PREMIER STATE MUNICIPAL BOND FUND, 497, 1996-12-24

PREMIER STATE MUNICIPAL BOND FUND
497, 1996-12-24

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PREMIER STATE MUNICIPAL BOND FUND

PROSPECTUS DECEMBER 16, 1996

Premier State Municipal Bond Fund (the "Fund") is an open-end,
non-diversified, management investment company, known as a mutual fund. The
Fund's investment objective is to maximize current income exempt from Federal
and, where applicable, from State income taxes, without
undue risk.
The Fund permits you to invest in any of thirteen separate portfolios
(each, a "Series"): the Connecticut Series, the Florida Series, the Georgia
Series, the Maryland Series, the Massachusetts Series, the Michigan Series,
the Minnesota Series, the New Jersey Series, the North Carolina Series, the
Ohio Series, the Pennsylvania Series, the Texas Series and the Virginia
Series. Each Series seeks to achieve the Fund's investment objective by
investing in Municipal Obligations primarily issued by issuers in the State
after which it is named and believed to be exempt from Federal and, where
applicable, from that State's income tax. It is anticipated that
substantially all dividends paid by each Series will be exempt from Federal
income tax and also, where applicable, will be exempt from the personal
income tax of the State after which the Series is named.
By this Prospectus, each Series is offering three Classes of
shares_Class A, Class B and Class C_which are described herein. See
"Alternative Purchase Methods."
The Fund provides free redemption checks with respect to Class A
shares, which you can use in amounts of $500 or more for cash or to pay
bills. You can purchase or redeem all classes of shares by telephone using
the TELETRANSFER Privilege.

The Dreyfus Corporation professionally manages the Fund's portfolios.

This Prospectus sets forth concisely information about the Fund that
you should know before investing. It should be read and retained for future
reference.

The Statement of Additional Information dated December 16, 1996,
which may be revised from time to time, provides a further discussion of
certain areas in this Prospectus and other matters which may be of interest
to some investors. It has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. The Securities and
Exchange Commission maintains a Web site (http://www.sec.gov) that contains
the Statement of Additional Information, material incorporated by reference, a
nd other information regarding the Fund. For a free copy of the Statement of
Additional Information, write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144, or call 1-800-554-4611. When telephoning, ask
for Operator 144.

Mutual fund shares are not deposits or obligations of, or guaranteed
or endorsed by, any bank, and are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency. Mutual fund shares involve certain investment risks, including the
possible loss of principal.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
TABLE OF CONTENTS

FEE TABLE.......................................... 3
CONDENSED FINANCIAL INFORMATION.................... 6
ALTERNATIVE PURCHASE METHODS....................... 28
DESCRIPTION OF THE FUND............................ 29
MANAGEMENT OF THE FUND............................. 35
HOW TO BUY SHARES.................................. 37
SHAREHOLDER SERVICES............................... 41
HOW TO REDEEM SHARES............................... 44
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN.... 48
DIVIDENDS, DISTRIBUTIONS AND TAXES................. 49
PERFORMANCE INFORMATION............................ 57
GENERAL INFORMATION................................ 58
APPENDIX........................................... 59

Page 2
<TABLE>
<CAPTION>

FEE TABLE
CONNECTICUT SERIES FLORIDA SERIES
------------------------------ -----------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
.. (as a percentage of offering price) 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge) None* 4.00% 1.00% None* 4.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees.................... .55% .55% .55% .55% .55% .55%
12b-1 Fees......................... None .50% .75% None .50% .75%
Other Expenses..................... .37% .39% .34% .36% .36% .69%
Total Fund Operating Expenses...... .92% 1.44% 1.64% .91% 1.41% 1.99%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
1 YEAR........................... $ 54 $55/15** $27/17** $ 54 $54/14** $30/20**
3 YEARS.......................... $ 73 $76/46** $52 $ 73 $75/45** $62
5 YEARS.......................... $ 94 $99/79** $89 $ 93 $97/77** $107
10 YEARS......................... $153 $145*** $194 $152 $143*** $232

GEORGIA SERIES MARYLAND SERIES
------------------------------ -----------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge) None* 4.00% 1.00% None* 4.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees................ .55% .55% .55% .55% .55% .55%
12b-1 Fees..................... None .50% .75% .None .50% .75%
Other Expenses................. .40% .39% .68% .35% .38% .50%
Total Fund Operating Expenses.. .95% 1.44% 1.98% .90% 1.43% 1.80%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
1 YEAR........................ $ 54 $55/15** $30/20** $ 54 $55/15** $28/18**
3 YEARS....................... $ 74 $76/46** $62 $ 72 $75/45** $57
5 YEARS....................... $ 95 $99/79** $107 $ 93 $98/78** $97
10 YEARS...................... $156 $147*** $231 $151 $144*** $212
*A contingent deferred sales charge of 1% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
**Assuming no redemption of shares.
***Ten-year figures assume conversion of Class B shares to Class A shares at
the end of the sixth year following the date of purchase.

Page 3

FEE TABLE
MASSACHUSETTS SERIES MICHIGAN SERIES
------------------------------ -----------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge) None* 4.00% 1.00% None* 4.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees................ .55% .55% .55% .55% .55% .55%
12b-1 Fees..................... None .50% .75% None .50% .75%
Other Expenses................. .37% .38% .39% .38% .39% .40%
Total Fund Operating Expenses.. .92% 1.43% 1.69% .93% 1.44% 1.70%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
1 YEAR........................ $ 54 $55/15** $27/17** $ 54 $55/15** $27/17**
3 YEARS....................... $ 73 $75/45** $53 $ 73 $76/46** $54
5 YEARS....................... $ 94 $98/78** $92 $ 94 $99/79** $92
10 YEARS...................... $153 $145*** $200 $154 $146*** $201

MINNESOTA SERIES NEW JERSEY SERIES
------------------------------ -----------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge) None* 4.00% 1.00% None* 4.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees................ .55% .55% .55% .55% .55% .55%
12b-1 Fees..................... None .50% .75% None .50% .75%
Other Expenses................. .35% .38% .12% .35% .35% .35%
Total Fund Operating Expenses.. .90% 1.43% 1.42% .90% 1.40% 1.65%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
1 Year....................... $ 54 $55/15** $24/14** $ 54 $54/$14** $27/$17**
3 Years...................... $ 72 $75/45** $45 $ 72 $74/$44** $52
5 Years...................... $ 93 $98/78** $78 $ 93 $97/$77** $90
10 Years..................... $151 $144*** $170 $151 $142*** $195
*A contingent deferred sales charge of 1% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
**Assuming no redemption of shares.
***Ten-year figures assume conversion of Class B shares to Class A shares at
the end of the sixth year following the date of purchase.

Page 4

FEE TABLE
NORTH CAROLINA SERIES OHIO SERIES
------------------------------ -----------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge) None* 4.00% 1.00% None* 4.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees................. .55% .55% .55% .55% .55% .55%
12b-1 Fees...................... None .50% .75% None .50% .75%
Other Expenses.................. .45% .46% .43% .34% .37% .33%
Total Fund Operating Expenses... 1.00% 1.51% 1.73% .89% 1.42% 1.63%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
1 Year........................ $ 55 $55/15** $28/18** $ 54 $54/14** $27/17**
3 Years....................... $ 75 $78/48** $54 $ 72 $75/45** $51
5 Years....................... $ 98 $102/82** $94 $ 92 $98/78** $89
10 Years...................... $162 $154*** $204 $150 $143*** $193

PENNSYLVANIA SERIES TEXAS SERIES
------------------------------ -----------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.50% None None 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge) None* 4.00% 1.00% None* 4.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees................ .55% .55% .55% .55% .55% .55%
12b-1 Fees..................... None .50% .75% None .50% .75%
Other Expenses................. .37% .38% .40% .37% .38% .46%
Total Fund Operating Expenses.. .92% 1.43% 1.70% .92% 1.43% 1.76%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
1 Year........................ $ 54 $55/15** $28/18** $ 54 $55/15** $27/17**
3 Years....................... $ 73 $75/45** $55 $ 73 $75/45** $54
5 Years....................... $ 94 $98/78** $95 $ 94 $98/78** $92
10 Years...................... $153 $145*** $207 $153 $145*** $201
*A contingent deferred sales charge of 1% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
**Assuming no redemption of shares.
***Ten-year figures assume conversion of Class B shares to Class A shares at
the end of the sixth year following the date of purchase.

Page 5

VIRGINIA SERIES
----------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C
------- ------- -------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................. 4.50% None None
Maximum Deferred Sales Charge Imposed on Redemptions
(as a percentage of the amount subject to charge)... None* 4.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
Management Fees..................................... .55% .55% .55%
12b-1 Fees.......................................... None .50% .75%
Other Expenses...................................... .50% .51% .43%
Total Fund Operating Expenses....................... 1.05% 1.56% 1.73%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) except where
noted, redemption at the end of each time period:
CLASS A CLASS B CLASS C
------- ------- -------
1 Year............................................. $ 55 $56/16** $28/18**
3 Years............................................ $ 77 $79/49** $54
5 Years............................................ $100 $105/85** $94
10 Years........................................... $167 $159*** $204
*A contingent deferred sales charge of 1% may be assessed on certain
redemptions of Class A shares purchased without an initial sales charge as
part of an investment of $1 million or more.
**Assuming no redemption of shares.
***Ten-year figures assume conversion of Class B shares to Class A shares at
the end of the sixth year following the date of purchase.

The amounts listed in the examples should not be considered as representative
of past or future expenses and actual expenses may be greater or less than
those indicated. Moreover, while the example assumes a 5% annual return, each
Series' actual performance will vary and may result in an actual return
greater or less than 5%.

The purpose of the foregoing tables is to assist you in
understanding the costs and expenses borne by the Fund and investors, the
payment of which will reduce investors' annual return. Other expenses for
the New Jersey Series and for Class C only for the other Series are based
on estimated amounts for the current fiscal year. Long-term investors in
Class B or Class C could pay more in 12b-1 fees than the economic
equivalent of paying a front-end sales charge. The information in the
foregoing tables does not reflect any fee waivers or expense
reimbursement arrangements that may be in effect. Certain Service Agents
(as defined below) may charge their clients direct fees for effecting
transactions in Fund shares; such fees are not reflected in the foregoing
tables. See "Management of the Fund," "How to Buy Shares," "How to Redeem
Shares"and "Distribution Plan and Shareholder Services Plan."

CONDENSED FINANCIAL INFORMATION
The information in the following tables has been audited by Ernst
& Young LLP, the Fund's independent auditors, whose report thereon
appears in the Statement of Additional Information. Further financial
data and related notes are included in the Statement of Additional
Information, available upon request.
Page 6

FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a
share of beneficial interest outstanding, total investment return, ratios
to average net assets and other supplemental data for each Series (other
than the New Jersey Series) for each year indicated. This information has
been derived from the Series' financial statements. No financial
information is available for the New Jersey Series which had not
commenced operations as of the date of the financial statements.

</TABLE>
<TABLE>
<CAPTION>

CONNECTICUT SERIES
---------------------------------------------------------------------------------------
Class A Shares
---------------------------------------------------------------------------------------
Year Ended April 30,
---------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year.. $11.00 $10.72 $11.05 $10.88 $11.28 $11.45 $12.26 $11.81 $11.76
------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income--net .76 .81 .80 .77 .72 .71 .68 .67 .66
Net realized and unrealized gain
(loss) on investments (.28) .38 (.15) .40 .17 .81 (.42) (.05) .14
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM
INVESTMENT OPERATIONS .48 1.19 .65 1.17 .89 1.52 .26 .62 .80
------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income--net........ (.76) (.81) (.80) (.77) (.72) (.71) (.68) (.67) (.66)
Dividends from net realized
gain on investments ._ (.05) (.02) ._ ._ ._ (.03) ._ ._
Dividends in excess of net
realized gain on investments ._ ._ ._ ._ ._ ._ ._ ._ ._
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.76) (.86) (.82) (.77) (.72) (.71) (.71) (.67) (.66)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of year........ $10.72 $11.05 $10.88 $11.28 $11.45 $12.26 $11.81 $11.76 $11.90
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) 5.00%(3) 11.54% 5.93% 11.10% 8.14% 13.62% 1.92% 5.47% 6.85%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets......... ._ ._ ._ .21% .52% .69% .80% .89% .92%
Ratio of net investment income to
average net assets. 7.31%(3) 7.24% 7.05% 6.81% 6.30% 5.93% 5.44% 5.77% 5.45%
Decrease reflected in above
expense ratios due to
undertakings by
The Dreyfus Corporation
(limited to the expense
limitation provision of the
Management Agreement) 1.50%(3) 1.42% 1.10% .75% .41% .21% .09% .01% ._
Portfolio Turnover Rate 91.09%(4) 72.52% 12.62% 6.30% 8.53% 24.22% 10.83% 10.48% 28.83%
Net Assets, end of year
(000's omitted).... $11,641 $31,056 $83,206 $183,788 $280,305 $360,020 $364,182 $335,964 $321,559
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
Page 7

CONNECTICUT SERIES (CONTINUED)
-----------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
----------------------------------- ---------------------
1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
PER SHARE DATA:
Net asset value, beginning of year.. $11.89 $12.26 $11.80 $11.76 $11.84
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income--net.............. .18 .61 .61 .60 .40
Net realized and unrealized gain (loss)
on investments...................... .37 (.43) (.04) .13 .05
------- ------- ------- ------- -------
Total from Investment Operations.... .55 .18 .57 .73 .45
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income--net (.18) (.61) (.61) (.60) (.40)
Dividends from net realized gain
on investments...................... ._ (.03) ._ ._ ._
------- ------- ------- ------- -------
Total Distributions................. (.18) (.64) (.61) (.60) (.40)
------- ------- ------- ------- -------
Net asset value, end of year........ $12.26 $11.80 $11.76 $11.89 $11.89
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 16.08%(4) 1.26% 4.99% 6.20% 5.31%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.12%(4) 1.36% 1.41% 1.44% 1.64%(4)
Ratio of net investment income to
average net assets.................. 4.57%(4) 4.78% 5.21% 4.92% 4.31%(4)
Decrease reflected in above expense ratios
due to undertakings by The Dreyfus
Corporation (limited to the expense limitation
provision of the Management Agreement) .12%(4) .08% .01% ._ ._
Portfolio Turnover Rate............. 24.22% 10.83% 10.48% 28.83% 28.83%
Net Assets, end of year (000's omitted) $9,492 $32,246 $35,425 $38,838 $1,007
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
Page 8

FLORIDA SERIES
----------------------------------------------------------------------------------------
Class A Shares
----------------------------------------------------------------------------------------
Year Ended April 30,
----------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
beginning of year.. $12.00 $12.85 $13.48 $13.34 $13.93 $14.33 $15.02 $14.43 $14.51
------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net .92 1.02 1.02 .99 .95 .92 .85 .81 .79
Net realized and unrealized gain
(loss) on investments .85 .63 (.11) .61 .41 .86 (.51) .12 .17
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... 1.77 1.65 .91 1.60 1.36 1.78 .34 .93 .96
------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net......... (.92) (1.02) (1.02) (.99) (.95) (.92) (.85) (.81) (.79)
Dividends from net realized
gain on investments ._ ._ (.03) (.02) (.01) (.17) (.04) (.04) (.20)
Dividends in excess of net
realized gain on investments ._ ._ ._ ._ ._ ._ (.04) ._ ._
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.92) (1.02) (1.05) (1.01) (.96) (1.09) (.93) (.85) (.99)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $12.85 $13.48 $13.34 $13.93 $14.33 $15.02 $14.43 $14.51 $14.48
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) 16.24%(3) 13.32% 6.83% 12.40% 10.09% 12.84% 2.14% 6.71% 6.63%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets. ._ ._ ._ .21% .52% .69% .80% .90% .91%
Ratio of net investment income
to average net assets 7.76%(3) 7.26% 7.24% 7.11% 6.65% 6.21% 5.61% 5.67% 5.29%
Decrease reflected in above
expense ratios due to
undertakings by
The Dreyfus Corporation
(limited to the expense
limitation provision of the
Management Agreement) 1.50%(3) 1.50% 1.08% .74% .41% .21% .10% .01% ._
Portfolio Turnover Rate 31.25%(4) 17.16% 27.69% .28% 20.99% 33.18% 20.84% 50.62% 54.37%
Net Assets, end of year
(000's omitted).... $1,493 $15,061 $67,416 $177,927 $245,474 $299,775 $289,791 $252,406 $227,478
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
Page 9

FLORIDA SERIES (CONTINUED)
------------------------------------------------------------
Class B Shares Class C Shares
------------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
------------------------------------- ---------------------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
Net asset value, beginning of year.. $14.59 $15.01 $14.42 $14.51 $14.65
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .24 .77 .73 .71 .48
Net realized and unrealized gain (loss)
on investments...................... .42 (.51) .13 .16 .02
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... .66 .26 .86 .87 .50
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.24) (.77) (.73) (.71) (.48)
Dividends from net realized gain
on investments...................... ._ (.04) (.04) (.20) (.20)
Dividends in excess of net realized gain
on investments...................... ._ (.04) ._ ._ ._
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.24) (.85) (.77) (.91) (.68)
------- ------- ------- ------- -------
Net asset value, end of year........ $15.01 $14.42 $14.51 $14.47 $14.47
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 15.60%(4) 1.54% 6.21% 6.01% 4.69%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.12%(4) 1.34% 1.41% 1.41% 1.99%(4)
Ratio of net investment income to
average net assets.................. 4.87%(4) 4.91% 5.13% 4.77% 4.20%(4)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to the
expense limitation provision of the
Management Agreement)................. .12%(4) .09% .01% ._ ._
Portfolio Turnover Rate............. 33.18% 20.84% 50.62% 54.37% 54.37%
Net Assets, end of year (000's omitted) $5,916 $22,47 $25,282 $27,023 $35
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
Page 10

GEORGIA SERIES
-----------------------------------------------------------------------------
CLASS C
CLASS A SHARES CLASS B SHARES SHARES
------------------------------------- ------------------------------------ ----------
YEAR ENDED
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, APRIL 30,
------------------------------------- ------------------------------------ ----------
PER SHARE DATA: 1993(1) 1994 1995 1996 1993(2) 1994 1995 1996 1996(3)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
beginning of year $12.50 $13.27 $12.69 $12.80 $12.71 $13.27 $12.69 $12.80 $12.85
------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net .51 .73 .73 .66 .20 .67 .66 .59 .38
Net realized and unrealized gain
(loss) on investments .77 (.58) .11 .25 .56 (.58) .11 .26 .20
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS...... 1.28 .15 .84 .91 .76 .09 .77 .85 .58
------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net...... (.51) (.73) (.73) (.66) (.20) (.67) (.66) (.59) (.38)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of year..... $13.27 $12.69 $12.80 $13.05 $13.27 $12.69 $12.80 $13.06 $13.05
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN(4) 15.91%(5) .97% 6.87% 7.14% 20.66%(5) .46% 6.33% 6.69% 6.28%(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets ._ .07% .25% .74% .50%(5) .58% .75% 1.24% 1.98%(5)
Ratio of net investment income
to average net assets 5.55%(5) 5.41% 5.80% 5.00% 4.60%(5) 4.85% 5.27% 4.46% 3.73%(5)
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision
of the Management
Agreement)...... 1.46%(5) 1.02% .78% .21% 1.37%(5) 1.02% .80% .20% ._
Portfolio Turnover Rate 37.79%(6) 6.76% 34.04% 33.09% 37.79%(6) 6.76% 34.04% 33.09% 33.09%
Net Assets, end of year
(000's omitted). $7,304 $10,058 $8,985 $8,346 $6,319 $16,243 $19,429 $20,106 $88
(1)From September 3, 1992 (commencement of operations) to April 30, 1993.
(2)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(3)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(4)Exclusive of sales load.
(5)Annualized.
(6)Not annualized.
Page 11

MARYLAND SERIES
-----------------------------------------------------------------------------------------
Class A Shares
-----------------------------------------------------------------------------------------
Year Ended April 30,
-----------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
beginning of year.. $12.50 $11.38 $11.72 $11.61 $12.13 $12.43 $13.02 $12.46 $12.54
------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net .80 .87 .86 .85 .79 .76 .73 .70 .67
Net realized and unrealized gain
(loss) on investments (1.12) .34 (.09) .53 .35 .68 (.53) .08 .23
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... (.32) 1.21 .77 1.38 1.14 1.44 .20 .78 .90
------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net......... (.80) (.87) (.86) (.85) (.79) (.76) (.73) (.70) (.67)
Dividends from net realized
gain on investments ._ ._ (.02) (.01) (.05) (.09) (.03) ._ (.08)
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.80) (.87) (.88) (.86) (.84) (.85) (.76) (.70) (.75)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $11.38 $11.72 $11.61 $12.13 $12.43 $13.02 $12.46 $12.54 $12.69
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) (2.50%)(3) 11.05% 6.69% 12.24% 9.68% 11.93% 1.33% 6.52% 7.24%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets......... ._ ._ ._ .21% .53% .69% .80% .90% .90%
Ratio of net investment income
to average net assets 7.44%(3) 7.26% 7.12% 6.98% 6.40% 5.93% 5.51% 5.69% 5.23%
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision of
the Management Agreement) 1.50%(3) 1.50% 1.11% .75% .41% .22% .10% .01% ._
Portfolio Turnover Rate 75.21%(4) 8.67% 30.03% 1.45% 16.21% 17.92% 10.27% 35.39% 41.65%
Net Assets, end of year
(000's omitted).... $4,353 $24,383 $85,794 $179,959 $254,240 $337,307 $335,518 $301,834 $283,878
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
Page 12

MARYLAND SERIES (CONTINUED)
-----------------------------------------------------------
Class B Shares Class C Shares
------------------------------ ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
------------------------------ ---------------------
------- ------- ------- ------- -------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
Net asset value, beginning of year.. $12.64 $13.02 $12.46 $12.54 $12.67
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .20 .65 .63 .61 .41
Net realized and unrealized gain (loss)
on investments...................... .38 (.53) .08 .23 .10
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... .58 .12 .71 .84 .51
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.20) (.65) (.63) (.61) (.41)
Dividends from net realized gain on investments ._ (.03) ._ (.08) (.08)
Dividends in excess of net realized gain
on investments...................... ._ ._ ._ ._ ._
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.20) (.68) (.63) (.69) (.49)
------- ------- ------- ------- -------
Net asset value, end of year........ $13.02 $12.46 $12.54$ 12.69 $12.69
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 15.74%(4) .75% 5.94% 6.66% 5.57%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.09%(4) 1.37% 1.44% 1.43% 1.80%(4)
Ratio of net investment income to
average net assets.................. 4.55%(4) 4.82% 5.13% 4.68% 4.59%(4)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to
the expense limitation provision of
the Management Agreement)............. .12%(4) .08% .01% ._ ._
Portfolio Turnover Rate............. 17.92% 10.27% 35.39% 41.65% 41.65%
Net Assets, end of year (000's omitted) $5,931 $30,527 $35,090 $41,179 $27
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
Page 13

MASSACHUSETTS SERIES
------------------------------------------------------------------------------------------
Class A Shares
------------------------------------------------------------------------------------------
Year Ended April 30,
------------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
beginning of year.. $11.50 $10.54 $10.92 $10.69 $11.05 $11.41 $12.13 $11.64 $11.53
------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net .76 .83 .82 .79 .75 .73 .71 .69 .66
Net realized and unrealized gain
(loss) on investments (.96) .38 (.23) .37 .36 .73 (.44) (.06) ._
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... (.20) 1.21 .59 1.16 1.11 1.46 .27 .63 .66
------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net......... (.76) (.83) (.82) (.79) (.75) (.73) (.71) (.69) (.66)
Dividends from net realized
gain on investments ._ ._ ._ (.01) ._ (.01) (.05) ._ (.03)
Dividends in excess of net
realized gain on investments ._ ._ ._ ._ ._ ._ ._ (.05) ._
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.76) (.83) (.82) (.80) (.75) (.74) (.76) (.74) (.69)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $10.54 $10.92 $10.69 $11.05 $11.41 $12.13 $11.64 $11.53 $11.50
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) (1.67%)(3) 11.91% 5.49% 11.23% 10.32% 13.14% 2.08% 5.72% 5.69%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets. ._ ._ ._ .19% .55% .69% .82% .94% .92%
Ratio of net investment income
to average net assets 7.63%(3) 7.58% 7.40% 7.21% 6.65% 6.16% 5.80% 6.04% 5.57%
Decrease reflected in above expense
ratios due to undertakings by
The Dreyfus Corporation (limited
to the expense limitation provision
of the Management Agreement) 1.50%(3) 1.48% 1.11% .78% .41% .24% .11% .01% ._
Portfolio Turnover Rate 36.11%(4) 17.76% 28.44% 47.07% 24.75% 11.36% 12.04% 13.62% 34.86%
Net Assets, end of year
(000's omitted).... $5,174 $21,578 $43,375 $57,328 $66,873 $79,701 $76,865 $72,731 $68,812
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
Page 14

MASSACHUSETTS SERIES (CONTINUED)
---------------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
------------------------------------- ---------------------
------- ------- ------- ------- -------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
Net asset value, beginning of year.. $11.79 $12.13 $11.63 $11.52 $11.59
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .19 .64 .63 .60 .40
Net realized and unrealized gain (loss)
on investments...................... .34 (.45) (.06) ._ (.08)
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... .53 .19 .57 .60 .32
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.19) (.64) (.63) (.60) (.40)
Dividends from net realized gain on investments ._ (.05) ._ (.03) (.03)
Dividends in excess of net realized gain
on investments...................... ._ ._ (.05) ._ ._
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.19) (.69) (.68) (.63) (.43)
------- ------- ------- ------- -------
Net asset value, end of year........ $12.13 $11.63 $11.52 $11.49 $11.48
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 15.56%(4) 1.44% 5.15% 5.15% 3.76%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.15%(4) 1.36% 1.45% 1.43% 1.69%(4)
Ratio of net investment income to
average net assets 4.92%(4) 5.18% 5.47% 5.03% 4.72%(4)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to the
expense limitation provision of the
Management Agreement)................. .13%(4) .10% .01% ._ ._
Portfolio Turnover Rate............. 11.36% 12.04% 13.62% 34.86% 34.86%
Net Assets, end of year (000's omitted) $1,066 $3,702 $4,220 $5,255 $1
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
Page 15

MICHIGAN SERIES
------------------------------------------------------------------------------------------
Class A Shares
------------------------------------------------------------------------------------------
Year Ended April 30,
------------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
beginning of year.. $13.00 $13.45 $14.10 $13.80 $14.34 $14.80 $15.65 $15.27 $15.14
------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net 1.00 1.07 1.05 1.01 .95 .92 .89 .85 .83
Net realized and unrealized gain
(loss) on investments .45 .65 (.27) .54 .46 .98 (.30) .11 .20
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... 1.45 1.72 .78 1.55 1.41 1.90 .59 .96 1.03
------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net......... (1.00) (1.07) (1.05) (1.01) (.95) (.92) (.89) (.85) (.83)
Dividends from net realized
gain on investments ._ ._ (.03) ._ ._ (.13) (.08) (.24) (.19)
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.00) (1.07) (1.08) (1.01) (.95) (1.05) (.97) (1.09) (1.02)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $13.45 $14.10 $13.80 $14.34 $14.80 $15.65 $15.27 $15.14 $15.15
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) 12.32%(3) 13.25% 5.59% 11.61% 10.12% 13.25% 3.65% 6.65% 6.81%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets......... ._ ._ ._ .20% .53% .69% .81% .92% .93%
Ratio of net investment income
to average net assets 7.97%(3) 7.49% 7.23% 7.07% 6.47% 6.01% 5.56% 5.66% 5.35%
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision of
the Management Agreement) 1.50%(3) 1.50% 1.16% .79% .42% .25% .11% .01% ._
Portfolio Turnover Rate 48.80%(4) 32.72% 20.23% 27.31% 21.42% 14.99% 19.96% 48.30% 56.88%
Net Assets, end of year
(000's omitted).... $1,671 $8,548 $56,699 $111,696 $145,159 $184,138 $187,405 $176,604 $166,538
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
Page 16

MICHIGAN SERIES (CONTINUED)
-------------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
-------------------------------------- ---------------------
------- ------- ------- ------- -------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
Net asset value, beginning of year.. $15.20 $15.64 $15.27 $15.13 $15.18
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .24 .80 .77 .75 .50
Net realized and unrealized gain (loss)
on investments...................... .44 (.29) .10 .21 .17
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... .68 .51 .87 .96 .67
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.24) (.80) (.77) (.75) (.50)
Dividends from net realized gain on investments ._ (.08) (.24) (.19) (.19)
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.24) (.88) (1.01) (.94) (.69)
------- ------- ------- ------- -------
Net asset value, end of year........ $15.64 $15.27 $15.13 $15.15 $15.16
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 15.50%(4) 3.11% 6.01% 6.33% 6.12%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.18%(4) 1.38% 1.44% 1.44% 1.70%(4)
Ratio of net investment income to
average net assets.................. 4.85%(4) 4.88% 5.10% 4.82% 4.47%(4)
Decrease reflected in above expense ratios due
to undertakings by The Dreyfus Corporation
(limited to the expense limitation provision of the
Management Agreement)................. .14%(4) .09% .01% ._ ._
Portfolio Turnover Rate............. 14.99% 19.96% 48.30% 56.88% 56.88%
Net Assets, end of year (000's omitted) $3,581 $13,861 $16,471 $19,031 $133
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
Page 17

MINNESOTA SERIES
------------------------------------------------------------------------------------------
Class A Shares
------------------------------------------------------------------------------------------
Year Ended April 30,
------------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
beginning of year.. $13.50 $13.37 $13.92 $13.74 $14.28 $14.63 $15.31 $14.72 $14.90
------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net .97 1.07 1.04 1.02 .96 .92 .87 .83 .82
Net realized and unrealized gain
(loss) on investments (.13) .55 (.13) .56 .36 .77 (.53) .18 .08
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... .84 1.62 .91 1.58 1.32 1.69 .34 1.01 .90
------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net......... (.97) (1.07) (1.04) (1.02) (.96) (.92) (.87) (.83) (.82)
Dividends from net realized
gain on investments ._ ._ (.05) (.02) (.01) (.09) (.06) ._ ._
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.97) (1.07) (1.09) (1.04) (.97) (1.01) (.93) (.83) (.82)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of year........ $13.37 $13.92 $13.74 $14.28 $14.63 $15.31 $14.72 $14.90 $14.98
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) 7.01%(3) 12.57% 6.67% 11.89% 9.45% 11.96% 2.08% 7.14% 6.11%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets...... ... ._ ._ ._ .20% .53% .69% .80% .90% .90%
Ratio of net investment income
to average net assets 7.79%(3) 7.66% 7.25% 7.19% 6.53% 6.13% 5.61% 5.68% 5.41%
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision of
the Management Agreement) 1.50%(3) 1.50% 1.16% .79% .41% .24% .11% .01% ._
Portfolio Turnover Rate 70.26%(4) 31.64% 23.48% 14.04% 12.32% 23.42% 12.21% 51.95% 35.47%
Net Assets, end of year
(000's omitted).... $4,331 $13,019 $46,428 $85,066 $122,782 $148,765 $155,657 $145,444 $138,058
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
Page 18

MINNESOTA SERIES (CONTINUED)
-------------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
-------------------------------------- ---------------------
------- ------- ------- ------- -------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
Net asset value, beginning of year.. $14.86 $15.32 $14.74 $14.92 $14.96
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .24 .78 .75 .74 .50
Net realized and unrealized gain (loss)
on investments...................... .46 (.52) .18 .09 .05
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... .70 .26 .93 .83 .55
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.24) (.78) (.75) (.74) (.50)
Dividends from net realized
gain on investments ._ (.06) ._ ._ ._
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.24) (.84) (.75) (.74) (.50)
------- ------- ------- ------- -------
Net asset value, end of year........ $15.32 $14.74 $14.92 $15.01 $15.01
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 16.32%(4) 1.55% 6.57% 5.62% 5.15%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.16%(4) 1.38% 1.44% 1.43% 1.42%(4)
Ratio of net investment income to
average net assets.................. 4.83%(4) 4.91% 5.13% 4.87% 4.00%(4)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to
the expense limitation provision of the
Management Agreement)................. .14%(4) .09% .01% ._ ._
Portfolio Turnover Rate............. 23.42% 12.21% 51.95% 35.47% 35.47%
Net Assets, end of year (000's omitted) $4,633 $21,004 $23,217 $25,617 $373
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
Page 19

NORTH CAROLINA SERIES
-------------------------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
----------------------------------------- ------------------------------------ --------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
----------------------------------------- ------------------------------------ --------------------
PER SHARE DATA: 1992(1) 1993 1994 1995 1996 1993(2) 1994 1995 1996 1996(3)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
beginning of year....... $12.00 $12.39 $13.40 $12.73 $12.72 $12.90 $13.39 $12.72 $12.71 $12.76
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net... .62 .78 .74 .70 .67 .20 .66 .64 .60 .40
Net realized and
unrealized gain (loss)
on investments.. .39 1.02 (.67) (.01) .19 .49 (.67) (.01) .19 .14
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS............ 1.01 1.80 .07 .69 .86 .69 (.01) .63 .79 .54
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from
investment income-net... (.62) (.78) (.74) (.70) (.67) (.20) (.66) (.64) (.60) (.40)
Dividends from net
realized gain
on investments........ ._ (.01) ._ ._ ._ ._ ._ ._ ._ ._
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS.... (.62) (.79) (.74) (.70) (.67) (.20) (.66) (.64) (.60) (.40)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of year........... $12.39 $13.40 $12.73 $12.72 $12.91 $13.39 $12.72 $12.71 $12.90 $12.90
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT
RETURN(4). .11.36%(5) 14.97% .29% 5.70% 6.79% 18.53%(5) (.27%) 5.12% 6.25% 5.92%(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets..... ._ .29% .44% .65% .98% .79%(5) 1.00% 1.18% 1.49% 1.73%(5)
Ratio of net investment
income to average
net assets.... 6.35%(5) 5.94% 5.38% 5.63% 5.11% 4.47%(5) 4.78% 5.08% 4.59% 4.31%(5)
Decrease reflected
in above expense ratios
due to undertakings by
The Dreyfus Corporation
(limited to the expense
limitation provision of the
Management Agreement). 1.14%(5) .76% .50% .31% .02% .56%(5) .48% .30% .02% ._
Portfolio Turnover
Rate. 15.01%(6) 5.76% 11.62% 12.02% 47.15% 5.76% 11.62% 12.02% 47.15% 47.15%
Net Assets,
end of year
(000's omitted)...... $26,387 $56,284 $68,074 $50,205 $47,042 $13,145 $38,968 $42,310 $42,668 $1
(1)From August 1, 1991 (commencement of operations ) to April 30, 1992.
(2)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(3)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(4)Exclusive of sales load.
(5)Annualized.
(6)Not annualized.
Page 20

OHIO SERIES
------------------------------------------------------------------------------------------
Class A Shares
------------------------------------------------------------------------------------------
Year Ended April 30,
------------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
beginning of year... $14.50 $11.18 $11.66 $11.54 $12.00 $12.35 $13.09 $12.70 $12.62
------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net .80 .89 .88 .86 .80 .77 .74 .73 .71
Net realized and unrealized gain
(loss) on investments (3.32) .48 (.08) .46 .36 .81 (.36) (.05) .14
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS.......... (2.52) 1.37 .80 1.32 1.16 1.58 .38 .68 .85
------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net.......... (.80) (.89) (.88) (.86) (.80) (.77) (.74) (.73) (.71)
Dividends from net realized
gain on investments. ._ ._ (.04) ._ (.01) (.07) (.03) (.03) (.18)
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS. (.80) (.89) (.92) (.86) (.81) (.84) (.77) (.76) (.89)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $11.18 $11.66 $11.54 $12.00 $12.35 $13.09 $12.70 $12.62 $12.58
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) (18.49%)(3) 12.72% 6.95% 11.84% 9.97% 13.24% 2.78% 5.63% 6.77%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets.......... ._ ._ ._ .21% .52% .70% .81% .92% .89%
Ratio of net investment
income to average net assets 7.79%(3) 7.57% 7.30% 7.20% 6.53% 6.03% 5.57% 5.84% 5.49%
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision of
the Management Agreement) 1.50%(3) 1.50% 1.12% .78% .41% .23% .12% .01% ._
Portfolio Turnover Rate 11.10%(4) 14.49% 14.58% 3.00% 13.68% 6.08% 7.73% 39.53% 43.90%
Net Assets, end of year
(000's omitted)..... $8,043 $31,420 $92,864 $176,223 $243,074 $295,564 $293,706 $273,225 $257,639
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
Page 21

OHIO SERIES (CONTINUED)
-------------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
-------------------------------------- ---------------------
------- ------- ------- ------- -------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
Net asset value, beginning of year.. $12.69 $13.09 $12.71 $12.63 $12.68
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .20 .66 .66 .64 .43
Net realized and unrealized gain (loss)
on investments...................... .40 (.35) (.05) .14 .09
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... .60 .31 .61 .78 .52
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.20) (.66) (.66) (.64) (.43)
Dividends from net realized gain on investments ._ (.03) (.03) (.18) (.18)
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.20) (.69) (.69) (.82) (.61)
------- ------- ------- ------- -------
Net asset value, end of year........ $13.09 $12.71 $12.63 $12.59 $12.59
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 16.36%(4) 2.24% 5.06% 6.19% 5.66%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.17%(4) 1.38% 1.44% 1.42% 1.63%(4)
Ratio of net investment income to
average net assets.................. 4.62%(4) 4.89% 5.29% 4.94% 4.66%(4)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to
the expense limitation provision of the
Management Agreement)................. .13%(4) .10% .01% ._ ._
Portfolio Turnover Rate............. 6.08% 7.73% 39.53% 43.90% 43.90%
Net Assets, end of year (000's omitted) $8,482 $27,657 $32,797 $40,476 $1
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
Page 22

PENNSYLVANIA SERIES
------------------------------------------------------------------------------------------
Class A Shares
------------------------------------------------------------------------------------------
Year Ended April 30,
------------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
beginning of year.. $15.00 $14.23 $14.78 $14.68 $15.21 $15.73 $16.61 $16.01 $16.12
------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net .85 1.13 1.13 1.12 1.06 1.02 .95 .91 .87
Net realized and unrealized gain
(loss) on investments (.77) .55 (.08) .55 .56 .99 (.57) .11 .32
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... .08 1.68 1.05 1.67 1.62 2.01 .38 1.02 1.19
------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net......... (.85) (1.13) (1.13) (1.12) (1.06) (1.02) (.95) (.91) (.87)
Dividends from net realized gain
on investments..... ._ ._ (.02) (.02) (.04) (.11) (.03) ._ (.27)
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (.85) (1.13) (1.15) (1.14) (1.10) (1.13) (.98) (.91) (1.14)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $14.23 $14.78 $14.68 $15.21 $15.73 $16.61 $16.01 $16.12 $16.17
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) .87%(3) 12.21% 7.20% 11.74% 10.97% 13.19% 2.17% 6.65% 7.46%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets......... ._ ._ ._ .22% .56% .69% .81% .92% .92%
Ratio of net investment income
to average net assets 7.08%(3) 7.46% 7.38% 7.32% 6.75% 6.24% 5.61% 5.77% 5.28%
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision of
the Management Agreement) 1.50%(3) 1.50% 1.24% .79% .41% .25% .12% .01% ._
Portfolio Turnover Rate 67.48%(4) 25.10% 59.15% 25.74% 38.97% 8.64% 7.21% 55.19% 52.69%
Net Assets, end of year
(000's omitted).... $2,870 $12,083 $51,418 $113,439 $158,437 $220,920 $235,619 $219,949 $216,802
(1)From July 30, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
Page 23

PENNSYLVANIA SERIES (CONTINUED)
-----------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
----------------------------------- ---------------------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
Net asset value, beginning of year.. $16.10 $16.60 $16.01 $16.11 $16.18
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .26 .85 .83 .79 .53
Net realized and unrealized gain (loss)
on investments...................... .50 (.56) .10 .32 .25
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... .76 .29 .93 1.11 .78
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.26) (.85) (.83) (.79) (.53)
Dividends from net
realized gain on investments ._ (.03) ._ (.27) (.27)
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.26) (.88) (.83) (1.06) (.80)
------- ------- ------- ------- -------
Net asset value, end of year........ $16.60 $16.01 $16.11 $16.16 $16.16
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 16.39%(4) 1.65% 6.02% 6.92% 6.71%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.14%(4) 1.38% 1.44% 1.43% 1.70%(4)
Ratio of net investment income to
average net assets.................. 4.90%(4) 4.95% 5.22% 4.76% 4.46%(4)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to
the expense limitation provision of the
Management Agreement)................. .15%(4) .10% .01% ._ ._
Portfolio Turnover Rate............. 8.64% 7.21% 55.19% 52.69% 52.69%
Net Assets, end of year (000's omitted) $14,631 $59,057 $70,062 $72,610 $21
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
Page 24

TEXAS SERIES
--------------------------------------------------------------------------------------------
Class A Shares
--------------------------------------------------------------------------------------------
Year Ended April 30,
--------------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
beginning of year.. $15.50 $17.89 $18.64 $18.58 $19.25 $19.89 $21.23 $20.41 $20.69
------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net 1.33 1.45 1.44 1.40 1.36 1.29 1.25 1.22 1.20
Net realized and unrealized gain
(loss) on investments 2.39 .75 (.05) .67 .69 1.37 (.66) .28 .45
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS......... 3.72 2.20 1.39 2.07 2.05 2.66 .59 1.50 1.65
------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net......... (1.33) (1.45 ) (1.44) (1.40) (1.36) (1.29) (1.25) (1.22) (1.20)
Dividends from net realized gain
on investments..... ._ ._ (.01) ._ (.05) (.03) (.13) ._ (.30)
Dividends in excess of net realized
gain on investments ._ ._ ._ ._ ._ ._ (.03) ._ ._
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.33) (1.45) (1.45) (1.40) (1.41) (1.32) (1.41) (1.22) (1.50)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $17.89 $18.64 $18.58 $19.25 $19.89 $21.23 $20.41 $20.69 $20.84
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN(2) 26.23%(3) 12.79% 7.55% 11.54% 10.97% 13.80% 2.62% 7.63% 8.06%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets......... ._ ._ ._ ._ .15% .36% .39% .37% .37%
Ratio of net investment income to
average net assets. 7.94%(3) 7.90% 7.50% 7.29% 6.78% 6.18% 5.78% 6.01% 5.64%
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision of
the Management Agreement) 1.50%(3) 1.50% 1.50% 1.27% .88% .62% .55% .55% .55%
Portfolio Turnover Rate 47.85%(4) 6.84% 2.62% 1.95% 7.49% 14.94% 9.68% 38.68% 49.24%
Net Assets, end of year
(000's omitted).... $1,553 $2,902 $5,642 $15,139 $37,208 $72,037 $76,277 $68,103 $62,864
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
Page 25

TEXAS SERIES (CONTINUED)
-----------------------------------------------------------
Class B Shares Class C Shares
----------------------------------- ---------------------
Year Ended APRIL 30, Year Ended APRIL 30,
----------------------------------- ---------------------
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
------- ------- ------- ------- -------
Net asset value, beginning of year.. $20.52 $21.23 $20.41 $20.69 $20.78
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net............... .33 1.13 1.10 1.09 .73
Net realized and unrealized gain (loss)
on investments...................... .71 (.66) .28 .45 .35
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS.... 1.04 .47 1.38 1.54 1.08
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net (.33) (1.13) (1.10) (1.09) (.73)
Dividends from net realized gain on investments ._ (.13) ._ (.30) (.30)
Dividends in excess of net realized gain
on investments...................... ._ (.03) ._ ._ ._
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS................. (.33) (1.29) (1.10) (1.39) (1.03)
------- ------- ------- ------- -------
Net asset value, end of year........ $21.23 $20.41 $20.69 $20.84 $20.83
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)............ 17.60%(4) 2.05% 7.05% 7.51% 7.29%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .82%(4) .94% .89% .88% 1.18%(4)
Ratio of net investment income to
average net assets.................. 4.81%(4) 5.15% 5.46% 5.13% 4.77%(4)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to
the expense limitation provision of the
Management Agreement)................. .49%(4) .54% .55% .55% .58%(4)
Portfolio Turnover Rate............. 14.94% 9.68% 38.68% 49.24% 49.24%
Net Assets, end of year (000's omitted) $6,373 $15,878 $16,818 $17,461 $1
(1)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(2)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(3)Exclusive of sales load.
(4)Annualized.
Page 26

VIRGINIA SERIES
-------------------------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
----------------------------------------- ------------------------------------- --------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
----------------------------------------- ------------------------------------- --------------------
PER SHARE DATA: 1992(1) 1993 1994 1995 1996 1993(2) 1994 1995 1996 1996(3)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
beginning of year.......$15.00 $15.50 $16.80 $16.02 $16.03 $16.25 $16.80 $16.02 $16.03 $16.17
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net.... .78 1.00 .97 .94 .93 .26 .88 .85 .84 .57
Net realized and
unrealized gain (loss)
on investments.. .50 1.31 (.75) .04 .24 .55 (.75) .04 .24 .09
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS.............. 1.28 2.31 .22 .98 1.17 .81 .13 .89 1.08 .66
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment
income-net............... (.78) (1.00) (.97) (.94) (.93) (.26) (.88) (.85) (.84) (.57)
Dividends from net
realized gain
on investments......... ._ (.01) (.01) (.03) ._ ._ (.01) ._ ._ ._
Dividends in excess of
net realized gain
on investments. ._ ._ (.02) ._ ._ ._ (.02) (.03) ._ ._
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS...... (.78) (1.01) (1.00) (.97) (.93) (.26) (.91) (.88) (.84) (.57)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of year.......... $15.50 $16.80 $16.02 $16.03 $16.27 $16.80 $16.02 $16.03 $16.27 $16.26
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT
RETURN(4).. 11.54%(5) 15.32% 1.10% 6.39% 7.32% 17.22%(5) .54% 5.83% 6.77% 5.64%(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses
to average net assets... ._ .27% .46% .39% .50% .83%(5) 1.01% .90% 1.01% 1.21%(5)
Ratio of net investment
income to average
net assets.... 6.42%(5) 6.02% 5.64% 5.93% 5.58% 4.62%(5) 5.02% 5.40% 5.06% 4.55%(5)
Decrease reflected in
above expense ratios
due to undertakings by
The Dreyfus Corporation
(limited to the expense
limitation provision of
the Management
Agreement) 1.22%(5) .76% .55% .55% .55% .54%(5) .54% .55% .55% .52%(5)
Portfolio Turnover
Rate................. 5.96%(6) 9.32% 30.69% 21.60% 50.06% 9.32% 30.69% 21.60% 50.06% 50.06%
Net Assets,
end of year
(000's omitted)....... $23,096 $55,627 $65,279 $62,428 $61,149 $8,402 $25,254 $28,813 $33,120 $166
(1)From August 1, 1991 (commencement of operations) to April 30, 1992.
(2)From January 15, 1993 (commencement of initial offering of Class B shares) to April 30, 1993.
(3)From August 15, 1995 (commencement of initial offering of Class C shares) to April 30, 1996.
(4)Exclusive of sales load.
(5)Annualized.
(6)Not annualized.
</TABLE>
Page 27

Further information about each such Series' performance is contained in
the Fund's annual report, which may be obtained without charge by writing
to the address or calling the number set forth on the cover page of this
Prospectus.
ALTERNATIVE PURCHASE METHODS
The Fund offers you three methods of purchasing each Series'
shares; you may choose the Class of shares that best suits your needs,
given the amount of your purchase, the length of time you expect to hold
your shares and any other relevant circumstances. Each Series' share
represents an identical pro rata interest in the Series' investment
portfolio.
As to each Series, Class A shares are sold at net asset value
per share plus a maximum initial sales charge of 4.50% of the public
offering price imposed at the time of purchase. The initial sales charge
may be reduced or waived for certain purchases. See "How to Buy Shares _
Class A Shares." These shares are subject to an annual service fee at the
rate of .25 of 1% of the value of the average daily net assets of Class
A. See "Distribution Plan and Shareholder Services Plan _ Shareholder
Services Plan."

As to each Series, Class B shares are sold at net asset value
per share with no initial sales charge at the time of purchase; as a
result, the entire purchase price is immediately invested in the Fund.
Class B shares are subject to a maximum 4% contingent deferred sales
charge ("CDSC"), which is assessed if you redeem Class B shares within
six years of their purchase. See "How to Buy Shares _ Class B Shares" and
"How to Redeem Shares _ Contingent Deferred Sales Charge _ Class B
Shares." These shares also are subject to an annual service fee at the
rate of .25 of 1% of the value of the average daily net assets of Class
B. In addition, Class B shares are subject to an annual distribution fee
at the rate of .50 of 1% of the value of the average daily net assets of
Class B. See "Distribution Plan and Shareholder Services Plan." The
distribution fee paid by Class B will cause such Class to have a higher
expense ratio and to pay lower dividends than Class A. Approximately six
years after the date of purchase, Class B shares of a Series
automatically will convert to Class A shares of such Series, based on the
relative net asset values for shares of each such Class, and will no
longer be subject to the distribution fee. Class B shares that have been
acquired through the reinvestment of dividends and distributions will be
converted on a pro rata basis together with other Class B shares, in the
proportion that a shareholder's Class B shares converting to Class A
shares bears to the total Class B shares not acquired through the
reinvestment of dividends and distributions.

As to each Series, Class C shares are sold at net asset value
per share with no initial sales charge at the time of purchase; as a
result, the entire purchase price is immediately invested in the Series.
Class C shares are subject to a 1% CDSC, which is assessed only if you
redeem Class C shares within one year of purchase. See "How to Buy Shares
-- Class C Shares" and "How to Redeem Shares -- Contingent Deferred Sales
Charge -- Class C Shares." These shares also are subject to an annual
service fee at the rate of .25 of 1%, and an annual distribution fee at
the rate of .75 of 1%, of the value of the average daily net assets of
Class C. See "Distribution Plan and Shareholder Services Plan." The
distribution fee paid by Class C will cause such Class to have a higher
expense ratio and to pay lower dividends than Class A.

The decision as to which Class of shares is more beneficial
to you depends on the amount and the intended length of your investment.
You should consider whether, during the anticipated life of your
investment in the Fund, the accumulated distribution fee and CDSC, if
any, on Class B or Class C shares would be less than the initial sales
charge on Class A shares purchased at the same time, and to what extent,
if any, such differential would be offset by the return of Class A.
Additionally, investors qualifying for reduced initial sales charges who
expect to maintain their investment for an extended period of time might
consider purchasing Class A shares because the accumulated continuing
distribution fees on Class B or Class C shares may exceed the initial
sales charge on Class A shares during the life of the investment.
Finally, you should consider the effect of the CDSC period and any
conversion rights of the Classes in the context of your own investment
time frame. For example, while Class C shares have a shorter CDSC
Page 28

period than Class B shares, Class C shares do not have a conversion
feature and, therefore, are subject to an ongoing distribution fee. Thus,
Class B shares may be more attractive than Class C shares to investors
with long-term investment outlooks. Generally, Class A shares may be more
appropriate for investors who invest $1,000,000 or more in Fund shares,
and for investors who invest between $100,000 and $999,999 in Fund shares
with long-term investment outlooks. Class A shares will not be
appropriate for investors who invest less than $50,000 in Fund shares.

DESCRIPTION OF THE FUND
INVESTMENT OBJECTIVE
The Fund's investment objective is to maximize current income
exempt from Federal income tax and, where applicable, from State income
taxes for residents of the States of Connecticut, Florida, Georgia,
Maryland, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina,
Ohio, Pennsylvania, Texas and Virginia, without undue risk. To accomplish
the Fund's investment objective, each Series invests primarily in the
debt securities of the State after which it is named, such State's
political subdivisions, authorities and corporations, the interest from
which is, in the opinion of bond counsel to the issuer, exempt from
Federal and such State's personal income taxes (collectively, "State
Municipal Obligations" or when the context so requires, "Connecticut
Municipal Obligations," "Florida Municipal Obligations," "Georgia
Municipal Obligations," "Maryland Municipal Obligations," etc.). To the
extent acceptable State Municipal Obligations are at any time unavailable
for investment, such Series will invest temporarily in other debt
securities the interest from which is, in the opinion of bond counsel to
the issuer, exempt from Federal income tax. Each Series' investment
objective cannot be changed without approval by the holders of a majority
(as defined in the Investment Company Act of 1940, as amended (the "1940
Act")) of such Series' outstanding voting shares. There can be no
assurance that the Series' investment objective will be achieved. When
used herein, the term "State" refers to the State after which a Series is
named.
MUNICIPAL OBLIGATIONS
Debt securities the interest from which is, in the opinion of
bond counsel to the issuer, exempt from Federal income tax ("Municipal
Obligations") generally include debt obligations issued to obtain funds
for various public purposes as well as certain industrial development
bonds issued by or on behalf of public authorities. Municipal Obligations
are classified as general obligation bonds, revenue bonds and notes.
General obligation bonds are secured by the issuer's pledge of its faith,
credit and taxing power for the payment of principal and interest.
Revenue bonds are payable from the revenue derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source, but not from the general
taxing power. Tax exempt industrial development bonds, in most cases, are
revenue bonds that do not carry the pledge of the credit of the issuing
municipality, but generally are guaranteed by the corporate entity on
whose behalf they are issued. Notes are short-term instruments which are
obligations of the issuing municipalities or agencies and are sold in
anticipation of a bond sale, collection of taxes or receipt of other
revenues. Municipal Obligations include municipal lease/purchase
agreements which are similar to installment purchase contracts for
property or equipment issued by municipalities. Municipal Obligations bear
fixed, floating or variable rates of interest, which are determined in
some instances by formulas under which the Municipal Obligation's interest
rate will change directly or inversely to changes in interest rates or an
index, or multiples thereof, in many cases subject to a maximum and
minimum. Certain Municipal Obligations are subject to redemption at a
date earlier than their stated maturity pursuant to call options, which
may be separated from the related Municipal Obligation and purchased and
sold separately.
MANAGEMENT POLICIES
It is a fundamental policy of the Fund that at least 80% of
the value of each Series' net assets (except when maintaining a temporary
defensive position) will be invested in
Page 29

Municipal Obligations and at least 65% of the value of each Series' net
assets (except when maintaining a temporary defensive position) will be
invested in bonds, debentures and other debt instruments. At least 65% of
the value of each Series' net assets will be invested in Municipal
Obligations issued by issuers in such State, as defined above, and the
remainder may be invested in securities that are not State Municipal
Obligations and therefore may be subject to State income taxes. See
"Investment Considerations and Risks _ Investing in State Municipal
Obligations" below, and "Dividends, Distributions and Taxes."

At least 70% of the value of each Series' net assets must
consist of Municipal Obligations which, in the case of bonds, are rated
no lower than Baa by Moody's Investors Service, Inc. ("Moody's") or BBB
by Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc. ("S&P"), or Fitch Investors Service, L.P. ("Fitch"). Each
Series may invest up to 30% of the value of its net assets in Municipal
Obligations which, in the case of bonds, are rated lower than Baa by
Moody's and BBB by S&P and Fitch and as low as the lowest rating assigned
by Moody's, S&P or Fitch. Each Series may invest in short-term Municipal
Obligations which are rated in the two highest rating categories by
Moody's, S&P or Fitch. See "Appendix B" in the Statement of Additional
Information. Municipal Obligations rated Baa by Moody's or BBB by S&P or
Fitch are considered investment grade obligations; those rated Baa by
Moody's are considered medium grade obligations which lack outstanding
investment characteristics and have speculative characteristics while
those rated BBB by S&P and Fitch are regarded as having an adequate
capacity to pay principal and interest. Investments rated Ba or lower by
Moody's and BB or lower by S&P and Fitch ordinarily provide higher yields
but involve greater risk because of their speculative characteristics.
Each Series may invest in Municipal Obligations rated C by Moody's or D
by S&P or Fitch, which is the lowest rating assigned by such rating
organizations and indicates that the Municipal Obligation is in default
and interest and/or repayment of principal is in arrears. See "Investment
Considerations and Risks _ Lower Rated Bonds" below for a further
discussion of certain risks. Each Series also may invest in securities
which, while not rated, are determined by The Dreyfus Corporation to be
of comparable quality to the rated securities in which the Series may
invest; for purposes of the 70% requirement described in this paragraph,
such unrated securities will be considered to have the rating so
determined. Each Series also may invest in Taxable Investments of the
quality described under "Appendix_Certain Portfolio Securities_Taxable
Investments." Under normal market conditions, the weighted average
maturity of each Series' portfolio is expected to exceed ten years.

From time to time, a Series may invest more than 25% of the
value of its total assets in industrial development bonds which, although
issued by industrial development authorities, may be backed only by the
assets and revenues of the non-governmental users. Interest on Municipal
Obligations (including certain industrial development bonds) which are
specified private activity bonds, as defined in the Internal Revenue Code
of 1986, as amended (the "Code"), issued after August 7, 1986, while
exempt from Federal income tax, is a preference item for the purpose of
the alternative minimum tax. Where a regulated investment company
receives such interest, a proportionate share of any exempt-interest
dividend paid by the investment company may be treated as such a
preference item to shareholders. Each Series may invest without
limitation in such Municipal Obligations if The Dreyfus Corporation
determines that their purchase is consistent with the Fund's investment
objective. See "Investment Considerations and Risks" below.

Each Series' annual portfolio turnover rate is not expected
to exceed 100%. Each Series may engage in various investment techniques,
such as options and futures transactions, lending portfolio securities
and short-selling. Use of certain of these techniques may give rise to
taxable income. For a discussion of the investment techniques and their
related risks, see "Investment Considerations and Risks,"
"Appendix_Investment Techniques" and "Dividends, Distributions and Taxes"
below and "Investment Objective and Management Policies _ Management
Policies" in the Statement of Additional Information.
Page 30

INVESTMENT CONSIDERATIONS AND RISKS
GENERAL -- Even though interest-bearing securities are investments
which promise a stable stream of income, the prices of such securities
are inversely affected by changes in interest rates and, therefore, are
subject to the risk of market price fluctuations. Certain securities that
may be purchased by each Series of the Fund, such as those with interest
rates that fluctuate directly or indirectly based upon multiples of a
stated index, are designed to be highly sensitive to changes in interest
rates and can subject the holders thereof to extreme reductions of yield
and possibly loss of principal. The values of fixed-income securities
also may be affected by changes in the credit rating or financial
condition of the issuing entities. Once the rating of a portfolio
security has been changed, the Fund will consider all circumstances
deemed relevant in determining whether to hold the security. Each Series'
net asset value generally will not be stable and should fluctuate based
upon changes in the value of the Fund's portfolio securities. Securities
in which the Series invests may earn a higher level of current income
than certain shorter-term or higher quality securities which generally
have greater liquidity, less market risk and less fluctuation in market
value.
INVESTING IN STATE MUNICIPAL OBLIGATIONS -- You should consider
carefully the special risks inherent in the purchase of shares of each
Series resulting from its purchase of the respective State's Municipal
Obligations. Certain of the States have experienced financial
difficulties, the recurrence of which could result in defaults or
declines in the market values of various Municipal Obligations in which
such Series invests. If there should be a default or other financial
crisis relating to a State or an agency or municipality thereof, the
market value and marketability of outstanding State Municipal Obligations
in a Series' portfolio and the interest income to the Series could be
adversely affected. You should obtain and review a copy of the Statement
of Additional Information which more fully sets forth these and other
risk factors.
CONNECTICUT SERIES -- Connecticut's economy relies in part on
activities that may be adversely affected by cyclical change, and recent
declines in defense spending have had a significant impact on
unemployment levels. Although the State recorded General Fund surpluses
in the fiscal years 1985 through 1987, and 1992 through 1995, Connecticut
reported deficits from its General Fund operations for the fiscal years
1988 through 1991. Together with the deficit carried forward from the
State's 1990 fiscal year, the total General Fund deficit for the 1991
fiscal year was $965.7 million. The total deficit was funded by the
issuance of General Obligation Economic Recovery Notes. Moreover, as of
June 30, 1995, the General Fund had a cumulative deficit under GAAP of
$576.9 million. As a result of the recurring budgetary problems, S&P
downgraded the State's general obligation bonds from AA+ to AA in April
1990 and to AA- in September 1991. Fitch downgraded the State's general
obligation bonds from AA+ to AA in March 1995. Moody's currently rates
Connecticut's bonds Aa.
FLORIDA SERIES -- The Florida Constitution and Statutes mandate that
the State budget as a whole, and each separate fund within the State
budget, be kept in balance from currently available revenues each fiscal
year. Florida's Constitution permits issuance of Florida Municipal
Obligations pledging the full faith and credit of the State, with a vote
of the electors, to finance or refinance fixed capital outlay projects
authorized by the Legislature, provided that the outstanding principal
does not exceed 50% of the total tax revenues of the State for the two
preceding years. Florida's Constitution also provides that the
Legislature shall appropriate monies sufficient to pay debt service on
State bonds pledging the full faith and credit of the State as the same
becomes due. All State tax revenues, other than trust funds dedicated by
Florida's Constitution for other purposes, would be available for such an
appropriation, if required. Revenue bonds may be issued by the State or
its agencies without a vote of Florida's electors only to finance or
refinance the cost of State fixed capital outlay projects which may be
payable solely from funds derived directly from sources other than State
tax revenues. Fiscal year 1994-95 total General Revenue and Working
Capital Funds available are estimated to
Page 31

have been $15.635 billion, which resulted in estimated unencumbered
reserves of $319.5 million at the end of fiscal 1994-95. The General
Revenue and Working Capital Funds ended the 1993-94 fiscal year with
unencumbered reserves of $351.8 million.
GEORGIA SERIES -- Georgia's Constitution limits appropriation of
funds for any given fiscal year to the sum of the amount of
unappropriated surplus expected to have accrued at the beginning of the
fiscal year and the amount not greater than the total receipts
anticipated, less refunds, as estimated. The State Constitution provides
for supplementary appropriations in accordance with its provisions as
well. Georgia's economy grew rapidly in the 1980's resulting in a general
fund reserve. As a result of a slowdown in the State's economy in the
early 1990's, the general fund reserve was effectively eliminated.
Beginning in fiscal 1993, however, revenues once again began to exceed
appropriations. The State's revenue shortfall reserve at the end of
fiscal 1995 was approximately $288 million. Revenues are estimated to
slightly exceed expenditures for fiscal 1996.
MARYLAND SERIES -- The public indebtedness of the State of Maryland
and its instrumentalities is divided into three basic types: general
obligation bonds for capital improvements and for various State-sponsored
projects to the payment of which the State ad valorem property tax is
exclusively pledged; limited, special obligation bonds issued by the
Maryland Department of Transportation for transportation purposes,
payable primarily from specific, fixed-rate excise taxes and other
revenues related mainly to highway use; and obligations issued by certain
authorities payable solely from specific non-tax, enterprise fund
revenues for which the State has no liability and has given no moral
obligation assurance.
Since at least the end of the Civil War, the State has paid
the principal of and interest on its general obligation bonds when due.
There is no general debt limit imposed by the State Constitution or
public general laws, but the Constitution does require the annual
operating budget to be in balance with estimated revenues. When the
fiscal year 1996 budget was enacted, it was estimated that the General
Fund surplus on a budgetary basis at June 30, 1996, would be
approximately $7.8 million. As of February, 1996, it was estimated that
the General Fund surplus on a budgetary basis at June 30, 1996, will be
$1 million. When the 1997 budget was submitted by the Governor to the
General Assembly, it was estimated that the General Fund surplus on a
budgetary basis at June 30, 1997 would be approximately $500 thousand,
and that the balance in the Revenue Stabilization Account of the State
Reserve Fund would be $538 million.
MASSACHUSETTS SERIES -- Massachusetts' economic and fiscal
difficulties of recent years appear to have abated. While the
Commonwealth's expenditures for state programs and services in each of
the fiscal years 1987 through 1991 exceeded each year's current revenues,
Massachusetts ended each of the fiscal years 1991 through 1996 with a
positive fiscal balance in its general operating funds.
MICHIGAN SERIES -- Michigan's economy has been undergoing certain
basic changes in its underlying structure. These changes reflect a
diversifying economy which is less reliant on the automobile industry. As
a result, it is anticipated that the State's economy in the future will
be less susceptible to cyclical swings and more resilient when national
downturns occur. The principal sectors of Michigan's diversifying economy
are manufacturing of durable goods (including automobile and office
equipment manufacturing), tourism and agriculture. Michigan's
unemployment rate averaged 9.9% in 1985 and averaged 5.3% in 1995.
Michigan's Annual Financial Reports for the fiscal years
ended September 30, 1987, 1988 and 1989 showed positive balances in the
State's general cash position representing an improvement from the
negative cash position of 1982. Michigan ended fiscal years 1989-90 and
1990-91 with negative balances of $310 million and $169 million,
respectively. This cumulative deficit was eliminated as of the fiscal
year ended September 30, 1992. Michigan ended fiscal years 1992-93,
1993-94 and 1994 -95 with surpluses of approximately $308 million, $460
million and 67.4 million respectively.
Page 32

MINNESOTA SERIES -- The structure of Minnesota's economy parallels
the structure of the United States' economy as a whole when viewed at a
highly aggregated level of detail. Diversity and a significant natural
resource base are two important characteristics of the State's economy.
However, the State of Minnesota experienced financial difficulties in the
early 1980s because of a downturn in the State's economy resulting from
the national recession. More recently, real growth has been equal to or
greater than national growth.
There can be no assurance that the financial problems
referred to or similar future problems will not affect the market value
or marketability of the Minnesota Municipal Obligations or the ability of
the issuer thereof to pay interest or principal thereon.

NEW JERSEY SERIES -- Although New Jersey enjoyed a period of economic
growth with unemployment levels below the national average during the
mid-1980s, its economy slowed down well before the onset of the national
recession in July 1990. Reflecting the economic downturn, the State's
unemployment rate rose from a low of 3.6% in the first quarter of 1989 to
a recessionary peak of 8.4% during 1992. Since then, New Jersey's
unemployment rate fell to an average of 6.4% during 1995. As a result of
New Jersey's fiscal weakness, in July 1991, S&P lowered its rating of the
State's general obligation debt from AAA to AA+.

NORTH CAROLINA SERIES -- The economic profile of the State of North
Carolina consists of a combination of agriculture, industry and tourism,
with agriculture as the basic element in the economy. Tobacco production
is the leading source of agricultural income in the State, accounting for
20% of gross agricultural income. The poultry and pork industries also
are significant sources of gross agricultural income.
The North Carolina Constitution requires a balanced budget.
While North Carolina's Governor lacks the power to veto budget or other
legislative actions, the Governor does have the power as ex office
Director of the Budget, after first making adequate provision for the
prompt payment of the principal of and interest on bonds and notes of the
State according to their terms, to reduce all appropriations for a
particular fiscal period on a pro rata basis to prevent an overdraft or
deficit for such fiscal period. The Governor also may take less drastic
action to reduce expenditures to maintain a balanced budget before the
need for across the board appropriations reductions arises.
OHIO SERIES -- Non-manufacturing industries now employ more than
78.9% of all payroll employees in Ohio. However, due to the continued
importance of manufacturing industries (including auto-related
manufacturing), economic activity in Ohio tends to be more cyclical than
in some other states and in the nation as a whole. Although Ohio's
economy has improved since the 1980-82 national recession, the State
experienced an economic slow-down during its 1990-91 fiscal year,
consistent with national economic conditions during that period. For
Ohio's fiscal year ended June 30, 1996, the Ohio Office of Budget and
Management reported positive $781.3 million and $1,138.5 million ending
fund and cash balances, respectively. Each of the foregoing factors could
have an effect on the market for issuers generally or may have the effect
of impairing the ability of issuers to pay interest on, or repay
principal of, Ohio Municipal Obligations.
PENNSYLVANIA SERIES -- Pennsylvania has been historically identified
as a heavy industry state although that reputation has recently changed
as the coal, steel and railroad industries declined. A more diversified
economy has developed in Pennsylvania as a long-term shift in jobs,
investment and workers away from the northeast part of the nation took
place. The major new sources of growth are in the service sector,
including trade, medical and health services, education and financial
institutions. Pennsylvania is highly urbanized, with approximately 50% of
the Commonwealth's total population contained in the metropolitan areas
which include the cities of Philadelphia and Pittsburgh. The
Commonwealth's adopted fiscal 1996-97 General Fund budget provided for no
new taxes. As of June 30, 1996, the General Fund had a surplus of $69.8
million or 0.4% above the official estimate for the prior fiscal year.
TEXAS SERIES -- Economically and financially the State of Texas
suffered during the 1980s significant damage from the continued depressed
price of oil and gas and the overbuilding in the
Page 33

real estate market. The decline in oil prices, particularly since 1986,
and the recession that followed have had a severe effect on the Texas
banking and savings and loan industries, resulting in a number of closings
among banks and savings and loans through the early 1990s. In recent
years, the State's overall financial situation has improved significantly,
as Texas' economic growth has been outpacing that of the United States as
a whole. In fiscal years 1991, 1992, 1993, 1994 and 1995, Texas' General
Revenue Fund ended with cash surpluses of $1.005 billion, $615 million,
$1.630 billion, $2.225 billion and $2.101 billion, respectively.
VIRGINIA SERIES -- Because of Northern Virginia, with its proximity
to Washington, D.C., and Hampton Roads, which has the nation's largest
concentration of military installations, the Federal government has a
greater impact on Virginia relative to its size than any states other
than Alaska and Hawaii. Virginia's economy has continued to grow over the
last decade, and while per capita income has grown both faster and slower
than the U.S. average from year to year during that period, per capita
income continues to be above the national average. Virginia's unreserved
General Fund balances have continued to grow in recent years from a low
in 1991. The Virginia Constitution requires a balanced budget and, since
1993, the funding of a Revenue Stabilization Fund. Current debt levels
are well below limits established by the Constitution.
INVESTING IN MUNICIPAL OBLIGATIONS -- Each Series may invest more
than 25% of the value of its total assets in Municipal Obligations which
are related in such a way that an economic, business or political
development or change affecting one such security also would affect the
other securities; for example, securities the interest upon which is paid
from revenues of similar types of projects. As a result, each Series may
be subject to greater risk as compared to a fund that does not follow
this practice.
Certain municipal lease/purchase obligations in which the
Series may invest may contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease payments in future
years unless money is appropriated for such purpose on a yearly basis.
Although "non-appropriation" lease/purchase obligations are secured by
the leased property, disposition of the leased property in the event of
foreclosure might prove difficult. In evaluating the credit quality of a
municipal lease/purchase obligation that is unrated, The Dreyfus
Corporation will consider, on an ongoing basis, a number of factors
including the likelihood that the issuing municipality will discontinue
appropriating funding for the leased property.
Certain provisions in the Code relating to the issuance of
Municipal Obligations may reduce the volume of Municipal Obligations
qualifying for Federal tax exemption. One effect of these provisions
could be to increase the cost of the Municipal Obligations available for
purchase by the Series and thus reduce the available yield. Shareholders
should consult their tax advisers concerning the effect of these
provisions on an investment in a Series. Proposals that may restrict or
eliminate the income tax exemption for interest on Municipal Obligations
may be introduced in the future. If any such proposal were enacted that
would reduce the availability of Municipal Obligations for investment by
the Fund so as to adversely affect Fund shareholders, the Fund would
reevaluate its investment objective and policies and submit possible
changes in the Fund's structure to shareholders for their consideration.
If legislation were enacted that would treat a type of Municipal
Obligation as taxable, the Fund would treat such security as a
permissible Taxable Investment within the applicable limits set forth
herein.
ZERO COUPON SECURITIES -- Federal income tax law requires the holder
of a zero coupon security or of certain pay-in-kind bonds to accrue
income with respect to these securities prior to the receipt of cash
payments. To maintain its qualification as a regulated investment company,
and avoid liability for Federal income taxes, a Series may be required to
distribute such income accrued with respect to these securities and may
have to dispose of portfolio securities under disadvantageous
circumstances in order to generate cash to satisfy these distribution
requirements.
LOWER RATED BONDS -- Each Series may invest up to 30% of its net
assets in higher yielding (and, therefore, higher risk) debt securities
(commonly known as junk bonds), such as those rated Ba
Page 34

by Moody's or BB by S&P or Fitch or as low as the lowest rating assigned
by Moody's, S&P or Fitch. They may be subject to certain risks with
respect to the issuing entity and to greater market fluctuations than
certain lower yielding, higher rated fixed-income securities. The retail
secondary market for these securities may be less liquid than that of
higher rated securities; adverse market conditions could make it difficult
at times for the Fund to sell certain securities or could result in lower
prices than those used in calculating the Series' net asset value. See
"Appendix _ Certain Portfolio Securities _ Ratings."

USE OF DERIVATIVES _ Each Series may invest in derivatives
("Derivatives"). These are financial instruments which derive their
performance, at least in part, from the performance of an underlying
asset, index or interest rate. The Derivatives the Series may use include
options and futures. While Derivatives can be used effectively in
furtherance of a Series' investment objective, under certain market
conditions, they can increase the volatility of the Series' net asset
value, can decrease the liquidity of the Series' portfolio and make more
difficult the accurate pricing of the Series' portfolio. See
"Appendix_Investment Techniques_Use of Derivatives" below and "Investment
Objective and Management Policies_Management Policies_Derivatives" in the
Statement of Additional Information.

NON-DIVERSIFIED STATUS -- The classification of each Series as a
"non-diversified" investment company means that the proportion of each
Series' assets that may be invested in the securities of a single issuer
is not limited by the 1940 Act. A "diversified" investment company is
required by the 1940 Act generally, with respect to 75% of its total
assets, to invest not more than 5% of such assets in the securities of a
single issuer. Since a relatively high percentage of a Series' assets may
be invested in the securities of a limited number of issuers, the Series'
portfolio may be more sensitive to changes in the market value of a
single issuer. However, to meet Federal tax requirements, at the close of
each quarter the Series may not have more than 25% of its total assets
invested in any one issuer and, with respect to 50% of total assets, not
more than 5% of its total assets invested in any one issuer. These
limitations do not apply to U.S. Government securities.

