File Nos. 33-10238
811-4906
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 29 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 29 [X]
(Check appropriate box or boxes.)
DREYFUS PREMIER STATE MUNICIPAL BOND FUND
(Exact Name of Registrant as Specified in Charter)
c/o The Dreyfus Corporation
200 Park Avenue, New York, New York 10166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 922-6000
Mark N. Jacobs, Esq.
200 Park Avenue
New York, New York 10166
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
----
On July 16, 1997 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a)(i)
----
on (date) pursuant to paragraph (a)(i)
----
75 days after filing pursuant to paragraph (a)(ii)
----
on (date) pursuant to paragraph (a)(ii) of Rule 485
----
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
----
Registrant has registered an indefinite number of shares of its
beneficial interest under the Securities Act of 1933 pursuant to
Section 24(f) of the Investment Company Act of 1940. Registrant's Rule
24f-2 Notice for the fiscal year ended April 30, 1997 was filed on June 30,
1997.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND
Cross-Reference Sheet Pursuant to Rule 495(a)
Items in
Part A of
Form N-1A Caption Page
_________ _______ ____
1 Cover Page Cover
2 Synopsis 3
3 Condensed Financial Information 6
4 General Description of Registrant 32
5 Management of the Fund 38
5(a) Management's Discussion of Fund's Performance *
6 Capital Stock and Other Securities 61
7 Purchase of Securities Being Offered 40
8 Redemption or Repurchase 47
9 Pending Legal Proceedings *
Items in
Part B of
Form N-1A
- ---------
10 Cover Page Cover
11 Table of Contents Cover
12 General Information and History B-1, B-42
13 Investment Objectives and Policies B-2
14 Management of the Fund B-13
15 Control Persons and Principal B-17
Holders of Securities
16 Investment Advisory and Other B-18
Services
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND
Cross-Reference Sheet Pursuant to Rule 495(a) (continued)
Items in
Part B of
Form N-1A Caption Page
_________ _______ _____
17 Brokerage Allocation B-33
18 Capital Stock and Other Securities B-33
19 Purchase, Redemption and Pricing B-21, B-26
of Securities Being Offered B-30
20 Tax Status B-31
21 Underwriters B-20
22 Calculations of Performance Data B-33
23 Financial Statements B-106
Items in
Part C of
Form N-1A
_________
24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under C-3
Common Control with Registrant
26 Number of Holders of Securities C-3
27 Indemnification C-4
28 Business and Other Connections of C-5
Investment Adviser
29 Principal Underwriters C-11
30 Location of Accounts and Records C-14
31 Management Services C-14
32 Undertakings C-14
_____________________________________
NOTE: * Omitted since answer is negative or inapplicable.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND
PROSPECTUS JULY 16, 1997
Dreyfus 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 July 16, 1997, 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, and 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....................... 31
DESCRIPTION OF THE FUND............................ 32
MANAGEMENT OF THE FUND............................. 38
HOW TO BUY SHARES.................................. 40
SHAREHOLDER SERVICES............................... 44
HOW TO REDEEM SHARES............................... 47
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES PLAN.... 52
DIVIDENDS, DISTRIBUTIONS AND TAXES................. 52
PERFORMANCE INFORMATION............................ 60
GENERAL INFORMATION................................ 61
APPENDIX........................................... 63
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..................... .38% .40% .40% .37% .37% .67%
Total Fund Operating Expenses...... .93% 1.45% 1.70% .92% 1.42% 1.97%
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** $54 $ 73 $75/45** $62
5 YEARS.......................... $ 94 $99/79** $92 $ 94 $98/78** $106
10 YEARS......................... $154 $147*** $201 $153 $144*** $230
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................. .43% .42% .50% .35% .38% .34%
Total Fund Operating Expenses.. .98% 1.47% 1.80% .90% 1.43% 1.64%
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 $55/15** $27/17**
3 YEARS.......................... $ 75 $76/46** $57 $ 72 $75/45** $52
5 YEARS.......................... $ 97 $100/80** $97 $ 93 $98/78** $89
10 YEARS......................... $160 $150*** $212 $151 $144*** $194
*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% .35% .36% .37% .42%
Total Fund Operating Expenses.. .92% 1.43% 1.65% .91% 1.42% 1.72%
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** $27/17**
3 YEARS....................... $ 73 $75/45** $52 $ 73 $75/45** $54
5 YEARS....................... $ 94 $98/78** $90 $ 93 $98/78** $93
10 YEARS...................... $153 $145*** $195 $152 $144*** 203
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................. .36% .39% .37% .75% .73% 1.43%
Total Fund Operating Expenses.. .91% 1.44% 1.67% 1.30% 1.78% 2.73%
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 CLASS A CLASS B CLASS C
-------- -------- -------- -------- -------- --------
1 Year........................ $ 54 $55/15** $27/17** $58 $58/18** $38/28**
3 Years....................... $ 73 $76/46** $53 $84 $86/56** $85
5 Years....................... $ 93 $99/79** $91 $113 $116/96* $144
10 Years...................... $152 $145*** $198 $195 $185*** $306
*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.................. .49% .49% .47% .36% .37% .34%
Total Fund Operating Expenses... 1.04% 1.54% 1.77% .91% 1.42% 1.64%
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 $56/16** $28/18** $ 54 $54/14** $27/17**
3 Years....................... $ 77 $79/49** $56 $ 73 $75/45** $52
5 Years....................... $100 $104/84** $96 $ 93 $98/78** $89
10 Years...................... $166 $158*** $208 $152 $144*** $194
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% .53% .37% .38% .43%
Total Fund Operating Expenses... .92% 1.43% 1.83% .92% 1.43% 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 CLASS A CLASS B CLASS C
-------- -------- -------- -------- -------- --------
1 Year........................ $ 54 $55/15** $29/19** $ 54 $55/15** $28/18**
3 Years....................... $ 73 $75/45** $58 $ 73 $75/45** $54
5 Years....................... $ 94 $98/78** $99 $ 94 $98/78** $94
10 Years...................... $153 $145*** $215 $153 $145*** $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.
</TABLE>
Page 5
<TABLE>
<CAPTION>
VIRGINIA SERIES
----------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C
-------- -------- --------
<S> <C> <C> <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...................................... .39% .40% .41%
Total Fund Operating Expenses....................... .94% 1.45% 1.71%
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............................................. $ 54 $55/15** $27/17**
3 Years............................................ $ 74 $76/46** $54
5 Years............................................ $ 95 $99/79** $93
10 Years........................................... $155 $147*** $202
*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.
</TABLE>
- ------------------------------------------------------------------------------
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. 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 for
each period indicated. This information has been derived from the Series'
financial statements.
<TABLE>
<CAPTION>
CONNECTICUT SERIES
-------------------------------------------------------------------------------------------------------
Class A Shares
-------------------------------------------------------------------------------------------------------
Year Ended April 30,
-------------------------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996 1997
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<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 11.90
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net .76 .81 .80 .77 .72 .71 .68 .67 .66 .64
Net realized and
unrealized gain (loss)
on investments (.28) .38 (.15) .40 .17 .81 (.42) (.05) .14 .16
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS.. .48 1.19 .65 1.17 .89 1.52 .26 .62 .80 .80
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment
income_net.. (.76) (.81) (.80) (.77) (.72) (.71) (.68) (.67) (.66) (.64)
Dividends from net
realized gain
on investments _ (.05) (.02) _ _ _ (.03) _ _ (.25)
Dividends in excess
of net realized gain
on investments _ _ _ _ _ _ _ _ _ _
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (.76) (.86) (.82) (.77) (.72) (.71) (.71) (.67) (.66) (.89)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value,
end of year. $10.72 $11.05 $10.88 $11.28 $11.45 $12.26 $11.81 $11.76 $11.90 $11.81
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT
RETURN(2)... 5.00%(3) 11.54% 5.93% 11.10% 8.14% 13.62% 1.92% 5.47% 6.85% 6.84%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets _ _ _ .21% .52% .69% .80% .89% .92% .93%
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% 5.32%
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% 30.66%
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 $313,881
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
</TABLE>
Page 7
<TABLE>
<CAPTION>
CONNECTICUT SERIES (CONTINUED)
---------------------------------------------------------------------------------------
Class B Shares Class C Shares
------------------------------------------- ----------------------------------
Year Ended APRIL 30, Year Ended APRIL 30,
------------------------------------------- ----------------------------------
1993(1) 1994 1995 1996 1997 1996(2) 1997
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of year $11.89 $12.26 $11.80 $11.76 $11.89 $11.84 $11.89
------- ------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income_net....... .18 .61 .61 .60 .57 .40 .54
Net realized and unrealized
gain (loss) on investments..... .37 (.43) (.04) .13 .16 .05 .15
------- ------- ------- ------- ------- ------- -------
Total from Investment Operations .55 .18 .57 .73 .73 .45 .69
------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment
income_net (.18) (.61) (.61) (.60) (.57) (.40) (.54)
Dividends from net realized gain
on investments............... _ (.03) _ _ (.25) _ (.25)
------- ------- ------- ------- ------- ------- -------
Total Distributions.......... (.18) (.64) (.61) (.60) (.82) (.40) (.79)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of year. $12.26 $11.80 $11.76 $11.89 $11.80 $11.89 $11.79
------ ------- ------- ------- ------- ------- -------
TOTAL INVESTMENT RETURN(3).... 16.08%(4) 1.26% 4.99% 6.20% 6.28% 5.31%(4) 5.93%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets 1.12%(4) 1.36% 1.41% 1.44% 1.45% 1.64%(4) 1.70%
Ratio of net investment income to
average net assets.......... 4.57%(4) 4.78% 5.21% 4.92% 4.79% 4.31%(4) 4.56%
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% 30.66% 28.83% 30.66%
Net Assets, end of year
(000's omitted) $9,492 $32,246 $35,425 $38,838 $54,661 $1,007 $1,290
(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.
