7/1/2012 (Insured; FGIC)......................................... 250,000 241,848
Water System Revenue:
5.75%, 7/1/2012....................................................... 100,000 91,103
5.75%, 7/1/2018....................................................... 500,000 440,730
University of Arizona, COP (Administrative and Packaging Facility Project)
6%, 7/15/2023 (Insured; MBIA)........................................... 1,000,000 917,080
University of Arizona Medical Center Corp., HR, Refunding
6.25%, 7/1/2010 (Insured; MBIA)......................................... 200,000 197,816
U.S. RELATED--11.1%
Guam Power Authority, Revenue 6.30%, 10/1/2022.............................. 500,000 450,005
Commonwealth of Puerto Rico, Refunding 6%, 7/1/2014......................... 400,000 366,336
Puerto Rico Electric Power Authority, Power Revenue:
6%, 7/1/2010............................................................ 550,000 516,483
6.25%, 7/1/2017......................................................... 520,000 488,826
Puerto Rico Highway and Transportation Authority, Highway Revenue
6.50%, 7/1/2022......................................................... 200,000 213,498
-------------
TOTAL INVESTMENTS
(cost $19,999,865)...................................................... $18,328,956
============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, Arizona Series
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Company IDR Industrial Development Revenue
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company MFHR Multi-Family Housing Revenue
FNMA Federal National Mortgage Association PCR Pollution Control Revenue
HR Hospital Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (B) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- --------- --------- -------------------- -----------------------
<S> <C> <S> <C>
AAA Aaa AAA 45.6%
AA Aa AA 21.6
A A A 18.7
BBB Baa BBB 9.4
BB Ba BB 4.7
--------
100.0%
======
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) 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, Arizona Series
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1994 (UNAUDITED)
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $19,999,865)--see statement..................................... $18,328,956
Interest receivable..................................................... 370,802
Receivable for shares of Beneficial Interest subscribed................. 9,994
Prepaid expenses........................................................ 13,721
Due from The Dreyfus Corporation........................................ 34,895
-------------
18,758,368
LIABILITIES:
Due to Custodian........................................................ $149,239
Accrued expenses and other liabilities.................................. 77,627 226,866
---------- -------------
NET ASSETS ................................................................ $18,531,502
============
REPRESENTED BY:
Paid-in capital......................................................... $20,464,628
Accumulated net realized (loss) on investments.......................... (262,217)
Accumulated net unrealized (depreciation) on investments_Note 3......... (1,670,909)
-------------
NET ASSETS at value ........................................................ $18,531,502
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 921,017
============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 624,726
============
NET ASSET VALUE per share:
Class A Shares
($11,037,510 / 921,017 shares)........................................ $11.98
=======
Class B Shares
($7,493,992 / 624,726 shares)......................................... $12.00
=======
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, Arizona Series
STATEMENT OF OPERATIONS SIX MONTHS ENDED OCTOBER 31, 1994 (UNAUDITED)
INVESTMENT INCOME:
<S> <C> <C>
INTEREST INCOME......................................................... $ 578,464
EXPENSES:
Management fee--Note 2(a)............................................. $ 52,919
Shareholder servicing costs_Note 2(c)................................. 34,594
Distribution fees (Class B shares)_Note 2(b).......................... 18,293
Auditing fees......................................................... 3,376
Prospectus and shareholders' reports.................................. 3,229
Organization expenses................................................. 2,300
Registration fees..................................................... 1,846
Legal fees............................................................ 1,555
Custodian fees........................................................ 1,121
Trustees' fees and expenses_Note 2(d)................................. 85
Miscellaneous......................................................... 5,089
----------
124,407
Less_expense reimbursement from Manager due to
undertaking_Note 2(a)............................................. 106,114
----------
TOTAL EXPENSES.................................................. 18,293
----------
INVESTMENT INCOME--NET.......................................... 560,171
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments--Note 3.............................. $(262,208)
Net unrealized (depreciation) on investments............................ (701,789)
----------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (963,997)
----------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $(403,826)
===========
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, 1994
1994 (UNAUDITED)
------------- -------------------
<S> <C> <C>
OPERATIONS:
Investment income--net.................................................. $ 748,595 $ 560,171
Net realized (loss) on investments...................................... ___ (262,208)
Net unrealized (depreciation) on investments for the period............. (1,152,136) (701,789)
------------- -------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............ (403,541) (403,826)
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net:
Class A shares........................................................ (524,294) (358,687)
Class B shares........................................................ (224,301) (201,484)
Net realized gain on investments:
Class A shares........................................................ (5,370) ___