SIMULTANEOUS INVESTMENTS -- Investment decisions for the Fund are
made independently from those of other investment companies advised by
The Dreyfus Corporation. If, however, such other investment companies
desire to invest in, or dispose of, the same securities as the Fund,
available investments or opportunities for sales will be allocated
equitably to each investment company. In some cases, this procedure may
adversely affect the size of the position obtained for or disposed of by
the Fund or the price paid or received by the Fund.
MANAGEMENT OF THE FUND

INVESTMENT ADVISER -- The Dreyfus Corporation, located at 200 Park
Avenue, New York, New York 10166, was formed in 1947 and serves as the
Fund's investment adviser. The Dreyfus Corporation is a wholly-owned
subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of
Mellon Bank Corporation ("Mellon"). As of October 31, 1996, The Dreyfus
Corporation managed or administered approximately $82 billion in assets
for more than 1.7 million investor accounts nationwide.

The Dreyfus Corporation supervises and assists in the overall
management of the Fund's affairs under a Management Agreement with the
Fund, subject to the authority of the Fund's Board in accordance with
Massachusetts law. The primary portfolio manager for each of the Florida
Series and the Georgia Series is Stephen C. Kris, who has held that
position since February 1996 with respect to the Florida Series and
September 1992 with respect to the Georgia Series, and has been employed
by The Dreyfus Corporation since February 1988. The primary portfolio
manager for each of the Connecticut Series, the Massachusetts Series, the
New Jersey Series, the North Carolina Series and the Virginia Series is
Samuel J. Weinstock, who has held that position with respect to the
Connecticut Series and the Massachusetts Series since August 1987, with
respect to the North Carolina Series and Virginia Series since August
Page 35

1991, and with respect to the New Jersey Series since the Series'
inception and has been employed by The Dreyfus Corporation since March
1987. The primary portfolio manager for each of the Maryland Series, the
Pennsylvania Series and the Texas Series is Douglas J. Gaylor, who has
held that position since January 1996 and has been employed by The
Dreyfus Corporation since January 1996. Prior to joining The Dreyfus
Corporation, Mr. Gaylor was a Municipal Portfolio Manager at PNC Bank
since 1993 and from 1989 to September 1993 was a Municipal Portfolio
Manager at Wilmington Trust Company. The primary portfolio manager for
each of the Michigan Series, the Minnesota Series and the Ohio Series is
Joseph P. Darcy, who has held that position and has been employed by The
Dreyfus Corporation since May 1994. For more than five years prior to
joining The Dreyfus Corporation, Mr. Darcy was a Vice President and
Portfolio Manager for Merrill Lynch Asset Management. The Fund's other
portfolio managers are identified in the Statement of Additional
Information. The Dreyfus Corporation also provides research services for
the Fund and for other funds advised by The Dreyfus Corporation through a
professional staff of portfolio managers and securities analysts.

Mellon is a publicly owned multibank holding company
incorporated under Pennsylvania law in 1971 and registered under the Bank
Holding Company Act of 1956, as amended. Mellon provides a comprehensive
range of financial products and services in domestic and selected
international markets. Mellon is among the twenty-five largest bank
holding companies in the United States based on total assets. Mellon's
principal wholly-owned subsidiaries are Mellon Bank, N.A., Mellon Bank
(DE) National Association, Mellon Bank (MD), The Boston Company, Inc.,
AFCO Credit Corporation and a number of companies known as Mellon
Financial Services Corporations. Through its subsidiaries, including The
Dreyfus Corporation, Mellon managed more than $226 billion in assets as
of September 30, 1996, including approximately $85 billion in proprietary
mutual fund assets. As of September 30, 1996, Mellon, through various
subsidiaries, provided non-investment services, such as custodial or
administration services, for more than $905 billion in assets including
approximately $60 billion in mutual fund assets.

Under the terms of the Management Agreement, the Fund has
agreed to pay The Dreyfus Corporation a monthly fee at the annual rate of
.55 of 1% of the value of each Series' average daily net assets. From
time to time, The Dreyfus Corporation may waive receipt of its fees
and/or voluntarily assume certain expenses of a Series which would have
the effect of lowering the expense ratio of that Series and increasing
yield to investors. The Fund will not pay The Dreyfus Corporation at a
later time for any amounts it may waive, nor will the Fund reimburse The
Dreyfus Corporation for any amounts it may assume.

For the fiscal year ended April 30, 1996, the Fund paid The
Dreyfus Corporation a monthly management fee pursuant to undertakings in
effect at the effective annual rate set forth below as a percentage of
the relevant Series' average daily net assets:

EFFECTIVE ANNUAL RATE OF
NAME OF SERIES MANAGEMENT FEE PAID
---------------------- ---------------------------------

Connecticut .55 of 1%
Florida .55 of 1%
Georgia .35 of 1%
Maryland .55 of 1%
Massachusetts .55 of 1%
Michigan .55 of 1%
Minnesota .55 of 1%
North Carolina .53 of 1%
Ohio .55 of 1%
Pennsylvania .55 of 1%
Texas .0
Virginia .0

Page 36

In allocating brokerage transactions for the Fund, The Dreyfus
Corporation seeks to obtain the best execution of orders at the most
favorable net price. Subject to this determination, The Dreyfus
Corporation may consider, among other things, the receipt of research
services and/or the sale of shares of the Fund or other funds managed,
advised or administered by The Dreyfus Corporation as factors in the
selection of broker-dealers to execute portfolio transactions for the
Fund. See "Portfolio Transactions" in the Statement of Additional
Information.
The Dreyfus Corporation may pay the Fund's distributor for
shareholder services from The Dreyfus Corporation's own assets, including
past profits but not including the management fee paid by the Fund. The
Fund's distributor may use part or all of such payments to pay Service
Agents in respect of these services.
DISTRIBUTOR -- The Fund's distributor is Premier Mutual Fund
Services, Inc. (the "Distributor"), located at 60 State Street, Boston,
Massachusetts 02109. The Distributor' ultimate parent is Boston
Institutional Group, Inc.
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN -- Dreyfus
Transfer, Inc., a wholly-owned subsidiary of The Dreyfus Corporation,
P.O. Box 9671, Providence, Rhode Island 02940-9671, is the Fund's
Transfer and Dividend Disbursing Agent (the "Transfer Agent"). The Bank
of New York, 90 Washington Street, New York, New York 10286, is the
Fund's Custodian.
HOW TO BUY SHARES

GENERAL -- Fund shares may be purchased only by clients of certain
financial institutions (which may include banks), securities dealers
("Selected Dealers") and other industry professionals (collectively,
"Service Agents"), except that full-time or part-time employees of The
Dreyfus Corporation or any of its affiliates or subsidiaries, directors
of The Dreyfus Corporation, Board members of a fund advised by The
Dreyfus Corporation, including members of the Fund's Board, or the spouse
or minor child of any of the foregoing may purchase Class A shares
directly through the Distributor. Subsequent purchases may be sent
directly to the Transfer Agent or your Service Agent.

When purchasing Fund shares, you must specify which Class is
being purchased. Share certificates are issued only upon your written
request. No certificates are issued for fractional shares. It is not
recommended that the Fund be used as a vehicle for Keogh, IRA or other
qualified retirement plans. The Fund reserves the right to reject any
purchase order.
Service Agents may receive different levels of compensation
for selling different Classes of shares. Management understands that some
Service Agents may impose certain conditions on their clients which are
different from those described in this Prospectus, and, to the extent
permitted by applicable regulatory authority, may charge their clients
direct fees which would be in addition to any amounts which might be
received under the Distribution Plan or Shareholder Services Plan. You
should consult your Service Agent in this regard.
The minimum initial investment is $1,000. Subsequent
investments must be at least $100. The initial investment must be
accompanied by the Account Application. The Fund reserves the right to
vary the initial and subsequent investment minimum requirements at any
time.

You may purchase Fund shares by check or wire, or through the
TELETRANSFER Privilege described below. Checks should be made payable to
"The Dreyfus Family of Funds," and should specify the Series in which you
are investing. Payments which are mailed should be sent to Premier State
Municipal Bond Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587.
If you are opening a new account, please enclose your Account Application
indicating which Class of shares is being purchased. For subsequent
investments, your Fund account number should appear on the check and an
investment slip should be enclosed. Neither initial nor subsequent
investments should be made by third party check.

Wire payments may be made if your bank account is in a
commercial bank that is a member of the Federal Reserve System or in any
other bank having a correspondent bank in New York
Page 37

City. Immediately available funds may be transmitted by wire to The Bank
of New York, together with the applicable Series' DDA # as shown below,
for purchase of Fund shares in your name:

DDA #8900119489/Premier State Municipal Bond Fund/Connecticut
Series
DDA #8900119381/Premier State Municipal Bond Fund/Florida
Series
DDA #8900117087/Premier State Municipal Bond Fund/Georgia
Series
DDA #8900119403/Premier State Municipal Bond Fund/Maryland
Series
DDA #8900119470/Premier State Municipal Bond
Fund/Massachusetts Series
DDA #8900119411/Premier State Municipal Bond Fund/Michigan
Series
DDA #8900119438/Premier State Municipal Bond Fund/Minnesota
Series
DDA #8900312475/Premier State Municipal Bond Fund/New Jersey
Series
DDA #8900208635/Premier State Municipal Bond Fund/North
Carolina Series
DDA #8900119446/Premier State Municipal Bond Fund/Ohio Series
DDA #8900119454/Premier State Municipal Bond
Fund/Pennsylvania Series
DDA #8900119462/Premier State Municipal Bond Fund/Texas
Series
DDA #8900208678/Premier State Municipal Bond Fund/Virginia
Series

The wire must include your Fund account number (for new
accounts, your Taxpayer Identification Number ("TIN") should be included
instead), account registration and dealer number, if applicable, and must
indicate the Class of shares being purchased. If your initial purchase of
Fund shares is by wire, please call 1-800-645-6561 after completing your
wire payment to obtain your Fund account number. Please include your Fund
account number on the Account Application and promptly mail the Account
Application to the Fund, as no redemptions will be permitted until the
Account Application is received. You may obtain further information about
remitting funds in this manner from your bank. All payments should be
made in U.S. dollars and, to avoid fees and delays, should be drawn only
on U.S. banks. A charge will be imposed if any check used for investment
in your account does not clear. The Fund makes available to certain large
institutions the ability to issue purchase instructions through
compatible computer facilities.

Fund shares also may be purchased through Dreyfus-AUTOMATIC
Asset BuilderRegistration Mark and the Government Direct Deposit
Privilege described under "Shareholder Services." These services enable
you to make regularly scheduled investments and may provide you with a
convenient way to invest for long-term financial goals. You should be
aware, however, that periodic investment plans do not guarantee a profit
and will not protect an investor against loss in a declining market.
Subsequent investments also may be made by electronic
transfer of funds from an account maintained in a bank or other domestic
financial institution that is an Automated Clearing House member. You
must direct the institution to transmit immediately available funds
through the Automated Clearing House to The Bank of New York with
instructions to credit your Fund account. The instructions must specify
your Fund account registration and your Fund account number PRECEDED BY
THE DIGITS "1111."
Each Series' shares are sold on a continuous basis. Net asset
value per share is determined as of the close of trading on the floor of
the New York Stock Exchange (currently, 4:00 p.m., New York time), on
each day the New York Stock Exchange is open for business. For purposes
of determining net asset value, options and futures contracts will be
valued 15 minutes after the close of trading on the floor of the New York
Stock Exchange. Net asset value per share of each Class is computed by
dividing the value of the net assets of each Series represented by such
Class (i.e., the value of its assets less liabilities) by the total
number of shares of such Class outstanding. Each Series' investments are
valued by an independent pricing service approved by the Fund's Board and
are valued at fair value as determined by the pricing service. The
pricing service's procedures are reviewed under the general supervision
of the Fund's Board. For further information regarding the methods
employed in valuing the Series' investments, see "Determination of Net
Asset Value" in the Statement of Additional Information.
Page 38

If an order is received by the Transfer Agent by the close of
trading on the floor of the New York Stock Exchange (currently, 4:00
p.m., New York time) on any business day, Fund shares will be purchased
at the public offering price determined as of the close of trading on the
floor of the New York Stock Exchange on that day. Otherwise, Fund shares
will be purchased at the public offering price determined as of the close
of trading on the floor of the New York Stock Exchange on the next
business day, except where shares are purchased through a dealer as
provided below.
Orders for the purchase of Fund shares received by dealers by
the close of trading on the floor of the New York Stock Exchange on a
business day and transmitted to the Distributor or its designee by the
close of its business day (normally 5:15 p.m., New York time) will be
based on the public offering price per share determined as of the close
of trading on the floor of the New York Stock Exchange on that day.
Otherwise, the orders will be based on the next determined public
offering price. It is the dealers' responsibility to transmit orders so
that they will be received by the Distributor or its designee before the
close of its business day. For certain institutions that have entered
into agreements with the Distributor, payment for the purchase of Fund
shares may be transmitted, and must be received by the Transfer Agent,
within three business days after the order is placed. If such payment is
not received within three business days after the order is placed, the
order may be cancelled and the institution could be held liable for
resulting fees and/or losses.
Federal regulations require that you provide a certified TIN
upon opening or reopening an account. See "Dividends, Distributions and
Taxes" and the Account Application for further information concerning
this requirement. Failure to furnish a certified TIN to the Fund could
subject you to a $50 penalty imposed by the Internal Revenue Service (the
"IRS").
CLASS A SHARES -- The public offering price for Class A shares is the
net asset value per share of that Class plus a sales load as shown below:
<TABLE>
<CAPTION>

SALES LOAD
---------------------------------------
AS A % OF AS A % OF DEALERS' REALLOWANCE
OFFERING PRICE NET ASSET VALUE AS A % OF
AMOUNT OF TRANSACTION PER SHARE PER SHARE OFFERING PRICE
--------------------------- ---------------- ----------------- ------------------------
<S> <C> <C> <C>
Less than $50,000...... 4.50 4.70 4.25
$50,000 to less than $100,000 4.00 4.20 3.75
$100,000 to less than $250,000 3.00 3.10 2.75
$250,000 to less than $500,000 2.50 2.60 2.25
$500,000 to less than $1,000,000 2.00 2.00 1.75
$1,000,000 or more..... -0- -0- -0-
</TABLE>
A CDSC of 1% will be assessed at the time of redemption of
Class A shares purchased without an initial sales charge as part of an
investment of at least $1,000,000 and redeemed within one year of
purchase. The terms contained in the section of the Prospectus entitled
"How to Redeem Shares -- Contingent Deferred Sales Charge" (other than the
amount of the CDSC and time periods) are applicable to the Class A shares
subject to a CDSC. Letter of Intent and Right of Accumulation apply to
such purchases of Class A shares.
Full-time employees of NASD member firms and full-time
employees of other financial institutions which have entered into an
agreement with the Distributor pertaining to the sale of Fund shares (or
which otherwise have a brokerage related or clearing arrangement with an
NASD member firm or financial institution with respect to the sale of
Fund shares) may purchase Class A shares for themselves, directly or
pursuant to an employee benefit plan or other program, or for their
spouses or minor children at net asset value, provided that they have
furnished the Distributor with such information as it may request from
time to time in order to verify eligibility for this privilege. This
privilege also applies to full-time employees of financial institutions
affiliated with NASD member firms whose full-time employees are eligible
to purchase Class A shares at net asset value. In addition, Class A
shares are offered at net asset value to full-time or part-time employees
of The Dreyfus Corporation or any of its affiliates or subsidiaries,
directors
Page 39

of The Dreyfus Corporation, Board members of a fund advised by The Dreyfus
Corporation, including members of the Fund's Board, or the spouse or minor
child of any of the foregoing.
Class A shares also may be purchased at net asset value
without a sales load through certain broker-dealers and other financial
institutions which have entered into an agreement with the Distributor,
which includes a requirement that such shares be sold for the benefit of
clients participating in a "wrap account" or a similar program under
which such clients pay a fee to such broker-dealer or other financial
institution.
Class A shares also may be purchased at net asset value,
subject to appropriate documentation, through a broker-dealer or other
financial institution with the proceeds from the redemption of shares of
a registered open-end management investment company not managed by The
Dreyfus Corporation or its affiliates. The purchase of Class A shares of
the Fund must be made within 60 days of such redemption and the
shareholder must have either (i) paid an initial sales charge or a
contingent deferred sales charge or (ii) been obligated to pay at any
time during the holding period, but did not actually pay on redemption, a
deferred sales charge with respect to such redeemed shares.
Class A shares also may be purchased at net asset value,
subject to appropriate documentation, by (i) qualified separate accounts
maintained by an insurance company pursuant to the laws of any State or
territory of the United States, (ii) a State, county or city or
instrumentality thereof, (iii) a charitable organization (as defined in
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code")) investing $50,000 or more in Fund shares, and (iv) a charitable
remainder trust (as defined in Section 501(c)(3) of the Code).
The dealer reallowance may be changed from time to time but
will remain the same for all dealers. The Distributor, at its expense,
may provide additional promotional incentives to dealers that sell shares
of funds advised by The Dreyfus Corporation which are sold with a sales
load, such as Class A shares. In some instances, these incentives may be
offered only to certain dealers who have sold or may sell significant
amounts of such shares.
CLASS B SHARES -- The public offering price for Class B shares is the
net asset value per share of that Class. No initial sales charge is
imposed at the time of purchase. A CDSC is imposed, however, on certain
redemptions of Class B shares as described under "How to Redeem Shares."
The Distributor compensates certain Service Agents for selling Class B
and Class C shares at the time of purchase from the Distributor's own
assets. The proceeds of the CDSC and the distribution fee, in part, are
used to defray these expenses.
CLASS C SHARES -- The public offering price for Class C shares is the
net asset value per share of that Class. No initial sales charge is
imposed at the time of purchase. A CDSC is imposed, however, on
redemptions of Class C shares made within the first year of purchase. See
"Class B Shares" above and "How to Redeem Shares."
RIGHT OF ACCUMULATION -- CLASS A SHARES -- Reduced sales loads apply
to any purchase of Class A shares, shares of other funds in the Premier
Family of Funds, shares of certain other funds advised by The Dreyfus
Corporation which are sold with a sales load and shares acquired by a
previous exchange of such shares (hereinafter referred to as "Eligible
Funds"), by you and any related "purchaser" as defined in the Statement
of Additional Information, where the aggregate investment, including such
purchase, is $50,000 or more. If, for example, you previously purchased
and still hold Class A shares of the Fund, or of any other Eligible Fund
or combination thereof, with an aggregate current market value of $40,000
and subsequently purchase Class A shares of the Fund or an Eligible Fund
having a current value of $20,000, the sales load applicable to the
subsequent purchase would be reduced to 4% of the offering price. All
present holdings of Eligible Funds may be combined to determine the
current offering price of the aggregate investment in ascertaining the
sales load applicable to each subsequent purchase.
To qualify for reduced sales loads, at the time of purchase
you or your Service Agent must notify the Distributor if orders are
Page 40

made by wire, or the Transfer Agent if orders are made by mail. The
reduced sales load is subject to confirmation of your holdings through a
check of appropriate records.
TELETRANSFER PRIVILEGE -- You may purchase Fund shares (minimum $500,
maximum $150,000 per day) by telephone if you have checked the
appropriate box and supplied the necessary information on the Account
Application or have filed a Shareholder Services Form with the Transfer
Agent. The proceeds will be transferred between the bank account
designated in one of these documents and your Fund account. Only a bank
account maintained in a domestic financial institution which is an
Automated Clearing House member may be so designated. The Fund may modify
or terminate this Privilege at any time or charge a service fee upon
notice to shareholders. No such fee currently is contemplated.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER purchase of shares by calling 1-800-645-6561 or,
if you are calling from overseas, call 516-794-5452.
SHAREHOLDER SERVICES
The services and privileges described under this heading may
not be available to clients of certain Service Agents and some Service
Agents may impose certain conditions on their clients which are different
from those described in this Prospectus. You should consult your Service
Agent in this regard.
FUND EXCHANGES

You may purchase, in exchange for a Class of a Series, shares
of the same Class of one of the other Series or of certain other funds
managed or administered by The Dreyfus Corporation, to the extent such
shares are offered for sale in your state of residence. These funds have
different investment objectives which may be of interest to you. You also
may exchange your Fund shares that are subject to a CDSC for shares of
Dreyfus Worldwide Dollar Money Market Fund, Inc. The shares so purchased
will be held in a special account created solely for this purpose
("Exchange Account"). Exchanges of shares from an Exchange Account only
can be made into certain other funds managed or administered by The
Dreyfus Corporation. No CDSC is charged when an investor exchanges into
an Exchange Account; however, the applicable CDSC will be imposed when
shares are redeemed from an Exchange Account or other applicable Fund
account. Upon redemption, the applicable CDSC will be calculated without
regard to the time such shares were held in an Exchange Account. See "How
to Redeem Shares." Redemption proceeds for Exchange Account Shares are
paid by Federal wire or check only. Exchange Account shares also are
eligible for the Auto-Exchange Privilege, Dividend Sweep and the Automatic
Withdrawal Plan. To use this service, you should consult your Service
Agent or call 1-800-645-6561 to determine if it is available and whether
any other conditions are imposed on its use.

To request an exchange, your Service Agent acting on your
behalf must give exchange instructions to the Transfer Agent in writing
or by telephone. Before any exchange, you must obtain and should review a
copy of the current prospectus of the fund into which the exchange is
being made. Prospectuses may be obtained by calling 1-800-645-6561.
Except in the case of personal retirement plans, the shares being
exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares being exchanged must
have a value of at least the minimum initial investment required for the
fund into which the exchange is being made. The ability to issue exchange
instructions by telephone is given to all Fund shareholders automatically,
unless you check the applicable "No" box on the Account Application,
indicating that you specifically refuse this Privilege. The Telephone
Exchange Privilege may be established for an existing account by written
request signed by all shareholders on the account, by a separate signed
Shareholder Services Form, available by calling 1-800-645-6561, or by oral
request from any of the authorized signatories on the account by calling
1-800-645-6561. If you have established the Telephone Exchange Privilege,
you may telephone exchange instructions (including over The Dreyfus
TouchRegistration Mark automated telephone system) by calling
1-800-645-6561. If you are calling from overseas, call 516-794-5452. See
"How to Redeem Shares _ Procedures." Upon an exchange into a new account,
the following share-
Page 41

holder services and privileges, as applicable and where available, will be
automatically carried over to the fund into which the exchange is being
made: Telephone Exchange Privilege, Check Redemption Privilege,
TELETRANSFER Privilege, and the dividend/capital gain distribution option
(except for Dividend Sweep) selected by the investor.

Shares will be exchanged at the next determined net asset
value; however, a sales load may be charged with respect to exchanges of
Class A shares into funds sold with a sales load. No CDSC will be imposed
on Class B or Class C shares at the time of an exchange; however, Class B
or Class C shares acquired through an exchange will be subject on
redemption to the higher CDSC applicable to the exchanged or acquired
shares. The CDSC applicable on redemption of the acquired Class B or
Class C shares will be calculated from the date of the initial purchase
of the Class B or Class C shares exchanged, as the case may be. If you
are exchanging Class A shares into a fund that charges a sales load, you
may qualify for share prices which do not include the sales load or which
reflect a reduced sales load, if the shares you are exchanging were: (a)
purchased with a sales load, (b) acquired by a previous exchange from
shares purchased with a sales load, or (c) acquired through reinvestment
of dividends or distributions paid with respect to the foregoing
categories of shares. To qualify, at the time of the exchange your
Service Agent must notify the Distributor. Any such qualification is
subject to confirmation of your holdings through a check of appropriate
records. See "Shareholder Services" in the Statement of Additional
Information. No fees currently are charged shareholders directly in
connection with exchanges, although the Fund reserves the right, upon not
less than 60 days' written notice, to charge shareholders a nominal
administrative fee in accordance with rules promulgated by the Securities
and Exchange Commission. The Fund reserves the right to reject any
exchange request in whole or in part. The availability of Fund Exchanges
may be modified or terminated at any time upon notice to shareholders.
See "Dividends, Distributions and Taxes."

AUTO-EXCHANGE PRIVILEGE
Auto-Exchange Privilege enables you to invest regularly (on a
semi-monthly, monthly, quarterly or annual basis) in exchange for shares
of a Series, in shares of the same Class of one of the other Series or of
other funds in the Premier Family of Funds or certain other funds in the
Dreyfus Family of Funds of which you are a shareholder. The amount you
designate, which can be expressed either in terms of a specific dollar or
share amount ($100 minimum), will be exchanged automatically on the first
and/or fifteenth of the month according to the schedule you have
selected. Shares will be exchanged at the then-current net asset value;
however, a sales load may be charged with respect to exchanges of Class A
shares into funds sold with a sales load. No CDSC will be imposed on
Class B or Class C shares at the time of an exchange; however, Class B or
Class C shares acquired through an exchange will be subject on redemption
to the higher CDSC applicable to the exchanged or acquired shares. The
CDSC applicable on redemption of the acquired Class B or Class C shares
will be calculated from the date of the initial purchase of the Class B
or Class C shares exchanged, as the case may be. See "Shareholder
Services" in the Statement of Additional Information. The right to
exercise this Privilege may be modified or cancelled by the Fund or the
Transfer Agent. You may modify or cancel your exercise of this Privilege
at any time by mailing written notification to Premier State Municipal
Bond Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. The Fund
may charge a service fee for the use of this Privilege. No such fee
currently is contemplated. For more information concerning this Privilege
and the funds in the Premier Family of Funds or the Dreyfus Family of
Funds eligible to participate in this Privilege, or to obtain an
Auto-Exchange Authorization Form, please call toll free 1-800-645-6561.
See "Dividends, Distributions and Taxes."

DREYFUS-AUTOMATIC ASSET BUILDERRegistration Mark
Dreyfus-AUTOMATIC Asset Builder permits you to purchase Fund
shares (minimum of $100 and maximum of $150,000 per transaction) at
regular intervals selected by you. Fund shares are purchased by
transferring funds from the bank account designated by you. At your
option, the bank account designated by you will be debited in the
specified amount, and Fund shares will
Page 42

be purchased, once a month, on either the first or fifteenth day, or twice
a month, on both days. Only an account maintained at a domestic financial
institution which is an Automated Clearing House member may be so
designated. To establish a Dreyfus-AUTOMATIC Asset Builder account, you
must file an authorization form with the Transfer Agent. You may obtain
the necessary authorization form by calling 1-800-645-6561. You may cancel
your participation in this Privilege or change the amount of purchase at
any time by mailing written notification to Premier State Municipal Bond
Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587, and the
notification will be effective three business days following receipt. The
Fund may modify or terminate this Privilege at any time or charge a
service fee. No such fee currently is contemplated.
GOVERNMENT DIRECT DEPOSIT PRIVILEGE
Government Direct Deposit Privilege enables you to purchase
Fund shares (minimum of $100 and maximum of $50,000 per transaction) by
having Federal salary, Social Security, or certain veterans', military or
other payments from the Federal government automatically deposited into
your Fund account. You may deposit as much of such payments as you elect.
To enroll in Government Direct Deposit, you must file with the Transfer
Agent a completed Direct Deposit Sign-Up Form for each type of payment
that you desire to include in this Privilege. The appropriate form may be
obtained by calling 1-800-645-6561. Death or legal incapacity will
terminate your participation in this Privilege. You may elect at any time
to terminate your participation by notifying in writing the appropriate
Federal agency. Further, the Fund may terminate your participation upon
30 days' notice to you.
DIVIDEND OPTIONS
Dividend Sweep enables you to invest automatically dividends
or dividends and capital gain distributions, if any, paid by the Fund in
shares of the same class of another fund in the Premier Family of Funds
or the Dreyfus Family of Funds of which you are a shareholder. Shares of
the other fund will be purchased at the then-current net asset value;
however, a sales load may be charged with respect to investments in
shares of a fund sold with a sales load. If you are investing in a fund
that charges a sales load, you may qualify for share prices which do not
include the sales load or which reflect a reduced sales load. If you are
investing in a fund or class that charges a CDSC, the shares purchased
will be subject on redemption to the CDSC, if any, applicable to the
purchased shares. See "Shareholder Services" in the Statement of
Additional Information. Dividend ACH permits you to transfer
electronically dividends or dividends and capital gain distributions, if
any, from the Fund to a designated bank account. Only an account
maintained at a domestic financial institution which is an Automated
Clearing House member may be so designated. Banks may charge a fee for
this service.
For more information concerning these privileges, or to
request a Dividend Options Form, please call toll free 1-800-645-6561.
You may cancel these privileges by mailing written notification to
Premier State Municipal Bond Fund, P.O. Box 6587, Providence, Rhode
Island 02940-6587. To select a new fund after cancellation, you must
submit a new Dividend Options Form. Enrollment in or cancellation of
these privileges is effective three business days following receipt.
These privileges are available only for existing accounts and may not be
used to open new accounts. Minimum subsequent investments do not apply
for Dividend Sweep. The Fund may modify or terminate these privileges at
any time or charge a service fee. No such fee currently is contemplated.
AUTOMATIC WITHDRAWAL PLAN
The Automatic Withdrawal Plan permits you to request
withdrawal of a specified dollar amount (minimum of $50) on either a
monthly or quarterly basis if you have a $5,000 minimum account. An
application for the Automatic Withdrawal Plan can be obtained by calling
1-800-645-6561. The Automatic Withdrawal Plan may be ended at any time by
you, the Fund or the Transfer Agent. Shares for which certificates have
been issued may not be redeemed through the Automatic Withdrawal Plan.
Page 43

No CDSC with respect to Class B shares will be imposed on
withdrawals made under the Automatic Withdrawal Plan, provided that the
amounts withdrawn under the plan do not exceed on an annual basis 12% of
the account value at the time the shareholder elects to participate in
the Automatic Withdrawal Plan. Withdrawals with respect to Class B shares
under the Automatic Withdrawal Plan that exceed on an annual basis 12% of
the value of the shareholder's account will be subject to a CDSC on the
amounts exceeding 12% of the initial account value. Class C shares
withdrawn pursuant to the Automatic Withdrawal Plan will be subject to
any applicable CDSC. Purchases of additional Class A shares where the
sales load is imposed concurrently with withdrawals of Class A shares
generally are undesirable.

LETTER OF INTENT -- CLASS A SHARES
By signing a Letter of Intent form, which can be obtained by
calling 1-800-645-6561, you become eligible for the reduced sales load
applicable to the total number of Eligible Fund shares purchased in a
13-month period pursuant to the terms and conditions set forth in the
Letter of Intent. A minimum initial purchase of $5,000 is required. To
compute the applicable sales load, the offering price of shares you hold
(on the date of submission of the Letter of Intent) in any Eligible Fund
that may be used toward "Right of Accumulation" benefits described above
may be used as a credit toward completion of the Letter of Intent.
However, the reduced sales load will be applied only to new purchases.
The Transfer Agent will hold in escrow 5% of the amount
indicated in the Letter of Intent for payment of a higher sales load if
you do not purchase the full amount indicated in the Letter of Intent.
The escrow will be released when you fulfill the terms of the Letter of
Intent by purchasing the specified amount. If your purchases qualify for
a further sales load reduction, the sales load will be adjusted to
reflect your total purchase at the end of 13 months. If total purchases
are less than the amount specified, you will be requested to remit an
amount equal to the difference between the sales load actually paid and
the sales load applicable to the aggregate purchases actually made. If
such remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will
redeem an appropriate number of Class A shares held in escrow to realize
the difference. Signing a Letter of Intent does not bind you to purchase,
or the Fund to sell, the full amount indicated at the sales load in
effect at the time of signing, but you must complete the intended
purchase to obtain the reduced sales load. At the time you purchase Class
A shares, you must indicate your intention to do so under a Letter of
Intent. Purchases pursuant to a Letter of Intent will be made at the
then-current net asset value plus the applicable sales load in effect at
the time such Letter of Intent was executed.
HOW TO REDEEM SHARES
GENERAL
You may request redemption of your shares at any time.
Redemption requests should be transmitted to the Transfer Agent as
described below. When a request is received in proper form, the Fund will
redeem the shares at the next determined net asset value as described
below. If you hold Fund shares of more than one Class, any request for
redemption must specify the Class of shares being redeemed. If you fail
to specify the Class of shares to be redeemed or if you own fewer shares
of the Class than specified to be redeemed, the redemption request may be
delayed until the Transfer Agent receives further instructions from you
or your Service Agent.

The Fund imposes no charges (other than any applicable CDSC)
when shares are redeemed. Service Agents may charge their clients a
nominal fee for effecting redemptions of Fund shares. Any certificates
representing Fund shares being redeemed must be submitted with the
redemption request. The value of the shares redeemed may be more or less
than their original cost, depending upon the Series' then-current net
asset value.

The Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption
request in proper form, except as provided by the rules of the Securities
and Exchange Commission. HOWEVER, IF YOU HAVE PURCHASED FUND SHARES BY
CHECK, BY THE TELETRANSFER PRIVILEGE OR THROUGH DREYFUS-AUTOMATIC ASSET
BUILDERRegistration Mark AND SUB-
Page 44

SEQUENTLY SUBMIT A WRITTEN REQUEST TO THE TRANSFER AGENT, THE REDEMPTION
PROCEEDS WILL BE TRANSMITTED TO YOU PROMPTLY UPON BANK CLEARANCE OF YOUR
PURCHASE CHECK, TELETRANSFER PURCHASE OR DREYFUS-AUTOMATIC ASSET BUILDER
ORDER, WHICH MAY TAKE UP TO EIGHT BUSINESS DAYS OR MORE. IN ADDITION, THE
FUND WILL NOT HONOR REDEMPTION CHECKS UNDER THE CHECK REDEMPTION
PRIVILEGE, AND WILL REJECT REQUESTS TO REDEEM SHARES PURSUANT TO THE
TELETRANSFER PRIVILEGE, FOR A PERIOD OF EIGHT BUSINESS DAYS AFTER RECEIPT
BY THE TRANSFER AGENT OF THE PURCHASE CHECK, THE TELETRANSFER PURCHASE OR
THE DREYFUS-AUTOMATIC ASSET BUILDER ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THESE PROCEDURES WILL NOT APPLY IF YOUR SHARES WERE PURCHASED
BY WIRE PAYMENT, OR IF YOU OTHERWISE HAVE A SUFFICIENT COLLECTED BALANCE
IN YOUR ACCOUNT TO COVER THE REDEMPTION REQUEST. PRIOR TO THE TIME ANY
REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL ACCRUE AND BE
PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF
BENEFICIAL OWNERSHIP. Fund shares will not be redeemed until the Transfer
Agent has received your Account Application.
The Fund reserves the right to redeem your account at its
option upon not less than 30 days' written notice if your account's net
asset value is $500 or less and remains so during the notice period.
CONTINGENT DEFERRED SALES CHARGE
CLASS B SHARES -- A CDSC payable to the Distributor is imposed on any
redemption of Class B shares of a Series which reduces the current net
asset value of your Class B shares to an amount which is lower than the
dollar amount of all payments by you for the purchase of Class B shares
of such Series held by you at the time of redemption. No CDSC will be
imposed to the extent that the net asset value of the Class B shares
redeemed does not exceed (i) the current net asset value of Class B
shares acquired through reinvestment of dividends or capital gain
distributions, plus (ii) increases in the net asset value of Class B
shares above the dollar amount of all your payments for the purchase of
Class B shares of such Series held by you at the time of redemption.
If the aggregate value of the Class B shares redeemed has
declined below their original cost as a result of the Series'
performance, a CDSC may be applied to the then-current net asset value
rather than the purchase price.
In circumstances where the CDSC is imposed, the amount of the
charge will depend on the number of years from the time you purchased the
Class B shares until the time of redemption of such shares. Solely for
purposes of determining the number of years from the time of any payment
for the purchase of Class B shares, all payments during a month will be
aggregated and deemed to have been made on the first day of the month.
The following table sets forth the rates of the CDSC for
Class B shares, except as set forth below:

YEAR SINCE PURCHASE CDSC AS A % OF AMOUNT
PAYMENT WAS MADE INVESTED OR REDEMPTION PROCEEDS
----------------------- ------------------------------------
First.............................. 4.00
Second............................. 4.00
Third.............................. 3.00
Fourth............................. 3.00
Fifth.............................. 2.00
Sixth.............................. 1.00

The following table sets forth the rates of the CDSC for
Class B shares purchased by shareholders who beneficially owned Class B
shares on November 30, 1996:

YEAR SINCE PURCHASE CDSC AS A % OF AMOUNT
PAYMENT WAS MADE INVESTED OR REDEMPTION PROCEEDS
----------------------- -----------------------------------
First.............................. 3.00
Second............................. 3.00
Third.............................. 2.00
Fourth............................. 2.00
Fifth.............................. 1.00
Sixth.............................. 0.00

Page 45

In determining whether a CDSC is applicable to a redemption,
the calculation will be made in a manner that results in the lowest
possible rate. It will be assumed that the redemption is made first of
amounts representing shares acquired pursuant to the reinvestment of
dividends and distributions; then of amounts representing the increase in
net asset value of Class B shares above the total amount of payments for
the purchase of Class B shares made during the preceding six years (five
years for shareholders beneficially owning Class B shares on November 30,
1996); then of amounts representing the cost of shares purchased six years
(five years for shareholders beneficially owning Class B shares on
November 30, 1996) prior to the redemption; and finally, of amounts
representing the cost of shares held for the longest period of time within
the applicable six-year period (five-year period for shareholders
beneficially owning Class B shares on November 30, 1996).

For example, assume an investor purchased 100 shares at $10
per share for a cost of $1,000. Subsequently, the shareholder acquired
five additional shares through dividend reinvestment. During the second
year after the purchase the investor decided to redeem $500 of his or her
investment. Assuming at the time of the redemption the net asset value
had appreciated to $12 per share, the value of the investor's shares
would be $1,260 (105 shares at $12 per share). The CDSC would not be
applied to the value of the reinvested dividend shares and the amount
which represents appreciation ($260). Therefore, $240 of the $500
redemption proceeds ($500 minus $260) would be charged at a rate of 4%
(the applicable rate in the second year after purchase) for a total CDSC
of $9.60.

CLASS C SHARES -- A CDSC of 1% payable to the Distributor is imposed
on any redemption of Class C shares within one year of the date of
purchase. The basis for calculating the payment of any such CDSC will be
the method used in calculating the CDSC for Class B shares. See
"Contingent Deferred Sales Charge -- Class B Shares" above.

WAIVER OF CDSC -- The CDSC may be waived in connection with (a)
redemptions made within one year after the death or disability, as
defined in Section 72(m)(7) of the Code, of the shareholder, (b)
redemptions by employees participating in qualified or non-qualified
employee benefit plans or other programs where (i) the employers or
affiliated employers maintaining such plans or programs have a minimum of
250 employees eligible for participation in such plans or programs, or
(ii) such plan's or program's aggregate investment in the Dreyfus Family
of Funds or certain other products made available by the Distributor
exceeds $1,000,000, (c) redemptions as a result of a combination of any
investment company with the relevant Series by merger, acquisition of
assets or otherwise, (d) a distribution following retirement under a
tax-deferred retirement plan or upon attaining age 70-1/2 in the case of
an IRA or Keogh plan or custodial account pursuant to Section 403(b) of
the Code, and (e) redemptions pursuant to the Automatic Withdrawal Plan,
as described in the Fund's Prospectus. If the Fund's Board determines to
discontinue the waiver of the CDSC, the disclosure in the Fund's
Prospectus will be revised appropriately. Any Fund shares subject to a
CDSC which were purchased prior to the termination of such waiver will
have the CDSC waived as provided in the Fund's Prospectus at the time of
the purchase of such shares.

To qualify for a waiver of the CDSC, at the time of
redemption you must notify the Transfer Agent or your Service Agent must
notify the Distributor. Any such qualification is subject to confirmation
of your entitlement.
PROCEDURES
You may redeem shares by using the regular redemption
procedure through the Transfer Agent, or, if you have checked the
appropriate box and supplied the necessary information on the Account
Application or have filed a Shareholder Services Form with the Transfer
Agent, through the Check Redemption Privilege with respect to Class A
shares only, or the TELETRANSFER Privilege. If you are a client of a
Selected Dealer, you may redeem shares through the Selected Dealer. If
you have given your Service Agent authority to instruct the Transfer
Agent to redeem
Page 46

shares and to credit the proceeds of such redemptions to a designated
account at your Service Agent, you may redeem shares only in this manner
and in accordance with the regular redemption procedure described below.
If you wish to use the other redemption methods described below, you must
arrange with your Service Agent for delivery of the required
application(s) to the Transfer Agent. Other redemption procedures may be
in effect for clients of certain Service Agents. The Fund makes available
to certain large institutions the ability to issue redemption instructions
through compatible computer facilities. The Fund reserves the right to
refuse any request made by telephone, including requests made shortly
after a change of address, and may limit the amount involved or the number
of such requests. The Fund may modify or terminate any redemption
Privilege at any time or charge a service fee upon notice to shareholders.
No such fee currently is contemplated. Shares for which certificates have
been issued are not eligible for the Check Redemption or TELETRANSFER
Privilege.
You may redeem Fund shares by telephone if you have checked
the appropriate box on the Account Application or have filed a Shareholder
Services Form with the Transfer Agent. If you select the TELETRANSFER
redemption privilege or telephone exchange privilege (which is granted
automatically unless you refuse it), you authorize the Transfer Agent to
act on telephone instructions (including over The Dreyfus TouchRegistration
Mark automated telephone system) from any person representing himself or
herself to be you, or a representative of your Service Agent, and
reasonably believed by the Transfer Agent to be genuine. The Fund will
require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions
are genuine and, if it does not follow such procedures, the Fund or the
Transfer Agent may be liable for any losses due to unauthorized or
fraudulent instructions. Neither the Fund nor the Transfer Agent will be
liable for following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market conditions, you
may experience difficulty in contacting the Transfer Agent by telephone
to request a redemption or exchange of Series shares. In such cases, you
should consider using the other redemption procedures described herein.
Use of these other redemption procedures may result in your redemption
request being processed at a later time than it would have been if
telephone redemption had been used. During the delay, the Series' net
asset value may fluctuate.
REGULAR REDEMPTION -- Under the regular redemption procedure, you may
redeem shares by written request mailed to Premier State Municipal Bond
Fund, P.O. Box 6587, Providence, Rhode Island 02940-6587. Redemption
requests must be signed by each shareholder, including each owner of a
joint account, and each signature must be guaranteed. The Transfer Agent
has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from
domestic banks, brokers, dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and
savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program.
If you have any questions with respect to signature guarantees, please
contact your Service Agent or call the telephone number listed on the
cover of this Prospectus.
Redemption proceeds of at least $1,000 will be wired to any
member bank of the Federal Reserve System in accordance with a written
signature-guaranteed request.
CHECK REDEMPTION PRIVILEGE -- CLASS A SHARES -- You may write
Redemption Checks drawn on your Fund account. Redemption Checks may be
made payable to the order of any person in the amount of $500 or more.
Potential fluctuations in the net asset value of the Class A shares
should be considered in determining the amount of the check. Redemption
Checks should not be used to close your account. Redemption Checks are
free, but the Transfer Agent will impose a fee for stopping payment of a
Redemption Check upon your request or if the Transfer Agent cannot honor
the Redemption Check due to insufficient funds or other valid reason. You
should date your Redemption Checks with the current date when you write
them. Please do not post-
Page 47

date your Redemption Checks. If you do the Transfer Agent will honor, upon
presentment, even if presented before the date of the check, all postdated
Redemption Checks which are dated within six months of presentment for
payment, if they are otherwise in good order. This Privilege will be
terminated immediately, without notice, with respect to any account which
is, or becomes, subject to backup withholding on redemptions (See
"Dividends, Distributions and Taxes"). Any Redemption Check written on an
account which has become subject to backup withholding on redemptions will
not be honored by the Transfer Agent.
TELETRANSFER PRIVILEGE -- You may request by telephone that
redemption proceeds (minimum $500 per day) be transferred between your
Fund account and your bank account. Only a bank account maintained in a
domestic financial institution which is an Automated Clearing House member
may be designated. Redemption proceeds will be on deposit in your account
at an Automated Clearing House member bank ordinarily two days after
receipt of the redemption request or, at your request, paid by check
(maximum $150,000 per day) and mailed to your address. Holders of jointly
registered Fund or bank accounts may redeem through the TELETRANSFER
Privilege for transfer to their bank account not more than $250,000
within any 30-day period.
If you have selected the TELETRANSFER Privilege, you may
request a TELETRANSFER redemption of shares by calling 1-800-645-6561 or,
if you are calling from overseas, call 516-794-5252.
REDEMPTION THROUGH A SELECTED DEALER -- If you are a customer of a
Selected Dealer, you may make redemption requests to your Selected
Dealer. If the Selected Dealer transmits the redemption request so that
it is received by the Transfer Agent prior to the close of trading on the
floor of the New York Stock Exchange (currently 4:00 p.m., New York
time), the redemption request will be effective on that day. If a
redemption request is received by the Transfer Agent after the close of
trading on the floor of the New York Stock Exchange, the redemption
request will be effective on the next business day. It is the
responsibility of the Selected Dealer to transmit a request so that it is
received in a timely manner. The proceeds of the redemption are credited
to your account with the Selected Dealer. See "How to Buy Shares" for a
discussion of additional conditions or fees that may be imposed upon
redemption.
In addition, the Distributor or its designee will accept
orders from Selected Dealers with which the Distributor has sales
agreements for the repurchase of shares held by shareholders. Repurchase
orders received by dealers by the close of trading on the floor of the
New York Stock Exchange on any business day and transmitted to the
Distributor or its designee by the close of its business day (normally
5:15 p.m., New York time) are effected at the price determined as of the
close of trading on the floor of the New York Stock Exchange on that day.
Otherwise, the shares will be redeemed at the next determined net asset
value. It is the responsibility of the dealer to transmit orders on a
timely basis. The dealer may charge the shareholder a fee for executing
the order. This repurchase arrangement is discretionary and may be
withdrawn at any time.

REINVESTMENT PRIVILEGE -- Upon written request, you may reinvest up
to the number of Class A or Class B shares you have redeemed, within 45
days of redemption, at the then-prevailing net asset value without a
sales load, or reinstate your account for the purpose of exercising the
Exchange Privilege. Upon reinvestment, with respect to Class B shares, or
Class A shares if such shares were subject to a CDSC, the shareholder's
account will be credited with an amount equal to the CDSC previously paid
upon redemption of the Class A or Class B shares reinvested. The
Reinvestment Privilege may be exercised only once.

DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN
Class B and Class C shares are subject to a Distribution Plan
and Class A, Class B and Class C shares are subject to a Shareholder
Services Plan.
DISTRIBUTION PLAN -- Under the Distribution Plan, adopted pursuant to
Rule 12b-1 under the 1940 Act, the Fund pays the Distributor for
distributing the Fund's Class B and Class C
Page 48

shares of each Series at an annual rate of .50 of 1% of the value of the
average daily net assets of Class B and .75 of 1% of the value of the
average daily net assets of Class C.
SHAREHOLDER SERVICES PLAN -- Under the Shareholder Services Plan, the
Fund pays the Distributor for the provision of certain services to the
holders of Class A, Class B and Class C shares a fee at the annual rate
of .25 of 1% of the value of the average daily net assets of each such
Class. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding
the Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts. The Distributor may
make payments to Service Agents in respect of these services. The
Distributor determines the amounts to be paid to Service Agents.
DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS -- Each Series ordinarily declares
dividends from its net investment income on each day the New York Stock
Exchange is open for business. Fund shares begin earning income dividends
on the day immediately available funds ("Federal Funds" (monies of member
banks within the Federal Reserve System which are held on deposit at a
Federal Reserve Bank)) are received by the Transfer Agent in written or
telegraphic form. If a purchase order is not accompanied by remittance in
Federal Funds, there may be a delay between the time the purchase order
becomes effective and the time the shares purchased start earning
dividends. If your payment is not made in Federal Funds, it must be
converted into Federal Funds. This usually occurs within one business day
of receipt of a bank wire and within two business days of receipt of a
check drawn on a member bank of the Federal Reserve System. Checks drawn
on banks which are not members of the Federal Reserve System may take
considerably longer to convert into Federal Funds.

Dividends usually are paid on the last calendar day of each
month and are automatically reinvested in additional shares of the Series
and the same Class from which they were paid at net asset value without a
sales load or, at your option, paid in cash. Each Series' earnings for
Saturdays, Sundays and holidays are declared as dividends on the
preceding business day. If you redeem all shares in your account at any
time during the month, all dividends to which you are entitled will be
paid to you along with the proceeds of the redemption. If you are an
omnibus accountholder and indicate in a partial redemption request that a
portion of any accrued dividends to which such account is entitled
belongs to an underlying account-holder who has redeemed all shares in
his or her account, such portion of the accrued dividends will be paid to
you along with the proceeds of the redemption. Distributions by each
Series from its net realized securities gains, if any, generally are
declared and paid once a year, but the Series may make distributions on a
more frequent basis to comply with distribution requirements of the Code,
in all events in a manner consistent with the provisions of the 1940 Act.
No Series will make distributions from its net realized securities gains
unless capital loss carryovers, if any, have been utilized or have
expired. You may choose whether to receive dividends and distributions in
cash or to reinvest in additional shares of the Series and the same Class
from which they were paid at net asset value. All expenses are accrued
daily and deducted before declaration of dividends to investors.
Dividends paid by each Class will be calculated at the same time and in
the same manner and will be of the same amount, except that the expenses
attributable solely to a particular Class will be borne exclusively by
such Class. Class B and Class C shares will receive lower per share
dividends than Class A shares because of the higher expenses borne by the
relevant Class. See "Fee Table."

FEDERAL TAX TREATMENT -- Under the Code, each Series of the Fund is
treated as a separate entity for purposes of qualification and taxation
as a regulated investment company. Except for dividends from Taxable
Investments, the Fund anticipates that substantially all dividends paid
by a Series from net investment income will not be subject to Federal
income tax. Dividends derived from Taxable Investments, together with
distributions from any net realized short-term securities gains and all
or a portion of any gains realized from the sale or other disposition of
certain
Page 49

market discount bonds, paid by the Fund are subject to Federal income
tax as ordinary income whether received in cash or reinvested in
additional shares. Distributions from net realized long-term securities
gains of a Series generally are subject to Federal income tax as
long-term capital gains if you are a citizen or resident of the United
States. Dividends and distributions attributable to income or gain
derived from securities transactions and from the use of certain of the
investment techniques described under "Appendix _ Investment Techniques,"
will be subject to Federal income tax. No dividend paid by any Series
will qualify for the dividends received deduction allowable to certain
U.S. corporations. The Code provides that the net capital gain of an
individual generally will not be subject to Federal income tax at a rate
in excess of 28%. Under the Code, interest on indebtedness incurred or
continued to purchase or carry shares of any Series which is deemed to
relate to exempt-interest dividends is not deductible.

Although all or a substantial portion of the dividends paid
by each Series may be excluded by shareholders of the Series from their
gross income for Federal income tax purposes, each Series may purchase
specified private activity bonds, the interest from which may be (i) a
preference item for purposes of the alternative minimum tax, (ii) a
component of the "adjusted current earnings" preference item for purposes
of the corporate alternative minimum tax as well as a component in
computing the corporate environmental tax or (iii) a factor in
determining the extent to which a shareholder's Social Security benefits
are taxable. If a Series purchases such securities, the portion of the
Series' dividends related thereto will not necessarily be tax exempt to an
investor who is subject to the alternative minimum tax and/or tax on
Social Security benefits and may cause an investor to be subject to such
taxes.
The Code provides for the "carryover" of some or all of the
sales load imposed on Class A shares of a Series if you exchange your
Class A shares for shares of another Series or fund advised or
administered by The Dreyfus Corporation within 91 days of purchase and
such other Series or other fund reduces or eliminates its otherwise
applicable sales load charge for the purpose of the exchange. In this
case, the amount of your sales load charge for Class A shares, up to the
amount of the reduction of the sales load charge on the exchange, is not
included in the basis of your Class A shares for purposes of computing
gain or loss on the exchange, and instead is added to the basis of the
other Series or fund shares received on the exchange.
The exchange of shares of one fund for shares of another is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize a taxable gain or loss.
Notice as to the tax status of your dividends and
distributions will be mailed to you annually. You also will receive
periodic summaries of your account which will include information as to
dividends and distributions from securities gains, if any, paid during
the year. These statements set forth the dollar amount of income exempt
from Federal tax and the dollar amount, if any, subject to Federal tax.
These dollar amounts will vary depending on the size and length of time
of your investment in a Series. If a Series pays dividends derived from
taxable income, it intends to designate as taxable the same percentage of
the day's dividends as the actual taxable income earned on that day bears
to total income earned on that day. Thus, the percentage of the dividend
designated as taxable, if any, may vary from day to day.
Federal regulations generally require the Fund to withhold
("backup withholding") and remit to the U.S. Treasury 31% of taxable
dividends, distributions from net realized securities gains and the
proceeds of any redemption, regardless of the extent to which gain or
loss may be realized, paid to a shareholder if such shareholder fails to
certify either that the TIN furnished in connection with opening an
account is correct, or that such shareholder has not received notice from
the IRS of being subject to backup withholding as a result of a failure
to properly report taxable dividend or interest income on a Federal
income tax return. Furthermore, the IRS may notify the Fund to institute
backup withholding if the IRS determines a shareholder's TIN is incorrect
or if a shareholder has failed to properly report taxable dividend and
interest income on a Federal income tax return.
Page 50

A TIN is either the Social Security number or employer
identification number of the record owner of the account. Any tax
withheld as a result of backup withholding does not constitute an
additional tax imposed on the record owner of the account, and may be
claimed as a credit on the record owner's Federal income tax return.
Management of the Fund believes that each Series (other than
the New Jersey Series which had not commenced operations) has qualified
for the fiscal year ended April 30, 1996 as a "regulated investment
company" under the Code. Each such Series intends to continue to so
qualify, if such qualification is in the best interests of its
shareholders. It is expected that the New Jersey Series will qualify as a
"regulated investment company" under the Code so long as such
qualification is in the best interests of its shareholders. Qualification
as a regulated investment company relieves the Series of any liability
for Federal income taxes to the extent its earnings are distributed in
accordance with applicable provisions of the Code. Each Series of the
Fund is subject to a non-deductible 4% excise tax, measured with respect
to certain undistributed amounts of taxable investment income and capital
gains, if any.
STATE AND LOCAL TAX TREATMENT -- Each Series will invest primarily in
Municipal Obligations of the State after which the Series is named.
Except to the extent specifically noted below, dividends by a Series are
not subject to an income tax by such State to the extent that the
dividends are attributable to interest on such Municipal Obligations.
However, some or all of the other dividends or distributions by a Series
may be taxable by those States that have income taxes, even if the
dividends or distributions are attributable to income of the Series
derived from obligations of the United States or its agencies or
instrumentalities.
The Fund anticipates that a substantial portion of the
dividends paid by each Series will not be subject to income tax of the
State after which the Series is named. However, to the extent that you
are obligated to pay State or local taxes outside of such State,
dividends earned by an investment in such Series may represent taxable
income. Also, all or a portion of the dividends paid by a Series that are
not subject to income tax of the State after which the Series is named
may be a preference item for such State's alternative minimum tax (where
imposed). Finally, you should be aware that State and local taxes, other
than those described above, may apply to the dividends, distributions or
shares of a Series.
The paragraphs below discuss the State tax treatment of
dividends and distributions by each Series to residents of the State
after which the Series is named. Investors should consult their own tax
advisers regarding specific questions as to Federal, State and local
taxes.
CONNECTICUT SERIES -- Dividends by the Series that qualify as
exempt-interest dividends for Federal income tax purposes are not subject
to the Connecticut income tax imposed on individuals, trusts and estates,
to the extent that such dividends are derived from income received by the
Series as interest from Connecticut Municipal Obligations or obligations
the interest with respect to which Connecticut is prohibited by Federal
law from taxing. Dividends that qualify as capital gain dividends for
Federal income tax purposes are not subject to the Connecticut income tax
to the extent they are derived from Connecticut Municipal Obligations.
Dividends derived from other sources are subject to the Connecticut
income tax. In the case of a shareholder subject to the Connecticut income
tax and required to pay the Federal alternative minimum tax, the portion
of exempt-interest dividends paid by the Series that is derived from
income received by the Series as interest from Connecticut Municipal
Obligations or obligations the interest with respect to which Connecticut
is prohibited by Federal law from taxing is not subject to the net
Connecticut minimum tax even though treated as a preference item for
purposes of the Federal alternative minimum tax.
Dividends qualifying as exempt-interest dividends for Federal
income tax purposes that are distributed by the Series to entities taxed
as corporations under the Connecticut corporation business tax are not
exempt from that tax.
The shares of the Series are not subject to property taxation
by the State of Connecticut or its political subdivisions.
Page 51

FLORIDA SERIES -- Dividends or distributions by the Fund to a Florida
individual resident are not taxable by Florida. However, Florida imposes
an intangible personal property tax on shares of the Series owned by a
Florida resident on January 1 of each year unless such shares qualify for
an exemption from the tax.
Dividends qualifying as exempt-interest dividends for Federal
income tax purposes as well as other Federally taxable dividends and
distributions that are distributed by the Series to entities taxed as
corporations under Florida law may not be exempt from the Florida
corporate income tax.
The Fund has received a Technical Assistance Advisement from
the State of Florida, Department of Revenue, to the effect that Florida
Series' shares owned by a Florida resident will be exempt from the
intangible personal property tax so long as the Series' portfolio
includes only assets, such as notes, bonds, and other obligations issued
by the State of Florida or its municipalities, counties, and other taxing
districts, the United States Government, and its agencies, Puerto Rico,
Guam, and the U.S. Virgin Islands, and other assets which are exempt from
that tax.
GEORGIA SERIES -- Dividends and distributions by the Georgia Series
to a Georgia resident that are attributable to interest on Georgia
Municipal Obligations or direct obligations of the United States and its
territories and possessions are not subject to the State of Georgia
income tax. Dividends or other distributions by the Series which are
attributable to other sources, including all distributions that qualify
as capital gains dividends for Federal income tax purposes, are subject
to the State of Georgia income tax at the applicable rate.
The Georgia intangibles tax previously imposed upon certain
intangible personal property has been repealed, effective as of January
1, 1996. Accordingly, shares of the Georgia Series will not be subject to
an intangibles tax in Georgia.
MARYLAND SERIES -- Dividends and distributions by the Series to a
Maryland resident (including individuals, corporations, estates or trusts
who are subject to Maryland state and local income tax) will not be
subject to income tax in Maryland to the extent that such dividends or
distributions (a) qualify, for Federal income tax purposes, as
exempt-interest dividends of a regulated investment company and are
attributable to (i) interest on Maryland Municipal Obligations or (ii)
interest on obligations of the United States or an authority, commission,
instrumentality, possession or territory of the United States, or (b) are
attributable to gain realized by the Series from the sale or exchange of
Maryland Municipal Obligations or obligations of the United States or an
authority, commission or instrumentality thereof. To the extent that
distributions by the Series are attributable to sources other than those
described above, such as (x) interest on obligations issued by states
other than Maryland or (y) income from repurchase agreements, such
distributions will not be exempt from Maryland state and local income
taxes. In addition, any gain realized by a shareholder upon a redemption
or exchange of Series shares will be subject to Maryland taxation.
Maryland presently includes in taxable net income items of
tax preferences as defined in the Code. Interest paid on certain private
activity bonds constitutes a tax preference. Accordingly, subject to a
threshold amount, 50% of any distributions by the Series attributable to
such private activity bonds will not be exempt from Maryland state and
local income taxes. Interest on indebtedness incurred (directly or
indirectly) by a shareholder of the Series to purchase or carry shares of
the Series will not be deductible for Maryland state and local income tax
purposes to the extent such interest is allocable to exempt-interest
dividends.
In the event the Series fails to qualify as a regulated
investment company, the Series would be subject to corporate Maryland
income tax and distributions generally would be taxable as ordinary
income to the shareholders.
Individuals will not be subject to personal property tax on
their shares of the Maryland Series.
MASSACHUSETTS SERIES -- Dividends by the Series to a Massachusetts
resident are not subject to the Massachusetts personal income tax to the
extent that the dividends are attributable to income received by the
Series from Massachusetts Municipal Obligations or direct U.S. Government
obligations, and are properly designated as such. Distributions of
capital gain div-
Page 52

idends by the Series to a Massachusetts resident are not subject to the
Massachusetts personal income tax to the extent such distributions are
attributable to gain from the sale of certain Massachusetts Municipal
Obligations the gain from which is exempt from the Massachusetts personal
income tax, and the distributions are properly designated as such.
Dividends or distributions by the Series to a Massachusetts resident that
are attributable to most other sources are subject to the Massachusetts
personal income tax. In addition, distributions from the Series may be
included in the net income measure of the corporate excise tax for
corporate shareholders who are subject to the Massachusetts corporate
excise tax. The Series believes that distributions from net realized
long-term securities gains that are taxable by Massachusetts are
reportable as long-term capital gains, irrespective of how long the
resident has held shares in the Series. In 1994, the Massachusetts
personal income tax statute was modified to provide for graduated rates of
tax (with some exceptions) on long-term capital gains based on the length
of time the asset has been held since January 1, 1995. There is as yet no
official guidance concerning the treatment under the revised statute of
mutual fund shareholders that receive capital gain distributions. However,
the state Department of Revenue has released "working" draft regulations
providing that the holding period of the mutual fund (rather than that of
its shareholders) will be determinative for purposes of applying the
revised statute to shareholders that receive capital gain distributions,
so long as the mutual fund separately designates each portion of such
distributions in a notice provided to shareholders within 30 days of
year-end. A challenge to the new law is currently pending before the
Massachusetts Supreme Judicial Court. Shareholders should consult their
tax advisers with respect to the Massachusetts personal income tax
treatment of capital gain distributions from the Series.
The shares of the Series are not subject to property taxation
by Massachusetts or its political subdivisions.
MICHIGAN SERIES -- Dividends by the Series to a Michigan resident
individual are not subject to the Michigan personal income tax and are
excluded from the taxable income base of the Michigan intangibles tax to
the extent that the dividends are attributable to income received by the
Series as interest from the Series' investment in Michigan Municipal
Obligations, obligations of U.S. possessions, as well as direct U.S.
Government obligations. Dividends or distributions by the Series to a
Michigan resident that are attributable to most other sources are subject
to both the Michigan personal income tax and are included in the taxable
income base of the Michigan intangibles tax.
For Michigan personal income and intangibles tax purposes,
the proportionate share of dividends from the Series' net investment
income from other than Michigan Municipal Obligations and from
distributions from any short-term or long-term capital gains will be
included in Michigan taxable income and will be included in the taxable
income base of the Michigan intangibles tax, except that dividends from
net investment income or distributions from capital gains reinvested in
Series' shares are exempt from such tax. Additionally, for Michigan
personal income tax purposes, any gain or loss realized when the
shareholder sells or exchanges Series' shares will be included in
Michigan taxable income.
Persons engaging in business activities in Michigan may be
subject to the Michigan Single Business Tax and should consult their tax
advisers with respect to the application of such tax in connection with
an investment in the Series.
MINNESOTA SERIES -- Dividends paid by the Series to a Minnesota
resident are not subject to the Minnesota personal income tax to the
extent that the dividends are attributable to income received by the
Series as interest from Minnesota Municipal Obligations, provided such
attributable dividends represent 95% or more of the exempt-interest
dividends that are paid by the Series. Moreover, dividends paid by the
Series to a Minnesota resident are not subject to the Minnesota personal
income tax to the extent that the dividends are attributable to income
received by the Series as interest from a Series' investment in direct
U.S. Government obligations. Dividends and distributions by the Series to
a Minnesota resident that are attrib-
Page 53

utable to most other sources are subject to the Minnesota personal income
tax. Dividends and distributions from the Series will be included in the
determination of taxable net income of corporate shareholders who are
subject to Minnesota income (franchise) taxes. In addition, dividends
attributable to interest received by the Series that is a preference item
for Federal income tax purposes, whether or not such interest is from a
Minnesota Municipal Obligation, may be subject to the Minnesota
alternative minimum tax.
The shares of the Series are not subject to property taxation
by Minnesota or its political subdivisions.
NEW JERSEY SERIES -- The New Jersey Series intends to be a "qualified
investment fund" within the meaning of the New Jersey gross income tax.
The primary criteria for constituting a "qualified investment fund" are
that (i) the Series is an investment company registered with the
Securities and Exchange Commission which, for the calendar year in which
the dividends and distributions (if any) are paid, has no investments
other than interest-bearing obligations, obligations issued at a
discount, and cash and cash items, including receivables, and financial
options, futures and forward contracts, or other similar financial
instruments relating to interest-bearing obligations, obligations issued
at a discount or bond indices related thereto and (ii) at the close of
each quarter of the taxable year, the Series has not less than 80% of the
aggregate principal amount of all of its investments, excluding financial
options, futures and forward contracts, or other similar financial
instruments, related to interest-bearing obligations, obligations issued
at a discount or bond indices related thereto, cash and cash items, which
cash items shall include receivables, in New Jersey Municipal
Obligations, including obligations of Puerto Rico, the Virgin Islands and
other territories and possessions of the United States and certain other
specified securities exempt from Federal and New Jersey income taxes.
Additionally, a qualified investment fund must comply with certain
continuing reporting requirements.
If the New Jersey Series qualifies as a qualified investment
fund and the Series complies with its reporting obligations, (a)
dividends and distributions by the New Jersey Series to a New Jersey
resident individual shareholder will not be subject to New Jersey gross
income tax to the extent that the dividends and distributions are
attributable to income earned by the Series as interest on or gain from
New Jersey Municipal Obligations, and (b) gain from the sale of New
Jersey Series shares by a New Jersey resident individual shareholder will
not be subject to the New Jersey gross income tax. Shares of the New
Jersey Series are not subject to property taxation by New Jersey or its
political subdivisions. To the extent that you are subject to state and
local taxes outside of New Jersey, dividends and distributions earned by
an investment in the New Jersey Series may represent taxable income.
NORTH CAROLINA SERIES -- Dividends paid by the North Carolina Series
to a North Carolina resident that are attributable to interest on North
Carolina Municipal Obligations or direct U.S. Government obligations are
not subject to the North Carolina income tax. Dividends or distributions
attributable to gain realized by the Series from the sale or exchange of
certain North Carolina Municipal Obligations issued before July 1, 1995
will not be included in the North Carolina taxable income of a resident
individual, trust or estate. Other dividends or distributions which are
attributable to net realized securities gains and most other sources are
subject to the North Carolina income tax at the applicable rate. Gain
realized by a North Carolina resident shareholder from the sale or
exchange of an interest held in the North Carolina Series also will be
subject to the North Carolina income tax at the applicable rate.
The North Carolina intangibles tax previously imposed upon
certain intangible personal property has been repealed, effective as of
January 1, 1995. Accordingly, shares of the North Carolina Series will
not be subject to an intangibles tax in North Carolina.
To the extent that dividends or distributions from the North
Carolina Series increase the surplus of a corporate shareholder required
to file a North Carolina franchise tax return, such increase in the
surplus will be subject to the North Carolina franchise tax.
Page 54

OHIO SERIES -- Dividends paid by the Series to an Ohio resident, or
to a corporation subject to the Ohio Corporation Franchise Tax, are not
subject to Ohio state and local income taxes or the net income basis of
the Ohio Corporation Franchise Tax to the extent that such dividends are
attributable to income received by the Series as interest from Ohio
Municipal Obligations and direct obligations of the United States,
certain Federal agencies and certain U.S. territories. Dividends or
distributions paid by the Series to an Ohio resident, or to a corporation
subject to the Ohio Corporation Franchise Tax, that are attributable to
most other sources are subject to Ohio state and local income taxes and
are includable in the net income basis of the Ohio Corporation Franchise
Tax. The shares of the Series are not subject to property taxation by the
State of Ohio or its political subdivisions, except when held by a
"dealer in intangibles" (generally, a person in the lending or brokerage
business), a decedent's estate, an Ohio insurance company, or a
corporation taxed on the net worth basis of the Ohio Corporation
Franchise Tax.
PENNSYLVANIA SERIES -- Dividends by the Series will not be subject to
the Pennsylvania personal income tax to the extent that the dividends are
attributable to interest received by the Series from its investments in
Pennsylvania Municipal Obligations and U.S. Government obligations,
including obligations issued by U.S. possessions. Dividends by the Series
will not be subject to the Philadelphia School District investment income
tax to the extent that the dividends are attributable to interest
received by the Series from its investments in Pennsylvania Municipal
Obligations and U.S. obligations, including obligations issued by U.S.
possessions. Dividends or distributions by the Series to a Pennsylvania
resident that are attributable to most other sources may be subject to
the Pennsylvania personal income tax and (for residents of Philadelphia)
to the Philadelphia School District investment net income tax.
Dividends paid by the Series which are considered
"exempt-interest dividends" for Federal income tax purposes are not
subject to the Pennsylvania Corporate Net Income Tax, but other dividends
or distributions paid by the Series may be subject to that tax. An
additional deduction from Pennsylvania taxable income is permitted for
dividends or distributions paid by the Series attributable to interest
received by the Series from its investments in Pennsylvania Municipal
Obligations and U.S. Government obligations to the extent included in
Federal taxable income, but such a deduction is reduced by any interest
on indebtedness incurred to carry the securities and other expenses
incurred in the production of such interest income, including expenses
deducted on the Federal income tax return that would not have been
allowed under the Code if the interest were exempt from Federal income
tax. It is the current position of the Department of Revenue of the
Commonwealth of Pennsylvania that Series shares are considered exempt
assets (with a pro rata exclusion based on the value of the Series
attributable to its investments in Pennsylvania Municipal Obligations and
U.S. Government obligations, including obligations issued by U.S.
possessions) for purposes of determining a corporation's capital stock
value subject to the Pennsylvania Capital Stock/Franchise Tax.
Shares of the Series are exempt from Pennsylvania county
personal property taxes to the extent that the portfolio of the Series
consists of Pennsylvania Municipal Obligations and U.S. Government
obligations, including obligations issued by U.S. possessions.
TEXAS SERIES -- All dividends and distributions by the Series to
Texas resident individuals are not subject to taxation by Texas. However,
Texas enacted significant changes to its corporate franchise tax law for
reporting years beginning January 1, 1992 and thereafter. These changes
include the imposition of a tax measured by earned surplus, in addition
to the previously existing tax on a corporation's capital. The earned
surplus component of the Texas franchise tax is applicable only to the
extent that it exceeds the taxable capital component of the franchise
tax. For Texas franchise tax purposes, earned surplus is computed by
reference to Federal taxable income. Thus, any amounts subject to Federal
income tax that are payable by the Series to corporations doing business
in or incorporated in Texas generally will be included in the earned
surplus component of the Texas franchise tax, to the extent such earned
surplus is apportioned
Page 55

to Texas. Dividends and other distributions not subject to Federal income
tax generally will be excluded from the calculation of the earned surplus
component of the franchise tax.
Both the capital tax and earned surplus tax components of the
Texas franchise tax are computed by reference to the portion of the
corporation's capital or earned surplus, respectively, based on the
corporation's gross receipts derived from Texas. To the extent dividend
and interest payments are made by a corporation not incorporated in
Texas, or another type of entity not legally domiciled in Texas, such
dividends and payments are not considered to be Texas sourced receipts
for franchise tax apportionment purposes.
Effective with franchise tax reports originally due after
January l, 1994 (which are based upon accounting years ending in 1993),
other taxable distributions from the Series to corporations doing
business in or incorporated in Texas (such as the proceeds resulting from
net gain upon the sale of Series bonds) may be allocable to Texas as
Texas sourced gross receipts for the earned surplus component of the
franchise tax if: (l) the activities of the recipient corporation do not
have a sufficient unitary connection with that corporation's other
activities conducted within the state giving rise to the underlying sale
of such assets; and (2) the recipient corporation has its commercial
domicile in Texas.
The shares of the Series are not subject to property taxation
by Texas or its political subdivisions.
VIRGINIA SERIES -- Subject to the provisions discussed below,
dividends paid to shareholders and derived from interest on obligations
of the Commonwealth of Virginia or of any political subdivision or
instrumentality of the Commonwealth or derived from interest or dividends
on obligations of the United States excludable from Virginia taxable
income under the laws of the United States, which obligations are issued
in the exercise of the borrowing power of the Commonwealth or the United
States and are backed by the full faith and credit of the Commonwealth or
the United States, will be exempt from Virginia income tax. Dividends
paid to shareholders by the Series and derived from interest on debt
obligations of certain territories and possessions of the United States
(those issued by Puerto Rico, the Virgin Islands and Guam) will be exempt
from Virginia income tax. To the extent any portion of the dividends are
derived from interest on debt obligations other than those described
above, such portion will be subject to Virginia income tax even though it
may be excludable from gross income for Federal income tax purposes.
Generally, dividends distributed to shareholders by the
Series and derived from capital gains will be taxable to the
shareholders. To the extent any portion of the dividends are derived from
taxable interest for Virginia purposes or from net short-term capital
gains, such portion will be taxable to the shareholders as ordinary
income. The character of long-term capital gains realized and distributed
by the Series will flow through to its shareholders regardless of how
long the shareholders have held their shares. Capital gains distributed
to shareholders derived from Virginia obligations issued pursuant to
special Virginia enabling legislation that provides a specific exemption
for such gains will be exempt from Virginia income tax. Generally,
interest on indebtedness incurred by shareholders to purchase or carry
shares of the Fund will not be deductible for Virginia income tax
purposes.
As a regulated investment company, the Series may distribute
dividends that are exempt from Virginia income tax to its shareholders if
the Series satisfies all requirements for conduit treatment under Federal
law and, at the close of each quarter of its taxable year, at least 50%
of the value of its total assets consists of obligations the interest on
which is exempt from taxation under Federal law. If the Series fails to
qualify, no part of its dividends will be exempt from Virginia income
tax.
When taxable income of a regulated investment company is
commingled with exempt income, all distributions of the income are
presumed taxable to the shareholders unless the portion of income that is
exempt from Virginia income tax can be determined with reasonable
certainty and substantiated. Generally, this determination must be made
for each distribution to
Page 56

each shareholder. The Virginia Department of Taxation has adopted a
policy, however, of allowing shareholders to exclude from Virginia taxable
income the exempt portion of distributions from a regulated investment
company even though the shareholders receive distributions monthly but
receive reports substantiating the exempt portion of such distributions at
less frequent intervals. Accordingly, if the Series receives taxable
income, the Series must determine the portion of income that is exempt
from Virginia income tax and provide such information to the shareholders
in accordance with the foregoing so that the shareholders may exclude from
Virginia taxable income the exempt portion of the distribution from
the Series.
PERFORMANCE INFORMATION
For purposes of advertising, performance for each Class of
shares may be calculated on several bases, including current yield, tax
equivalent yield, average annual total return and/or total return.
These total return figures reflect changes in the price of
the shares and assume that any income dividends and/or capital gains
distributions made by the Fund during the measuring period were
reinvested in shares of the same Class. These figures also take into
account any applicable service and distribution fees. As a result, at any
given time, the performance of Class B and Class C should be expected to
be lower than that of Class A. Performance for each Class will be
calculated separately.
Current yield refers to each Series' annualized net
investment income per share over a 30-day period, expressed as a
percentage of the maximum offering price per share in the case of Class A
or the net asset value in the case of Class B or Class C at the end of
the period. For purposes of calculating current yield, the amount of net
investment income per share during that 30-day period, computed in
accordance with regulatory requirements, is compounded by assuming that
it is reinvested at a constant rate over a six-month period. An identical
result is then assumed to have occurred during a second six-month period
which, when added to the result for the first six months, provides an
"annualized" yield for an entire one-year period. Calculations of each
Series' current yield may reflect absorbed expenses pursuant to any
undertaking that may be in effect. See "Management of the Fund."
Tax equivalent yield is calculated by determining the pre-tax
yield which, after being taxed at a stated rate, would be equivalent to a
stated current yield calculated as described above.
Average annual total return is calculated pursuant to a
standardized formula which assumes that an investment in a Series of the
Fund was purchased with an initial payment of $1,000 and that the
investment was redeemed at the end of a stated period of time, after
giving effect to the reinvestment of dividends and distributions during
the period. The return is expressed as a percentage rate which, if
applied on a compounded annual basis, would result in the redeemable
value of the investment at the end of the period. Advertisements of each
Series' performance will include each Series' average annual total return
for one, five and ten year periods, or for shorter periods depending upon
the length of time during which each Series has operated.
Total return is computed on a per share basis and assumes the
reinvestment of dividends and distributions. Total return generally is
expressed as a percentage rate which is calculated by combining the
income and principal changes for a specified period and dividing by the
net asset value (maximum offering price in the case of Class A) per share
at the beginning of the period. Advertisements may include the percentage
rate of total return or may include the value of a hypothetical
investment at the end of the period which assumes the application of the
percentage rate of total return. Total return also may be calculated by
using the net asset value per share at the beginning of the period
instead of the maximum offering price per share at the beginning of the
period for Class A shares or without giving effect to any applicable CDSC
at the end of the period for Class B or Class C shares. Calculations
based on the net asset value per share do not reflect the deduction of
the applicable sales charge on Class A shares which, if reflected, would
reduce the performance quoted.
Page 57

Performance will vary from time to time and past results are
not necessarily representative of future results. Investors should
remember that performance is a function of portfolio management in
selecting the type and quality of portfolio securities and is affected by
operating expenses. Performance information, such as that described
above, may not provide a basis for comparison with other investments or
other investment companies using a different method of calculating
performance.
Comparative performance information may be used from time to
time in advertising the Fund's shares, including data from Lipper
Analytical Services, Inc., Moody's Bond Survey Bond Index, Lehman
Brothers Municipal Bond Index, Morningstar, Inc. and other industry
publications.
GENERAL INFORMATION

The Fund was organized as an unincorporated business trust
under the laws of the Commonwealth of Massachusetts pursuant to an
Agreement and Declaration of Trust (the "Trust Agreement") dated
September 19, 1986. Before July 2, 1990, the Fund's name was Premier
State Tax Exempt Bond Fund. The Fund is authorized to issue an unlimited
number of shares of beneficial interest, par value $.001 per share. The
Fund's shares are classified into three classes _ Class A, Class B and
Class C. Each share has one vote and shareholders will vote in the
aggregate and not by class except as otherwise required by law. Only
holders of Class B or Class C shares, as the case may be, will be
entitled to vote on matters submitted to shareholders pertaining to the
Distribution Plan.

Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Trust Agreement disclaims shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be
given in each agreement, obligation or instrument entered into or
executed by the Fund or a Trustee. The Trust Agreement provides for
indemnification from the Fund's property for all losses and expenses of
any shareholder held personally liable for the obligations of the Fund.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund itself
would be unable to meet its obligations, a possibility which management
believes is remote. Upon payment of any liability incurred by the Fund,
the shareholder paying such liability will be entitled to reimbursement
from the general assets of the Fund. The Fund intends to conduct its
operations in such a way so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of the Fund. As discussed
under "Management of the Fund" in the Statement of Additional
Information, the Fund ordinarily will not hold shareholder meetings;
however, shareholders under certain circumstances may have the right to
call a meeting of shareholders for the purpose of voting to remove
Trustees.
The Fund is a "series fund," which is a mutual fund divided
into separate portfolios, each of which is treated as a separate entity
for certain matters under the 1940 Act, and for other purposes. A
shareholder of one Series is not deemed to be a shareholder of any other
Series. For certain matters Fund shareholders vote together as a group;
as to others they vote separately by Series.
To date, the Trustees have authorized the creation of
thirteen Series of shares. All consideration received by the Fund for
shares of one of the Series and all assets in which such consideration is
invested, will belong to that Series (subject only to the rights of
creditors of the Fund) and will be subject to the liabilities related
thereto. The income attributable to, and the expenses of, one Series
would be treated separately from those of the other Series. The Fund has
the ability to create, from time to time, new series without shareholder
approval.
The Transfer Agent maintains a record of your ownership and
sends you confirmations and statements of account.
Shareholder inquiries may be made by writing to the Fund at
144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144.
Page 58

APPENDIX
INVESTMENT TECHNIQUES
BORROWING MONEY -- Each Series is permitted to borrow to the extent
permitted under the 1940 Act, which permits an investment company to
borrow in an amount up to 331/3% of the value of its total assets. Each
Series currently intends to borrow money only for temporary or emergency
(not leveraging) purposes in an amount up to 15% of the value of its
total assets (including the amount borrowed) valued at the lesser of cost
or market, less liabilities (not including the amount borrowed) at the
time the borrowing is made. While borrowings exceed 5% of the value of a
Series' total assets, such Series will not make any additional
investments.
SHORT-SELLING -- Each Series may make short sales of securities. In
these transactions, a Series sells a security it does not own in
anticipation of a decline in the market value of that security. To
complete the transaction, the Series must borrow the security to make
delivery to the buyer. The Series is obligated to replace the security
borrowed by purchasing it at the market price at the time of replacement.
The price at such time may be more or less than the price at which the
security was sold by the Series, which would result in a loss or gain,
respectively.
Securities will not be sold short if, after effect is given
to any such short sale, the total market value of all securities sold
short would exceed 25% of the value of a Series' net assets. A Series may
not sell short the securities of any single issuer listed on a national
securities exchange to the extent of more than 5% of the value of such
Series' net assets. A Series may not make a short sale which results in
the Series having sold short in the aggregate more than 5% of the
outstanding securities of any class of an issuer.

Each Series also may make short sales "against the box," in
which the Series enters into a short sale of a security it owns in order
to hedge an unrealized gain on the security. At no time will a Series
have more than 15% of the value of its net assets in deposits on short
sales against the box.

USE OF DERIVATIVES -- Each Series may invest in the types of
Derivatives enumerated under "Description of the Fund -- Investment
Considerations and Risks -- Use of Derivatives." These instruments and
certain related risks are described more specifically under "Investment
Objective and Management Policies -- Management Policies -- Derivatives"
in the Statement of Additional Information.
Derivatives may entail investment exposures that are greater
than their cost would suggest, meaning that a small investment in
Derivatives could have a large potential impact on the Series'
performance.

If a Series invests in Derivatives at inappropriate times or
judges the market conditions incorrectly, such investments may lower the
Series' return or result in a loss. A Series also could experience losses
if its Derivatives were poorly correlated with its other investments, or
if the Series were unable to liquidate its position because of an
illiquid secondary market. The market for many Derivatives is, or
suddenly can become, illiquid. Changes in liquidity may result in
significant, rapid and unpredictable changes in the prices for
Derivatives.

Although neither the Fund nor any Series is a commodity pool,
Derivatives subject the Fund to the rules of the Commodity Futures
Trading Commission which limit the extent to which a Series can invest in
certain Derivatives. Each Series may invest in futures contracts and
options with respect thereto for hedging purposes without limit. However,
no Series may invest in such contracts and options for other purposes if
the sum of the amount of initial margin deposits and premiums paid for
unexpired options with respect to such contracts, other than bona fide
hedging purposes, exceeds 5% of the liquidation value of the Series'
assets, after taking into account unrealized profits
Page 59

and unrealized losses on such contracts and options; provided, however,
that in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation.
Each Series may invest up to 5% of its assets, represented by
the premium paid, in the purchase of call and put options. Each Series may
write (i.e., sell) covered call and put option contracts to the extent of
20% of the value of its net assets at the time such option contracts are
written. When required by the Securities and Exchange Commission, a Series
will set aside permissible liquid assets in a segregated account to cover
its obligations relating to its transactions in Derivatives. To maintain
this required cover, the Series may have to sell portfolio securities at
disadvantageous prices or times since it may not be possible to liquidate
a Derivative position at a reasonable price.
LENDING PORTFOLIO SECURITIES -- Each Series may lend securities from
its portfolio to brokers, dealers and other financial institutions
needing to borrow securities to complete certain transactions. The Series
continues to be entitled to payments in amounts equal to the interest or
other distributions payable on the loaned securities which affords the
Series an opportunity to earn interest on the amount of the loan and on
the loaned securities' collateral. Loans of portfolio securities may not
exceed 331/3 % of the value of such Series' total assets, and the Series
will receive collateral consisting of cash, U. S. Government securities
or irrevocable letters of credit which will be maintained at all times in
an amount equal to at least 100% of the current market value of the
loaned securities. Such loans are terminable at any time upon specified
notice. The Series might experience risk of loss if the institution with
which it has engaged in a portfolio loan transaction breaches its
agreement with the Series.
FORWARD COMMITMENTS -- Each Series may purchase Municipal Obligations
and other securities on a forward commitment or when-issued basis, which
means delivery and payment take place a number of days after the date of
the commitment to purchase. The payment obligation and the interest rate
receivable on a forward commitment or when-issued security are fixed when
the Fund enters into the commitment, but the Fund does not make payment
until it receives delivery from the counterparty. The Fund will commit to
purchase such securities only with the intention of actually acquiring
the securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. A segregated account of the
Fund consisting of permissible liquid assets at least equal at all times
to the amount of the commitments will be established and maintained at
the Fund's custodian bank.
CERTAIN PORTFOLIO SECURITIES
CERTAIN TAX EXEMPT OBLIGATIONS -- Each Series may purchase floating
and variable rate demand notes and bonds, which are tax exempt
obligations ordinarily having stated maturities in excess of one year,
but which permit the holder to demand payment of principal at any time or
at specified intervals. Variable rate demand notes include master demand
notes which are obligations that permit the Series to invest fluctuating
amounts at varying rates of interest, pursuant to direct arrangements
between the Series, as lender, and the borrower. These obligations permit
daily changes in the amount borrowed. Because these obligations are
direct lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and there
generally is no established secondary market for these obligations,
although they are redeemable at face value, plus accrued interest.
Accordingly, where these obligations are not secured by letters of credit
or other credit support arrangements, the Fund's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Each obligation purchased will meet the quality criteria
established for the purchase of Municipal Obligations.
Page 60

TAX EXEMPT PARTICIPATION INTERESTS -- Each Series may purchase from
financial institutions participation interests in Municipal Obligations
(such as industrial development bonds and municipal lease/purchase
agreements). A participation interest gives the Series an undivided
interest in the Municipal Obligation in the proportion that the Series'
participation interest bears to the total principal amount of the
Municipal Obligation. These instruments may have fixed, floating or
variable rates of interest. If the participation interest is unrated or
has been given a rating below that which otherwise is permissible for
purchase by the Series, it will be backed by an irrevocable letter of
credit or guarantee of a bank that the Series' Board has determined meets
prescribed quality standards for banks, or the payment obligation
otherwise will be collateralized by U.S. Government securities. For
certain participation interests, the Series will have the right to demand
payment, on not more than seven days' notice, for all or any part of the
Series' participation interest in the Municipal Obligation, plus accrued
interest. As to these instruments, each Series intends to exercise its
right to demand payment only upon a default under the terms of the
Municipal Obligation, as needed to provide liquidity to meet redemptions,
or to maintain or improve the quality of its investment portfolio.

TENDER OPTION BONDS -- Each Series may purchase tender option bonds. A
tender option bond is a Municipal Obligation (generally held pursuant to
a custodial arrangement) having a relatively long maturity and bearing
interest at a fixed rate substantially higher than prevailing short-term
tax exempt rates, that has been coupled with the agreement of a third
party, such as a bank, broker-dealer or other financial institution,
pursuant to which such institution grants the security holders the
option, at periodic intervals, to tender their securities to the
institution and receive the face value thereof. As consideration for
providing the option, the financial institution receives periodic fees
equal to the difference between the Municipal Obligation's fixed coupon
rate and the rate, as determined by a remarketing or similar agent at or
near the commencement of such period, that would cause the securities,
coupled with the tender option, to trade at par on the date of such
determination. Thus, after payment of this fee, the security holder
effectively holds a demand obligation that bears interest at the
prevailing short-term tax exempt rate. The Dreyfus Corporation, on behalf
of the Fund, will consider on an ongoing basis the creditworthiness of
the issuer of the underlying Municipal Obligations, of any custodian and
of the third party provider of the tender option. In certain instances
and for certain tender option bonds, the option may be terminable in the
event of a default in payment of principal or interest on the underlying
Municipal Obligations and for other reasons.

CUSTODIAL RECEIPTS -- Each Series may purchase custodial receipts
representing the right to receive certain future principal and interest
payments on Municipal Obligations which underlie the custodial receipts.
A number of different arrangements are possible. In a typical custodial
receipt arrangement, an issuer or a third party owner of Municipal
Obligations deposits such obligations with a custodian in exchange for
two classes of custodial receipts. The two classes have different
characteristics, but, in each case, payments on the two classes are based
on payments received on the underlying Municipal Obligations. One class
has the characteristics of a typical auction rate security, where at
specified intervals its interest rate is adjusted, and ownership changes,
based on an auction mechanism. This class's interest rate generally is
expected to be below the coupon rate of the underlying Municipal
Obligations and generally is at a level comparable to that of a Municipal
Obligation of similar quality and having a maturity equal to the period
between interest rate adjustments. The second class bears interest at a
rate that exceeds the interest rate typically borne by a security of
comparable quality and maturity; this rate also is adjusted, but in this
case
Page 61

inversely to changes in the rate of interest of the first class. In
no event will the aggregate interest paid with respect to the two classes
exceed the interest paid by the underlying Municipal Obligations. The
value of the second class and similar securities should be expected to
fluctuate more than the value of a Municipal Obligation of comparable
quality and maturity and their purchase by a Series should increase the
volatility of its net asset value and, thus, its price per share. These
custodial receipts are sold in private placements. Each Series also may
purchase directly from issuers, and not in a private placement, Municipal
Obligations having characteristics similar to custodial receipts. These
securities may be issued as part of a multi-class offering and the
interest rate on certain classes may be subject to a cap or floor.

STAND-BY COMMITMENTS -- The Fund may acquire "stand-by commitments"
with respect to Municipal Obligations held in its portfolio. Under a
stand-by commitment, the Fund obligates a broker, dealer or bank to
repurchase, at the Fund's option, specified securities at a specified
price and, in this respect, stand-by commitments are comparable to put
options. The exercise of a stand-by commitment, therefore, is subject to
the ability of the seller to make payment on demand. The Fund will
acquire stand-by commitments solely to facilitate portfolio liquidity and
does not intend to exercise its rights thereunder for trading purposes.
The Fund may pay for stand-by commitments if such action is deemed
necessary, thus increasing to a degree the cost of the underlying
Municipal Obligation and similarly decreasing such security's yield to
investors. Gains realized in connection with stand-by commitments will be
taxable. Each Series also may acquire call options on specific Municipal
Obligations. A Series generally would purchase these call options to
protect the Series from the issuer of the related Municipal Obligation
redeeming, or other holder of the call option from calling away, the
Municipal Obligation before maturity. The sale by the Series of a call
option that it owns on a specific Municipal Obligation could result in
the receipt of taxable income by the Series.
ZERO COUPON SECURITIES -- Each Series may invest in zero coupon
securities which are debt securities issued or sold at a discount from
their face value which do not entitle the holder to any periodic payment
of interest prior to maturity or a specified redemption date (or cash
payment date). The amount of the discount varies depending on the time
remaining until maturity or cash payment date, prevailing interest rates,
liquidity of the security and perceived credit quality of the issuer.
Zero coupon securities also may take the form of debt securities that
have been stripped of their unmatured interest coupons, the coupons
themselves and receipts or certificates representing interests in such
stripped debt obligations and coupons. The market prices of zero coupon
securities generally are more volatile than the market prices of
securities that pay interest periodically and are likely to respond to a
greater degree to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.
ILLIQUID SECURITIES -- Each Series may invest up to 15% of the value
of its net assets in securities as to which a liquid trading market does
not exist, provided such investments are consistent with the Fund's
investment objective. Such securities may include securities that are not
readily marketable, such as certain securities that are subject to legal
or contractual restrictions on resale, and repurchase agreements
providing for settlement in more than seven days after notice. As to
these securities, the Series is subject to a risk that should the Series
desire to sell them when a ready buyer is not available at a price the
Fund deems representative of their value, the value of the Series' net
assets could be adversely affected.
TAXABLE INVESTMENTS -- From time to time, on a temporary basis other
than for temporary defensive purposes (but not to exceed 20% of the value
of a Series' net assets) or for temporary defensive purposes, each Series
may invest in taxable short-term investments ("Taxable Investments")
consisting of: notes of issuers having, at the time of
Page 62

purchase, a quality rating within the two highest grades of Moody's, S&P
or Fitch; obligations of the U.S. Government, its agencies or
instrumentalities; commercial paper rated not lower than P-1 by Moody's,
A-1 by S&P or F-1 by Fitch; certificates of deposit of U.S. domestic
banks, including foreign branches of domestic banks, with assets of one
billion dollars or more; time deposits; bankers' acceptances and other
short-term bank obligations; and repurchase agreements in respect of any
of the foregoing. Dividends paid by a Series that are attributable to
income earned by the Series from Taxable Investments will be taxable to
investors. See "Dividends, Distributions and Taxes." Except for temporary
defensive purposes, at no time will more than 20% of the value of a
Series' net assets be invested in Taxable Investments. When a Series has
adopted a temporary defensive position, including when acceptable State
Municipal Obligations are unavailable for investment by a Series, in
excess of 35% of a Series' net assets may be invested in securities that
are not exempt from Federal and, where applicable, State personal income
taxes. Under normal market conditions, each Series anticipates that not
more than 5% of the value of its total assets will be invested in any one
category of Taxable Investments. Taxable Investments are more fully
described in the Statement of Additional Information, to which reference
hereby is made.
RATINGS -- Bonds rated Ba by Moody's are judged to have speculative
elements; their future cannot be considered as well assured and often the
protection of interest and principal payments may be very moderate. Bonds
rated BB by S&P are regarded as having predominantly speculative
characteristics and, while such obligations have less near-term
vulnerability to default than other speculative grade debt, they face
major ongoing uncertainties or exposure to adverse business, financial or
economic conditions which could lead to inadequate capacity to meet
timely interest and principal payments. Bonds rated BB by Fitch are
considered speculative and the payment of principal and interest may be
affected at any time by adverse economic changes. Bonds rated C by Moody's
are regarded as having extremely poor prospects of ever attaining any real
investment standing. Bonds rated D by S&P are in default and the payment
of interest and/or repayment of principal is in arrears. Bonds rated DDD,
DD or D by Fitch are in actual or imminent default, are extremely
speculative and should be valued on the basis of their ultimate recovery
value in liquidation or reorganization of the issuer; DDD represents the
highest potential for recovery of such bonds; and D represents the lowest
potential for recovery. Such bonds, though high yielding, are
characterized by great risk. See "Appendix B" in the Statement of
Additional Information for a general description of Moody's, S&P and
Fitch ratings of Municipal Obligations.
The ratings of Moody's, S&P and Fitch represent their
opinions as to the quality of the Municipal Obligations which they
undertake to rate. It should be emphasized, however, that ratings are
relative and subjective and, although ratings may be useful in evaluating
the safety of interest and principal payments, they do not evaluate the
market value risk of these bonds. Therefore, although these ratings may
be an initial criterion for selection of portfolio investments, The
Dreyfus Corporation also will evaluate these securities and the ability
of the issuers of such securities to pay interest and principal. The
Fund's ability to achieve its investment objective may be more dependent
on The Dreyfus Corporation's credit analysis than might be the case for a
series that invested in higher rated securities.
Page 63

The average distribution of investments (at value) in
Municipal Obligations by ratings for the fiscal year ended April 30,
1996, computed on a monthly basis, for each Series indicated was as
follows:
<TABLE>
<CAPTION>

OHIO PENNSYLVANIA
FITCH OR MOODY'S OR S & P SERIES SERIES
- ------------- ------------- -------------- ---------- ------------
<S> <C> <C> <C> <C>
AAA Aaa AAA 38.8% 43.1%
AA Aa AA 8.3 9.1
A A A 23.4 13.6
BBB Baa BBB 18.3 19.8
BB Ba BB 6.7 .8
F-1 MIG1/P-1 SP-1/A-1 1.0 1.8
Not Rated Not Rated Not Rated 3.5(1) 11.8(2)
-------- --------
100.0% 100.0%
======== ========
</TABLE>
(1) Included under the Not Rated category are securities
comprising 3.5% of the Ohio Series' market value which, while not rated,
have been determined by The Dreyfus Corporation to be of comparable
quality to securities in the following rating categories: Aaa/AAA (1.1%),
A/A (.3%), Baa/BBB (1.8%) and B (.3%).
(2) Included under the Not Rated category are securities
comprising 11.8% of the Pennsylvania Series' market value which, while
not rated, have been determined by The Dreyfus Corporation to be of
comparable quality to securities in the following rating categories:
Aaa/AAA (.9%), A/A (1.7%), Baa/BBB (4.0%), Ba/BB (3.1%) and B (2.1%).
The actual distribution of the Series' investments by ratings
on any given date will vary. In addition, the distribution of the Series'
investments by ratings as set forth above should not be considered as
representative of the Series' future portfolio composition.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS
AND IN THE SERIES' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER
OF THE SERIES' SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
SERIES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN
WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
PSTEBP121696
Page 64

PREMIER STATE MUNICIPAL BOND FUND
CLASS A AND CLASS B AND CLASS C SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)

DECEMBER 16, 1996

This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus
of Premier State Municipal Bond Fund (the "Fund"), dated December 16, 1996,
as it may be revised from time to time. To obtain a copy of the Fund's
Prospectus, please write to the Fund at 144 Glenn Curtiss Boulevard,
Uniondale, New York 11556-0144.

The Dreyfus Corporation (the "Manager") serves as the Fund's
investment adviser.

Premier Mutual Fund Services, Inc. (the "Distributor") is the
distributor of the Fund's shares.

TABLE OF CONTENTS
Page

Investment Objective and Management Policies . . . . . . . . .B-2
Management of the Fund . . . . . . . . . . . . . . . . . . . .B-13
Management Agreement . . . . . . . . . . . . . . . . . . . . .B-18
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . .B-20
Distribution Plan and Shareholder Services Plan. . . . . . . .B-23
Redemption of Shares . . . . . . . . . . . . . . . . . . . . .B-25
Shareholder Services . . . . . . . . . . . . . . . . . . . . .B-26
Determination of Net Asset Value . . . . . . . . . . . . . . .B-29
Dividends, Distributions and Taxes . . . . . . . . . . . . . .B-30
Portfolio Transactions . . . . . . . . . . . . . . . . . . . .B-31
Performance Information. . . . . . . . . . . . . . . . . . . .B-32
Information About the Fund . . . . . . . . . . . . . . . . . .B-39
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors. . . . . . . . . . . . .B-39
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . .B-41
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . .B-92
Financial Statements . . . . . . . . . . . . . . . . . . . . .B-101
Report of Independent Auditors . . . . . . . . . . . . . . . .B-112
Connecticut . . . . . . . B-112. . . . . Minnesota .B-181
Florida . . . . . . . . . B-124 . . . North CarolinaB-190
Georgia . . . . . . . . . B-134 . . . Ohio. . . . . .B-205
Maryland. . . . . . . . . B-146 . . . Pennsylvania. .B-219
Massachusetts . . . . . . B-156 . . . Texas . . . . .B-231
Michigan. . . . . . . . . B-169 . . . Virginia. . . .B-243

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

The following information supplements and should be read in
conjunction with the sections in the Fund's Prospectus entitled
"Description of the Fund" and "Appendix."

Portfolio Securities

Municipal Obligations. The average distribution of investments (at
value) in Municipal Obligations (including notes) by ratings for the fiscal
year ended April 30, 1996, computed on a monthly basis, for each Series
(other than the New Jersey Series which had not commenced operations) was
as follows:

Fitch Investors Moody's Investors Standard & Poor's
Service, L.P. Service, Inc. Ratings Group Connecticut Florida Georgia
("Fitch") or ("Moody's") or ("S&P") Series Series Series
<S> <C> <C> <C> <C> <C>

AAA Aaa AAA 32.4% 42.8% 43.3%
AA Aa AA 33.8 14.8 39.6
A A A 14.3 5.8 13.4
BBB Baa BBB 12.0 15.0 2.3
BB Ba BB - 4.1 .8
F-1 MIG 1/P-1 SP-1/A-1 .3 1.8 -
Not Rated Not Rated Not Rated 7.2 1 15.7 2 .6 3
100.0% 100.0% 100.0%

Maryland Massachusetts Michigan
Fitch or Moody's or S&P Series Series Series

AAA Aaa AAA 28.8% 44.6% 45.7%
AA Aa AA 38.5 9.1 18.9
A A A 21.0 27.6 14.9
BBB Baa BBB 3.9 10.2 10.8
BB Ba BB- - - -
F-1 MIG 1/P-1 SP-1/A-1 .5 .9 1.0
Not Rated Not Rated Not Rated 7.3 4 7.6 5 8.7 6
100.0% 100.0% 100.0%

North
Minnesota Carolina Ohio
Fitch or Moody's or S&P Series Series Series

AAA Aaa AAA 50.3% 31.4% 38.8%
AA Aa AA 21.3 22.7 8.3
A A A 13.3 30.4 23.4
BBB Baa BBB 10.3 13.8 18.3
BB Ba BB - - 6.7
F-1 MIG 1/P-1 SP-1/A-1 1.1 - 1.0
Not Rated Not Rated Not Rated 3.7 7 1.7 8 3.5 9
100.0% 100.0% 100.0%

Pennsylvania Texas Virginia
Fitch or Moody's or S&P Series Series Series

AAA Aaa AAA 43.1% 44.1% 32.4%
AA Aa AA 9.1 25.0 25.5
A A A 13.6 9.7 26.3
BBB Baa BBB 19.8 16.4 13.1
BB Ba BB .8 - -
F-1 MIG 1/P-1 SP-1/A-1 1.8 1.7 1.0
Not Rated Not Rated Not Rated 11.8 10 3.1 11 1.7 12
100.0% 100.0% 100.0%
___________________
1 Included in the Not Rated category are securities comprising 7.2% of
the Series' market value which, while not rated, have been determined by
the Manager to be of comparable quality to securities in the following
rating categories: Aaa/AAA (.3%), Baa/BBB (6.7%) and Ba/BB (.2%).
2 Included in the Not Rated category are securities comprising 15.7% of
the Series' market value which, while not rated, have been determined by
the Manager to be of comparable quality to securities in the following
rating categories: A/A (.3%) and Baa/BBB (15.4%).
3 Included in the Not Rated category are securities comprising .6% of
the Series' market value which, while not rated, have been determined by
the Manager to be of comparable quality to securities in the following
rating categories: F-1/MIG 1, P-1/SP-1, A-1 (.6%)
4 Included in the Not Rated category are securities comprising 7.3% of
the Series' market value which, while not rated, have been determined by
the Manager to be of comparable quality to securities in the following
rating categories: Baa/BBB (6.3%), B (.8%) and F-1/MIG1, P-1/SP-1, A-1
(.2%).
5 Included in the Not Rated category are securities comprising 7.6% of
the Series' market value which, while not rated, have been determined by
the Manager to be of comparable quality to securities in the following
rating categories: A/A (.9%) and Baa/BBB (6.7%).
6 Included in the Not Rated category are securities comprising 8.7% of
the Series' market value which, while not rated, have been determined by
the Manager to be of comparable quality to securities in the following
rating categories: Aaa/AAA (2.8%), A/A (.9%), Baa/BBB (3.5%) and Ba/BB
(1.5%).
7 Included in the Not Rated category are securities comprising 3.7% of
the Series' market value which, while not rated, have been determined by
the Manager to be of comparable quality to securities in the following
rating categories: Aaa/AAA (.3%), Aa/AA (.1%) and Baa/BBB (3.3%).
8 Included in the Not Rated category are securities comprising 1.7% of
the Series' market value which, while not rated, have been determined by
the Manager to be of comparable quality to securities in the following
rating categories: BBB (1.7%).
9 Included in the Not Rated category are securities comprising 3.5% of
the Ohio Series' market value which, while not rated, have been determined
by the Manager to be of comparable quality to securities in the following
rating categories: Aaa/AAA (1.1%), A/A (.3%), Baa/BBB (1.8%) and B (.3%).
10 Included in the Not Rated category are securities comprising 11.8% of
the Pennsylvania Series' market value which, while not rated, have been
determined by the Manager to be of comparable quality to securities in the
following rating categories: Aaa/AAA (.9%), A/A (1.7%), Baa/BBB (4.0%),
Ba/BB (3.1%) and B (2.1%).
11 Included in the Not Rated category are securities comprising 3.1% of
the Series' market value which, while not rated, have been determined by
the Manager to be of comparable quality to securities in the following
rating categories: Aaa/AAA (.7%) and Baa/BBB (2.4%).
12 Included in the Not Rated category are securities comprising 1.7% of
the Series' market value which, while not rated, have been determined by
the Manager to be of comparable quality to securities in the following
rating categories: Baa/BBB (1.7%).
</TABLE>

The term "Municipal Obligations" generally includes debt obligations
issued to obtain funds for various public purposes, including the
construction of a wide range of public facilities such as airports,
bridges, highways, housing, hospitals, mass transportation, schools,
streets and water and sewer works. Other public purposes for which
Municipal Obligations may be issued include refunding outstanding
obligations, obtaining funds for general operating expenses and lending
such funds to other public institutions and facilities. In addition,
certain types of industrial development bonds are issued by or on behalf of
public authorities to obtain funds to provide for the construction,
equipment, repair or improvement of privately operated housing facilities,
sports facilities, convention or trade show facilities, airport, mass
transit, industrial, port or parking facilities, air or water pollution
control facilities and certain local facilities for water supply, gas,
electricity, or sewage or solid waste disposal; the interest paid on such
obligations may be exempt from Federal income tax, although current tax
laws place substantial limitations on the size of such issues. Such
obligations are considered to be Municipal Obligations if the interest paid
thereon qualifies as exempt from Federal income tax in the opinion of bond
counsel to the issuer. There are, of course, variations in the security of
Municipal Obligations, both within a particular classification and between
classifications.

Floating and variable rate demand obligations are tax exempt
obligations ordinarily having stated maturities in excess of one year, but
which permit the holder to demand payment of principal at any time, or at
specified intervals. The issuer of such obligations ordinarily has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon
a specified number of days' notice to the holders thereof. The interest
rate on a floating rate demand obligation is based on a known lending rate,
such as a bank's prime rate, and is adjusted automatically each time such
rate is adjusted. The interest rate on a variable rate demand obligation
is adjusted automatically at specified intervals.

The yields on Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a
particular offering, maturity of the obligation, and rating of the issue.
The imposition of the Fund's management fee, as well as other operating
expenses, including fees paid under the Fund's Shareholder Services Plan
and, with respect to Class B and Class C shares only, Distribution Plan,
will have the effect of reducing the yield to investors.

Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease
obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation
ordinarily is backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such
purpose on a yearly basis. Although "non-appropriation" lease obligations
are secured by the leased property, disposition of the property in the
event of foreclosure might prove difficult. The staff of the Securities
and Exchange Commission currently considers certain lease obligations to be
illiquid. Determination as to the liquidity of such securities is made in
accordance with guidelines established by the Fund's Board. Pursuant to
such guidelines, the Board has directed the Manager to monitor carefully
each Series' investment in such securities with particular regard to (1)
the frequency of trades and quotes for the lease obligation; (2) the number
of dealers willing to purchase or sell the lease obligation and the number
of other potential buyers; (3) the willingness of dealers to undertake to
make a market in the lease obligation; (4) the nature of the marketplace
trades including the time needed to dispose of the lease obligation, the
method of soliciting offers and the mechanics of transfer; and
(5) such other factors concerning the trading market for the lease
obligation as the Manager may deem relevant. In addition, in evaluating
the liquidity and credit quality of a lease obligation that is unrated, the
Fund's Board has directed the Manager to consider (a) whether the lease can
be cancelled; (b) what assurance there is that the assets represented by
the lease can be sold; (c) the strength of the lessee's general credit
(e.g., its debt, administrative, economic, and financial characteristics);
(d) the likelihood that the municipality will discontinue appropriating
funding for the leased property because the property is no longer deemed
essential to the operations of the municipality (e.g., the potential for an
"event of nonappropriation"); (e) the legal recourse in the event of
failure to appropriate; and (f) such other factors concerning credit
quality as the Manager may deem relevant. No Series will invest more than
15% of the value of its net assets in lease obligations that are illiquid
and in other illiquid securities. See "Investment Restriction No. 6"
below.

A Series will purchase tender option bonds only when the Fund is
satisfied that the custodial and tender option arrangements, including the
fee payment arrangements, will not adversely affect the tax exempt status
of the underlying Municipal Obligations and that payment of any tender fees
will not have the effect of creating taxable income for the Series. Based
on the tender option bond agreement, the Fund expects to be able to value
the tender option bond at par; however, the value of the instrument will be
monitored to assure that it is valued at fair value.

Ratings of Municipal Obligations. Subsequent to its purchase by the
Fund, an issue of rated Municipal Obligations may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require the sale of such Municipal Obligations by the
Fund, but the Manager will consider such event in determining whether the
Fund should continue to hold the Municipal Obligations. To the extent that
the ratings given by Moody's, S&P or Fitch for Municipal Obligations may
change as a result of changes in such organizations or their rating
systems, the Fund will attempt to use comparable ratings as standards for
its investments in accordance with the investment policies contained in the
Fund's Prospectus and this Statement of Additional Information. The
ratings of Moody's, S&P and Fitch represent their opinions as to the
quality of the Municipal Obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective and
are not absolute standards of quality. Although these ratings may be an
initial criterion for selection of portfolio investments, the Manager also
will evaluate these securities.

Illiquid Securities. Where a substantial market of qualified
institutional buyers develops for certain restricted securities purchased
by the Fund pursuant to Rule 144A under the Securities Act of 1933, as
amended, the Fund intends to treat such securities as liquid securities in
accordance with procedures approved by the Fund's Board. Because it is not
possible to predict with assurance how the market for restricted securities
pursuant to Rule 144A will develop, the Fund's Board has directed the
Manager to monitor carefully the Fund's investments in such securities with
particular regard to trading activity, availability of reliable price
information and other relevant information. To the extent that, for a
period of time, qualified institutional buyers cease purchasing restricted
securities pursuant to Rule 144A, the Fund's investing in such securities
may have the effect of increasing the level of illiquidity in its portfolio
during such period.

Taxable Investments. Securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities are supported by the full faith and credit
of the U.S. Treasury; others by the right of the issuer to borrow from the
U.S. Treasury; others by discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality; and others
only by the credit of the agency or instrumentality. These securities bear
fixed, floating or variable rates of interest. While the U.S. Government
provides financial support to such U.S. Government-sponsored agencies or
instrumentalities, no assurance can be given that it will always do so,
since it is not so obligated by law.

Commercial paper consists of short-term, unsecured promissory notes
issued to finance short-term credit needs.

Certificates of deposit are negotiable certificates representing the
obligation of a bank to repay funds deposited with it for a specified
period of time.

Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven
days) at a stated interest rate. Investments in time deposits generally
are limited to London branches of domestic banks that have total assets in
excess of one billion dollars. Time deposits which may be held by the Fund
will not benefit from insurance from the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the Federal Deposit Insurance
Corporation.

Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments
reflect the obligation both of the bank and of the drawer to pay the face
amount of the instrument upon maturity. Other short-term bank obligations
may include uninsured, direct obligations bearing fixed, floating or
variable interest rates.

In a repurchase agreement, the Fund buys and the seller agrees to
repurchase a security at a mutually agreed upon time and price (usually
within seven days). The repurchase agreement thereby determines the yield
during the purchaser's holding period, while the seller's obligation to
repurchase is secured by the value of the underlying security. The Fund's
custodian or sub-custodian will have custody of, and will hold in a
segregated account, securities acquired by the Series under a repurchase
agreement. Repurchase agreements are considered by the staff of the
Securities and Exchange Commission to be loans by the Series. In an
attempt to reduce the risk of incurring a loss on a repurchase agreement,
each Series will enter into repurchase agreements only with domestic banks
with total assets in excess of $1 billion, or primary government securities
dealers reporting to the Federal Reserve Bank of New York, with respect to
securities of the type in which such Series may invest, and will require
that additional securities be deposited with it if the value of the
securities purchased should decrease below resale price. Repurchase
agreements could involve risks in the event of a default or insolvency of
the other party to the agreement, including possible delays or restrictions
upon the Fund's ability to dispose of the underlying securities.

Management Policies

Short-Selling. Until the Fund closes its short position or replaces
the borrowed security, it will (a) maintain a segregated account,
containing permissible liquid assets, at such a level that the amount
deposited in the account plus the amount deposited with the broker as
collateral always equals the current value of the securities sold short; or
(b) otherwise cover its short position.

Lending Portfolio Securities. In connection with its securities
lending transactions, each Series may return to the borrower or a third
party which is unaffiliated with the Fund, and which is acting as a
"placing broker," a part of the interest earned from the investment of
collateral received for securities loaned.

The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned:
(1) the Series must receive at least 100% cash collateral from the
borrower; (2) the borrower must increase such collateral whenever the
market value of the securities rises above the level of such collateral;
(3) the Series must be able to terminate the loan at any time; (4) the
Series must receive reasonable interest on the loan, as well as any
interest or other distributions payable on the loaned securities, and any
increase in market value; and (5) the Series may pay only reasonable
custodian fees in connection with the loan.

Derivatives. Each Series may invest in Derivatives (as defined in the
Fund's Prospectus) for a variety of reasons, including to hedge certain
market risks, to provide a substitute for purchasing or selling particular
securities or to increase potential income gain. Derivatives may provide a
cheaper, quicker or more specifically focused way for the Series to invest
than "traditional" securities would.

Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and
the portfolio as a whole. Derivatives permit the Series to increase or
decrease the level of risk, or change the character of the risk, to which
its portfolio is exposed in much the same way as the Series can increase or
decrease the level of risk, or change the character of the risk, of its
portfolio by making investments in specific securities.

Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter
Derivatives. Exchange-traded Derivatives generally are guaranteed by the
clearing agency which is the issuer or counterparty to such Derivatives.
This guarantee usually is supported by a daily payment system (i.e.,
variation margin requirements) operated by the clearing agency in order to
reduce overall credit risk. As a result, unless the clearing agency
defaults, there is relatively little counterparty credit risk associated
with Derivatives purchased on an exchange. By contrast, no clearing agency
guarantees over-the-counter Derivatives. Therefore, each party to an over-
the-counter Derivative bears the risk that the counterparty will default.
Accordingly, the Manager will consider the creditworthiness of
counterparties to over-the-counter Derivatives in the same manner as it
would review the credit quality of a security to be purchased by the
Series. Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only
investor with sufficient understanding of the Derivative to be interested
in bidding for it.

Futures Transactions--In General. Each Series may enter into futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade.
Engaging in these transactions involves risk of loss to the Series which
could adversely affect the value of the Fund's net assets. Although the
Series intends to purchase or sell futures contracts only if there is an
active market for such contracts, no assurance can be given that a liquid
market will exist for any particular contract at any particular time. Many
futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the
daily limit has been reached in a particular contract, no trades may be
made that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could
move to the limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
potentially subjecting the Series to substantial losses.

Successful use of futures by each Series also is subject to the
Manager's ability to predict correctly movements in the direction of the
relevant market, and, to the extent the transaction is entered into for
hedging purposes, to ascertain the appropriate correlation between the
transaction being hedged and the price movements of the futures contract.
For example, if the Series uses futures to hedge against the possibility of
a decline in the market value of securities held in its portfolio and the
prices of such securities instead increase, the Series will lose part or
all of the benefit of the increased value of securities which it has hedged
because it will have offsetting losses in its futures positions.
Furthermore, if in such circumstances the Series has insufficient cash, it
may have to sell securities to meet daily variation margin requirements.
The Series may have to sell such securities at a time when it may be
disadvantageous to do so.

Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, the Series may be required to segregate
permissible liquid assets in connection with its commodities transactions
in an amount generally equal to the value of the underlying commodity. The
segregation of such assets will have the effect of limiting the Series'
ability otherwise to invest those assets.

Specific Futures Transactions. Each Series may purchase and sell interest
rate futures contracts. An interest rate future obligates the Series to
purchase or sell an amount of a specific debt security at a future date at
a specific price.

Options--In General. Each Series may purchase and write (i.e., sell) call
or put options with respect to interest rate futures contracts. A call
option gives the purchaser of the option the right to buy, and obligates
the writer to sell, the underlying security or securities at the exercise
price at any time during the option period, or at a specific date.
Conversely, a put option gives the purchaser of the option the right to
sell, and obligates the writer to buy, the underlying security or
securities at the exercise price at any time during the option period, or
at a specific date.

A covered call option written by the Fund is a call option with
respect to which the Fund owns the underlying security or otherwise covers
the transaction by segregating cash or other securities. A put option
written by the Fund is covered when, among other things, cash or liquid
securities having a value equal to or greater than the exercise price of
the option are placed in a segregated account with the Fund's custodian to
fulfill the obligation undertaken. The principal reason for writing
covered call and put options is to realize, through the receipt of
premiums, a greater return than would be realized on the underlying
securities alone. The Fund receives a premium from writing covered call or
put options which it retains whether or not the option is exercised.

There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any
particular option or at any particular time, and for some options no such
secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher
than anticipated trading activity or order flow, or other unforeseen
events, at times have rendered certain of the clearing facilities
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading halts
or suspensions in one or more options. There can be no assurance that
similar events, or events that may otherwise interfere with the timely
execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If,
as a covered call option writer, the Fund is unable to effect a closing
purchase transaction in the secondary market, it will not be able to sell
the underlying security until the option expires or it delivers the
underlying security upon exercise or it otherwise covers its position.

Successful use by the Fund of options will be subject to the Manager's
ability to predict correctly movements in interest rates. To the extent
the Manager's predictions are incorrect, the Fund may incur losses.

Futures Developments. Each Series may take advantage of opportunities
in the area of options and futures contracts and options on futures
contracts and any other Derivatives which are not presently contemplated
for use by the Series or which are not currently available but which may be
developed, to the extent such opportunities are both consistent with the
Fund's investment objective and legally permissible for the Series. Before
entering into such transactions or making any such investment, the Fund
will provide appropriate disclosure in its Prospectus or Statement of
Additional Information.

Forward Commitments. Municipal Obligations and other securities
purchased on a forward commitment or when-issued basis are subject to
changes in value (generally changing in the same way, i.e., appreciating
when interest rates decline and depreciating when interest rates rise)
based upon the public's perception of the creditworthiness of the issuer
and changes, real or anticipated, in the level of interest rates.
Securities purchased on a forward commitment or when-issued basis may
expose the Series to risks because they may experience such fluctuations
prior to their actual delivery. Purchasing securities on a when-issued
basis can involve the additional risk that the yield available in the
market when the delivery takes place actually may be higher than that
obtained in the transaction itself. Purchasing securities on a forward
commitment or when-issued basis when a Series is fully or almost fully
invested may result in greater potential fluctuation in the value of such
Series' net assets and its net asset value per share.

Investment Considerations and Risks

Lower Rated Bonds. Each Series is permitted to invest in securities
rated Ba or lower by Moody's or BB or lower by S&P or Fitch and as low as
the lowest rating assigned by Moody's, S&P or Fitch. Such bonds, though
higher yielding, are characterized by risk. See "Description of the Fund--
Investment Considerations and Risks--Lower Rated Bonds" in the Prospectus
for a discussion of certain risks and "Appendix B" in this Statement of
Additional Information for a general description of Moody's, S&P and Fitch
ratings of Municipal Obligations. Although ratings may be useful in
evaluating the safety of interest and principal payments, they do not
evaluate the market value risk of these bonds. The Fund will rely on the
Manager's judgment, analysis and experience in evaluating the
creditworthiness of an issuer.

Investors should be aware that the market values of many of these
bonds tend to be more sensitive to economic conditions than are higher
rated securities. These bonds generally are considered by S&P, Moody's and
Fitch to be predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation
and generally will involve more credit risk than securities in the higher
rating categories.

Because there is no established retail secondary market for many of
these securities, the Fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these bonds does exist, it generally
is not as liquid as the secondary market for higher rated securities. The
lack of a liquid secondary market may have an adverse impact on market
price and yield and the Fund's ability to dispose of particular issues when
necessary to meet the Series' liquidity needs or in response to a specific
economic event such as a deterioration in the creditworthiness of the
issuer. The lack of a liquid secondary market for certain securities also
may make it more difficult for the Fund to obtain accurate market
quotations for purposes of valuing a Series' portfolio and calculating such
Series' net asset value. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the values and
liquidity of these securities. In such cases, judgment may play a greater
role in valuation because less reliable objective data may be available.

These bonds may be particularly susceptible to economic downturns. It
is likely that any economic recession could disrupt severely the market for
such securities and may have an adverse impact on the value of such
securities. In addition, it is likely that any such economic downturn
could adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon and increase the incidence of
default for such securities.

The Fund may acquire these bonds during any initial offering. Such
securities may involve special risks because they are new issues. The Fund
has no arrangement with any persons concerning the acquisition of such
securities, and the Manager will review carefully the credit and other
characteristics pertinent to such new issues.

The credit risk factors pertaining to lower rated securities also
apply to lower rated zero coupon bonds and pay-in-kind bonds in which each
Series may invest up to 5% of its net assets. Zero coupon securities and
pay-in-kind or delayed interest bonds carry an additional risk in that,
unlike bonds which pay interest throughout the period to maturity, the
Series will realize no cash until the cash payment date unless a portion of
such securities are sold and, if the issuer defaults, the Series may obtain
no return at all on its investment. See "Dividends, Distributions and
Taxes."

Investing in State Municipal Obligations. Investors should review the
information in "Appendix A," which provides a brief summary of special
investment considerations and risk factors relating to investing in State
Municipal Obligations.

Investment Restrictions

The Fund has adopted the following investment restrictions (except as
otherwise noted) as fundamental policies which will apply to each Series.
These restrictions cannot be changed as to a Series without approval by the
holders of a majority (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of such Series' outstanding voting shares.
Investment restrictions numbered 3 and 6 are not fundamental policies and
may be changed as to a Series by a vote of a majority of the Fund's Board
members at any time. No Series may:

1. Purchase securities other than Municipal Obligations and Taxable
Investments as those terms are defined above and in the Prospectus and
those arising out of transactions in futures and options.

2. Borrow money, except to the extent permitted under the 1940 Act
(which currently limits borrowing to no more than 33-1/3% of the value of
the Series' total assets). Transactions in futures and options and the
entry into short sales transactions do not involve any borrowing for
purposes of this restriction.

3. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to the extent necessary to secure permitted borrowings. The deposit
of assets in escrow in connection with the writing of covered put and call
options and the purchase of securities on a when-issued or delayed-delivery
basis and collateral arrangements with respect to initial or variation
margin for futures contracts and options on futures contracts or indices
will not be deemed to be pledges of assets.

4. Purchase securities on margin, but may make margin deposits in
connection with transactions in futures, including those related to
indices, and options on futures or indices.

5. Underwrite the securities of other issuers, except that the
Series may bid separately or as part of a group for the purchase of
Municipal Obligations directly from an issuer for its own portfolio to take
advantage of the lower purchase price available, and except to the extent
the Series may be deemed an underwriter under the Securities Act of 1933,
as amended, by virtue of disposing of portfolio securities.

6. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid
(which securities could include participation interests that are not
subject to the demand feature described in the Fund's Prospectus and
floating and variable rate demand obligations as to which the Fund cannot
exercise the demand feature described in the Fund's Prospectus on not more
than seven days' notice if there is no secondary market), if, in the
aggregate, more than 15% of the value of the Series' net assets would be so
invested.

7. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
but this shall not prevent the Fund from investing in Municipal Obligations
secured by real estate or interests therein, or prevent the Fund from
purchasing and selling futures contracts, including those related to
indices, and options on futures contracts or indices.

8. Make loans to others except through the purchase of qualified
debt obligations and the entry into repurchase agreements referred to above
and in the Fund's Prospectus; however, the Fund may lend each Series'
portfolio securities in an amount not to exceed
33-1/3% of the value of the Series' total assets. Any loans of portfolio
securities will be made according to guidelines established by the
Securities and Exchange Commission and the Fund's Board.

9. Invest more than 25% of its total assets in the securities of
issuers in any single industry; provided that there shall be no such
limitation on the purchase of Municipal Obligations and, for temporary
defensive purposes, obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.

10. Invest in companies for the purpose of exercising control.

11. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or acquisition of
assets.

For purposes of Investment Restriction No. 9, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together
as an "industry."

If a percentage restriction is adhered to at the time of investment, a
later increase in percentage resulting from a change in values or assets
will not constitute a violation of such restriction.

The Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Series shares in certain states.
Should the Fund determine that a commitment is no longer in the best
interests of a Series and its shareholders, the Fund reserves the right to
revoke the commitment by terminating the sale of such Series in the state
involved.

In addition, although not fundamental policies, the Pennsylvania
Series may vary its portfolio investments only to (i) eliminate unsafe
investments and investments not consistent with the preservation of capital
or the tax status of investments of the Pennsylvania Series; (ii) honor
redemption orders, meet anticipated redemption requirements and negate
gains from discount purchases; (iii) reinvest the earnings from securities
in like securities; or (iv) defray ordinarily administrative expenses.

While not a fundamental policy, the Texas Series will not invest in
real estate limited partnerships.

MANAGEMENT OF THE FUND

Board members of the Fund, together with information as to their
principal business occupations during at least the last five years, are
shown below. Each Board member who is deemed to be an "interested person"
of the Fund (as defined in the 1940 Act) is indicated by an asterisk.

Board Members of the Fund

CLIFFORD L. ALEXANDER, JR., Board Member. President of Alexander &
Associates, Inc., a management consulting firm. From 1977 to 1981,
Mr. Alexander served as Secretary of the Army and Chairman of the
Board of the Panama Canal Company, and from 1975 to 1977, he was a
member of the Washington, D.C. law firm of Verner, Liipfert, Bernhard,
McPherson and Alexander. He is a director of American Home Products
Corporation, The Dun & Bradstreet Corporation, MCI Communications
Corporation, Mutual of America Life Insurance Company and TLC Beatrice
International Holdings, Inc. He is 63 years old and his address is
400 C Street, N.E., Washington, D.C. 20002.

PEGGY C. DAVIS, Board Member. Shad Professor of Law, New York University
School of Law. Professor Davis has been a member of the New York
University law faculty since 1983. Prior to that time, she served for
three years as a judge in the courts of New York State; was engaged
for eight years in the practice of law, working in both corporate and
non-profit sectors; and served for two years as a criminal justice
administrator in the government of the City of New York. She writes
and teaches in the fields of evidence, constitutional theory, family
law, social sciences and the law, legal process and professional
methodology and training. She is 53 years old and her address is c/o
New York University School of Law, 249 Sullivan Street, New York, New
York 10012.

*JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman
of the Board for various funds in the Dreyfus Family of Funds. He is
Chairman of the Board of Noel Group, Inc., a venture capital company;
and a director of the Muscular Dystrophy Association, HealthPlan
Services Corporation, Belding Heminway, Inc., a manufacturer and
marketer of industrial threads, specialty yarns, home furnishings and
fabrics, Curtis Industries, Inc., a nationwide distributor of security
products, chemicals and automotive and other hardware, and Staffing
Resources, Inc. For more than five years prior to January 1995, he
was President, a director and, until August 1994, Chief Operating
Officer of the Manager and Executive Vice President and a director of
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
and until August 1994, the Fund's distributor. From August 1994 to
December 31, 1994, he was a director of Mellon Bank Corporation. He
is 52 years old and his address is 200 Park Avenue, New York, New York
10166.

ERNEST KAFKA, Board Member. A physician engaged in private practice
specializing in the psychoanalysis of adults and adolescents. Since
1981, he has served as an Instructor at the New York Psychoanalytic
Institute and, prior thereto, held other teaching positions. He is
Associate Clinical Professor of Psychiatry at Cornell Medical School.
For more than the past five years, Dr. Kafka has held numerous
administrative positions and has published many articles on subjects
in the field of psychoanalysis. He is 63 years old and his address is
23 East 92nd Street, New York, New York 10128.

SAUL B. KLAMAN, Board Member. Chairman and Chief Executive Officer of SBK
Associates, which provides research and consulting services to
financial institutions. Dr. Klaman was President of the National
Association of Mutual Savings Banks until November 1983, President of
the National Council of Savings Institutions until June 1985, Vice
Chairman of Golembe Associates and BEI Golembe, Inc. until 1989 and
Chairman Emeritus of BEI Golembe, Inc. until November 1992. He also
served as an Economist to the Board of Governors of the Federal
Reserve System and on several Presidential Commissions, and has held
numerous consulting and advisory positions in the fields of economics
and housing finance. He is 76 years old and his address is 431-B
Dedham Street, The Gables, Newton Center, Massachusetts 02159.

NATHAN LEVENTHAL, Board Member. President of Lincoln Center for the
Performing Arts, Inc. Mr. Leventhal was Deputy Mayor for Operations
of New York City from September 1979 to March 1984 and Commissioner of
the Department of Housing Preservation and Development of New York
City from February 1978 to September 1979. Mr. Leventhal was an
associate and then a member of the New York law firm of Poletti
Freidin Prashker Feldman and Gartner from 1974 to 1978. He was
Commissioner of Rent and Housing Maintenance for New York City from
1972 to 1973. Mr. Leventhal also serves as Chairman of Citizens
Union, an organization which strives to reform and modernize City and
State government. He is 53 years old and his address is 70 Lincoln
Center Plaza, New York, New York 10023-6583.

For so long as the Fund's plans described in the section captioned
"Distribution Plan and Shareholder Services Plan" remain in effect, the
Board members of the Fund who are not "interested persons" of the Fund, as
defined in the 1940 Act, will be selected and nominated by the Board
members who are not "interested persons" of the Fund.

Ordinarily meetings of shareholders for the purpose of electing Board
members will not be held unless and until such time as less than a majority
of the Board members holding office have been elected by shareholders at
which time the Board members then in office will call a shareholders'
meeting for the election of Board members. Under the 1940 Act,
shareholders of record of not less than two-thirds of the outstanding
shares of the Fund may remove a Board member through a declaration in
writing or by vote cast in person or by proxy at a meeting called for that
purpose. The Board members are required to call a meeting of shareholders
for the purpose of voting upon the question of removal of any such Board
member when requested in writing to do so by the shareholders of record of
not less than 10% of the Fund's outstanding shares.

The Fund typically pays its Board members an annual retainer and a per
meeting fee and reimburses them for their expenses. The Chairman of the
Board receives an additional 25% of such compensation. Emeritus Board
members are entitled to receive an annual retainer and a per meeting fee of
one-half the amount paid to them as Board members. The aggregate amount of
compensation paid to each Board member by the Fund for the fiscal year
ended April 30, 1996, and, by all other funds in the Dreyfus Family of
Funds for which such person is a Board member (the number of which is set
forth in parenthesis next to each Board member's total compensation) for
the year ended December 31, 1995, were as follows:

Total
Compensation from
Aggregate Fund and Fund
Name of Board Compensation from Complex Paid to
Member Fund* Board Member

Clifford L. Alexander, Jr. $3,750 $ 94,386 (17)

Peggy C. Davis $3,750 $ 81,636 (15)

Joseph S. DiMartino $4,688 $448,618 (94)

Ernest Kafka $3,750 $ 81,136 (15)

Saul B. Klaman $3,750 $ 81,886 (15)

Nathan Leventhal $3,750 $ 81,636 (15)

* Amount does not include reimbursed expenses for attending
Board meetings, which amounted to $9,329 for all Board
members as a group.

Officers of the Fund

MARIE E. CONNOLLY, President and Treasurer. President, Chief Executive
Officer and a director of the Distributor and an officer of other
investment companies advised or administered by the Manager. From
December 1991 to July 1994, she was President and Chief Compliance
Officer of Funds Distributor, Inc., the ultimate parent of which is
Boston Institutional Group, Inc. She is 38 years old.

JOHN E. PELLETIER, Vice President and Secretary. Senior Vice President and
General Counsel of the Distributor and an officer of other investment
companies advised or administered by the Manager. From February 1992
to July 1994, he served as Counsel for The Boston Company Advisors,
Inc. From August 1990 to February 1992, he was employed as an
Associate at Ropes & Gray. He is 32 years old.

MARY A. NELSON, Vice President and Assistant Treasurer. Vice President and
Manager of Treasury Services and Administration of Funds Distributor,
Inc. and an officer of other investment companies advised or
administered by the Manager. From September 1989 to July 1994, she
was an Assistant Vice President and Client Manager for The Boston
Company, Inc. She is 32 years old.

JOSEPH F. TOWER, III, Vice President and Assistant Treasurer. Senior Vice
President, Treasurer and Chief Financial Officer of the Distributor
and an officer of other investment companies advised or administered
by the Manager. From July 1988 to August 1994, he was employed by The
Boston Company, Inc. where he held various management positions in the
Corporate Finance and Treasury areas. He is 34 years old.

ELIZABETH BACHMAN, Vice President and Assistant Secretary. Assistant Vice
President of the Distributor and an officer of other investment
companies advised or administered by the Manager. She is 27 years
old.

DOUGLAS C. CONROY, Vice President and Assistant Secretary. Supervisor of
Treasury Services and Administration of Funds Distributor, Inc. and an
officer of other investment companies advised or administered by the
Manager. From April 1993 to January 1995, he was a Senior Fund
Accountant for Investors Bank & Trust Company. From December 1991 to
March 1993, he was employed as a Fund Accountant at The Boston
Company, Inc. He is 27 years old.

RICHARD W. INGRAM, Vice President and Assistant Secretary. Senior Vice
President and Director of Client Services and Treasury Operations of
Funds Distributor, Inc. and an officer of other investment companies
advised or administered by the Manager. From March 1994 to November
1995, he was Vice President and Division Manager for First Data
Investor Services Group. From 1989 to 1994, Mr. Ingram was Vice
President, Assistant Treasurer and Tax Director - Mutual Funds of The
Boston Company, Inc. He is 40 years old.

MARK A. KARPE, Vice President and Assistant Secretary. Senior Paralegal of
the Distributor. From August 1993 to May 1996, he attended Hofstra
University School of Law. Previously, he was employed as an Associate
Examiner at the National Association of Securities Dealers, Inc. He
is 27 years old.

The address of all officers of the Fund is 200 Park Avenue, New York,
New York 10166.

The Fund's Board members and officers, as a group, owned less than 1%
of the Fund's shares of beneficial interest outstanding on December 10,
1996.

As of December 10, 1996, the following persons owned 5% or more of the
outstanding shares of beneficial interest of the Fund; Class A: Connecticut
Series - Merrill Lynch Pierce Fenner & Smith, Inc., Jacksonville, FL -
8.7%; Florida Series - Merrill Lynch Pierce Fenner & Smith, Inc.,
Jacksonville, FL - 5.3%; Georgia Series - BHC Securities, Philadelphia, PA
- - 13.9%; Alicia B. Nichols - 5.3%; Maryland Series - Stephens Inc., Little
Rock, AR - 5.7%; Michigan Series - Merrill Lynch Pierce Fenner & Smith,
Inc., Jacksonville FL - 7.9%; North Carolina Series - Merrill Lynch Pierce
Fenner & Smith, Jacksonville, FL - 6.5%; Ohio Series - BHC Securities,
Philadelphia, PA - 6.3%; Pennsylvania Series - Mary Alice Morrissey &
James D. Morrissey, Huntingdon Valley, PA - 5.5%; Virginia Series - Merrill
Lynch Pierce Fenner & Smith, Jacksonville, FL - 5.9%. Class B: Connecticut
Series - Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL - 7.0%;
Florida Series - Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL -
8.6%; Georgia Series - Merrill Lynch Pierce Fenner & Smith, Jacksonville,
FL - 16.3%; Maryland Series - Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL - 6.1%; Michigan Series - Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL - 9.7%; Virginia Series - Merrill Lynch Pierce
Fenner & Smith, Jacksonville, FL - 7.6%. Class C: Connecticut Series - US
Clearing Corp, New York, NY - 18.4%; Paul L. Lutson, Stratford, CT - 8.3%;
US Clearing Corp, New York, NY - 7.4%; US Clearing Corp, New York, NY -
6.0%; U.S. Clearing Corp., New York, NY - 5.2%; Florida Series - Merrill
Lynch Pierce Fenner & Smith, Jacksonville, FL - 62.5%; PaineWebber for the
benefit of The Erick Stern Revocable Living Trust, Fort Lee, NJ - 26.6%;
Frederick Carleton & Helen Carleton, Boynton Beach, Fl - 8.8; Georgia
Series - BHC Securities, Inc. - Philadelphia, PA - 61.4%; Selvin L. Smith,
Jr., Atlanta, GA - 17.5%; Merrill Lynch Pierce Fenner & Smith, Inc. -
10.0%; Elton Roberts, Marietta GA - 9.9%; Maryland Series - Charles R.
Brenner & Louise M. Brenner, Severna Park, MD - 60.7%; PaineWebber for the
benefit of Adela Rotsztain, Potomac, MD - 36.7%; Massachusetts Series -
Premier Mutual Fund Services, Boston, MA - 100%; Michigan Series - Merrill
Lynch Pierce Fenner & Smith, Inc., Jacksonville, FL - 56.1%; Murvale L.
Huston & Catherine Ann Huston, Saint Clair, MI - 21.8%; Lee O. Newport &
Alice B. Newport, Constantine, MI - 6.8%; Richard D. Snyder & Carole G.
Snyder, Kalamazoo, MI 6.5%; Violet V. Webber, Waterford, MI - 6.1%;
Minnesota Series - John D. Floyd & Becky S. Floyd, Apple Valley, MN -
58.0%; Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL - 20.8%;
Lawrence McConnell, Chatfield, MN - 14.1%; Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL - 6.8%; North Carolina Series - William L. Crowe &
C. Elizabeth Crowe, Cary, NC - 90.2%; Premier Mutual Fund Services, Inc.
Boston, MA - 9.7%; Ohio Series - Max Weisbrod & Sylvia Weisbrod, Canton, OH
- - 69.0%; JoAnn Robedeau, Toledo, OH - 23.5%; Merrill Lynch Pierce Fenner &
Smith, Inc., Jacksonville, FL - 6.6%; Pennsylvania Series - Charles R.
Weikert & Mary Jane Weikert, Fairfield, PA - 65.0%; Robert Hoffman &
Dorothy Hoffman, Norristown, PA - 18.5%; Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL - 12.7%; Texas Series - Merrill Lynch Pierce Fenner
& Smith, Jacksonville, FL - 85.2%; Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL - 13.4%; Virginia Series - US Clearing Corp, New York, NY
- - 35.5%; Stephens Inc., Little Rock, AR - 20.0%; Merrill Lynch Pierce
Fenner & Smith, Jacksonville, FL - 22.6%; Stephens Inc., Little Rock, AR -
18.1%. A shareholder who beneficially owned, directly or indirectly, 25%
or more of a Series' voting securities may be deemed to be a "control
person" (as defined in the 1940 Act) of that Series.

MANAGEMENT AGREEMENT

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Management
of the Fund."

The Manager provides management services pursuant to the Management
Agreement (the "Agreement") with the Fund dated August 24, 1994. As to
each Series, the Agreement is subject to annual approval by (i) the Fund's
Board or (ii) vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of such Series, provided that in either event
the continuance also is approved by a majority of the Board members who are
not "interested persons" (as defined in the 1940 Act) of the Fund or the
Manager, by vote cast in person at a meeting called for the purpose of
voting on such approval. The Agreement was last approved by the Fund's
Board, including a majority of the Board members who are not "interested
persons" of any party to the Agreement, at a meeting held on October 31,
1996. Shareholders of each Series (other than the New Jersey Series which
had not commenced operations) approved the Agreement on August 3, 1994.
The Agreement is terminable without penalty, as to each Series, on 60 days'
notice, by the Fund's Board or by vote of the holders of a majority of such
Series' shares, or, on not less than 90 days' notice, by the Manager. The
Agreement will terminate automatically, as to the relevant Series, in the
event of its assignment (as defined in the Act).

The following persons are officers and/or directors of the Manager:
W. Keith Smith, Chairman of the Board; Christopher M. Condron, President,
Chief Executive Officer, Chief Operating Officer and a director; Stephen E.
Canter, Vice Chairman, Chief Investment Officer and a director; Lawrence S.
Kash, Vice Chairman-Distribution and a director; Philip L. Toia, Vice
Chairman-Operations and Administration and a director; William T. Sandalls,
Jr., Senior Vice President and Chief Financial Officer; Elie M. Genadry,
Vice President-Institutional Sales; William F. Glavin, Jr., Vice President-
Corporate Development; Mark N. Jacobs, Vice President, General Counsel and
Secretary; Patrice M. Kozlowski, Vice President-Corporate Communications;
Mary Beth Leibig, Vice President-Human Resources; Jeffrey N. Nachman, Vice
President-Mutual Fund Accounting; Andrew S. Wasser, Vice President-
Information Systems; Elvira Oslapas, Assistant Secretary; and Mandell L.
Berman, Frank V. Cahouet, Alvin E. Friedman, Lawrence M. Greene and Julian
M. Smerling, directors.

The Manager manages each Series' portfolio of investments in
accordance with the stated policies of such Series, subject to the approval
of the Fund's Board. The Manager is responsible for investment decisions,
and provides the Fund with portfolio managers who are authorized by the
Board to execute purchases and sales of securities. The Fund's portfolio
managers are Joseph P. Darcy, Douglas J. Gaylor, Karen M. Hand, Stephen C.
Kris, Richard J. Moynihan, Jill C. Shaffro, Samuel J. Weinstock and Monica
S. Wieboldt. The Manager also maintains a research department with a
professional staff of portfolio managers and securities analysts who
provide research services for the Fund as well as for other funds advised
by the Manager. All purchases and sales are reported for the Board's
review at the meeting subsequent to such transactions.

The Manager maintains office facilities on behalf of the Fund and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. The Manager also may make such advertising and
promotional expenditures, using its own resources, as it from time to time
deems appropriate.

All expenses incurred in the operation of the Fund are borne by the
Fund, except to the extent specifically assumed by the Manager. The
expenses borne by the Fund include, without limitation, the following:
taxes, interest, loan commitment fees, interest and distributions on
securities sold short, brokerage fees and commissions, if any, fees of
Board members who are not officers, directors, employees or holders of 5%
or more of the outstanding voting securities of the Manager, Securities and
Exchange Commission fees and state Blue Sky qualification fees, advisory
fees, charges of custodians, transfer and dividend disbursing agents' fees,
certain insurance premiums, industry association fees, outside auditing and
legal expenses, costs of independent pricing services, costs of maintaining
the Fund's existence, costs attributable to investor services (including,
without limitation, telephone and personnel expenses), costs of preparing
and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders, costs of
shareholders' reports and meetings, and any extraordinary expenses. In
addition, shares of each Class are subject to an annual service fee and
Class B and Class C shares are subject to an annual distribution fee. See
"Distribution Plan and Shareholder Services Plan." Expenses attributable
to a particular Series are charged against the assets of that Series; other
expenses of the Fund are allocated among the Series on the basis determined
by the Board, including, but not limited to, proportionately in relation to
the net assets of each Series.

As compensation for the Manager's services, the Fund has agreed to pay
the Manager a monthly management fee at the annual rate of .55 of 1% of the
value of each Series' average daily net assets. For the fiscal years ended
April 30, 1994, 1995 and 1996, the management fee payable, the reduction in
such fee pursuant to undertakings in effect, and the net management fee
paid by each Series (other than the New Jersey Series which had not
commenced operations) was as set forth below:

Series Management Fee Payable Reduction in Fee

1994 1995 1996 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Connecticut $2,222,426 $2,082,924 $2,045,864 $378,489 $ 35,533 $ -
Florida 1,811,102 1,599,553 1,504,679 328,323 27,718 -
Georgia 120,183 149,119 160,860 120,183 149,119 59,898
Maryland 2,079,227 1,901,194 1,852,002 375,233 32,614 -
Massachusetts 466,331 426,673 423,126 95,389 7,190 -
Michigan 1,124,896 1,074,186 1,067,900 219,841 18,112 -
Minnesota 952,683 943,548 924,716 184,360 15,888 -
North Carolina 533,032 535,236 517,799 475,442 297,996 20,032
Ohio 1,811,687 1,707,720 1,684,215 386,259 28,783 -
Pennsylvania 1,544,000 1,589,232 1,600,235 317,330 26,631 -
Texas 503,485 485,593 464,591 503,485 485,593 464,591
Virginia 464,237 496,788 522,229 464,237 496,788 522,229
</TABLE>

Series Net Fee Paid

1994 1995 1996

Connecticut $1,843,937 $2,047,391 $2,045,864
Florida 1,482,779 1,571,835 1,504,679
Georgia -0- -0- 100,962
Maryland 1,703,994 1,868,580 1,852,002
Massachusetts 370,942 419,483 423,126
Michigan 905,055 1,056,074 1,067,900
Minnesota 768,323 927,660 924,716
North Carolina 57,590 237,240 497,767
Ohio 1,425,428 1,678,937 1,684,215
Pennsylvania 1,226,670 1,562,601 1,600,235
Texas -0- -0- -0-
Virginia -0- -0- -0-

The Manager has agreed that if in any fiscal year the aggregate
expenses of each Series, exclusive of taxes, brokerage, interest on
borrowings and (with the prior written consent of the necessary state
securities commissions) extraordinary expenses, but including the
management fee, exceed the expense limitation of any state having
jurisdiction over such Series, the Fund may deduct from the payment to be
made to the Manager under the Agreement, or the Manager will bear, such
excess expense to the extent required by state law. Such deduction of
payment, if any, will be estimated daily, and reconciled and effected or
paid, as the case may be, on a monthly basis.

The aggregate of the fees payable to the Manager is not subject to
reduction as the value of the Series' net assets increases.

PURCHASE OF SHARES

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Shares."

The Distributor. The Distributor serves as the Fund's distributor on
a best efforts basis pursuant to an agreement which is renewable annually.
The Distributor also acts as distributor for the other funds in the Premier
Family of Funds, for the funds in the Dreyfus Family of Funds and for
certain other investment companies. In some states, certain financial
institutions effecting transactions in Fund shares may be required to
register as dealers pursuant to state law.

For the fiscal year ended April 30, 1996, the Distributor retained the
following amounts from sales loads in the respect to Class A, and from
contingent deferred sales charges ("CDSC") with respect to Class B, of each
Series (other than the New Jersey Series which had not commenced
operations):

Series Class A Class B

Connecticut $25,153 $ 57,412
Florida 21,041 62,568
Georgia 1,369 36,034
Maryland 24,087 63,161
Massachusetts 6,837 3,841
Michigan 16,807 34,324
Minnesota 13,055 43,202
North Carolina 5,070 72,256
Ohio 23,198 52,134
Pennsylvania 21,816 133,577
Texas 4,008 25,002
Virginia 10,873 38,249

For the period from August 15, 1995 (commencement of offering of Class
C shares) through April 30, 1996, no amount was retained by the Distributor
from CDSC on Class C shares of the Series.

Using Federal Funds. Dreyfus Transfer, Inc., the Fund's transfer and
dividend disbursing agent (the "Transfer Agent"), or the Fund may attempt
to notify the investor upon receipt of checks drawn on banks that are not
members of the Federal Reserve System as to the possible delay in
conversion into Federal Funds and may attempt to arrange for a better means
of transmitting the money. If the investor is a customer of a securities
dealer ("Selected Dealer") and his order to purchase Fund shares is paid
for other than in Federal Funds, the Selected Dealer, acting on behalf of
its customer, will complete the conversion into, or itself advance, Federal
Funds generally on the business day following receipt of the customer
order. The order is effective only when so converted and received by the
Transfer Agent. An order for the purchase of Fund shares placed by an
investor with sufficient Federal Funds or a cash balance in his brokerage
account with a Selected Dealer will become effective on the day that the
order, including Federal Funds, is received by the Transfer Agent.

Sales Loads--Class A. The scale of sales loads applies to purchases
of Class A shares made by any "purchaser," which term includes an
individual and/or spouse purchasing securities for his, her or their own
account or for the account of any minor children, or a trustee or other
fiduciary purchasing securities for a single trust estate or a single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Internal Revenue Code of 1986, as amended (the "Code")), although more than
one beneficiary is involved; or a group of accounts established by or on
behalf of the employees of an employer or affiliated employers pursuant to
an employee benefit plan or other program (including accounts established
pursuant to Sections 403(b), 408(k), and 457 of the Code); or an organized
group which has been in existence for more than six months, provided that
it is not organized for the purpose of buying redeemable securities of a
registered investment company and provided that the purchases are made
through a central administration or a single dealer, or by other means
which result in economy of sales effort or expense.

Set forth below is an example of the method of computing the offering
price of each Series' Class A shares. The examples assume a purchase of
Class A shares of the Series aggregating less than $50,000 subject to the
schedule of sales charges set forth in the Fund's Prospectus at a price
based upon the net asset value of the Series' Class A shares on April 30,
1996 (other than the New Jersey Series whose price is based upon the
initial offering price).

