LETTER TO SHAREHOLDERS
Dear Shareholder:
At the close of your Series' fiscal year on April 30, 1995, the net asset
value for Class A shares was $12.74, which was $.14 (1.11%) higher than the
closing net asset value one year ago. Income dividends of approximately $.754
per share were paid during this period, which translates into a distribution
rate per share of 5.65%, based on the April 30 closing maximum offering
price.
The net asset value for Class B shares was $12.75, which was $.14 (1.11%)
higher than the closing net asset value one year ago. Income dividends of
approximately $.692 per share were paid during this period, which translates
into a distribution rate per share of 5.43% based on the April 30 closing net
asset value.
We are pleased to report that all dividends paid from the net investment
income during this period were exempt from Federal and State of Arizona
personal income taxes.*
The past fiscal year was marked by market turbulence and mixed economic
signals. The Series saw both sides of the volatile market as the Bond Buyer
25 Bond Revenue Index moved approximately 117 basis points. We attempted to
manage the Series through these difficult times by purchasing defensive
coupons to balance the discount holdings in the portfolio and by shortening
the average duration of the portfolio.
Factors which negatively affected the performance of the Series during
the past fiscal year included interest rate increases by the Federal Reserve
Board, inflation pressures, and certain conditions in the municipal
marketplace. By the first quarter of 1995, however, these pressures had
abated and both the market and the Series began a strong recovery.
As your Series' fiscal year progressed, new issuance of municipal bonds
in the specialty state sector became progressively thin, which forced
secondary market prices to high levels. Supply continued to be scant after
the New Year, but our investment posture remained unchanged. Because we did
not chase the roller-coaster market as it moved through the second and third
fiscal quarters, the Series was well positioned to capitalize on the market
strength which materialized during the last fiscal quarter. As a result, your
Series was able to rebound to its current level.
Overall, we view the prospect of a continuation of the current market
rally with a cautious eye, since it appears that much of the appreciation
expected for 1995 is already behind us. With this in mind, the Series remains
fully invested to seek to take advantage of any additional market run-up in
an environment witnessing a continued scarcity of securities, and to seek a
high level of tax exempt income.
We have included a current Statement of Investments and recent financial
statements for your review. We appreciate your investment in the Series and
look forward to serving your investment needs in the future.
Sincerely,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
May 16, 1995
New York, N.Y.
*Some income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders.
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES APRIL 30, 1995
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PREMIER STATE
MUNICIPAL BOND FUND, ARIZONA SERIES CLASS A SHARES AND THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX
In Dollars
$11,698
Lehman Brothers Municipal Bond Index*
$11,383
Premier State
Municipal Bond Fund, Arizona Series
(Class A Shares)
*Source: Lehman Brothers
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
CLASS A CLASS B
------------------------------ ------------------------------
% Return Reflecting
% Return Applicable Contingent
Reflecting % Return Deferred Sales
% Return Without Maximum Initial Assuming No Charge Upon
Periods ended 4/30/95 Sales Charge Sales Charge (4.5%) Periods ended 4/30/95 Redemption Redemption*
- -------------------- -------- --------- ------------ ------ ----------
<S> <C> <C> <C> <C> <C>
1 Year 7.41% 2.61% 1 Year 6.88% 3.88%
From Inception (9/3/92) 6.83 4.99 From Inception (1/15/93) 5.85 5.04
</TABLE>
Past performance is not predictive of future performance. Share price and
investment return fluctuate and share price may be more or less than original
cost upon redemption.
The above graph compares a $10,000 investment made in Class A shares of
Premier State Municipal Bond Fund, Arizona Series on 9/3/92 (Inception Date)
to a $10,000 investment made in the Lehman Brothers Municipal Bond Index on
that date. For comparative purposes the value of the Index on 8/31/92 is used
as the beginning value on 9/3/92. All dividends and capital gain
distributions are reinvested. Performance for Class B shares will differ from
the results shown above due to difference in charges and expenses charged to
that class.
The Series invests primarily in Arizona municipal securities and its
performance shown in the line graph takes into account the maximum initial
sales charge on Class A shares and all other applicable fees and expenses.
Unlike the Series, the Lehman Brothers Municipal Bond Index is an unmanaged
total return performance benchmark for the long-term, investment grade,
geographically unrestricted tax exempt bond market, calculated by using
municipal bonds selected to be representative of the market. The Index does
not take into account charges, fees and other expenses. Also, unlike the Fund
which principally limits investments to Arizona municipal obligations, the
Index is not state-specific. Further information relating to Series
performance, including expense reimbursements, if applicable, is contained in
the Condensed Financial Information section of the Prospectus and elsewhere
in this report.
