PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Premier State
Municipal Bond Fund - Virginia Series. For its annual reporting period ended
April 30, 1996, your Series produced a total return of 7.32% for Class A
shares, 6.77% for Class B shares and, since their inception on August 15,
1995, 4.02% for Class C shares.* Income dividends exempt from Federal and
Virginia State personal income taxes of approximately $.929 for Class A
shares, $.843 for Class B shares and $.567 for Class C shares were paid.**
This amounts to an annualized tax-free distribution rate per share of 5.44%,
5.17% and 4.90% for Class A, Class B and Class C shares respectively.***
THE ECONOMY
Concerns that the economy was heading toward recession were eased by the
recent release of brighter-than-expected reports on employment and consumer
spending. Consequently, the Federal Reserve Board refrained from making any
further reductions in the Federal Funds rate; the last easing of this
benchmark interest rate occurred on January 31. In reaction to the more
optimistic economic news (and the related fears of a potential rekindling of
inflation), long-term interest rates as measured by 30-year Treasury bonds
have risen nearly one percentage point since February.
The rosier outlook for the economy was spearheaded by reports of large
gains in employment for two consecutive months (February and March).
Furthermore, personal income and expenditures data indicated that consumers
continued to spend, despite their present high level of installment credit.
Retail sales reports have correspondingly edged higher, confirming a modest
recovery in consumer spending from its year-end slump.
Supporting the growing consensus that the economy has picked up steam
were reports of slow but steady growth in the manufacturing sector. After
adjusting data for the 17-day General Motors strike, industrial output rose
modestly. New orders for durable goods, a closely watched indicator of future
hiring and production, also posted gains.
Despite the economy's apparent recovery from its year-end pause,
inflation has remained under control. Through March of this year, the
Consumer Price Index rose at an annual rate of 2.8%. There appear to be few
signs of inflationary pressure in the economy. Factories are running at a
relatively comfortable rate of capacity (82.5%), markedly below this
expansion's peak of 85.1% reached over a year ago. With major industries
trying to reduce inventories, there is little to suggest that product pricing
will surge upwards. Reflecting this absence of so-called pipeline
inflationary pressure, price increases at both the wholesale and production
levels of the economy remained similarly under control. We believe the
cautionary stance of the Federal Reserve regarding additional reductions in
interest rates combined with the fiscal restraint from reduced government
spending should serve as additional moderating forces against any resurgence
in inflation.
We are mindful, however, of a potential change in what has been a benign
inflation picture. The recent rise in oil prices, along with strength in
other commodity prices such as grain, is not to be dismissed lightly. While
they may be only aberrations of a temporary nature, they also could represent
early warning signs of a fundamental change in inflation which will be seen
later in the year.
MARKET ENVIRONMENT
The bond market has recently risen from its lows and is showing stable to
improving signs. This is in reaction to a favorable Producer Price Index
report and, to some extent, a better-than-expected "beige book" survey from
the Fed which showed "moderate" growth coupled with "generally subdued" price
increases. These reports, in conjunction with recently released declining
retail sales figures, are changing the mood of the market. This change in
market sentiment reflects a shift in the stance of the Federal Reserve. The
Fed, recently viewed as moving from easing to tightening, could be on hold
for a while. It is possible that the Fed might be slow to tighten after being
severely criticized in 1994 when they tightened preemptively, without overt
evidence of an inflation problem.
The municipal market has outperformed Treasuries lately, shaking off the
residual effects of the flat tax proposal. Although not at the level it saw
before the flat tax proposal, which was 81% of Treasuries for long insured
paper in early 1995, the 87% current level is an improvement from recent
readings which had been in the low 90s. The municipal market is also
benefiting from a forward supply calendar that needs a 40-50 basis point drop
in rates for 30% of it to be brought to market. These rate-sensitive issues
are usually refinancings of earlier bonds.
THE PORTFOLIO
The portfolio has stayed fully invested during this choppy time in the
market. We have been trying to improve call features on many holdings through
swap opportunities or new purchases in the primary market. Many of these
issues are insured and carry superior market liquidity should we need to
change our strategy later. At present, however, we remain comfortable with
our security selections. We are encouraged by the positive supply pattern
developing (mentioned above) and the upcoming June and July interest payment
and maturity dates. These are critical dates when investors potentially seek
to reinvest large sums of money into the municipal market.
Included in this report is a series of detailed statements about your
Series' holdings and its financial condition. We hope they are informative.
Please know that we greatly appreciate your continued confidence in the
Series and in The Dreyfus Corporation.
Sincerely,
(RICHARD J. MOYNIHAN - SIGNATURE)
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
May 15, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid, without taking into account the maximum initial sales charge in the
case of Class A shares or the applicable contingent deferred sales charge
imposed on redemptions in the case of Class B shares and Class C shares.