Connecticut Florida Georgia Maryland
Series Series Series Series
Class A Shares:
NET ASSET VALUE, per share $11.90 $14.48 $13.05 $12.69
Sales load for individual sales
of shares aggregating less
than $50,000 - 4.5%
of offering price
(approximately 4.7% of net
asset value per share) . . . .56 .68 .61 .60
Offering price to public . . . $12.46 $15.16 $13.66 $13.29
<TABLE>
<CAPTION>

North
Massachusetts Michigan Minnesota New Jersey Carolina
Series Series Series Series Series
<S> <C> <C> <C> <C> <C>
Class A Shares:
NET ASSET VALUE, per share $11.50 $15.15 $14.98 $12.50 $12.91
Sales load for individual
sales of shares aggregating
less than $50,000 - 4.5%
of offering price
(approximately 4.7% of net
asset value per share) . . . .54 .71 .70 .59 .61
Offering price to public $12.04 $15.86 $15.68 $13.09 $13.52

</TABLE>

Ohio Pennsylvania Texas Virginia
Series Series Series Series
Class A Shares:
NET ASSET VALUE, per share $12.58 $16.17 $20.84 $16.27
Sales load for individual
sales of shares aggregating
less than $50,000 - 4.5%
of offering price
(approximately 4.7% of net
asset value per share . . .59 .76 .98 .77
Offering price to public . $13.17 $16.93 $21.82 $17.04

TeleTransfer Privilege. TeleTransfer purchase orders may be made at
any time. Purchase orders received by 4:00 p.m., New York time, on any
business day the Transfer Agent and the New York Stock Exchange are open
for business will be credited to the shareholder's Fund account on the next
bank business day following such purchase order. Purchase orders made
after 4:00 p.m., New York time, on any business day the Transfer Agent and
the New York Stock Exchange are open for business, or orders made on
Saturday, Sunday or any Fund holiday (e.g., when the New York Stock
Exchange is not open for business), will be credited to the shareholder's
Fund account on the second bank business day following such purchase order.

To qualify to use the TeleTransfer Privilege, the initial payment for the
purchase of Fund shares must be drawn on, and redemption proceeds paid to,
the same bank and account as are designated on the Account Application or
Shareholder Services Form on file. If the proceeds of a particular
redemption are to be wired to an account at any other bank, the request
must be in writing and signature-guaranteed. See "Redemption of
Shares--TeleTransfer Privilege."

Reopening an Account. An investor may reopen an account with a
minimum investment of $100 without filing a new Account Application during
the calendar year the account is closed or during the following calendar
year, provided the information on the old Account Application is still
applicable.

DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled
"Distribution Plan and Shareholder Services Plan."

Class B and Class C shares only are subject to a Distribution Plan and
Class A, Class B and Class C shares are subject to a Shareholder Services
Plan.

Distribution Plan. Rule 12b-1 (the "Rule") adopted by the Securities
and Exchange Commission under the 1940 Act provides, among other things,
that an investment company may bear expenses of distributing its shares
only pursuant to a plan adopted in accordance with the Rule. The Fund's
Board has adopted such a plan (the "Distribution Plan") with respect to the
Class B and Class C shares of each Series, pursuant to which the Fund pays
the Distributor for distributing the relevant Class of shares. The Fund's
Board believes that there is a reasonable likelihood that the Distribution
Plan will benefit the Fund and the holders of the Series' relevant Class of
shares.

A quarterly report of the amounts expended under the Distribution
Plan, and the purposes for which such expenditures were incurred, must be
made to the Fund's Board for its review. In addition, the Distribution
Plan provides that it may not be amended to increase materially the costs
which holders of Class B or Class C shares may bear for distribution
pursuant to the Distribution Plan without such shareholders' approval and
that other material amendments of the Distribution Plan must be approved by
the Fund's Board, and by the Board members who are not "interested persons"
(as defined in the 1940 Act) of the Fund and have no direct or indirect
financial interest in the operation of the Distribution Plan or in any
agreements entered into in connection with the Distribution Plan, by vote
cast in person at a meeting called for the purpose of considering such
amendments. The Distribution Plan is subject to annual approval by such
vote of the Board members cast in person at a meeting called for the
purpose of voting on the Distribution Plan. The Distribution Plan was last
so approved by the Board members at a meeting held on October 31, 1996 and
by the Fund's shareholders on August 3, 1994. As to each such Class, the
Distribution Plan may be terminated at any time by vote of a majority of
the Board members who are not "interested persons" and have no direct or
indirect financial interest in the operation of the Distribution Plan, or
by vote of the holders of a majority of the outstanding shares of such
Class.

For the fiscal year ended April 30, 1996, each Series (other than the
New Jersey Series which had not commenced operations) paid the Distributor
the following amounts with respect to Class B shares and Class C shares
under the Distribution Plan:

Amount Charged Amount Charged
Series Class B Class C
Connecticut $ 190,357 $ 1,225
Florida 134,640 61
Georgia 101,671 100
Maryland 194,067 35
Massachusetts 24,276 6
Michigan 92,044 295
Minnesota 123,137 544
North Carolina 217,316 5
Ohio 184,668 6
Pennsylvania 362,739 9
Texas 87,651 6
Virginia 157,606 276

Shareholder Services Plan. The Fund has adopted a Shareholder
Services Plan, pursuant to which the Fund pays the Distributor for the
provision of certain services to the holders of Class A, Class B and Class
C shares. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding the
Fund and providing reports and other information, and services related to
the maintenance of such shareholder accounts. Under the Shareholder
Services Plan, the Distributor may make payments to certain financial
institutions (which may include banks), Selected Dealers and other
financial industry professionals (collectively "Service Agents") in respect
to these services.

A quarterly report of the amounts expended under the Shareholder
Services Plan, and the purposes for which such expenditures were incurred,
must be made to the Fund's Board for its review. In addition, the
Shareholder Services Plan provides that material amendments must be
approved by the Fund's Board, and by the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Fund and have no
direct or indirect financial interest in the operation of the Shareholder
Services Plan or in any agreements entered into in connection with the
Shareholder Services Plan by vote cast in person at a meeting called for
the purpose of considering such amendments. The Shareholder Services Plan
is subject to annual approval by such vote of the Board members cast in
person at a meeting called for the purpose of voting on the Shareholder
Services Plan. The Shareholder Services Plan was last so approved October
31, 1996. As to each Series, the Shareholder Services Plan is terminable
at any time by vote of a majority of the Board members who are not
"interested persons" and have no direct or indirect financial interest in
the operation of the Shareholder Services Plan or in any agreements entered
into in connection with the Shareholder Services Plan.

For the fiscal year ended April 30, 1996, each Series (other than the
New Jersey Series which had not commenced operations) paid the Distributor
the following amounts with respect to Class A, Class B and Class C under
the Shareholder Services Plan:

Series Class A Class B Class C
Connecticut $834,351 $ 95,178 $ 409
Florida 616,605 67,320 20
Georgia 22,250 50,835 33
Maryland 744,774 97,033 12
Massachusetts 180,190 12,138 2
Michigan 439,289 46,022 98
Minnesota 358,575 61,568 182
North Carolina 126,703 108,658 2
Ohio 673,216 92,334 2
Pennsylvania 546,007 181,369 3
Texas 167,350 43,826 2
Virginia 158,482 78,803 92

REDEMPTION OF SHARES

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to
Redeem Shares."

Check Redemption Privilege - Class A Shares. An investor may indicate
on the Account Application, Shareholder Services Form or by later written
request that the Fund provide Redemption Checks ("Checks") with respect to
Class A shares, drawn on the investor's Fund account. Checks will be sent
only to the registered owner(s) of the account and only to the address of
record. The Account Application, Shareholder Services Form or later
written request must be manually signed by the registered owner(s). Checks
may be made payable to the order of any person in an amount of $500 or
more. When a Check is presented to the Transfer Agent for payment, the
Transfer Agent, as the investor's agent, will cause the Fund to redeem a
sufficient number of full and fractional Class A shares in the investor's
account to cover the amount of the Check. Dividends are earned until the
Check clears. After clearance, a copy of the Check will be returned to the
investor. Investors generally will be subject to the same rules and
regulations that apply to checking accounts, although the election of this
Privilege creates only a shareholder-transfer agent relationship with the
Transfer Agent.

If the amount of the Check is greater than the value of the Class A
shares in the investor's account, the Check will be returned marked
insufficient funds. Checks should not be used to close an account.

TeleTransfer Privilege. Investors should be aware that if they have
selected the TeleTransfer Privilege, any request for a TeleTransfer
transaction will be effected through the Automated Clearing House ("ACH")
system unless more prompt transmittal specifically is requested.
Redemption proceeds will be on deposit in the investor's account at an ACH
member bank ordinarily two business days after receipt of the redemption
request. See "Purchase of Shares--TeleTransfer Privilege."

Share Certificates; Signatures. Any certificates representing Fund
shares to be redeemed must be submitted with the redemption request.
Written redemption requests must be signed by each shareholder, including
each owner of a joint account, and each signature must be guaranteed.
Signatures on endorsed certificates submitted for redemption also must be
guaranteed. The Transfer Agent has adopted standards and procedures
pursuant to which signature-guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations, as well as from participants in the New York
Stock Exchange Medallion Signature Program, the Securities Transfer Agents
Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program.
Guarantees must be signed by an authorized signatory of the guarantor and
"Signature-Guaranteed" must appear with the signature. The Transfer Agent
may request additional documentation from corporations, executors,
administrators, trustees or guardians, and may accept other suitable
verification arrangements from foreign investors, such as consular
verification.

Redemption Commitment. The Fund has committed itself to pay in cash
all redemption requests by any shareholder of record of a Series, limited
in amount during any 90-day period to the lesser of $250,000 or 1% of the
value of such Series' net assets at the beginning of such period. Such
commitment is irrevocable without the prior approval of the Securities and
Exchange Commission. In the case of requests for redemption in excess of
such amount, the Fund's Board reserves the right to make payments in whole
or in part in securities (which may include non-marketable securities) or
other assets in case of an emergency or any time a cash distribution would
impair the liquidity of the Series to the detriment of the existing
shareholders. In this event, the securities would be valued in the same
manner as the Series' portfolio is valued. If the recipient sold such
securities, brokerage charges might be incurred.

Suspension of Redemptions. The right of redemption may be suspended
or the date of payment postponed (a) during any period when the New York
Stock Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (c)
for such other periods as the Securities and Exchange Commission by order
may permit to protect the Fund's shareholders.

SHAREHOLDER SERVICES

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Shareholder
Services."

Fund Exchanges. Class A, Class B and Class C shares of the Fund may
be exchanged for shares of the respective Class of certain other funds
advised or administered by the Manager. Shares of the same Class of such
other funds purchased by exchange will be purchased on the basis of
relative net asset value per share as follows:

A. Class A shares of funds purchased without a sales load may be
exchanged for Class A shares of other funds sold with a sales
load, and the applicable sales load will be deducted.

B. Class A shares of funds purchased with or without a sales load
may be exchanged without a sales load for Class A shares of other
funds sold without a sales load.

C. Class A shares of funds purchased with a sales load, Class A
shares of funds acquired by a previous exchange from Class A
shares purchased with a sales load, and additional Class A shares
acquired through reinvestment of dividends or distributions of
any such funds (collectively referred to herein as "Purchased
Shares") may be exchanged for Class A shares of other funds sold
with a sales load (referred to herein as "Offered Shares"),
provided that, if the sales load applicable to the Offered Shares
exceeds the maximum sales load that could have been imposed in
connection with the Purchased Shares (at the time the Purchased
Shares were acquired), without giving effect to any reduced
loads, the difference will be deducted.

D. Class B or Class C shares of any fund may be exchanged for the
same Class of shares of other funds without a sales load. Class
B or Class C shares of any fund exchanged for the same Class of
shares of another fund will be subject to the higher applicable
CDSC of the two exchanged funds and, for purposes of calculating
CDSC rates and conversion periods, will be deemed to have been
held since the date the shares being exchanged were initially
purchased.

To accomplish an exchange under item C above, an investor's Service
Agent must notify the Transfer Agent of the investor's prior ownership of
such Class A shares and the investor's account number.

To request an exchange, the investor's Service Agent acting on the
investor's behalf must give exchange instructions to the Transfer Agent in
writing or by telephone. The ability to issue exchange instructions by
telephone is given to all Fund shareholders automatically, unless the
investor checks the applicable "No" box on the Account Application,
indicating that the investor specifically refuses this privilege. By using
the Telephone Exchange Privilege, the investor authorizes the Transfer
Agent to act on telephonic instructions (including over The Dreyfus
TouchRegistration Mark Automated Telephone System) from any person
representing himself or herself to be a representative of the investor's
Service Agent, and reasonably believed by the Transfer Agent to be genuine.
Telephone exchanges may be subject to limitations as to the amount involved
or the number of telephone exchanges permitted. Shares issued in
certificate form are not eligible for telephone exchange.

To establish a personal retirement plan by exchange, shares of the
fund being exchanged must have a value of at least the minimum initial
investment being required for shares of the same Class of the fund into
which the exchange is being made. For Dreyfus-sponsored Keogh Plans, IRAs
and IRAs set up under a Simplified Employee Pension Plan ("SEP-IRAs") with
only one participant, the minimum initial investment is $750. To exchange
shares held in corporate plans, 403(b)(7) Plans and SEP-IRAs with more than
one participant, the minimum initial investment is $100 if the plan has at
least $2,500 invested among shares of the same Class of the funds in the
Dreyfus Family of Funds. To exchange shares held in personal retirement
plans, the shares exchanged must have a current value of at least $100.

Auto-Exchange Privilege. The Auto-Exchange Privilege permits an
investor to purchase, in exchange for Class A, Class B or Class C shares
of a Series, shares of the same Class of one of the other Series or another
fund in the Premier Family of Funds or the Dreyfus Family of Funds. This
Privilege is available only for existing accounts. Shares will be
exchanged on the basis of relative net asset value as described above under
"Fund Exchanges." Enrollment in or modification or cancellation of this
Privilege is effective three business days following notification by the
investor. An investor will be notified if his account falls below the
amount designated to be exchanged under this Privilege. In this case, an
investor's account will fall to zero unless additional investments are made
in excess of the designated amount prior to the next Auto-Exchange
transaction. Shares held under IRA and other retirement plans are eligible
for this Privilege. Exchanges of IRA shares may be made between IRA
accounts and from regular accounts to IRA accounts, but not from IRA
accounts to regular accounts. With respect to all other retirement
accounts, exchanges may be made only among those accounts.

Fund Exchanges and the Auto-Exchange Privilege are available to
shareholders resident in any state in which shares of the series or fund
being acquired may legally be sold. Shares may be exchanged only between
accounts having identical names and other identifying designations.

Shareholder Services Forms and prospectuses of the other funds may be
obtained by calling 1-800-645-6561. The Fund reserves the right to reject
any exchange request in whole or in part. The Fund Exchanges service or
the Auto-Exchange Privilege may be modified or terminated at any time upon
notice to shareholders.

Automatic Withdrawal Plan. The Automatic Withdrawal Plan permits an
investor with a $5,000 minimum account to request withdrawal of a specified
dollar amount (minimum of $50) on either a monthly or quarterly basis.
Withdrawal payments are the proceeds from sales of Fund shares, not the
yield on the shares. If withdrawal payments exceed reinvested dividends
and distributions, the investor's shares will be reduced and eventually may
be depleted. Automatic Withdrawal may be terminated at any time by the
investor, the Fund or the Transfer Agent. Shares for which certificates
have been issued may not be redeemed through the Automatic Withdrawal Plan.

Class B or Class C shares withdrawn pursuant to the Automatic Withdrawal
Plan will be subject to any applicable CDSC.

Dividend Sweep. Dividend Sweep allows investors to invest
automatically their dividends or dividends and capital gain distributions,
if any, from the Fund in shares of the same Class of another fund in the
Premier Family of Funds or the Dreyfus Family of Funds of which the
investor is a shareholder. Shares of the same Class of other funds
purchased pursuant to this privilege will be purchased on the basis of
relative net asset value per share as follows:

A. Dividends and distributions paid with respect to Class A shares
by a fund may be invested without imposition of a sales load in
Class A shares of other funds that are offered without a sales
load.

B. Dividends and distributions paid with respect to Class A shares
by a fund which does not charge a sales load may be invested
in Class A shares of other funds sold with a sales load, and
the applicable sales load will be deducted.

C. Dividends and distributions paid with respect to Class A shares
by a fund which charges a sales load may be invested in Class A
shares of other funds sold with a sales load (referred to herein
as "Offered Shares"), provided that, if the sales load applicable
to the Offered Shares exceeds the maximum sales load charged by
the fund from which dividends or distributions are being swept,
without giving effect to any reduced loads, the difference will
be deducted.

D. Dividends and distributions paid with respect to Class B or Class
C shares by a fund may be invested without imposition of any
applicable CDSC in the same Class of shares of other funds and
the relevant Class of shares of such other funds will be subject
on redemption to any applicable CDSC.

DETERMINATION OF NET ASSET VALUE

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "How to Buy
Shares."

Valuation of Portfolio Securities. Each Series' investments are
valued each business day by an independent pricing service (the "Service")
approved by the Fund's Board. When, in the judgment of the Service, quoted
bid prices for investments are readily available and are representative of
the bid side of the market, these investments are valued at the mean
between the quoted bid prices (as obtained by the Service from dealers in
such securities) and asked prices (as calculated by the Service based upon
its evaluation of the market for such securities). Other investments
(which constitute a majority of the portfolio securities) are carried at
fair value as determined by the Service, based on methods which include
consideration of: yields or prices of municipal bonds of comparable
quality, coupon, maturity and type; indications as to values from dealers;
and general market conditions. The Service may employ electronic data
processing techniques and/or a matrix system to determine valuations. The
Service's procedures are reviewed by the Fund's officers under the general
supervision of the Fund's Board. Expenses and fees, including the
management fee (reduced by the expense limitation, if any) and, fees
pursuant to the Shareholder Services Plan, and with respect to Class B and
Class C shares only, Distribution Plan, are accrued daily and are taken
into account for the purpose of determining the net asset value of the
relevant Class of each Series' shares. Because of the difference in
operating expenses incurred by each Class, the per share net asset value of
each Class will differ.

New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Dividends,
Distributions and Taxes."

Management believes that each Series (other than the New Jersey Series
which had not commenced operations) qualified for the fiscal year ended
April 30, 1996 as a "regulated investment company" under the Code. It is
expected that the New Jersey Series will qualify as a "registered
investment company" under the Code. Each Series intends to continue to so
qualify, if such qualification is in the best interests of its
shareholders. As a regulated investment company, a Series will pay no
Federal income tax on net investment income and net realized capital gains
to the extent that such income and gains are distributed to shareholders in
accordance with applicable provisions of the Code. To qualify as a
regulated investment company, a Series must distribute to its shareholders
at least 90% of its net income (consisting of net investment income from
tax exempt obligations and taxable obligations, if any, and net short-term
capital gains), must derive less than 30% of its annual gross income from
gain on the sale of securities held for less than three months, and must
meet certain asset diversification and other requirements. The term
"regulated investment company" does not imply the supervision of management
or investment practices or policies by any government agency.

The Code provides that if a shareholder has not held his shares for
more than six months (or such shorter period as the Internal Revenue
Service may prescribe by regulation) and has received an exempt-interest
dividend with respect to such shares, any loss incurred on the sale of such
shares will be disallowed to the extent of the exempt-interest dividend
received. In addition, any dividend or distribution paid shortly after an
investor's purchase may have the effect of reducing the net asset value of
his shares below the cost of his investment. Such a distribution would be
a return on investment in an economic sense although taxable as stated
under "Dividends, Distributions and Taxes" in the Prospectus.

Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of any gain
realized from the sale or other disposition of certain market discount
bonds will be treated as ordinary income under Section 1276 of the Code.
In addition, all or a portion of any gain realized from engaging in
"conversion transactions" may be treated as ordinary income under Section
1258 of the Code. "Conversion transactions" are defined to include certain
forward, futures, option and "straddle" transactions, transactions marketed
or sold to produce capital gains, or transactions described in Treasury
regulations to be issued in the future.

Under Section 1256 of the Code, gain or loss realized by a Series from
certain financial futures and options transactions will be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss.
Gain or loss will arise upon exercise or lapse of such futures or options
as well as from closing transactions. In addition, any such futures or
options remaining unexercised at the end of a Series' taxable year will be
treated as sold for their then fair market value, resulting in additional
gain or loss to a Series characterized in the manner described above.

Offsetting positions held by a Series involving certain futures
contracts or options transactions may be considered, for tax purposes, to
constitute "straddles." "Straddles" are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of
"straddles" is governed by Sections 1092 and 1258 of the Code, which, in
certain circumstances, overrides or modifies the provisions of Section 1256
of the Code. As such, all or a portion of any short- or long-term capital
gain from certain "straddle" and/or conversion transactions may be
recharacterized to ordinary income.

If a Series were treated as entering into "straddles" by reason of its
engaging in certain futures or options transactions, such "straddles" would
be characterized as "mixed straddles" if the futures or options
transactions comprising a part of such "straddles" were governed by Section
1256 of the Code. A Series may make one or more elections with respect to
"mixed straddles." Depending on which election is made, if any, the
results to a Series may differ. If no election is made to the extent the
"straddle" rules apply to positions established by a Series, losses
realized by a Series will be deferred to the extent of unrealized gain in
the offsetting position. Moreover, as a result of the "straddle" and the
conversion transaction rules, short-term capital losses on "straddle"
positions may be recharacterized as long-term capital losses, and long-term
capital gains may be treated as short-term capital gains or ordinary
income.

Investment by a Series in securities issued at a discount or providing
for deferred interest or for payment of interest in the form of additional
obligations could, under special tax rules, affect the amount, timing and
character of distributions to shareholders. For example, a Series could be
required to take into account annually a portion of the discount (or deemed
discount) at which such securities were issued and to distribute such
portion in order to maintain its qualification as a regulated investment
company. In such case, a Series may have to dispose of securities which it
might otherwise have continued to hold in order to generate cash to satisfy
these distribution requirements.

PORTFOLIO TRANSACTIONS

Portfolio securities ordinarily are purchased from and sold to parties
acting as either principal or agent. Newly-issued securities ordinarily
are purchased directly from the issuer or from an underwriter; other
purchases and sales usually are placed with those dealers from which it
appears that the best price or execution will be obtained. Usually no
brokerage commissions, as such, are paid by the Fund for such purchases and
sales, although the price paid usually includes an undisclosed compensation
to the dealer acting as agent. The prices paid to underwriters of
newly-issued securities usually include a concession paid by the issuer to
the underwriter, and purchases of after-market securities from dealers
ordinarily are executed at a price between the bid and asked price. No
brokerage commissions have been paid by the Fund to date.

Transactions are allocated to various dealers by the Fund's portfolio
managers in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Manager to supplement its own research and
analysis with the views and information of other securities firms.

Research services furnished by brokers through which the Fund effects
securities transactions may be used by the Manager in advising other funds
it advises and, conversely, research services furnished to the Manager by
brokers in connection with other funds the Manager advises may be used by
the Manager in advising the Fund. Although it is not possible to place a
dollar value on these services, it is the opinion of the Manager that the
receipt and study of such services should not reduce the overall expenses
of its research department.

Each Series anticipates that its annual portfolio turnover rate
generally will not exceed 100%, but the turnover rate will not be a
limiting factor when each Series deems it desirable to sell or purchase
securities. Therefore, depending upon market conditions, each Series'
annual portfolio turnover rate may exceed 100% in particular years.

PERFORMANCE INFORMATION

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "Performance
Information."

No performance information is available for the New Jersey Series
which had not commenced operations as of April 30, 1996.

The current yield for the 30-day period ended April 30, 1996, for
Class A, Class B and Class C of each Series was as follows:

Current Net of Absorbed
Series Yield Expenses(1)
Class A:
Connecticut 4.99 -
Florida 4.96 -
Georgia 4.67 -
Maryland 4.94 -
Massachusetts 4.91 -
Michigan 4.90 -
Minnesota 4.70 -
North Carolina 4.92 -
Ohio 4.87 -
Pennsylvania 5.00 -
Texas 5.37 4.84
Virginia 5.32 4.79
____________________________
(1) This column sets forth current yield had expenses not been absorbed.

Current Net of Absorbed
Series Yield Expenses(1)

Class B:
Connecticut 4.71 -
Florida 4.69 -
Georgia 4.39 -
Maryland 4.63 -
Massachusetts 4.61 -
Michigan 4.61 -
Minnesota 4.40 -
North Carolina 4.62 -
Ohio 4.57 -
Pennsylvania 4.73 -
Texas 5.09 4.54
Virginia 5.05 4.50

Current Net of Absorbed
Series Yield Expenses(1)

Class C:
Connecticut 4.44 -
Florida 4.40 -
Georgia 4.11 -
Maryland 4.47 -
Massachusetts 4.37 -
Michigan 4.29 -
Minnesota 4.17 -
North Carolina 4.37 -
Ohio 4.32 -
Pennsylvania 4.41 -
Texas 4.80 4.25
Virginia 4.76 4.21
____________________________
(1) This column sets forth current yield had expenses not been absorbed.

Current yield is computed pursuant to a formula which operates as follows:
The amount of each Series' expenses accrued for the 30-day period (net of
reimbursements) is subtracted from the amount of the dividends and interest
earned (computed in accordance with regulatory requirements) by the Series
during the period. That result is then divided by the product of: (a) the
average daily number of shares outstanding during the period that were
entitled to receive dividends, and (b) the net asset value (or maximum
offering price in the case of Class A) per share on the last day of the
period less any undistributed earned income per share reasonably expected
to be declared as a dividend shortly thereafter. The quotient is then
added to 1, and that sum is raised to the 6th power, after which 1 is
subtracted. The current yield is then arrived at by multiplying the result
by 2.

Based upon the 1996 combined (except where noted) Federal and
applicable State tax rate specified below, the tax equivalent yield for the
30-day period ended April 30, 1996 for Class A, Class B and Class C of each
Series was as follows:

Tax Equivalent Net of Absorbed
Series Tax Rate Yield Expenses(1)

Class A:
Connecticut 42.32 8.65 -
Florida(2) 39.60 8.21 -
Georgia 43.22 8.22 -
Maryland 44.13 8.84 -
Massachusetts 46.85 9.24 -
Michigan 42.26 8.49 -
Minnesota 44.73 8.50 -
North Carolina 44.28 8.83 -
Ohio 44.13 8.72 -
Pennsylvania 41.29 8.52 -
Texas(2) 39.60 8.89 8.01
Virginia 43.07 9.34 8.41

Class B:
Connecticut 42.32 8.17 -
Florida(2) 39.60 7.76 -
Georgia 43.22 7.73 -
Maryland 44.13 8.29 -
Massachusetts 46.85 8.67 -
Michigan 42.26 7.98 -
Minnesota 44.73 7.96 -
North Carolina 44.28 8.29 -
Ohio 44.13 8.18 -
Pennsylvania 41.29 8.06 -
Texas(2) 39.60 8.43 7.52
Virginia 43.07 8.87 7.90
___________________________
(1) This column sets forth tax equivalent yield had expenses not been absorbed.
(2) Federal tax rate only. No state personal income tax imposed during 1996.

Tax Equivalent Net of Absorbed
Series Tax Rate Yield Expenses(1)
Class C:
Connecticut 42.32 7.70 -
Florida(2) 39.60 7.28 -
Georgia 43.22 7.24 -
Maryland 44.13 8.00 -
Massachusetts 46.85 8.22 -
Michigan 42.26 7.43 -
Minnesota 44.73 7.54 -
North Carolina 44.28 7.84 -
Ohio 44.13 7.73 -
Pennsylvania 41.29 7.51 -
Texas(2) 39.60 7.95 7.04
Virginia 43.07 8.36 7.40
_________________________
(1) This column sets forth tax equivalent yield had expenses not been absorbed.
(2) Federal tax rate only. No state personal income tax imposed during 1996.

Tax equivalent yield is computed by dividing that portion of the current
yield (calculated as described above) which is tax-exempt by 1 minus a
stated tax rate and adding the quotient to that portion, if any, of the
yield of the Series that is not tax-exempt.

The tax equivalent yield noted above represents the application of the
highest marginal personal tax rates currently in effect. For Federal
personal income tax purposes, a 39.60% tax rate has been used. The tax
equivalent figure, however, does not include the potential effect of any
local (including, but not limited to, county, district or city) taxes,
including applicable surcharges. In addition, there may be pending
legislation which could affect such stated tax rates or yields. Each
investor should consult its tax adviser, and consider its own factual
circumstances and applicable tax laws, in order to ascertain the relevant
tax equivalent yield.

The average annual total return for the periods indicated for Class A
of each Series was as follows:

1-year period 5-year period 8.926-year period
Series ended April 30, 1996 ended April 30, 1996 ended April 30, 1996
Connecticut 2.08 6.15 7.14
Florida 1.85 6.63 9.00
Georgia 2.34 5.571 -
Maryland 2.42 6.30 6.56
Massachusetts 0.96 6.34 6.52
Michigan 2.02 7.05 8.62
Minnesota 1.34 6.32 7.73
North Carolina 1.98 6.492 -
Ohio 1.99 6.62 4.95
Pennsylvania 2.63 7.02 7.613
Texas 3.22 7.55 10.42
Virginia 2.46 7.032 -
____________________________
(1) For the 3.658 year period ended April 30, 1996.
(2) For the 4.748 year period ended April 30, 1996.
(3) For the 8.753 year period ended April 30, 1996.

The average annual total return since inception and for the periods
indicated for Class B of each Series was as follows:

1-year period 3.290-year period
Series ended April 30, 1996 ended April 30, 1996
Connecticut 3.20 4.66
Florida 3.02 5.03
Georgia 3.69 5.37
Maryland 3.66 4.90
Massachusetts 2.16 4.41
Michigan 3.33 5.56
Minnesota 2.62 5.08
North Carolina 3.25 4.45
Ohio 3.20 5.02
Pennsylvania 3.92 5.35
Texas 4.50 6.08
Virginia 3.76 4.96

The average annual total return since inception for Class C of each
Series was as follows:
.710 years
Series ended April 30, 1996
Connecticut 3.94
Florida 3.33
Georgia 4.92
Maryland 4.21
Massachusetts 2.39
Michigan 4.76
Minnesota 3.78
North Carolina 4.56
Ohio 4.31
Pennsylvania 5.36
Texas 5.95
Virginia 4.28

Average annual total return is calculated by determining the ending
redeemable value of an investment purchased at net asset value (maximum
offering price in the case of Class A) per share with a hypothetical $1,000
payment made at the beginning of the period (assuming the reinvestment of
dividends and distributions), dividing by the amount of the initial
investment, taking the "n"th root of the quotient (where "n" is the number
of years in the period) and subtracting 1 from the result. A Class'
average annual total return figures calculated in accordance with such
formula assume that in the case of Class A the maximum sales load has been
deducted from the hypothetical initial investment at the time of purchase
or in the case of Class B or Class C the maximum applicable CDSC has been
paid upon redemption at the end of the period.

The total return for the period May 28, 1987 through April 30, 1996
(except where indicated) for Class A of each Series was as follows:

Based on Maximum Based on Net Asset
Series Offering Price Value

Connecticut 85.12 93.87
Florida 115.80 126.05
Georgia(1) 21.95 27.70
Maryland 76.25 84.58
Massachusetts 75.76 84.02
Michigan 109.18 118.98
Minnesota 94.30 103.51
North Carolina(2) 34.82 41.23
Ohio 53.98 61.18
Pennsylvania(3) 89.98 98.97
Texas 142.16 153.56
Virginia(2) 38.11 44.63

____________________________
(1) For the period from September 3, 1992 (commencement of
operations) through April 30, 1996.
(2) For the period from August 1, 1991 (commencement of
operations) through April 30, 1996.
(3) For the period from July 30, 1987 (commencement of
operations) through April 30, 1996.

The total return for the period January 15, 1993 to April 30, 1996 for
Class B of each Series was as follows:

Series Based on Net Asset Based on
Class B: Value Maximum CDSC

Connecticut 18.17 16.17
Florida 19.52 17.53
Georgia 20.79 18.79
Maryland 19.04 17.04
Massachusetts 17.22 15.27
Michigan 21.46 19.47
Minnesota 19.71 17.71
North Carolina 17.39 15.39
Ohio 19.48 17.50
Pennsylvania 20.70 18.70
Texas 23.44 21.44
Virginia 19.27 17.27

The total return for the period August 15, 1995 to April 30, 1996 for
Class C of each Series was as follows:

Series Based on Net Asset Based on
Class C: Value Maximum CDSC

Connecticut 3.78 2.78
Florida 3.34 2.35
Georgia 4.47 3.47
Maryland 3.97 2.97
Massachusetts 2.68 1.69
Michigan 4.36 3.36
Minnesota 3.67 2.67
North Carolina 4.22 3.22
Ohio 4.03 3.04
Pennsylvania 4.78 3.78
Texas 5.19 4.19
Virginia 4.02 3.02

Total return is calculated by subtracting the amount of the Series'
net asset value (maximum offering price in the case of Class A) per share
at the beginning of a stated period from the net asset value per share at
the end of the period (after giving effect to the reinvestment of dividends
and distributions during the period and any applicable CDSC), and dividing
the result by the net asset value (maximum offering price in the case of
Class A) per share at the beginning of the period. Total return also may
be calculated based on the net asset value per share at the beginning of
the period for Class A shares or without giving effect to any applicable
CDSC at the end of the period for Class B or Class C shares. In such
cases, the calculation would not reflect the deduction of the sales load
with respect to Class A shares or any applicable CDSC with respect to Class
B or Class C shares which, if reflected, would reduce the performance
quoted.

From time to time, the Fund may use hypothetical tax equivalent yields
or charts in its advertising. These hypothetical yields or charts will be
used for illustrative purposes only and not as representative of the Fund's
past or future performance.

From time to time, advertising materials for the Fund may refer to or
discuss then-current or past economic conditions, developments and/or
events, including those relating to actual or proposed tax legislation.
Advertising materials for the Fund also may refer to statistical or other
information concerning trends relating to investment companies, as compiled
by industry associations such as the Investment Company Institute. From
time to time, advertising materials for the Fund, also may refer to
Morningstar ratings and related analyses supporting such ratings.

The Fund may compare its performance, directly as well as against
inflation, with that of other instruments, such as short-term Treasury
bills (which are direct obligations of the U.S. Government), FDIC-insured
bank money market accounts and FDIC-insured fixed-rate certificates of
deposit. In addition, advertising for the Fund may indicate that investors
may consider diversifying their investment portfolios in order to seek
protection of the value of their assets against inflation.

From time to time, advertising materials for the Fund may include
biographical information relating to its portfolio managers and may refer
to, or include commentary by a portfolio manager relating to an investment
strategy, asset growth, current or past business, political, economic or
financial conditions and other matters of general interest to investors.

INFORMATION ABOUT THE FUND

The following information supplements and should be read in
conjunction with the section in the Fund's Prospectus entitled "General
Information."

Each Series share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and
non-assessable. Series' shares have no preemptive or subscription rights
and are freely transferable.

The Fund sends annual and semi-annual financial statements to all its
shareholders.

The Manager's legislative efforts led to the 1976 Congressional
Amendment to the Code permitting an incorporated mutual fund to pass
through tax exempt income to its shareholders. The Manager offered to the
public the first incorporated tax exempt fund and currently manages or
administers over twenty-five billion dollars in tax exempt assets.

TRANSFER AND DIVIDEND DISBURSING AGENT, CUSTODIAN,
COUNSEL AND INDEPENDENT AUDITORS

Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, P.O.
Box 9671, Providence, Rhode Island 02940-9671, is the Fund's transfer and
dividend disbursing agent. Under a transfer agency agreement with the
Fund, the Transfer Agent arranges for the maintenance of shareholder
account records for the Fund, the handling of certain communications
between shareholders and the Fund and the payment of dividends and
distributions payable by the Fund. For these services, the Transfer Agent
receives a monthly fee computed on the basis of the number of shareholder
accounts it maintains for the Fund during the month, and is reimbursed for
certain out-of-pocket expenses. For the period December 1, 1995 (effective
date of transfer agency agreement) through April 30, 1996, the Fund paid
the Transfer Agent $428,901.

The Bank of New York, 90 Washington Street, New York, New York 10286,
is the Fund's custodian.

Neither the Transfer Agent nor The Bank of New York has any part in
determining the investment policies of the Fund or which securities are to
be purchased or sold by the Fund.

Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York
10004-2696, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of shares
being sold pursuant to the Fund's Prospectus.

Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
independent auditors, have been selected as auditors of the Fund.

APPENDIX A

RISK FACTORS -- INVESTING
IN STATE MUNICIPAL OBLIGATIONS

The following information constitutes only a brief summary, does not
purport to be a complete description, and is based primarily on information
drawn from official statements relating to securities offerings of the
relevant State available as of the date of this Statement of Additional
Information. While the Fund has not independently verified this
information, it has no reason to believe that such information is not
correct in all material respects.

Connecticut Series. . . . . . . . . . . . . . . . . . . . . . . . B-41
Florida Series. . . . . . . . . . . . . . . . . . . . . . . . . . B-43
Georgia Series. . . . . . . . . . . . . . . . . . . . . . . . . . B-48
Maryland Series . . . . . . . . . . . . . . . . . . . . . . . . . B-51
Massachusetts Series. . . . . . . . . . . . . . . . . . . . . . . B-53
Michigan Series . . . . . . . . . . . . . . . . . . . . . . . . . B-55
Minnesota Series. . . . . . . . . . . . . . . . . . . . . . . . . B-59
New Jersey Series . . . . . . . . . . . . . . . . . . . . . . . . B-64
North Carolina Series . . . . . . . . . . . . . . . . . . . . . . B-66
Ohio Series . . . . . . . . . . . . . . . . . . . . . . . . . . . B-71
Pennsylvania Series . . . . . . . . . . . . . . . . . . . . . . . B-76
Texas Series. . . . . . . . . . . . . . . . . . . . . . . . . . . B-83
Virginia Series . . . . . . . . . . . . . . . . . . . . . . . . . B-88

Connecticut Series

Connecticut's economy is diverse, with manufacturing, services and
trade accounting for approximately 70% of total non-agricultural
employment. The State's manufacturing industry is diversified, but from
1970 to 1994 manufacturing employment declined 35.4%, while non-
manufacturing employment increased 66.3%, particularly in the service,
trade and finance categories, resulting in an increase of 28.8% in total
growth in non-agricultural sectors. Defense-related business plays an
important role in the Connecticut economy, and economic activity has been
affected by the volume of defense contracts awarded to Connecticut firms.
In recent years, the Federal government has reduced the amount of defense-
related spending and the largest defense-related employers in the State
have announced substantial labor force reductions. The future effect of
these and other industrial labor force reductions on the Connecticut
economy cannot be predicted at this time.

Connecticut has a high level of personal income. According to Bureau
of Economic Analysis figures, personal income of State residents for
calendar year 1994 was $95.1 billion, a 3.3% increase over the previous
year. Total personal income in the State increased 18.0% from 1989 to 1994
and 11.6% from 1991 to 1994. According to U.S. Department of Commerce
projections, the State is expected to continue to rank among the highest in
State per capita income. For 1994, the estimated rate of unemployment (on
a seasonably adjusted basis) in the State was 5.6%.

While the State's General Fund ended fiscal 1984-85, 1985-86 and 1986-
87 with operating surpluses of approximately $365.5 million, $250.1 million
and $365.2 million, respectively, the State recorded operating deficits of
$115.6 million, $28.0 million, $259.5 million and $808.5 million for fiscal
1987-88, 1988-89, 1989-90 and 1990-91, respectively. Together with the
deficit carried forward from fiscal 1989-90, the total deficit for the
fiscal year 1990-91 was $965.7 million. The total deficit amount was
funded by the issuance of General Obligation Economic Recovery Notes in
late 1991. As of April 4, 1996, $311,055,000 of such Notes remained
outstanding. The Comptroller's annual report for the fiscal year ended
June 30, 1992 reflected a General Fund operating surplus of $110.2 million,
which surplus was used to retire $110.1 million of the State's Economic
Recovery Notes. The Comptroller's annual report for the fiscal year ended
June 30, 1993 reflected a General Fund operating surplus of $113.5 million.
The Comptroller's annual report for the fiscal year ended June 30, 1994
reflected a General Fund operating surplus of $19.7 million. The
Comptroller's annual report for the fiscal year ended June 30, 1995
reflected a General Fund operating surplus of $80.5 million, which was
transferred to the Budget Reserve Fund.

Since 1988, the Comptroller's annual report has reported results on
the basis of both the modified cash basis required by State law and the
modified accrual basis used for GAAP financial reporting. On a GAAP basis
the cumulative deficit was $576.9 million for fiscal 1994-95. The modified
cash basis of accounting used for statutory financial reporting and the
modified accrual basis used for GAAP financial reporting are different and,
as a result, often produce varying financial results, primarily because of
differences in the recognition of revenues and expenditures.

The State finances its operations primarily through the General Fund.
All tax and most non-tax revenues of the State, except for motor fuels
taxes and other transportation related taxes, fees and revenues, are paid
into, and substantially all expenditures pursuant to legislative
appropriations are made out of, the General Fund. The State derives over
70% of its revenues from taxes. Miscellaneous fees, receipts, transfers
and Federal grants account for most of the other State revenue. The Sales
and Use Taxes, the corporation business tax and the recently enacted broad
based personal income tax are the major revenue raising taxes. For fiscal
1995-96 and 1996-97, the adopted budget anticipates General Fund
expenditures of $9.055 billion and $9.201 billion, respectively, and
General Fund revenues of $8.988 billion and $9.203 billion, respectively.

On November 3, 1992, Connecticut voters approved a constitutional
amendment which requires a balanced budget for each year and imposes a cap
on the growth of expenditures. The General Assembly is required by the
constitutional amendment to adopt by three-fifths vote certain spending cap
definitions. The statutory spending cap limits the growth of expenditures
to either (1) the rolling five-year average annual growth in personal
income, or (2) the increase in the consumer price index for urban consumers
during the preceding twelve-month period, whichever is greater.
Expenditures for the payment of bonds, notes and other evidences of
indebtedness are excluded from the constitutional and statutory definitions
of general budget expenditures. To preclude shifting expenditures out of
the General Fund to other funds, the spending cap applies to all
appropriated funds combined.

The State has no constitutional or other organic limit on its power to
issue obligations or incur indebtedness other than that it may only borrow
for public purposes. There are no reported court decisions relating to
State bonded indebtedness other than two cases validating the legislative
determination of the public purpose for improving employment opportunities
and related activities. The State Constitution has never contained
provisions requiring submission of the questions of incurring indebtedness
to a public referendum. Therefore, the authorization and issuance of State
debt, including the purpose, amount and nature thereof, the method and
manner of the incurrence of such debt, the maturity and terms of repayment
thereof, and other related matters are statutory.

The State has established a program of temporary note issuances to
cover periodic cash flow requirements. The maximum volume of cash flow
borrowing is determined based upon the State's actual cash needs on a daily
basis. The State, as of April 17, 1990, commenced a program permitting the
issuance of up to $539 million of General Obligation Temporary Notes (the
"April 1990 Program"). Under the April 1990 Program, the State may issue
notes during a five-year period concluding in April of 1995. Additionally,
a separate $200 million temporary note program commenced as of April 30,
1991 and concluded on October 31, 1991. There are currently no notes
outstanding under either program.

As of April 4, 1996, the General Assembly has empowered, pursuant to
bonds acts in effect, the State Bond Commission to authorize general
obligation bonds in the amount of $10,534,394,000. As of April 4, 1996,
the State Bond Commission has authorized $9,381,215,000 in such bonds and
the balance of $1,153,179,000 was available for authorization. From such
total authorizations of $9,381,215,000, bonds in the aggregate of
$8,237,794,000 have been issued and the balance of $1,143,421,000 remained
authorized but unissued as of April 4, 1996.

General obligation bonds issued by Connecticut municipalities are
payable primarily from ad valorem taxes on property subject to taxation by
the municipality. Certain Connecticut municipalities have experienced
severe fiscal difficulties and have reported operating and accumulated
deficits in recent years. The most notable of these is the City of
Bridgeport.

S&P, Moody's and Fitch rate Connecticut's municipal bonds AA-, Aa and
AA, respectively.

Florida Series

Revenues and Expenditures. Financial operations of the State of
Florida covering all receipts and expenditures are maintained through the
use of three funds: General Revenue Fund, Trust Funds and Working Capital
Fund. The General Revenue Fund receives the majority of State tax
revenues. The Trust Funds consist of monies received by the State which
under law or trust agreement are segregated for a purpose authorized by
law. Revenues in the General Revenue Fund which are in excess of the
amount needed to meet appropriations may be transferred to the Working
Capital Fund. Beginning in 1993-94, the Florida Constitution requires that
the State establish a Budget Stabilization Fund. This fund is to contain a
balance of at least 1% of the previous year's net General Revenue
collections in 1994-95, 2% in 1995-96, 3% in 1996-97, 4% in 1997-98 and 5%
in 1998-99 and thereafter. These moneys can be only spent for the purpose
of covering revenue shortfalls and for emergency purposes as defined by
general law. Implementing legislation establishing this fund was enacted
during the 1994 Session of the Florida legislature.

In November of 1994, Florida voters approved an amendment to the
Florida Constitution which set forth limitations on revenue collections by
the State. With certain exceptions, State revenues collected for any
fiscal year are limited to State revenues allowed under the amendment for
the prior fiscal year plus an adjustment for growth.

As used in the amendment, "growth" means an amount equal to the
average annual rate of growth in Florida personal income over the most
recent twenty quarters times the State revenues allowed under the amendment
for the prior fiscal year. For the 1995-1996 fiscal year, the State
revenues allowed under the amendment for the prior fiscal year shall equal
the State revenues collected for the 1994-1995 fiscal year. Florida
personal income will be determined by the Legislature, from information
available from the United States Department of Commerce or its successor on
the first day of February prior to the beginning of the fiscal year. State
revenues collected for any fiscal year in excess of this limitation will be
transferred to the Budget Stabilization Fund until the fund reaches the
maximum balance specified above, and thereafter shall be refunded to
taxpayers as provided by general law. State revenues allowed under the
amendment for any fiscal year may be increased by a two-thirds vote of the
membership of each house of the Florida Legislature.

For purposes of the amendment "State revenues" means taxes, fees,
licenses, and charges for services imposed by the Legislature on
individuals, businesses, or agencies outside State government. However,
"State revenues" does not include: revenues that are necessary to meet the
requirements set forth in documents authorizing the issuance of bonds by
the State; revenues that are used to provide matching funds for the federal
Medicaid program with the exception of the revenues used to support the
Public Medical Assistance Trust Fund or its successor program and with the
exception of State matching funds used to fund elective expansions made
after July 1, 1994; proceeds from the State Lottery returned as prizes;
receipts of the Florida Hurricane Catastrophe Fund; balances carried
forward from prior fiscal years; taxes, licenses, fees and charges for
services imposed by local, regional, or school district governing bodies;
or revenue from taxes, licenses, fees and charges for services required to
be imposed by any amendment or revision to the Constitution after July 1,
1994. An adjustment to the revenue limitation will be made by general law
to reflect the fiscal impact of transfers of responsibility for the funding
of governmental functions between the State and other levels of government.

The amendment became effective January 1, 1995.

The Florida Constitution and Statutes mandate that the State budget as
a whole, and each separate fund within the State budget, be kept in balance
from currently available revenues each State fiscal year.

Florida ended fiscal years 1993-94 and 1994-95 with General Revenue
plus Working Capital Funds unencumbered reserves of approximately $351.8
million and $319.5 million, respectively. Estimated fiscal year 1995-96
General Revenue plus Working Capital Funds available total $14.99 billion.
Total effective appropriations for the 1995-96 fiscal year are estimated at
$14.85 billion, resulting in estimated unencumbered reserves of $140.0
million at the end of the fiscal year.

In fiscal year 1994-95, the State derived approximately 61% of its
total direct revenues from the General Revenue Fund, Trust Funds and
Working Capital Fund from State taxes. Federal grants and other special
revenues accounted for the remaining revenues. Major sources of tax
revenues to the General Revenue Fund are the sales and use tax, corporate
income tax, and beverage tax, which amounted to 61%, 6% and 3%,
respectively, of total General Revenue Fund receipts.

State expenditures are categorized for budget and appropriation
purposes by type of fund and spending unit, which are further subdivided by
line item. In fiscal year 1993-94, expenditures from the General Revenue
Fund for education, health and welfare and public safety amounted to
approximately 48.9%, 31.6% and 13%, respectively, of total General
Revenues.

Sales and Use Tax. The greatest single source of tax receipts in
Florida is the sales and use tax. The sales tax is 6% of the sales price
of tangible property sold at retail in the State. The use tax is 6% of the
cost price of tangible personal property when the same is not sold but is
used, or stored for use, in the State. The use tax also applies to the use
in the State of tangible personal property purchased outside Florida which
would have been subject to the sales tax if purchased from a Florida
dealer. Less than 10% of the sales tax is designated for local governments
and is distributed to the respective counties in which it is collected for
use by such counties and municipalities therein. In addition to this
distribution, local governments may (by referendum) assess a .5% or 1%
discretionary sales surtax within their county. Proceeds from this local
option sales tax are earmarked for funding local infrastructure programs
and acquiring land for public recreation or conservation or protection of
natural resources. In addition, non-consolidated counties with populations
in excess of 800,000 may levy a local option sales tax to fund indigent
health care. This tax rate may not exceed .5% and the combined levy of the
indigent health care surtax and the infrastructure surtax described above
may not exceed 1%. Furthermore, charter counties which adopted a charter
prior to June 1, 1976, and each county with a consolidated county/municipal
government, may (by referendum) assess up to a 1% discretionary sales
surtax within their county. Proceeds from this tax are earmarked for the
development, construction, maintenance and operation of a fixed guideway
rapid transit system or may be remitted to an expressway or transportation
authority for use on country roads and bridges, for a bus system, or to
service bonds financing roads and bridges. The two taxes, sales and use,
stand as complements to each other, and taken together provide a uniform
tax upon either the sale at retail or the use of all tangible personal
property irrespective of where it may have been purchased. This tax also
includes a levy on the following: (i) rentals of tangible personal
property, transient lodging and non-residential real property; (ii)
admissions to places of amusements, most sports and recreation events;
(iii) utilities, except those used in homes; and (iv) restaurant meals.
Exemptions include: groceries; medicines; hospital rooms and meals; fuels
used to produce electricity; purchases by religious, charitable and
educational nonprofit institutions; most professional, insurance and
personal service transactions; apartments used as permanent dwellings; the
trade-in value of motor vehicles; and residential utilities.

All receipts of the sales and use tax, with the exception of the tax
on gasoline and special fuels, are credited to either the General Revenue
Fund, the Solid Waste Management Trust Fund, or countries and cities. For
the State fiscal year which ended June 30, 1994, receipts from this source
were $10.505 billion, an increase of 11.4% from fiscal year 1992-93.

Motor Fuel Tax. The second largest source of State tax receipts is
the tax on motor fuels. Preliminary data show collections from this source
in the State fiscal year ended June 30, 1994, were $1.416 billion.
However, these revenues are almost entirely dedicated trust funds for
specific purposes and are not included in the State General Revenue Fund.

State and local taxes on motor fuels (gasoline and special fuel)
include several distinct fuel taxes: (i) the State sales tax on motor
fuels, levied at 6% of the average retail price per gallon of fuel, not to
fall below 6.9 cents per gallon; (ii) the State excise tax of four cents
per gallon of motor fuel, proceeds distributed to local governments; (iii)
the State Comprehensive Enhanced Transportation System (SCETS) tax, which
is levied at a rate in each county equal to two-thirds of the sum of the
county's local option motor fuel taxes; and (iv) local option motor fuel
taxes, which may range between one cent to seven cents per gallon.

Alcoholic Beverage Tax. Florida's alcoholic beverage tax is an excise
tax on beer, wine, and liquor. This tax is one of the State's major tax
sources, with revenues totalling $559.3 million in State fiscal year ended
June 30, 1994. Alcoholic beverage receipts declined from the previous
year's total. The revenues collected from this tax are deposited into the
State's General Revenue Fund.

The 1990 Legislature established a surcharge on alcoholic beverages.
This cargo is levied on alcoholic beverages sold for consumption on
premises. The surcharge is at ten cents per ounce of liquor, ten cents per
four ounces of wine, four cents per twelve ounces of beer. Most of these
proceeds are deposited into the General Revenue Fund. In fiscal 1993-94 a
total of $95.1 million was collected.

Corporate Income Tax. Pursuant to an amendment to the State
Constitution, the State Legislature adopted, effective January 1, 1972, the
"Florida Income Tax Code" imposing a tax upon the net income of
corporations, organizations, associations and other artificial entities for
the privilege of conducting business, deriving income or existing within
the State. This tax does not apply to natural persons who engage in a
trade or business or profession under their own or any fictitious name,
whether individually as proprietorships or in partnerships with others,
estates of decedents or incompetents, or testamentary trusts.

The tax is imposed in an amount equal to 5.5% of the taxpayer's net
corporate income for the taxable year, less a $5,000 exemption, as defined
in such Code. Net income is defined by the Code as that share of a
taxpayer's adjusted Federal income for such year which is apportioned to
the State of Florida. Apportionment is by weighted factors of sales (50%),
property (25%) and payroll (25%). All business income is apportioned and
non-business income is allocated to a single jurisdiction, usually the
State of commercial domicile.

All receipts of the corporate income tax are credited to the General
Revenue Fund. For the fiscal year ended June 30, 1995, receipts from this
source were $1.267 billion, an increase of 3% from fiscal year 1993-94.

Documentary Stamp Tax. Deeds and other documents relating to a realty
are taxed at 70 cents per $100 of consideration, while corporate shares,
bonds, certificates of indebtedness, promissory notes, wage assignments and
retail charge accounts are taxed at 35 cents per $100 of consideration.
Documentary stamp tax collections totalled $699.7 million during fiscal
year 1994-95, posting a 10% decrease from the previous fiscal year. The
General Revenue Fund receives approximately 62% of documentary stamp tax
collections.

Gross Receipts Tax. Effective July 1, 1992, the tax rate was
increased from 2.25% to 2.5% of the gross receipts of electric, natural gas
and telecommunications services. All gross receipts utilities collections
are credited to the Public Education Capital Outlay and Debt Service Trust
Fund. In fiscal year 1994-95, gross receipts utilities tax collections
totalled $511.9 million, an increase of 9% over the previous fiscal year.

Intangible Personal Property Tax. This tax is levied on two distinct
bases: (i) stocks, bonds, including bonds secured by Florida realty,
notes, government leaseholds, interests in limited partnerships registered
with the SEC, and other miscellaneous intangible personal property not
secured by liens on Florida realty are taxed annually at a rate of 2 mills,
(ii) mortgages and other obligations secured by liens on Florida realty,
taxed with a non-recurring 2 mill tax.

Of the tax proceeds, 33.5% is distributed to the Municipal Revenue
Sharing Trust Fund. The remainder is distributed to the General Reserve
Fund.

Fiscal year 1994-95 total intangible personal property tax collections
were $1.055 billion, a 1% increase over the prior year.

Severance Taxes. The severance tax includes the taxation of oil, gas
and sulfur production and a tax on the severance of primarily phosphate
rock and other solid minerals. Total collections from severance taxes
totalled $56.5 million during fiscal year 1994-95, up 3% from the previous
fiscal year.

Lottery. The 1987 Legislature created the Department of the Lottery
to operate the State Lottery and setting forth the allocation of the
revenues. Of the revenues generated by the Lottery, 50% is to be returned
to the public as prizes; at least 38% is to be deposited in the Educational
Enhancement Trust Fund (for public education); and no more than 12% can be
spent on the administrative cost of operating the lottery.

Fiscal year 1994-95 produced ticket sales of $2.7 billion of which
education received approximately $1.1 billion.

Georgia Series

Georgia's economy grew rapidly in the 1980s, resulting in a general
fund reserve. As a result of a slowdown in the State's economy in the
early 1990's, the general fund reserve was effectively eliminated.

Beginning in fiscal 1993, however, revenues once again began to exceed
appropriations. The State's revenue shortfall reserve at the end of Fiscal
1995 was approximately $288 million. Revenues are estimated to slightly
exceed expenditures for Fiscal 1996.

Georgia's unemployment rate was 4.5% for 1996 (January- April
annualized rate), which is a decrease of 0.3% over the State's 1995 annual
average unemployment rate. The largest sectors of Georgia's economy are
wholesale and retail trade, services, manufacturing and government. Per
capita income levels are less than the U.S. average (92.9% of the U.S.
average in 1993), but Georgia's average annual growth rate of per capita
income has exceeded that of the United States as a whole since 1960.

Constitutional Provisions. Georgia's Constitution limits the
appropriation of funds for any given fiscal year to the sum of the amount
of unappropriated surplus expected to have accrued at the beginning of the
fiscal year and the amount not greater than the total receipts anticipated,
less refunds, as estimated. The State Constitution provides for
supplementary appropriations in accordance with its provisions as well.

Georgia may incur public debt to supply a temporary deficit due to a
delay in collecting the taxes of that fiscal year. Such debt may not
exceed, in the aggregate, 5% of the total revenue receipts, less refunds,
in the fiscal year immediately preceding the year in which such debt is
incurred. The debt incurred is to be repaid on or before the last day of
the fiscal year in which it is incurred out of taxes levied for that fiscal
year. No such debt may be incurred in any fiscal year under this provision
if there is then outstanding unpaid debt from any previous fiscal year
which was incurred to supply a temporary deficit. No such debt has been
incurred under this provision since its inception.

The State Constitution also provides that the State may incur public
debt for three types of public purposes: (1) debt to "repel invasion,
suppress insurrection, and defend the State in time of war;" (2) general
obligation debt and (3) guaranteed revenue debt. General obligation debt
may be incurred to acquire, construct, develop, extend, enlarge or improve
land, waters, property, highways, buildings, structures, equipment or
facilities of the State, its agencies, departments, institutions and
certain State Authorities, to provide educational facilities for county and
independent school systems, to provide public library facilities for county
and independent school systems, counties, municipalities, and boards of
trustees of public libraries or boards of trustees of public library
systems, and to make loans to counties, municipal corporations, political
subdivisions, local authorities and other local government entities for
water and sewerage facilities or systems. Guaranteed revenue debt may be
incurred by guaranteeing the payment of certain revenue obligations issued
by an instrumentality of the State as set forth in its Constitution.

Georgia may not incur debt at any time when the highest aggregate
annual debt service requirements for the then current year or any
subsequent year for outstanding general obligation debt and guaranteed
revenue debt, including the proposed debt, and the highest aggregate annual
payments for the then current year or any subsequent fiscal year of the
State under certain contracts then in force, exceed 10% of the total
revenue receipts, less refunds, of the State treasury in the fiscal year
immediately preceding the year in which any such debt is to be incurred.
No general obligation debt may be incurred at any time when the term of the
debt is in excess of 25 years.

The State Constitution also provides that Georgia counties,
municipalities, and other political subdivisions may not incur debt
(including debt incurred on behalf of any special district) in excess of
10% of the assessed value of all taxable property within such county,
municipality, or political subdivision. However, a separate provision of
the State Constitution permits certain long-term, intergovernmental
contracts for services and facilities. The Georgia Supreme Court has held
that certain categories of intergovernmental contracts give rise to payment
obligations which are not "debts" subject to the 10% debt limitation. It
is possible that the intergovernmental contracts clause could be used by
local governments to justify entering into transactions which increase
their financial obligations, and such transactions could result in
increasing the credit risk associated with debt obligations issued by such
governmental units.

Revenues and Expenditures. Georgia's major revenue sources are its
sales tax and its income tax. The State also receives revenues from its
motor fuels tax, from miscellaneous fees and sales, from other taxes (such
as the intangibles tax, alcohol taxes, inheritance tax, and license taxes),
and from the State lottery. Unaudited information from the Georgia Revenue
Department indicates that revenues from these sources increased 8% in
fiscal year 1995 from fiscal year 1994, and that these revenue sources
generated the following percentages of total Georgia State revenue in
fiscal year 1995:

Sales Tax 34.04%
Income Tax 43.78%
Motor Fuels Tax 5.06%
Lottery 3.97%
Other Taxes 13.15%
TOTAL 100.0%

State expenditures are classified by major policy category for
budgetary purposes. In the fiscal year 1996 operating budget, Georgia
expenditures for educational development, human resources, protection of
persons and property, and transportation amounted to 52.2%, 25.6%, 9.0%,
and 4.3%, respectively, of total budgeted expenditures. Debt service for
issued obligations accounts for 3.9% of total budgeted expenditures for
fiscal year 1996, and is projected to account for 3.7% of total budgeted
expenditures in fiscal year 1997.

For fiscal years ended June 30, 1975 through June 30, 1997, the
aggregate general obligation debt and guaranteed revenue debt authorized by
the State General Assembly are $7.9 billion and $193 million, respectively.

The aggregate amount of general obligation debt and guaranteed revenue debt
actually issued by the State, as of May 31, 1996, is $8.1 billion. The
total outstanding principal amount of indebtedness of the State as of May
31, 1996 is $4.9 billion. Of this outstanding debt, 28.8% is due and
payable on or before January 1, 2001 and 56.8% is due and payable on or
before January 1, 2006.

Significant Contingent Liabilities. The State from time to time is
named as a party in certain lawsuits, which may or may not have a material
adverse impact on the financial position of the State if decided in a
manner adverse to the State's interests. Certain of such lawsuits which
could have a significant impact on the State's financial position are
summarized below.

Age International, Inc. v. State (two cases) and Age International,
Inc. v. Miller. Three suits (two for refund and one for declaratory and
injunctive relief) have been filed against the State of Georgia by
out-of-state producers of alcoholic beverages. The first suit for refund
seeks $96 million dollars in refunds of alcohol taxes imposed under
Georgia's post-Bacchus (see previous note) statute, O.C.G.A. Sec. 3-4-60.
These claims constitute 99% of all such taxes paid during the 3 years
preceding these claims. In addition, the claimants have filed a second
suit for refund for an additional $23 million dollars for later time
periods. These two cases encompass all known or anticipated claims for
refund of such type within the apparently applicable statutes of
limitations for the years in question, i.e., 1989 through January 1993.
The two Age refund cases are still pending in the state trial court. The
Age declaratory/injunctive relief case was dismissed by the District Court.

That dismissal was affirmed by the Eleventh Circuit Court of Appeals.

Board of Public Education for Savannah/Chatham County v. State of
Georgia. This case is based on the local school board's claim that the
State is obligated to finance the major portion of the costs of its
desegregation program. The Savannah Board originally requested restitution
in the amount of approximately $30,000,000, but the Federal District Court
set forth a formula which would require a State payment in the amount of
approximately $8,900,000 computed through June 30, 1994. Plaintiffs,
dissatisfied with the apportionment of desegregation costs between State
and county, and an adverse ruling on the State funding formula for
transportation costs, appealed to the Eleventh Circuit Court of Appeals.
The State has filed a responsive cross-appeal on the ground that there is
no basis for any liability. Subsequently, the parties agreed to a
settlement, which has been approved by the Court. The settlement calls for
the State to pay the amount awarded to the Plaintiff and to offer an option
regarding future funding methodology for pupil transportation. Because
interest was accruing in the settlement, in March, 1995, the State paid the
Plaintiffs $8,925,000 in partial satisfaction of the settlement agreement.
The final settlement figure has yet to be calculated, due to costs which
accrued during the pendency of the settlement proposal. Those cost
calculations will be finalized in the next several months but are not
expected to exceed a total of $10,000,000, including the money already
paid.

DeKalb County v. State of Georgia. A similar complaint has been filed
by DeKalb County. The Plaintiffs sought approximately $67,500,000 in
restitution. The Federal District court ruled that the State's funding
formula for pupil transportation (which the District Court in the
Savannah/Chatham County case upheld) was contrary to State law. This ruling
would require a State payment of a state law funding entitlement in the
amount of approximately $34,000,000 computed through June 30, 1994.
Motions to reconsider and amend the Court's judgment were filed by both
parties. The State's motion was granted, in part, which reduced the
required State payment to approximately $28,000,000. Notices of appeal to
the Eleventh Circuit Court of appeals have been filed. There are
approximately five other school districts which might file similar claims.

Leslie K. Johnson v. Collins. Plaintiff in this case has filed suit
in federal district court and in the State Superior Court of Chatham
County. Plaintiff challenges the constitutionality of Georgia's transfer
fee provided by O.C.G.A. Sec. 40-3-21.1 (often referred to as "impact fee") by
asserting that the fee violates the commerce clause, due process, equal
protection and privilege and immunities provisions of the constitution.
Plaintiff seeks to prohibit the State from further collections and to
require the State to return to her and those similarly situated all fees
previously collected. A similar lawsuit has also been filed in the
Superior Court of Fulton County (Mueller v. Collins). From May of 1992 to
February 15, 1995, the State has collected $20,006,834.72. The State
continues to collect approximately $500,000 to $600,000 per month.

Daniel W. Tedder v. Marcus E. Collins, Sr., Cobb County Superior
Court, Civil Action No. 931553028. Class action challenging the validity
of a Georgia Department of Revenue Regulation issued in July of 1992, which
resulted in enforcement of sales tax collections on sales of used
transportation equipment, most notably sales of used cars where neither
party is engaged in the regular sale of used cars. The trial court
declared the regulation invalid. Approximately $30,000,000 of tax on such
sales was collected before the regulation was rescinded and collections
ceased. Accordingly, refund claims of up to $30,000,000 plus interest,
could be sought. Approximately $21,900,000 in refunds have been paid.

Buskirk and Estill v. State of Georgia, et al.. On September 1, 1994,
plaintiffs in this case filed a civil action in the Superior Court of
Fulton County, Georgia (No. E-31547) on behalf of all "classified employees
of the State of Georgia or its agencies and departments during all or part
of fiscal year 1992 through 1995 who were eligible to receive within grade
pay increases and who would have received same were it not for a freeze of
within grade pay increases." The trial court granted the State's motion to
dismiss and for summary judgement, which completely resolved the case in
the State's favor. Plaintiffs have filed a notice of appeal to the Georgia
Supreme Court. If the plaintiffs prevail, the parties will conduct
separate discovery on the issue of damages. The State believes that it has
good and adequate defenses to the claims made, but, should the plaintiffs
prevail in every aspect of their claims, the liability of the State in this
matter could be as much as $295,000,000, based on best estimates currently
available.

Maryland Series

The State's total expenditures for the fiscal years ending June 30,
1993, 1994 and 1995 were $11.786 billion, $12.351 billion and $13.528
billion, respectively. As of February 14, 1996, it was estimated that
total expenditures for fiscal year 1996 would be $14.611 billion. The
State's General Fund, representing approximately 54% - 60% of each year's
total budget, had an unreserved deficit of $56 million in fiscal year 1992
and unreserved surpluses of $11 million, $60 million and $132.5 million in
fiscal years 1993, 1994 and 1995, respectively. The Governor of Maryland
reduced fiscal year 1993 appropriations by approximately $56 million to
offset the fiscal year 1992 deficit. The State Constitution mandates a
balanced budget.

In April 1995, the General Assembly approved the $14.429 billion 1996
fiscal year budget. The Budget includes $2.8 billion in aid to local
governments (reflecting a $161 million increase in funding over 1995 that
provides for substantial increase in education, health and police aid), and
134.1 million in general fund deficiency appropriations for fiscal year
1995, of which $60 million is a legislatively mandated appropriation to the
Revenue Stabilization Account of the State Reserve Fund. The Revenue
Stabilization Account was established in 1986 to retain State revenues for
future needs and to reduce the need for future tax increases. The 1996
Budget does not include any proposed expenditures dependent on additional
revenue from new or broad-based taxes. When the 1996 Budget was enacted,
it was estimated that the general fund surplus on a budgetary basis at June
30, 1996, would be approximately $7.8 million. As of February 14, 1996, it
is estimated that the general fund surplus on a budgetary basis at June 30,
1996, will be $1 million. At its December 12, 1995 meeting, the Board of
Revenue Estimates lowered the estimate of fiscal year 1996 revenues by $92
million. The Governor has proposed a plan to address this shortfall by
reducing general fund appropriations by $26 million and by obtaining
additional money for the general Fund from appropriate sources (including
use of the 1995 surplus and from a transfer from the Revenue Stabilization
Account).

In January 1996, the Governor submitted his proposed 1997 Fiscal Year
Budget to the General Assembly. The Budget includes $2.9 billion in aid to
local governments (reflecting a $121.5 million increase over 1996 that
provides substantial increases in education, health and police aid), and
$77 million in general fund deficiency appropriations for fiscal year 1996.

As of February 14, 1996, it is estimated that the general fund surplus on a
budgetary basis at June 30, 1997 will be $500 thousand and that the balance
in the Revenue Stabilization Account of the State Reserve Fund also at June
30, 1997 will be $538 million.

The public indebtedness of Maryland and its instrumentalities is
divided into three basic types. The State issues general obligation bonds
for capital improvements and for various State-sponsored projects. The
Department of Transportation of Maryland issues limited special obligations
bonds for transportation purposes payable primarily from specific, fixed-
rate excise taxes and other revenues related mainly to highway use.
Certain authorities issue obligations solely from specific non-tax
enterprise fund revenues and for which the State has no liability and has
given no moral obligation assurance.

At least since the end of the Civil War, the State has paid the
principal of and interest on its general obligation bonds when due. There
is no general debt limit imposed by the State Constitution or public
general laws. Although the State has the authority to make short-term
borrowings in anticipation of taxes and other receipts up to a maximum of
$100 million, the State in the past has not issued short-term tax
anticipation and bond anticipation notes, or made any other similar short-
term borrowings for cash flow purposes.

As of July 1996, the State's general obligation bonds were rated "Aaa"
by Moody's and "AAA" by S&P and Fitch.

The Maryland Department of Transportation issues Consolidated
Transportation Bonds, which are payable out of specific excise taxes, motor
vehicle taxes and corporate income taxes, and from the general revenues of
the Department. Issued to finance highway, port, transit, rail or aviation
facilities, as of July 1996, these bonds were rated "Aa" by Moody's and
"AA" by S&P and Fitch. The Maryland Transportation Authority, an entity of
the Department issues its own revenue bonds for transportation facilities,
which are payable from certain highway, bridge and tunnel tolls. These
bonds were rated "A1" by Moody's and "A+" by S&P as of July 1996.

According to recent available ratings, general obligation bonds of
Montgomery County (abutting Washington, D.C.) are rated "Aaa" by Moody's
and "AAA" by S&P. Prince George's County, also in the Washington, D.C.
suburbs, issues general obligation bonds rated "Aa" by Moody's and "AA" by
S&P, while Baltimore County, a separate political subdivision surrounding
the City of Baltimore, issues general obligation bonds rated "Aaa" by
Moody's and "AAA" by S&P. The City of Baltimore's general obligation bonds
are rated "A1" by Moody's and "A" by S&P. The other counties in Maryland
which are rated by Moody's all have general obligation bond ratings of "A"
or better from Moody's, except for Allegheny County, the bonds of which are
rated "Baa" by Moody's. The Washington Suburban Sanitary district, a bi-
county agency providing water and sewerage services in Montgomery and
Prince George's Counties, issues general obligation bonds rated "Aa1" by
Moody's and "AA" by S&P as of July 1996. Additionally, some of the large
municipal corporations in Maryland (such as the cities of Rockville and
Annapolis) have issued general obligation bonds. There can be no assurance
that any of the foregoing ratings will continue.

Massachusetts Series

The economy of the Commonwealth of Massachusetts is experiencing a
recovery following a slowdown that began in mid-1988. Massachusetts had
benefitted from an annual job growth rate of approximately 2% since the
early 1980s, but by 1989 employment started to decline. Between 1988 and
1992, total employment in Massachusetts declined 10.7%. In 1993, 1994 and
1995, however, total employment increased by 1.6%, 2.2% and 2.4%,
respectively. Employment levels increased in all sectors except
manufacturing. Between 1990 and 1992, the Commonwealth's unemployment rate
was considerably higher than the national average, however, unemployment
rates in Massachusetts since 1993 have declined faster than the national
average (6.9% compared to 6.8% in 1993) and the employment rate in
Massachusetts in 1994 and 1995 was slightly below the national average
(6.0% compared to 6.1% for 1994 and 5.4% compared with 5.6% for 1995).

While the Commonwealth's expenditures for State programs and services
in each of the fiscal years 1987 through 1991 exceeded each year's current
revenues, Massachusetts ended each of the fiscal years 1991 to 1996 with a
positive closing fund balance in its budgeted operating funds.

In recent years, health care related costs have risen dramatically in
Massachusetts and across the nation and the increase in the State's
Medicaid and group health insurance costs reflects this trend. In fiscal
1993, Medicaid was the largest item in Massachusetts' budget and has been
one of the fastest growing budget items, although the rate of increase has
abated in recent years. During fiscal years 1989, 1990, 1991 and 1992,
Medicaid expenditures were $1.83 billion, $2.12 billion, $2.77 billion and
$2.82 billion, respectively, representing an average annual increase of
15.4%. Expenditures for fiscal 1993 were $3.15 billion, an 11.8% increase
over fiscal 1992. Medicaid expenses in fiscal 1994 were $3.31 billion and
in fiscal 1995 $3.398 billion. The average annual growth from fiscal 1991
to fiscal 1995 was 5.4% compared with approximately 17% between fiscal 1987
and fiscal 1991.

Massachusetts' pension costs have risen dramatically as the State has
appropriated funds to address in part the unfunded liabilities that had
accumulated over several decades. Total pension costs increased at an
average annual rate of 8.1% from $703.9 million in fiscal 1991 to $968.8
million in fiscal 1995.

Payments for debt service on Massachusetts general obligation bonds
and notes have risen at an average annual rate of 11.6% from $649.8 million
in fiscal 1989 to $1.23 billion in fiscal 1995. Debt service payments were
$898.3 million in fiscal 1992, $1.14 billion in fiscal 1993 and $1.15
billion in fiscal 1994. In 1990, legislation was enacted which generally
imposes a 10% limit on the total appropriations in any fiscal year that may
be expended for payment of interest and principal on general obligation
debt. As of January 1, 1995, the State had approximately $9,595 billion of
long-term general obligation debt outstanding and short-term direct
obligations of the Commonwealth totalled $264 million.

Certain independent authorities and agencies within the State are
statutorily authorized to issue debt for which Massachusetts is directly,
in whole or in part, or indirectly liable. The State's liabilities are
either in the form of (i) a direct guaranty, (ii) State support through
contract assistance payments for debt service, or (iii) indirect
obligations. The State is indirectly liable for the debt of certain
authorities through a moral obligation to maintain the funding of reserve
funds which are pledged as security for the authorities' debt.