*Maximum contingent deferred sales charge for Class B shares is 3% and is
reduced to 0% after five years.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-90.7% AMOUNT VALUE
------- -------
<S> <C> <C>
ARIZONA-84.1%
Arizona Board of Regents - Arizona State University, System Revenue,
Refunding:
6.125%, 7/1/2015........................................................ $ 100,000 $ 101,303
5.50%, 7/1/2019......................................................... 750,000 699,683
Arizona Educational Loan Marketing Corp., Educational Loan Revenue
6.375%, 9/1/2005........................................................ 100,000 104,422
Arizona Health Facilities Authority, Hospital System Revenue, Refunding
(Samaritan Health System) 5.625%, 12/1/2015 (Insured; MBIA)............. 700,000 672,350
Casa Grande Industrial Development Authority, PCR
(Frito-Lay, Inc. Pollution Control Project) 6.60%, 12/1/2010 (Guaranteed; Pepsico) 200,000 205,036
Chandler, Water and Sewer Revenue, Refunding 6.25%, 7/1/2013 (Insured; FGIC) 200,000 205,026
Douglas Industrial Development Authority, IDR, Refunding (KMart Corp.
Project)
6%, 1/1/2003............................................................ 460,000 459,673
Glendale, Improvement Revenue, District Number 59 6%, 1/1/2013.............. 100,000 98,917
Maricopa County Hospital District Number 1, Hospital Facilities, Refunding:
6.25%, 6/1/2010 (Insured; FGIC)......................................... 100,000 104,302
6.125%, 6/1/2015 (Insured; FGIC)........................................ 200,000 201,666
Maricopa County Industrial Development Authority:
Health Facility Revenue (Catholic Healthcare West) 5.50%, 7/1/2010 (Insured; MBIA) 500,000 484,460
MFHR, Refunding (Laguna Private Apartments Project) 6.75%, 7/1/2019..... 1,000,000 1,007,670
Maricopa County Pollution Control Corp., PCR, Refunding
(Public Service Co.-Palo Verde) 6.375%, 8/15/2023....................... 1,000,000 913,060
Maricopa County School District:
Number 6 (Washington Elementary) 6%, 7/1/2009 (Insured; AMBAC).......... 200,000 207,908
Number 28 (Kyrene Elementary) 6%, 7/1/2013 (Insured; AMBAC)
(Prerefunded 7/1/2001) (a)............................................ 175,000 183,615
School Improvement Number 3 (Tempe Elementary) 6%, 7/1/2008
(Prerefunded 7/1/2006) (a)............................................ 100,000 101,824
Maricopa County Stadium District, Revenue 5.50%, 7/1/2013 (Insured; MBIA)... 1,000,000 954,600
Maricopa County Unified School District, School Improvement:
Chandler, Refunding 6.40%, 7/1/2010 (Insured; FGIC)..................... 300,000 312,732
Gilbert, Refunding, Zero Coupon, 7/1/2005 (Insured; FGIC) (b)........... 1,860,000 1,049,914
Paradise Valley 5.875%, 7/1/2012 (Insured; FGIC)........................ 200,000 198,380
Scottsdale 6%, 7/1/2012 (Prerefunded 7/1/2002) (a)...................... 100,000 105,854
City of Mesa 5.70%, 7/1/2008 (Insured; MBIA)................................ 300,000 299,421
Navajo County Pollution Control Corp., PCR, Refunding (Arizona Public Service
Co.)