**Some income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders. Income may be subject to some state and local taxes for
non-Virginia residents.
***Annualized distribution rate per share is based upon dividends per share
paid from net investment income during the period, divided by the maximum
offering price, in the case of Class A shares, or the net asset value per
share, in the case of Class B and Class C shares, at the end of the period.
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES APRIL 30, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PREMIER STATE
MUNICIPAL BOND FUND, VIRGINIA SERIES CLASS A SHARES AND THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX
Dollars
$14,222
Lehman Brothers
Municipal Bond Index*
$13,810
Premier State Municipal
Bond Fund, Virginia
Series (Class A Shares)
*Source: Lehman Brothers
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
CLASS A SHARES CLASS B SHARES
% Return Reflecting
% Return Applicable Contingent
Reflecting % Return Deferred Sales
% Return Without Maximum Initial Assuming No Charge Upon
PERIOD ENDED 4/30/96 Sales Charge Sales Charge (4.5%) PERIOD ENDED 4/30/96 Redemption Redemption*
<S> <C> <C> <C> <C> <C>
1 Year 7.32% 2.46% 1 Year 6.77% 3.76%
From Inception (8/1/91) 8.08 7.03 From Inception (1/15/93) 5.50 4.96
</TABLE>
ACTUAL AGGREGATE TOTAL RETURNS
CLASS C SHARES
% Return Reflecting
Applicable Contingent
% Return Deferred Sales
Assuming No Charge Upon
PERIOD ENDED 4/30/96 Redemption Redemption**
From Inception (8/15/95) 4.02% 3.02%
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Class A shares of
Premier State Municipal Bond Fund, Virginia Series on 8/1/91 (Inception Date)
to a $10,000 investment made in the Lehman Brothers Municipal Bond Index on
that date. For comparative purposes, the value of the Index on 7/31/91 is
used as the beginning value on 8/1/91. All dividends and capital gain
distributions are reinvested. Performance for Class B and Class C shares will
vary from the performance of Class A shares shown above due to differences in
charges and expenses.
The Series invests primarily in Virginia municipal securities and its
performance shown in the line graph takes into account the maximum initial
sales charge on Class A shares and all other applicable fees and expenses.
Unlike the Series, the Lehman Brothers Municipal Bond Index is an unmanaged
total return performance benchmark for the long-term, investment-grade,
geographically unrestricted tax exempt bond market, calculated by using
municipal bonds selected to be representative of the municipal market
overall. The Index does not take into account charges, fees and other
expenses. Also, unlike the Fund which principally limits investments to
Virginia municipal obligations, the Index is not State specific. These
factors can contribute to the Index potentially outperforming the Series.
Further information relating to Series performance, including expense
reimbursements, if applicable, is contained in the Financial Highlights
section of the Prospectus and elsewhere in this report.
* Maximum contingent deferred sales charge for Class B shares is 3% and is
reduced to 0% after five years.
**Maximum contingent deferred sales charge for Class C shares is 1% within
one year of the date of purchase.
<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
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE
________________ ______________
U. S. RELATED (CONTINUED)
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>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each year indicated. This
information has been derived from the Series' financial statements.
CLASS A SHARES
_______________________________________________________________________
YEAR ENDED APRIL 30,
_______________________________________________________________________
PER SHARE DATA: 1992(1) 1993 1994 1995 1996
_____________ ___________ ___________ ____________ ___________
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........... $15.00 $15.50 $16.80 $16.02 $16.03
_____________ ___________ ___________ ____________ ___________
INVESTMENT OPERATIONS:
Investment income-net........................ .78 1.00 .97 .94 .93
Net realized and unrealized gain (loss)
on investments............................. .50 1.31 (.75) .04 .24
_____________ ___________ ___________ ____________ ___________
TOTAL FROM INVESTMENT OPERATIONS........... 1.28 2.31 .22 .98 1.17
_____________ ___________ ___________ ____________ ___________
DISTRIBUTIONS:
Dividends from investment income-net......... (.78) (1.00) (.97) (.94) (.93)
Dividends from net realized gain on investments - (.01) (.01) - -
Dividends in excess of net realized gain
on investments............................. - - (.02) (.03) -
_____________ ___________ ___________ ____________ ___________
TOTAL DISTRIBUTIONS........................ (.78) (1.01) (1.00) (.97) (.93)
_____________ ___________ ___________ ____________ ___________
Net asset value, end of year................. $15.50 $16.80 $16.02 $16.03 $16.27
============= =========== =========== ============ ===========
TOTAL INVESTMENT RETURN(2)....................... 11.54%(3) 15.32% 1.10% 6.39% 7.32%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets...... - .27% .46% .39% .50%
Ratio of net investment income to average net assets 6.42%(3) 6.02% 5.64% 5.93% 5.58%
Decrease reflected in above expense ratios due
to undertakings by the Manager............. 1.22%(3) .76% .55% .55% .55%
Portfolio Turnover Rate...................... 5.96%(4) 9.32% 30.69% 21.60% 50.06%
Net Assets, end of year (000's Omitted)...... $23,096 $55,627 $65,279 $62,428 $61,149
(1) From August 1, 1991 (commencement of operations) to April 30, 1992.