In November 1980, voters in the Commonwealth approved a State-wide tax
limitation initiative petition, commonly known as Proposition 2 1/2, to
constrain levels of property taxation and to limit the charges and fees
imposed on cities and towns by certain government entities, including
county governments. The law is not a constitutional provision and
accordingly is subject to amendment or repeal by the legislature.
Proposition 2 1/2 limits the property taxes which a Massachusetts city or town
may assess in any fiscal year to the lesser of (i) 2.5% of the full and
fair cash value of real estate and personal property therein and (ii) 2.5%
over the previous year's levy limit plus any growth in the tax base from
certain new construction and parcel subdivisions. In addition, Proposition
2 1/2 limits any increase in the charges and fees assessed by certain
governmental entities, including county governments, on cities and towns to
the sum of (i) 2.5% of the total charges and fees imposed in the preceding
fiscal year, and (ii) any increase in charges for services customarily
provided locally or services obtained by the city or town at its option.
The law contains certain override provisions which require vote approval at
a general or special election. Proposition 2 1/2 also limits any annual
increase in the total assessments on cities and towns by any county,
district, authority, the Commonwealth, or any other governmental entity
except regional school districts and regional water and sewer districts
whose budgets are approved by 2/3 of their member cities and towns. During
the 1980s, Massachusetts increased payments to the cities, towns and
regional school districts ("Local Aid") to mitigate the impact of
Proposition 2 1/2 on local programs and services. In fiscal 1996,
approximately 19.1% of Massachusetts' budget was allocated to Local Aid.
Direct Local Aid dropped from a high of $2.961 billion in fiscal 1989 to
$2.727 billion in fiscal 1994, but increased to $2.976 billion in fiscal
1995 and an estimated $3.240 billion in fiscal 1996. Recent increases are
largely a result of comprehensive education reform legislation enacted in
1993 that requires annual increases in state expenditures for education
funding, subject to annual legislative appropriations, above a fiscal 1993
base of approximately $1.288 billion. Increases of $175 million above the
base for fiscal 1994 to $876 million for fiscal 1997 have been fully
funded. Additional increases are called for in future years.

Many factors affect the financial condition of the Commonwealth and
its cities, towns and public bodies, such as social, environmental, and
economic conditions, many of which are not within the control of such
entities. As is the case with most urban States, the continuation of many
of Massachusetts' programs, particularly its human services programs, is in
significant part dependent upon continuing Federal reimbursements which
have been steadily declining. The loss of grants to Massachusetts and its
cities and towns could further slow economic development. To the extent
that such factors may exist, they could have an adverse effect on economic
conditions in Massachusetts, although what effect, if any, such factors
would have on Massachusetts' Municipal Obligations cannot be predicted.

Michigan Series

General. Recently, the State's economy has been undergoing certain
basic changes in its underlying structure. These changes reflect a
diversifying economy which is less reliant on the automobile industry. As
a result, the State anticipates that its economy in the future will be less
susceptible to cyclical swings and more resilient when national downturns
occur. In 1995, approximately 77% of wage and salary employment was in the
State's non-manufacturing sectors. In 1995, total employment was 4,491,000
with manufacturing wage and salary employment totaling 974,900.
Manufacturing employment remains below the peak employment level of
1,179,600 attained in 1978. Employment in the durable goods manufacturing
industries was 728,600 and non-durable goods employment was 246,400 in the
State in 1995. The motor vehicle industry, which is still an important
component in the State's economy, employed 283,700 in 1995. The State's
average unemployment rate for calendar year 1995 was 5.3%.

The State's general obligation bonds are rated Aa by Moody's, AA by
S&P and AA by Fitch. Because most of the State Municipal Obligations are
revenue or general obligations of local government or authorities, rather
than general obligations of the State of Michigan itself, ratings on such
State Municipal Obligations may be different from those given to the State
of Michigan.

State Constitutional Provisions Affecting Revenues and Expenditures.
The State Constitution provides that proposed expenditures and revenues of
any operating fund must be in balance and that any prior year's surplus or
deficit must be included in the succeeding year's budget for that fund.

In 1978, the State Constitution was amended to limit the amount of
total State revenues raised from taxes and certain other sources. State
revenues (excluding Federal aid and revenues for payment of principal and
interest on general obligation bonds) in any fiscal year are limited to a
fixed percentage of State personal income in the prior calendar year or
average of the prior three calendar years, whichever is greater. The
percentage is fixed by the amendment to equal the ratio of the 1978-79
fiscal year revenues to total calendar 1977 State personal income.

If, in any fiscal year, revenues exceed the revenue limitation by 1%
or more, the entire amount of such excess shall be rebated in the following
fiscal year's personal income tax or single business tax. Any excess of
less than 1% may be transferred to the State's Budget Stabilization Fund.
The State may raise taxes in excess of the limit for emergencies when
deemed necessary by the Governor and two-thirds of the members of each
house of the Legislature.

The State Constitution provides that the proportion of State spending
paid to all units of local government to total State spending may not be
reduced below the proportion in effect in the 1978-79 fiscal year. If such
spending does not meet the required level in a given year, an additional
appropriation for local governmental units is required by the following
fiscal year. Spending for local units met this requirement for fiscal
years 1985-86 through 1991-92 and fiscal year 1993-94.

The State has settled litigation with Oakland County, Michigan in
which Oakland County had alleged that the classification of State
expenditures for certain mental health programs as spending for local units
was improper. As part of the settlement, the State agreed to reclassify
these expenditures, beginning in fiscal year 1992-93. As a result, the
State determined that in fiscal year 1992-93 the proportion of State
spending from State sources paid to local units of government was
approximately $97 million less than constitutionally required and an amount
at least this large will be appropriated to the State's local government
payment fund in the next budget submission.

The State Constitution also requires the State to finance any new or
expanded activity of local governments mandated by State law. Any
expenditures required by this provision would be counted as State spending
for local units of government for the purpose of determining compliance
with the provision cited above.

Economic and Fiscal Condition. Legislation requires that the
administration prepare two economic forecasts each year. These are
presented to a Consensus Revenue Estimating Conference in January and May
of each year. The May 1996 forecast is summarized below.

The State's economic forecast for calendar year 1996 projects modest
growth. Real GDP is projected to grow 2.7% in 1996, on a calendar year
basis. Car and light truck sales are expected to total 14.9 million units
in 1996.

The forecast assumes moderate inflation, accompanied by steady
interest rates. Ninety-day T-Bill rates are expected to average 5.1
percent for 1996. The United States' unemployment rate is projected to
decline to an average of 5.5 percent for 1996.

The State's forecast for the Michigan economy reflects the above
national outlook. Total wage and salary employment is projected to grow
1.5% in 1996. This slight growth reflects the ongoing diversification of
the Michigan economy. The unemployment rate is projected to average 6.0%
in 1996, continuing the recent trend to Michigan's unemployment rate being
near the national average compared to the 15-year history of having higher
unemployment.

The Governor's Executive Budget for fiscal year 1995-96 was submitted
to the Legislature on February 9, 1995. The fiscal year 1995-96 general
fund general purpose Executive Budget recommendation totaled $8,507.6
million. The budget was passed by the Legislature in June 1995.

The Governor's Executive Budget for fiscal year 1996-97 was submitted
to the Legislature on February 8, 1996. The fiscal year 1996-97 general
fund/general purpose Executive Budge recommendation totaled $8,246.6
million.

Property Tax Reform Proposals. On August 19, 1993, the Governor
signed into law Act 145, Public Acts of Michigan, 1993 ("Act 145"), a
measure which would have significantly impacted financing of primary and
secondary school operations and which has resulted in additional property
tax and school finance reform legislation. Act 145 would have exempted all
property in the State of Michigan from millage levied for local and
intermediate school districts operating purposes, other than millage levied
for community colleges, effective July 1, 1994. In order to replace local
property tax revenues lost as a result of Act 145, the Michigan
Legislature, in December 1993, enacted several statutes which address
property tax and school finance reform.

The property tax and school finance reform measures included a ballot
proposal which was approved by the voters on March 15, 1994. Effective May
1, 1994, the State sales and use tax was increased from 4% to 6%, the State
income tax was decreased from 4.6% to 4.4%, the cigarette tax was increased
from $.25 to $.75 per pack and an additional tax of 16% of the wholesale
price was imposed on certain other tobacco products. A 0.75% real estate
transfer tax became effective January 1, 1995. Beginning in 1994, a State-
wide property tax of 6 mills will be imposed on all real and personal
property currently subject to the general property tax. The ability of
school districts to levy property taxes for school operating purposes has
been partially restored. A school board will, with voter approval, be able
to levy up to the lesser of 18 mills or the number of mills levied in 1993
for school operating purposes, on non-homestead property and non-qualified
agricultural property. The adopted ballot proposal contains additional
provisions regarding the ability of local school districts to levy taxes as
well as a limit on assessment increases for each parcel of property,
beginning in 1995 to the lesser of 5% or the rate of inflation. When
property is subsequently sold, its assessed value will revert to the
current assessment level of 50% of true cash value. Under the adopted
ballot proposal, much of the additional revenue generated by the new taxes
will be dedicated to the State School Aid Fund.

The adopted ballot proposal contains a system of financing local
school operating costs relying upon a foundation allowance amount which may
vary by district based upon historical spending levels. State funding will
provide each school district an amount equal to the difference between
their foundation allowance and the revenues generated by their local
property tax levy. Local school districts will also be entitled to levy
supplemental property taxes to generate additional revenue if their
foundation allowance is less than their historical per pupil expenditures.
The adopted proposal also contains provisions which allow for the levy of a
limited number of enhancement mills on regional and local school district
bases.

The adopted ballot proposal shifts significant portions of the cost of
local school operations from local school districts to the State and raises
additional State revenues to fund these additional State expenditures.
These additional revenues will be included within the State's
constitutional revenue limitations and may impact the State's ability to
raise additional revenues in the future.

Budget Stabilization Fund. In 1977, the BSF was established to
accumulate balances during years of significant economic growth which may
be utilized in years when the State's economy experiences cyclical
downturns or unforeseen fiscal emergencies. Calculated on an accrual
basis, the unreserved ending accrued balance of the Budget Stabilization
Fund on September 30, 1994 was $775.5 million. The preliminary unreserved
accrued balance of the Budget Stabilization Fund on September 30, 1995 was
$1,003.2 million.

State and State-Related Indebtedness. The State Constitution limits
State general obligation debt to (i) short-term debt for State operating
purposes, (ii) short- and long-term debt for the purpose of making loans to
school districts and (iii) voter-approved long-term debt.

Short-term debt for operating purposes is limited to an amount not in
excess of 15% of undedicated revenues received during the preceding fiscal
year and must be issued only to meet obligations incurred pursuant to
appropriation and repaid during the fiscal year in which incurred. Such
debt does not require voter approval.

Debt incurred by the State for the purpose of making loans to school
districts may be issued in whatever amount required without voter approval.

All other general obligation bonds issued by the State must be approved as
to amount, purpose and method of repayment by a two-thirds vote of each
house of the Legislature and by a majority vote of the public at a general
election. There is no limitation as to number or size of such general
obligation issues.

There are also various State authorities and special purpose agencies
created by the State which issue bonds secured by specific revenues. Such
debt is not a general obligation of the State.

The State has issued outstanding general obligation full faith and
credit bonds and notes for Water Resources, Environmental Protection,
Recreation Program, and School Loan purposes. As of September 30, 1995,
the outstanding principal amount of all State general obligation bonds was
$706 million. On February 20, 1996, the State issued $900 million in
short-term general obligation notes in order to meet cash flow
requirements. These notes will mature on September 30, 1996.

As of December 31, 1994, approximately $5.0 billion in principal
amount of "qualified" bonds of local school districts was outstanding. In
the past 30 years, the State has been required only once to advance monies
from the State School Bond Loan Fund to make a debt service payment on
behalf of a school district, other than for routine loans. In that case
the tax collections available to the school district for payment of debt
service were escrowed on the due date because of litigation. After the
litigation was completed, the escrowed funds were repaid in full to the
State School Bond Loan Fund.

Minnesota Series

State Government. The State of Minnesota was formally organized as a
territory in 1849 and was admitted to the Union in 1858 as the 32nd state.
Bordered by Canada on the north, Lake Superior and Wisconsin on the east,
Iowa on the south, and North and South Dakota on the west, it is the 12th
largest and 20th most populous state in the Union.

The Minnesota Constitution organizes State government into three
branches: Executive, Legislative and Judicial. The Legislative Branch is
composed of a Senate and a House of Representatives. Fiscal administration
is performed by the Department of Finance under the control and supervision
of the Commissioner of Finance.

State and State-Related Indebtedness. The Minnesota Constitution
authorizes public debt to be incurred for the acquisition and betterment of
public land, buildings and other improvements of a capital nature or for
appropriations or loans to Minnesota state agencies or political
subdivisions for this purpose, as the Legislature by the three-fifths vote
of each House may direct, and to finance the development of agricultural
resources of the State by extending credit on real estate security, as the
Legislature may direct. All such debt is evidenced by the issuance of
State of Minnesota bonds maturing within 20 years of their date of issue,
for which the full faith and credit and taxing powers of the State are
irrevocably pledged. There is no limitation as to the amount or interest
rate of such general obligation issues.

As of May 1, 1996, the outstanding principal amount of all Minnesota
general obligation bonds was approximately $2.109 billion.

The Minnesota Constitution limits Minnesota general obligation debt to
(i) short-term debt for Minnesota operating purposes, (ii) short-term debt
for purpose of making loans to school districts and (iii) voter-approved
long-term debt.

Short-term debt for operating purposes is limited to an amount not in
excess of 15 percent of undedicated revenues received during the preceding
fiscal year and must be issued only to meeting obligations incurred
pursuant to appropriation and repaid during the fiscal year in which
incurred. The May, 1995, end of the first special session cash flow
analysis for Minnesota's Statutory General Fund indicates that Minnesota
will have a positive cash flow balance during the Current Biennium which
began on July 1, 1995 and ends June 30, 1997. Minnesota has no short-term
debt outstanding and, therefore, Minnesota does not expect to do any short
term borrowing for cash flow purposes during the Current Biennium. A more
recent cash flow analysis is not available. The Department of Finance is
in the process of developing a new cash flow forecasting model and expects
to do its next cash flow analysis in connection with the November, 1996
revenue and expenditure forecast.

There are also various Minnesota authorities and special purpose
agencies created by the state which issue bonds secured by specific
revenues. Such debt is not a general obligation of the State of Minnesota.

Constitutional and Statutory Provisions Relating to Minnesota and
Local Funding. Minnesota revenues in Minnesota are generated primarily
from individual income taxes, corporate franchise taxes, sales and use
taxes, insurance gross earnings taxes, estate taxes, motor vehicle excise
taxes, excise taxes on liquor and tobacco, mortgage taxes, deed taxes,
legalized gambling taxes, rental motor vehicle taxes, 900 telephone service
taxes, taconite and iron ore taxes, and health care provider taxes. In
addition to the major taxes described above, other sources of non-dedicated
revenue include minor taxes, 60 percent of Minnesota's lottery net
proceeds, unrestricted grants, fees and charges of Minnesota state agencies
and departments, and investment income. County, municipal and certain
special purpose districts (such as water, flood or mosquito control
districts) are authorized to levy property taxes within specified
legislative limits. A portion of Minnesota's revenues is allocated from
state government to other governmental units within Minnesota such as
municipal and county governments, school districts and state agencies
through a complex series of appropriations and financial aid formulas.
This financial interdependency of the Minnesota state government with other
units of government, subject all levels of government, in varying degrees,
to fluctuations in Minnesota's overall economy.

Minnesota's constitutional prescribed fiscal period is a biennium, and
Minnesota operates on a biennial budget basis with revenues created in the
period in which they are collected and expenditures debited in the period
in which the corresponding liabilities are incurred. The biennium begins
on July 1st of the odd numbered year and runs through June 30th of the next
odd numbered year.

Minnesota's ability to appropriate funds is limited by the Minnesota
Constitution, which directs that Minnesota government shall not in any
biennium appropriate funds in excess of projected tax revenues from all
sources. Minnesota is authorized to levy additional taxes to resolve any
inadvertent shortfalls.

Appropriations for each biennium are enacted during the final
legislative session of the immediately preceding biennium. A revenue
forecast is prepared during the legislative session to provide the
legislature with updated information for the appropriations process.
During each biennium regular forecasts of revenues and expenditures are
prepared.

Minnesota's biennial appropriation process relies on revenue
forecasting as the basis for establishing aggregate expenditure levels.
Risks are inherent in the revenue and expenditure forecasts. Assumptions
about U.S. economic activity and federal tax and expenditure policies
underlie these forecasts. Any federal law changes that increases federal
income taxes or reduce federal spending programs may adversely affect these
forecasts. Finally, even if economic and federal tax assumptions are
correct, revenue forecasts are still subject to some normal level of error.

The correctness of revenue forecasts and the strength of Minnesota's
overall economy may restrict future aid or appropriations from Minnesota
government to other units of government.

Prior to the Current Biennium, Minnesota law established a Budget
Reserve and Cash Flow Account in the Accounting General Fund which served
two functions. However, in 1995 the Minnesota Legislature departed the
Budget Reserve and Cash Flow Account into two separate accounts; the Cash
Flow Account and the Budget Reserve Account, each having a different
function. The Cash Flow Account was established in the General Accounting
Fund for the purpose of providing sufficient cash balances to cover monthly
revenue and expenditure imbalances. The use of funds from the Cash Flow
Account is governed by statute. The Cash Flow Account balance is set for
the Current Biennium at $350 million. No provision has been made for
increasing the balance of the Cash Flow Account from increases in forecast
revenues over forecast expenditures. The Budget Reserve Account was
established in the Accounting General Fund for the purpose of reserving
funds to cushion the State from an economic downturn. The use of funds
from the Budget Reserve Account and the allocation of surplus forecast
balances to the Budget Reserve Account are governed by statute. The Budget
Reserve Account balance is set for the Current Biennium at $270 million.

For Fiscal Year 1995, ending June 30, 1995, net revenues received were
$8.984 billion. After total expenditures and net transfers of $8.894
billion, Fiscal Year 1995 ended with an Unrestricted Accounting General
Fund balance of $445 million and an Unreserved Accounting General Fund
balance of $1.021 billion.

For Fiscal Year 1996, ending June 30, 1996, total revenues are
estimated to be approximately $9.237 billion. Total expenditures and
transfers are estimated at $9.363 billion and after deducting a Cash Flow
Account appropriations carry forward of $350 million and Budget Reserve
Account carry forward of $220 million, it is estimated that an Unrestricted
Accounting General Fund balance of $324 million will remain.

For Fiscal Year 1997, ending June 30, 1997, total revenues are
estimated to be approximately $9.215 billion. Total expenditures and
transfers are estimated at $9.488 billion and after deducting a Cash Flow
Account appropriations carry forward of $350 million and Budget Reserve
Account carry forward of $270 million, it is estimated that an Unrestricted
Accounting General Fund balance of $1.025 billion will remain.

In 1992 the Minnesota Legislature established the
MinnesotaCareRegistration Mark program to provide subsidized health care
insurance for long term uninsured Minnesotans, reform individual and small
group health insurance regulations, create a health care analysis unit to
collect condition-specific data about health care practices in order to
develop practice parameters for health care providers, implement certain
cost containment measures into the system, and establish an office of rural
health to ensure the health care needs of all Minnesotans are being met.
The program is not part of the Accounting General Fund. A separate
account, called the Health Care Access Fund, has been established in
Minnesota's Special Reserve Fund to account for revenues and expenditures
for the MinnesotaCareRegistration Mark program. Program expenditures are
limited to revenues received in the Health Care Access Fund. Program
revenues are derived from dedication of insurance premiums paid by
individuals, five cents of the state cigarette tax through December 31,
1993, and permanent taxes including a 2 percent gross revenue tax on
hospitals, health care providers and wholesale drug distributors, a 2
percent use tax on prescription drugs and a 1 percent gross premium tax on
nonprofit health service plans and HMOs. A previously required transfer
from the Health Care Access Fund to the Accounting General Fund was
eliminated after Fiscal year 1995. The purpose of the transfer was to pay
for increased costs in the generally funded Medicaid (MA) and General
Assistance Medical Care (GAMC) programs, due to applicants found ineligible
for MinnesotaCareRegistration Mark, but qualifying for MA or GAMC.

The 1993 Legislature adopted legislation establishing a school
district credit enhancement program. The legislation authorizes and
directs the Commissioner of Finance, under certain circumstances and
subject to the availability of funds, to issue a warrant and authorize the
Commissioner of Children, Families and Learning to pay debt service coming
due on school district tax and state-aid anticipation certificates of
indebtedness and school district general obligation bonds in the event that
the school district notifies the Commissioner of Children, Families and
Learning that it does not have sufficient money in its debt service fund
for that purpose, or the paying agent informs the Commissioner of Children,
Families and Learning that it has not received from the school district
timely payment of moneys to be used to pay debt service. The legislation
appropriates annually from the Accounting General Fund to the Commissioner
of Children, Families and Learning the amount needed to pay any warrants
which are issued. The amounts paid on behalf of any school district are
required to be repaid by it with interest, either through a reduction of
subsequent state-aid payments or by the levy of an ad valorem tax which may
be made with the approval of the Commissioner of Children, Families and
Learning. As of April 1, 1996 there were approximately $1.913 billion
principal amount of bonds enrolled in the program, some of which have been
paid. The State has not had to made any debt service payments on behalf of
school districts under the program and does not expect to make any payments
in the future.

The amount of revenue generated by Minnesota's tax structure, because
of the dependence on the income and sales taxes, is sensitive to the status
of the national and local economy. There can be no assurance that the
financial problems referred to or similar future problems will not affect
the market value or marketability of the Minnesota Municipal Obligations or
the ability of the issuers thereof to pay the interest or principal of such
obligations.

Minnesota general obligation bonds are rated AAA by Moody's and AA+ by
S&P and AAA by Fitch.

Selected Economic and Demographic Factors. Diversity and a
significant natural resource base are two important characteristics of
Minnesota's economy. Minnesota's economy is being lifted by strong
earnings growth in the service industry, rising housing construction, and
job gains which are slowly firming up to labor market.

When viewed in 1995 at a highly aggregative level of detail, the
structure of Minnesota's economy parallels the structure of the U.S.
economy as a whole. Minnesota employment in ten major industrial sectors
was distributed in approximately the same proportions as national
employment. In all sectors, the share of total Minnesota employment was
within two percentage points of national employment share.

Minnesota's employment in the durable goods industries continues to be
highly concentrated in industries specializing in the manufacturing of
industrial machinery, fabricated metal and instruments. This emphasis is
partially explained by the location in Minnesota of computer-related
equipment manufacturers. Further, manufacturers of food products, wood
products, and printed and published materials joined the high technology
manufacturing group which has lead to significant business expansion in
Minnesota in this decade.

The importance of Minnesota's rich natural resource base for overall
employment is apparent in the employment mix in non-durable goods
industries. In 1995, approximately 29.0 percent of Minnesota's non-durable
goods employment was concentrated in food and kindred industries, and
approximately 18.8 percent in paper and allied industries. This compares
to approximately 21.7 percent and 8.9 percent, respectively, for comparable
sectors in the national economy. both of these rely heavily on renewable
resources in Minnesota. Over half of Minnesota's acreage is devoted to
agricultural purposes and nearly one-third to forestry. Printing and
publishing are also relatively more important in Minnesota than in the U.S.

Mining is currently a less significant factor in the Minnesota economy
than formerly. Mining employment, primarily in the iron ore or taconite
industry, dropped from 17.3 per thousand in 1979 to 7.9 per thousand in
1995. It is not expected that mining employment will soon return to 1979
levels. However, Minnesota retains vast quantities of taconite as well as
copper, nickel, cobalt and peat which may be utilized in the future.

While Minnesota's involvement in the defense industry is limited, as
military procurement cuts continue, Minnesota employers may face challenges
in maintaining employment and sales. More importantly, Minnesota firms
producing electronic components, communication equipment, electrical
equipment, chemicals, plastics, computers and software may face additional
competition from companies converting from military to civilian production.

Job expansion and business start-ups improved remarkably in this
decade with an average rate for new businesses at 2 percent, while business
dissolutions were on the decline.

Finally, despite a state economy that is outperforming the national
economy, the future economic outlook is guarded primarily because the
growth of the health care industry has slowed significantly and the
mainframe computer and airline industries face continued softness.

Minnesota resident population grew from 4,085,000 in 1980 to 4,387 in
1990 or, at an average annual compound rate of .7 percent. In comparison,
U.S. population grew at an annual compound rate of .9 percent during this
period. Minnesota population is currently forecast by the U.S. Department
of Commerce to grow at an annual compound rate of .8 percent through 2005.

Employment and Income Growth in Minnesota. In the period 1980 to
1990, overall employment growth in Minnesota lagged behind national growth.

However, manufacturing has been a strong sector, with Minnesota employment
outperforming its U.S. counterpart in both the 1980-1990 and 1990-1995
periods.

In spite of the strong manufacturing sector, during the 1980 to 1990
period, total employment in Minnesota increased 17.9 percent as compared to
20.1 percent nationally. Most of Minnesota's slower growth can be
associated with declining agricultural employment and two recessions int he
U.S. economy in the early 1980's which were more severe in Minnesota than
nationwide. Minnesota non-farm employment growth generally kept pace with
the nation in the period after the 1981-82 recession ended in late 1982.
In the period 1990 to 1995, non-farm employment growth in Minnesota
exceeded national growth. Minnesota's non-farm employment grew 11.5
percent compared to 6.6 percent nationwide.

Since 1980, Minnesota per capita personal income has been within three
percentage points of national per capita personal income. The state's per
capita income, which is computed by dividing personal income by total
resident population, has generally remained above the national average in
spit of the early 1980's recessions and some difficult years in
agriculture. In 1994, Minnesota per capita personal income was 103.0
percent of its U.S. counterpart.

Another measure of the vitality of Minnesota's economy is its
unemployment rate. During 1994 and 1995, respectively, Minnesota's monthly
unemployment rate was generally less than the national unemployment rate,
averaging 3.6 percent in 1995, as compared to the national average of 5.2
percent.

New Jersey Series

New Jersey's economic base is diversified, consisting of a variety of
manufacturing, construction and service industries, supplemented by rural
areas with selective commercial agriculture. New Jersey's principal
manufacturing industries produce chemicals, pharmaceuticals, electrical
equipment and instruments, machinery, services, wholesale and retail trade,
food products, and printing. Other economic activities include services,
wholesale and retail trade, insurance, tourism, petroleum refining and
truck farming.

While New Jersey's economy continued to expand during the late 1980s,
the level of growth slowed considerably after 1987. By the beginning of
the national recession in July 1990 (according to the National Bureau of
Economic Research), construction activity had already been declining in New
Jersey for nearly two years, growth had tapered off markedly in the service
sectors and the long-term downward trend of factory employment had
accelerated, partly because of a leveling off of industrial demand
nationally. The onset of recession caused an acceleration of New Jersey's
job losses in construction and manufacturing, as well as an employment
downturn in such previously growing sectors as wholesale trade, retail
trade, finance, utilities and trucking and warehousing. The net effect was
a decline in the State's total nonfarm wage and salary employment from a
peak of 3,689,800 in 1989 to a low of 3,445,000 in 1992. This loss has
been followed by an employment gain of 176,400 from May 1992 to October
1995, a recovery of 67% of the jobs lost during the recession. In July
1991, S&P lowered the State's general obligation bond rating from AAA to
AA+.

Reflecting the downturn, the rate of unemployment in the State rose
from a low of 3.6% during the first quarter of 1989 to a recessionary peak
of 8.4% during 1992. Since then, the unemployment rate fell to 6.4% during
the first ten months of 1995. Despite an increase reported in December
1995, the annualized unemployment rate remained 6.4% for the fourth quarter
of 1995.

The revised estimate as shown in the Governor's Fiscal Year 1997
Budget Message forecasts Sales and Use Tax collections for Fiscal Year 1996
as $4.310 billion, a 4.3% increase from Fiscal Year 1995 revenue. The
Fiscal Year 1997 estimate of $4.403 billion, is a 2.2% increase from the
Fiscal Year 1996 estimate.

The revised estimate as shown in the Governor's Fiscal Year 1997
Budget Message forecasts Gross Income Tax collections for Fiscal Year 1996
of $4.547 billion, a 0.2% increase from Fiscal Year 1995 revenue. Included
in the Fiscal Year 1995 revenue is a 5% reduction of personal income tax
rates effective January 1, 1994 and a further 10% reduction of personal
income tax rates effective January 1, 1995 (on joint income under $80,000).

The estimate for fiscal year 1997 as shown in the Governor's Fiscal Year
1997 Budget Message of $4.610 billion, is a 1.4% increase from the Fiscal
Year 1996 estimate. Included in the Fiscal Year 1996 forecast is the 10%
reduction of personal income tax rates effective January 1, 1995 and a
further 15% reduction of personal income tax rates effective January 1,
1996 (on joint incomes under $80,000).

The revised estimate as shown in the Governor's Fiscal Year 1997
Budget Message forecasts Corporation Business Tax collections for Fiscal
Year 1996 of $1.198 billion, a 10.4% increase from Fiscal Year 1995
revenue. Included in the Corporation Business Tax forecast is a reduction
in the Corporation Business Tax rate from 9.375% to 9.0% of net New Jersey
income. The Fiscal Year 1997 forecast as shown in the Governor's Fiscal
1997 Budget Message of $1.210 billion, represents a 1.0% increase from the
Fiscal Year 1996 estimate.

The revised estimate as shown in the Governor's Fiscal Year 1997
Budget Message forecasts Other Miscellaneous Taxes Fees and Revenues
collections for Fiscal Year 1996 as $1.514 billion, a decrease from fiscal
year 1995 revenue.

The Fiscal Year 1996 revised estimates anticipate that the Legislature
will enact a Tax Amnesty program. It is estimated that a 90-day tax
amnesty will yield $70 million.

Should revenues be less than the amount anticipated in the budget for
a fiscal year, the Governor may, pursuant to statutory authority, prevent
any expenditure under any appropriation. There are additional means by
which the Governor may ensure that the State is operated efficiently and
does not incur a deficit. No supplemental appropriation may be enacted
after adoption of an appropriations act except where there are sufficient
revenues on hand or anticipated, as certified by the Governor, to meet such
appropriation. In the past when actual revenues have been less than the
amount anticipated in the budget, the Governor has exercised her plenary
powers leading to, among other actions, implementation of a hiring freeze
for all State departments and the discontinuation of programs for which
appropriations were budgeted but not yet spent.

The State appropriated approximately $15.439 billion and $16.109
billion for Fiscal 1995 and 1996, respectively. Of the $16.109 billion
appropriated in Fiscal Year 1996 from the General Fund, the Property Tax
Relief Fund, the Casino Control Fund, the Casino Revenue Fund and
Gubernatorial Elections Fund, $6.447 billion (40.0%) is appropriated for
State aid to local governments, $3.746 billion (23.3%) is appropriated for
grants-in-aid (payments to individuals or public or private agencies for
benefits to which a recipient is entitled by law or for the provision of
service on behalf of the State), $5.233 billion (32.5%) for Direct State
services, $466.3 million (2.9%) for debt service on State general
obligation bonds and $217.1 million (1.3%) for capital construction.

Should tax revenues be less than the amount anticipated in the Budget
for a fiscal year, the Governor may, pursuant to statutory authority,
prevent any expenditure under any appropriation. The appropriations for
Fiscal Year 1996 and for Fiscal year 1997 reflect the amounts contained in
the Governor's Fiscal Year 1997 Budget Message.

The State has made appropriations for principal and interest payments
for general obligation bonds for fiscal years 1993 through 1996 in the
amounts of $444.3 million, $119.9 million, $103.6 million and $466.3
million, respectively. The Governor's Fiscal Year 1997 Budget Message for
Fiscal Year 1997 includes an appropriation in the amount of $463.1 million
for principal and interest payments for general obligations bonds.

North Carolina Series

Economic Characteristics. The economic profile of North Carolina
consists of a combination of industry, agriculture, and tourism.
Non-agricultural wage and salary employment accounted for approximately
3,361,100 jobs in 1994, of which approximately 858,900 were in
manufacturing. According to the North Carolina Employment Security
Commission, in November 1994, the State ranked ninth in non-agricultural
employment and eighth in manufacturing employment. During the period from
1980 to 1993, per capita income in the State grew from $7,999 to $18,702,
an increase of 133.8%. The North Carolina Employment Security Commission
estimated the March 1995 seasonally adjusted unemployment rate to be 3.9%,
as compared with a national unemployment rate of 5.5%.

Agriculture is a basic element in North Carolina's economy. Gross
agricultural income in 1993 exceeded $5.3 billion, placing the State tenth
in the nation in gross agricultural income. Tobacco production is the
leading source of agricultural income, accounting for 20% of gross
agricultural income. The poultry industry (chicken, eggs, broilers, and
turkeys) provides nearly 34% of the total agricultural income. The pork
industry continues to expand and North Carolina is now the second largest
pork-producing State. Pork production accounts for 17% of gross
agricultural income.

North Carolina's agricultural diversity and a continuing push in
marketing efforts have protected farm income from some of the wide
variations experienced in States where most of the agricultural economy is
dependent on a small number of agricultural commodities. North Carolina is
the third most diversified agricultural State in the nation. In 1993,
there were approximately 59,000 farms in the State. A strong agribusiness
sector also supports farmers with farm inputs (agricultural chemicals and
fertilizer, farm machinery, and building supplies) and processing of
commodities produced by farmers (vegetable canning and cigarette
manufacturing). North Carolina's agricultural industry, including food,
fiber and forest, contributes over $42 billion annually to the State's
economy.

The labor force has undergone significant changes during recent years.

The State has moved from an agricultural to a service and goods producing
economy. According to the Employment Security Commission, the labor force
has grown from 2,855,200 in 1980 to 3,609,000 in 1994, an increase of
26.4%.

The Travel and Tourism Division of the North Carolina Department of
Commerce has estimated that in excess of $8 billion was spent on tourism in
the State in 1993 (up from slightly less than $7 billion in 1990),
two-thirds of which was derived from out-of-State travelers. The Travel
and Tourism Division estimates approximately 250,000 people were employed
in tourism-related jobs in the State. The State maintains 43 State parks
covering an area of approximately 135,000 acres. State forests cover an
area of approximately 35,355 acres.

Revenue Structure. North Carolina's two major operating funds which
receive revenues and from which monies are expended are the General Fund
and the Highway Fund. The 1989 General Assembly also created the Highway
Trust Fund to provide monies for a major highway construction program for
the State. There are no prohibitions or limitations in the North Carolina
Constitution on the State's power to levy taxes except an income tax rate
limitation of 10% and a prohibition against a capitation or "poll" tax.

A portion of North Carolina's tax revenue is generated from individual
and corporate income taxes, sales and use taxes, highway use tax on certain
motor vehicle rentals, corporate franchise tax, taxes on alcoholic
beverages, tobacco products and soft drinks, inheritance taxes, insurance
taxes levied on insurance companies and other taxes, which revenues are
deposited into the State's General Fund. Additional tax revenue is
generated from a motor fuels tax, highway use tax and motor vehicle license
tax, which revenue is deposited in the Highway Fund and Highway Trust Fund.

Additional non-tax revenue deposited to the General Fund consists of (i)
institutional and departmental receipts which are deposited with the State
Treasurer, including fees, tuition payments, and Federal funds collected by
State agencies, (ii) interest earned by the State Treasurer on investments
of General Fund monies, and (iii) revenues from the judicial branch.
Federal aid is an important source of non-tax revenue for the Highway Fund
and Highway Trust Fund.

State Budget. The North Carolina Constitution requires that the total
expenditures of the State for the fiscal period covered by the budget not
exceed the total of receipts during the fiscal period and the surplus
remaining in the State Treasury at the beginning of the period.

The Executive Budget Act, adopted by the General Assembly in 1925,
sets out the procedure by which the State's budget is adopted and
administered. The Act requires the adoption of a balanced budget. North
Carolina's Governor does not have the power to veto budget or other
legislative actions; however, North Carolina General Statute Section 143-25
provides that the Governor, as ex officio Director of the Budget, "may
reduce all of said appropriations, pro rata when necessary, to prevent an
overdraft or deficit to the fiscal period for which such appropriations are
made. The purpose and policy of this Article is to provide and insure that
there shall be no overdraft or deficit in the General Fund of the State at
the end of the fiscal period, growing out of appropriations for
maintenance, and the Director of the Budget is directed and required to so
administer this Article so as to prevent any such overdraft or deficit.
Prior to taking any action under this section to reduce appropriations pro
rata, the Governor may consult with the Advisory Budget Commission." The
Governor may take less drastic action to reduce expenditures to maintain a
balanced budget before the need for across-the-board appropriations
reduction arises.

The 1993 Sessions of the General Assembly reduced departmental
operating requirements $357.6 million in 1994-95 and authorized
continuation funding of $8,603.4 million for 1994-95. The saving
reductions were based on recommendations from the Governor, the Government
Performance Audit Committee and selective savings identified by the General
Assembly. After review of the continuation budget, the General Assembly
authorized funding for planned expansion of existing programs and new
initiatives for children, economic development, education, human services
and environmental programs. Expansion funds of $1,650.4 million for
1994-95 were approved by the 1993 Regular Session, the 1994 Special Session
and the 1994 Regular Session of the General Assembly. In 1993, the General
Assembly appropriated a $66.7 million transfer to the Savings Reserve
Account, in addition to the regularly scheduled transfer thereto from the
credit balance in the General Fund. The General Assembly authorized $189.4
million for capital improvements spending and $60 million for repairs and
renovations for 1994-95.

With capital projects being financed with bond proceeds and fund
balance, continuation appropriations and expansion items discussed above
are supported with the assistance of a number of new taxes and fees enacted
by the 1991 Session of the General Assembly. These taxes and fees
generated an estimated $665.5 million in 1991-92. Revenues for 1992-93
were estimated to include an additional $95.6 million as a result of the
actions of the 1991 Session of the General Assembly. These taxes and fees
combined with a projected growth of 4.8% for 1994-95 finance the authorized
budget by the 1993 Session of the General Assembly.

The Highway Fund revenue collections totalled $982.4 million in fiscal
year 1993-94, $37.8 million above budgeted revenues. Sources of revenue
for the Highway Fund include taxes on the sale of motor fuels as well as
registration and licensing fees for motor vehicles.

The Highway Trust Fund is more dependent on consumption-based
revenues, such as taxes and fees derived from sales of motor fuels and
vehicles, than the Highway Fund, which draws upon more stable sources for
its revenue, such as motor vehicle registration and licensing fees.
Collections for the Highway Trust Fund totaled $643.7 million in 1993-94,
$86 million more than the budgeted amount. Total Highway Trust Fund
collections increased approximately 12.5% in 1993-94 over 1992-93.

The budget is based upon estimated revenues and a multitude of
existing and assumed State and non-State factors, including State and
national economic conditions, international activity and federal government
policies and legislation.

State Indebtedness. The North Carolina Constitution provides in
substance that the State shall not contract a debt, other than refunding
debt, by borrowing money in any biennium and pledge its faith and credit to
the payment thereof for an amount in excess of two-thirds of the amount by
which the outstanding debt of the State was reduced in the preceding
biennium unless the proposed debt is submitted to and approved by the
voters at an election.

The State is authorized by the Constitution to borrow in anticipation
of the collection of taxes due and payable within the current fiscal year
to an amount not exceeding 50% of such taxes. The State has not borrowed
in anticipation of taxes since fiscal year 1959-60.

There are no bonds of the State outstanding which contemplate the
appropriation by the General Assembly of such amount as may be necessary to
make up any deficiency in a debt service reserve. Furthermore, no
legislation has been enacted by the General Assembly which would authorize
the issuance of any such bonds.

Litigation. The following are cases pending in which the State of
North Carolina faces the risk of either a loss of revenue or an
unanticipated expenditure but which, in the opinion of the Department of
State Treasurer, would not materially adversely affect the State of North
Carolina's ability to meet its financial obligations:

1. Leandro, et al. v. State of North Carolina and State Board of
Education. On May 25, 1994, students and boards of education in five
counties in the State filed suit in Superior Court requesting a declaration
that the public education system of North Carolina, including its system of
funding, violates the State constitution by failing to provide adequate or
substantially equal educational opportunities and denying due process of
law and violates various statutes relating to public education. The suit
requests the Court for such other equitable relief, including injunction or
mandamus, as the Court deems proper.

The suit is similar to a number of suits in other states, some of
which resulted in holdings that the respective systems of public education
funding were unconstitutional under the applicable state law. The
defendants filed a motion to dismiss for failure to state a cause of
action, which was denied at the trial court level. An appeal from the
decision was taken to the North Carolina Court of Appeals, which reversed
the trial court and granted defendants motion to dismiss. The plaintiffs
have appealed to the North Carolina Supreme Court, and oral argument is
scheduled for September 12, 1996. The North Carolina Attorney General's
Office believes that sound legal arguments support the State's position.

2. Francisco Case. On August 10, 1994, a class action lawsuit was
filed in Wake County Superior Court against the Superintendent of Public
Instruction and the State Board of Education on behalf of a class of
parents and their children who are characterized as limited English
proficient. The complaint alleges that the State has failed to provide
funding for the education of these students and has failed to supervise
local school systems in administering programs for them. The complaint
does not allege an amount in controversy, but asks the Court to order the
defendants to fund a comprehensive program to insure equal educational
opportunities for limited English proficient children. Discovery is
underway, but no trial date has been set. The North Carolina Attorney
General's Office believes that sound legal arguments support the State's
position.

3. Bailey case -- State Tax Refunds-State Retirees. State and local
government retirees filed a class action suit in 1990 as a result of the
repeal of the income tax exemptions for state and local government
retirement benefits. The original suit was dismissed after the North
Carolina Supreme Court ruled in 1991 that the plaintiffs had failed to
comply with state law requirements for challenging unconstitutional taxes
and the United States Supreme Court denied review. In 1992, many of the
same plaintiffs filed a new lawsuit alleging essentially the same claims,
including breach of contract, unconstitutional impairment of contract
rights by the State in taxing benefits that were allegedly promised to be
tax-exempt and violation of several state constitutional provisions. The
North Carolina Attorney General's Office estimates that the amount in
controversy is approximately $40-$45 million annually for tax years 1989
through 1992. A decision was entered in favor of the plaintiffs at the
trial court level. The State has appealed the decision to the North
Carolina Supreme Court and oral arguments are scheduled for September 12,
1996. The North Carolina Attorney General's Office believes that sound
legal arguments support the State's position.

4. Faulkenbury v. Teachers' and State Employees' Retirement System,
Peele v. Teachers' and State Employees' Retirement System and Woodard v.
Local Governmental Employees' Retirement System. Plaintiffs are disability
retirees who brought class actions in state court challenging changes in
the formula for payment of disability retirement benefits and claiming
impairment of contract rights, breach of fiduciary duty, violation of other
federal constitutional rights, and violation of state constitutional and
statutory rights. The State estimates that the cost in damages and higher
prospective benefit payments to plaintiffs and class members would probably
amount to $50 million or more in Faulkenbury, $50 million or more in Peele
and $15 million or more in Woodard, all ultimately payable, at least
initially, from the funds of the Retirement Systems. Upon review in
Faulkenbury, the North Carolina Court of Appeals and Supreme Court have
held that claims made in Faulkenbury, substantially similar to those in
Peele and Woodard, for breach of fiduciary duty and violation of federal
constitutional rights brought under the federal Civil Rights Act either do
not state a cause of action or are otherwise barred by the statute of
limitations. In 1994 plaintiffs took voluntary dismissals of their claims
for impairment of contract rights in violation of the United States
Constitution and filed new actions in federal court asserting the same
claims along with claims for violation of constitutional rights in the
taxation of retirement benefits. The remaining State court claims in all
cases were heard in the Superior Court of Wake County and the trial court
rendered a decision in favor of the plaintiffs. The State has appealed the
decision to the North Carolina Supreme Court and oral arguments are
scheduled for September 12, 1996. The federal court actions have been
stayed pending the trial in State Court. The Attorney General's Office
believes that sound legal arguments support the State's position in these
cases.

5. Fulton Case. The State's intangible personal property tax levied
on certain shares of stock, as in effect for taxable years ending before
January 1, 1995, was challenged by the plaintiff on grounds that it
violates the United States Constitution Commerce Clause by discriminating
against stock issued by corporations that do all or part of their business
outside the State. The plaintiff in the action is a North Carolina
corporation that does all or part of its business outside the State. The
plaintiff sought to invalidate the tax in its entirety and to recover tax
paid on the value of its shares in other corporations. The North Carolina
Court of Appeals invalidated the taxable percentage deduction and excised
it from the statute beginning with the 1994 tax year. The North Carolina
Supreme Court reversed the Court of Appeals and held that the tax is valid
and constitutional. The plaintiff's petition for review by the United
States Supreme Court was granted, and on February 21, 1996, the United
States Supreme Court reversed the lower courts and invalidated the tax in
its entirety. The case is currently on remand to the North Carolina
Supreme Court for determination of an appropriate remedy. Net collections
from the tax for the fiscal year ended on June 30, 1993 amounted to $120.6
million. The North Carolina General Assembly has repealed the intangibles
tax, effective for taxable years beginning on or after January 1, 1995.

Ohio Series

State Economy and Budget. Non-manufacturing industries now employ
approximately 78.9% of all payroll workers in the State of Ohio. However,
due to the continued importance of manufacturing industries (including
auto-related manufacturing), economic activity in Ohio, as in many other
industrially developed States, tends to be more cyclical than in some other
States and in the nation as a whole. Agriculture also is an important
segment of the Ohio economy. The financial condition of the State has
fluctuated in a pattern related to national economic conditions, with
periods of prolonged stringency characterizing fiscal years 1980 through
1983. Additionally, the 1980-82 recession brought with it a substantial
increase in bankruptcies and foreclosures. While the State's economy
improved since 1983, the State experienced an economic slowdown in 1990-91,
consistent with the national economic conditions during that period.

The State constitution imposes a duty on the Ohio General Assembly to
"provide for raising revenue, sufficient to defray the expenses of the
State, for each year, and also a sufficient sum to pay the principal and
interest as they become due on the State debt." The State is effectively
precluded by law from ending a fiscal year or a biennium in a "deficit"
position. State borrowing to meet casual deficits or failures in revenues
or to meet expenses not otherwise provided for is limited by the
constitution to $750,000.

The State finances most of its operations through the General Revenue
Fund ("GRF") which receives general State revenues not otherwise dedicated
pursuant to certain constitutional and statutory claims on State revenues.
The GRF sources consist primarily of personal income and sales-use taxes.
The GRF ending (June 30) fund balance is reduced during less-favorable
national economic periods and then increases during more favorable economic
periods.

The Office of Budget and Management ("OBM") reported positive $781.3
million and $1,138.5 million ending fund and cash balances, respectively,
for the GRF for fiscal year ended June 30, 1996. In addition, as of June
30, 1996 the Budget Stabilization Fund ("BSF") had a cash balance of $828.3
million.

The GFR appropriations bill for the biennium ending June 30, 1997 was
passed on June 28, 1995 and promptly signed, with selective vetoes, by the
Governor. The act provides for total GRF biennial expenditures of
approximately $33.5 billion, an increase over those for the 1994-95 fiscal
biennium. As reported by OBM, the high ending GRF fund balance for the
fiscal year ended June 30, 1996 guaranteed the availability of funds to
support an income tax reduction for 1996 and a variety of educational
projects for primary and secondary education in the State. Pursuant to a
recently enacted budget corrections bill, the OBM reported that it will be
able to certify a projected $400.0 million income tax cut, or approximately
6.5% reduction in income taxes.

State statutory provisions permit the adjustment of payment schedules
and the use of the Total Operating Fund ("TOF") to manage temporary GRF
cash flow deficiencies. The State has not undertaken external revenue
anticipation borrowing.

TOF includes the total consolidated total cash balances, revenues,
disbursements and transfers of the GRF and several other specified funds.
TOF cash balance at June 30, 1996 was $5.063 billion. These cash balances
are consolidated only for the purpose of meeting cash flow requirements
and, except for the GRF, a positive cash balance must be maintained for
each discrete fund included in the TOF. The GRF is permitted to incur a
temporary cash deficiency by drawing upon the available consolidated cash
balance in the TOF. The amount of that permitted GRF cash deficiency at
any time is limited to 10% of GRF revenues for the then-preceding fiscal
year. GRF cash flow deficiencies occurred in seven months of the fiscal
year ended June 30, 1996, the highest being $742.0 million in December
1995.

State Debt. The Ohio Constitution prohibits the incurrence or
assumption of debt by the State without a popular vote except to (i) cover
causal deficits or failures in revenues limited in amount to $750,000 and
(ii) repel invasion, suppress insurrection or defend the State in war.

At various times between 1921 and 1993, the voters of Ohio, by
thirteen specific constitutional amendments, have authorized the incurrence
of up to $6.764 billion in State debt to which taxes or excises were
pledged for payment. As of February 1, 1996, excluding Highway Obligations
Bonds discussed below, $3.405 billion had been issued, of which $2.642
billion had been retired and approximately $777.9 million (all evidenced by
bonds) remained outstanding. The only such debt still authorized to be
incurred is a portion of the Highway Obligations Bonds and Coal Development
Bonds as well as State general obligation bonds for local government
infrastructure projects, described below and general obligation park bonds.

Approved at the November 1995 election was a constitutional amendment
authorizing additional Highway Obligations Bonds. As of February 1, 1996,
the General Assembly had authorized approximately $1.855 billion of highway
bonds. The amendment authorizes not more than $1.2 billion to be
outstanding at any one time and not more than $220 million to be issued in
a fiscal year.

A 1985 constitutional amendment authorized up to $100 million in State
full faith and credit obligations for coal research and development to be
outstanding at any one time. In addition, the General Assembly has
authorized the issuance of $150 million of Coal Development Bonds. As of
February 1, 1996, $95 million of Coal Development Bonds were issued, of
which $45.3 million were outstanding.

A 1987 State constitutional amendment authorized the issuance of $1.2
billion of State full faith and credit obligations for infrastructure
improvements of which no more than $120 million may be issued in any
calendar year. A 1995 constitutional amendment extended this authority by
authorizing an additional $1.2 billion of State full faith and credit
obligations to be issued over ten years. As of February 1, 1996,
approximately $960.0 million of such obligations were issued, of which
$805.4 million were outstanding.

A constitutional amendment adopted in 1990 authorizes greater State
and political subdivision participation in the provision of housing for
individuals and families. This supplements the previously constitutionally
authorized for loans-for-lenders and other housing assistance programs,
financed in part with State Revenue Bonds. The amendment authorizes the
General Assembly to provide for State assistance for housing in a variety
of manners. The General Assembly could authorize State borrowing for the
purpose by the issuance of State obligations secured by a pledge of all or
a portion of State revenues or receipts, although the obligations may not
be supported by the State's full faith and credit.

A constitutional amendment approved by the voters in 1993 authorizes
$200.0 million in State general obligation bonds to be outstanding for
parks, recreation and natural resource purposes (no more than $50.0 million
to be issued in any one fiscal year). The General Assembly in the general
capital appropriations act for the 1995-96 capital appropriations biennium
authorized the Commissioners of the Sinking Fund to issue $100.0 million of
such obligations.

A constitutional amendment approved at the November 1994 election
pledges the full faith and credit and taxing power of the State to meeting
certain guarantees under the State's tuition credit program. That program
provides for purchase of tuition credits, for the benefit of State
residents, guaranteed to cover a specified amount when applied to the cost
of higher education tuition. Under the amendment, to secure the tuition
guarantees the General Assembly shall appropriate moneys sufficient to
offset any deficiency that may occur from time to time in the trust fund
that provides for the guarantees and at any time necessary to make payment
of the full amount of any tuition payment or refund required by a tuition
payment contract.

As of February 1, 1996, approximately $1.645 billion in Highway
Obligations Bonds had been issued and $457.7 million were outstanding.

Resolutions have been introduced in both houses of the General
Assembly that would submit a constitutional amendment relating to certain
other aspects of the State debt. The amendment would authorize, among
other things, the issuance of general obligation state debt for a variety
of purposes, with debt service on all general obligation State debt and
GRF-supported obligations not to exceed 5% of the preceding fiscal year's
GRF expenditures. It cannot be predicted whether any such amendment will
in fact be submitted, or, if submitted, whether it would be approved by the
electors.

In addition, the State constitution authorizes the issuance, for
certain purposes, of State obligations the owners or holders of which are
not given the right to have taxes or excises levied by the General Assembly
to pay principal and interest. Such special obligations include bonds and
notes issued by, among others, the Ohio Public Facilities Commission
("OPFC"), the Ohio Building Authority ("OBA") and certain obligations
issued by the Treasurer of State. As of February 1, 1996 the OPFC had
issued approximately $3.821 billion for higher education facilities,
approximately $2.164 billion of which were outstanding, $997.535 million
for mental health facilities, approximately $458.7 million of which were
outstanding and $184.95 million for parks and recreation facilities,
approximately $110.95 million of which were outstanding.

A statewide economic development program assists, with loans and loan
guarantees, the financing of facilities for industry, commerce, research
and distribution. The law authorizes the issuance of State bonds and loan
guarantees secured by a pledge of portions of the State profits from liquor
sales. The General Assembly has authorized the issuance of these bonds by
the State Treasurer, with a general maximum of $300 million currently
authorized to be outstanding at any one time (excluding bonds issued to
meet guarantees, but less any amount be which 4% of the unpaid principal
amount of guaranteed loan payments exceeds the funded amount applicable to
the guarantees). The aggregate amount from the liquor profits to be used
in any fiscal year in connection with these bonds (except for bonds issued
to meet guarantees) may not under present law exceed $25 million. The
total of unpaid guaranteed loan amounts and unpaid principal of direct
loans may not exceed $500 million. Of the $147.685 million liquor profits
refunding bonds issued in 1989, $69.284 million is outstanding; the highest
future fiscal year debt service on those bonds, which are payable through
2000, is $18.261 million.

Only a portion of State capital needs can be met by direct GRF
appropriations; therefore, additional State borrowing for capital purposes
has been and will be required. Under present constitutional limitations,
most of that borrowing will be primarily by lease-rental supported
obligations such as those issued by OPFC and OBA.

The general capital appropriations act for the 1995-96 capital
appropriations biennium authorizes additional borrowing. It authorizes
issuance by OPFC of obligations, in addition to those previously authorized
by the General Assembly, in the amounts of $679.2 million for higher
education capital facilities projects (a substantial number of which are
renovations of equipment and improvements to existing facilities), $77.5
million for mental health and retardation facilities projects, and $30.0
million for parks and recreation facilities. It also authorized the OBA to
issue obligations in the amounts of $221.0 million for local jails and
prisons, $48.0 million for Department of Youth Services facilities, $230.3
million for Department of Administrative Services facilities, $42.5 million
for Ohio Arts Facilities Commission facilities, $11.2 million for
Department of Public Safety and $43.95 million for Ohio Department of
Transportation facilities. In addition, the Treasurer of State has been
authorized to issue bonds to finance approximately $138.6 million of
capital improvements for elementary and secondary public school facilities
($68.64 issued). As of February 1, 1996, the Commissioners of the Sinking
Fund had additional General Assembly authorization to issue $55.0 million
of additional Coal Development Bonds, $209.7 million of Highway Obligation
Bonds, and $50.0 million of Natural Resources Bonds.

A State law, originally enacted in 1986 and now amended (the "Rail
Act"), authorizes the Ohio Rail Development Commission (replacing the prior
Ohio High-Speed Rail Authority to issue obligations to finance the cost of
rail service projects within the State, either directly or by loans to
other entities. The Rail Act originally was limited to inter-city
passenger services. The amendments extend the authority to include freight
and commuter service. The Rail Development Commission (or the predecessor
Authority) from time to time has considered financing plan options and the
general possibility of issuing bonds or notes. The Rail Act prohibits,
without express approval by joint resolution of the General Assembly, the
collapse of any escrow of financing proceeds for any purpose other than
payment of the original financing, the substitution of any other security,
and the application of any proceeds to loans or grants. The Rail Act
authorizes the Rail Development Commission, but only with subsequent
General Assembly action, to pledge the faith and credit of the State but
not the State's power to levy and collect taxes (except ad valorem property
taxes if subsequently authorized by the General Assembly) to secure debt
service on any post-escrow obligations and, provided it obtains the annual
consent of the State Controlling Board, to pledge to and use for the
payment of debt service on any such obligations all excises, fees, fines
and forfeitures and other revenues (except highway use receipts) of the
State after provision for the payment of certain other State obligations.

The State and State agencies have issued revenue bonds that are
payable from net revenues of revenue-producing facilities or categories of
facilities, such as those issued by the Ohio Turnpike Commission. Under
interpretations by Ohio courts, those revenue bonds are not "debt" within
the meaning of the constitutional provisions prohibiting the incurrence of
debt without popular vote. The Constitution also authorizes State bonds
(issued by the Ohio Housing Finance Agency) for certain housing purposes;
tax moneys may not be obligated or pledged to those bonds.

The State is a party to various legal proceedings seeking damages or
injunctive relief and generally incidental to its operations. In
particular, litigation contesting the Ohio system of school funding is
pending on appeal in the Ohio Supreme Court.

The outstanding State Bonds issued by the OPFC are rated A + by S&P
and A1 by Moody's. (Certain recent issues or portions of issues of
Commission bonds are the object of municipal bond insurance procured by the
original or subsequent purchasers and bear different ratings.) S&P rates
certain of the State's general obligation bonds AA, with AAA ratings on the
State's Highway Obligations Bonds. The State's general obligation debt is
rated as Aa by Moody's.

State Employees and Retirement Systems. The State has established
five public retirement systems to provide retirement, disability retirement
and survivor benefits. Three cover both State and local employees, one
State employees only and one local government employees only. The Public
Employees Retirement System ("PERS"), the largest of the five, covers both
State and local public employees. The State Teachers Retirement System
("STRS") and School Employees Retirement System ("SERS") primarily cover
school district employees and public higher education employees. The
Highway Patrol Retirement System ("HPRS") covers State troopers and the
Police and Fire Pension and Disability System ("PFPDS") covers local safety
forces.

As of the most recent year reported by the particular system, the
unfunded accrued liabilities of STRS and SERS were $8.043 billion and
$3.182 billion, respectively, and the unfunded accrued liabilities of PERS,
HPRS and PFPDS were $4.928 billion, $51.2 million and $1.071 million,
respectively.

State Municipalities. Ohio has a mixture of urban and rural
population, with approximately three-quarters urban. There are
approximately 943 incorporated cities and villages (populations under
5,000) in the State; six cities have populations of over 100,000 and
nineteen over 50,000. A 1979 act established procedures for identifying
and assisting those few cities and villages experiencing defined "fiscal
emergencies."

A commission composed of State and local officials, and private sector
members experienced in business and finance appointed by the Governor, is
to monitor the fiscal affairs of a municipality facing substantial
financial problems. That act requires the municipality to develop, subject
to approval and monitoring by its commission, a financial plan to eliminate
deficits and cure any defaults and otherwise remedy fiscal emergency
conditions, and to take other actions required under its financial plan.
It also provides enhanced protection for the municipality's bonds and notes
and, subject to the act's stated standards and controls, permits the State
to purchase limited amounts of the municipality's short-term obligations
(used only once, in 1980).

As of 1994, the act has been applied to 11 cities and to 12 villages.
The situations in 9 cities and 10 villages have been resolved and their
commissions terminated. Only the Cities of East Cleveland and Nelsonville
and 2 villages remain under the procedure.

Summary. Many factors affect or could affect the financial condition
of the State and other issuers of debt obligations, many of which are not
within the control of the State or such issuers. There can be no assurance
that such factors and the resulting impact on State and local governmental
finances will not affect adversely the market value of Ohio Municipal
Obligations held in the portfolio of the Fund or the ability of the
respective obligors to make required payments on such obligations.

Pennsylvania Series

General. Pennsylvania historically has been dependent on heavy
industry, although recent declines in the coal, steel and railroad
industries have led to diversification of the Commonwealth's economy.
Recent sources of economic growth in Pennsylvania are in the service
sector, including trade, medical and health services, education and
financial institutions. Agriculture continues to be an important component
for the Commonwealth's economic structure, with nearly one-fourth of the
Commonwealth's total land area devoted to cropland, pasture and farm
woodlands.

In 1994, the population of Pennsylvania was 12.1 million people.
According to the U.S. Bureau of the Census, Pennsylvania experienced a
slight increase from the 1985 estimate of 11.8 million. Pennsylvania has a
high proportion of persons 65 or older. The Commonwealth is highly
urbanized, with almost 85% of the 1990 census population residing in
metropolitan statistical areas. The cities of Philadelphia and Pittsburgh,
the Commonwealth's largest metropolitan statistical areas, together
comprise approximately 50% of the Commonwealth's total population.

Pennsylvania's average annual unemployment rate remained below the
national average between 1986 and 1990. Slower economic growth caused the
rate to rise to 6.9% in 1991 and 7.5% in 1992. The resumption of faster
economic growth resulted in a decrease in the Commonwealth's unemployment
rate to 7.0 percent in 1993. Seasonally adjusted data for March 1996 shows
and unemployment rate of 5.6% compared to an unemployment rate of 5.5% for
the United States as a whole.

Financial Accounting. Pennsylvania utilizes the fund method of
accounting and over 150 funds have been established for the purpose of
recording receipts and disbursements, of which the General Fund is the
largest. Most of the operating and administrative expenses are payable
from the General Fund. The Motor License Fund is a special revenue fund
that receives tax and fee revenues relating to motor fuels and vehicles
(except one-half cent per gallon of the liquid fuels tax which is deposited
in the Liquid Fuels Tax Fund for distribution to local municipalities) and
all such revenues are required to be used for highway purposes. Other
special revenue funds have been established to receive specified revenues
appropriated to specific departments, boards and/or commissions. Such
funds include the Game, Fish, Boat, Banking Department, Milk Marketing,
State Farm Products Show, State Racing and State Lottery Funds. The
General Fund, all special revenue funds, the Debt Service Funds and the
Capital Project Funds combine to form the Governmental Fund Types.

Enterprise funds are maintained for departments or programs operated
like private enterprises. The largest of the Enterprise funds is the State
Stores Fund, which is used for the receipts and disbursements of the
Commonwealth's liquor store system. Sale and distribution of all liquor
within Pennsylvania is a government enterprise.

Financial information for the funds is maintained on a budgetary basis
of accounting ("Budgetary"). Since 1984, the Commonwealth has also
prepared financial statements in accordance with generally accepted
accounting principles ("GAAP"). The GAAP statements have been audited
jointly by the Auditor General of the Commonwealth and an independent
public accounting firm. The Budgetary information is adjusted at fiscal
year end to reflect appropriate accruals for financial reporting in
conformity with GAAP. The Commonwealth maintains a June 30th fiscal year
end.

The Constitution of Pennsylvania provides that operating budget
appropriations may not exceed the actual and estimated revenues and
available surplus in the fiscal year for which funds are appropriated.
Annual budgets are enacted for the General Fund and for certain special
revenue funds which represent the majority of expenditures of the
Commonwealth.

Revenues and Expenditures. Pennsylvania's Governmental Fund Types
receive over 57% of their revenues from taxes levied by the Commonwealth.
Interest earnings, licenses and fees, lottery ticket sales, liquor store
profits, miscellaneous revenues, augmentations and federal government
grants supply the balance of the receipts to these funds. Revenues not
required to be deposited in another fund are deposited in the General Fund.

The major tax sources for the General Fund are the 6% sales and use tax
(34.1% of General Fund revenues in fiscal 1995), the 2.8% personal income
tax (31.3% of General Fund revenues in fiscal 1995) and the 10.99%
corporate net income tax (11.7% of General Fund revenues in fiscal 1995).
Tax and fee proceeds relating to motor fuels and vehicles are
constitutionally dedicated to highway purposes and are deposited into the
Motor License Fund. The major sources of revenues for the Motor License
Fund include the liquid fuels tax and the oil company franchise tax. That
Fund also receives revenues from fees levied on heavy trucks and from taxes
on fuels used for aviation purposes. These latter revenues are restricted
to the repair and construction of highway bridges and aviation programs,
respectively. Revenues from lottery ticket sales are deposited in the
State Lottery Fund and are reserved by statute for programs to benefit
senior citizens.

Pennsylvania's major expenditures include funding for education ($6.7
billion of fiscal 1995 expenditures, $7.0 billion of the fiscal 1996
budget, and $7.0 billion of the fiscal 1997 budget) and public health and
human services ($12.4 billion of fiscal 1995 expenditures, $13.1 billion of
the fiscal 1996 budget and $12.9 billion of the fiscal 1997 budget).

Governmental Fund Types: Financial Condition/Results of Operations
(GAAP Basis). Financial conditions during fiscal years 1991 through 1995
were distinguished by slow economic growth and a rapid expansion of the
costs of certain governmental programs that together produced a significant
stress on the Commonwealth's budget. These problems were particularly
evident during fiscal years 1990 and 1991 when revenues were significantly
below projections, and expenditures, largely driven by demand for public
welfare services, rose above budgeted amounts. Actions taken during fiscal
1992 to bring the General Fund back into balance, including tax increases
and expenditure restraints, resulted in a $1.1 billion reduction to the
unreserved-undesignated fund deficit for combined Governmental Fund Types
and a return to a positive fund balance. The fund balance for the
Governmental Fund Types, as restated, has increased during the 1993, 1994
and 1995 fiscal years. At June 30, 1995, the fund balance totaled $1,927.6
million including an unreserved-undesignated fund balance of $104.8
million.

General Fund: Financial Condition/Results of Operations.

Five Year Overview (GAAP Basis). For the five year period fiscal 1991
through fiscal 1995, total revenues and other sources rose at a 9.1 percent
average annual rate while total expenditures and other uses grew by 7.4
percent annually. Over two-thirds of the increase in total revenues and
other sources during this period occurred during fiscal 1992 when a $2.7
billion tax increase was enacted to address a fiscal 1991 budget deficit
and to fund increased expenditures for fiscal 1992. For the four year
period fiscal 1992 through fiscal 1995, total revenues and other sources
increased at an annual average of 3.3 percent, less than one-half the rate
of increase for the five year period beginning with fiscal 1991. This
slower rate of growth was due, in part, to tax rate reductions and other
tax law revisions that restrained the growth of tax receipts for fiscal
years 1993, 1994 and 1995.

Expenditures and other uses followed a patten similar to that for
revenues, although with smaller growth rates, during the fiscal 1991
through fiscal 1995 period. Program areas having the largest increase in
costs for the fiscal 1991 to fiscal 1995 period were for protection of
persons and property, due to an expansion of state prisons, and for public
heath and welfare, due to rising caseloads, program utilization and
increased prices. Recently, efforts to restrain the rapid expansion of
public health and welfare program costs have resulted in expenditure
increases at or below the total rate of increase for total expenditures in
each fiscal year. For the period fiscal 1992 through fiscal 1995, public
health and welfare costs increased by an average annual rate of 3.5
percent, well below the 5.2 percent average for total expenditures and
other uses during the same period.

Fiscal 1994 Financial Results (GAAP Basis). The fund balance of the
General Fund increased by $194.0 million during the 1994 fiscal year, over
the prior fiscal year balance. The unreserved-undesignated balance
increased by $14.8 million to $79.2 million. Revenues and other sources
increased by 1.8 percent over the prior fiscal year while expenditures and
other uses increased by 4.3 percent. Consequently, the operating surplus
declined to $179.4 million for fiscal 1994 from $686.3 million for fiscal
1993.

Fiscal 1994 Financial Results (Budgetary Basis). Commonwealth
revenues during the 1994 fiscal year totaled $15,210.7 million, $38.6
million above the fiscal year estimate, and 3.9 percent over commonwealth
revenues during the previous fiscal year. The sales tax was an important
contributor to the higher than estimated revenues. The strength of
collections from the sales tax offset the lower than budgeted performance
of the personal income tax which ended the fiscal year $74.4 million below
estimate. The shortfall in the personal income tax was largely due to
shortfalls in income not subject to withholding such as interest, dividends
and other income. Tax refunds in fiscal 1994 were reduced substantially
below the amount provided in fiscal 1993. The higher fiscal 1993 amount
and the reduced fiscal 1994 amount occurred because reserves of
approximately $160 million were added to fiscal 1993 tax refunds to cover
potential payments if the Commonwealth lost litigation known as
Philadelphia Suburban Corp. v. Commonwealth. Those reserves were carried
into fiscal 1994 until the litigation was decided in the Commonwealth's
favor in December 1993 and $147.3 million of those reserves for tax refunds
were released.

Fiscal 1995 Financial Results (GAAP Basis): Revenues and other
sources totaled $23,771.6 million, an increase of $1,135.0 million (0.5
percent) over the prior fiscal year. The largest increase was $817.9
million in taxes which represents a 5.6 percent increase over taxes in the
prior fiscal year. Expenditures and other uses rose by $1,364.1 million to
$23,821.4 million, an increase over the prior fiscal year of 6.1 percent.
Consequently, an operating deficit of $49.8 million was recorded for the
fiscal year and led to a decline in fund balance to $688.3 million at June
30, 1995. The fund balance for June 30, 1994, was restated for the fiscal
1995 financial statements. That restatement totaled $116.7 million to
recognize previously unreported revenues and expenditures for fiscal 1994.
The fund balance for June 30, 1994, as restated, was $776.3 million.

Fiscal 1995 Financial Results (Budgetary Basis): Commonwealth
revenues for the fiscal year were above estimate and exceeded fiscal year
expenditures and encumbrances. Fiscal 1995 was the fourth consecutive
fiscal year the Commonwealth reported an increase in the fiscal year-end
unappropriated balance. Prior to reserves for transfer to the Tax
Stabilization Reserve Fund, the fiscal 1995 closing unappropriated surplus
was $540.0 million, and increase of $204.2 million over the fiscal 1994
closing unappropriated surplus prior to transfers.

Commonwealth revenues were $459.4 million, 2.9 percent, above the
estimate of revenues used at the time the budget was enacted. Corporation
taxes contributed $329.4 million of the additional receipts due largely to
higher receipts from the corporate net income tax. The sales and use tax
and miscellaneous revenues also showed strong year-over-year growth that
produced above-estimate revenue collections. Sales and use tax revenues
were $5,526.9 million, $12.8 million above the enacted budget estimate and
7.9 percent over fiscal 1994 collections. Personal income tax receipts for
fiscal 1995 were slightly above the budgeted estimate. Receipts totaled
$5,083.2 million, $5.1 million above the estimate and 4.3 percent over
collections for fiscal 1994. The higher than estimated revenues from tax
sources were due to faster economic growth in the national and state
economy than had been projected when the budget was adopted. The higher
rate of economic growth for the nation and the state gave rise to increases
in employment, income and sales higher than expected which translated into
above-estimate tax revenues.

Tax revenue refunds were also higher than estimated in the budget. An
acceleration of the tax refund process for corporation taxes, litigation
settlements, and an increase in the personal income tax poverty exemption
contributed to the higher tax refunds.

Funds held in reserve at the end of fiscal 1995 for transfer to the
Tax Stabilization Reserve Fund totaled $111.0 million. The Tax
Stabilization Reserve Fund was anticipated to have an available balance of
$182.8 million at June 30, 1996, representing approximately 1.1 percent of
general fund annual commonwealth revenues.

Fiscal 1996 Budget: The fiscal 1996 budget provided for expenditures
from commonwealth revenues of $16,165.7 million, a 2.7 percent increase
over total appropriations from commonwealth revenues in fiscal 1995. The
appropriations increase for fiscal 1996 is one of the lowest rates in
recent years. Tax changes enacted with the fiscal 1996 budget totaled a
net reduction of $282.9 million, representing an approximate 1.7 percent of
base revenues. The largest dollar value changes were in the corporate net
income tax where the scheduled 1997 reduction of the tax rate to 9.99
percent was accelerated to the 1995 tax year. Other major components of
the tax reduction include a $12.1 million decrease for the capital stock
and franchise tax from an increase in the basic exemption; $24.7 million
from the repeal of the tax on annuities; and $27.9 million from an
acceleration of the scheduled phase-out of the inheritance tax on transfers
of certain property to a surviving spouse. A 90 day tax amnesty program
also was authorized in the tax bill.

Increases in authorized spending for fiscal 1996 emphasized education.

Appropriations for the basic subsidy for pubic schools were increased $143
million representing a 4.4 percent increase. This increase reversed a
four-year trend of a declining budget share for education. The budget also
contemplated several changes to certain public welfare programs. Estimated
savings are approximately $27 million based on a caseload of approximately
90,000 persons per year.

Commonwealth revenues for fiscal 1996 were $59.8 million (or 0.4
percent) over the official estimate of revenues for the fiscal year. The
fiscal year ending unappropriated surplus (prior to any transfer to the Tax
Stabilization Reserve Fund) was $153.5 million. The increase is primarily
due to the amount of appropriation lapses anticipated in excess of
supplemental appropriation needs and to a lower estimate of tax refunds.

Fiscal 1997 Proposed Budget: In February 1996, the Governor presented
his proposed budget for fiscal 1997. Proposed appropriations from General
Fund commonwealth revenues total $16.2 billion, a slight reduction from the
estimate for fiscal 1996. Revenue receipts are estimated to increase by
$403.9 million, or 2.5 percent, over anticipated receipts for fiscal 1996.
The decline in appropriation authority over the prior fiscal year in the
proposed budget relies on several program changes. The largest changes
proposed are $329 million of cost containment efforts in public health and
welfare programs. Other significant cost restrains include reductions to
appropriations for state-aided colleges and universities and no increases
for state-related colleges and universities. Funds for basic education
programs to local school districts are proposed to increase slightly.

Commonwealth Debt. Current constitutional provisions permit
Pennsylvania to issue the following types of debt: (i) debt to suppress
insurrection or rehabilitate areas affected by disaster, (ii) electorate
approved debt, (iii) debt for capital projects subject to an aggregate debt
limit of 1.75 times the annual average tax revenues of the preceding five
fiscal years, (iv) tax anticipation notes payable in the fiscal year of
issuance. All debt except tax anticipation notes must be amortized in
substantial and regular amounts.

General obligation debt totaled $5,045.4 million at June 30, 1995.
Over the 10-year period ended June 30, 1995, total outstanding general
obligation debt increased at an annual rate of 1.1% and for the five years
ended June 30, 1995, at an annual rate of 1.7%. All outstanding general
obligation bonds of the Commonwealth are rated AA- by Standard and Poor's
Corporation, A1 by Moody's Investors Service, and AA- by Fitch Investors
Service. The ratings reflect only the views of the rating agencies.

Pennsylvania engages in short-term borrowing to fund expenses within a
fiscal year through the sale of tax anticipation notes which must mature
within the fiscal year of issuance. The principal amount issued, when
added to that already outstanding, may not exceed in aggregate 20% of the
revenues estimated to accrue to the appropriate fund in the fiscal year.
The Commonwealth is not permitted to fund deficits between fiscal years
with any form of debt. All year-end deficit balances must be funded within
the succeeding fiscal year's budget. Pennsylvania issued a total of $500.0
million of tax anticipation notes for the account of the General Fund in
fiscal 1996, all of which matured on June 28 1996, and were paid from
fiscal 1996 General Fund receipts.