</TABLE>
Page 8
<TABLE>
<CAPTION>
FLORIDA SERIES
-------------------------------------------------------------------------------------------------------
Class A Shares
-------------------------------------------------------------------------------------------------------
Year Ended April 30,
-------------------------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996 1997
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $12.00 $12.85 $13.48 $13.34 $13.93 $14.33 $15.02 $14.43 $14.51 $14.48
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net .92 1.02 1.02 .99 .95 .92 .85 .81 .79 .76
Net realized and
unrealized gain (loss)
on investments .85 .63 (.11) .61 .41 .86 (.51) .12 .17 (.08)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS.. 1.77 1.65 .91 1.60 1.36 1.78 .34 .93 .96 .68
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment
income-net.. (.92) (1.02) (1.02) (.99) (.95) (.92) (.85) (.81) (.79) (.76)
Dividends from net realized
gain on investments _ _ (.03) (.02) (.01) (.17) (.04) (.04) (.20) (.34)
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) (1.10)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value,
end of year. $12.85 $13.48 $13.34 $13.93 $14.33 $15.02 $14.43 $14.51 $14.48 $14.06
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT
RETURN(2.... 16.24%(3) 13.32% 6.83% 12.40% 10.09% 12.84% 2.14% 6.71% 6.63% 4.74%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets _ _ _ .21% .52% .69% .80% .90% .91% .92%
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% 5.27%
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% 71.68%
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 $202,503
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
</TABLE>
Page 9
<TABLE>
<CAPTION>
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 1997 1996(2) 1997
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $14.59 $15.01 $14.42 $14.51 $14.47 $14.65 $14.47
------- ------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net........ .24 .77 .73 .71 .69 .48 .65
Net realized and unrealized
gain (loss)
on investments............... .42 (.51) .13 .16 (.08) .02 (.08)
------- ------- ------- ------- ------- ------- -------
Total from Investment Operations .66 .26 .86 .87 .61 .50 .57
------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment
income-net (.24) (.77) (.73) (.71) (.69) (.48) (.65)
Dividends from net
realized gain
on investments............... _ (.04) (.04) (.20) (.34) (.20) (.34)
Dividends in excess of
net realized gain
on investments............... _ (.04) _ _ _ _ _
------- ------- ------- ------- ------- ------- -------
Total Distributions.......... (.24) (.85) (.77) (.91) (1.03) (.68) (.99)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of year. $15.01 $14.42 $14.51 $14.47 $14.05 $14.47 $14.05
======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)..... 15.60%(4) 1.54% 6.21% 6.01% 4.21% 4.69%(4) 3.95%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets 1.12%(4) 1.34% 1.41% 1.41% 1.42% 1.99%(4) 1.97%
Ratio of net investment income to
average net assets........... 4.87%(4) 4.91% 5.13% 4.77% 4.76% 4.20%(4) 4.60%
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% 71.68% 54.37% 71.68%
Net Assets, end of year
(000's omitted) $5,916 $22,476 $25,282 $27,023 $35,802 $35 $58
(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.
</TABLE>
Page 10
<TABLE>
<CAPTION>
GEORGIA SERIES
--------------------------------------------------
Class A Shares
--------------------------------------------------
Year Ended APRIL 30,
--------------------------------------------------
PER SHARE DATA: 1993(1) 1994 1995 1996 1997
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......... $12.50 $13.27 $12.69 $12.80 $13.05
------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net....................... .51 .73 .73 .66 .62
Net realized and unrealized gain (loss) on investments .77 (.58) .11 .25 .17
------- ------- ------- ------- -------
Total from Investment Operations............ 1.28 .15 .84 .91 .79
------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment income-net........ (.51) (.73) (.73) (.66) (.62)
------- ------- ------- ------- -------
Net asset value, end of year................ $13.27 $12.69 $12.80 $13.05 $13.22
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(4).................... 15.91%(3) .97% 6.87% 7.14% 6.16%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets..... _ .07% .25% .74% .98%
Ratio of net investment income to
average net assets 5.55%(3) 5.41% 5.80% 5.00% 4.71%
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%(3) 1.02% .78% .21% _
Portfolio Turnover Rate..................... 37.79%(4) 6.76% 34.04% 33.09% 50.96%
Net Assets, end of year (000's omitted)..... $7,304 $10,058 $8,985 $8,346 $6,598
(1)From September 3, 1992 (commencement of operations) to April 30, 1993.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
</TABLE>
<TABLE>
<CAPTION>
GEORGIA SERIES (continued)
----------------------------------------------------------------------------------------------
Class B Shares Class C Shares
------------------------------------------------------ ----------------------------------
Year Ended APRIL 30, Year Ended APRIL 30,
------------------------------------------------------ ----------------------------------
PER SHARE DATA: 1993(1) 1994 1995 1996 1997 1996(2) 1997
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $12.71 $13.27 $12.69 $12.80 $13.06 $12.85 $13.05
------- ------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net........ .20 .67 .66 .59 .56 .38 .51
Net realized and unrealized
gain (loss)
on investments............... .56 (.58) .11 .26 .16 .20 .17
------- ------- ------- ------- ------- ------- -------
Total from Investment Operations .76 .09 .77 .85 .72 .58 .68
------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment
income-net (.20) (.67) (.66) (.59) (.56) (.38) (.51)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of year. $13.27 $12.69 $12.80 $13.06 $13.22 $13.05 $13.22
======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN(3)..... 20.66%(4) .46% 6.33% 6.69% 5.55% 6.28%(4) 5.30%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets .50%(4) .58% .75% 1.24% 1.47% 1.98%(4) 1.80%
Ratio of net investment income to
average net assets......... 4.60%(4) 4.85% 5.27% 4.46% 4.20% 3.73%(4) 3.87%
Decrease reflected in above
expense ratios due to
undertakings by The Dreyfus
Corporation (limited to the
expense limitation provision
of the Management
Agreement). 1.37%(4) 1.02% .80% .20% _ _ _
Portfolio Turnover Rate.... 37.79% 6.76% 34.04% 33.09% 50.96% 33.09% 50.96%
Net Assets, end of year
(000's omitted) $6,319 $16,243 $19,429 $20,106 $18,211 $88 $105
(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.
</TABLE>
Page 11
<TABLE>
<CAPTION>
MARYLAND SERIES
-------------------------------------------------------------------------------------------------------
Class A Shares
-------------------------------------------------------------------------------------------------------
Year Ended April 30,
-------------------------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996 1997
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $12.50 $11.38 $11.72 $11.61 $12.13 $12.43 $13.02 $12.46 $12.54 $12.69
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS:
Investment income-net .80 .87 .86 .85 .79 .76 .73 .70 .67 .68
Net realized and
unrealized gain (loss)
on investments (1.12) .34 (.09) .53 .35 .68 (.53) .08 .23 .18
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS.. (.32) 1.21 .77 1.38 1.14 1.44 .20 .78 .90 .86
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from investment
income-net.. (.80) (.87) (.86) (.85) (.79) (.76) (.73) (.70) (.67) (.68)
Dividends from
net realized gain
on investments _ _ (.02) (.01) (.05) (.09) (.03) _ (.08) (.17)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (.80) (.87) (.88) (.86) (.84) (.85) (.76) (.70) (.75) (.85)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
end of year. $11.38 $11.72 $11.61 $12.13 $12.43 $13.02 $12.46 $12.54 $12.69 $12.70
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT
RETURN(2)... (2.50%)(3) 11.05% 6.69% 12.24% 9.68% 11.93% 1.33% 6.52% 7.24% 6.91%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets _ _ _ .21% .53% .69% .80% .90% .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% 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% 1.11% .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% 43.63%
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 $266,658
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) Exclusive of sales load.
(3) Annualized.
(4) Not annualized.
</TABLE>
Page 12
<TABLE>
<CAPTION>
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 1997 1996(2) 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $12.64 $13.02 $12.46 $12.54 $12.69 $12.67 $12.69
---- ---- ---- ---- ---- ---- ----
INVESTMENT OPERATIONS:
Investment income-net.. ...... .20 .65 .63 .61 .61 .41 .58
Net realized and unrealized gain (loss)
on investments............... .38 (.53) .08 .23 .18 .10 .19
---- ---- ---- ---- ---- ---- ----
Total from Investment Operations .58 .12 .71 .84 .79 .51 .77
---- ---- ---- ---- ---- ---- ----
DISTRIBUTIONS:
Dividends from investment income-net (.20) (.65) (.63) (.61) (.61) (.41) (.58)
Dividends from net realized gain on investments _ (.03) _ (.08) (.17) (.08) (.17)
Dividends in excess of net realized gain
on investments............... _ _ _ _ _ _ _
---- ---- ---- ---- ---- ---- ----
Total Distributions.......... (.20) (.68) (.63) (.69) (.78) (.49) (.75)
---- ---- ---- ---- ---- ---- ----
Net asset value, end of year. $13.02 $12.46 $12.54 $12.69 $12.70 $12.69 $12.71
==== ==== ==== ==== ==== ==== ====
TOTAL INVESTMENT RETURN(3)..... 15.74%(4) .75% 5.94% 6.66% 6.34% 5.57%(4) 6.16%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.09%(4) 1.37% 1.44% 1.43% 1.43% 1.80%(4) 1.64%
Ratio of net investment income to
average net assets........... 4.55%(4) 4.82% 5.13% 4.68% 4.75% 4.59%(4) 4.47%
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% 43.63% 41.65% 43.63%
Net Assets, end of year (000's omitted) $5,931 $30,527 $35,090 $41,179 $45,329 $27 $202
(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.