(2) Exclusive of sales load.
(3) Annualized.
(4) Not annualized.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
FINANCIAL HIGHLIGHTS (CONTINUED)
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each year indicated. This
information has been derived from the Series' financial statements.
CLASS B SHARES CLASS C SHARES
______________________________________ _________________________
YEAR ENDED
YEAR ENDED APRIL 30, APRIL 30,
______________________________________
PER SHARE DATA: 1993(1) 1994 1995 1996 1996(2)
_________ ________ ________ ________ _________________________
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $16.25 $16.80 $16.02 $16.03 $16.17
_________ ________ ________ ________ _________________________
INVESTMENT OPERATIONS:
Investment income-net................. .26 .88 .85 .84 .57
Net realized and unrealized gain
(loss) on investments............... .55 (.75) .04 .24 .09
_________ ________ ________ ________ _________________________
TOTAL FROM INVESTMENT OPERATIONS.... .81 .13 .89 1.08 .66
_________ ________ ________ ________ _________________________
DISTRIBUTIONS:
Dividends from investment income-net.. (.26) (.88) (.85) (.84) (.57)
Dividends from net realized gain
on investments...................... - (.01) - - -
Dividends in excess of net realized gain
on investments...................... - (.02) (.03) - -
_________ ________ ________ ________ _________________________
TOTAL DISTRIBUTIONS................. (.26) (.91) (.88) (.84) (.57)
_________ ________ ________ ________ _________________________
Net asset value, end of year.......... $16.80 $16.02 $16.03 $16.27 $16.26
========= ======== ======== ======== =========================
TOTAL INVESTMENT RETURN(3)................ 17.22%(4) .54% 5.83% 6.77% 5.64%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets.......................... .83%(4) 1.01% .90% 1.01% 1.21%(4)
Ratio of net investment income to
average net assets.................. 4.62%(4) 5.02% 5.40% 5.06% 4.55%(4)
Decrease reflected in above expense ratios
due to undertakings by the Manager.. .54%(4) .54% .55% .55% .52%(4)
Portfolio Turnover Rate............... 9.32% 30.69% 21.60% 50.06% 50.06%
Net Assets, end of year (000's Omitted) $8,402 $25,254 $28,813 $33,120 $166
(1) From January 15, 1993 (commencement of initial offering) to April 30, 1993.
(2) From August 15, 1995 (commencement of initial offering) to April 30, 1996.
(3) Exclusive of sales load.
(4) Annualized.
See notes to financial statements
</TABLE>
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
PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Series hereby designates all the
dividends paid from investment income-net during the fiscal year ended April
30, 1996 as "exempt-interest dividends" (not subject to regular Federal and,
for individuals who are Virginia residents, Virginia personal income taxes).
As required by Federal tax law rules, shareholders will receive
notification of their portion of the Series' taxable ordinary dividends (if
any) and capital gain distributions (if any) paid for the 1996 calendar year
on Form 1099-DIV which will be mailed by January 31, 1997.
PREMIER STATE MUNICIPAL
BOND FUND, VIRGINIA SERIES
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
One American Express Plaza
Providence, RI 02903
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 066/625AR964
(Dreyfus Logo)
Annual Report
Premier State
Municipal Bond Fund
Virginia Series
April 30, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
CLASS A SHARES AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
EXHIBIT A:
____________________________________________________
| | | PREMIER STATE |
| | LEHMAN BROTHERS |MUNICIPAL BOND FUND, |
| PERIOD | MUNICIPAL | VIRGINIA SERIES |
| | BOND INDEX * | (CLASS A SHARES) |
|-----------|-----------------|---------------------|
| 8/1/91 | 10,000 | 9,548 |
| 4/30/92 | 10,734 | 10,375 |
| 4/30/93 | 12,092 | 11,965 |
| 4/30/94 | 12,353 | 12,097 |
| 4/30/95 | 13,175 | 12,869 |
| 4/30/96 | 14,222 | 13,810 |
|---------------------------------------------------|
*Source: Lehman Brothers