Pending the issuance of bonds, Pennsylvania may issue bond
anticipation notes subject to the applicable statutory and constitutional
limitations generally imposed on bonds. The term of such borrowings may
not exceed three years. Currently, there are no bond anticipation notes
outstanding.

State-related Obligations. Certain state-created agencies have
statutory authorization to incur debt for which no legislation providing
for state appropriations to pay debt service thereon is required. The debt
of these agencies is supported by assets of, or revenues derived from, the
various projects financed and the debt of such agencies is not an
obligation of Pennsylvania although some of the agencies are indirectly
dependent on Commonwealth appropriations. The following agencies had debt
currently outstanding as of December 3, 1995: Delaware River Joint Toll
Bridge Commission ($55.1 million), Delaware River Port Authority ($185.5
million), Pennsylvania Economic Development Financing Authority ($1,050.8
million), Pennsylvania Higher Education Assistance Agency ($1,408.8
million), Pennsylvania Higher Educational Facilities Authority ($2,115.1
million), Pennsylvania Industrial Development Authority ($344.8 million),
Pennsylvania Infrastructure Investment Authority ($213.1 million),
Pennsylvania Turnpike Commission ($1,228.7 million), Philadelphia Regional
Port Authority ($62.6 million), and the State Public School Building
Authority ($316.2 million). In addition, the Governor is statutorily
required to place in the budget of the Commonwealth an amount sufficient to
make up any deficiency in the capital reserve fund created for, or to avoid
default on, bonds issued by the Pennsylvania Housing Finance Agency
($2,164.8 million of revenue bonds as of December 31, 1995), and an amount
of funds sufficient to alleviate any deficiency that may arise in the debt
service reserve fund for bonds issued by The Hospitals and Higher Education
Facilities Authority of Philadelphia ($1.49 million of the loan principal
was outstanding as of December 31, 1995.)

Litigation. Certain litigation is pending against the Commonwealth
that could adversely affect the ability of the Commonwealth to pay debt
service on its obligations, including suits relating to the following
matters: (a) Approximately 3,500 tort suits are pending against the
Commonwealth pursuant to the General Assembly's 1978 approval of a limited
waiver of sovereign immunity which permits recovery of damages for any loss
up to $250,000 per person and $1,000,000 per accident ($27 million was
appropriated from the Motor License Fund for fiscal 1996); (b) The ACLU
filed suit in April 1990 in federal court demanding additional funding for
child welfare services (no estimates of potential liability are available),
which the Commonwealth is seeking to have dismissed based on, among other
things, the settlement in a similar Commonwealth Court action that provided
for more funding in fiscal 1991 as well as a commitment to pay to counties
$30.0 million over 5 years. In January 1992, the district court denied the
ACLU's motion for class certification, but that ruling was overturned by
the Third Circuit and the parties have resumed discovery; (c) in 1987, the
Supreme Court of Pennsylvania held that the statutory scheme for county
funding of the judicial system was in conflict with the Pennsylvania
Constitution but stayed judgement pending enactment by the legislature of
funding consistent with the opinion. The legislature has yet to consider
legislation implementing the judgment; (d) in November 1990, the ACLU
brought a class action suit on behalf of the inmates in thirteen
Commonwealth correctional institutions challenging confinement conditions
and including a variety of other allegations. In 1995, the parties agreed
to a court monitored settlement and the Commonwealth paid $1.3 million in
attorney fees; (e) Actions have been filed in both sate and federal court
by an association of rural and small schools and several individual school
districts and parents challenging the constitutionality of the
Commonwealth's system for funding local school districts. The federal case
has been stayed pending resolution of the state case. The trial has not
yet bee scheduled, and there is no available estimate of potential
liability; and (f) Several banks have filed suit against the Commonwealth
contesting the constitutionality of a 1989 law imposing a bank shares tax
on banking institutions.
After the Commonwealth Court ruled in favor of the Commonwealth, finding no
constitutional deficiencies, Fidelity Bank, the Commonwealth, and certain
intervenor banks filed Notices of Appeal to the Pennsylvania Supreme Court
on August 5, 1994. Pursuant to a Settlement Agreement, dated as of April
2, 1995, the Commonwealth agreed to enter a credit in favor of Fidelity in
the amount of $4,100,000 in settlement of the constitutional and non-
constitutional issues including interest. Pursuant to a separate
Settlement Agreement, dated as of April 21, 1995, the Commonwealth settled
with the intervening banks, referred to as "New Banks." As part of the
settlement, the commonwealth agreed neither to assesses nor attempt to
recoup any new bank tax credits which had been granted or taken by any of
the intervening banks. Although the described settlements have quantified
the Commonwealth's exposure to Fidelity and the intervening banks, other
banks have filed protective Petitions, and one or more of these banks may
seek to raise a new constitutional challenge in the Commonwealth Court.
However, the Commonwealth Court has previously examined and confirmed the
Act's constitutionality; and (g) on November 11, 1993, the Commonwealth of
Pennsylvania, Department of Transportation and Envirotest/Synterra Partners
("Envirotest"), a partnership, entered into a "Contract for Centralized
Emissions Inspection Facilities." Thereafter, Envirotest acquired certain
land and constructed approximately 85 automobile emissions inspection
facilities throughout various regions of the Commonwealth. By Act of the
General Assembly in October 1994 (Act No. 1994-95), the program was
suspended and the Department of Transportation was prohibited from
expending funds to implement the program. Envirotest sued, and on December
15, 1995, Envirotest Systems Corporation, Envirotest Partners (successor to
Envirotest/Synterra Partners) and the Commonwealth of Pennsylvania entered
into a Settlement Agreement pursuant to which Envirotest will receive $145
million by installment payments through 1998.

Philadelphia. The City of Philadelphia is the largest city in the
Commonwealth, with an estimated population of 1,585,577 people according to
the 1990 Census. Philadelphia functions both as a city of the first class
and a county for the purpose of administering various governmental
programs.

Legislation providing for the establishment of the Pennsylvania
Intergovernmental Cooperation Authority ("PICA") to assist first class
cities in remedying fiscal emergencies was enacted by the General Assembly
and approved by the Governor in June 1991. PICA is designed to provide
assistance through the issuance of funding debt to liquidate budget
deficits and to make factual findings and recommendations to the assisted
city concerning its budgetary and fiscal affairs. An intergovernmental
cooperation agreement between Philadelphia and PICA was approved by City
Council and the PICA Board and signed by the Mayor in January, 1992. At
this time, Philadelphia is operating under a five year fiscal plan approved
by PICA on April 17, 1995, with technical modifications approved in July
1995.

PICA has issued $1,418,680,000 of its Special Tax Revenue Bonds. This
financial assistance has included the refunding of certain general
obligation bonds to fund capital projects and to liquidate the Cumulative
General Fund balance deficit as of June 30, 1992, of $224.9 million. The
audited General Fund balance as of June 30, 1995, showed a surplus of
approximately $80.5 million.

Texas Series

General. Beginning in late 1982, the decline of the State's oil and
gas industry, the devaluation of the Mexican peso and the generally soft
national economy combined to cause a significant reduction in the rate of
growth of State revenues. During late 1985 and early 1986, the price of
oil fell dramatically worldwide. This drop in oil prices created a ripple
that caused other sectors of the State's economy, such as real estate, to
decline. As a result of an increase in non-performing loans in the energy
and real estate sectors, major Texas bank holding companies, individual
banks and savings and loans experienced losses or sharp downturns in
profitabilities and many sought Federal assistance from the FDIC.

As a further result of the drastic drop in the price of oil, the
subsequent loss of jobs and the overbuilding in the real estate market, the
State experienced deficits for fiscal years ended August 31, 1986 and 1987
of $230 million and $744 million, respectively. However, as a result of
the budget trimming and increasing taxes and the improving Texas economy,
the State finished fiscal years 1989, 1990, 1991, 1992, 1993, 1994 and 1995
with surpluses in the General Revenue Fund of $295 million, $768 million,
$1.006.4 billion, $615.3 million, $1.630 billion, $2.239 billion and $2.101
billion, respectively. Since the early 1990's, the State's economy has
rebounded in several areas and has, to a large extent, significantly
improved its performance since the deep recession of the 1980's.

By December 1990, the Texas unemployment rate had declined to 6.6%.
The unemployment rate, however, began to increase in 1991 and by December
1992 was 7.6%. This increase was merely temporary since by September 1994,
the unemployment rate had declined to just over 6.5% and by September 1995,
it had again declined to 6.1%.

In the overall race for new job growth, Texas has been the national
leader for most of the 1990's. Total employment in Texas has been steadily
improving since 1991. Total non-farm employment stood at 8.02 million as
of July 1995, up 892,000 (12.5%) from July 1990. Over the 12 month period
ending in June 1995, Texas gained 284,800 jobs, an increase of 3.7%. Most
of the new jobs have been in the service sector, which added an estimated
267,712 jobs from 1994 to 1995.

State Debt. Except as specifically authorized, the Texas Constitution
generally prohibits the creation of debt by or on behalf of the State, with
two exceptions: (i) debt created to supply casual deficiencies in revenues
which does not exceed in the aggregate, at any one time, $200,000 and (ii)
debt to repel invasion, suppress insurrection, defend the Sate in war or
pay existing debt. In addition, the State Constitution prohibits the
Legislature from lending the credit of the State to or in aid of any
person, including municipalities, or pledging the credit of the State in
any manner for the payment of the liabilities of any individual,
association of individuals, corporation or municipality. The limitations
of the State Constitution do not prohibit the issuance of revenue bonds.
Furthermore, obligations which are payable from funds expected to be
available during the current budget period, such as tax and revenue
anticipation notes issued by the State Treasurer, do not constitute "debt"
within the meaning of the Texas Constitution. The State may issue short
term obligations like Tax and Revenue Anticipation Notes which must mature
and be paid in full during the biennium in which notes were issued; such
obligations are not deemed to be debt within the meaning of the State
constitutional prohibition.

At various times, State voters, by constitutional amendment, have
authorized the issuance of debt by the State, including general obligation
indebtedness for which the full faith and credit and the taxing power of
the State may be pledged. The total amount of general obligation bonds that
have been authorized by the voters is in excess of $11.57 billion. Bond
income during the State's fiscal year ending August 31, 1995 brought an end
to the trend toward increased issuance of nonself-supporting Texas bonds
whereby income from such bonds declined from $656,915,000 for fiscal year
1994 to $430,293,000. On August 31, 1995, Texas had $3.1 billion in bonds
outstanding which must be paid back from the State's general revenue fund.
This is the same amount of such bonds outstanding at the end of fiscal
1994, and is up from $2.3 billion in such bonds outstanding at the end of
fiscal 1993, $1.8 billion outstanding at the end of fiscal 1992, and $1.5
billion outstanding at the end of fiscal 1991.

Revenue Sources and Tax Collection. Historically, the primary sources
of the State's revenues have been sales taxes, mineral severance taxes and
Federal grants. Due to the collapse of oil and gas prices and the
resulting enactment of recent State Legislatures of new tax measures,
including those increasing the rates of existing taxes and expanding the
tax base and adding a component of the corporate (franchise) tax measured
by income, there has been a reordering in the relative importance of the
State's taxes in terms of their contribution to the State's revenue in any
year. Federal grants are the State's single largest revenue source,
accounting for approximately 29.9% of total revenue during fiscal year
1995. Sales taxes are the State's second largest source of revenues (and by
far the largest source of tax revenue), accounting for approximately 29.4%
of the State's total revenues during fiscal year 1995. Licenses, fees and
permits, motor fuels taxes and interest and investment income, accounted
for approximately 8.9%, 6.4% and 4.8%, respectively, of the State's total
revenue in fiscal year 1995. The remainder of the State's revenues are
derived primarily from other taxes. The State has no personal income tax.
The State does impose a corporate franchise tax based on the greater of a
corporation's capital or net earned surplus (i.e.,income), from which it
derived approximately 4.1% of total revenues in fiscal 1995. The corporate
franchise tax is, in essence, based upon net income apportionable to the
State, and thus works very much like a corporate income tax. It is likely
to become a larger source of revenues in future years.

Total net revenues and opening balances for fiscal years 1990, 1991,
1992, 1993, 1994 and 1995 amounted to approximately $23.622 billion,
$26.190 billion, $29.647 billion, $33.795 billion, $36.707 billion and
$38.682 billion, respectively, while tax collections for the same period
amounted to $12.905 billion, $14.922 billion, $15.849 billion, $17.011
billion, $18.106 billion and $18.859 billion, respectively.

The 75th State Legislative Session convened in January 1995 and before
adjourning passed a budget for the 1996-97 biennium. The 1996-97 budget
provides for appropriations totalling $45.1 billion from general revenue
related funds and $79.9 billion from all fund sources. The 1995-96
biennium budget increases general revenue funding by 10.9%, which funding
from all funds increased by 12.5%. Funding for education has been
increased by $2.3 billion, or 6.9%, while health and human services
increased $2.4 billion, or 9.1%.

Limitations on Taxing Powers. The State Constitution prohibits the
State from levying ad valorem taxes on property for general revenue
purposes. Property taxes are levied exclusively by county and local taxing
authorities. There is also a constitutional prohibition on enacting a
personal income tax unless approved by a majority of voters in a
referendum.

The State Constitution also limits the rate of growth of
appropriations from tax revenues not dedicated by the Constitution during
any biennium to the estimated rate of growth for the State's economy. The
Legislature may avoid the constitutional limitation if it finds, by a
majority vote of both houses, that an emergency exists. The State
Constitution authorizes the Legislature to provide by law for the
implementation of this restriction, and the Legislature, pursuant to such
authorization, has defined the estimated rate of growth in the State's
economy to mean the estimated increase in State personal income.

Petroleum Production and Mining. The Texas economy and the oil and
gas industry have been intricately linked since the discovery of the
Spindletop Field in southeast Texas in 1901. Dramatic increases in the
price of oil in 1973-74 and 1979-81 propelled Texas into a leadership
position in national economic growth. This situation, however, changed
rapidly for Texas during the 1980's. The Texas economy reeled in 1982-83
and again in 1986 as the price of West Texas Intermediate crude oil
declined over 50% from $30 per barrel in November 1985 to under $12 per
barrel in July 1986. During the oil-patch recession of 1986-87, employment
levels declined as the effects of the downturn in the energy industry
rippled through the rest of the economy. While there have been
fluctuations in petroleum production and mining employment since the
recession, the overall trend of that sector in its importance to the Texas
economy has been downward. The number of oil and gas wells drilled in the
state during 1995 (9,299) was less than half the number drilled in 1986
(18,707). Texas mining employment is currently at its lowest level since
1977. Oil and gas comprises 95% of Texas employment in the mining sector.
Because of substantial weakness in the oil and gas industry, mining
employment in the State totals approximately 160,400, a decrease of
approximately 14% from July 1990. The shift of drilling activity to other
parts of the world and weak natural gas prices indicate a likely persistent
sluggishness in the industry.

Financial Institutions. The decline in oil prices, particularly since
January 1986, and the recession that followed have had a severe effect on
the banking and savings and loans industries in Texas. In most cases, major
Texas bank holding companies, individual banks and savings and loans have
experienced losses or sharp downturns in profitability due to the increase
in non-performing loans in the energy and real estate sectors. The
financial difficulties also led to a number of closings among banks and
savings and loans. Texas bank failures peaked in 1989, reaching 133 or
two-thirds of all bank closings in the nation. Texas bank failures declined
to 103 in 1990, 31 in both 1991 and 1992, and 29 in 1993 (of which 20 were
subsidiaries of a single bank holding company). No Texas banks failed in
1994 or 1995.

The Texas banking industry has made substantial strides toward
recovery during the 1990's. Texas bank profits in 1993, 1994 and 1995 were
$2.4 billion, $1.9 billion and $2.3 billion, respectively. Total loans,
total equity capital, and total assets also rose in 1993, 1994 and 1995.
Most loan growth was in consumer real estate, but business lending also
showed an increase. On a discordant note, nonperforming loans increased
26% in 1995.

Many Texas banks and banking organizations have consolidated with a
continuing downward trend in the number of operating banks. Texas had 948
banks at the end of 1995, compared to 991 banks in 1994 and down from 1,125
banks as of the end of 1991. It is anticipated that the number of banking
organizations in the state will continue to drop, although the number of
branch location will rise. Also, in keeping with a nationwide trend, Texas
banks have been shifting a substantial amount of their portfolios away from
loans and into federal securities. The annualized return on assets for
Texas banks in 1995 was 1.16%.

No industry was more severely affected by the decline in Texas real
estate values during the 1980's than the savings and loan industry. At the
end of 1992, assets of private Texas savings and loan associations totaled
$42.9 billion, down from the industry high in 1988 of $112.4 billion in
assets. Further, the number of Texas savings and loans has decreased from
273 in 1984 to only 45 in 1993. However, in terms of profits, after a
nearly flat year in 1991, the State's thrifts have posted healthy earnings
from 1992 forward. Texas' savings and loans led the nation in profits for
1993. After a dip in 1994, Texas savings and loans, benefitting from home
refinancing, increased their earning by 59% in 1995. Texas' savings and
loan problems of recent years has mostly been resolved, with steady
progress being made in increasing capital levels.

Property Values and Taxes. Various State laws place limits upon the
amounts of tax that can be levied upon the property subject to ad valorem
taxes within various taxing units, such as cities, counties and the
districts which have ad valorem taxing powers (including, without
limitation, school and hospital districts). Similarly, the amounts of
sales and use taxes which can be levied and the types of property and
services to which sales and use taxes apply are subject to legal
restrictions.

The 1994 total value of taxable property in Texas School Districts
(the most recent information available) amounted to approximately $645
billion in 1994, according to records compiled by the Property Tax Division
of the Office of the Comptroller (derived from school districts in the
State). This $645 billion valuation total included approximately $248.5
billion of single-family residences (after allowing for exemptions), a
strong 7.7% increase over the $230.7 billion amount for 1993. The value of
multi-family residential property values increased 7.6 percent during the
same period. By way of contrast, the valuation of oil, gas and mineral
properties dropped a dramatic 13.3% during 1993. The value of commercial
and industrial real estate rose more slowly during 1993, increasing at the
rates of 0.5% and 1.5%, respectively. The value of vacant lots also
declined slightly by about 0.5%.

Litigation. After protracted litigation over property tax in the
early 1990's, the Texas Legislature (in February 1993) approved proposed
constitutional amendments that were intended to address the constitutional
deficiencies in the State's system of funding public schools that have been
noted by the courts. At an election held on May 1, 1993, the voters of the
State rejected all of the proposed constitutional amendments.

The legislation was enacted in late May 1993 (Senate Bill 7), which
included provisions concerning the operation of school districts as well as
creating a whole new funding system for public education in the State.
This bill provided for a two-tiered education finance structure, known as
the Foundation School Program. Tier 1 provides that each school district
is entitled to a basic allotment of $2,300.00 per student, financed by ad
valorem taxes of $.86 per $100.00 valuation on property within the
district, with any deficiency to be made up by the State. Tier 2 provides
that school districts may levy additional ad valorem taxes of as much as
$.64 per $100.00 valuation. For every cent of the additional tax levy a
district undertakes, the State guarantees a yield of $20.55 per student,
regardless of how much tax revenue is actually collected. Senate Bill 7
also imposes a cap on a school district's taxable property at a level of
$280,000 per student. School districts with property more valuable than
$280,000 per student have various choices as to how their taxable property
may be brought within the $280,000 cap.

Senate Bill 7 was immediately challenged by numerous groups of
plaintiffs, representing hundreds of school districts, both property-rich
and property-poor, as well as many parents and local officials. After a
trial on the consolidated actions in the case of Edgewood v. Meno, the
district court held that Senate Bill 7 was constitutional, but found that
the Legislature had failed to provide efficiently for facilities. The
district court accordingly denied most of the relief sought by the
plaintiffs but ordered by injunction that no bonds for any school district
could be approved, registered, or guaranteed after September 1, 1995,
unless the Legislature had provided for the efficient funding of
educational facilities by that time. On appeal, the Texas Supreme Court
affirmed the constitutionality of the public school finance system enacted
in Senate Bill 7 in all respects. The Supreme Court modified the district
court's judgment to provide that the relief requested by the plaintiffs was
denied in all respects and that the district court's injunction was
vacated. In all other respects, the Supreme Court affirmed the district
court's judgment.

The current governor has made property tax reform one of the
centerpieces of his legislative agenda, with a stated goal of substantially
reducing the state's reliance on school property taxes. There are a number
of public hearings scheduled through Texas during 1996 to address the issue
of the continuing rise of property taxes paid by both individuals and
businesses. It is uncertain at the present time what, if any, changes will
result to the state's tax system as a result of dissatisfaction with the
property tax structure.

Virginia Series

The rate of economic growth in the Commonwealth of Virginia has
increased steadily over the past decade. Per capita income in Virginia has
been consistently above national levels during that time. The services
sector in Virginia generates the largest number of jobs, followed by
wholesale and retail trade, state and local government and manufacturing.
Because of Northern Virginia, with its proximity to Washington, D.C., and
Hampton Roads, which has the nation's largest concentration of military
installations, the Federal government has a greater economic impact on
Virginia relative to its size than any states other than Alaska and Hawaii.

It is unclear what effect the current efforts by the Federal government to
restructure the defense budget will have on long-term economic conditions
in Virginia.

According to statistics published by the U.S. Department of Labor,
Virginia typically has one of the lowest unemployment rates in the nation.
This is generally attributed to the balance among the various sectors
represented in the economy. Virginia is one of twenty states with a right-
to-work law and is generally regarded as having a favorable business
climate marked by few strikes or work stoppages. Virginia is also one of
the least unionized among the industrialized states.

Virginia's state government operates on a two-year budget. The
Constitution vests the ultimate responsibility and authority for levying
taxes and appropriating revenue in the General Assembly, but the Governor
has broad authority to manage the budgetary process. Once an appropriation
act becomes law, revenue collections and expenditures are constantly
monitored by the Governor, assisted by the Secretary of Finance and the
Department of Planning and Budget, to ensure that a balanced budget is
maintained. If projected revenue collections fall below amounts
appropriated at any time, the Governor must reduce expenditures and
withhold allotments of appropriations (other than for debt service and
other specified purposes) to restore balance. An amendment to the
Constitution, effective January 1, 1993, established a Revenue
Stabilization Fund. This Fund is used to offset a portion of anticipated
shortfalls in revenues in years when appropriations based on initial
forecasts exceed expected revenues in any subsequent forecast. The Revenue
Stabilization Fund consists of an amount not to exceed 10 percent of
Virginia's average annual tax revenues derived from taxes on income and
retail sales for the three preceding fiscal years.

General Fund revenues are principally composed of direct taxes. In
recent fiscal years most of the total tax revenues have been derived from
five major taxes imposed by Virginia on individual and fiduciary income,
sales and use, corporate income, public services corporations and premiums
of insurance companies.

In September 1991, the Debt Capacity Advisory Committee was created by
the Governor through an executive order. The committee is charged with
annually estimating the amount of tax-supported debt that may prudently be
authorized consistent with the financial goals, capital needs and policies
of Virginia. The committee reviews the outstanding debt of all agencies,
institutions, boards and authorities of Virginia for which Virginia has
either a direct or indirect pledge of tax revenues or moral obligation.

The Constitution of Virginia prohibits the creation of debt by or on
behalf of Virginia that is backed by Virginia's full faith and credit,
except as provided in Section 9 of Article X. Section 9 of Article X
contains several different provisions for the issuance of general
obligation and other debt, and Virginia is well within its limit for each:

Section 9(a)(2) provides that the General Assembly may incur general
obligation debt to meet certain types of emergencies, subject to
limitations on amount and duration; to meet casual deficits in the revenue
or in anticipation of the collection of revenues of Virginia; and to redeem
a previous debt obligation of Virginia. Total indebtedness issued pursuant
to this Section may not exceed 30 percent of an amount equal to 1.15 times
the annual tax revenues derived from taxes on income and retail sales, as
certified by the auditor of Public Accounts for the preceding fiscal year.

Section 9(b) provided that the General Assembly may authorize the
creation of general obligation debt for capital projects. Such debt is
required to be authorized by an affirmative vote of a majority of each
house of the General Assembly and approved in a statewide election. The
outstanding amount of such debt is limited to an amount equal to 1.15 times
the average annual tax revenues derived from taxes on income and retail
sales, as certified by the Auditor of Public Accounts for the three
preceding fiscal years less the total amount of bonds outstanding. The
amount of 9(b) debt that may be authorized in any single fiscal year is
limited to 25 percent of the limit on all 9(b) debt less the amount of 9(b)
debt authorized in the current and prior three fiscal years.

Section 9(c) provides that the General Assembly may authorize the
creation of general obligation debt for revenue-producing capital projects
(so-called "double-barrel" debt). Such debt is required to be authorized
by an affirmative vote of two-thirds of each house of the General Assembly
and approved by the Governor. The Governor must certify before the
enactment of the authorizing legislation and again before the issuance of
the debt that the net revenues pledged are expected to be sufficient to pay
principal of and interest on the debt. The outstanding amount of 9(c) debt
is limited to an amount equal to 1.15 times the average annual tax revenues
derived from taxes on income and retail sales, as certified by the Auditor
of Public Accounts for the three preceding fiscal years. While the debt
limits under Sections 9(b) and 9(c) are each calculated as the same
percentage of the same average tax revenues, these debt limits are
separately computed and apply separately to each type of debt.

Article X further provides in Section 9(d) that the restrictions of
Section 9 are not applicable to any obligation incurred by Virginia or any
of its institutions, agencies or authorities if the full faith and credit
of Virginia is not pledged or committed to the payment of such obligation.
There are currently outstanding various types of such 9(d) revenue bonds.
Certain of these bonds, however, are paid in part or in whole from revenues
received as appropriations by the General Assembly from general tax
revenues, while others are paid solely from revenues of the applicable
project. The debt repayments of the Virginia Public Building Authority,
the Virginia Port Authority, the Virginia College Building Authority
Equipment Leasing Program and The Innovative Technology Authority are
supported in large part by General Fund appropriations.

The Commonwealth Transportation Board is a substantial issuer of bonds
for highway projects. These bonds are secured by and payable from funds
appropriated by the General Assembly from the Transportation Trust Fund for
such purpose. The Transportation Trust Fund was established by the General
Assembly in 1986 as a special non-reverting fund administered and allocated
by the Transportation Board to provide increased funding for constructions,
capital and other needs of state highways, airports, mass transportation
and ports. The Virginia Port Authority has also issued bonds which are
secured by a portion of the Transportation Trust Fund.

Virginia is involved in numerous leases that are subject to
appropriation of funding by the General Assembly. Virginia also finances
the acquisition of certain personal property and equipment through
installment purchase agreements.

Bonds issued by the Virginia Housing Development Authority, the
Virginia Resources Authority and the Virginia Public School Authority are
designed to be self-supporting from their individual loan programs. A
portion of the Virginia Housing Development Authority and Virginia Public
School Authority bonds and all of the Virginia Resources Authority bonds
are secured in part by a moral obligation pledge of Virginia. Should the
need arise, Virginia may consider funding deficiencies in the respective
debt service reserves for such moral obligation debt. To date, none of
these authorities has advised Virginia that any such deficiencies exist.

Local government in Virginia is comprised of 95 counties, 41
incorporated cities, and 188 incorporated towns. Virginia is unique among
the several states in that cities and counties are independent, and their
land areas do not overlap. The largest expenditure by local governments in
Virginia are for education, but local governments also provide other
services such as water and sewer, police and fire protection and
recreational facilities. The Virginia Constitution imposes numerous
restrictions on local indebtedness, affecting both its incurrence and
amount.

In Davis v. Michigan (decided March 28, 1989), the United States
Supreme Court ruled unconstitutional states' exempting from state income
tax the retirement benefits paid by the state or local governments without
exempting retirement benefits paid by the Federal government. At that
time, Virginia exempted state and local retirement benefits but not Federal
retirement benefits. At a Special Session held in April 1989, the General
Assembly repealed the exemption of state and local retirement benefits.
Following Davis, at least five suits, some with multiple plaintiffs, for
refunds of Virginia income taxes, were filed by Federal retirees. These
suits were consolidated under the name of Harper v. Virginia Department of
Taxation.

In a Special Session, the Virginia General Assembly on July 9, 1994,
passed emerging legislation to provide payments to Federal retirees in
settlement of the retirees' claims as a result of Davis. The settlement
payments are to be made over a five-year period, commencing March 31, 1995.

The total amount of authorized appropriations for the settlement is $340
million (payable to participating retirees in installments of $60 million
on March 31, 1995, and $70 million on each succeeding March 31 through
March 31, 1999, subject to appropriation by the General Assembly).

On September 15, 1995, the Virginia Supreme Court rendered its
decision in Harper, reversing the judgement of the trial court, entering
final judgement in favor of the plaintiff retirees who elected not to
settle, and dictating that the amounts unlawfully collected be refunded
with statutory interest. The total cost to Virginia of the settlement and
judgment will be approximately $394.9 million, of which approximately
$203.2 million has been paid.

Most recently, Moody's has rated the long-term general obligations
bonds of Virginia Aaa, and Standard & Poor's has rated such bonds AAA.
There can be no assurance that the economic conditions on which these
ratings are based will continue or that particular bond issues may not be
adversely affected by changes in economic or political conditions.

APPENDIX B

Description of S&P, Moody's and Fitch ratings:

S&P

Municipal Bond Ratings

An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.

The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable, and will
include: (1) likelihood of default-capacity and willingness of the obligor
as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation; (2) nature and provisions of
the obligation; and (3) protection afforded by, and relative position of,
the obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.

AAA

Debt rated AAA is the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA

Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.

Principal and interest payments on bonds in this category are regarded
as safe. This rating describes the third strongest capacity for payment of
debt service. It differs from the two higher ratings because:

General Obligations Bonds -- There is some weakness in the local
economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse
circumstances, any one such weakness might impair the ability of the issuer
to meet debt obligations at some future date.

Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledge revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.

BBB

Of the investment grade, this is the lowest.

General Obligations Bonds -- Under certain adverse conditions, several
of the above factors could contribute to a lesser capacity for payment of
debt service. The difference between "A" and "BBB" ratings is that the
latter shows more than one fundamental weakness, or one very substantial
fundamental weakness, whereas the former shows only one deficiency among
the factors considered.

Revenue Bonds -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations, with the revenue flow possibly
being subject to erosion over time. Basic security provisions are no more
than adequate. Management performance could be stronger.
BB, B, CCC, CC, C

Debt rated BB, B, CCC, CC or C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal. BB indicates the least degree of speculation and C the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.

Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payment.

Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.

CCC

Debt rated CCC has a current identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions
to meet timely payments of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not
likely to have the capacity to pay interest and repay principal.

The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.

The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating.
D

Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.

Plus (+) or minus (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within the
major ratings categories.

Municipal Note Ratings
SP-1

The issuers of these municipal notes exhibit very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics are given a plus (+) designation.

SP-2

The issuers of these municipal notes exhibit satisfactory capacity to
pay principal and interest.
SP-3

The issuers of these municipal notes exhibit speculative capacity to
pay principal and interest.

Commercial Paper Ratings

An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Issues assigned an A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.

A-1

This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign
(+) designation.

A-2

Capacity for timely payment on issues with this designation is strong.

However, the relative degree of safety is not as high as for issues
designated A-1.

A-3

Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.

Moody's

Municipal Bond Ratings
Aaa

Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.

Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A

Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.

Baa

Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and therefor not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
maintenance of other terms of the contract over any long period of time may
be small.

Caa

Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.

Bonds which are rated Ca present obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.

Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Generally, Moody's provides either a generic rating or a rating with a
numerical modifier of 1 for bonds in each of the generic rating categories
Aa, A, Baa, Ba and B. Moody's also provides numerical modifiers of 2 and 3
in each of these categories for bond issues in the health care, higher
education and other not-for-profit sectors; the modifier 1 indicates that
the issue ranks in the higher end of its generic rating category; the
modifier 2 indicates that the issue is in the mid-range of the generic
category; and the modifier 3 indicates that the issue is in the low end of
the generic category.

Municipal Note Ratings

Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). Such ratings
recognize the difference between short-term credit risk and long-term risk.
Factors affecting the liquidity of the borrower and short-term cyclical
elements are critical in short-term ratings, while other factors of major
importance in bond risk, long-term secular trends for example, may be less
important over the short run.

A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG or, if the demand feature
is not rated, as NR. Short-term ratings on issues with demand features are
differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon periodic demand rather than fixed maturity
dates and payment relying on external liquidity. Additionally, investors
should be alert to the fact that the source of payment may be limited to
the external liquidity with no or limited legal recourse to the issuer in
the event the demand is not met.

Moody's short-term ratings are designated Moody's Investment Grade as
MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when Moody's
assigns a MIG or VMIG rating, all categories define an investment grade
situation.

MIG 1/VMIG 1

This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.

MIG 2/VMIG 2

This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.

MIG 3/VMIG 3

This designation denotes favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access
for refinancing is likely to be less well established.
MIG 4/VMIG 4

This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.

Commercial Paper Ratings

The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries, high
rates of return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad margins in
earnings coverage of fixed financial charges and high internal cash
generation, and well established access to a range of financial markets and
assured sources of alternate liquidity.

Issuers (or related supporting institutions) rated Prime-2 (P-2) have
a strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

Issuers (or related supporting institutions) rated Prime-3 (P-3) have
an acceptable capacity for repayment of short-term promissory obligations.
The effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and the requirements
for relatively high financial leverage. Adequate alternate liquidity is
maintained.

Fitch

Municipal Bond Ratings

The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.

AAA

Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonable foreseeable events.

Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because
bonds rated in the AAA and AA categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.

Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.

BBB

Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have an adverse
impact on these bonds and, therefore, impair timely payment. The
likelihood that the ratings of these bonds will fall below investment grade
is higher than for bonds with higher ratings.
BB

Bonds rated BB are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be
identified which could assist the obligor in satisfying its debt service
requirements.

Bonds rated B are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.

CCC

Bonds rated CCC have certain identifiable characteristics, which, if
not remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC

Bonds rated CC are minimally protected. Default payment of interest
and/or principal seems probable over time.
C

Bonds rated C are in imminent default in payment of interest or
principal.

DDD, DD and D

Bonds rated DDD, DD and D are in actual or imminent default of
interest and/or principal payments. Such bonds are extremely speculative
and should be valued on the basis of their ultimate recovery value in
liquidation or reorganization of the obligor. DDD represents the highest
potential for recovery on these bonds and D represents the lowest potential
for recovery.

Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category covering 13-36
months or the DDD, DD, or D categories.

Short-Term Ratings

Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.

Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings
on the existence of liquidity necessary to meet the issuer's obligations in
a timely manner.

F-1+

Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1

Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.

F-2

Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the F-1+ and F-1 categories.

<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1996
Principal
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
_____________ ______________
<S> <C> <C>
CONNECTICUT-79.4%
Connecticut:
6.90%, 3/15/2009 (Prerefunded 3/15/2000) (a)............................ $ 3,000,000 $ 3,298,410
5.50%, 3/15/2010........................................................ 3,000,000 3,007,020
6.875%, 7/15/2010 (Prerefunded 7/15/2000) (a)........................... 7,100,000 7,838,329
6.75%, 3/1/2011 (Prerefunded 3/1/2001) (a).............................. 3,000,000 3,318,540
5.50%, 5/15/2014........................................................ 2,000,000 1,951,920
5.375%, 10/1/2014....................................................... 6,500,000 6,242,795
5.50%, 5/15/2015........................................................ 3,000,000 2,912,100
Special Tax Obligation Revenue (Transportation Infrastructure):
Refunding 5.375%, 9/1/2008............................................ 2,500,000 2,504,275
6.80%, 12/1/2009 (Prerefunded 12/1/1999) (a).......................... 3,000,000 3,283,560
7.125%, 6/1/2010...................................................... 8,400,000 9,676,296
6.75%, 6/1/2011 (Prerefunded 6/1/2003) (a)............................ 8,500,000 9,466,365
Connecticut Clean Water Fund, Revenue:
7%, 1/1/2011 (Prerefunded 1/1/2001) (a)................................. 6,700,000 7,230,975
5.125%, 5/1/2018........................................................ 5,500,000 5,013,855
Connecticut Development Authority, Revenue:
First Mortgage Gross
(Elim Park Baptist Home Inc. Project) 9%, 12/1/2020................... 3,565,000 3,790,130
Health Care:
(Jerome Home Project) 8%, 11/1/2019................................... 1,940,000 2,018,395
(Masonic Charity Foundation of Connecticut) 6.50%, 8/1/2020 (Insured; AMBAC) 4,150,000 4,284,626
Life Care Facilities (Seabury Project):
Refunding 8.75%, 9/1/2006............................................. 1,625,000 1,615,965
10%, 9/1/2021......................................................... 11,175,000 11,805,941
Pollution Control
(Pfizer Inc. Project) 6.55%, 2/15/2013................................ 2,000,000 2,114,540
Water Facilities, Refunding
(Bridgeport Hydraulic Project) 5.60%, 6/1/2028 (Insured; MBIA)........ 2,600,000 2,398,916
Connecticut Health and Educational Facilities Authority, Revenue:
7%, 1/1/2020 (Insured; MBIA)............................................ 3,000,000 3,233,880
(Bridgeport Hospital, Connie Lee) 5.375%, 7/1/2025..................... 2,125,000 1,917,345
(Cherry Brook Nursing Center Project) 6%, 11/1/2022 (Insured; AMBAC).... 4,600,000 4,614,858
(Danbury Hospital) 6.50%, 7/1/2014 (Insured; MBIA)...................... 3,250,000 3,394,138
(Day Kimball Hospital) 5.375%, 7/1/2026 (Insured; FSA).................. 2,000,000 1,825,200
(Greenwich Academy) 5.75%, 3/1/2026 (Insured; FSA)...................... 3,130,000 3,027,962
(Greenwich Hospital) 5.80%, 7/1/2026 (Insured; MBIA).................... 9,365,000 9,110,740
(Hartford University):
6.75%, 7/1/2012....................................................... 3,500,000 3,507,175
8%, 7/1/2018 (Prerefunded 7/1/2003) (a)............................... 3,075,000 3,430,409
6.80%, 7/1/2022....................................................... 8,500,000 8,421,970
(Johnson Evergreen Corp.) 8.50%, 7/1/2022............................... 4,500,000 4,725,630

PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________________ ______________
CONNECTICUT (CONTINUED)
Connecticut Health and Educational Facilities Authority, Revenue (continued):
(Lawrence and Memorial Hospital)
7%, 7/1/2020 (Insured; MBIA) (Prerefunded 7/1/2000) (a)............... $ 2,500,000 $ 2,770,975
(Lutheran General Health Care System) 7.375%, 7/1/2019.................. 1,400,000 1,641,066
(Mansfield Nursing Center Project) 6%, 11/1/2022 (Insured; AMBAC)....... 2,700,000 2,708,721
(Middlesex Hospital) 6.25%, 7/1/2022 (Insured; MBIA).................... 2,500,000 2,542,050
(New Britain Memorial Hospital) 7.75%, 7/1/2022......................... 16,000,000 16,851,520
(Norwalk Hospital) 6.25%, 7/1/2022 (Insured; MBIA)...................... 3,600,000 3,681,540
(Nursing Home Program-Noble Horizon) 6%, 11/1/2022 (Insured; AMBAC)..... 1,500,000 1,504,845
(Quinnipiac College):
6%, 7/1/2013.......................................................... 6,545,000 6,077,883
7.75%, 7/1/2020 (Prerefunded 7/1/2000) (a)............................ 1,000,000 1,116,680
(Refunding- Saint Francis Hospital and Medical Center)
6.20%, 7/1/2022 (Insured; MBIA)....................................... 1,725,000 1,757,430
(Sacred Heart University):
6.50%, 7/1/2016....................................................... 2,000,000 1,985,340
5.80%, 7/1/2023....................................................... 1,700,000 1,472,642
6.625%, 7/1/2026...................................................... 3,000,000 2,953,470
(Saint Raphael Hospital) 6.625%, 7/1/2014 (Insured; AMBAC).............. 2,500,000 2,629,050
(Taft School) 7.375%, 7/1/2020 (Prerefunded 7/1/2000) (a)............... 1,150,000 1,276,236
(William W. Backus Hospital):
6%, 7/1/2012.......................................................... 1,500,000 1,459,800
6.375%, 7/1/2022...................................................... 2,250,000 2,235,578
Connecticut Housing Finance Authority (Housing Mortgage Finance Program):
7.20%, 11/15/2008....................................................... 10,280,000 10,648,744
5.60%, 5/15/2014........................................................ 4,000,000 3,816,520
6.45%, 5/15/2022........................................................ 6,000,000 6,023,280
6.70%, 11/15/2022....................................................... 26,000,000 26,523,120
6.75%, 11/15/2023....................................................... 6,000,000 6,192,000
6.05%, 11/15/2025....................................................... 9,065,000 8,809,820
Connecticut Municipal Electric Energy Cooperative, Power Supply System
Revenue,
Refunding:
5%, 1/1/2011 (Insured; MBIA).......................................... 4,660,000 4,344,844
5%, 1/1/2012 (Insured; MBIA).......................................... 2,000,000 1,858,980
5%, 1/1/2013 (Insured; MBIA).......................................... 2,000,000 1,843,400
Eastern Connecticut Resource Recovery Authority, Solid Waste Revenue
(Wheelabrator Lisbon Project):
5.50%, 1/1/2014....................................................... 10,000,000 9,111,900
5.50%, 1/1/2020....................................................... 7,250,000 6,429,518
New Haven
7.40%, 8/15/2011........................................................ 1,500,000 1,623,930

PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30,1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________________ ________________
CONNECTICUT (CONTINUED)
South Central Connecticut Regional Water Authority, Water Systems Revenue
5.75%, 8/1/2012 (Insured; FGIC)......................................... $ 6,000,000 $ 6,031,440
Stamford 6.60%, 1/15/2010................................................... 2,750,000 3,078,653
Stratford 7.30%, 3/1/2012 (Prerefunded 3/1/2001) (a)........................ 1,130,000 1,267,826
University of Connecticut 5%, 2/1/2015 (Insured; FGIC)...................... 1,250,000 1,135,825
U. S. RELATED-20.6%
Commonwealth of Puerto Rico 5.40%, 7/1/2025................................. 13,000,000 11,773,710
Puerto Rico:
(Public Improvement):
7.70%, 7/1/2020 (Prerefunded 7/1/2000) (a)............................ 3,000,000 3,409,710
6.80%, 7/1/2021 (Prerefunded 7/1/2002) (a)............................ 6,000,000 6,732,000
Refunding 5.50%, 7/1/2013 .............................................. 3,000,000 2,852,670
Puerto Rico Aqueduct and Sewer Authority, Revenue 6%, 7/1/2009.............. 7,250,000 7,435,310
Puerto Rico Electric Power Authority, Power Revenue 7%, 7/1/2021
(Prerefunded 7/1/2001) (a).............................................. 6,775,000 7,607,038
Puerto Rico Highway and Transportation Authority, Highway Revenue:
6.673%, 7/1/2010 (b).................................................... 3,200,000 2,872,000
6.625%, 7/1/2018 (Prerefunded 7/1/2002) (a)............................. 5,000,000 5,561,950
5.25%, 7/1/2020 (Insured; FSA).......................................... 1,750,000 1,596,998
5.50%, 7/1/2026......................................................... 5,000,000 4,597,650
Puerto Rico Industrial Medical and Environmental Pollution Control Facilities
Financing Authority, Revenue (Motorola Inc. Project) 6.75%, 1/1/2014........ 2,000,000 2,168,160
Puerto Rico Ports Authority, Special Facilities Revenue (American Airlines)
6.30%, 6/1/2023......................................................... 2,000,000 2,013,040
Puerto Rico Public Buildings Authority, Guaranteed Public Education and
Health Facilities, Refunding 5.75%, 7/1/2015............................ 8,000,000 7,628,880
University of Puerto Rico, University Revenue:
5.50%, 6/1/2015 (Insured; MBIA)......................................... 5,000,000 4,881,449
5.25%, 6/1/2025 (Insured; MBIA)......................................... 3,400,000 3,136,295
Virgin Islands Public Finance Authority, Revenue, Refunding
7.25%, 10/1/2018........................................................ 2,000,000 2,104,539
_____________
TOTAL INVESTMENTS (cost $360,448,142)....................................... $370,758,285
=============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES

SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation FSA Financial Security Assurance
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
Insurance Corporation
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____________ ______________ __________________ ____________________
<S> <C> <C> <C>
AAA Aaa AAA 36.3%
AA Aa AA 28.3
A A A 14.8
BBB Baa BBB 13.2
Not Rated (d) Not Rated (d) Not Rated (d) 7.4
____________
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 prinicpal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) Inverse floater security - the interest rate is subject to change
periodically.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
(d) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Series may invest.

See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $360,448,142)-see statement..................................... $370,758,285
Interest receivable..................................................... 7,846,808
Receivable for shares of Beneficial Interest subscribed................. 133,395
Prepaid expenses........................................................ 9,644
________________
378,748,132
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 163,199
Due to Distributor...................................................... 90,636
Due to Custodian........................................................ 16,924,558
Payable for shares of Beneficial Interest redeemed...................... 66,590
Accrued expenses........................................................ 99,532 17,344,515
________________ _______________
NET ASSETS ................................................................ $361,403,617
===============
REPRESENTED BY:
Paid-in capital......................................................... $347,570,572
Accumulated undistributed net realized gain on investments.............. 3,522,902
Accumulated net unrealized appreciation on investments-Note 3........... 10,310,143
_______________
NET ASSETS at value......................................................... $361,403,617
===============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 27,023,443
===============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 3,265,372
===============
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 84,734
===============
NET ASSET VALUE per share:
Class A Shares
($321,558,697/ 27,023,443 shares)..................................... $11.90
===============
Class B Shares
($38,837,586 / 3,265,372 shares)...................................... $11.89
===============
Class C Shares
($1,007,334 / 84,734 shares).......................................... $11.89
===============

See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $23,749,936
EXPENSES:
Management fee-Note 2(a).............................................. $ 2,045,864
Shareholder servicing costs-Note 2(c)................................. 1,147,331
Distribution fees-Note 2(b)........................................... 191,582
Professional fees..................................................... 56,898
Custodian fees........................................................ 38,166
Prospectus and shareholders' reports.................................. 19,462
Trustees' fees and expenses-Note 2(d)................................. 5,501
Registration fees..................................................... 2,800
Miscellaneous......................................................... 126,118
_______________
TOTAL EXPENSES.................................................... 3,633,722
______________
INVESTMENT INCOME-NET............................................. 20,116,214
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 5,701,419
Net unrealized (depreciation) on investments............................ (1,150,970)
________________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 4,550,449
_______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $24,666,663
===============

See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
__________________________________________
1995 1996
__________________ ________________
OPERATIONS:
Investment income-net................................................... $ 21,655,899 $ 20,116,214
Net realized gain (loss) on investments................................. (1,973,798) 5,701,419
Net unrealized (depreciation) on investments for the year............... (287,865) (1,150,970)
__________________ _________________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 19,394,236 24,666,663
__________________ _________________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (19,881,887) (18,231,897)
Class B shares........................................................ (1,774,012) (1,877,253)
Class C shares........................................................ - (7,064)
__________________ _________________
TOTAL DIVIDENDS................................................... (21,655,899) (20,116,214)
__________________ _________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 15,947,221 14,645,030
Class B shares........................................................ 5,896,601 5,468,178
Class C shares........................................................ - 1,023,317
Dividends reinvested:
Class A shares........................................................ 11,434,147 10,502,564
Class B shares........................................................ 1,240,658 1,298,271
Class C shares........................................................ - 6,163
Cost of shares redeemed:
Class A shares........................................................ (53,507,884) (43,749,996)
Class B shares........................................................ (3,788,582) (3,727,309)
Class C shares........................................................ - (1,996)
__________________ _________________
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.... (22,777,839) (14,535,778)
__________________ _________________
TOTAL (DECREASE) IN NET ASSETS.................................. (25,039,502) (9,985,329)
NET ASSETS:
Beginning of year....................................................... 396,428,448 371,388,946
__________________ _________________
End of year............................................................. $371,388,946 $361,403,617
================== =================
</TABLE>
<TABLE>
<CAPTION>
SHARES
________________________________________________________________________________________
CLASS A CLASS B CLASS C
_____________________________ _______________________ _______________________
YEAR ENDED
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, APRIL 30,
_____________________________ _______________________
1995 1996 1995 1996 1996*
_______________ ____________ __________ __________ _______________
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 1,373,091 1,212,141 503,373 453,771 84,387
Shares issued for
dividends reinvested. 983,180 869,313 106,773 107,482 515
Shares redeemed........ (4,637,620) (3,626,051) (329,539) (309,036) (168)
_______________ ____________ __________ __________ _______________
NET INCREASE (DECREASE)
IN SHARES
OUTSTANDING...... (2,281,349) (1,544,597) 280,607 252,217 84,734
=============== ============ ========== ========== ===============
*From August 15, 1995 (commencement of initial offering) to April 30, 1996.
See notes to financial statements.
</TABLE>

PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
FINANCIAL HIGHLIGHTS

Reference is made to pages 7 to 27 of the Fund's Prospectus
dated December 16, 1996.

PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering twelve series including the Connecticut Series (the "Series"). The
Fund's investment objective is to maximize current income exempt from Federal
and, where applicable, from State income taxes, without undue risk. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, 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 and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
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.
(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, CONNECTICUT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the 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 value
of the Series' average daily 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. There was no expense
reimbursement for the year ended April 30, 1996.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $1,837 during the year ended April 30, 1996 from commissions earned
on sales of the Series' shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the year ended April 30, 1996,
$190,357 was charged to the Series for the Class B shares and $1,225 was
charged to the Series for the Class C shares.
(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, Class B and Class C shares for the provision of certain services.
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 (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. For the year ended April 30, 1996,
$834,351, $95,178 and $409 were charged to Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $59,649 for the period
from December 1, 1995 through April 30, 1996.
(D) Each trustee who is not an "affiliated person" as defined in the Act
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.
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended April 30, 1996
amounted to $109,381,501 and $106,401,513, respectively.
At April 30, 1996, accumulated net unrealized appreciation on investments
was $10,310,143, consisting of $14,959,283 gross unrealized appreciation and
$4,649,140 gross unrealized depreciation.
At April 30, 1996, 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, CONNECTICUT SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Connecticut Series (one of the Series constituting the Premier State
Municipal Bond Fund) as of April 30, 1996, 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, 1996 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Connecticut Series at April
30, 1996, 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 & Young LLP - Signature)
New York, New York
June 5, 1996

<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
_______ _______
<S> <C> <C>
FLORIDA-95.7%
Alachua County Health Facilities Authority, Health Facilities Revenue, Refunding
(Santa Fe Healthcare Facilities Project) 7.60%, 11/15/2013.............. $ 3,500,000 $ 3,998,750
Arcadia, Water and Sewer Revenue 7.75%, 12/1/2021........................... 2,190,000 2,352,542
Brevard County Health Facilities Authority, HR
(Holmes Regional Medical Center Project) 5.70%, 10/1/2008............... 4,585,000 4,701,963
Broward County Health Facilities Authority, Revenue, Refunding
(Broward County Nursing Home) 7.50%, 8/15/2020 (LOC; Allied Irish Bank) (a) 1,000,000 1,058,270
Charlotte County, Health Care Facilities Revenue
(Charlotte Community Mental Health Project) 9.25%, 7/1/2020............. 1,635,000 1,795,917
Clay County Housing Finance Authority, SFMR
8.20%, 6/1/2021 (Collateralized; GNMA).................................. 670,000 703,453
Dade County:
Aviation Revenue:
6.55% 10/1/2013 (Insured; MBIA)....................................... 4,225,000 4,434,898
(Miami International Airport) 5.75%, 10/1/2013 (Insured; MBIA)........ 10,000,000 9,950,500
Refunding (Seaport) 5.125%, 10/1/2021 (Insured; MBIA)................... 7,500,000 6,780,225
Water and Sewer Systems Revenue 6.25%, 10/1/2011 (Insured; FGIC)........ 2,115,000 2,288,684
Dade County Health Facilities Authority, HR
(South Shore Hospital and Medical Center) 7.60%, 8/1/2024 (Insured; FHA) 2,345,000 2,528,426
Dade County Housing Finance Authority, Revenue, Refunding:
MFMR (Cutler Meadows Apartment) 6.50%, 7/1/2022 (Insured; FHA).......... 1,785,000 1,804,260
SFMR 6.70%, 4/1/2028 (Collateralized: FNMA & GNMA)...................... 4,500,000 4,540,905
Duval County Housing Finance Authority, SFMR:
7.85%, 12/1/2022 (Collateralized; GNMA)................................. 2,625,000 2,765,464
7.70%, 9/1/2024 (Collateralized; GNMA).................................. 1,460,000 1,534,460
Escambia County Housing Finance Authority, SFMR 7.80%, 4/1/2022............. 1,090,000 1,144,380
Florida, Refunding (Jacksonville Transportation) 5.30%, 7/1/2018............ 2,000,000 1,849,000
Florida Board of Education, Capital Outlay, Refunding:
5.80%, 6/1/2010......................................................... 2,000,000 2,045,080
5%, 6/1/2015............................................................ 10,300,000 9,284,317
5.125%, 6/1/2022........................................................ 4,000,000 3,543,640
Florida Division of Bond Finance Department, General Services Revenues
(Department of Natural Resources-Preservation 2000)
5.75%, 7/1/2013 (Insured; AMBAC)........................................ 7,695,000 7,726,626
Florida Housing Finance Agency:
(Brittany Rosemont Apartments) 7%, 2/1/2035............................. 6,000,000 6,357,360
Multi-Family Housing (Driftwood Terrace Project)
7.65%, 12/20/2031 (Collateralized; GNMA).............................. 3,440,000 3,645,815

PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
FLORIDA (CONTINUED)
Florida Housing Finance Agency (continued):
Single Family Mortgage, Refunding 6.65%, 1/1/2024....................... $ 2,415,000 $ 2,445,984
(Turtle Creek Apartment Projects) 6.10%, 5/1/2016 (Insured; AMBAC)...... 1,000,000 1,000,840
Florida Municipal Power Agency, Revenue (All Requirements Power Supply
Project)
5.10%, 10/1/2025 (Insured; AMBAC)....................................... 5,000,000 4,434,800
Florida Turnpike Authority, Turnpike Revenue, Refunding:
5%, 7/1/2013 (Insured; FGIC)............................................ 3,750,000 3,435,788
5%, 7/1/2019 (Insured; FGIC)............................................ 3,000,000 2,666,280
Gainesville, Utility System Revenue, Refunding 5.20%, 10/1/2026............. 5,000,000 4,491,500
Greater Orlando Aviation Authority, Airport Facilities Revenue, Refunding:
5.50%, 10/1/2008 (Insured; AMBAC)....................................... 5,940,000 5,949,207
5.50%, 10/1/2013 (Insured; AMBAC)....................................... 2,750,000 2,648,498
Highlands County Health Facilities Authority, Revenue (Adventist Sunbelt Hospital)
7%, 11/15/2014.......................................................... 1,500,000 1,621,155
Hillsborough, Capital Improvement Program, Revenue, Refunding
5%, 8/1/2015 (Insured; FGIC)............................................ 3,325,000 3,009,690
Hillsborough County, Utility Revenue, Refunding:
6.625%, 8/1/2011........................................................ 4,000,000 4,247,320
7%, 8/1/2014............................................................ 4,765,000 5,116,514
Hillsborough County Aviation Authority, Revenue, Refunding (Delta Airlines):
6.80%, 1/1/2024......................................................... 2,500,000 2,570,150
7.75%, 1/1/2024......................................................... 1,500,000 1,587,435
Indian Trace Community Development District, Water and Sewer Revenue
8.50%, 4/1/1997......................................................... 151,000 155,681
Jacksonville, Excise Taxes Revenue, Refunding 6.50%, 10/1/2013 (Insured; AMBAC) 5,000,000 5,293,350
Jacksonville, Water and Sewer Revenue 5%, 10/1/2020 (Insured; MBIA)......... 3,000,000 2,668,800
Jacksonville Health Facilities Authority, HR, Refunding (Saint Luke's Hospital)
7.125%, 11/15/2020...................................................... 6,700,000 7,201,428
Lake County Resource Recovery, IDR, Refunding (NRG/Recovery Group)
5.85%, 10/1/2009........................................................ 6,000,000 5,790,600
Marion County Hospital District, Revenue, Refunding
(Munroe Regional Medical Center) 6.25%, 10/1/2012 (Insured; FGIC)....... 3,000,000 3,124,200
North Miami, Educational Facilities Revenue (Johnson & Whales University Project)
6.10%, 4/1/2013......................................................... 5,000,000 4,883,850
North Miami Health Facilities Authority, Health Facilities Revenue
(Villa Maria Nursing Housing Project) 7.50%, 9/1/2012................... 2,670,000 2,888,326
Orange County, Solid Waste Facilities Revenue 6.375%, 10/1/2007 (Insured; FGIC) 4,910,000 5,293,226

PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
FLORIDA (CONTINUED)
Orange County Health Facilities Authority, Health Facilities Revenue
(Mental Health Service Project) 9.25%, 7/1/2020 (Prerefunded 7/1/2000) (b) $ 3,780,000 $ 4,459,379
Osceola County Industrial Development Authority, Revenue
(Community Provider Pooled Loan Program) 7.75%, 7/1/2017................ 5,235,000 5,295,674
Palm Bay, Utility Revenue, Refunding (Palm Bay Utility Corp. Project)
5%, 10/1/2022 (Insured; MBIA)........................................... 5,300,000 4,662,039
Palm Beach County:
Solid Waste Industrial Development Revenue:
(Okeelanta Power LP Project) 6.85%, 2/15/2021......................... 11,000,000 10,862,830
(Osceola Power LP) 6.85%, 1/1/2014.................................... 5,800,000 5,737,824
Water and Sewer Revenue 5%, 10/1/2010 (Insured; MBIA)................... 4,320,000 4,084,042
Palm Beach County Housing Finance Authority, Single Family Mortgage
Purchase Revenue 6.55%, 4/1/2027........................................ 2,750,000 2,770,900
Pinellas County, PCR, Refunding (Florida Power Corp.) 7.20%, 12/1/2014...... 3,000,000 3,203,820
Pinellas County Housing Finance Authority, SFMR:
7.70%, 8/1/2022......................................................... 2,810,000 2,949,207
(Multi-County Program) 6.70%, 2/1/2028 (Insured; FHA)................... 5,000,000 5,060,050
Polk County Industrial Development Authority, IDR
(IMC Fertilizer) 7.525% 1/1/2015........................................ 10,000,000 10,355,200
Reedy Creek, Improvement District 5%, 6/1/2019 (Insured; AMBAC)............. 3,325,000 2,963,539
Saint Lucie County, SWDR (Florida Power and Light Co. Project)
7.15%, 2/1/2023......................................................... 4,000,000 4,318,040
Sarasota County, Utility System Revenue, Refunding
5.25%, 10/1/2016 (Insured; FGIC)........................................ 1,000,000 931,800
Sunrise, Special Tax District Number 1, Refunding
6.375%, 11/1/2021 (LOC; Bayerische Hypotheken-und Weschel Bank) (a)..... 2,500,000 2,570,400
Tampa, Water and Sewer Revenue 5.125%, 10/1/2017 (Insured; FGIC)............ 1,000,000 908,090
U.S. RELATED-4.3%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 5,000,000 5,015,200
Virgin Islands Public Finance Authority, Revenue, Refunding 7.25%, 10/1/2018 5,400,000 5,682,258
__________
TOTAL INVESTMENTS (cost $247,491,507)....................................... $251,189,849
============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES

SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
FHA Federal Housing Administration Insurance Corporation
FNMA Federal National Mortgage Association MFMR Multi-Family Mortgage Revenue
GNMA Government National Mortgage Association PCR Pollution Control Revenue
HR Hospital Revenue SFMR Single Family Mortgage Revenue
IDR Industrial Development Revenue SWDR Solid Waste Disposal Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<S> <C> <C> <C>
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _______ _______________ ____________________
AAA Aaa AAA 50.3%
AA Aa AA 15.3
A A A 2.6
BBB Baa BBB 10.5
BB Ba BB 5.8
Not Rated (d) Not Rated (d) Not Rated (d) 15.5
________
100.0%
========
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(b) 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.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
(d) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Series may invest.

See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $247,491,507)-see statement..................................... $251,189,849
Receivable for investment securities sold............................... 4,063,458
Interest receivable..................................................... 3,753,959
Receivable for shares of Beneficial Interest subscribed................. 28,830
Prepaid expenses........................................................ 19,543
_____________
259,055,639
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 115,542
Due to Distributor...................................................... 63,611
Due to Custodian........................................................ 3,819,244
Payable for shares of Beneficial Interest redeemed...................... 461,014
Accrued expenses........................................................ 59,907 4,519,318
____________ _____________
NET ASSETS ................................................................ $254,536,321
==============
REPRESENTED BY:
Paid-in capital......................................................... $245,312,787
Accumulated undistributed net realized gain on investments.............. 5,525,192
Accumulated net unrealized appreciation on investments-Note 3........... 3,698,342
_____________
NET ASSETS at value......................................................... $254,536,321
===============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 15,710,599
===============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 1,867,187
===============
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 2,430
===============
NET ASSET VALUE per share:
Class A Shares
($227,478,154 / 15,710,599 shares).................................... $14.48
========
Class B Shares
($27,023,005 / 1,867,187 shares)...................................... $14.47
========
Class C Shares
($35,162 / 2,430 shares).............................................. $14.47
========

See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $17,013,955
EXPENSES:
Management fee-Note 2(a).............................................. $ 1,504,679
Shareholder servicing costs-Note 2(c)................................. 855,159
Distribution fees-Note 2(b)........................................... 134,701
Professional fees..................................................... 78,027
Custodian fees........................................................ 29,329
Prospectus and shareholders' reports.................................. 6,418
Trustees' fees and expenses-Note 2(d)................................. 3,746
Registration fees..................................................... 1,892
Miscellaneous......................................................... 18,676
__________
TOTAL EXPENSES.................................................. 2,632,627
__________
INVESTMENT INCOME-NET........................................... 14,381,328
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 6,336,711
Net unrealized (depreciation) on investments............................ (2,819,982)
__________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 3,516,729
__________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $17,898,057
=============

See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
____________________________________
1995 1996
_____________ ___________
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 16,368,966 $ 14,381,328
Net realized gain on investments........................................ 4,410,983 6,336,711
Net unrealized (depreciation) on investments for the year............... (2,782,324) (2,819,982)
_____________ ___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 17,997,625 17,898,057
_____________ ___________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares........................................................ (15,149,356) (13,092,008)
Class B shares........................................................ (1,219,610) (1,288,976)
Class C shares........................................................ _ (344)
Net realized gain on investments:
Class A shares........................................................ (716,166) (3,306,553)
Class B shares........................................................ (65,057) (370,770)
Class C shares........................................................ _ (14)
_____________ ___________
TOTAL DIVIDENDS................................................... (17,150,189) (18,058,665)
_____________ ___________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 12,537,474 9,844,149
Class B shares........................................................ 5,009,096 4,401,949
Class C shares........................................................ _ 36,586
Dividends reinvested:
Class A shares........................................................ 5,971,345 6,539,239
Class B shares........................................................ 509,461 644,364
Class C shares........................................................ _ 107
Cost of shares redeemed:
Class A shares........................................................ (56,564,392) (41,280,587)
Class B shares........................................................ (2,889,736) (3,176,969)
_____________ ___________
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.... (35,426,752) (22,991,162)
_____________ ___________
TOTAL (DECREASE) IN NET ASSETS.................................. (34,579,316) (23,151,770)
NET ASSETS:
Beginning of year....................................................... 312,267,407 277,688,091
_____________ ___________
End of year............................................................. $277,688,091 $254,536,321
============ ===============

</TABLE>
<TABLE>
<CAPTION>

SHARES
___________________________________________________________________________________
CLASS A CLASS B CLASS C
_____________________________ ____________________ _______________
YEAR ENDED
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, APRIL 30,
_____________________________ ____________________

1995 1996 1995 1996 1996*
_________ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 877,487 658,995 350,773 295,615 2,423
Shares issued for dividends
reinvested........... 419,064 437,472 35,744 43,121 7
Shares redeemed........ (3,988,619) (2,776,392) (202,194) (214,088) _
_________ _______ _______ _______ _______
NET INCREASE (DECREASE)
IN SHARES
OUTSTANDING...... (2,692,068) (1,679,925) 184,323 124,648 2,430
============ ============ ========== ========== ============
*From August 15, 1995 (commencement of initial offering) to April 30, 1996.
See notes to financial statements.
</TABLE>

PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
FINANCIAL HIGHLIGHTS

Reference is made to pages 7 to 27 of the Fund's Propsectus
dated December 16, 1996.

PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering twelve series including the Florida Series (the "Series"). The
Fund's investment objective is to maximize current income exempt from Federal
and, where applicable, from State income taxes, without undue risk. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, 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 and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
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.
(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, FLORIDA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the 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 value
of the Series' average daily 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. There was no expense
reimbursement for the year ended April 30, 1996.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $2,593 during the year ended April 30, 1996 from commissions earned
on sales of the Series' shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the year ended April 30, 1996,
$134,640 was charged to the Series for the Class B shares and $61 was charged
to the Series for the Class C shares.
(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, Class B and Class C shares for the provision of certain services.
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 (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. During the year ended April 30, 1996,
$616,605, $67,320 and $20 were charged to Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $44,055 for the period
from December 1, 1995 through April 30, 1996.

PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) Each trustee who is not an "affiliated person" as defined in the Act
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,
excluding short-term securities, during the year ended April 30, 1996
amounted to $144,987,747 and $171,615,659, respectively.
At April 30, 1996, accumulated net unrealized appreciation on investments
was $3,698,342, consisting of $7,261,047 gross unrealized appreciation and
$3,562,705 gross unrealized depreciation.
At April 30, 1996, 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, FLORIDA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Florida Series (one of the Series constituting the Premier State Municipal
Bond Fund) as of April 30, 1996, 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, 1996 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Florida Series at April 30,
1996, 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 & Young LLP signature logo]
New York, New York
June 5, 1996

<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
__________ __________
<S> <C> <C>
GEORGIA-97.9%
Albany, Sewer System Revenue 6.50%, 7/1/2009 (Insured; MBIA)................ $ 100,000 $ 109,094
Albany-Dougherty Inner City Authority, Revenue, Refunding 6%, 2/1/2011...... 200,000 203,008
Athens-Clarke County Unified Government, Water and Sewer Revenue, Refunding
5.875%, 1/1/2008 (Insured; FGIC)........................................ 265,000 273,888
Atlanta:
Airport Facilities Revenue:
6.50%, 1/1/2013....................................................... 150,000 154,929
6%, 1/1/2014 (Insured; AMBAC)......................................... 1,000,000 1,000,260
COP (Atlanta Pretrial Detention Center Project) 6.25%, 12/1/2011 (Insured; MBIA) 300,000 311,370
GO 6.10%, 12/1/2019..................................................... 1,000,000 1,008,860
School Improvement 5.60%, 12/1/2018..................................... 1,000,000 957,360
Atlanta Downtown Development Authority, Revenue, Refunding
(Underground Atlanta Project) 6.25%, 10/1/2016.......................... 200,000 205,354
Barrow County School District 5.60%, 2/1/2015 (Insured; MBIA)............... 1,000,000 977,780
Bartow County, Water and Sewer Revenue, Refunding
6%, 9/1/2015 (Insured; AMBAC)........................................... 450,000 455,989
Chatham County School District 6.25%, 8/1/2016.............................. 1,000,000 1,098,460
Clayton County and Clayton County Water Authority, Water and Sewer Revenue,
Refunding 5.60%, 5/1/2013 (Insured; AMBAC).............................. 1,200,000 1,191,816
Columbus, Water and Sewer Revenue, Refunding:
6.25%, 5/1/2011 (Insured; FGIC)......................................... 155,000 162,114
5.70%, 5/1/2020......................................................... 500,000 478,905
Columbus Hospital Authority, Revenue Certificates (Saint Francis Hospital)
6.20%, 1/1/2010 (Insured; MBIA)......................................... 200,000 207,090
Coweta County School System:
6.35%, 8/1/2012......................................................... 100,000 104,388
Refunding 5.75%, 2/1/2010 (Insured; FGIC)............................... 200,000 203,348
Dekalb County Development Authority, Revenue:
Refunding (Emory University Project) 5.25%, 11/1/2015................... 1,000,000 943,500
(Wesley Homes, Inc.-Budd Terrace Project)
6.75%, 10/1/2013 (LOC; Wachovia Bank of Georgia, N.A.) (a)............ 200,000 207,382
Dekalb County Health Facilities, GO 5.50%, 1/1/2020......................... 1,000,000 942,550
Dekalb County School District, Refunding 5.60%, 7/1/2010.................... 500,000 503,125
Fayette County School District 6.125%, 3/1/2015............................. 500,000 514,455
Fulco Hospital Authority, Revenue Anticipation Certificates
(Georgia Baptist Healthcare) 6.25%, 9/1/2013............................ 250,000 241,265
Fulton County, Water and Sewer Revenue, Refunding
6.375%, 1/1/2014 (Insured; FGIC)........................................ 290,000 311,759

PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
__________ __________
GEORGIA (CONTINUED)
Fulton County Building Authority, Revenue, Refunding
(County Government and Health Facilities Project) 6.125%, 1/1/2011..... $ 300,000 $ 311,193
Fulton County Development Authority, Special Facilities Revenue, Refunding
(Delta Air Lines Inc., Project) 6.95%, 11/1/2012........................ 245,000 253,698
Fulton County Hospital Authority, Revenue Anticipation Certificates
(Northside Hospital Project)
6.625%, 10/1/2016 (Insured; MBIA) (Prerefunded 10/1/2002) (b)........... 200,000 223,430
Gainesville, Water and Sewer Revenue, Refunding 6%, 11/15/2012 (Insured; FGIC) 300,000 315,981
Gainesville and Hall County Hospital Authority, Revenue Anticipation
Certificates
(Northeast Healthcare Project) 6.25%, 10/1/2012 (Insured; MBIA)......... 100,000 104,004
Georgia, GO:
6.30%, 3/1/2008......................................................... 100,000 110,042
6.65%, 3/1/2009......................................................... 1,000,000 1,128,960
5.65%, 3/1/2012......................................................... 1,000,000 1,012,570
Georgia Housing and Finance Authority, Revenue:
(Home Ownership Opportunity Program) 6.50%, 12/1/2011................... 130,000 132,817
Single Family Mortgage 6.50%, 12/1/2017 (Insured; FHA).................. 1,000,000 1,007,270
Georgia Medical Center Hospital Authority, Revenue
(Columbus Regional Healthcare System) 5.50%, 8/15/2015 (Insured; MBIA).. 2,200,000 2,087,206
Georgia Municipal Electric Authority:
Power Revenue, Refunding:
5.50%, 1/1/2012....................................................... 1,000,000 956,420
6.125%, 1/1/2014 (Insured; FGIC)...................................... 300,000 305,415
Special Obligation (First Crossover-General Resolution) 6.50%, 1/1/2020. 100,000 105,548
Glynn County, Board of Education 5.10%, 7/1/2011............................ 500,000 471,610
Hancock County, Various Purpose Asset Guaranty 6.70%, 4/1/2015.............. 1,000,000 1,042,960
Henry County and Henry County Water and Sewer Authority, Revenue, Refunding
6.50%, 2/1/2011 (Insured; MBIA)......................................... 100,000 105,748
Marietta Development Authority, Revenue (First Mortgage-Life College)
5.75%, 9/1/2014 (Insured; CGIC)......................................... 850,000 831,564
Metropolitan Atlanta Rapid Transportation Authority, Sales Tax Revenue, Refunding
6.25%, 7/1/2020 (Insured; AMBAC)........................................ 300,000 317,604
Monroe County Development Authority, PCR (Oglethorpe Power Corp. Scherer
Project)
6.80%, 1/1/2011......................................................... 100,000 108,026
Private Colleges and Universities Authority, Revenue, Refunding
(Spellman College Project) 6.20%, 6/1/2014 (Insured; FGIC).............. 1,000,000 1,037,510
Roswell, GO 5.65%, 2/1/2011................................................. 1,000,000 1,009,610

PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_____________ __________
GEORGIA (CONTINUED)
Savannah Economic Development Authority, PCR, Refunding (Union Camp Corp. Project)
6.80%, 2/1/2012......................................................... $ 200,000 $ 214,074
Savannah Hospital Authority, Revenue, Refunding (Saint Joseph's Hospital
Project)
6.20%, 7/1/2023......................................................... 1,000,000 964,940
Sugar Hill Public Utility, Revenue, Refunding 5.90%, 1/1/2014 (Insured; FSA) 500,000 498,595
U.S. RELATED-2.1%
Puerto Rico, GO, Refunding 6%, 7/1/2014..................................... 600,000 591,786
______
TOTAL INVESTMENTS (cost $27,683,090)........................................ $28,016,630
______
______

</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation GO General Obligation
CGIC Capital Guaranty Insurance Company LOC Letter of Credit
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FHA Federal Housing Administration PCR Pollution Control Revenue
FSA Financial Security Assurance
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_________ ______ _________________ ___________________
<S> <C> <C> <C>
AAA Aaa AAA 49.1%
AA Aa AA 35.3
A A A 14.7
BB Ba BB .9
_____
100.0%
=====
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Secured by letters of credit.
(b) 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.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.