</TABLE>
Page 13
<TABLE>
<CAPTION>
MASSACHUSETTS SERIES
----------------------------------------------------------------------------------------------
Class A Shares
----------------------------------------------------------------------------------------------
Year Ended April 30,
----------------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996 1997
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $11.50 $10.54 $10.92 $10.69 $11.05 $11.41 $12.13 $11.64 $11.53 $11.50
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
INVESTMENT OPERATIONS:
Investment income-net .76 .83 .82 .79 .75 .73 .71 .69 .66 .63
Net realized and
unrealized gain (loss)
on investments (.96) .38 (.23) .37 .36 .73 (.44) (.06) _ .17
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
TOTAL FROM INVESTMENT
OPERATIONS.. (.20) 1.21 .59 1.16 1.11 1.46 .27 .63 .66 .80
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
DISTRIBUTIONS:
Dividends from investment
income-net.. (.76) (.83) (.82) (.79) (.75) (.73) (.71) (.69) (.66) (.63)
Dividends from net realized
gain on investments _ _ _ (.01) _ (.01) (.05) _ (.03) (.27)
Dividends in excess
of net realized gain
on investments _ _ _ _ _ _ _ (.05) _ _
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
TOTAL DISTRIBUTIONS (.76) (.83) (.82) (.80) (.75) (.74) (.76) (.74) (.69) (.90)
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
Net asset value,
end of year. $10.54 $10.92 $10.69 $11.05 $11.41 $12.13 $11.64 $11.53 $11.50 $11.40
=== === === === === === === === === ===
TOTAL INVESTMENT
RETURN(2)... (1.67%)(3) 11.91% 5.49% 11.23% 10.32% 13.14% 2.08% 5.72% 5.69% 7.08%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets _ _ _ .19% .55% .69% .82% .94% .92% .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% 5.46%
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% 24.45%
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 $65,809
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
</TABLE>
Page 14
<TABLE>
<CAPTION>
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 1997 1996(2) 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.79 $12.13 $11.63 $11.52 $11.49 $11.59 $11.48
---- ---- ---- ---- ---- ---- ----
INVESTMENT OPERATIONS:
Investment income-net........ .19 .64 .63 .60 .57 .40 .54
Net realized and unrealized gain (loss)
on investments............... .34 (.45) (.06) _ .18 (.08) .20
---- ---- ---- ---- ---- ---- ----
Total from Investment Operations .53 .19 .57 .60 .75 .32 .74
---- ---- ---- ---- ---- ---- ----
DISTRIBUTIONS:
Dividends from investment income-net (.19) (.64) (.63) (.60) (.57) (.40) (.54)
Dividends from net realized gain on investments _ (.05) _ (.03) (.27) (.03) (.27)
Dividends in excess of net realized gain
on investments............... _ _ (.05) _ _ _ _
---- ---- ---- ---- ---- ---- ----
Total Distributions.......... (.19) (.69) (.68) (.63) (.84) (.43) (.81)
---- ---- ---- ---- ---- ---- ----
Net asset value, end of year. $12.13 $11.63 $11.52 $11.49 $11.40 $11.48 $11.41
==== ==== ==== ==== ==== ==== ====
TOTAL INVESTMENT RETURN(3)..... 15.56%(4) 1.44% 5.15% 5.15% 6.63% 3.76%(4) 6.55%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.15%(4) 1.36% 1.45% 1.43% 1.43% 1.69%(4) 1.65%
Ratio of net investment income to
average net assets........... 4.92%(4) 5.18% 5.47% 5.03% 4.94% 4.72%(4) 4.64%
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% 24.45% 34.86% 24.45%
Net Assets, end of year (000's omitted) $1,066 $3,702 $4,220 $5,255 $6,064 $1 $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.
</TABLE>
Page 15
<TABLE>
<CAPTION>
MICHIGAN SERIES
----------------------------------------------------------------------------------------------
Class A Shares
----------------------------------------------------------------------------------------------
Year Ended April 30,
----------------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996 1997
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $13.00 $13.45 $14.10 $13.80 $14.34 $14.80 $15.65 $15.2 7$15.14 $15.15
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
INVESTMENT OPERATIONS:
Investment income-net 1.00 1.07 1.05 1.01 .95 .92 .89 .85 .83 .81
Net realized and
unrealized gain (loss)
on investments .45 .65 (.27) .54 .46 .98 (.30) .11 .20 .21
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
TOTAL FROM INVESTMENT
OPERATIONS.. 1.45 1.72 .78 1.55 1.41 1.90 .59 .96 1.03 1.02
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
DISTRIBUTIONS:
Dividends from investment
income-net.. (1.00) (1.07) (1.05) (1.01) (.95) (.92) (.89) (.85) (.83) (.81)
Dividends from net
realized gain
on investments _ _ (.03) _ _ (.13) (.08) (.24) (.19) (.22)
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
TOTAL DISTRIBUTIONS (1.00) (1.07) (1.08) (1.01) (.95) (1.05) (.97) (1.09) (1.02) (1.03)
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
Net asset value,
end of year. $13.45 $14.10 $13.80 $14.34 $14.80 $15.65 $15.27 $15.14 $15.15 $15.14
=== === === === === === === === === ===
TOTAL INVESTMENT
RETURN(2)... 12.32%(3) 13.25% 5.59% 11.61% 10.12% 13.25% 3.65% 6.65% 6.81% 6.89%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets _ _ _ .20% .53% .69% .81% .92% .93% .91%
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% 5.34%
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% 22.32%
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 $155,568
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
</TABLE>
Page 16
<TABLE>
<CAPTION>
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 1997 1996(2) 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $15.20 $15.64 $15.27 $15.13 $15.15 $15.18 $15.16
---- ---- ---- ---- ---- ---- ----
INVESTMENT OPERATIONS:
Investment income-net........ .24 .80 .77 .75 .74 .50 .69
Net realized and unrealized gain (loss)
on investments............... .44 (.29) .10 .21 .20 .17 .20
---- ---- ---- ---- ---- ---- ----
Total from Investment Operations .68 .51 .87 .96 .94 .67 .89
---- ---- ---- ---- ---- ---- ----
DISTRIBUTIONS:
Dividends from investment income-net (.24) (.80) (.77) (.75) (.74) (.50) (.69)
Dividends from net realized gain on investments _ (.08) (.24) (.19) (.22) (.19) (.22)
---- ---- ---- ---- ---- ---- ----
Total Distributions.......... (.24) (.88) (1.01) (.94) (.96) (.69) (.91)
---- ---- ---- ---- ---- ---- ----
Net asset value, end of year. $15.64 $15.27 $15.13 $15.15 $15.13 $15.16 $15.14
==== ==== ==== ==== ==== ==== ====
TOTAL INVESTMENT RETURN(3)..... 15.50%(4) 3.11% 6.01% 6.33% 6.27% 6.12%(4) 5.94%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.18%(4) 1.38% 1.44% 1.44% 1.42% 1.70%(4) 1.72%
Ratio of net investment income to
average net assets........... 4.85%(4) 4.88% 5.10% 4.82% 4.82% 4.47%(4) 4.47%
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% 22.32% 56.88% 22.32%
Net Assets, end of year (000's omitted) $3,581 $13,861 $16,471 $19,031 $19,338 $133 $241
(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.
</TABLE>
Page 17
<TABLE>
<CAPTION>
MINNESOTA SERIES
----------------------------------------------------------------------------------------------
Class A Shares
----------------------------------------------------------------------------------------------
Year Ended April 30,
----------------------------------------------------------------------------------------------
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996 1997
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $13.50 $13.37 $13.92 $13.74 $14.28 $14.63 $15.31 $14.72 $14.90 $14.98
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
INVESTMENT OPERATIONS:
Investment income-net .97 1.07 1.04 1.02 .96 .92 .87 .83 .82 .82
Net realized and
unrealized gain(loss)
on investments (.13) .55 (.13) .56 .36 .77 (.53) .18 .08 .09
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
TOTAL FROM INVESTMENT
OPERATIONS.. .84 1.62 .91 1.58 1.32 1.69 .34 1.01 .90 .91
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
DISTRIBUTIONS:
Dividends from investment
income-net.. (.97) (1.07) (1.04) (1.02) (.96) (.92) (.87) (.83) (.82) (.82)
Dividends from
net realized gain
on investments _ _ (.05) (.02) (.01) (.09) (.06) _ _ (.04)
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
TOTAL DISTRIBUTIONS (.97) (1.07) (1.09) (1.04) (.97) (1.01) (.93) (.83) (.82) (.86)
___ ___ ___ ___ ___ ___ ___ ___ ___ ___
Net asset value,
end of year. $13.37 $13.92 $13.74 $14.28 $14.63 $15.31 $14.72 $14.90 $14.98 $15.03
=== === === === === === === === === ===
TOTAL INVESTMENT
RETURN(2)... 7.01%(3) 12.57% 6.67% 11.89% 9.45% 11.96% 2.08% 7.14% 6.11% 6.16%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets _ _ _ .20% .53% .69% .80% .90% .90% .91%
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% 5.42%
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% 25.82%
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 $129,031
(1)From May 28, 1987 (commencement of operations) to April 30, 1988.