5.875%, 8/15/2028 (Insured; AMBAC)...................................... 1,000,000 967,990
City of Phoenix, Refunding:
5.10%, 7/1/2013......................................................... 750,000 675,848
Street and Highway User Revenue:
6.60%, 7/1/2007....................................................... 250,000 267,905
6.25%, 7/1/2011 (Insured; FGIC)....................................... 200,000 206,456
Phoenix Civic Improvement Corp.:
Wastewater System Lease Revenue:
6.125%, 7/1/2014 (Prerefunded 7/1/2003) (a)........................... 100,000 107,924
6.125%, 7/1/2023 (Prerefunded 7/1/2003) (a)........................... 500,000 539,095
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ ______
ARIZONA (CONTINUED)
Phoenix Civic Improvement Corp. (continued):
Water Systems Revenue 5.40%, 7/1/2014................................... $ 1,000,000 $ 926,730
Phoenix Industrial Development Authority, SFMR
6.30%, 12/1/2012 (Insured: FNMA, GNMA) (c).............................. 1,000,000 987,380
Pima County, Tuscon Unified School District Number 1, School Improvement:
6.10%, 7/1/2010 (Insured; FGIC)......................................... 100,000 101,958
5.875%, 7/1/2014 (Insured; FGIC)........................................ 1,000,000 992,520
Pima and Maricopa Counties Industrial Development Authority, Multi-Family
Revenue
5.875%, 1/1/2029 (Insured; FNMA)........................................ 500,000 456,180
Salt River Agricultural Improvement and Power District,
Electric System Revenue (Salt River Project):
6%, 1/1/2013.......................................................... 150,000 150,185
5.50%, 1/1/2028....................................................... 1,000,000 901,070
Refunding 5.75%, 1/1/2013............................................. 200,000 193,942
City of Scottsdale Municipal Property Corp., Excise Tax Revenue, Refunding
6.25%, 11/1/2014 (Insured; FGIC)........................................ 100,000 101,976
City of Tempe 6%, 7/1/2009.................................................. 200,000 204,512
City of Tuscon, Refunding:
6.10%, 7/1/2012 (Insured; FGIC)......................................... 250,000 253,300
Water System Revenue:
5.75%, 7/1/2012....................................................... 100,000 98,384
5.75%, 7/1/2018....................................................... 500,000 478,385
University of Arizona, COP (Administrative and Packaging Facility Project)
6%, 7/15/2023 (Insured; MBIA)........................................... 1,000,000 989,160
University of Arizona Medical Center Corp., HR, Refunding
6.25%, 7/1/2010 (Insured; MBIA)......................................... 200,000 207,032
U.S. RELATED-6.6%
Commonwealth of Puerto Rico, Refunding 6%, 7/1/2014......................... 400,000 391,492
Puerto Rico Electric Power Authority, Power Revenue:
6%, 7/1/2010............................................................ 550,000 541,876
6.25%, 7/1/2017......................................................... 520,000 517,473
-------
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $20,297,684).................... $19,930,589
===========
SHORT-TERM MUNICIPAL INVESTMENTS-9.3%
ARIZONA;
Pima County, Industrial Development Authority, Industrial Revenue, VRDN
(Tuscon Electric Power-Ivington Project):
4.70%, 7/1/2022 (LOC; Societe Generale) (d)........................... $ 1,950,000 $ 1,950,000
4.70%, 10/1/2022 (LOC; Bank of America) (d)........................... 100,000 100,000
-------
TOTAL SHORT_TERM MUNICIPAL INVESTMENTS (cost $2,050,000)................... $ 2,050,000
============
TOTAL INVESTMENTS-100.0%
(cost $22,347,684)...................................................... $21,980,589
=============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Association
FNMA Federal National Mortgage Association MFHR Multi-Family Housing Revenue
GNMA Government National Mortgage Association PCR Pollution Control Revenue
HR Hospital Revenue SFMR Single Family Mortgage Revenue
IDR Industrial Development Revenue VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (E) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
- ----- ----- ---------- ------------
<S> <C> <S> <C>
AAA Aaa AAA 48.6%
AA Aa AA 19.4
A A A 16.4
BBB Baa BBB 2.1
BB Ba BB 4.2
F1+ VMIG1 SP1 9.3
------
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) Wholly held by the custodian in a segregated account as collateral
for a delayed delivery security.
(c) Purchased on a when-issued basis.
(d) Secured by letter of credit. Securities payable on demand. The
interest rate, which is subject to change, is based upon bank prime rates
or an index of market rates.