See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $27,683,090)-see statement...................................... $28,016,630
Cash.................................................................... 110,909
Interest receivable..................................................... 479,345
Receivable for shares of Beneficial Interest subscribed................. 10,000
Prepaid expenses........................................................ 1,384
__________
28,618,268
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $12,932
Due to Distributor...................................................... 14,221
Payable for shares of Beneficial Interest redeemed...................... 27,051
Accrued expenses........................................................ 24,167 78,371
_______ ___________
NET ASSETS.................................................................. $28,539,897
___________
___________
REPRESENTED BY:
Paid-in capital......................................................... $28,940,292
Accumulated net realized (loss) on investments.......................... (733,935)
Accumulated net unrealized appreciation on investments-Note 3........... 333,540
__________
NET ASSETS at value......................................................... $28,539,897
___________
___________
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 639,462
___________
___________
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 1,539,970
___________
___________
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 6,723
___________
___________
NET ASSET VALUE per share:
Class A Shares
($8,346,358 / 639,462 shares)......................................... $13.05
__________
__________
Class B Shares
($20,105,797 / 1,539,970 shares)...................................... $13.06
__________
__________
Class C Shares
($87,742 / 6,723 shares).............................................. $13.05
__________
__________
See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $1,673,453
EXPENSES:
Management fee-Note 2(a).............................................. $ 160,860
Shareholder servicing costs-Note 2(c)................................. 103,832
Distribution fees-Note 2(b)........................................... 101,771
Custodian fees........................................................ 3,641
Professional fees..................................................... 3,061
Prospectus and shareholders' reports.................................. 1,092
Registration fees..................................................... 795
Trustees' fees and expenses-Note 2(d)................................. 356
Miscellaneous......................................................... 4,655
______
TOTAL EXPENSES.................................................. 380,063
Less-reduction in management fee due to
undertakings-Note 2(a)............................................ 59,898
______
NET EXPENSES.................................................... 320,165
__________
INVESTMENT INCOME-NET........................................... 1,353,288
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized (loss) on investments-Note 3............................... $(205,254)
Net unrealized appreciation on investments.............................. 774,119
______
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 568,865
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,922,153
___________
___________

See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
___________________
1995 1996
_______ ______
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 1,478,725 $ 1,353,288
Net realized (loss) on investments...................................... (508,036) (205,254)
Net unrealized appreciation on investments for the year................. 667,389 774,119
_________ ____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 1,638,078 1,922,153
_________ ____________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (548,712) (443,972)
Class B shares........................................................ (930,013) (908,818)
Class C shares........................................................ - (498)
_________ ____________
TOTAL DIVIDENDS................................................... (1,478,725) (1,353,288)
_________ ____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 698,373 326,483
Class B shares........................................................ 4,788,621 2,305,085
Class C shares........................................................ - 88,634
Dividends reinvested:
Class A shares........................................................ 386,985 316,447
Class B shares........................................................ 479,506 438,970
Class C shares........................................................ - 498
Cost of shares redeemed:
Class A shares........................................................ (2,172,832) (1,482,789)
Class B shares........................................................ (2,227,045) (2,436,019)
_________ ____________
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 1,953,608 (442,691)
========= ============

TOTAL INCREASE IN NET ASSETS.................................... 2,112,961 126,174
NET ASSETS:
Beginning of year....................................................... 26,300,762 28,413,723
_________ ____________
End of year............................................................. $28,413,723 $28,539,897
_________ ____________
_________ ____________

</TABLE>
<TABLE>
<CAPTION>
SHARES
_____________________________________________________________________
CLASS A CLASS B CLASS C
________________________ ________________________ ___________
YEAR ENDED
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, APRIL 30,
________________________ ________________________
1995 1996 1995 1996 1996*
__________ ________ _______ _______ __________
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 56,480 24,765 380,245 173,357 6,685
Shares issued for
dividends reinvested. 30,950 23,848 38,336 33,082 38
Shares redeemed........ (178,009) (111,113) (180,856) (183,789) -
________ _________ _________ _________ ________
NET INCREASE
(DECREASE)
IN SHARES
OUTSTANDING.... (90,579) (62,500) 237,725 22,650 6,723
________ _________ _________ _________ ________
________ _________ _________ _________ ________
_________________________
* From August 15, 1995 (commencement of initial offering) to April 30, 1996.
See notes to financial statements.
</TABLE>

PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
FINANCIAL HIGHLIGHTS

Reference is made to pages 7 to 27 in the Fund's Prospectus
dated December 16, 1996.

PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering twelve series, including the Georgia Series (the "Series"). The
Fund's investment objective is to maximize current income exempt from Federal
and, where applicable, from State income taxes, without undue risk. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, 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 and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
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.
(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, GEORGIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid
monthly. Dividends from net realized capital gain, 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 Series has an unused capital loss carryover of approximately $648,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1996. The
carryover does not include net realized securities losses from November 1,
1995 through April 30, 1996 which are treated, for Federal income tax
purposes, as arising in fiscal 1997. If not applied, $14,625 of the carryover
expires in fiscal 2002, $366,375 of the carryover expires in fiscal 2003 and
$267,000 of the carryover expires in fiscal 2004.
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 value
of the Series' average daily net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
had undertaken from May 1, 1995 through July 6, 1995 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), and
thereafter through March 17, 1996, to reduce the management fee and reimburse
such excess expenses paid by the Series, to the extent that the Series'
aggregate expenses (excluding 12b-1 distribution plan fees and certain
expenses as described above) exceeded specified annual percentages of the
Series' average daily net assets. The Manager has currently undertaken from
March 18, 1996 through April 30, 1997 to reduce the management fee or
reimburse such excess expenses paid by the Series, to the extent that the
Series' aggregate annual expenses (excluding 12b-1 distribution plan fees and
certain expenses as described above) exceed an annual rate of 1.25 of 1% of
the value of the Series' average daily net assets. The reduction in
management fee, pursuant to the undertakings, amounted to $59,898 for the
year ended April 30, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $83 during the year ended April 30,1996 from commissions earned on
sales of the Series' shares.

PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the year ended April 30, 1996,
$101,671 was charged to the Series for the Class B shares and $100 was
charged to the Series for the Class C shares.
(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, Class B and Class C shares for the provision of certain services.
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 (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. For the year ended April 30, 1996,
$22,250, $50,835 and $33 were charged to Class A, Class B and Class C shares,
respectively, by the Distributor pursuant to the Shareholder Services Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $5,294 for the period
from December 1, 1995 through April 30, 1996.
(D) Each trustee who is not an "affiliated person" as defined in the Act
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,
excluding short-term securities, during the year ended April 30, 1996
amounted to $9,554,141 and $10,052,890, respectively.
At April 30, 1996, accumulated net unrealized appreciation on investments
was $333,540, consisting of $612,291 gross unrealized appreciation and
$278,751 gross unrealized depreciation.
At April 30, 1996, 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, GEORGIA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Georgia Series (one of the Series constituting the Premier State Municipal
Bond Fund) as of April 30, 1996, 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, 1996 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Georgia Series at April 30,
1996, 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 & Young LLP signature logo]

New York, New York
June 5, 1996

<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-98.8% AMOUNT VALUE
_______ _______
<S> <C> <C>
MARYLAND-84.0%
Anne Arundel County,
Consolidated Water and Sewer 7.75%, 3/15/2008........................... $ 1,000,000 $ 1,095,570
Baltimore:
7%, 10/15/2007 (Insured; MBIA).......................................... 1,500,000 1,740,000
7.15%, 10/15/2008....................................................... 1,275,000 1,478,554
Port Facilities Revenue (Consolidated Coal Sales) 6.50%, 12/1/2010...... 9,740,000 10,484,915
Baltimore City Housing Corp., MFHR, Refunding
7.25%, 7/1/2023 (Collateralized; FNMA).................................. 3,245,000 3,386,255
Baltimore County:
Mortgage Revenue:
(First Mortgage - Pickersgill) 7.70%, 1/1/2021........................ 3,000,000 3,120,750
(Refunding - Tindeco Wharf Project) 6.50%, 12/20/2012 (Collateralized; GNMA) 1,500,000 1,553,940
PCR Refunding (Bethlehem Steel Corp. Project):
7.50%, 6/1/2015....................................................... 3,500,000 3,586,660
7.55%, 6/1/2017....................................................... 2,500,000 2,581,650
Gaithersburg, Hospital Facilities Improvement Revenue, Refunding (Shady
Grove)
6.50%, 9/1/2012 (Insured; FSA).......................................... 10,000,000 11,005,100
Howard County:
COP 8.15%, 2/15/2020.................................................... 605,000 797,154
EDR, Refunding (M.O.R. XIV Associates Project) 7.75%, 6/1/2012.......... 2,500,000 2,669,150
Howard County Metropolitan District 6.125%, 5/15/2023....................... 2,000,000 2,058,640
Kent County, College Revenue, Refunding (Washington College Project)
7.70%, 7/1/2018......................................................... 1,750,000 1,897,052
Maryland Community Development Administration,
Department of Housing and Community Development:
MFHR:
5.95%, 5/15/2013.................................................. 10,000,000 10,006,600
6.50%, 5/15/2013.................................................. 5,000,000 5,165,300
8.875%, 5/15/2021................................................. 360,000 365,069
7.30%, 5/15/2023.................................................. 2,205,000 2,308,370
6.85%, 5/15/2033.................................................. 5,000,000 5,126,900
6.70%, 5/15/2036 (Insured; FHA)................................... 5,415,000 5,541,982
Single Family Program:
7.40%, 4/1/2009................................................... 1,000,000 1,054,950
6.95%, 4/1/2011................................................... 6,125,000 6,385,312
7.70%, 4/1/2015................................................... 3,590,000 3,723,979
6.55%, 4/1/2026................................................... 7,500,000 7,610,475
6.75%, 4/1/2026................................................... 3,650,000 3,723,693
7.375%, 4/1/2026.................................................. 2,000,000 2,059,000

PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
MARYLAND (CONTINUED)
Maryland Community Development Administration,
Department of Housing and Community Development (continued):
Single Family Program (continued):
Zero Coupon, 4/1/2029............................................. $ 85,075,000 $ 5,887,190
7.625%, 4/1/2029.................................................. 7,545,000 7,829,597
7.45%, 4/1/2032................................................... 6,410,000 6,686,591
Maryland Department of Transportation, Consolidated Transportation
6.375%, 9/1/2006........................................................ 5,000,000 5,354,450
Maryland Economic Development Corp., Revenue
(Health and Mental Hygiene Providers Facilities Acquisition Program):
8.375%, 3/1/2013...................................................... 4,415,000 4,684,006
8.75%, 3/1/2017....................................................... 5,150,000 5,462,863
Maryland Health and Higher Educational Facilities Authority, Revenue:
(Bon Secours Hospital) 7.375%, 9/1/2017 (Prerefunded 7/1/2000) (a)...... 2,575,000 2,822,406
(Frederick Memorial Hospital) 5%, 7/1/2023 (Insured; FGIC) (b).......... 2,870,000 2,506,428
(Refunding - Doctors Community Hospital) 5.50%, 7/1/2024................ 4,700,000 4,010,181
(Refunding - Francis Scott Key Medical Center) 5%, 7/1/2023 (Insured; FGIC) 1,000,000 873,320
(Refunding - Memorial Hospital of Cumberland) 6.50%, 7/1/2017 (Insured; MBIA) 1,000,000 1,022,430
(Refunding - Roland Park Project) 7.75%, 7/1/2012....................... 2,230,000 2,355,304
(Refunding - Suburban Hospital) 5.125%, 7/1/2021 (Insured; AMBAC)....... 4,700,000 4,199,732
(Union Hospital of Cecil County) 6.70%, 7/1/2009........................ 2,320,000 2,381,039
(University of Maryland Medical Systems):
7%, 7/1/2022 (Insured; FGIC).......................................... 4,500,000 5,225,355
Refunding:
5.40%, 7/1/2008 (Insured; FGIC)................................... 2,625,000 2,627,993
(Northwest Hospital Center) 5.25%, 7/1/2013 (Insured; AMBAC)...... 6,500,000 6,103,955
Maryland Industrial Development Financing Authority, EDR
(Medical Waste Association) 8.75%, 11/15/2010........................... 750,000 750,000
Maryland Local Government Insurance Trust, Capitalization Program, COP
7.125%, 8/1/2009........................................................ 3,250,000 3,551,535
Maryland National Capital Park and Planning Commission,
Prince Georges County, Refunding
(Park Aquisition and Development) 5.125%, 7/1/2010...................... 1,990,000 1,917,246
Maryland Stadium Authority, Sports Facility LR 7.60%, 12/15/2019............ 5,250,000 5,739,930
Maryland State and Local Facilities 5.125%, 10/15/2010...................... 4,635,000 4,479,218
Maryland Transportation Authority, Transportation Facilities Project Revenue
Refunding 5.70%, 7/1/2005............................................... 3,700,000 3,884,186
Maryland Water Quality Financing Administration, Revolving Loan Fund Revenue:
6.70%, 9/1/2013 (Prerefunded 9/1/2001) (a).............................. 1,200,000 1,332,612

PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996

PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
MARYLAND (CONTINUED)
Maryland Water Quality Financing Administration,
Revolving Loan Fund Revenue (continued):
7.10%, 9/1/2013 (Prerefunded 9/1/2001) (a)............................ $ 600,000 $ 676,794
Montgomery County, PCR, Refunding (Potomac Electric Power Company)
5.375%, 2/15/2024 (Insured; MBIA)....................................... 8,750,000 8,136,538
Montgomery County Housing Opportunities Commission, Revenue:
Multi-Family Mortgage:
7.05%, 7/1/2032....................................................... 2,485,000 2,570,260
7.375%, 7/1/2032...................................................... 4,630,000 4,831,729
Single Family Mortgage:
7.375%, 7/1/2017...................................................... 1,835,000 1,939,228
6.625%, 7/1/2026...................................................... 3,750,000 3,825,150
Montgomery County Revenue Authority, LR (Olney Indoor Swim Center Project)
6.30%, 7/15/2012 (Prerefunded 7/15/2000) (a)............................ 2,110,000 2,284,307
Northeast Waste Disposal Authority, Solid Waste Revenue
(Montgomery County Resource Recovery Project):
6%, 7/1/2006.......................................................... 6,170,000 6,334,739
6%, 7/1/2008.......................................................... 3,690,000 3,737,343
6.20%, 7/1/2010....................................................... 8,650,000 8,724,304
Prince Georges County:
Consolidated Public Improvement:
5.50%, 1/1/2012 (Insured; MBIA)....................................... 3,000,000 2,973,360
Refunding 6.75%, 7/1/2010 (Prerefunded 7/1/2001) (a).................. 1,170,000 1,266,069
PCR, Refunding (Potomac Electric Project):
5.75%, 3/15/2010...................................................... 5,250,000 5,339,093
6%, 9/1/2022.......................................................... 3,750,000 3,790,763
Prince Georges County Housing Authority:
Mortgage Revenue, Refunding:
(New Keystone Apartment Project) 6.80%, 7/1/2025 (Insured: FHA & MBIA) 4,300,000 4,467,829
(Stevenson Apartments Project) 6.35%, 7/20/2020 (Collateralized; GNMA) 3,000,000 3,055,890
SFMR 6.60%, 12/1/2025 (Collateralized: FNMA & GNMA)..................... 4,660,000 4,745,464
University of Maryland, System Auxiliary Facility and Tuition Revenue:
5.375%, 4/1/2009........................................................ 2,500,000 2,502,500
6.50%, 10/1/2012 (Prerefunded 10/1/2002) (a)............................ 1,420,000 1,575,802
Washington County, Public Improvement
4.875%, 1/1/2014 (Insured; FGIC)........................................ 1,450,000 1,299,142
Washington Suburban Sanitary District, Refunding
(Water Supply) 5%, 6/1/2011............................................. 1,200,000 1,128,996

PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
U. S. RELATED-14.8%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ $ 4,000,000 $ 4,012,160
Guam Power Authority, Revenue 6.30%, 10/1/2012.............................. 3,400,000 3,346,892
Puerto Rico Commonwealth 5.85%, 7/1/2009.................................... 5,000,000 5,046,350
Puerto Rico Commonwealth Aqueduct and Sewer Authority, Revenue, Refunding
5%, 7/1/2019............................................................ 6,000,000 5,196,420
Puerto Rico Commonwealth Highway and Transportation Authority, Highway Revenue:
5.40%, 7/1/2006 (Insured; FSA).......................................... 11,000,000 11,022,770
5.50%, 7/1/2013......................................................... 4,000,000 3,822,160
Refunding:
5.25%, 7/1/2021 (c)................................................... 2,500,000 2,206,325
5%, 7/1/2022.......................................................... 2,080,000 1,764,630
Puerto Rico Public Buildings Authority, Revenue, Refunding 5.70%, 7/1/2009.. 3,500,000 3,543,400
University of Puerto Rico, University Revenue 5.25%, 6/1/2025 (Insured; MBIA) 7,775,000 7,171,971
____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $307,100,599)................... $314,552,965
==============
SHORT-TERM MUNICIPAL INVESTMENTS-1.2%
MARYLAND-.1%
Frederick, VRDN 3.90% (LOC; Fuji Bank and Trust Company) (d,e).............. $ 300,000 $ 300,000
U.S. RELATED-1.1%
Puerto Rico Electric Power Authority, Power Revenue 3.32% (Insured; FSA) (f) 3,600,000 3,600,000
____________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $3,900,000).................... $ 3,900,000
==============
TOTAL INVESTMENTS-100.0% (cost $311,000,599)................................ $318,452,965
==============
</TABLE>
<TABLE>
<CAPTION>

PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES

SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificate of Participation LR Lease Revenue
EDR Economic Development Revenue MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FHA Federal Housing Administration MFHR Multi-Family Housing Revenue
FNMA Federal National Mortgage Association PCR Pollution Control Revenue
FSA Financial Security Assurance SFMR Single Family Mortgage Revenue
GNMA Government National Mortgage Association VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<S> <C> <C> <C>
FITCH (G) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
____ ________ ___________________ ______________________
AAA Aaa AAA 30.8%
AA Aa AA 35.2
A A A 21.9
BBB Baa BBB 4.9
F1+ & F1 MIG1, VMIG1 & P1 SP1 & A1 .1
Not Rated (h) Not Rated (h) Not Rated (h) 7.1
__________
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 delayed-delivery basis.
(d) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(e) Secured by letters of credit.
(f) Inverse floater security - the interest rate is subject to change
periodically.
(g) Fitch currently provides creditworthiness information for a limited
number of investments.
(h) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Series may invest.
(i) At April 30, 1996, the Series had $103,850,755 (31.9% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from housing projects.

See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $311,000,599)-see statement..................................... $318,452,965
Cash.................................................................... 1,251,041
Interest receivable..................................................... 5,430,384
Receivable for investment securities sold............................... 2,677,860
Receivable for shares of Beneficial Interest subscribed................. 196,474
Prepaid expenses........................................................ 8,469
___________
328,017,193
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 147,272
Due to Distributor...................................................... 83,750
Payable for investment securities purchased............................. 2,242,850
Payable for shares of Beneficial Interest redeemed...................... 393,595
Accrued expenses........................................................ 65,973 2,933,440
____________ _____________
NET ASSETS.................................................................. $325,083,753
=============
REPRESENTED BY:
Paid-in capital......................................................... $314,643,536
Accumulated undistributed net realized gain on investments.............. 2,987,851
Accumulated net unrealized appreciation on investments-Note 3........... 7,452,366
___________
NET ASSETS at value......................................................... $325,083,753
=============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 22,367,145
=============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 3,244,429
=============
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 2,094
=============
NET ASSET VALUE per share:
Class A Shares
($283,877,760 / 22,367,145 shares).................................... $12.69
========
Class B Shares
($41,179,420 / 3,244,429 shares)...................................... $12.69
========
Class C Shares
($26,573 / 2,094 shares).............................................. $12.69
========

See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $ 20,680,770
EXPENSES:
Management fee-Note 2(a).............................................. $ 1,852,002
Shareholder servicing costs-Note 2(c)................................. 1,067,466
Distribution fees-Note 2(b)........................................... 194,102
Professional fees..................................................... 48,325
Custodian fees........................................................ 36,892
Prospectus and shareholders' reports.................................. 13,072
Registration fees..................................................... 6,769
Trustees' fees and expenses-Note 2(d)................................. 4,732
Miscellaneous......................................................... 23,089
___________
TOTAL EXPENSES.................................................. 3,246,449
____________
INVESTMENT INCOME-NET........................................... 17,434,321
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $4,318,992
Net unrealized appreciation on investments.............................. 1,867,438
___________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 6,186,430
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $23,620,751
=============

See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
________________________________
1995 1996
______________ ______________
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 19,487,297 $ 17,434,321
Net realized gain on investments........................................ 874,479 4,318,992
Net unrealized appreciation on investments for the year................. 276,297 1,867,438
______________ ______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 20,638,073 23,620,751
______________ ______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares........................................................ (17,819,972) (15,612,512)
Class B shares........................................................ (1,667,325) (1,821,592)
Class C shares........................................................ - (217)
Net realized gain on investments:
Class A shares........................................................ - (1,739,958)
Class B shares........................................................ - (229,505)
Class C shares........................................................ - (6)
______________ ______________
TOTAL DIVIDENDS................................................... (19,487,297) (19,403,790)
______________ ______________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 15,871,084 11,106,487
Class B shares........................................................ 7,200,284 7,992,863
Class C shares........................................................ - 27,000
Dividends reinvested:
Class A shares........................................................ 11,260,663 11,154,241
Class B shares........................................................ 1,087,620 1,358,026
Class C shares........................................................ - 219
Cost of shares redeemed:
Class A shares........................................................ (61,788,292) (44,093,946)
Class B shares........................................................ (3,903,364) (3,601,826)
______________ ______________
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.... (30,272,005) (16,056,936)
______________ ______________
TOTAL (DECREASE) IN NET ASSETS.................................. (29,121,229) (11,839,975)
NET ASSETS:
Beginning of year....................................................... 366,044,957 336,923,728
______________ ______________
End of year............................................................. $336,923,728 $325,083,753
============ ==============
</TABLE>
<TABLE>
<CAPTION>

1995 1996 1995 1996 1996*
_________ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 1,283,464 860,692 582,210 620,596 2,077
Shares issued for
dividends reinvested. 913,405 863,509 88,247 105,093 17
Shares redeemed........ (5,049,171) (3,429,459) (321,839) (279,793) -
_________ _______ _______ _______ _______
NET INCREASE
(DECREASE)
IN SHARES
OUTSTANDING.... (2,852,302) (1,705,258) 348,618 445,896 2,094
============ ============ ========== ========== ============
* From August 15, 1995 (commencement of initial offering) to April 30, 1996.
See notes to financial statements.
</TABLE>

PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
FINANCIAL HIGHLIGHTS

Reference is made to pages 7 to 27 in the Fund's Prospectus
dated December 16, 1996.

PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering twelve series including the Maryland Series (the "Series"). The
Fund's investment objective is to maximize current income exempt from Federal
and, where applicable, from State income taxes, without undue risk. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, 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 and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
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.
(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, MARYLAND SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the 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 value
of the Series' average daily 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. There was no expense
reimbursement for the year ended April 30, 1996.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $1,197 during the year ended April 30, 1996 from commissions earned
on sales of the Series' shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the year ended April 30, 1996,
$194,067 was charged to the Series for the Class B shares and $35 was charged
to the Series for the Class C shares.
(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, Class B and Class C shares for the provision of certain services.
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 (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. During the year ended April 30, 1996,
$744,774, $97,033 and $12 were charged to Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $62,934 for the period
from December 1, 1995 through April 30, 1996.

PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) Each trustee who is not an "affiliated person" as defined in the Act
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,
excluding short-term securities, during the year ended April 30, 1996
amounted to $137,715,503 and $160,233,158, respectively.
At April 30, 1996, accumulated net unrealized appreciation on investments
was $7,452,366, consisting of $10,271,631 gross unrealized appreciation and
$2,819,265 gross unrealized depreciation.
At April 30, 1996, 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, MARYLAND SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Maryland Series (one of the Series constituting the Premier State Municipal
Bond Fund) as of April 30, 1996, 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, 1996 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, Maryland Series at April 30,
1996, 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 & Young LLP signature logo]

New York, New York
June 5, 1996

<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
_______ _______
<S> <C> <C>
MASSACHUSETTS-81.7%
Boston Industrial Development Financing Authority, Sewer Facility Revenue
(Harbor Electric Energy Co. Project) 7.375%, 5/15/2015.................. $ 2,500,000 $ 2,681,625
Leominster 7.50%, 4/1/2009 (Insured; MBIA, Prerefunded 4/1/2000) (a)........ 1,275,000 1,430,193
Lynn Water and Sewer Commission, General Revenue
7.25%, 12/1/2010 (Insured; MBIA, Prerefunded 12/1/2000) (a)............. 1,000,000 1,125,740
Massachusetts Bay Transportation Authority:
7%, 3/1/2021............................................................ 1,000,000 1,141,620
7.053%, 3/1/2021 (Insured; MBIA) (b,c).................................. 2,300,000 1,940,625
Massachusetts Commonwealth:
7.25%, 3/1/2000 (Insured; FGIC)......................................... 650,000 721,903
7%, 8/1/2012 (Prerefunded 8/1/2001) (a)................................. 1,850,000 2,074,368
Massachusetts Education Loan Authority, Education Loan Revenue
7.75%, 1/1/2008 (Insured; MBIA)......................................... 1,220,000 1,240,923
Massachusetts Health and Educational Facilities Authority, Revenue:
(Cooley Dickinson Hospital) 5.50%, 11/15/2018 (Insured; AMBAC).......... 3,500,000 3,274,915
(Medical Center of Central Massachusetts) 7.10%, 7/1/2021............... 1,000,000 1,064,500
(New England Deaconess Hospital) 6.875%, 4/1/2022....................... 6,000,000 6,271,020
(Refunding - Milton Hospital) 7%, 7/1/2016 (Insured; MBIA).............. 2,050,000 2,209,613
(South Shore Hospital) 7.50%, 7/1/2020
(Insured; MBIA, Prerefunded 7/1/2000) (a)............................. 2,000,000 2,253,540
(University Hospital) 7.25%, 7/1/2019 (Insured; MBIA)................... 2,750,000 2,995,988
Massachusetts Housing Finance Agency, Single Family Housing Revenue:
7.80%, 12/1/2005........................................................ 875,000 922,197
7.90%, 6/1/2014......................................................... 880,000 932,738
7.95%, 6/1/2023......................................................... 1,930,000 2,033,969
Massachusetts Industrial Finance Agency, Revenue:
(Brooks School) 5.95%, 7/1/2023......................................... 1,000,000 980,770
(Provider Lease Program) 8.75%, 7/15/2009............................... 685,000 722,504
(Water Treatment - American Hingham) 6.95%, 12/1/2035................... 3,000,000 3,011,580
Massachusetts Municipal Wholesale Electric Co., Power Supply Systems Revenue
6.125%, 7/1/2019........................................................ 1,200,000 1,180,920
Massachusetts Port Authority, Revenue:
Refunding 5%, 7/1/2018.................................................. 3,680,000 3,250,213
Special Project (Harborside Hyatt) 10%, 3/1/2026........................ 3,000,000 3,369,570
Massachusetts Water Pollution Abatement Trust (Pool Loan Program) 5.70%, 2/1/2015 1,300,000 1,292,317
Massachusetts Water Resources Authority:
7.625%, 4/1/2014 (Prerefunded 4/1/2000) (a)............................. 750,000 844,905
5%, 12/1/2016 (Insured; MBIA)........................................... 3,000,000 2,701,920
5%, 12/1/2025 (Insured; MBIA)........................................... 5,400,000 4,699,782
South Essex Sewer District, Refunding 5.25%, 6/15/2024 (Insured; MBIA)...... 1,000,000 913,140

PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
U. S. RELATED-18.3%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ $ 1,500,000 $ 1,504,560
Puerto Rico Commonwealth:
5.40%, 7/1/2025......................................................... 2,000,000 1,811,340
Public Improvement 6.80%, 7/1/2021 (Prerefunded 7/1/2002) (a)........... 1,000,000 1,122,000
Refunding:
6%, 7/1/2014.......................................................... 2,000,000 1,972,620
5.375%, 7/1/2022 (Insured; MBIA)...................................... 2,500,000 2,352,825
Puerto Rico Commonwealth Highway and Transportation Authority,
Highway Revenue:
6.573%, 7/1/2009 (b).................................................. 1,000,000 905,000
6.673%, 7/1/2010 (b).................................................. 1,000,000 897,500
Puerto Rico Public Buildings Authority,
Guaranteed Government Facilities Revenue 6.25%, 7/1/2015 (Insured; AMBAC) 1,100,000 1,177,231
Virgin Islands Public Finance Authority, Revenue, Refunding
7.25%, 10/1/2018........................................................ 1,000,000 1,052,270
__________
TOTAL INVESTMENTS (cost $69,082,072)........................................ $70,078,444
============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _______ _______________ _____________________
<S> <C> <C> <C>
AAA Aaa AAA 46.2%
AA Aa AA 10.2
A A A 23.5
BBB Baa BBB 12.8
Not Rated (e) Not Rated (e) Not Rated (e) 7.3
________
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) Inverse floater security-the interest rate is subject to change
periodically.
(c) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30,
1996, this security amounted to $1,940,625 or 2.6% of net assets.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
(e) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Series may invest.
(f) At April 30, 1996, 32.2% of the Series' net assets are insured by
MBIA.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $69,082,072)-see statement...................................... $70,078,444
Cash.................................................................... 2,505,274
Interest receivable..................................................... 1,377,601
Receivable for shares of Beneficial Interest subscribed................. 188,009
Prepaid expenses........................................................ 2,191
____________
74,151,519
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $33,389
Due to Distributor...................................................... 17,331
Accrued expenses........................................................ 33,135 83,855
____________ ____________
NET ASSETS.................................................................. $74,067,664
============
REPRESENTED BY:
Paid-in capital......................................................... $71,387,032
Accumulated undistributed net realized gain on investments.............. 1,684,260
Accumulated net unrealized appreciation on investments-Note 3........... 996,372
____________
NET ASSETS at value......................................................... $74,067,664
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 5,985,415
============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 457,347
============
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 89
============
NET ASSET VALUE per share:
Class A Shares
($68,812,117 / 5,985,415 shares)...................................... $11.50
=======
Class B Shares
($5,254,525 / 457,347 shares)......................................... $11.49
=======
Class C Shares
($1,022 / 89 shares).................................................. $11.48
=======
See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $5,011,570
EXPENSES:
Management fee-Note 2(a).............................................. $ 423,126
Shareholder servicing costs-Note 2(c)................................. 248,839
Distribution fees-Note 2(b)........................................... 24,282
Professional fees..................................................... 10,940
Custodian fees........................................................ 8,595
Prospectus and shareholders' reports.................................. 3,544
Registration fees..................................................... 2,902
Trustees' fees and expenses-Note 2(d)................................. 1,020
Miscellaneous......................................................... 14,320
______________
TOTAL EXPENSES.................................................. 737,568
___________
INVESTMENT INCOME-NET........................................... 4,274,002
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 2,354,880
Net unrealized (depreciation) on investments............................ (2,363,586)
______________
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (8,706)
___________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $4,265,296
=============

See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
____________________________________
1995 1996
___________ ___________
<S> <C> <C>
OPERATIONS:

Investment income-net................................................... $ 4,665,750 $ 4,274,002
Net realized gain (loss) on investments................................. (120,750) 2,354,880
Net unrealized (depreciation) on investments for the year............... (311,459) (2,363,586)
____________ ____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 4,233,541 4,265,296
____________ ____________
DIVIDENDS TO SHAREHOLDERS:
From investment income-net:
Class A shares........................................................ (4,451,783) (4,029,063)
Class B shares........................................................ (213,967) (244,904)
Class C shares........................................................ - (35)
From net realized gain on investments:
Class A shares........................................................ - (164,269)
Class B shares........................................................ - (11,333)
Class C shares........................................................ (2)
In excess of net realized gain on investments:
Class A shares........................................................ (343,505) -
Class B shares........................................................ (17,797) -
Class C shares........................................................ - -
____________ ____________
TOTAL DIVIDENDS................................................... (5,027,052) (4,449,606)
____________ ____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 4,730,079 2,996,973
Class B shares........................................................ 1,042,859 1,256,028
Class C shares........................................................ - 1,000
Dividends reinvested:
Class A shares........................................................ 2,596,861 2,291,472
Class B shares........................................................ 123,653 142,581
Class C shares........................................................ - 37
Cost of shares redeemed:
Class A shares........................................................ (10,711,882) (9,062,697)
Class B shares........................................................ (603,243) (324,846)
____________ ____________
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.... (2,821,673) (2,699,452)
____________ ____________
TOTAL (DECREASE) IN NET ASSETS.................................. (3,615,184) (2,883,762)
NET ASSETS:
Beginning of year...................................................... 80,566,610 76,951,426
____________ ____________
End of year........................................................... $ 76,951,426 $ 74,067,664
============== ================
</TABLE>
<TABLE>
<CAPTION>
SHARES
___________________________________________________________________________________
CLASS A CLASS B CLASS C
_____________________________ ____________________ _______________
YEAR ENDED
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, APRIL 30,
_____________________________ ____________________ _________________
1995 1996 1995 1996 1996*
_________ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 413,848 255,371 90,978 106,403 86
Shares issued for
dividends reinvested. 228,208 194,345 10,873 12,098 3
Shares redeemed........ (939,699) (771,980) (53,757) (27,545) -
_________ _______ _______ _______ _______
NET INCREASE
(DECREASE) IN
SHARES OUTSTANDING (297,643) (322,264) 48,094 90,956 89
============= =========== ======== =========== ===========
____________________
* From August 15, 1995 (commencement of initial offering) to April 30, 1996.
See notes to financial statements.
</TABLE>

PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
FINANCIAL HIGHLIGHTS

Reference is made to pages 7 to 27 of the Fund's Prospectus
dated December 16, 1996.

PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering twelve series including the Massachusetts Series (the "Series"). The
Fund's investment objective is to maximize current income exempt from Federal
and, where applicable, from State income taxes, without undue risk. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, 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 and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
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.
(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, MASSACHUSETTS SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code.
To the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the 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 value
of the Series' average daily 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. There was no expense
reimbursement for the year ended April 30, 1996.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $825 during the year ended April 30, 1996 from commissions earned on
sales of the Series' shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the year ended April 30, 1996,
$24,276 was charged to the Series for the Class B shares and $6 was charged
to the Series for the Class C shares.
(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, Class B and Class C shares for the provision of certain services.
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 (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. For the year ended April 30, 1996,
$180,190, $12,138 and $2 were charged to Class A, Class B and Class C shares,
respectively, by the Distributor pursuant to the Shareholder Services Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $13,747 for the period
from December 1, 1995 through April 30, 1996.
(D) Each trustee who is not an "affiliated person" as defined in the Act
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.

PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended April 30, 1996
amounted to $26,612,251 and $33,956,985, respectively.
At April 30, 1996, accumulated net unrealized appreciation on investments
was $996,372, consisting of $2,696,274 gross unrealized appreciation and
$1,699,902 gross unrealized depreciation.
At April 30, 1996, 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, MASSACHUSETTS SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Massachusetts Series (one of the Series constituting the Premier State
Municipal Bond Fund) as of April 30, 1996, 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, 1996 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Massachusetts Series at April
30, 1996, 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 & Young LLP signature logo]

New York, New York
June 5, 1996

<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-99.4% AMOUNT VALUE
_______ _______
<S> <C> <C>
MICHIGAN-98.0%
Brighton Area School District, Refunding:
Zero Coupon, 5/1/2014 (Insured; AMBAC).................................. $ 8,000,000 $ 2,702,560
Zero Coupon, 5/1/2020 (Insured; AMBAC).................................. 5,000,000 1,157,400
Byron Center Public Schools, Refunding 5.875%, 5/1/2024 (Insured; MBIA) (a). 3,400,000 3,344,954
Capital Region Airport Authority, Airport Revenue
6.70%, 7/1/2021 (Insured; MBIA)......................................... 2,500,000 2,615,550
Chelsea School District 6%, 5/1/2015 (Insured; FGIC) (a).................... 1,625,000 1,645,101
Chippewa Valley Schools, Refunding 7%, 5/1/2010 (Prerefunded 5/1/2001) (b).. 1,275,000 1,424,303
Clarkston Community School 5.75%, 5/1/2016 (Insured; FGIC).................. 1,340,000 1,321,990
Detroit:
(Development Area No. 1) 7.60%, 7/1/2010................................ 4,150,000 4,599,445
(Unlimited Tax) 6.35%, 4/1/2014......................................... 3,325,000 3,236,455
Water Supply Systems Revenue, Refunding:
4.75%, 7/1/2019 (Insured; FGIC)....................................... 2,500,000 2,099,000
8.79%, 7/1/2022 (Insured; FGIC) (c)................................... 1,500,000 1,578,750
Ferris State University, Revenue, Refunding 5.25%, 10/1/2020 (Insured; MBIA) 1,200,000 1,103,328
Flat Rock Community School District 5.25%, 5/1/2018 (Insured; MBIA)......... 1,500,000 1,383,315
Grand Ledge Public School District, Refunding 5.375%, 5/1/2024 (Insured; MBIA) 1,000,000 930,420
Grand Rapids Housing Finance Authority, Multi-Family Revenue, Refunding
7.625%, 9/1/2023 (Collateralized; FNMA)................................. 1,000,000 1,086,810
Huron Valley School District, Refunding:
Zero Coupon, 5/1/2018 (Insured; FGIC)................................... 6,370,000 1,665,755
6.125%, 5/1/2020 (Insured; FGIC)........................................ 1,735,000 1,772,285
Iron Mountain City School District, Refunding 5.125%, 5/1/2021 (Insured; AMBAC) 1,000,000 905,990
Kalamazoo Hospital Finance Authority, Hospital Facilities Revenue, Refunding
(Borgess Medical Center) 6.25%, 6/1/2014 (Insured; FGIC)................ 2,000,000 2,121,860
Kent County, Airport Revenue (Kent County International Airport):
5.90%, 1/1/2012......................................................... 1,145,000 1,134,512
5.90%, 1/1/2013......................................................... 1,095,000 1,078,925
Lake Orion Community School District:
5.25%, 5/1/2021 (Insured; FSA) (d)...................................... 1,400,000 1,284,360
Refunding 5.80%, 5/1/2015 (Insured; AMBAC).............................. 2,085,000 2,057,853
Lapeer Economic Development Corp., Ltd. Obligation Revenue
(Lapeer Health Services Project) 8.625%, 2/1/2020 (Prerefunded 2/1/2000) (b) 2,000,000 2,290,500
Leslie Public School (Ingham and Jackson Counties School Building and Site)
Refunding 6%, 5/1/2015 (Insured; AMBAC)................................. 1,000,000 1,013,260
Mason Public Schools District 5.40%, 5/1/2021 (Insured; FGIC)............... 1,760,000 1,655,544

PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
MICHIGAN (CONTINUED)
Michigan Building Authority, Revenue 6.75%, 10/1/2007 (Insured; AMBAC) (a).. $ 1,600,000 $ 1,755,488
Michigan Higher Education Student Loan Authority, Student Loan Revenue:
6.875%, 10/1/2007 (Insured; AMBAC)...................................... 2,250,000 2,287,890
7.55%, 10/1/2008 (Insured; MBIA)........................................ 1,625,000 1,662,537
6.125%, 9/1/2010........................................................ 1,520,000 1,499,906
Michigan Hospital Finance Authority, HR:
(Crittenton Hospital) 6.70%, 3/1/2007................................... 2,250,000 2,316,083
(Daughters of Charity National Health Systems-Providence Hospital) 7%, 11/1/2021 2,700,000 2,868,723
Refunding:
(Daughters of Charity National Health Systems-Providence Hospital)
5.25%, 11/1/2015.................................................. 3,700,000 3,389,459
(Detroit Medical Center) 8.125%, 8/15/2012............................ 220,000 236,898
(Genesys Health Systems) 8.125%, 10/1/2021............................ 5,000,000 5,420,450
(Henry Ford Health System) 5.25%, 11/15/2025.......................... 8,500,000 7,510,770
(Middle Michigan Obligation Group) 6.625%, 6/1/2010................... 2,000,000 2,029,040
(Sinai Hospital of Greater Detriot) 6.70%, 1/1/2026................... 2,500,000 2,475,850
(Sisters of Mercy Health Corp.):
6.25%, 2/15/2009 (Insured; FSA)................................... 1,065,000 1,116,674
5.375%, 8/15/2014 (Insured; MBIA)................................. 1,340,000 1,258,233
Michigan Housing Development Authority:
(Home Improvement Program) 7.65%, 12/1/2012............................. 2,150,000 2,264,789
MFHR 8.375%, 7/1/2019 (Insured; FGIC)................................... 1,550,000 1,632,351
Rental Housing Revenue:
6.50%, 4/1/2006....................................................... 2,000,000 2,085,340
7.70%, 4/1/2023 (Insured; FSA)........................................ 4,185,000 4,434,384
SFMR:
7.55%, 12/1/2014...................................................... 105,000 105,392
7.50%, 6/1/2015....................................................... 2,355,000 2,485,679
7.75%, 12/1/2019...................................................... 2,480,000 2,588,128
6.95%, 12/1/2020...................................................... 1,750,000 1,842,173
Michigan Municipal Bond Authority, Revenue (State Revolving Fund):
6.50%, 10/1/2014........................................................ 2,500,000 2,664,475
6.50%, 10/1/2017........................................................ 3,500,000 3,674,020
Michigan Strategic Fund:
Ltd. Obligation Revenue:
(Northeastern Community Mental Health Foundation) 8.25%, 1/1/2009..... 1,495,000 1,548,536
Refunding (Ledyard Association Ltd. Partnership Project)
6.25%, 10/1/2011 (Insured; ITT Lyndon Property Insurance Co.)..... 3,075,000 3,140,559
Solid Waste Disposal Revenue Refunding
(Genesee Power Station Project) 7.50%, 1/1/2021....................... 3,000,000 3,011,790

Monroe County:
PCR (Detroit Edison Project):
7.50%, 12/1/2019 (Insured; AMBAC)..................................... $ 4,650,000 $ 5,117,185
7.875%, 12/1/2019..................................................... 2,720,000 2,950,275
7.65%, 9/1/2020 (Insured; FGIC)....................................... 2,250,000 2,476,575
6.55%, 6/1/2024 (Insured; MBIA)....................................... 1,700,000 1,756,831
Water Supply Systems (Frenchtown Charter Township Water Treatment
and Distribution Systems) 6.50%, 5/1/2013............................. 2,500,000 2,614,725
Monroe County Economic Development Corp., Ltd. Obligation Refunding, Revenue
(Detroit Edison Co. Project) 6.95%, 9/1/2022 (Insured; FGIC)............ 2,000,000 2,292,000
Muskegon Public Schools 5.25%, 5/1/2013 (Insured; FGIC)..................... 2,100,000 1,990,317
Nice Community School District of Marquette and Baraga Counties
5.25%, 5/1/2016 (Insured; MBIA)......................................... 1,950,000 1,799,070
Northville, Special Assessment (Wayne County) 7.875%, 1/1/2006.............. 1,685,000 1,837,779
Northwestern Michigan College, Community College Improvement Revenue,
Refunding
7%, 7/1/2011............................................................ 1,800,000 1,913,166
Novi Community School District 5.30%, 5/1/2021 (Insured; FGIC) (d).......... 6,600,000 6,097,806
Oakland County Economic Development Corp., Ltd. Obligation Revenue
(Pontiac Osteopathic Hospital Project)
9.625%, 1/1/2020 (Prerefunded 1/1/2000) (b)............................. 1,630,000 1,922,080
Oxford Area Community School District, Building and Site
5.40%, 5/1/2025 (Insured; FGIC)......................................... 1,000,000 936,860
Riverview Community School District, Refunding:
5.25%, 5/1/2014 (Insured; AMBAC)........................................ 2,000,000 1,862,260
5.25%, 5/1/2021 (Insured; AMBAC)........................................ 2,000,000 1,834,800
Rockford Public Schools, Refunding (Kent County School Building and Site)
7.375%, 5/1/2019 (Prerefunded 5/1/2000) (b)............................. 2,000,000 2,218,240
Romulus Community Schools, Refunding:
5.125%, 5/1/2017 (Insured; FGIC)........................................ 4,650,000 4,253,262
Capital Appreciation Zero Coupon, 5/1/2019 (Insured; FGIC).............. 2,390,000 588,012
Romulus Economic Development Corp., Ltd. Obligation EDR
Refunding (Romulus Hir Ltd. Partnership Project)
7%, 11/1/2015 (Insured; ITT Lyndon Property Insurance Co.).............. 3,700,000 3,943,053
Saint Johns Public Schools 5.625%, 5/1/2020 (Insured; FGIC)................. 2,500,000 2,420,125
Sandusky Community School District, Refunding 5.25%, 5/1/2021 (Insured; AMBAC) 1,000,000 917,400
South Lyon Community Schools (School Building) 6.375%, 5/1/2018............. 1,500,000 1,554,045

PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______ _______
MICHIGAN (CONTINUED)
Traverse City Area Public Schools (Building and Site)
5.70%, 5/1/2020 (Insured; MBIA)......................................... $ 5,000,000 $ 4,888,150
Wayne Charter County, Special Airport Facilities Revenue, Refunding
(Northwest Airlines Inc.) 6.75%, 12/1/2015.............................. 5,000,000 4,995,850
U.S. RELATED-1.4%
Puerto Rico Housing Finance Corp., MFMR
7.50%, 4/1/2022 (LOC; Government Development Bank) (e).................. 2,510,000 2,646,971
______________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $175,510,898)..................................................... $180,342,679
==============
SHORT-TERM MUNICIPAL INVESTMENT-.6%
MICHIGAN;
Midland County Economic Development Corp., Economic Development Limited Obligation
Revenue, Refunding, VRDN (Dow Chemical Corp.) 4% (f)
(cost $1,000,000)....................................................... $ 1,000,000 $ 1,000,000
==============
TOTAL INVESTMENTS-100.0%
(cost $176,510,898)..................................................... $181,342,679
==============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES

SUMMARY OF ABBREVIATIONS
<S> <C> <C> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
EDR Economic Development Revenue Insurance Corporation
FGIC Financial Guaranty Insurance Company MFHR Multi-Family Housing Revenue
FNMA Federal National Mortgage Association MFMR Multi-Family Mortgage Revenue
FSA Financial Security Assurance PCR Pollution Control Revenue
HR Hospital Revenue SFMR Single Family Mortgage Revenue
LOC Letter of Credit VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (G) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _____ _________________ ______________________
<S> <C> <C> <C>
AAA Aaa AAA 46.7%
AA Aa AA 17.3
A A A 13.2
BBB Baa BBB 10.0
F1 MIG1 SP1 .6
Not Rated (h) Not Rated (h) Not Rated (h) 12.2
________
100.0%
=========
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Held by the custodian in a segregated account as collateral for a
delayed-delivery security.
(b) 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.
(c) Inverse floater security - the interest rate is subject to change
periodically.
(d) Purchased on a delayed-delivery basis.
(e) Secured by letters of credit.
(f) Security payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(g) Fitch currently provides creditworthiness information for a limited
number of investments.
(h) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Series may invest.
(i) At April 30, 1996, the Series had $61,403,484 (33.1% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from city municipal projects.

See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $176,510,898)-see statement..................................... $181,342,679
Receivable for investment securities sold............................... 6,402,083
Interest receivable..................................................... 3,891,829
Receivable for shares of Beneficial Interest subscribed................. 9,268
Prepaid expenses........................................................ 6,558
___________
191,652,417
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 84,311
Due to Distributor...................................................... 46,194
Payable for investment securities purchased............................. 5,546,040
Payable for shares of Beneficial Interest redeemed...................... 151,155
Accrued expenses and other liabilities.................................. 122,794 5,950,494
____________ ____________
NET ASSETS.................................................................. $185,701,923
=============
REPRESENTED BY:
Paid-in capital......................................................... $178,271,945
Accumulated undistributed net realized gain on investments.............. 2,598,197
Accumulated net unrealized appreciation on investments-Note 3........... 4,831,781
___________
NET ASSETS at value......................................................... $185,701,923
=============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 10,992,391
=============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 1,256,241
=============
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 8,764
=======
NET ASSET VALUE per share:
Class A Shares
($166,537,676 / 10,992,391 shares).................................... $15.15
=======
Class B Shares
($19,031,405 / 1,256,241 shares)...................................... $15.15
=======
Class C Shares
($132,842 / 8,764 shares)............................................. $15.16
=======

See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $12,183,096
EXPENSES:
Management fee-Note 2(a).............................................. $ 1,067,900
Shareholder servicing costs-Note 2(c)................................. 643,363
Distribution fees-Note 2(b)........................................... 92,339
Professional fees..................................................... 26,897
Custodian fees........................................................ 21,558
Prospectus and shareholders' reports.................................. 17,979
Registration fees..................................................... 2,905
Trustees' fees and expenses-Note 2(d)................................. 2,496
Miscellaneous......................................................... 17,727
____________
TOTAL EXPENSES.................................................. 1,893,164
____________
INVESTMENT INCOME-NET........................................... 10,289,932
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 4,253,950
Net unrealized (depreciation) on investments............................ (1,629,095)
____________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 2,624,855
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $12,914,787
============

See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
____________________________________
1995 1996
____________ ____________
<S> <C> <C>
OPERATIONS:
Investment income-net........................................... $ 10,969,293 $ 10,289,932
Net realized gain on investments........................................ 1,828,821 4,253,950
Net unrealized (depreciation) on investments for the year............... (818,115) (1,629,095)
____________ ____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 11,979,999 12,914,787
____________ ____________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares........................................................ (10,186,162) (9,401,220)
Class B shares........................................................ (783,131) (886,953)
Class C shares........................................................ - (1,759)
Net realized gain on investments:
Class A shares........................................................ (2,793,660) (2,113,095)
Class B shares........................................................ (239,175) (230,061)
Class C shares........................................................ - (13)
____________ ____________
TOTAL DIVIDENDS................................................... (14,002,128) (12,633,101)
____________ ____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 10,587,097 6,590,274
Class B shares........................................................ 4,942,392 4,290,323
Class C shares........................................................ - 135,546
Dividends reinvested:
Class A shares........................................................ 7,582,697 6,818,746
Class B shares........................................................ 656,238 688,066
Class C shares........................................................ - 1,816
Cost of shares redeemed:
Class A shares........................................................ (27,084,772) (23,824,458)
Class B shares........................................................ (2,852,874) (2,354,777)
____________ ____________
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.... (6,169,222) (7,654,464)
____________ ____________
TOTAL (DECREASE) IN NET ASSETS.................................. (8,191,351) (7,372,778)
NET ASSETS:
Beginning of year...................................................... 201,266,052 193,074,701
____________ ____________
End of year............................................................. $193,074,701 $185,701,923
============= ============
</TABLE>
<TABLE>
<CAPTION>
SHARES
___________________________________________________________________________________
CLASS A CLASS B CLASS C
_____________________________ ____________________ _______________
YEAR ENDED
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, APRIL 30,
_____________________________ ____________________

1995 1996 1995 1996 1996*
_________ _______ _______ _______ _______
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 701,669 424,521 327,697 276,378 8,647
Shares issued for
dividends reinvested. 511,163 437,436 44,292 44,106 117
Shares redeemed........ (1,819,806) (1,537,548) (191,401) (152,659) -
_________ _______ _______ _______ _______
NET INCREASE
(DECREASE) IN
SHARES OUTSTANDING (606,974) (675,591) 180,588 167,825 8,764
========== =========== ========= ========= ==========
* From August 15, 1995 (commencement of initial offering) to April 30, 1996.

See notes to financial statements.

</TABLE>

PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
FINANCIAL HIGHLIGHTS

Reference is made to pages 7 to 27 of the Fund's Prospectus
dated December 16, 1996.

PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering twelve series, including the Michigan Series (the "Series"). The
Fund's investment objective is to maximize current income exempt from Federal
and, where applicable, from State income taxes, without undue risk. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, 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 and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
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.
(A) PORTFOLIO VALUATION: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
The Series follows an investment policy of investing primarily in
municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the Series.

PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
NOTES TO FINANCIAL STATEMENTS (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 value
of the Series' average daily 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. There was no expense
reimbursement for the year ended April 30, 1996.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $5,680 during the year ended April 30, 1996 from commissions earned
on sales of the Series' shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the year ended April 30, 1996,
$92,044 was charged to the Series for the Class B shares and $295 was charged
to the Series for the Class C shares.
(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, Class B and Class C shares for the provision of certain services.
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 (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. For the year ended April 30, 1996,
$439,289, $46,022 and $98 were charged to Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $39,610 for the period
from December 1, 1995 through April 30, 1996.

PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(D) Each trustee who is not an "affiliated person" as defined in the Act
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,
excluding short-term securities, during the year ended April 30, 1996
amounted to $108,216,959 and $116,812,970, respectively.
At April 30, 1996, accumulated net unrealized appreciation on investments
was $4,831,781, consisting of $7,151,570 gross unrealized appreciation and
$2,319,789 gross unrealized depreciation.
At April 30, 1996, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).

PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Michigan Series (one of the Series constituting the Premier State Municipal
Bond Fund) as of April 30, 1996, 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, 1996 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, Michigan Series at April 30,
1996, 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 & Young LLP signature logo]

New York, New York
June 5, 1996

<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-99.9% AMOUNT VALUE
_______________ _________________
<S> <C> <C>
MINNESOTA-91.1%
Anoka County:
Resources Recovery Revenue (Northern States Power Co.) 7.15%, 12/1/2008. $ 1,150,000 $ 1,227,062
Solid Waste Disposal Revenue (United Power Association Project)
6.95%, 12/1/2008 (Guaranteed; National Rural Utilities
Cooperative Finance Corp.)............................................ 3,825,000 4,054,500
Burnsville, MFHR Refunding (Conventry Court Apartments)
7.50%, 9/1/2027 (Insured; FHA).......................................... 2,250,000 2,358,788
Burnsville Independent School District Number 191 5.125%, 2/1/2015.......... 3,875,000 3,617,894
Dakota County Housing and Redevelopment Authority, South-Saint Paul
Revenue Refunding (Single Family-GNMA Program) 8.10%, 9/1/2012.......... 155,000 164,438
Duluth Economic Development Authority, Health Care Facilities Revenue
(Benedictine Health-Saint Mary's Project)
8.375%, 2/15/2020 (Prerefunded 2/15/2000) (a)........................... 2,500,000 2,872,900
Eagan, MFHR Refunding (Forest Ridge Apartments) 7.50%, 9/1/2017 (Insured; FHA) 1,000,000 1,056,070
Eden Prairie, MFHR Refunding:
(Eden Investments Project) 7.40%, 8/1/2025 (Insured; FHA)............... 500,000 523,795
(Welsh Parkway Apartments) 8%, 7/1/2026 (Insured; FHA).................. 2,860,000 3,085,626
Edina:
Hospital Systems Revenue (Fairview Hospital) 7.125%, 7/1/2006........... 1,000,000 1,062,660
Housing Development Revenue Refunding (Edina Park Plaza Project)
7.70%, 12/1/2028 (Insured; FHA)....................................... 2,500,000 2,631,675
Hubbard County, Solid Waste Disposal Revenue (Potlatch Corp. Project)
7.375%, 8/1/2013........................................................ 1,000,000 1,068,030
Minneapolis:
Zero Coupon, 12/1/2014.................................................. 1,825,000 609,331
Home Ownership Program 7.10%, 6/1/2021.................................. 730,000 758,689
HR (Lifespan Inc.-Minneapolis Children's Medical Center Project):
8.125%, 8/1/2017 (Prerefunded 8/1/1998) (a)........................... 1,500,000 1,651,950
7%, 12/1/2020 (Prerefunded 6/1/2001) (a).............................. 5,650,000 6,324,836
MFHR Refunding (Churchill Apartments Project) 7.05%, 10/1/2022 (Insured; FSA) 4,000,000 4,158,560
MFMR (Seward Towers Project) 7.375%, 12/20/2030 (Collateralized; GNMA).. 2,350,000 2,481,177
Refunding (Sports Arena Project) 5.20%, 10/1/2024....................... 5,000,000 4,517,000
Minneapolis Community Development Agency, Ltd. Tax Support
Development Revenue:
8.375%, 6/1/2007...................................................... 2,500,000 2,694,325
8%, 12/1/2009......................................................... 300,000 315,228
7.75%, 12/1/2019...................................................... 2,850,000 3,114,024
7.40%, 12/1/2021...................................................... 2,000,000 2,161,320
Minneapolis-Saint Paul Housing and Redevelopment Authority,
Health Care Systems Revenue:
8%, 8/15/2014 (Prerefunded 8/15/2000) (a)............................. 3,000,000 3,447,900

PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______________ ________________
MINNESOTA (CONTINUED)

Minneapolis-Saint Paul Housing and Redevelopment Authority,
Health Care Systems Revenue (continued):
(Group Health Plan Inc., Project) 6.75%, 12/1/2013...................... $ 2,750,000 $ 2,910,270
Refunding:
(Childrens Health Care) 5.50%, 8/15/2025 (Insured; FSA)............... 1,000,000 937,190
(Healthspan Health Systems) 4.75%, 11/15/2018 (Insured; AMBAC)........ 2,000,000 1,674,780
Minneapolis-Saint Paul Housing Finance Board, SFMR:
8.875%, 11/1/2018 (Collateralized; GNMA)................................ 125,000 131,685
8.30%, 8/1/2021 (Collateralized; GNMA).................................. 370,000 388,189
7.30%, 8/1/2031 (Collateralized; GNMA).................................. 6,265,000 6,539,282
Minneapolis-Saint Paul Metropolitan Apartments Community 7.80%, 1/1/2014.... 3,000,000 3,281,490
State of Minnesota (Duluth Airport) 6.25%, 8/1/2014......................... 2,500,000 2,549,825
Minnesota Agricultural and Economic Development Board,
Minnesota Small Business Development Loan Revenue:
9%, Series B, 8/1/2008................................................ 75,000 77,127
9%, Series C, 8/1/2008................................................ 245,000 251,948
8.125%, Lot 2, 8/1/2009............................................... 500,000 521,975
8.125%, Lot 3, 8/1/2009............................................... 815,000 850,819
8.20%, 8/1/2009....................................................... 655,000 697,745
8.375%, 8/1/2010...................................................... 1,385,000 1,476,479
Minnesota Higher Education Facilities Authority, Revenue (University of St.
Thomas)
5.625%, 10/1/2016....................................................... 1,000,000 955,570
Minnesota Housing Finance Agency, Revenue:
Rental Housing 6.10%, 8/1/2009.......................................... 2,585,000 2,611,186
Single Family Mortgage:
7.35%, 7/1/2016....................................................... 1,555,000 1,647,787
7.30%, 1/1/2017....................................................... 895,000 947,393
7.90%, 7/1/2019....................................................... 1,630,000 1,705,860
7.45%, 7/1/2022 (Insured; FHA)........................................ 2,830,000 2,937,653
7.95%, 7/1/2022....................................................... 1,700,000 1,785,867
6.15%, 1/1/2026....................................................... 1,690,000 1,662,656
6.95%, 7/1/2026....................................................... 2,960,000 3,060,581
Minnesota Public Facilities Authority, Water Pollution Control Revenue:
7.10%, 3/1/2012 (Prerefunded 3/1/2000) (a).............................. 2,350,000 2,598,724
6.95%, 3/1/2013 (Prerefunded 3/1/2001) (a).............................. 3,000,000 3,344,790
6.50%, 3/1/2014......................................................... 5,200,000 5,532,020
New Prague Independent School District 5%, 2/1/2016 (Insured; MBIA)......... 2,000,000 1,809,860
New York Mills Independent School District,
Refunding 5.05%, 2/1/2015 (Insured; AMBAC).............................. 1,000,000 913,260
Northern Municipal Power Agency, Electric System Revenue Refunding
7.25%, 1/1/2016......................................................... 3,500,000 3,702,720

North Saint Paul Maplewood Independent School District, Refunding
5.125%, 2/1/2025........................................................ $ 2,500,000 $ 2,241,000
City of Red Wing, Health Care Facilities Revenue Refunding
(River Region Obligation Group) 6.50%, 9/1/2022......................... 3,445,000 3,461,329
Saint Cloud, Hospital Facilities Revenue (The Saint Cloud Hospital):
7%, 7/1/2020 (Insured; AMBAC) (Prerefunded 7/1/2001) (a)................ 1,000,000 1,120,850
Refunding 5%, 7/1/2020 (Insured; AMBAC)................................. 2,000,000 1,763,740
Saint Louis Park, Health Care Facilities Revenue (Health Systems Obligated
Group)
5.20%, 7/1/2016 (Insured; AMBAC)........................................ 2,500,000 2,266,250
Saint Paul Housing and Redevelopment Authority, SFMR
Refunding 6.90%, 12/1/2021 (Insured; FNMA).............................. 2,765,000 2,851,019
Saint Paul Port Authority:
First Lien Tax Increment Refunding (Energy Park Project)
5%, 2/1/2008 (Insured; AGIC).......................................... 5,495,000 5,097,107
IDR Refunding (Hampden Building Project) 9.25%, 6/1/2011................ 1,065,000 966,594
Sartell, PCR Refunding (Champion International Corp. Project) 6.95%, 10/1/2012 5,000,000 5,285,200
Seaway Port Authority of Duluth,
Industrial Development Dock and Wharf Revenues Refunding (Cargill Inc.
Project)
6.80%, 5/1/2012......................................................... 3,000,000 3,227,340
Southern Minnesota Municipal Power Agency, Power Supply System Revenue:
Zero Coupon, 1/1/2026 (Insured; MBIA)................................... 11,000,000 1,832,380
(Custodial Receipts) 5%, 1/1/2013....................................... 2,000,000 1,831,340
Refunding 4.75%, 1/1/2016............................................... 1,500,000 1,279,665
U.S. RELATED-8.8%
Commonwealth of Puerto Rico:
(Custodial Receipts) 6.45%, 7/1/2017 (Insured; AMBAC)................... 1,700,000 1,793,857
5.875%, 7/1/2018 (Insured; AMBAC)....................................... 4,000,000 3,958,080
Puerto Rico Highway and Transportation Authority, Highway Revenue
5.55%, 7/1/2010......................................................... 6,900,000 6,549,204
University of Puerto Rico 5.25%, 6/1/2025 (Insured; MBIA)................... 2,000,000 1,844,880
_____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $155,784,856)..................................................... $160,832,344
=============
SHORT-TERM MUNICIPAL INVESTMENT-.1%
U.S. RELATED;
Puerto Rico Electric Power Authority, Revenue VRDN 3.32% (Insured; FSA) (b)
(cost $200,000)......................................................... $ 200,000 $ 200,000
=============
TOTAL INVESTMENTS-100.0%
(cost $155,984,856)..................................................... $161,032,344
=============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES

SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AGIC Asset Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
AMBAC American Municipal Bond Assurance Corporation Insurance Corporation
FHA Federal Housing Administration MFHR Multi-Family Housing Revenue
FNMA Federal National Mortgage Association MFMR Multi-Family Mortgage Revenue
FSA Financial Security Assurance PCR Pollution Control Revenue
GNMA Government National Mortgage Association SFMR Single Family Mortgage Revenue
HR Hospital Revenue VRDN Variable Rate Demand Notes
IDR Industrial Development Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
____________ ____________ __________________ _____________________
<S> <C> <C> <C>
AAA Aaa AAA 50.5%
AA Aa AA 23.9
A A A 12.0
BBB Bbb BBB 10.6
Not Rated(d) Not Rated(d) Not Rated(d) 3.0
________
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) Inverse floater secuirty - the interest rate is subject to change
periodically.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
(d) Securities which, while not rated by Fitch, Moody's and Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Series may invest.
(e) At April 30, 1996, the Series had $42,729,286 (26.0% of net assets)
invested in securities whose payment of prinicipal and interest is
dependent upon revenues generated from housing projects.

See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $155,984,856)-see statement..................................... $161,032,344
Cash.................................................................... 169,196
Interest receivable..................................................... 3,027,802
Receivable for shares of Beneficial Interest subscribed................. 61,945
Prepaid expenses........................................................ 5,377
________________
164,296,664
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 74,204
Due to Distributor...................................................... 44,543
Payable for shares of Beneficial Interest redeemed...................... 100,462
Accrued expenses........................................................ 30,110 249,319
_____________ ________________
NET ASSETS.................................................................. $164,047,345
================
REPRESENTED BY:
Paid-in capital......................................................... $158,631,229
Accumulated undistributed net realized gain on investments.............. 368,628
Accumulated net unrealized appreciation on investments-Note 3........... 5,047,488
________________
NET ASSETS at value......................................................... $164,047,345
================
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 9,213,422
================
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 1,706,860
================
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 24,834
================
NET ASSET VALUE per share:
Class A Shares
($138,057,638 / 9,213,422 shares)..................................... $14.98
================
Class B Shares
($25,616,979 / 1,706,860 shares)...................................... $15.01
================
Class C Shares
($372,728 / 24,834 shares)............................................ $15.01
================
See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $10,604,102
EXPENSES:
Management fee-Note 2(a).............................................. $ 924,716
Shareholder servicing costs-Note 2(c)................................. 535,663
Distribution fees-Note 2(b)........................................... 123,681
Professional fees..................................................... 28,332
Custodian fees........................................................ 16,772
Prospectus and shareholders' reports.................................. 8,862
Registration fees..................................................... 1,660
Trustees' fees and expenses-Note 2(d)................................. 2,143
Miscellaneous......................................................... 3,284
_______________
TOTAL EXPENSES.................................................. 1,645,113
________________
INVESTMENT INCOME-NET........................................... 8,958,989
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $1,903,251
Net unrealized (depreciation) on investments............................ (911,785)
_______________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 991,466
________________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 9,950,455
================

See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
________________________________________
1995 1996
________________ ________________
OPERATIONS:
Investment income-net................................................... $ 9,619,787 $ 8,958,989
Net realized gain (loss) on investments................................. (1,533,666) 1,903,251
Net unrealized appreciation (depreciation) on investments for the year.. 3,390,900 (911,785)
________________ ________________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 11,477,021 9,950,455
________________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares........................................................ (8,494,472) (7,756,084)
Class B shares........................................................ (1,125,315) (1,199,994)
Class C shares........................................................ - (2,911)
Net realized gain on investments:
Class A shares........................................................ (40,522) -
Class B shares........................................................ (6,066) -
________________ ________________
TOTAL DIVIDENDS................................................... (9,666,375) (8,958,989)
________________ ________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 5,767,528 8,018,049
Class B shares........................................................ 3,173,322 4,260,990
Class C shares........................................................ - 376,197
Dividends reinvested:
Class A shares........................................................ 5,693,880 5,052,267
Class B shares........................................................ 758,030 781,540
Class C shares........................................................ - 2,715
Cost of shares redeemed:
Class A shares........................................................ (23,226,166) (21,377,789)
Class B shares........................................................ (1,976,764) (2,719,337)
________________ ________________
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.... (9,810,170) (5,605,368)
________________ ________________
TOTAL (DECREASE) IN NET ASSETS.................................. (7,999,524) (4,613,902)
NET ASSETS:
Beginning of year....................................................... 176,660,771 168,661,247
________________ ________________
End of year............................................................. $168,661,247 $164,047,345
================ ================
</TABLE>
<TABLE>
<CAPTION>
SHARES
________________________________________________________________________________________________
CLASS A CLASS B CLASS C
__________________________ _____________________________ _____________________________
YEAR ENDED
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, APRIL 30,
___________________________ ______________________________
1995 1996 1995 1996 1996*
___________ ___________ ___________ ____________ _________________
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 395,165 525,972 215,707 279,091 24,654
Shares issued for
dividends reinvested. 389,703 331,830 51,805 51,250 180
Shares redeemed........ (1,600,971) (1,405,368) (136,616) (179,050) -
___________ ___________ ___________ ____________ _________________
NET INCREASE
(DECREASE) IN
SHARES OUTSTANDING (816,103) (547,566) 130,896 151,291 24,834
=========== =========== =========== ============ =================
________________________________
* From August 15, 1995 (commencement of initial offering) to April 30, 1996.
See notes to financial statements.
</TABLE>

PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
FINANCIAL HIGHLIGHTS

Reference is made to pages 7 to 27 of the Fund's Prospectus
dated December 16, 1996.

PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering twelve series including the Minnesota Series (the "Series"). The
Fund's investment objective is to maximize current income exempt from Federal
and, where applicable, from State income taxes, without undue risk. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, 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 and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
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.
(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, MINNESOTA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To the
extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the 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 value
of the Series' average daily 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. There was no expense
reimbursement for the year ended April 30, 1996.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $174 during the year ended April 30, 1996 from commissions earned on
sales of the Series' shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the year ended April 30, 1996,
$123,137 was charged to the Series for the Class B shares and $544 was
charged to the Series for the Class C shares.
(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, Class B and Class C shares for the provision of certain services.
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 (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. For the year ended April 30, 1996,
$358,575, $61,568 and $182 were charged to Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $29,902 for the period
from December 1, 1995 through April 30, 1996.

PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(D) Each trustee who is not an "affiliated person" as defined in the Act
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,
excluding short-term securities, during the year ended April 30, 1996
amounted to $63,976,521 and $57,393,998, respectively.
At April 30, 1996, accumulated net unrealized appreciation on investments
was $5,047,488, consisting of $7,303,483 gross unrealized appreciation and
$2,255,995 gross unrealized depreciation.
At April 30, 1996, 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, MINNESOTA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Minnesota Series (one of the Series constituting the Premier State Municipal
Bond Fund) as of April 30, 1996, 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, 1996 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Minnesota Series at April 30,
1996, 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 & Young LLP - Signature)

New York, New York
June 5, 1996

<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
________________ ______________
<S> <C> <C>
NORTH CAROLINA-79.2%
Board of Governors of the University of North Carolina, Revenue
(University of North Carolina Hospitals at Chapel Hill):
6%, 2/15/2024......................................................... $ 3,000,000 $ 2,895,630
5.25%, 2/15/2026...................................................... 2,500,000 2,261,750
5%, 2/15/2029......................................................... 4,000,000 3,436,520
Buncombe County Metropolitan Sewage District, Sewage System Revenue:
6.75%, 7/1/2022 (Prerefunded 7/1/2002) (a).............................. 500,000 560,520
Refunding 5.50%, 7/1/2022 (Insured; FGIC)............................... 1,125,000 1,058,861
Charlotte, COP Refunding (Convention Facility Project)
5.25%, 12/1/2020 (Insured; AMBAC)....................................... 2,000,000 1,811,900
Haywood County, Environmental Improvement Revenue, Refunding
(Champion International Corp. Project) 6.25%, 9/1/2025.................. 2,000,000 1,983,840
Martin County Industrial Facilities and Pollution Control Financing
Authority,
Revenue (Solid Waste Disposal - Weyerhaeuser Company Project):
6.80%, 5/1/2024....................................................... 2,000,000 2,117,180
6%, 11/1/2025......................................................... 2,000,000 1,941,660
New Hanover County Industrial Facilities and Pollution Control Financing
Authority,
SWDR (Occidental Petroleum) 6.50%, 8/1/2014............................. 1,000,000 1,007,530
North Carolina Eastern Municipal Power Agency, Power System Revenue:
5.75%, 12/1/2016........................................................ 1,865,000 1,706,363
Refunding:
5.125%, 1/1/2012 (Insured; AMBAC)..................................... 3,000,000 2,797,830
5.875%, 1/1/2013...................................................... 5,000,000 4,750,000
6%, 1/1/2013.......................................................... 2,500,000 2,414,275
6%, 1/1/2022.......................................................... 1,000,000 960,130
North Carolina Housing Finance Agency, Single Family Revenue:
6.10%, 9/1/2025 (Insured; FHA).......................................... 3,730,000 3,818,625
6.50%, 9/1/2026......................................................... 4,275,000 4,340,963
6.70%, 9/1/2026......................................................... 2,185,000 2,227,258
North Carolina Medical Care Commission, HR:
(Annie Penn Memorial Hospital Project) 7.50%, 8/15/2021................. 4,250,000 4,388,167
(Duke University Hospital Project) 7%, 6/1/2021 (Prerefunded 6/1/2001) (a) 3,000,000 3,358,320
Refunding (Mercy Hospital Project) 6.50%, 8/1/2015...................... 1,000,000 1,009,710
North Carolina Municipal Power Agency Number 1, Catawba Electric Revenue:
5%, 1/1/2015 (Insured; MBIA)............................................ 1,000,000 903,610
5.75%, 1/1/2015 (Insured; MBIA)......................................... 6,250,000 6,092,438
5.75%, 1/1/2020 (Insured; MBIA)......................................... 2,000,000 1,938,260
Pitt County, Revenue Refunding (Pitt County Memorial Hospital)
5.25%, 12/1/2021........................................................ 3,500,000 3,177,790

PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
______________ ______________
NORTH CAROLINA (CONTINUED)
Shelby, Combined Enterprise System Revenue, Refunding 5.625%, 5/1/2014...... $ 1,000,000 $ 963,850
Wake County, Hospital System Revenue, Refunding:
Zero Coupon, 10/1/2010 (Insured; MBIA).................................. 2,200,000 936,716
5.125%, 10/1/2026 (Insured; MBIA)....................................... 3,250,000 2,852,298
U.S. RELATED-20.8%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 2,000,000 2,006,080
Commonwealth of Puerto Rico:
5.40%, 7/1/2025......................................................... 2,000,000 1,811,340
Public Improvement:
6.80%, 7/1/2021 (Prerefunded 7/1/2002) (a)............................ 600,000 673,200
Refunding 5.50%, 7/1/2013............................................. 2,000,000 1,901,780
Puerto Rico Highway and Transportation Authority, Highway Revenue
6.625%, 7/1/2018 (Prerefunded 7/1/2002) (a)............................. 3,600,000 4,004,604
Puerto Rico Ports Authority, Special Facilities Revenue
(American Airlines, Inc. Project) 6.30%, 6/1/2023....................... 1,500,000 1,509,780
Puerto Rico Public Buildings Authority, Guaranteed Public Education and
Health
Facilities Refunding 5.75%, 7/1/2015.................................... 4,500,000 4,291,245
Virgin Islands Public Finance Authority, Revenue, Refunding,
Matching Fund Loan Notes 7.25%, 10/1/2018............................... 1,500,000 1,578,405
_____________ _______________
TOTAL INVESTMENTS
(cost $86,142,776)...................................................... $85,488,428
===============

</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES

SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation HR Hospital Revenue
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FHA Federal Housing Administration SWDR Solid Waste Disposal Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (B) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
__________ __________ ___________________ ______________________
<S> <C> <C> <C>
AAA Aaa AAA 31.6%
AA Aa AA 25.9
A A A 27.9
BBB Baa BBB 12.8
Not Rated (c) Not Rated (c) Not Rated (c) 1.8
__________
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.
(c) Securities which, while not rated by Fitch, Moody's and Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Series may invest.
(d) At April 30, 1996, the Series had $24,316,901 (27.1% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from health care projects.