(2)Exclusive of sales load.
(3)Annualized.
(4)Not annualized.
</TABLE>
Page 18
<TABLE>
<CAPTION>
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 1997 1996(2) 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $14.86 $15.32 $14.74 $14.92 $15.01 $14.96 $15.01
---- ---- ---- ---- ---- ---- ----
INVESTMENT OPERATIONS:
Investment income-net........ .24 .78 .75 .74 .74 .50 .70
Net realized and unrealized gain (loss)
on investments............... .46 (.52) .18 .09 .09 .05 .09
---- ---- ---- ---- ---- ---- ----
Total from Investment Operations .70 .26 .93 .83 .83 .55 .79
---- ---- ---- ---- ---- ---- ----
DISTRIBUTIONS:
Dividends from investment income-net (.24) (.78) (.75) (.74) (.74) (.50) (.70)
Dividends from net realized gain on investments _ (.06) _ _ (.04) _ (.04)
---- ---- ---- ---- ---- ---- ----
Total Distributions.......... (.24) (.84) (.75) (.74) (.78) (.50) (.74)
---- ---- ---- ---- ---- ---- ----
Net asset value, end of year. $15.32 $14.74 $14.92 $15.01 $15.06 $15.01 $15.06
==== ==== ==== ==== ==== ==== ====
TOTAL INVESTMENT RETURN(3)..... 16.32%(4) 1.55% 6.57% 5.62% 5.60% 5.15%(4) 5.34%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.16%(4) 1.38% 1.44% 1.43% 1.44% 1.42%(4) 1.67%
Ratio of net investment income to
average net assets........... 4.83%(4) 4.91% 5.13% 4.87% 4.90% 4.00%(4) 4.62%
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% 25.82% 35.47% 25.82%
Net Assets, end of year (000's omitted) $4,633 $21,004 $23,217 $25,617 $26,004 $373 $307
(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.
</TABLE>
Page 19
<TABLE>
<CAPTION>
NEW JERSEY SERIES*
------------------------------------------------------------------
CLASS A SHARES
------------------------------------------------------------------
Year Ended July 31, Nine Months Ended
--------------------------------
PER SHARE DATA: 1994(1) 1995 1996 APRIL 30, 1997(2)
------- ------- ----- ---------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year.. $12.50 $12.58 $12.71 $12.79
---- ---- ---- ----
INVESTMENT OPERATIONS:
Investment income-net............... .18 .71 .59 .42
Net realized and unrealized gain (loss)
on investments...................... .08 .13 .08 (.02)
---- ---- ---- ----
TOTAL FROM INVESTMENT OPERATIONS.... .26 .84 .67 .40
---- ---- ---- ----
DISTRIBUTIONS:
Dividends from investment income-net (.18) (.71) (.59) (.42)
Dividends from net realized gain on investments _ _ _ (.14)
---- ---- ---- ----
TOTAL DISTRIBUTIONS................. (.18) (.71) (.59) (.56)
---- ---- ---- ----
Net asset value, end of year........ $12.58 $12.71 $12.79 $12.63
==== ==== ==== ====
TOTAL INVESTMENT RETURN(3)............ 2.07%(4) 7.01% 5.31% 4.25%(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets _ .10% 1.14% 1.20%(5)
Ratio of net investment income to
average net assets.................. 5.25%(5) 5.60% 4.55% 4.39%(5)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to
the expense limitation provision of the
Management Agreement)................. 2.50%(5) 1.35% .08% .10%(5)
Portfolio Turnover Rate............. _ 43.48% 28.14% 110.12%(4)
Net Assets, end of year (000's omitted) $2,318 $4,981 $5,212 $4,837
*On March 31, 1997, the New Jersey Series commenced operations through a transfer of assets from the New Jersey
Series of Premier Insured Municipal Bond Fund. The financial data provided above prior to such date is for the New
Jersey Series of Premier Insured Municipal Bond Fund.
(1) From May 4, 1994 (commencement of operations) to July 31, 1994.
(2) Effective August 1, 1996, the Series has changed its fiscal year end from July 31 to April 30. The information provided
is from August 1, 1996 through April 30, 1997.
(3) Exclusive of sales load.
(4) Not annualized.
(5) Annualized.
</TABLE>
Page 20
<TABLE>
<CAPTION>
NEW JERSEY SERIES* (CONTINUED)
-----------------------------------------------------------------
CLASS B SHARES
-----------------------------------------------------------------
Year Ended July 31, Nine Months Ended
-------------------------------------
PER SHARE DATA: 1994(1) 1995 1996 APRIL 30, 1997(2)
------- ------- ----- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year.. $12.50 $12.58 $12.71 $12.79
---- ---- ---- ----
INVESTMENT OPERATIONS:
Investment income-net............... .16 .65 .52 .37
Net realized and unrealized gain (loss)
on investments...................... .08 .13 .08 (.02)
---- ---- ---- ----
TOTAL FROM INVESTMENT OPERATIONS.... .24 .78 .60 .35
---- ---- ---- ----
DISTRIBUTIONS:
Dividends from investment income-net (.16) (.65) (.52) (.37)
Dividends from net realized gain on investments _ _ _ (.14)
---- ---- ---- ----
TOTAL DISTRIBUTIONS................. (.16) (.65) (.52) (.51)
---- ---- ---- ----
Net asset value, end of year........ $12.58 $12.71 $12.79 $12.63
==== ==== ==== ====
TOTAL INVESTMENT RETURN(3)............ 1.94%(4) 6.48% 4.79% 3.74%(5)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .50%(5) .61% 1.63% 1.69%(5)
Ratio of net investment income to
average net assets.................. 4.69%(5) 5.00% 4.04% 3.88%(5)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to
the expense limitation provision of the
Management Agreement)................. 2.50%(5) 1.29% .08% .09%(5)
Portfolio Turnover Rate............. _ 43.48% 28.14% 110.12%(4)
Net Assets, end of year (000's omitted) $2,373 $6,852 $8,910 $8,680
*On March 31, 1997, the New Jersey Series commenced operations through a transfer of assets from the New Jersey
Series of Premier Insured Municipal Bond Fund. The financial data provided above prior to such date is for the New
Jersey Series of Premier Insured Municipal Bond Fund.
(1) From May 4, 1994 (commencement of operations) to July 31, 1994.
(2) Effective August 1, 1996, the Series has changed its fiscal year end from July 31 to April 30. The information provided
is from August 1, 1996 through April 30, 1997.
(3) Exclusive of sales load.
(4) Not annualized.
(5) Annualized.
</TABLE>
Page 21
<TABLE>
<CAPTION>
NEW JERSEY SERIES* (CONTINUED)
_________________________________________________________
CLASS C SHARES
_________________________________________________________
Year Ended July 31, Nine Months Ended
____________________
PER SHARE DATA: 1996(1) APRIL 30, 1997(2)
________ __________________
<S> <C> <C>
Net asset value, beginning of year.. $13.21 $12.78
__________ __________
INVESTMENT OPERATIONS:
Investment income-net............... .32 .35
Net realized and unrealized gain (loss)
on investments...................... (.43) __
__________ __________
TOTAL FROM INVESTMENT OPERATIONS.... (.11) .35
__________ __________
DISTRIBUTIONS:
Dividends from investment income-net (.32) (.35)
Dividends from net realized gain on investments __ (.14)
__________ __________
TOTAL DISTRIBUTIONS................. (.32) (.49)
__________ __________
Net asset value, end of year........ $12.78 $12.64
========== ============
TOTAL INVESTMENT RETURN(3)............ (1.21%)(4) 3.72%(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.95%(4) 1.97%(4)
Ratio of net investment income to
average net assets.................. 3.68%(4) 3.62%(4)
Decrease reflected in above expense ratios due to
undertakings by The Dreyfus Corporation (limited to
the expense limitation provision of the
Management Agreement)................. .02%(4) .76%(4)
Portfolio Turnover Rate............. 28.14% 110.12%(5)
Net Assets, end of year (000's omitted) $6 $1
*On March 31, 1997, the New Jersey Series commenced operations through a transfer of assets from the New Jersey
Series of Premier Insured Municipal Bond Fund. The financial data provided above prior to such date is for the New
Jersey Series of Premier Insured Municipal Bond Fund.
(1) From December 4, 1995 (commencement of initial offering) to July 31, 1996.
(2) Effective August 1, 1996, the Series has changed its fiscal year end from July 31 to April 30. The information provided
is from August 1, 1996 through April 30, 1997.
(3) Exclusive of sales load.
(4) Annualized.
(5) Not annualized.