(e) Fitch currently provides creditworthiness information for a limited
number of investments.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $22,347,684)-see statement...................................... $21,980,589
Interest receivable..................................................... 354,387
Receivable for shares of Beneficial Interest subscribed................. 29,558
Prepaid expenses........................................................ 11,230
Due from The Dreyfus Corporation........................................ 8,185
-------
22,383,949
LIABILITIES:
Due to Distributor...................................................... $ 7,815
Due to Custodian........................................................ 94,110
Payable for investment securities purchased............................. 1,003,150
Payable for shares of Beneficial Interest redeemed...................... 13
Accrued expenses and other liabilities.................................. 51,116 1,156,204
------- ------
NET ASSETS ................................................................ $21,227,745
==========
REPRESENTED BY:
Paid-in capital......................................................... $21,938,293
Accumulated net realized (loss) on investments.......................... (343,453)
Accumulated net unrealized (depreciation) on investments-Note 3......... (367,095)
-------
NET ASSETS at value......................................................... $21,227,745
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 1,018,275
==========
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 647,399
==========
NET ASSET VALUE per share:
Class A Shares
($12,972,013 / 1,018,275 shares)...................................... $12.74
======
Class B Shares
($8,255,732 / 647,399 shares)......................................... $12.75
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1995
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $1,173,115
EXPENSES:
Management fee-Note 2(a).............................................. $ 106,761
Shareholder servicing costs-Note 2(c)................................. 68,466
Distribution fees (Class B shares)-Note 2(b).......................... 37,203
Auditing fees......................................................... 8,357
Prospectus and shareholders' reports.................................. 6,495
Organization expenses................................................. 4,600
Registration fees..................................................... 2,360
Custodian fees........................................................ 2,269
Legal fees............................................................ 1,819
Trustees' fees and expenses-Note 2(d)................................. 195
Miscellaneous......................................................... 9,833
-----
248,358
Less-expense reimbursement from Manager due to
undertakings-Note 2(a)............................................ 210,380
_____
TOTAL EXPENSES.................................................. 37,978
______
INVESTMENT INCOME-NET........................................... 1,135,137
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $(343,444)
Net unrealized appreciation on investments.............................. 602,025
_____
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 258,581
______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,393,718
==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
----------------
1994 1995
-------- ------
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 748,595 $ 1,135,137
Net realized (loss) on investments...................................... -- (343,444)
Net unrealized appreciation (depreciation) on investments for the year.. (1,152,136) 602,025
_______ ______
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS... (403,541) 1,393,718
_______ ______
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares........................................................ (524,294) (722,637)
Class B shares........................................................ (224,301) (412,500)
Net realized gain on investments:
Class A shares........................................................ (5,370) --
Class B shares........................................................ (2,805) --
_______ ______
TOTAL DIVIDENDS................................................... (756,770) (1,135,137)
______ _______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 8,029,274 3,423,651
Class B shares........................................................ 5,684,625 2,606,355
Dividends reinvested:
Class A shares........................................................ 282,465 336,271
Class B shares........................................................ 94,531 161,187
Cost of shares redeemed:
Class A shares........................................................ (736,531) (3,489,944)
Class B shares........................................................ (534,479) (1,143,645)
_______ ______
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...... 12,819,885 1,893,875
_______ ______
TOTAL INCREASE IN NET ASSETS.................................... 11,659,574 2,152,456
NET ASSETS:
Beginning of year....................................................... 7,415,715 19,075,289
_______ ______
End of year............................................................. $19,075,289 $21,227,745
======== ========
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------------------------
CLASS A CLASS B
---------------- ----------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
---------------- ----------------
1994 1995 1994 1995
------ ------- ------- -------
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............................ 594,166 281,816 420,705 206,514
Shares issued for dividends reinvested. 21,163 27,031 7,085 12,967
Shares redeemed........................ (54,791) (283,309) (39,666) (93,196)
------- -------- ------- -------
NET INCREASE IN SHARES OUTSTANDING 560,538 25,538 388,124 126,285
======= ======= ======= =======
See 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 year indicated. This
information has been derived from the Series' financial statements.
CLASS A SHARES CLASS B SHARES
-------------- --------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
-------------- --------------
PER SHARE DATA: 1993(1) 1994 1995 1993(2) 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year................. $12.50 $13.12 $12.60 $12.65 $13.12 $12.61
---- ---- ---- ---- ---- ----
INVESTMENT OPERATIONS:
Investment income-net.............................. .51 .75 .75 .21 .68 .69
Net realized and unrealized gain (loss) on investments .62 (.51) .14 .47 (.50) .14
---- ---- ---- ---- ---- ----
TOTAL FROM INVESTMENT OPERATIONS................. 1.13 .24 .89 .68 .18 .83
---- ---- ---- ---- ---- ----
DISTRIBUTIONS:
Dividends from investment income-net............... (.51) (.75) (.75) (.21) (.68) (.69)
Dividends from net realized gain on investments.... -- (.01) -- -- (.01) --
---- ---- ---- ---- ---- ----
TOTAL DISTRIBUTIONS.............................. (.51) (.76) (.75) (.21) (.69) (.69)
---- ---- ---- ---- ---- ----
Net asset value, end of year....................... $13.12 $12.60 $12.74 $13.12 $12.61 $12.75
===== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(3)............................. 14.01%(4) 1.61% 7.41% 18.49%(4) 1.16% 6.88%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets ........... -- -- -- .50%(4) .50% .50%
Ratio of net investment income to average net assets 5.71%(4) 5.51% 6.04% 4.61%(4) 4.95% 5.54%
Decrease reflected in above expense ratios due to
undertaking by the Manager ...................... 1.87%(4) 1.26% 1.07% 1.68%(4) 1.27% 1.10%
Portfolio Turnover Rate ........................... 5.94%(5) 3.65% 21.96% 5.94%(5) 3.65% 21.96%
Net Assets, end of year (000's Omitted)............ $5,671 $12,506 $12,972 $1,745 $6,569 $8,256
(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.