See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $86,142,776)-see statement...................................... $85,488,428
Cash.................................................................... 2,851,526
Interest receivable..................................................... 1,522,395
Receivable for shares of Beneficial Interest subscribed................. 51,739
Prepaid expenses........................................................ 3,877
______________
89,917,965
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $40,715
Due to Distributor...................................................... 36,068
Payable for shares of Beneficial Interest redeemed...................... 95,066
Accrued expenses........................................................ 35,432 207,281
____________ ______________
NET ASSETS ................................................................ $89,710,684
==============
REPRESENTED BY:
Paid-in capital......................................................... $92,094,075
Accumulated net realized (loss) on investments.......................... (1,729,043)
Accumulated net unrealized (depreciation) on investments-Note 3......... (654,348)
______________
NET ASSETS at value......................................................... $89,710,684
==============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)................. 3,644,295
==============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 3,307,913
==============
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 81
==============
NET ASSET VALUE per share:
Class A Shares
($47,042,169 / 3,644,295 shares)...................................... $12.91
==============
Class B Shares
($42,667,470 / 3,307,913 shares)...................................... $12.90
==============
Class C Shares
($1,045 / 81 shares).................................................. $12.90
==============

See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $5,728,170
EXPENSES:
Management fee-Note 2(a).............................................. $ 517,799
Shareholder servicing costs-Note 2(c)................................. 307,348
Distribution fees-Note 2(b)........................................... 217,321
Professional fees..................................................... 14,110
Prospectus and shareholders' reports.................................. 12,402
Custodian fees........................................................ 10,310
Trustees' fees and expenses-Note 2(d)................................. 1,229
Registration fees..................................................... 597
Miscellaneous......................................................... 81,355
________________
TOTAL EXPENSES.................................................. 1,162,471
Less-reduction in management fee due to
undertakings-Note 2(a)............................................ 20,032
________________
NET EXPENSES.................................................... 1,142,439
______________
INVESTMENT INCOME-NET........................................... 4,585,731
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 874,881
Net unrealized appreciation on investments.............................. 520,983
________________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 1,395,864
______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $5,981,595
==============

See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
_____________________________________
1995 1996
__________________ _______________
OPERATIONS:
Investment income-net................................................... $ 5,259,404 $ 4,585,731
Net realized gain (loss) on investments................................. (2,342,576) 874,881
Net unrealized appreciation on investments for the year................. 2,019,925 520,983
__________________ _______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 4,936,753 5,981,595
__________________ _______________
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (3,229,769) (2,589,575)
Class B shares........................................................ (2,029,635) (1,996,124)
Class C shares........................................................ - (32)
__________________ _______________
TOTAL DIVIDENDS................................................... (5,259,404) (4,585,731)
__________________ _______________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 3,792,421 3,323,717
Class B shares........................................................ 5,258,725 3,025,081
Class C shares........................................................ - 1,000
Dividends reinvested:
Class A shares........................................................ 1,700,541 1,291,521
Class B shares........................................................ 1,251,870 1,177,707
Class C shares........................................................ - 32
Cost of shares redeemed:
Class A shares........................................................ (23,036,441) (8,574,929)
Class B shares........................................................ (3,172,359) (4,444,067)
__________________ _______________
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.... (14,205,243) (4,199,938)
__________________ _______________
TOTAL (DECREASE) IN NET ASSETS.................................. (14,527,894) (2,804,074)
NET ASSETS:
Beginning of year....................................................... 107,042,652 92,514,758
__________________ _______________
End of year............................................................. $ 92,514,758 $ 89,710,684
================== ===============
</TABLE>
<TABLE>
<CAPTION>
SHARES
________________________________________________________________________________________
CLASS A CLASS B CLASS C
____________________________ _________________________ _________________________
YEAR ENDED
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, APRIL 30,
____________________________ _________________________
1995 1996 1995 1996 1996*
_____________ _____________ ____________ __________ _________________________
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 302,337 254,297 420,696 229,111 78
Shares issued for
dividends reinvested. 135,607 98,177 100,207 89,591 3
Shares redeemed........ (1,840,173) (653,564) (256,909) (338,431) -
_____________ _____________ ____________ __________ _________________________
NET INCREASE (DECREASE)
IN SHARES
OUTSTANDING...... (1,402,229) (301,090) 263,994 (19,729) 81
============= ============= ============ ========== =========================
*From August 15, 1995 (commencement of initial offering) to April 30, 1996.
See notes to financial statements.
</TABLE>

PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
FINANCIAL HIGHLIGHTS

Reference is made to pages 7 to 27 of the Fund's Prospectus
dated December 16, 1996.

PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering twelve series including the North Carolina Series (the "Series").
The Fund's investment objective is to maximize current income exempt from
Federal and, where applicable, from State income taxes, without undue risk.
The Dreyfus Corporation ("Manager") serves as the Fund's investment adviser.
The Manager is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, 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 and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
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.
(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, NORTH CAROLINA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, 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 $1,728,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1996. If not
applied, $225,000 of the carryover expires in fiscal 2002, $1,308,000 of the
carryover expires in fiscal 2003 and $195,000 of the carryover expires in
fiscal 2004.
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 value
of the Series' average daily net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. However, the Manager
had undertaken through July 10, 1995 to reduce the management fee paid by the
Series, to the extent that the Series' aggregate expenses (exclusive of
certain expenses as described above) exceeded specified annual percentages of
the Series' average daily net assets. The reduction in management fee,
pursuant to the undertakings, amounted to $20,032 for the year ended April
30, 1996.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the year ended April 30, 1996,
$217,316 was charged to the Series for the Class B shares and $5 was charged
to the Series for the Class C shares.
(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, Class B and Class C shares for the provision of certain services.
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 (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. During the year ended April 30, 1996,
$126,703, $108,658 and $2 were charged to Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.

PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Effective December 1, 1995, the Series compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a transfer agency agreement
for providing personnel and facilities to perform transfer agency services
for the Series. Such compensation amounted to $18,897 for the period from
December 1, 1995 through April 30, 1996.
(D) Each trustee who is not an "affiliated person" as defined in the Act
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,
excluding short-term securities, during the year ended April 30, 1996
amounted to $43,892,947 and $50,856,286, respectively.
At April 30, 1996, accumulated net unrealized depreciation on investments
was $654,348, consisting of $1,446,961 gross unrealized appreciation and
$2,101,309 gross unrealized depreciation.
At April 30, 1996, 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, NORTH CAROLINA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
North Carolina Series (one of the Series constituting the Premier State
Municipal Bond Fund) as of April 30, 1996, 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, 1996, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, North Carolina Series at April
30, 1996, 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 & Young LLP- Signature)

New York, New York
June 5, 1996

PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-99.3% AMOUNT VALUE
________________ ________________
<S> <C> <C>
OHIO-95.5%
Akron, Waterworks System Mortgage Revenue Improvement:
6%, 3/1/2014 (Insured; FGIC)............................................ $ 1,000,000 $ 1,016,610
Refunding 4.875%, 3/1/2012 (Insured; MBIA).............................. 2,250,000 2,039,355
Akron Bath Copley Joint Township Hospital District, Revenue
(Summa Health Systems) 5.75%, 11/15/2008................................ 5,000,000 4,880,000
Akron-Wilbeth Housing Development Corp., First Mortgage Revenue
7.90%, 8/1/2003 (Insured; FHA).......................................... 1,805,000 2,077,410
Allen County, Industrial First Mortgage Revenue, Refunding
6.75%, 11/15/2008 (Guaranteed; K-Mart Corp.)............................ 1,280,000 1,135,104
Anthony Wayne Local School District 5.75%, 12/1/2024 (Insured; FGIC)........ 1,000,000 988,190
Breckville-Broadview Heights City School District, School Improvement
5.25%, 12/1/2021 (Insured; FGIC)....................................... 5,000,000 4,632,250
Butler County:
Hospital Facilities Revenue, Refunding and Improvement
(Fort Hamilton Hughes Hospital) 7.25%, 1/1/2001....................... 4,000,000 4,099,280
Sewer System Revenue 5.25%, 12/1/2021 (Insured; AMBAC).................. 1,500,000 1,385,925
City of Barberton, Hospital Facilities Revenue
(The Barberton Citizens Hospital Co. Project) 7.25%, 1/1/2012........... 2,400,000 2,549,424
Buckeye Valley Local School District
5.25%, 12/1/2020 (Insured; MBIA)........................................ 3,140,000 2,917,028
Celina City School District 5.25%, 12/1/2020 (Insured; FGIC)................ 1,750,000 1,610,700
City of Cambridge, HR Refunding (Guernsey Memorial Hospital Project)
8%, 12/1/2006........................................................... 2,000,000 2,150,880
Clermont County, Hospital Facilities Revenue, Refunding (Mercy Health
Systems):
6%, 9/1/2019 (Insured; AMBAC)........................................... 2,000,000 2,006,180
7.50%, 9/1/2019 (Prerefunded 9/1/2001) (Insured; AMBAC) (a)............. 180,000 203,573
City of Cleveland:
COP (Motor Vehicle, Motorized and Communication Equipment) 7.10%, 7/1/2002 2,000,000 2,086,720
Parking Facility Improvement Revenue 8%, 9/15/2012...................... 5,000,000 5,444,100
Waterworks First Mortgage Revenue:
5.50%, 1/1/2013 (Insured; MBIA)....................................... 2,660,000 2,626,936
5.50%, 1/1/2021 (Insured; MBIA)....................................... 5,000,000 4,794,550
Cleveland City School District, School Improvement 8%, 12/1/2001............ 1,675,000 1,901,292
Cuyahoga County:
5.25%, 11/15/2015....................................................... 1,485,000 1,381,198
HR:
(Meridia Health Systems):
7.25%, 8/15/2019.................................................. 4,715,000 5,047,454
7%, 8/15/2023..................................................... 1,750,000 1,863,155

PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________________ ________________
OHIO (CONTINUED)
Cuyahoga County (continued):
HR:
Refunding:
(Cleveland Clinic Foundation) 8%, 12/1/2015....................... $ 1,000,000 $ 1,049,530
Improvement (University Hospitals Health) 5.625%, 1/15/2015
(Insured; MBIA)............................................................. 3,695,000 3,615,225
(Mount Sinai Medical Center) 8.125%, 11/15/2014................... 1,000,000 1,059,940
Jail Facilities 7%, 10/1/2013 (Prerefunded 10/1/2001) (a)............... 6,125,000 6,885,480
Delaware City School District 5.75%, 12/1/2020 (Insured; FGIC).............. 1,000,000 988,920
Eaton, IDR Refunding (Baxter International Inc. Project) 6.50%, 12/1/2012... 1,500,000 1,573,545
Euclid City School District, Improvement:
7.10%, 12/1/2011 (Prerefunded 12/1/2001) (a)............................ 1,000,000 1,129,290
Library and School, Refunding 5.125%, 12/1/2015 (Insured; AMBAC)........ 1,420,000 1,318,796
Village of Evendale, IDR Refunding (Ashland Oil Inc. Project) 6.90%, 11/1/2010 2,000,000 2,078,720
Fairfield City School District, School Improvement Unlimited Tax:
7.20%, 12/1/2011 (Insured; FGIC)........................................ 1,000,000 1,146,770
7.20%, 12/1/2012 (Insured; FGIC)........................................ 1,250,000 1,433,463
6.10%, 12/1/2015 (Insured; FGIC)........................................ 2,000,000 2,048,700
6%, 12/1/2020 (Insured; FGIC)........................................... 2,000,000 2,028,240
Fairlawn, Health Care Facilities Revenue (Village at Saint Edward Project)
8.75%, 10/1/2019........................................................ 2,420,000 2,602,420
Fairview Park City School District, 5.25%, 12/15/2013 (Insured; AMBAC)...... 2,000,000 1,934,040
Franklin County:
Hospital Improvement Revenue (The Children's Hospital Project)
6.60%, 11/1/2011 (Prerefunded 11/1/2001) (a).......................... 1,500,000 1,660,245
HR:
(Holy Cross Health Systems Corp.-Mount Carmel Health)
6.75%, 6/1/2019 (Insured; MBIA)................................... 2,500,000 2,665,525
Refunding Improvement:
(The Children's Hospital Project) 6.60%, 5/1/2013................. 4,000,000 4,183,760
(Worthington Christian Village Congregate Care Project):
10.25%, 8/1/2015................................................ 805,000 882,385
7.80%, 2/1/2017 (Insured; FHA).................................. 5,690,000 6,067,190
Gallia County Local School District, 7.375%, 12/1/2004...................... 570,000 659,268
Greater Cleveland Gateway Economic Development Corp.:
Senior Lien Excise Tax Revenue 6.875%, 9/1/2005 (Insured; FSA).......... 1,500,000 1,630,020
Stadium Revenue 7.50%, 9/1/2005......................................... 5,675,000 6,221,389
Hamilton County:
Hospital Facilities Improvement Revenue, Refunding (Deaconess Hospital)
7%, 1/1/2012.......................................................... 2,570,000 2,713,792
Mortgage Revenue (Judson Care Center) 7.80%, 8/1/2019 (Insured; FHA).... 3,970,000 4,219,832

PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________________ ________________
OHIO (CONTINUED)
Hamilton County (continued):
Sewer Systems Improvement Revenue, Refunding
5.50%, 12/1/2017 (Insured; FGIC)...................................... $ 5,500,000 $ 5,314,430
Hilliard School District, School Improvement:
Zero Coupon, 12/1/2013 (Insured; FGIC).................................. 1,655,000 606,541
Zero Coupon, 12/1/2014 (Insured; FGIC).................................. 1,655,000 567,748
5.75%, 12/1/2019 (Insured; FGIC)........................................ 4,500,000 4,451,085
5%, 12/1/2020 (Insured; FGIC)........................................... 1,600,000 1,434,304
Kirtland Local School District 7.50%, 12/1/2009............................. 760,000 827,161
Knox County, IDR (Weyerhaeuser Co. Project) 9%, 10/1/2007................... 1,000,000 1,251,330
Lakota Local School District 6.125%, 12/1/2017 (Insured; AMBAC)............. 1,075,000 1,103,133
Lorain, Water System Revenue 5.20%, 4/1/2016 (Insured; AMBAC)............... 2,260,000 2,109,800
Lorain County, HR Refunding (EMH Regional Medical Center)
5.375%, 11/1/2021 (Insured; AMBAC)...................................... 4,650,000 4,287,067
Lowellville, Sanitary Sewer Systems Revenue (Browning-Ferris Industries Inc.)
7.25%, 6/1/2006......................................................... 1,300,000 1,369,849
Mahoning County, Health Care Facilities Revenue:
(Western Reserve Care System) 5.50%, 10/15/2025 (Insured; MBIA)......... 2,450,000 2,305,646
(Youngstown Osteopathic Hospital Project)
7.60%, 8/1/2010 (LOC; Marine Midland Bank) (b)........................ 3,775,000 4,073,565
Marion County, Health Care Facilities Revenue (United Church Homes Inc.)
Refunding and Improvement 6.375%, 11/15/2010............................ 3,000,000 2,945,610
Miami County, Hospital Facilities Revenue, Refunding
(Upper Valley Medical Center) 8.375%, 5/1/2013.......................... 525,000 549,397
Moraine, SWDR (General Motors Corp. Project)
6.75%, 7/1/2014......................................................... 5,000,000 5,458,750
Mount Vernon City School District 5.85%, 12/1/2019 (Insured; FGIC).......... 1,000,000 989,220
Muskingum County, Revenue, Refunding:
(Franciscan Health Advisory Services) 7.50%, 3/1/2012................... 3,185,000 3,345,811
Hospital Facilities Improvement (Bethesda Care System)
5.40%, 12/1/2016 (Insured; Connie Lee)................................ 2,755,000 2,587,221
North Royalton City School District 6.10%, 12/1/2019 (Insured; MBIA)........ 2,000,000 2,057,780
State of Ohio:
Economic Development Revenue:
Ohio Enterprise Bond Fund (VSM Corp. Project) 7.375%, 12/1/2011....... 885,000 932,781
(Sponge Inc. Project) 8.375%, 6/1/2014................................ 1,640,000 1,814,479
Mortgage Revenue (Odd Fellows Home Ohio Inc. Project)
8.15%, 8/1/2017 (Insured; FHA)........................................ 350,000 371,263

PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________________ ________________
OHIO (CONTINUED)
State of Ohio (continued):
PCR (Standard Oil Co. Project)
6.75%, 12/1/2015 (Guaranteed; British Petroleum Co. p.l.c.)........... $ 2,700,000 $ 3,007,881
Ohio Air Quality Development Authority, Revenue:
8.10%, 9/1/2018......................................................... 1,000,000 1,056,640
Pollution Control Refunding:
(Cleveland Electric Illuminating Co. Project) 6.85%, 7/1/2023......... 5,250,000 4,901,663
(Ohio Edison) 7.45%, 3/1/2016 (Insured; FGIC)......................... 3,500,000 3,832,325
Refunding:
(JMG Funding Limited Partnership Project) 6.375%, 4/1/2029 (Insured; AMBAC) 2,500,000 2,568,775
(Ohio Power Co. Project) 7.40%, 8/1/2009.............................. 1,500,000 1,572,615
Ohio Building Authority, State Facilities:
(Administration Building Fund Projects):
4.875%, 10/1/2009..................................................... 2,500,000 2,307,150
4.875%, 10/1/2010..................................................... 1,735,000 1,581,921
(Adult Correctional Facilities Building Fund Projects) 5.90%, 10/1/2012 (Insured; MBIA) 1,000,000 1,023,780
(Adult Correctional Facilities Building Fund Projects) 5.50%, 4/1/2016
(Insured; AMBAC)............................................................ 2,000,000 1,926,140
(Juvenile Correctional Building Fund Projects) 6.60%, 10/1/2014 (Insured; AMBAC) 1,660,000 1,768,680
Ohio Capital Corp. for Housing, MFHR Refunding
7.60%, 11/1/2023 (Collateralized; FNMA)................................. 1,250,000 1,328,400
Ohio Higher Educational Facility Community, Revenue
(Case Western Reserve Project):
7.70%, 10/1/2018 (Prerefunded 10/1/1997) (a).......................... 485,000 516,855
7.70%, 10/1/2018...................................................... 15,000 15,847
Ohio Housing Finance Agency:
Mortgage Revenue (Saint Francis Court Apartment Project)
8%, 10/1/2026 (Insured; FHA).......................................... 695,000 744,435
SFMR (GNMA Mortgage Backed Securities Program):
8.25%, 12/15/2019 .................................................... 165,000 173,616
8.125%, 3/1/2020...................................................... 365,000 384,389
Zero Coupon, 9/1/2021................................................. 17,545,000 2,324,011
7.85%, 9/1/2021....................................................... 1,880,000 1,971,142
7.65%, 3/1/2029....................................................... 5,325,000 5,591,357
7.80%, 3/1/2030....................................................... 3,005,000 3,160,419
Ohio Turnpike Commission, Turnpike Revenue 5.75%, 2/15/2024................. 3,250,000 3,142,555
Ohio Water Development Authority, Revenue:
(Fresh Water Development) 5.90%, 12/1/2015 (Insured; AMBAC)............. 4,000,000 4,001,360
Pollution Control Facilities:
(Cleveland Electric Illuminating Project) 8%, 10/1/2023............... 5,800,000 5,895,932
(Ohio Edison) 8.10%, 10/1/2023........................................ 3,700,000 3,924,109

PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________________ ________________
OHIO (CONTINUED)
Ohio Water Development Authority, Revenue (continued):
Pollution Control Facilities (continued):
(Pennsylvania Power Co. Project) 8.10%, 9/1/2018...................... $ 2,000,000 $ 2,112,740
Refunding:
(Ohio Edison) 7.625%, 7/1/2023.................................... 5,000,000 5,299,200
(Toledo Edison Co.):
7.55%, 6/1/2023................................................. 2,000,000 2,023,900
8%, 10/1/2023................................................... 3,635,000 3,724,094
Ottawa County, Sanitary Sewer Systems Special Assessment
(Portage-Catawba Island Sewer Project) 7%, 9/1/2011 (Insured; AMBAC).... 1,000,000 1,101,250
Shelby County, Hospital Facilities Revenue, Refunding and Improvement
(The Shelby County Memorial Hospital Association) 7.70%, 9/1/2018....... 2,500,000 2,628,075
South Euclid, Recreation Facilities 7%, 12/1/2011........................... 2,285,000 2,462,636
South Western City School District, (Franklin and Pickway Counties)
5%, 12/1/2013 (Insured; MBIA)........................................... 2,825,000 2,579,225
Southwest Regional Water District, Water Revenue:
6%, 12/1/2015 (Insured; MBIA)........................................... 1,600,000 1,626,848
6%, 12/1/2020 (Insured; MBIA)........................................... 1,250,000 1,266,037
Springboro Community City School District, Refunding
5.10%, 12/01/2023 (Insured; AMBAC)...................................... 6,000,000 5,421,300
Springdale, Hospital Facilities First Mortgage Revenue,
(Southwestern Seniors Services, Inc.) 5.875%, 11/1/2012................. 3,000,000 2,804,730
Student Loan Funding Corp.:
Student Loan Revenue, Refunding 7.20%, 8/1/2003......................... 3,115,000 3,293,801
Student Loan Senior Subordinated Revenue 6.15%, 8/1/2010................ 6,775,000 6,663,890
Sylvania City School District 5.75%, 12/1/2022 (Insured; FGIC).............. 1,750,000 1,732,255
University of Cincinnati, COP 6.75%, 12/1/2009 (Insured; MBIA).............. 750,000 815,235
University of Ohio, General Receipts, 5%, 12/1/2018 (Insured; FGIC)......... 1,250,000 1,112,675
Warren 7.75%, 11/1/2010 (Prerefunded 11/1/2000) (a)......................... 2,785,000 3,202,583
U.S. RELATED-3.8%
Puerto Rico Highway and Transportation Authority, Highway Revenue
5.45%, 7/1/2007......................................................... 5,500,000 5,299,250
Virgin Islands Public Finance Authority, Revenue Refunding
Matching Fund Loan Notes 7.25%, 10/1/2018............................... 2,200,000 2,314,994
Virgin Islands Water and Power Authority, Electric Systems Revenue 7.40%, 7/1/2011 3,450,000 3,652,550
________________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $281,807,598)..................................................... $291,247,035
================

PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
SHORT-TERM MUNICIPAL INVESTMENTS-.7% AMOUNT VALUE
________________ ________________
OHIO;
Cuyahoga County Ohio Hospital Revenue
VRDN 4.15%, (LOC; The Dai-Ichi Kangyo Bank) (b,c)
(cost $2,000,000)....................................................... $ 2,000,000 $ 2,000,000
=================
TOTAL INVESTMENTS-100.0%
(cost $283,807,598)..................................................... $293,247,035
=================
</TABLE>
<TABLE>
<CAPTION>
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 Corporation
FHA Federal Housing Administration MFHR Multi-Family Housing Revenue
FNMA Federal National Mortgage Association PCR Pollution Control Revenue
FSA Financial Security Assurance SFMR Single-Family Mortgage Revenue
GNMA Government National Mortgage Association SWDR Solid Waste Disposal Revenue
HR Hospital Revenue VRDN Variable Rate Demand Notes
IDR Industrial Development Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____________ ____________ __________________ _____________________
<S> <C> <C> <C>
AAA Aaa AA 44.0%
AA Aa AA 8.9
A A A 22.8
BBB Baa BBB 15.3
B B B 6.0
F1 MIG1 SP1 .7
Not Rated(e) Not Rated(e) Not Rated(e) 2.3
_________
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) Secured by letters of credit.
(c) Security payable on demand. The interest rate, which is subject to
change, is based upon prime rates or an index of market interest rates.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
(e) Securities which, while not rated by Fitch, Moody's and Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Series may invest.
(f) At April 30, 1996, the Series had $81,418,173 (27.3% of net assets)
invested in securities whose payment of principal and interest is
dependent upon revenues generated from health care projects.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $283,807,598)-see statement..................................... $293,247,035
Interest receivable..................................................... 5,282,357
Receivable for investment securities sold............................... 972,801
Receivable for shares of Beneficial Interest subscribed................. 156,757
Prepaid expenses........................................................ 9,345
_____________
299,668,295
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $134,689
Due to Distributor...................................................... 77,621
Due to Custodian........................................................ 141,842
Payable for investment securities purchased............................. 942,276
Payable for shares of Beneficial Interest redeemed...................... 202,537
Accrued expenses........................................................ 53,692 1,552,657
_____________ ____________
NET ASSETS.................................................................. $298,115,638
============

REPRESENTED BY:
Paid-in capital......................................................... $286,947,311
Accumulated undistributed net realized gain on investments.............. 1,728,890
Accumulated net unrealized appreciation on investments-Note 3........... 9,439,437
____________
NET ASSETS at value......................................................... $298,115,638
============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 20,481,238
============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 3,215,868
============
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 82
============
NET ASSET VALUE per share:
Class A Shares
($257,638,998 / 20,481,238 shares).................................... $12.58
============
Class B Shares
($40,475,608 / 3,215,868 shares)...................................... $12.59
============
Class C Shares
($1,032 / 82 shares).................................................. $12.59
============

See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $19,529,154
EXPENSES:
Management fee-Note 2(a).............................................. $ 1,684,215
Shareholder servicing costs-Note 2(c)................................. 976,878
Distribution fees-Note 2(b)........................................... 184,674
Custodian fees........................................................ 31,318
Prospectus and shareholders' reports.................................. 16,049
Professional fees..................................................... 10,791
Registration fees..................................................... 4,140
Trustees' fees and expenses-Note 2(d)................................. 3,907
Miscellaneous......................................................... 5,819
_______________
TOTAL EXPENSES.................................................. 2,917,791
_____________
INVESTMENT INCOME-NET........................................... 16,611,363
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $ 6,261,292
Net unrealized (depreciation) on investments............................ (2,957,977)
_______________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 3,303,315
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $19,914,678
=============

See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
____________________________________
1995 1996
________________ ______________
OPERATIONS:
Investment income-net................................................... $ 17,976,032 $ 16,611,363
Net realized gain (loss) on investments................................. (231,734) 6,261,292
Net unrealized (depreciation) on investments for the year............... (1,447,408) (2,957,977)
________________ ______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 16,296,890 19,914,678
________________ ______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares........................................................ (16,395,897) (14,787,880)
Class B shares........................................................ (1,580,135) (1,823,448)
Class C shares........................................................ - (35)
Net realized gain on investments:
Class A shares........................................................ (737,090) (3,773,931)
Class B shares........................................................ (80,832) (523,745)
Class C shares........................................................ - (15)
________________ ______________
TOTAL DIVIDENDS................................................... (18,793,954) (20,909,054)
________________ ______________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 14,075,586 9,363,475
Class B shares........................................................ 7,880,402 9,283,699
Class C shares........................................................ - 1,000
Dividends reinvested:
Class A shares........................................................ 11,395,733 12,469,387
Class B shares........................................................ 1,146,894 1,692,992
Class C shares........................................................ - 48
Cost of shares redeemed:
Class A shares........................................................ (43,645,693) (36,740,008)
Class B shares........................................................ (3,696,758) (2,982,178)
________________ ______________
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.... (12,843,836) (6,911,585)
________________ ______________
TOTAL (DECREASE) IN NET ASSETS.................................. (15,340,900) (7,905,961)
NET ASSETS:
Beginning of year....................................................... 321,362,499 306,021,599
________________ ______________
End of year............................................................. $306,021,599 $298,115,638
================ ==============

</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
SHARES
____________________________________________________________________________________________
CLASS A CLASS B CLASS C
____________________________ ________________________ __________________________
YEAR ENDED

YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, APRIL 30,
____________________________ ________________________
1995 1996 1995 1996 1996*
____________ ____________ ___________ _________ _______________
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold........... 1,122,269 724,402 625,670 718,846 79
Shares issued for
dividends reinvested 911,859 964,492 91,754 130,834 3
Shares redeemed....... (3,506,799) (2,853,615) (296,186) (230,753) -
____________ ____________ ___________ _________ _______________
NET INCREASE (DECREASE)
IN SHARES
OUTSTANDING..... (1,472,671) (1,164,721) 421,238 618,927 82
============ ============ =========== ========= ===============
* From August 15, 1995 (commencement of initial offering) to April 30, 1996.

See notes to financial statements.
</TABLE>

PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
FINANCIAL HIGHLIGHTS

Reference is made to pages 7 to 27 of the Fund's Prospectus
dated December 16, 1996.

PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering twelve series including the Ohio Series (the "Series"). The Fund's
investment objective is to maximize current income exempt from Federal and,
where applicable, from State income taxes, without undue risk. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Funds' shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, 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 and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
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.
(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, OHIO SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the 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 value
of the Series' average daily 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. There was no expense
reimbursement for the year ended April 30, 1996.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $554 during the year ended April 30, 1996 from commissions earned on
sales of the Series' shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the year ended April 30, 1996,
$184,668 was charged to the Series for the Class B shares and $6 was charged
to the Series for Class C shares.
(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, Class B and Class C shares for provision of certain services. 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 (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. For the year ended April 30, 1996,
$673,216, $92,334 and $2 were charged to Class A, Class B and Class C shares,
respectively, by the Distributor pursuant to the Shareholder Services Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $56,600 for the period
from December 1, 1995 through April 30, 1996.

PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(D) Each trustee who is not an "affiliated person" as defined in the Act
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,
excluding short-term securities during the year ended April 30, 1996 amounted
to $131,059,631 and $140,879,528, respectively.
At April 30, 1996, accumulated net unrealized appreciation on investments
was $9,439,437, consisting of $11,812,801 gross unrealized appreciation and
$2,373,364 gross unrealized depreciation.
At April 30, 1996, 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, OHIO SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund
Ohio Series, (one of the Series constituting the Premier State Municipal Bond
Fund) as of April 30, 1996, 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, 1996 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, Ohio Series at April 30, 1996,
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 & Young LLP-SIGNATURE)
New York, New York
June 5, 1996

<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-94.4% AMOUNT VALUE
__________________ ______________
<S> <C> <C>
PENNSYLVANIA-84.3%
Allegheny County, Airport Revenue, Refunding
(Pittsburgh International Airport)
5.75%, 1/1/2008 (Insured; FSA).......................................... $ 2,005,000 $ 2,025,251
Allegheny County Industrial Development Authority, Revenue:
Commercial Development, Refunding
(Kaufmann Medical Office Building) 6.80%, 3/1/2015 (Insured; MBIA) (a) 3,500,000 3,774,260
Medical Center, Refunding (Presbyterian Medical Center of
Oakmont Pennsylvania, Inc.) 6.75%, 2/1/2026 (Insured; FHA)............ 1,945,000 1,978,532
Allegheny County Residential Finance Authority, SFMR:
7.40%, 12/1/2022........................................................ 1,945,000 2,048,610
7.95%, 6/1/2023......................................................... 1,425,000 1,498,616
Beaver County Industrial Development Authority, PCR, Refunding:
(Ohio Edison Project) 7.75%, 9/1/2024................................... 3,150,000 3,320,069
(Pennsylvania Power Company Mansfield Project) 7.15%, 9/1/2021.......... 3,000,000 3,059,490
Berks County Municipal Authority, Revenue
(Phoebe Berks Village, Inc. Project) 8.25%, 5/15/2022................... 2,445,000 2,575,196
Bethlehem Authority, Water Revenue, Refunding
5.20%, 11/15/2021 (Insured; MBIA)....................................... 7,350,000 6,661,820
Blair County Hospital Authority, Revenue (Altoona Hospital Project)
6.375%, 7/1/2013 (Insured; AMBAC)....................................... 5,000,000 5,192,700
Bradford County Industrial Development Authority, SWDR
(International Paper Company Projects) 6.60%, 3/1/2019.................. 3,250,000 3,329,983
Bucks County Technical School Authority, Revenue
5.375%, 8/15/2015 (Insured; AMBAC)...................................... 1,640,000 1,553,178
Butler County Hospital Authority, Refunding,
HR (Butler Memorial Hospital) 5.25%, 7/1/2016 (Insured; FSA)............ 2,500,000 2,269,900
Revenue, Health Center (Saint Francis Health Care Project) 6%, 5/1/2008. 1,860,000 1,857,638
Cambria County Industrial Development Authority, RRR
(Cambria Cogen Project):
7.75%, 9/1/2019, Series F-1 (LOC; Fuji Bank) (b)...................... 1,750,000 1,837,290
7.75%, 9/1/2019, Series F-2 (LOC; Fuji Bank) (b)...................... 2,750,000 2,887,170
Delaware County Authority:
HR (Crozer - Chester Medical Center) 5.30%, 12/15/2011 (Insured; MBIA).. 2,750,000 2,598,970
Revenue (Elwyn Inc. Project) 8.35%, 6/1/2015............................ 4,300,000 4,707,769
University Revenue (Villanova University) 5.50%, 8/1/2023 (Insured; MBIA) 6,510,000 6,137,498
Haverford Township School District, Refunding
5.30%, 3/15/2019 (Insured; FGIC)........................................ 2,200,000 2,042,832
Langhorne Manor Borough Higher Educational and Health Authority, HR
(Lower Bucks Hospital) 7%, 7/1/2005..................................... 1,975,000 1,806,197

PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
__________________ ______________
PENNSYLVANIA (CONTINUED)
Lawrence County 4.875%, 8/1/2010 (Insured; FGIC)............................ $ 3,890,000 $ 3,563,357
Lehigh County General Purpose Authority, Revenue:
Refunding (Ceder Crest College) 6.65%, 4/1/2017 (c)..................... 2,500,000 2,437,625
(Wiley House):
8.75%, 11/1/2014 (LOC; Northeastern Bank of Pennsylvania) (b)......... 3,785,000 3,902,600
9.50%, 11/1/2016...................................................... 2,000,000 2,138,100
Lehigh County Industrial Development Authority, PCR, Refunding
(Pennsylvania Power and Light Company Project)
6.40%, 11/1/2021 (Insured; MBIA)........................................ 4,845,000 5,046,213
Luzerne County Industrial Development Authority, Exempt Facilities Revenue,
Refunding
(Pennsylvania Gas and Water Company Project) 7.125%, 12/1/2022.......... 4,000,000 4,168,360
Meadville 5.25%, 10/1/2025 (Insured; AMBAC)................................. 2,655,000 2,427,281
Montgomery County 6.10%, 10/15/2025......................................... 5,000,000 5,078,600
Montgomery County Higher Educational and Health Authority:
HR (Abington Memorial Hospital) 5.125%, 6/1/2014 (Insured; AMBAC)....... 3,000,000 2,726,370
Revenue:
First Mortgage (Montgomery Income Project) 10.50%, 9/1/2020........... 3,000,000 3,247,470
Mortgage (Waverly Heights Project):
6%, 1/1/2013...................................................... 1,250,000 1,173,525
6.25%, 1/1/2018................................................... 2,825,000 2,677,337
(Northwestern Corporation) 8.375%, 6/1/2009........................... 2,685,000 2,909,976
Montgomery County Industrial Development Authority, RRR
7.50%, 1/1/2012 (LOC; Banque Paribas) (b)............................... 11,715,000 12,409,348
Norristown Municipal Waste Authority, Sewer Revenue
5.125%, 11/15/2023 (Insured; FGIC)...................................... 4,400,000 3,941,168
Northampton County Industrial Development Authority, Refunding, Revenue:
(Moravian Hall Square Project)
7.45%, 6/1/2014 (LOC; Meridian Bank) (Prerefunded 6/1/1999) (b,d)..... 1,800,000 1,987,812
Pollution Control:
(Bethlehem Steel) 7.55%, 6/1/2017..................................... 5,700,000 5,873,736
(Met Edison) 6.10%, 7/15/2021 (Insured; MBIA)......................... 5,000,000 5,041,850
Pennsylvania:
5%, 11/15/2011 (Insured; AMBAC)......................................... 3,875,000 3,622,350
5%, 11/15/2013 (Insured; AMBAC)......................................... 3,875,000 3,562,481
Pennsylvania Convention Center Authority, Revenue, Refunding
6.75%, 9/1/2019......................................................... 3,520,000 3,711,066
Pennsylvania Economic Development Financing Authority:
Exempt Facilities Revenue (Macmillan Ltd. Partnership Project) 7.60%, 12/1/2020 3,500,000 3,862,845

PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
__________________ ______________
PENNSYLVANIA (CONTINUED)
Pennsylvania Economic Development Financing Authority (continued):
RRR (Northampton Generating Project):
6.40%, 1/1/2009....................................................... $ 2,500,000 $ 2,429,700
6.50%, 1/1/2013....................................................... 6,500,000 6,262,685
Wastewater Treatment Revenue (Sun Co. Inc. - R and M Project) 7.60%, 12/1/2024 4,240,000 4,651,577
Pennsylvania Higher Education Assistance Agency, Student Loan Revenue
7.05%, 10/1/2016 (Insured; AMBAC)....................................... 2,500,000 2,596,850
Pennsylvania Higher Educational Facilities Authority, College and University
Revenue
Refunding (Dequesne University) 7%, 4/1/2010 (Insured; MBIA)............ 2,000,000 2,155,740
Pennsylvania Housing Finance Agency:
6.50%, 7/1/2023......................................................... 2,750,000 2,819,658
Single Family Mortgage:
7.875%, 10/1/2020..................................................... 1,435,000 1,511,170
6.90%, 4/1/2025....................................................... 6,250,000 6,439,438
Philadelphia, Water and Wastewater Revenue:
Refunding 5.50%, 6/15/2007 (Insured; MBIA).............................. 4,155,000 4,232,657
Refunding 5.625%, 6/15/2008 (Insured; FSA).............................. 5,000,000 5,136,900
6.25%, 8/1/2010 (Insured; MBIA)......................................... 2,730,000 2,942,831
Refunding 5.25%, 6/15/2023 (Insured; MBIA).............................. 15,255,000 13,853,523
Philadelphia Hospital and Higher Education Facilities Authority:
HR:
(Albert Einstein Medical Center) 7%, 10/1/2021........................ 1,500,000 1,545,705
(Graduate Health System Obligation) 7.25%, 7/1/2018................... 3,500,000 3,523,030
(Pennsylvania Hospital) 5.25%, 2/15/2014 (Insured; FGIC).............. 2,500,000 2,290,025
(Refunding - Philadelphia Children's Hospital) 5%, 2/15/2021.......... 2,155,000 1,837,956
Revenue (Northwestern Corporation) 8.375%, 6/1/2009..................... 1,885,000 2,042,944
Philadelphia Industrial Development Authority, IDR, Refunding
(Ashland Oil Inc. Project) 5.70%, 6/1/2005.............................. 2,500,000 2,503,200
Philadelphia Municipal Authority, LR, Refunding
5.60%, 11/15/2009 (Insured; FGIC)....................................... 2,100,000 2,118,942
Philadelphia School District:
Refunding 6.25%, 9/1/2009 (Insured; AMBAC).............................. 2,000,000 2,162,920
5.50%, 9/1/2025 (Insured; AMBAC)........................................ 2,000,000 1,887,540
Pittsburgh Urban Redevelopment Authority:
Mortgage Revenue 7.05%, 4/1/2023........................................ 1,785,000 1,837,711
Single Family Mortgage 7.40%, 4/1/2024.................................. 860,000 893,454
Schuylkill County Industrial Development Authority, Refunding
First Mortgage Revenue (Valley Health Concerns) 8.75%, 3/1/2012......... 2,500,000 2,644,950
RRR (Schuylkill Energy Resources Inc.) 6.50%, 1/1/2010.................. 7,090,000 7,098,223

PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
__________________ ______________
PENNSYLVANIA (CONTINUED)
Washington County Industrial Development Authority, Revenue, Refunding
(Presbyterian Medical Center) 6.75%, 1/15/2023 (Insured; FHA)........... $ 3,000,000 $ 3,109,410
York County Hospital Authority, Revenue
(Health Center - Village at Sprenkle Drive)
7.75%, 4/1/2022 (Prerefunded 4/1/2002) (d).............................. 1,205,000 1,403,740
U.S. RELATED-10.1%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 4,500,000 4,513,679
Guam Government 5.375%, 11/15/2013.......................................... 4,000,000 3,550,200
Puerto Rico Highway and Transportation Authority,
Highway Revenue:
5.40%, 7/1/2006....................................................... 10,000,000 9,658,100
5.25%, 7/1/2020 (Insured; FSA)........................................ 6,600,000 6,022,961
Puerto Rico Public Buildings Authority, Guaranteed Public Education and
Health Facilities, Refunding 5.70%, 7/1/2009................................... 5,000,000 5,078,800
______________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $264,448,694)................... $269,428,658
==============
SHORT-TERM MUNICIPAL INVESTMENTS-5.6%
PENNSYLVANIA-3.0%
Allegheny County Hospital Development Authority, Revenue, VRDN
(Presbyterian Health Center) 4.10% (Insured; MBIA) (e).................. $ 1,500,000 $ 1,500,000
Pennsylvania, TAN 4.50%, 6/28/1996.......................................... 2,000,000 2,002,140
Pennsylvania Energy Development Authority, Energy Development Revenue
(B and W Ebensburg Project) 4.20% (LOC; Swiss Bank Corporation) (b,e)... 5,000,000 5,000,000
U.S. RELATED-2.6%
Commonwealth of Puerto Rico Government Development Bank, Refunding, VRDN
3.75% (LOC; Credit Suisse) (b,e)........................................ 6,950,000 6,950,000
Puerto Rico Electric Power Authority, Power Revenue 3.32% (Insured; FSA) (f) 400,000 400,000
______________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $15,853,105)................... $ 15,852,140
==============
TOTAL INVESTMENTS-100%
(cost $280,301,799)..................................................... $285,280,798
==============
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES

SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FHA Federal Housing Administration PCR Pollution Control Revenue
FSA Financial Security Assurance RRR Resources Recovery Revenue
HR Hospital Revenue SFMR Single Family Mortgage Revenue
IDR Industrial Development Revenue SWDR Solid Waste Disposal Revenue
LOC Letter of Credit TAN Tax Anticipation Notes
LR Lease Revenue VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (G) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____________ _______________ ___________________ _____________________
<S> <C> <C> <C>
AAA Aaa AAA 43.7%
AA Aa AA 3.4
A A A 15.2
BBB Baa BBB 19.8
BB Ba BB .6
F1 MIG1/P1 SP1/A1 5.4
Not Rated (h) Not Rated (h) Not Rated (h) 11.9
________
100.0%
========
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Wholly held by custodian as collateral for delayed-delivery
security.
(b) Secured by letters of credit.
(c) Purchased on a delayed-delivery basis.
(d) 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.
(e) Securities payable on demand. The interest rate, which is subject to
change, is based upon bank prime rates or an index of market interest
rates.
(f) Inverse Floater Security - the interest rate is subject to change
periodically.
(g) Fitch currently provides creditworthiness information for a limited
number of investments.
(h) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Series may invest.

See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $280,301,799)-see statement..................................... $285,280,798
Cash.................................................................... 1,233,609
Interest receivable..................................................... 5,521,212
Receivable for shares of Beneficial Interest subscribed................. 224,540
Receivable for investment securities sold............................... 93,433
Prepaid expenses........................................................ 9,137
______________
292,362,729
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 128,905
Due to Distributor...................................................... 88,348
Payable for investment securities purchased............................. 2,447,858
Payable for shares of Beneficial Interest redeemed...................... 214,060
Accrued expenses........................................................ 50,486 2,929,657
_______________
NET ASSETS.................................................................. $289,433,072
==============
REPRESENTED BY:
Paid-in capital......................................................... $282,542,947
Accumulated undistributed net realized gain on investments.............. 1,911,126
Accumulated net unrealized appreciation on investments-Note 3........... 4,978,999
______________
NET ASSETS at value......................................................... $289,433,072
==============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 13,408,608
==============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 4,492,451
==============
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 1,302
==============
NET ASSET VALUE per share:
Class A Shares
($216,801,832 / 13,408,608 shares).................................... $16.17
=========
Class B Shares
($72,610,204 / 4,492,451 shares)...................................... $16.16
=========
Class C Shares
($21,036 / 1,302 shares).............................................. $16.16
=========

See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $18,081,065
EXPENSES:
Management fee-Note 2(a).............................................. $1,600,235
Shareholder servicing costs-Note 2(c)................................. 981,973
Distribution fees-Note 2(b)........................................... 362,748
Professional fees..................................................... 45,123
Custodian fees........................................................ 32,496
Prospectus and shareholders' reports.................................. 21,254
Trustees' fees and expenses-Note 2(d)................................. 3,918
Registration fees..................................................... 1,736
Miscellaneous......................................................... 5,404
_______________
TOTAL EXPENSES.................................................... 3,054,887
_______________
INVESTMENT INCOME-NET............................................. 15,026,178
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $3,624,514
Net unrealized appreciation on investments.............................. 2,233,089
______________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................... 5,857,603
_______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $20,883,781
===============

See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
__________________________________________
1995 1996
____________________ __________________
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 16,303,282 $ 15,026,178
Net realized gain on investments........................................ 3,749,748 3,624,514
Net unrealized appreciation (depreciation) on investments for the year.. (2,373,737) 2,233,089
____________________ __________________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 17,679,293 20,883,781
____________________ __________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares........................................................ (12,907,659) (11,560,546)
Class B shares........................................................ (3,395,623) (3,465,577)
Class C shares........................................................ - (55)
Net realized gain on investment:
Class A shares........................................................ - (3,548,917)
Class B shares........................................................ - (1,187,046)
Class C shares........................................................ - (17)
____________________ __________________
TOTAL DIVIDENDS................................................... (16,303,282) (19,762,158)
____________________ __________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 14,323,499 20,084,706
Class B shares........................................................ 13,962,833 6,829,157
Class C shares........................................................ - 21,000
Dividends reinvested:
Class A shares........................................................ 6,652,944 8,442,622
Class B shares........................................................ 2,024,872 2,978,350
Class C shares........................................................ - 73
Cost of shares redeemed:
Class A shares........................................................ (37,539,324) (32,654,140)
Class B shares........................................................ (5,465,675) (7,401,867)
____________________ __________________
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.... (6,040,851) (1,700,099)
____________________ __________________
TOTAL (DECREASE) IN NET ASSETS.................................. (4,664,840) (578,476)
NET ASSETS:
Beginning of year....................................................... 294,676,388 290,011,548
____________________ __________________
End of year............................................................. $290,011,548 $289,433,072
==================== ==================
</TABLE>
<TABLE>
<CAPTION>

PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
SHARES
________________________________________________________________________________________
CLASS A CLASS B CLASS C
____________________________ __________________________ ______________________
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
____________________________ __________________________ ______________________

1995 1996 1995 1996 1996*
____________ ___________ ___________ __________ ______________________
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 900,647 1,227,069 881,375 412,949 1,298
Shares issued for
dividends reinvested. 421,108 508,499 128,216 179,443 4
Shares redeemed........ (2,389,230) (1,973,350) (350,112) (448,471) -
____________ ___________ ___________ __________ ______________________
NET INCREASE (DECREASE)
IN SHARES
OUTSTANDING...... (1,067,475) (237,782) 659,479 143,921 1,302
============= =========== =========== ========== ======================
* From August 15, 1995 (commencement of initial offering) to April 30, 1996.

See notes to financial statements.
</TABLE>

PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
FINANCIAL HIGHLIGHTS

Reference is made to pages 7 to 27 of the Fund's Prospectus
dated December 16, 1996.

PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering twelve series including the Pennsylvania Series (the "Series"). The
Fund's investment objective is to maximize current income exempt from Federal
and, where applicable, from State income taxes, without undue risk. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, 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 and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
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.
(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, PENNSYLVANIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the 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 value
of the Series' average daily 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. There was no expense
reimbursement for the year ended April 30, 1996.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $852 during the year ended April 30, 1996 from commissions earned on
sales of the Series' shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the year ended April 30, 1996,
$362,739 was charged to the Series for the Class B shares and $9 was charged
to the Series for the Class C shares.
(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, Class B and Class C shares for the provision of certain services.
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 (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. For the year ended April 30, 1996,
$546,007, $181,369 and $3 were charged to Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $67,082 for the period
from December 1, 1995 through April 30, 1996.

PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) Each trustee who is not an "affiliated person" as defined in the Act
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,
excluding short-term securities, during the year ended April 30, 1996
amounted to $148,797,723 and $173,013,257, respectively.
At April 30, 1996, accumulated net unrealized appreciation on investments
was $4,978,999, consisting of $7,513,971 gross unrealized appreciation and
$2,534,972 gross unrealized depreciation.
At April 30, 1996, 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, PENNSYLVANIA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Pennsylvania Series (one of the Series constituting the Premier State
Municipal Bond Fund) as of April 30, 1996, 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, 1996 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, Pennsylvania Series at April
30, 1996, 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 & Young LLP Signature)

New York, New York
June 5, 1996

<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-99.5% AMOUNT VALUE
_______________ ______________
<S> <C> <C>
TEXAS-98.1%
Allen Independent School District Building
5.20%, 2/15/2021........................................................ $ 2,030,000 $ 1,827,670
Alliance Airport Authority Inc., Special Facilities Revenue
(American Airlines Inc., Project) 7.50%, 12/01/2029..................... 3,800,000 4,041,224
Amarillo Health Facilities Corp., HR (High Plains Baptist Hospital)
6.562%, 1/3/2022 (Insured; FSA)......................................... 4,500,000 4,635,810
Bexar County, Refunding, Limited Tax 5%, 6/15/2010.......................... 5,000,000 4,711,850
Bexar County Health Facilities Development Corp., HR Refunding
(Baptist Memorial Hospital System Project) 6.625%, 2/15/2011 (Insured; MBIA) 2,690,000 2,873,861
Brazos Higher Education Authority Inc., Student Loan Revenue, Refunding:
5.70%, 6/1/2004......................................................... 3,500,000 3,564,680
6.80%, 12/1/2004........................................................ 850,000 899,725
Brazos River Authority, Special Facilities Revenue, Refunding
5.50%, 8/15/2021 (Insured; FGIC)........................................ 2,000,000 1,886,620
Clear Creek Independent School District
4.25%, 2/1/2013......................................................... 1,575,000 1,294,115
Clint Independent School District, Refunding
7%, 3/1/2015............................................................ 750,000 799,650
Dallas-Fort Worth Regional Airport, Joint Revenue
6.625%, 11/1/2021 (Insured; FGIC)....................................... 1,250,000 1,286,475
El Paso Housing Authority, Multi-Family Revenue
(Section 8 Projects) 6.25%, 12/1/2009................................... 2,510,000 2,533,042
Grapevine-Colleyville Independent School District
5.125%, 8/15/2022....................................................... 3,000,000 2,678,280
Gulf Coast Waste Disposal Authority, SWDR
(Champion International Corp. Project) 7.25%, 4/1/2017.................. 1,000,000 1,057,070
Harris County (Toll Road) Senior Lien 6.375%, 8/15/2024 (Insured; MBIA)..... 3,000,000 3,114,300
Harris County Health Facilities Development Corp., Health Care System Revenue
(Sisters of Charity) 7.10%, 7/1/2021.................................... 1,000,000 1,079,810
Houston:
Refunding 7%, 3/1/2008.................................................. 2,000,000 2,304,500
Water and Sewer System Revenue, Refunding (Junior Lien)
5.25%, 12/1/2025 (Insured; FGIC)...................................... 3,000,000 2,726,550
Keller Independent School District,
Unlimited Tax School Building and Refunding
5.125%, 8/15/2025....................................................... 2,000,000 1,778,600
Leander 6.75%, 8/15/2016.................................................... 2,325,000 2,349,389
Leon County, PCR, Refunding (Nucor Corp. Project) 7.375%, 8/1/2009.......... 750,000 816,982

PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
_______________ _____________
TEXAS (CONTINUED)

Lewisville Independent School District 5.35%, 8/15/2014..................... $ 2,750,000 $ 2,612,858
Matagorda County Navigation District No. 1, PCR
(Collateralized Houston Lighting and Power) 7.875%, 2/1/2019............ 500,000 531,190
Montgomery County Health Facilities Development Corp., Hospital Mortgage
Revenue
(Woodlands Medical Center Project) 8.85%, 8/15/2014..................... 580,000 627,676
North Texas Higher Education Authority, Inc., Student Loan Revenue
7.25%, 4/1/2003 (Insured; AMBAC)........................................ 1,000,000 1,056,970
Red River Authority, PCR
(Hoechst Celanese Corp. Project) 6.875%, 4/1/2017....................... 4,100,000 4,325,377
San Antonio, Water Revenue (Prior Lien)
7.125%, 5/1/2016 (Prerefunded 5/1/1999) (a)............................. 750,000 817,110
Southwest Higher Education Authority, Inc., Higher Education Revenue
(Southern Methodist University Project) 5.125%, 10/1/2026 (Insured; FSA) 1,000,000 885,230
Texas (Veterans Housing Assistance) 6.80%, 12/1/2023........................ 3,135,000 3,205,569
Texas Health Facilities Development Corp., HR, Refunding
(All Saints Episcopal Hospitals) 6.25%, 8/15/2022 (Insured; MBIA)....... 2,000,000 2,044,280
Texas Higher Education Coordinating Board, College Student Loan Revenue
7.30%, 10/1/2003........................................................ 750,000 783,923
Texas National Research Laboratory Commission Financing Corp., LR
(Superconducting Super Collider):
6.95%, 12/1/2012...................................................... 700,000 772,877
7.10%, 12/1/2021 (Prerefunded 12/1/2001) (a).......................... 230,000 260,466
Texas Public Property Finance Corp., Revenue
(Mental Health and Retardation) 8.875%, 9/1/2011 (Prerefunded 9/1/2001) (a) 455,000 549,708
Texas Water Development Board, Revenue (State Revolving Fund) Senior Lien
6%, 7/15/2013........................................................... 3,000,000 3,014,130
Tomball Hospital Authority, Revenue, Refunding 6%, 7/1/2013................. 5,000,000 4,716,000
Tyler Texas Health Facility Development Corp., HR
(East Texas Medical Center Regional Health) 6.625%, 11/1/2011........... 1,820,000 1,831,575
West Side Calhoun County Navigation District, SWDR
(Union Carbide Chemical and Plastics) 8.20%, 3/15/2021.................. 500,000 557,685
U.S. RELATED-1.4%
Puerto Rico Public Buildings Authority, Guaranteed
Public Education and Health Facilities
6.875%, 7/1/2012 (Prerefunded 7/1/2002) (a)............................. 1,000,000 1,128,500
_____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $76,587,967)...................................................... $77,981,327
=============

PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
SHORT-TERM MUNICIPAL INVESTMENT-.5% AMOUNT VALUE
________________ _______________
U.S. RELATED;
Puerto Rico Electric Power Authority, Power Revenue, 3.32% (Insured; FSA) (b)
(cost $400,000)......................................................... $ 400,000 $ 400,000
================
TOTAL INVESTMENTS-100.0%
(cost $76,987,967)...................................................... $78,381,327
================
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FSA Financial Security Assurance PCR Pollution Control Revenue
HR Hospital Revenue SWDR Solid Waste Disposal Revenue
LR Lease Revenue
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (C) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
________________ _____________ ___________________ ______________________
<S> <C> <C> <C>
AAA Aaa AAA 52.9%
AA Aa AA 15.4
A A A 11.6
BBB Baa BBB 15.6
Not Rated (d) Not Rated (d) Not Rated (d) 4.5
________
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) Inverse Floater Security - the interest rate is subject to change
periodically.
(c) Fitch currently provides creditworthiness information for a limited
number of investments.
(d) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Series may invest.

See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $76,987,967)-see statement...................................... $78,381,327
Cash.................................................................... 584,941
Interest receivable..................................................... 1,405,965
Receivable for shares of Beneficial Interest subscribed................. 20,000
Prepaid expenses........................................................ 7,101
________________
80,399,334
LIABILITIES:
Due to Distributor...................................................... $23,690
Payable for shares of Beneficial Interest redeemed...................... 20,714
Accrued expenses........................................................ 29,340 73,744
_____________ ________________
NET ASSETS.................................................................. $80,325,590
================
REPRESENTED BY:
Paid-in capital......................................................... $78,414,939
Accumulated undistributed net realized gain on investments.............. 517,291
Accumulated net unrealized appreciation on investments-Note 3........... 1,393,360
________________
NET ASSETS at value......................................................... $80,325,590
================
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 3,016,239
================
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 837,867
================
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 51
================
NET ASSET VALUE per share:
Class A Shares
($62,863,623 / 3,016,239 shares)...................................... $20.84
================
Class B Shares
($17,460,915 / 837,867 shares)........................................ $20.84
================
Class C Shares
($1,052 / 50,504 shares).............................................. $20.83
================

See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $5,091,856
EXPENSES:
Management fee-Note 2(a).............................................. $ 464,591
Shareholder servicing costs-Note 2(c)................................. 257,487
Distribution fees-Note 2(b)........................................... 87,657
Professional fees..................................................... 15,522
Prospectus and shareholders' reports.................................. 10,225
Custodian fees........................................................ 9,835
Registration fees..................................................... 1,209
Trustees' fees and expenses-Note 2(d)................................. 1,123
Miscellaneous......................................................... 18,385
______________
TOTAL EXPENSES.................................................. 866,034
Less-Management fee waived due to
undertaking-Note 2(a)............................................. 464,591
______________
NET EXPENSES.................................................... 401,443
______________
INVESTMENT INCOME-NET........................................... 4,690,413
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $1,514,366
Net unrealized appreciation on investments.............................. 400,100
______________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 1,914,466
______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $6,604,879
==============

See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
_________________________________________
1995 1996
____________________ _________________
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 5,213,354 $ 4,690,413
Net realized gain on investments........................................ 336,502 1,514,366
Net unrealized appreciation on investments for the year................. 460,699 400,100
____________________ _________________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 6,010,555 6,604,879
____________________ _________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net:
Class A shares........................................................ (4,315,213) (3,789,456)
Class B shares........................................................ (898,141) (900,921)
Class C shares........................................................ - (36)
Net realized gain on investments:
Class A shares........................................................ - (937,967)
Class B shares........................................................ - (248,855)
Class C shares........................................................ - (15)
____________________ _________________
TOTAL DIVIDENDS................................................... (5,213,354) (5,877,250)
____________________ _________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 1,872,238 1,598,276
Class B shares........................................................ 1,960,522 1,221,189
Class C shares........................................................ - 1,014
Dividends reinvested:
Class A shares........................................................ 1,978,459 2,309,470
Class B shares........................................................ 498,663 668,539
Class C shares........................................................ - 51
Cost of shares redeemed:
Class A shares........................................................ (12,622,094) (9,766,053)
Class B shares........................................................ (1,719,028) (1,355,717)
____________________ _________________
(DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS.... (8,031,240) (5,323,231)
____________________ _________________
TOTAL (DECREASE) IN NET ASSETS.................................. (7,234,039) (4,595,602)
NET ASSETS:
Beginning of year....................................................... 92,155,231 84,921,192
____________________ _________________
End of year............................................................. $ 84,921,192 $ 80,325,590
==================== =================
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
SHARES
__________________________________________________________________________________
CLASS A CLASS B CLASS C
________________________ ______________________ _______________________
YEAR ENDED
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, APRIL 30,
_______________________ _______________________
1995 1996 1995 1996 1996*
___________ __________ __________ __________ _______________________
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold............ 92,136 75,223 96,542 57,381 49
Shares issued for
dividends reinvested. 97,778 108,052 24,656 31,283 2
Shares redeemed........ (636,330) (458,438) (86,401) (63,720) -
___________ __________ __________ __________ _______________________
NET INCREASE
(DECREASE) IN
SHARES OUTSTANDING (446,416) (275,163) 34,797 24,944 51
=========== ========== ========== ========== =======================
* From August 15, 1995 (commencement of initial offering) to April 30, 1996.

See notes to financial statements.
</TABLE>

PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
FINANCIAL HIGHLIGHTS

Reference is made to pages 7 to 27 of the Fund's Prospectus
dated December 16, 1996.

PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering twelve series including the Texas Series (the "Series"). The Fund's
investment objective is to maximize current income exempt from Federal and,
where applicable, from State income taxes, without undue risk. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager
is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, 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 and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
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.
(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 (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 value
of the Series' average daily 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, 1995 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 undertaking, amounted to $464,591 for
the year ended April 30, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the year ended April 30, 1996,
$87,651 was charged to the Series for the Class B shares and $6 was charged
to the Series for the Class C shares.
(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, Class B and Class C shares for the provision of certain services.
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 (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. For the year ended April 30, 1996,
$167,350, $43,826 and $2 were charged to Class A, Class B and Class C shares,
respectively, by the Distributor pursuant to the Shareholder Services Plan.

PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Effective December 1, 1995, the Series compensates Dreyfus Transfer, Inc.,
a wholly-owned subsidiary of the Manager, under a transfer agency agreement
for providing personnel and facilities to perform transfer agency services
for the Series. Such compensation amounted to $11,727 for the period from
December 1, 1995 through April 30, 1996.
(D) Each trustee who is not an "affiliated person" as defined in the Act
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,
excluding short-term securities, during the year ended April 30, 1996
amounted to $40,754,684 and $45,945,727, respectively.
At April 30, 1996, accumulated net unrealized appreciation on investments
was $1,393,360, consisting of $2,110,926 gross unrealized appreciation and
$717,566 gross unrealized depreciation.
At April 30, 1996, 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
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
We have audited 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 April 30, 1996, 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, 1996 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Texas Series at April 30,
1996, 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 & Young LLP - Signature)

New York, New York
June 5, 1996

<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
________________ ______________
<S> <C> <C>
VIRGINIA-84.5%
Alexandria Redevelopment and Housing Authority,
Multi-Family Housing Mortgage Revenue (Buckingham Village Apartments)
6.125%, 7/1/2021........................................................ $ 3,000,000 $ 2,941,260
Augusta County Industrial Development Authority, HR
(Augusta Hospital Corp. Project) 7%, 9/1/2021 (Prerefunded 9/1/2001) (a) 2,750,000 3,081,898
Capital Region Airport Commission, Airport Revenue
(Richmond International Airport Projects) 5.625%, 7/1/2025 (Insured; AMBAC) 3,000,000 2,843,670
Charlottesville-Albemarle Airport Authority, Airport Revenue Refunding:
6.125%, 12/1/2009....................................................... 450,000 432,738
6.125%, 12/1/2013....................................................... 350,000 335,807
Chesapeake, Water and Sewer System Revenue, Refunding 6.50%, 7/1/2012....... 1,000,000 1,049,240
Chesapeake Bay Bridge and Tunnel District, General Resolution Revenue,
Refunding 5%, 7/1/2022 (Insured; MBIA).................................. 5,410,000 4,767,779
Chesapeake Hospital Authority, Hospital Facility Revenue, Refunding
(Chesapeake General Hospital) 5.25%, 7/1/2018 (Insured; MBIA)........... 1,000,000 906,920
Community Housing Finance Corp. Arlington County,
Collateralized Mortgage Revenue, Refunding (Colonial Village Project)
6.25%, 6/1/2022 (Insured; FHA).......................................... 1,000,000 1,001,360
Covington-Alleghany County Industrial Development Authority,
Hospital Facility Revenue (Alleghany Regional Hospital)
6.875%, 4/1/2022 (Prerefunded 4/1/2002) (a)............................. 1,000,000 1,106,940
Fairfax County Park Authority, Park Facilities Revenue
6.625%, 7/15/2020....................................................... 2,665,000 2,710,545
Fairfax County Water Authority, Water Revenue:
5%, 4/1/2016............................................................ 2,000,000 1,806,900
7.561%, 4/1/2029 (b,c).................................................. 2,000,000 1,710,000
Hanover County Industrial Development Authority, HR
(Memorial Regional Medical Center Project) 5.50%, 8/15/2025 (Insured; MBIA) 1,000,000 930,670
Harrisonburg Redevelopment and Housing Authority, MFHR, Refunding
(Hanover Crossing Apartments Project) 6.35%, 3/1/2023................... 2,000,000 2,003,800
Industrial Development Authority of Albermarle County,
HR, Refunding (Martha Jefferson Hospital):
5.875%, 10/1/2013..................................................... 2,360,000 2,263,098
5.50%, 10/1/2020...................................................... 1,500,000 1,333,425
Industrial Development Authority of the City of Williamsburg,
Hospital Facility Revenue (Williamsburg Community Hospital) 5.75%, 10/1/2022 2,000,000 1,794,360
Industrial Development Authority of Giles County,
Exempt Facility Revenue (Hoechst Celanese Corp. Project)
5.95%, 12/1/2025........................................................ 3,000,000 2,919,690

PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________________ _____________
VIRGINIA (CONTINUED)

Industrial Development Authority of the County of Henrico,
SWDR (Browning-Ferris Industries of South Atlantic, Inc. Project)
5.45%, 1/1/2014......................................................... $ 3,500,000 $ 3,312,855
Industrial Development Authority of the County of Prince William:
Hospital Facility Revenue (Potomac Hospital Corp. of Prince William)
6.85%, 10/1/2025...................................................... 1,000,000 1,043,820
HR, Refunding (Prince William Hospital)
5.625%, 4/1/2012...................................................... 1,000,000 944,700
Industrial Development Authority of the Town of West Point,
SWDR (Chesapeake Corp. Project) 6.375%, 3/1/2019........................ 2,500,000 2,431,825
Nelson County Service Authority, Water and Sewer Revenue, Refunding
5.50%, 7/1/2018 (Insured; FGIC)......................................... 1,750,000 1,648,430
Norfolk Redevelopment and Housing Authority, Educational Facility Revenue
(Tidewater Community College Campus) 5.875%, 11/1/2015.................. 1,000,000 976,210
Prince William County Park Authority, Revenue
6.875%, 10/15/2016...................................................... 3,000,000 3,195,630
Rector and Visitors of the University of Virginia, General Revenue Pledge
5.375%, 6/1/2020........................................................ 4,370,000 4,068,776
Richmond Industrial Development Authority, HR (Retreat Hospital)
7.35%, 7/1/2021 (Prerefunded 7/1/2001) (a).............................. 1,900,000 2,144,283
Richmond Metropolitan Authority, Expressway Revenue, Refunding
6.375%, 7/15/2016 (Insured; FGIC)....................................... 1,500,000 1,564,980
Southeastern Public Service Authority, Revenue
5.125%, 7/1/2013 (Insured; MBIA)........................................ 7,850,000 7,339,593
Upper Occoquan Sewer Authority, Regional Sewer Revenue:
6.50%, 7/1/2017 (Insured; MBIA) (Prerefunded 7/1/2001) (a).............. 1,000,000 1,098,140
5%, 7/1/2025 (Insured; MBIA)............................................ 4,000,000 3,508,920
Virginia Beach Development Authority
Nursing Home Revenue (Sentara Life Care Corp.) 7.75%, 11/1/2021......... 1,000,000 1,096,670
Virginia Housing Development Authority:
Commonwealth Mortgage:
6.20%, 7/1/2021....................................................... 3,255,000 3,221,929
6.85%, 1/1/2027....................................................... 2,000,000 2,040,300
Multi-Family Refunding 5.90%, 11/1/2017................................. 2,000,000 1,957,120
U. S. RELATED-15.5%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 2,000,000 2,006,080
Commonwealth of Puerto Rico:
5.40%, 7/1/2025......................................................... 3,000,000 2,717,010
(Public Improvement) 6.80%, 7/1/2021 (Prerefunded 7/1/2002) (a)......... 1,000,000 1,122,000

Puerto Rico Highway and Transportation Authority, Highway Revenue:
6.625%, 7/1/2018 (Prerefunded 7/1/2002) (a)............................. $ 2,000,000 $ 2,224,780
5.50%, 7/1/2026......................................................... 5,000,000 4,597,650
Virgin Islands Public Finance Authority, Revenue, Refunding, Matching Fund
Loan Notes
7.25%, 10/1/2018........................................................ 1,500,000 1,578,405
______________
TOTAL INVESTMENTS (cost $92,283,183)........................................ $91,780,206
==============
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
FHA Federal Housing Administration MFHR Multi-Family Housing Revenue
HR Hospital Revenue SWDR Solid Waste Disposal Revenue

</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____________ _____________ ___________________ _____________________
<S> <C> <C> <C>
AAA Aaa AAA 31.5%
AA Aa AA 20.6
A A A 35.2
BBB Baa BBB 11.0
Not Rated (e) Not Rated (e) Not Rated (e) 1.7
___________
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) Inverse Floater Security f the interest rate is subject to change
periodically.
(c) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30,
1996, this security amounted to $1,710,000 or 1.8% of net assets.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
(e) Securities which, while not rated by Fitch, Moody's or Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Series may invest.

See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1996
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $92,283,183)-see statement...................................... $91,780,206
Cash.................................................................... 1,031,926
Interest receivable..................................................... 1,530,159
Receivable for shares of Beneficial Interest subscribed................. 208,537
Prepaid expenses........................................................ 3,900
_______________
94,554,728
LIABILITIES:
Due to Distributor...................................................... $32,981
Payable for shares of Beneficial Interest redeemed...................... 14,191
Accrued expenses........................................................ 72,788 119,960
____________ _______________
NET ASSETS.................................................................. $94,434,768
===============
REPRESENTED BY:
Paid-in capital......................................................... $95,195,136
Accumulated net realized (loss) on investments.......................... (257,391)
Accumulated net unrealized (depreciation) on investments-Note 3......... (502,977)
_______________
NET ASSETS at value......................................................... $94,434,768
===============
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 3,759,009
===============
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 2,036,179
===============
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 10,194
===============
NET ASSET VALUE per share:
Class A Shares
($61,149,373 / 3,759,009 shares)...................................... $16.27
===============
Class B Shares
($33,119,613 / 2,036,179 shares)...................................... $16.27
===============
Class C Shares
($165,782 / 10,194 shares)............................................ $16.26
===============

See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $5,783,574
EXPENSES:
Management fee-Note 2(a).............................................. $ 522,229
Shareholder servicing costs-Note 2(c)................................. 315,653
Distribution fees-Note 2(b)........................................... 157,882
Professional fees..................................................... 18,106
Prospectus and shareholders' reports.................................. 15,763
Custodian fees........................................................ 10,760
Registration fees..................................................... 1,648
Trustees' fees and expenses-Note 2(d)................................. 1,264
Miscellaneous......................................................... 116,338
______________
TOTAL EXPENSES.................................................. 1,159,643
Less-management fee waived due to
undertaking-Note 2(a)............................................. 522,229
______________
NET EXPENSES.................................................... 637,414
_____________
INVESTMENT INCOME-NET........................................... 5,146,160
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3................................. $1,771,595
Net unrealized (depreciation) on investments............................ (539,154)
_____________
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 1,232,441
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $6,378,601
=============

See notes to financial statements.

PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30,
_____________________________________
1995 1996
_____________ _____________
OPERATIONS:
Investment income-net................................................... $ 5,219,359 $ 5,146,160
Net realized gain (loss) on investments................................. (1,651,777) 1,771,595
Net unrealized appreciation (depreciation) on investments for the year.. 1,713,847 (539,154)
_____________ _____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 5,281,429 6,378,601
_____________ _____________
DIVIDENDS TO SHAREHOLDERS:
From investment income-net:
Class A shares........................................................ (3,761,772) (3,546,219)
Class B shares........................................................ (1,457,587) (1,598,256)
Class C shares........................................................ - (1,685)
In excess of net realized gain on investments:
Class A shares........................................................ (120,788) -
Class B shares........................................................ (53,700) -
_____________ _____________
TOTAL DIVIDENDS................................................... (5,393,847) (5,146,160)
_____________ _____________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 7,081,776 4,126,648
Class B shares........................................................ 5,599,985 5,468,182
Class C shares........................................................ - 171,138
Dividends reinvested:
Class A shares........................................................ 2,086,577 1,849,325
Class B shares........................................................ 818,920 812,093
Class C shares........................................................ - 1,041
Cost of shares redeemed:
Class A shares........................................................ (11,840,016) (8,185,998)
Class B shares........................................................ (2,926,642) (2,280,799)
_____________ _____________
INCREASE IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS........................................... 820,600 1,961,630
_____________ _____________
TOTAL INCREASE IN NET ASSETS.................................... 708,182 3,194,071
NET ASSETS:
Beginning of year....................................................... 90,532,515 91,240,697
_____________ _____________
End of year............................................................. $91,240,697 $94,434,768
============= =============

</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
SHARES
____________________________________________________________________________________________
CLASS A CLASS B CLASS C
__________________________ ____________________________________ ________________________
YEAR ENDED
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, APRIL 30,
__________________________ ____________________________________
1995 1996 1995 1996 1996*
____________ ___________ _______________ _______________ ________________________
<S> <C> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS:
Shares sold.......... 447,976 249,234 356,143 328,113 10,131
Shares issued for
dividends reinvested 132,774 111,225 52,168 48,831 63
Shares redeemed...... (761,303) (494,748) (187,333) (137,908) -
____________ ___________ _______________ _______________ ________________________
NET INCREASE (DECREASE)
IN SHARES
OUTSTANDING.... (180,553) (134,289) 220,978 239,036 10,194
============ =========== =============== =============== ========================
* From August 15, 1995 (commencement of initial offering) to April 30, 1996.

See notes to financial statements.
</TABLE>

PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
FINANCIAL HIGHLIGHTS

Reference is made to pages 7 to 27 of the Fund's Prospectus
dated December 16, 1996.

PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier State Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering twelve series including the Virginia Series (the "Series"). The
Fund's investment objective is to maximize current income exempt from Federal
and, where applicable, from State income taxes, without undue risk. The
Dreyfus Corporation ("Manager") serves as the Fund's investment adviser. The
Manager is a direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc., (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, 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 and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
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.
(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, VIRGINIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Series may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, 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 $148,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 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 value
of the Series' average daily 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, 1995 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 undertaking, amounted to $522,229 for
the year ended April 30, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $39 during the year ended April 30, 1996 from commissions earned on
sales of the Series' shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the year ended April 30, 1996,
$157,606 was charged to the Series for the Class B shares and $276 was
charged to the Series for the Class C shares.
(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, Class B and Class C shares for the provision of certain services.
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 (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Agents. During the year ended April 30, 1996, $158,482, $78,803 and $92 were
charged to Class A, Class B and Class C shares, respectively, by the
Distributor pursuant to the Shareholder Service Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $19,409 for the period
from December 1, 1995 through April 30, 1996.
(D) Each trustee who is not an "affiliated person" as defined in the Act
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,
excluding short-term securities, during the year ended April 30, 1996
amounted to $49,693,408 and $47,684,106, respectively.
At April 30, 1996, accumulated net unrealized depreciation on investments
was $502,977, consisting of $2,070,929 gross unrealized appreciation and
$2,573,906 gross unrealized depreciation.
At April 30, 1996, 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, VIRGINIA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier State Municipal Bond Fund,
Virginia Series (one of the Series constituting the Premier State Municipal
Bond Fund) as of April 30, 1996, 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, 1996 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier State Municipal Bond Fund, Virginia Series at April 30,
1996, 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 & YOUNG LLP..... SIGNATURE LOGO)

New York, New York
June 5, 1996