</TABLE>
Page 22
<TABLE>
<CAPTION>
NORTH CAROLINA SERIES
_____________________________________________________________________________
Class A Shares
_____________________________________________________________________________
Year Ended APRIL 30,
_____________________________________________________________________________
PER SHARE DATA: 1992(1) 1993 1994 1995 1996 1997
________ ________ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year... $12.00 $12.39 $13.40 $12.73 $12.72 $12.91
________ ________ ________ ________ ________ ________
INVESTMENT OPERATIONS:
Investment income-net................ .62 .78 .74 .70 .67 .67
Net realized and unrealized gain (loss)
on investments .39 1.02 (.67) (.01) .19 .32
________ ________ ________ ________ ________ ________
Total from Investment Operations..... 1.01 1.80 .07 .69 .86 .99
________ ________ ________ ________ ________ ________
DISTRIBUTIONS:
Dividends from investment income-net. (.62) (.78) (.74) (.70) (.67) (.67)
Dividends from net realized gain
on investments __ (.01) __ __ __ __
________ ________ ________ ________ ________ ________
Total Distributions.................. (.62) (.79) (.74) (.70) (.67) (.67)
________ ________ ________ ________ ________ ________
Net asset value, end of year......... $12.39 $13.40 $12.73 $12.72 $12.91 $13.23
======== ========= ======== ========= ======== ========
TOTAL INVESTMENT RETURN(2)............. 11.36%(3) 14.97% .29% 5.70% 6.79% 7.81%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets __ .29% .44% .65% .98% 1.04%
Ratio of net investment income to
average net assets 6.35%(3) 5.94% 5.38% 5.63% 5.11% 5.10%
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%(3) .76% .50% .31% .02% __
Portfolio Turnover Rate.............. 15.01%(4) 5.76% 11.62% 12.02% 47.15% 44.91%
Net Assets, end of year (000's omitted) $26,387 $56,284 $68,074 $50,205 $47,042 $42,130
(1) From August 1, 1991 (commencement of operations) to April 30, 1992.
(2) Exclusive of sales load.
(3) Annualized.
(4) Not annualized.
</TABLE>
<TABLE>
<CAPTION>
NORTH CAROLINA SERIES (continued)
______________________________________________________________________________
Class B Shares Class C Shares
_______________________________________________ _____________________
Year Ended APRIL 30, Year Ended APRIL 30,
_______________________________________________ _____________________
PER SHARE DATA: 1993(1) 1994 1995 1996 1997 1996(2) 1997
_______ _______ _______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $12.90 $13.39 $12.72 $12.71 $12.90 $12.76 $12.90
_______ _______ _______ _______ _______ _______ _______
INVESTMENT OPERATIONS:
Investment income-net........ .20 .66 .64 .60 .60 .40 .57
Net realized and unrealized gain (loss)
on investments.............. . .49 (.67) (.01) .19 .32 .14 .32
_______ _______ _______ _______ _______ _______ _______
Total from Investment Operations .69 (.01) .63 .79 .92 .54 .89
_______ _______ _______ _______ _______ _______ _______
DISTRIBUTIONS:
Dividends from investment income-net (.20) (.66) (.64) (.60) (.60) (.40) (.57)
Dividends from net realized gain
on investments __ __ __ __ __ __ __
_______ _______ _______ _______ _______ _______ _______
Total Distributions.......... (.20) (.66) (.64) (.60) (.60) (.40) (.57)
_______ _______ _______ _______ _______ _______ _______
Net asset value, end of year. $13.39 $12.72 $12.71 $12.90 $13.22 $12.90 $13.22
======= ======= ======= ======= ======= ======= ========
TOTAL INVESTMENT RETURN(3)..... 18.53%(4) (.27%) 5.12% 6.25% 7.27% 5.92%(4) 7.00%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .79%(4) 1.00% 1.18% 1.49% 1.54% 1.73%(4) 1.77%
Ratio of net investment income to
average net assets........... 4.47%(4) 4.78% 5.08% 4.59% 4.59% 4.31%(4) 4.31%
Decrease reflected in above expense
ratios due to
undertakings by The Dreyfus Corporation
(limited to the expense limitation provision
of the Management Agreement). .56%(4) .48% .30% .02% __ __ __
Portfolio Turnover Rate...... 5.76% 11.62% 12.02% 47.15% 44.91% 47.15% 44.91%
Net Assets, end of year (000's omitted) $13,145 $38,968 $42,310 $42,668 $43,979 $1 $11
(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.
</TABLE>
Page 23
<TABLE>
<CAPTION>
OHIO SERIES
___________________________________________________________________________________________________
Class A Shares
___________________________________________________________________________________________________
Year Ended April 30,
___________________________________________________________________________________________________
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996 1997
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $14.50 $11.18 $11.66 $11.54 $12.00 $12.35 $13.09 $12.70 $12.62 $12.58
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
INVESTMENT OPERATIONS:
Investment income-net .80 .89 .88 .86 .80 .77 .74 .73 .71 .69
Net realized and
unrealized gain (loss)
on investments (3.32) .48 (.08) .46 .36 .81 (.36) (.05) .14 .17
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
TOTAL FROM INVESTMENT
OPERATIONS.. (2.52) 1.37 .80 1.32 1.16 1.58 .38 .68 .85 .86
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
DISTRIBUTIONS:
Dividends from
investment
income-net.. (.80) (.89) (.88) (.86) (.80) (.77) (.74) (.73) (.71) (.69)
Dividends from
net realized gain
on investments __ __ (.04) __ (.01) (.07) (.03) (.03) (.18) (.10)
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
TOTAL DISTRIBUTIONS (.80) (.89) (.92) (.86) (.81) (.84) (.77) (.76) (.89) (.79)
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Net asset value,
end of year. $11.18 $11.66 $11.54 $12.00 $12.35 $13.09 $12.70 $12.62 $12.58 $12.65
======= ======= ======= ======= ======= ======= ======= ======= ======= ========
TOTAL INVESTMENT
RETURN(2)... (18.49%)(3) 12.72% 6.95% 11.84% 9.97% 13.24% 2.78% 5.63% 6.77% 6.91%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses
to average
net assets.. __ __ __ .21% .52% .70% .81% .92% .89% .91%
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% 5.40%
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% 29.65%
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 $242,572
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) Exclusive of sales load.
(3) Annualized.
(4) Not annualized.
</TABLE>
Page 24
<TABLE>
<CAPTION>
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 1997 1996(2) 1997
_______ _______ _______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $12.69 $13.09 $12.71 $12.63 $12.59 $12.68 $12.59
_______ _______ _______ _______ _______ _______ _______
INVESTMENT OPERATIONS:
Investment income-net........ .20 .66 .66 .64 .62 .43 .59
Net realized and unrealized gain (loss)
on investments............... .40 (.35) (.05) .14 .16 .09 .17
_______ _______ _______ _______ _______ _______ _______
Total from Investment Operations .60 .31 .61 .78 .78 .52 .76
_______ _______ _______ _______ _______ _______ _______
DISTRIBUTIONS:
Dividends from investment income-net (.20) (.66) (.66) (.64) (.62) (.43) (.59)
Dividends from net realized gain
on investments __ (.03) (.03) (.18) (.10) (.18) (.10)
_______ _______ _______ _______ _______ _______ _______
Total Distributions.......... (.20) (.69) (.69) (.82) (.72) (.61) (.69)
_______ _______ _______ _______ _______ _______ _______
Net asset value, end of year. $13.09 $12.71 $12.63 $12.59 $12.65 $12.59 $12.66
======= ======= ======= ======= ======= ======= =========
TOTAL INVESTMENT RETURN(3)..... 16.36%(4) 2.24% 5.06% 6.19% 6.27% 5.66%(4) 6.07%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.17%(4) 1.38% 1.44% 1.42% 1.42% 1.63%(4) 1.64%
Ratio of net investment income to
average net assets........... 4.62%(4) 4.89% 5.29% 4.94% 4.87% 4.66%(4) 4.44%
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% 29.65% 43.90% 29.65%
Net Assets, end of year (000's omitted) $8,482 $27,657 $32,797 $40,476 $44,746 $1 $694
(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.
</TABLE>
Page 25
<TABLE>
<CAPTION>
PENNSYLVANIA SERIES
___________________________________________________________________________________________________
Class A Shares
___________________________________________________________________________________________________
Year Ended April 30,
___________________________________________________________________________________________________
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996 1997
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $15.00 $14.23 $14.78 $14.68 $15.21 $15.73 $16.61 $16.01 $16.12 $16.17
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
INVESTMENT OPERATIONS:
Investment income-net .85 1.13 1.13 1.12 1.06 1.02 .95 .91 .87 .85
Net realized and
unrealized gain (loss)
on investments (.77) .55 (.08) .55 .56 .99 (.57) .11 .32 .24
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
TOTAL FROM INVESTMENT
OPERATIONS.. .08 1.68 1.05 1.67 1.62 2.01 .38 1.02 1.19 1.09
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
DISTRIBUTIONS:
Dividends from investment
income-net.. (.85) (1.13) (1.13) (1.12) (1.06) (1.02) (.95) (.91) (.87) (.85)
Dividends from net realized
gain on investments __ __ (.02) (.02) (.04) (.11) (.03) __ (.27) (.18)
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
TOTAL DISTRIBUTIONS (.85) (1.13) (1.15) (1.14) (1.10) (1.13) (.98) (.91) (1.14) (1.03)
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Net asset value,
end of year. $14.23 $14.78 $14.68 $15.21 $15.73 $16.61 $16.01 $16.12 $16.17 $16.23
====== ======= ====== ====== ====== ====== ====== ====== ======= =======
TOTAL INVESTMENT
RETURN(2)... .87%(3) 12.21% 7.20% 11.74% 10.97% 13.19% 2.17% 6.65% 7.46% 6.89%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets __ __ __ .22% .56% .69% .81% .92% .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% 5.22%
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% 60.57%
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 $201,229
(1) From July 30, 1987 (commencement of operations) to April 30, 1988.
(2) Exclusive of sales load.
(3) Annualized.
(4) Not annualized.