See notes to financial statements.
</TABLE>
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering 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 FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., 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.
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state
and certain of its public bodies and municipalities may affect the ability
of issuers within the state to pay interest on, or repay principal of,
municipal obligations held by the Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, 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, 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.
The Fund has an unused capital loss carryover of approximately $262,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1995. The
carryover does not include net realized securities losses from November 1,
1994 through April 30, 1995 which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, the carryover expires in
fiscal 2003.
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 April 2, 1995 to reimburse all fees
and expenses of the Series (excluding 12b-1 distribution plan fees and
certain expenses as described above), and thereafter through April 30, 1995,
to reduce the shareholder services plan fee paid by and reimburse such excess
expenses of the Series, to the extent that the Series' aggregate expenses
(excluding certain expenses as described above) exceeded specified annual
percentages of the Series' average daily net assets. The expense
reimbursement, pursuant to the undertakings, amounted to $210,380 for the
year ended April 30, 1995.
The Manager has currently undertaken through June 30, 1995 or until such
time as the net assets of the Series exceed $50 million, regardless of
whether they remain at that level, to reimburse all fees and expenses of the
Series (excluding 12b-1 distribution plan fees, shareholder services plan
fees and certain expenses as described above).
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 $5,509 during the year ended April
30, 1995 from commissions earned on sales of the Series' Class A shares.
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 year ended April 30, 1995, $26,079 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.
(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, $9,574 and $5,562 were charged to Class A and Class B shares,
respectively, by Dreyfus Service Corporation. From August 24, 1994 through
April 30, 1995, $20,352 and $13,040 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. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities
amounted to $13,042,072 and $10,087,640, respectively, for the year ended
April 30, 1995, and consisted entirely of long-term and short-term municipal
investments.
At April 30, 1995, accumulated net unrealized depreciation on investments
was $367,095, consisting of $178,743 gross unrealized appreciation and
$545,838 gross unrealized depreciation.
At April 30, 1995, 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
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
We have audited 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 April 30, 1995, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of the
years indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of April 30, 1995 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Arizona Series at April 30,
1995, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
June 6, 1995
PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Series hereby designates all the
dividends paid from investment income_net during the fiscal year ended April
30, 1995 as "exempt_interest dividends" (not subject to regular Federal and,
for individuals who are Arizona residents, Arizona personal income taxes).
As required by Federal tax law rules, shareholders will receive
notification of their portion of the Series' taxable ordinary dividends (if
any) and capital gain distributions (if any) paid for the 1995 calendar year
on Form 1099-DIV which will be mailed by January 31, 1996.
[Dreyfus lion "d" logo]
PREMIER STATE MUNICIPAL
BOND FUND, ARIZONA SERIES
200 Park Avenue
New York, NY 10166
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. 067/626AR954
[Dreyfus logo]
Annual Report
Premier State
Municipal Bond Fund
Arizona Series
April 30, 1995
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN PREMIER STATE MUNICIPAL BOND FUND, ARIZONA SERIES
CLASS A SHARES AND THE LEHMAN BROTHERS MUNICIPAL
BOND INDEX
EXHIBIT A:
____________________________________________________
| | | |
| | | PREMIER STATE |
| PERIOD | LEHMAN BROTHERS |MUNICIPAL BOND FUND, |
| | MUNICIPAL | ARIZONA SERIES |
| | BOND INDEX * | (CLASS A SHARES) |
|-----------|-----------------|---------------------|
| 9/3/92 | 10,000 | 9,549 |
| 4/30/93 | 10,736 | 10,429 |
| 4/30/94 | 10,968 | 10,597 |
| 4/30/95 | 11,698 | 11,383 |
|---------------------------------------------------|
*Source: Lehman Brothers