Class B shares........................................................ (2,805) ___
------------- -------------
TOTAL DIVIDENDS................................................... (756,770) (560,171)
------------- -------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 8,029,274 1,167,117
Class B shares........................................................ 5,684,625 1,672,260
Dividends reinvested:
Class A shares........................................................ 282,465 187,403
Class B shares........................................................ 94,531 88,787
Cost of shares redeemed:
Class A shares........................................................ (736,531) (2,248,892)
Class B shares........................................................ (534,479) (446,465)
------------- -------------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...... 12,819,885 420,210
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 11,659,574 (543,787)
NET ASSETS:
Beginning of period..................................................... 7,415,715 19,075,289
------------- -------------
End of period........................................................... $19,075,289 $18,531,502
============= =============
</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........................... 594,166 92,974 420,705 132,159
Shares issued for dividends reinvested 21,163 14,992 7,085 7,104
Shares redeemed....................... (54,791) (179,686) (39,666) (35,651)
------------- ------------ -------------- -------------
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING.............. 560,538 (71,720) 388,124 103,612
============= ============ ============== ==============
See independent accountants' review report and notes to financial
statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, Arizona 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
YEAR ENDED ENDED YEAR ENDED ENDED
APRIL 30, OCTOBER 31, 1994 APRIL 30, OCTOBER 31, 1994
--------------------- --------------------
PER SHARE DATA: 1993(1) 1994 (UNAUDITED) 1993(2) 1994 (UNAUDITED)
------- ------- ------------ ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.50 $13.12 $12.60 $12.65 $13.12 $12.61
------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income--net........... .51 .75 .38 .21 .68 .35
Net realized and unrealized gain (loss)
on investments................. .62 (.51) (.62) .47 (.50) (.61)
------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS................. 1.13 .24 (.24) .68 .18 (.26)
------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income--net (.51) (.75) (.38) (.21) (.68) (.35)
Dividends from net realized
gain on investments............ -_ (.01) -_ -_ (.01) -_
------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS........ (.51) (.76) (.38) (.21) (.69) (.35)
------- ------- ------- ------- ------- -------
Net asset value, end of period... $13.12 $12.60 $11.98 $13.12 $12.61 $12.00
======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN (3).......... 14.01%(4) 1.61% (3.93%)(4) 18.49%(4) 1.16% (4.25%)(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets -_ -_ -_ .50%(4) .50% .50%(4)
Ratio of net investment income to
average net assets............. 5.71%(4) 5.51% 6.02%(4) 4.61%(4) 4.95% 5.51%(4)
Decrease reflected in above expense ratios
due to undertaking by the Manager 1.87%(4) 1.26% 1.09%(4) 1.68%(4) 1.27% 1.12%(4)
Portfolio Turnover Rate.......... 5.94%(5) 3.65% 13.40%(5) 5.94%(5) 3.65% 13.40%(5)
Net Assets, end of period (000's Omitted) $5,671 $12,506 $11,038 $1,745 $6,569 $7,494
- -----------------------------------
(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 load.
(4) Annualized.
(5) Not annualized.
</TABLE>
See independent accountants' review report and notes to financial statements.
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 fifteen series including the Arizona 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, Arizona Series
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the average
daily value of the Series' net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
has undertaken from May 1, 1994 through December 31, 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 undertaking, amounted to
$106,114 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 $1,879 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 $9,435
from contingent deferred sales charges imposed upon redemptions of the
Series' Class B shares.
(B) On August 3, 1994, Series' shareholders approved a revised
Distribution Plan with respect to Class B shares only (the "Class B
Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the
Class B Distribution Plan, effective August 24, 1994, the Fund pays the
Distributor for distributing the Series' Class B shares at an annual rate of
.50 of 1% of the value of the average daily net assets of Class B shares.
Prior to August 24, 1994, the Distribution Plan ("prior Class B
Distribution Plan") provided that the Series 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 Agent.
During the six months ended October 31, 1994, $7,169 was charged to the
Series pursuant to the Class B Distribution Plan and $11,124 was charged to
the Series pursuant to the prior Class B Distribution Plan.
PREMIER STATE MUNICIPAL BOND FUND, Arizona 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 Serv
ice 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, $9,574 and $5,562 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
October 31, 1994, $5,333 and $3,585 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 $8,324,082 and $7,771,882, 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 $1,670,909, consisting of $34,083 gross unrealized
appreciation and $1,704,992 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, Arizona Series
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
We have reviewed the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Arizona 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 two 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 Signature Logo
New York, New York
December 6, 1994
PREMIER STATE MUNICIPAL
BOND FUND, ARIZONA 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. 067/626SA9410
Semi-Annual Report
Premier State
Municipal Bond Fund
Arizona Series
October 31, 1994
(Dreyfus Lion Logo)