</TABLE>
Page 26
<TABLE>
<CAPTION>
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 1997 1996(2) 1997
_______ _______ _______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $16.10 $16.60 $16.01 $16.11 $16.16 $16.18 $16.16
_______ _______ _______ _______ _______ _______ _______
INVESTMENT OPERATIONS:
Investment income-net........ .26 .85 .83 .79 .77 .53 .69
Net realized and unrealized gain (loss)
on investments............... .50 (.56) .10 .32 .25 .25 .25
_______ _______ _______ _______ _______ _______ _______
Total from Investment Operations .76 .29 .93 1.11 1.02 .78 .94
_______ _______ _______ _______ _______ _______ _______
DISTRIBUTIONS:
Dividends from investment income-net (.26) (.85) (.83) (.79) (.77) (.53) (.69)
Dividends from net realized gain
on investments __ (.03) __ (.27) (.18) (.27) (.18)
_______ _______ _______ _______ _______ _______ _______
Total Distributions.......... (.26) (.88) (.83) (1.06) (.95) (.80) (.87)
_______ _______ _______ _______ _______ _______ _______
Net asset value, end of year. $16.60 $16.01 $16.11 $16.16 $16.23 $16.16 $16.23
======= ======= ======= ======= ======= ======== =======
TOTAL INVESTMENT RETURN(3)..... 16.39%(4) 1.65% 6.02% 6.92% 6.41% 6.71%(4) 5.92%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.14%(4) 1.38% 1.44% 1.43% 1.43% 1.70%(4) 1.83%
Ratio of net investment income to
average net assets........... 4.90%(4) 4.95% 5.22% 4.76% 4.71% 4.46%(4) 4.28%
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% 60.57% 52.69% 60.57%
Net Assets, end of year (000's omitted) $14,631 $59,057 $70,062 $72,610 $71,671 $21 $32
(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.
</TABLE>
Page 27
<TABLE>
<CAPTION>
TEXAS SERIES
___________________________________________________________________________________________________
Class A Shares
___________________________________________________________________________________________________
Year Ended April 30,
___________________________________________________________________________________________________
PER SHARE DATA: 1988(1) 1989 1990 1991 1992 1993 1994 1995 1996 1997
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $15.50 $17.89 $18.64 $18.58 $19.25 $19.89 $21.23 $20.41 $20.69 $20.84
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
INVESTMENT OPERATIONS:
Investment income-net 1.33 1.45 1.44 1.40 1.36 1.29 1.25 1.22 1.20 1.17
Net realized and
unrealized gain (loss)
on investments 2.39 .75 (.05) .67 .69 1.37 (.66) .28 .45 .41
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
TOTAL FROM INVESTMENT
OPERATIONS.. 3.72 2.20 1.39 2.07 2.05 2.66 .59 1.50 1.65 1.58
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
DISTRIBUTIONS:
Dividends from investment
income-net.. (1.33) (1.45) (1.44) (1.40) (1.36) (1.29) (1.25) (1.22) (1.20) (1.17)
Dividends from net
realized gain
on investments __ __ (.01) __ (.05) (.03) (.13) __ (.30) (.26)
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) (1.43)
______ ______ ______ ______ ______ ______ ______ ______ ______ ______
Net asset value,
end of year. $17.89 $18.64 $18.58 $19.25 $19.89 $21.23 $20.41 $20.69 $20.84 $20.99
====== ======= ======= ======= ====== ======= ======= ======= ======= ========
TOTAL INVESTMENT
RETURN(2)... 26.23%(3) 12.79% 7.55% 11.54% 10.97% 13.80% 2.62% 7.63% 8.06% 7.74%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses
to average
net assets.. __ __ __ __ .15% .36% .39% .37% .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% 5.54%
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% .55%
Portfolio Turnover
Rate 47.85%(4) 6.84% 2.62% 1.95% 7.49% 14.94% 9.68% 38.68% 49.24% 61.22%
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 $60,849
(1) From May 28, 1987 (commencement of operations) to April 30, 1988.
(2) Exclusive of sales load.
(3) Annualized.
(4) Not annualized.
</TABLE>
Page 28
<TABLE>
<CAPTION>
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 1997 1996(2) 1997
_______ _______ _______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $20.52 $21.23 $20.41 $20.69 $20.84 $20.78 $20.83
_______ _______ _______ _______ _______ _______ _______
INVESTMENT OPERATIONS:
Investment income-net....... . .33 1.13 1.10 1.09 1.06 .73 .99
Net realized and unrealized gain (loss)
on investments............... .71 (.66) .28 .45 .40 .35 .40
_______ _______ _______ _______ _______ _______ _______
Total from Investment Operations 1.04 .47 1.38 1.54 1.46 1.08 1.39
_______ _______ _______ _______ _______ _______ _______
DISTRIBUTIONS:
Dividends from investment income-net (.33) (1.13) (1.10) (1.09) (1.06) (.73) (.99)
Dividends from net realized gain
on investments __ (.13) __ (.30) (.26) (.30) (.26)
Dividends in excess of net realized gain
on investments............... __ (.03) __ __ __ __ __
_______ _______ _______ _______ _______ _______ _______
Total Distributions.......... (.33) (1.29) (1.10) (1.39) (1.32) (1.03) (1.25)
_______ _______ _______ _______ _______ _______ _______
Net asset value, end of year. $21.23 $20.41 $20.69 $20.84 $20.98 $20.83 $20.97
======= ======= ======= ======= ======= ======== =======
TOTAL INVESTMENT RETURN(3)..... 17.60%(4) 2.05% 7.05% 7.51% 7.15% 7.29%(4) 6.79%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .82%(4) .94% .89% .88% .88% 1.18%(4) 1.19%
Ratio of net investment income to
average net assets........... 4.81%(4) 5.15% 5.46% 5.13% 5.03% 4.77%(4) 4.57%
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% .55% .58%(4) .54%
Portfolio Turnover Rate...... 14.94% 9.68% 38.68% 49.24% 61.22% 49.24%6 1.22%
Net Assets, end of year (000's omitted) $6,373 $15,878 $16,818 $17,461 $17,396 $1 $129
(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.
</TABLE>
Page 29
<TABLE>
<CAPTION>
VIRGINIA SERIES
_____________________________________________________________________________
Class A Shares
_____________________________________________________________________________
Year Ended APRIL 30,
_____________________________________________________________________________
PER SHARE DATA: 1992(1) 1993 1994 1995 1996 1997
________ ________ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year... $15.00 $15.50 $16.80 $16.02 $16.03 $16.27
________ ________ ________ ________ ________ ________
INVESTMENT OPERATIONS:
Investment income-net................ .78 1.00 .97 .94 .93 .94
Net realized and unrealized gain (loss)
on investments .50 1.31 (.75) .04 .24 .34
________ ________ ________ ________ ________ ________
Total from Investment Operations..... 1.28 2.31 .22 .98 1.17 1.28
________ ________ ________ ________ ________ ________
DISTRIBUTIONS:
Dividends from investment income-net. (.78) (1.00) (.97) (.94) (.93) (.94)
Dividends from net realized gain on investments __ (.01) (.01) (.03) __ __
Dividends in excess of net realized gain
on investments __ __ (.02) __ __ __
________ ________ ________ ________ ________ ________
Total Distributions.................. (.78) (1.01) (1.00) (.97) (.93) (.94)
________ ________ ________ ________ ________ ________
Net asset value, end of year......... $15.50 $16.80 $16.02 $16.03 $16.27 $16.61
======== ======== ======== ======== ======== =========
TOTAL INVESTMENT RETURN(2)............. 11.54%(3) 15.32% 1.10% 6.39% 7.32% 8.02%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets __ .27% .46% .39% .50% .39%
Ratio of net investment income to
average net assets 6.42%(3) 6.02% 5.64% 5.93% 5.58% 5.67%
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%(3) .76% .55% .55% .55% .55%
Portfolio Turnover Rate.............. 5.96%(4) 9.32% 30.69% 21.60% 50.06% 45.29%
Net Assets, end of year (000's omitted) $23,096 $55,627 $65,279 $62,428 $61,149 $61,099
(1) From August 1, 1991 (commencement of operations) to April 30, 1992.
(2) Exclusive of sales load.
(3) Annualized.
(4) Not annualized.
</TABLE>
<TABLE>
<CAPTION>
VIRGINIA SERIES
______________________________________________________________________________
Class B Shares Class C Shares
_______________________________________________ _____________________
Year Ended APRIL 30, Year Ended APRIL 30,
_______________________________________________ _____________________
PER SHARE DATA: 1993(1) 1994 1995 1996 1997 1996(2) 1997
_______ _______ _______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $16.25 $16.80 $16.02 $16.03 $16.27 $16.17 $16.26
_______ _______ _______ _______ _______ _______ _______
Investment Operations:
Investment income-net .26 .88 .85 .84 .86 .57 .81
Net realized and unrealized gain (loss)
on investments .55 (.75) .04 .24 .33 .09 .34
_______ _______ _______ _______ _______ _______ _______
Total from Investment Operations .81 .13 .89 1.08 1.19 .66 1.15
_______ _______ _______ _______ _______ _______ _______
DISTRIBUTIONS:
Dividends from investment income-net (.26) (.88) (.85) (.84) (.86) (.57) (.81)
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) (.86) (.57) (.81)
_______ _______ _______ _______ _______ _______ _______
Net asset value, end of year $16.80 $16.02 $16.03 $16.27 $16.60 $16.26 $16.60
======= ======= ======= ======= ======= ======== =======
TOTAL INVESTMENT RETURN(3) 17.22%(4) .54% 5.83% 6.77% 7.41% 5.64%(4) 7.18%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets .83%(4) 1.01% .90% 1.01% .90% 1.21%(4) 1.17%
Ratio of net investment income to
average net assets........... 4.62%(4) 5.02% 5.40% 5.06% 5.15% 4.55%(4) 4.83%
Decrease reflected in above expense ratios
due to undertakings
by The Dreyfus Corporation
(limited to the expense limitation provision
of the Management Agreement). .54%(4) .54% .55% .55% .55% .52%(4) .54%
Portfolio Turnover Rate...... 9.32% 30.69% 21.60% 50.06% 45.29% 50.06% 45.29%
Net Assets, end of year (000's omitted) $8,402 $25,254 $28,813 $33,120 $35,787 $166 $674
(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.
</TABLE>
Page 30
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 Series.
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 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
Page 31
shares have a shorter CDSC 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 A and 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.
Page 32
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 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 ("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 BBB by S&P and Fitch are regarded as having an
adequate capacity to pay principal and interest, while those rated Baa by
Moody's are considered medium grade obligations which lack outstanding
investment characteristics and have speculative characteristics.
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. See "Dividends, Distribution and Taxes." For a discussion
of the investment tech-
Page 33
niques and their related risks, see "Investment Considerations and Risks"
and "Appendix_Investment Techniques" below and "Investment Objective and
Management Policies _ Management Policies" in the Statement of Additional
Information.
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 1992 through 1996, 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. As of June 30, 1996, the General Fund
had a cumulative deficit under GAAP of $639.9 million. It is estimated
that the General Fund had a cumulative deficit under GAAP of $607.9
million as of June 30, 1997. 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
Page 34
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 1995-96 total
General Revenue and Working Capital Funds available are estimated to have
been $16.679 billion, which resulted in estimated unencumbered reserves of
$293.3 million at the end of fiscal 1994-95. The General Revenue and
Working Capital Funds ended the 1994-95 fiscal year with unencumbered
reserves of $319.5 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 an 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 1996 was approximately $313 million. Revenues are estimated to
exceed expenditures for fiscal 1997.
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 1997 budget was enacted, it was estimated that the General
Fund surplus on a budgetary basis at June 30, 1997, would be
approximately $22.5 million. As of February 1997, it was estimated that
the General Fund surplus on a budgetary basis at June 30, 1997, would be
$102.7 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, 1998 would be approximately $7.6 million, and
that the balance in the Revenue Stabilization Account of the State
Reserve Fund would be approximately $631 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 4.9% in 1996.
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, 1994 -95 and 1995-96 with
surpluses of approximately $308 million, $460 million, $67.4 million and
$6.2 million, respectively.
Page 35
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 6.2% during 1996. 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. The poultry
industry is the leading source of agricultural income in the State,
accounting for 29% of gross agricultural income. The tobacco and pork
industries also are significant sources of gross agricultural income.
The North Carolina Constitution requires a balanced budget.
In 1996, State voters approved a State Constitutional amendment to give
the Governor the power to veto budgetary and certain other legislative
actions.
OHIO SERIES _ Non-manufacturing industries now employ approximately
79.0% of all non-agricultural payroll workers 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 sources of growth currently 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 1997-98 General Fund budget provided for a
decrease in taxes of over $170 million. As of April 30, 1997, the General
Fund had a surplus of $524.4 million or 3.8% 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 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,
Page 36
the State's overall financial situation has improved significantly,
however, as Texas' economic growth has been outpacing that of the United
States as a whole. In fiscal years 1991, 1992, 1993, 1994, 1995 and 1996,
Texas' General Revenue Fund ended with cash surpluses of $1.005 billion,
$615 million, $1.630 billion, $2.225 billion, $2.101 billion and $1.623
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 _ Each Series may invest in zero coupon
securities and pay-in-kind bonds (bonds which pay interest through the
issuance of additional bonds). 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,
such as those rated Ba 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 (commonly known as junk
bonds). They may be subject to certain risks with respect to the issuing
entity and to greater mar-
Page 37
ket 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, 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 June 30, 1997, The Dreyfus
Corporation managed or administered approximately $87 billion in assets
for approximately 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 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, Massachusetts Series, New Jersey Series, North
Carolina Series and Virginia Series is Samuel J. Weinstock, who has held
that position with respect to the Connecticut Series and Massachusetts
Series since August 1987, with respect to the North Carolina Series and
Virginia Series since August 1991, and with respect to the New Jersey
Series since March 31, 1997, and has been employed by The Dreyfus
Corporation since March 1987. The primary portfolio manager for each of
the Maryland Series, Pennsylvania
Page 38
Series and Texas Series is Douglas J. Gaylor, who has held that position
since January 1996 with respect to each such Series, 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, Minnesota Series and 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 $259 billion in assets as
of March 31, 1997, including approximately $88 billion in proprietary
mutual fund assets. As of March 31, 1997, Mellon, through various
subsidiaries, provided non-investment services, such as custodial or
administration services, for more than $1.061 trillion in assets
including approximately $58 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, 1997, 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 .55 of 1%
Maryland .55 of 1%
Massachusetts .55 of 1%
Michigan .55 of 1%
Minnesota .55 of 1%
New Jersey .46 of 1%
North Carolina .55 of 1%
Ohio .55 of 1%
Pennsylvania .55 of 1%
Texas .0
Virginia .0
Page 39
In allocating brokerage transactions, 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's 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. 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 Dreyfus
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 40
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/Dreyfus Premier State Municipal Bond
Fund/Connecticut Series
DDA #8900119381/Dreyfus Premier State Municipal Bond
Fund/Florida Series
DDA #8900117087/Dreyfus Premier State Municipal Bond
Fund/Georgia Series
DDA #8900119403/Dreyfus Premier State Municipal Bond
Fund/Maryland Series
DDA #8900119470/Dreyfus Premier State Municipal Bond
Fund/Massachusetts Series
DDA #8900119411/Dreyfus Premier State Municipal Bond
Fund/Michigan Series
DDA #8900119438/Dreyfus Premier State Municipal Bond
Fund/Minnesota Series
DDA #8900088389/Dreyfus Premier State Municipal Bond
Fund/New Jersey Series
DDA #8900208635/Dreyfus Premier State Municipal Bond
Fund/North Carolina Series
DDA #8900119446/Dreyfus Premier State Municipal Bond
Fund/Ohio Series
DDA #8900119454/Dreyfus Premier State Municipal Bond
Fund/Pennsylvania Series
DDA #8900119462/Dreyfus Premier State Municipal Bond
Fund/Texas Series
DDA #8900208678/Dreyfus 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 1-800-554-4611 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 of each Class 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 41
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 Distributor may pay Service Agents an amount up to 1% of
the net asset value of Class A shares purchased by their clients that are
subject to a CDSC. 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
Page 42
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 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 Dreyfus
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.
Page 43
To qualify for reduced sales loads, at the time of purchase
you or your Service Agent must notify the Distributor if orders are 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 1-800-554-4611 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 1-800-554-4611 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 1-800-554-4611.
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 1-800-554-4611, or by
oral request from any of the authorized signatories on the account by
calling 1-800-554-4611. If you have established the Telephone
Page 44
Exchange Privilege, you may telephone exchange instructions (including
over The Dreyfus TouchRegistration Mark automated telephone system) by
calling 1-800-554-4611. 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 shareholder 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. 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 Dreyfus 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 Dreyfus 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 Dreyfus 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 1-800-554-4611. See "Dividends, Distributions and Taxes."
Page 45
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 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 1-800-554-4611. You may cancel your participation in this
Privilege or change the amount of purchase at any time by mailing written
notification to Dreyfus 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 1-800-554-4611. 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 Dreyfus 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 1-800-554-4611.
You may cancel these privileges by mailing written notification to Dreyfus
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.
Page 46
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
1-800-554-4611. 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.
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. Withdrawals with
respect to Class A shares subject to a CDSC and Class C shares under 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 1-800-554-4611, 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.
Page 47
The Fund imposes no charges (other than any applicable CDSC)
when shares are redeemed. Service Agents may charge their clients a 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 SUBSEQUENTLY 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 for Class B shares purchased by shareholders who
beneficially owned Class B shares on November 30, 1996:
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE CDSC AS A % OF AMOUNT
PAYMENT WAS MADE INVESTED OR REDEMPTION PROCEEDS
--------------------- ---------------------------------
<S> <C>
First.................................... 4.00
Second................................... 4.00
Third.................................... 3.00
Fourth................................... 3.00
Fifth.................................... 2.00
Sixth.................................... 1.00
Page 48
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
</TABLE>
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.
Page 49
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. 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.
Your redemption request may direct that the redemption
proceeds be used to purchase shares of other funds advised or
administered by The Dreyfus Corporation that are not available through
the Exchange Privilege. The applicable CDSC will be charged upon the
redemption of Class B and Class C shares. Your redemption proceeds will
be invested in shares of the other fund on the next business day. Before
you make such a request, you must obtain and should review a copy of the
current prospectus of the fund being purchased. Prospectuses may be
obtained by calling 1-800-554-4611. The prospectus will contain
information concerning minimum investment requirements and other
conditions that may apply to your purchase.
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 TELETRANSFER 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 TELETRANSFER 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 Dreyfus 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
Page 50
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 postdate 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 1-800-554-4611 or,
if you are calling from overseas, call 516-794-5452.
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.
Page 51
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 Fund
Exchanges. 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 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
Page 52
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 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, or (ii) 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.
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.
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.
Page 53
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.
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 has
qualified for the fiscal year ended April 30, 1997 as a "regulated
investment company" under the Code. Each Series intends to continue to so
qualify, if 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
Page 54
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.
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.
Page 55
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 dividends 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. In 1994, the Massachusetts
personal income tax statute was modified to provide for graduated rates
of tax (with some exceptions) on gains from the sale or exchange of
capital assets held for more than one year based on the length of time
the asset has been held since January 1, 1995. The Massachusetts
Department of Revenue has released proposed 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 the amount of such distributions
attributable to each of six classes of gains from the sale or exchange of
capital assets held for more than one year in a notice provided to
shareholders and the Commissioner of Revenue on or before March 1 of the
calendar year after the calendar year of such distributions. In the
absence of such notice, the holding period of the assets giving rise to
such gains is deemed to be more than one but not more than two years. 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 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.
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. The Michigan intangibles tax is
being phased out over a four-year period which began in 1994 and will be
fully repealed as of January 1, 1998. 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.
Page 56
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 attributable 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 is 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 New Jersey income taxes. Additionally, a qualified investment
fund must comply with certain continuing reporting requirements.
If the New Jersey Series continues to qualify 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
Page 57
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 was repealed, 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.
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
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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 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 Texas legislature has proposed legislation that,
if adopted, would extend applicability of the franchise tax to numerous
types of additional legal entities.
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.
Page 59
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 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 the Series' average annual total return
for one, five and ten year periods, or for shorter periods depending upon
the length of time the 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
Page 60
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.
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 and, before March 31, 1997, its name was
Premier State Municipal 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.
Page 61
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 62
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 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,
certain Derivatives subject the Fund to the rules of the Commodity
Futures Trading Commission which limit the extent to which a Series can
invest in such 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 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.
Page 63
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.
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'
Page 64
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 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
Page 65
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 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
Page 66
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
fund that invested in higher rated securities.
Page 67
The average distribution of investments (at value) in
Municipal Obligations by ratings for the fiscal year ended April 30,
1997, computed on a monthly basis, for each Series indicated, which
invested over 5% of its assets in Municipal Obligations rated below
investment grade, was as follows:
<TABLE>
<CAPTION>
OHIO PENNSYLVANIA
FITCH OR MOODY'S OR S & P SERIES SERIES
------- --------- -------- -------- ------------
<S> <C> <C> <C> <C>
AAA Aaa AAA 48.2% 48.3%
AA Aa AA 8.0 7.9
A A A 19.3 16.8
BBB Baa BBB 14.0 12.9
BB Ba BB 6.3 _
F-1 MIG1/P-1 SP-1/A-1 .9 1.4
Not Rated Not Rated Not Rated 3.3(1) 12.7(2)
________
100.0% 100.0%
________ ________
________ ________
</TABLE>
(1) Included under the Not Rated category are securities comprising
3.3% 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 (1.2%), A/A (.3%),
Baa/BBB (1.5%) and B (.3%).
(2) Included under the Not Rated category are securities
comprising 12.7% 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 (1.8%), Baa/BBB (4.7%), Ba/BB (3.2%) 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 Fund's official sales literature in connection with the offer
of Series shares, and, if given or made, such other information or
representations must not be relied upon as having been authorized by the
Fund. 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.
Copy Rights 1997 Dreyfus Service Corporation PSTMBp071697
Page 68
DREYFUS PREMIER STATE MUNICIPAL BOND FUND
CLASS A AND CLASS B AND CLASS C SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
JULY 16, 1997
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Dreyfus Premier State Municipal Bond Fund (the "Fund"), dated July 16, 1997,
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-21
Distribution Plan and Shareholder Services Plan......................B-23
Redemption of Shares.................................................B-26
Shareholder Services.................................................B-27
Determination of Net Asset Value.....................................B-30
Dividends, Distributions and Taxes...................................B-31
Portfolio Transactions...............................................B-33
Performance Information..............................................B-33
Information About the Fund...........................................B-42
Transfer and Dividend Disbursing Agent, Custodian,
Counsel and Independent Auditors.............................B-42
Appendix A...........................................................B-44
Appendix B...........................................................B-97
Financial Statements and Reports of Independent Auditors:
Connecticut............B-106 New Jersey............B-194
Florida................B-118 North Carolina........B-205
Georgia................B-132 Ohio..................B-217
Maryland...............B-143 Pennsylvania..........B-231
Massachusetts..........B-156 Texas.................B-244
Michigan...............B-168 Virginia..............B-256
Minnesota..............B-181
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, 1997, computed on a monthly basis, for each Series was as
follows:
<TABLE>
<CAPTION>
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 35.1% 50.0% 62.3%
AA Aa AA 26.1 13.7 28.5
A A A 13.6 4.3 5.5
BBB Baa BBB 17.7 11.0 .9
BB Ba BB - 4.4 .1
F-1 MIG 1/P-1 SP-1/A-1 .6 2.0 2.7
Not Rated Not Rated Not Rated 6.9 (1) 14.6 (2) -
--------- --------- --------
100.0% 100.0% 100.0%
========= ========= ========
Maryland Massachusetts Michigan
Fitch or Moody's or S&P Series Series Series
AAA Aaa AAA 25.2% 45.8% 45.3%
AA Aa AA 31.0 10.8 16.4
A A A 27.4 18.2 13.8
BBB Baa BBB 7.7 14.0 10.2
BB Ba BB - - -
F-1 MIG 1/P-1 SP-1/A-1 .6 2.0 1.4
Not Rated Not Rated Not Rated 8.1 (3) 9.2 (4) 12.9 (5)
--------- --------- --------
100.0% 100.0% 100.0%
========= ========= ========
______________
1 Included in the Not Rated category are securities comprising 6.9% 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%) and Ba/BB (.6%).
2 Included in the Not Rated category are securities comprising 14.6% 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: Aaa/AAA
(1.0%), A/A (.9%) and Baa/BBB (12.7%).
3 Included in the Not Rated category are securities comprising 8.1% 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: Baa/BBB (
7.2%), B (.8%) and F-1/MIG1, P-1/SP-1, A-1 (.1%).
4 Included in the Not Rated category are securities comprising 9.2% 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 rated category: Baa/BBB (9.2%).
5 Included in the Not Rated category are securities comprising 12.9% 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
(3.1%), A/A (.9%), Baa/BBB (5.8%) and Ba/BB (3.1%).
</TABLE>
<TABLE>
<CAPTION>
New North
Minnesota Jersey Carolina Ohio
Fitch or Moody's or S&P Series Series Series Series
<S> <C> <C> <C> <C> <C> <C>
AAA Aaa AAA 54.5% 91.7% 27.9% 48.2%
AA Aa AA 24.2 .1 24.1 8.0
A A A 7.5 1.8 19.2 19.3
BBB Baa BBB 10.1 4.7 22.1 14.0
BB Ba BB - .5 - 6.3
F-1 MIG 1/P-1 SP-1/A-1 .6 1.2 .4 .9
Not Rated Not Rated Not Rated 3.1 (6) - 6.3 (7) 3.3 (8)
--------- ------ --------- ---------
100.0% 100.0% 100.0% 100.0%
========= ====== ========= =========
Pennsylvania Texas Virginia
Fitch or Moody's or S&P Series Series Series
AAA Aaa AAA 48.3% 50.7% 29.2%
AA Aa AA 7.9 11.3 15.5
A A A 16.8 16.0 30.1
BBB Baa BBB 12.9 15.7 13.5
BB Ba BB - - -
F-1 MIG 1/P-1 SP-1/A-1 1.4 1.7 .9
Not Rated Not Rated Not Rated 12.7 (9) 4.6 (10) 10.8 (11)
--------- ---------- ----------
100.0% 100.0% 100.0%
========= ========== ==========
_______________________
6 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 rated category: Baa/BBB (3.1%).
7 Included in the Not Rated category are securities comprising 6.3% 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 rated category: BBB (6.3%).
8 Included in the Not Rated category are securities comprising 3.3% 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: Aaa/AAA
(1.2%), A/A (.3%), Baa/BBB (1.5%) and B (.3%).
9 Included in the Not Rated category are securities comprising 12.7% 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
(.9%), A/A (1.8%), Baa/BBB (4.7%), Ba/BB (3.2%) and B (2.1%).
10 Included in the Not Rated category are securities comprising 4.6% 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: Aaa/AAA
(.7%) and Baa/BBB (3.9%).
11 Included in the Not Rated category are securities comprising 10.8% 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
(1.1%) , Baa/BBB (6.6%) and Ba/BB (3.1%).
</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 oper ated
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 th e 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, Distributio n 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 d
ealers 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. A
Series will not 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 P rospectus
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, quali fied
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 issu ed 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. Gove rnment 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 financi al
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 branche s 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 Feder al 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 up on 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 holdin g 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 each 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 th e 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 portf olio 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 th e 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 w hen, 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 w riting 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 whe ther 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 li quid 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 de preciating 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 exp ose 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 a ctually
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 chara cterized 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 spe culative 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 m arket 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 part icular 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 in which each Series may invest up to
5% of its net assets. Zero coupon 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
Each Series has adopted investment restrictions numbered 1 through 9
as fundamental policies, which 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 10 and 11 are not fundamental
policies and may be changed 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 t ransactions do not involve any borrowing for purposes of
this restriction.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. Invest in companies for the purpose of exercising control.
9. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or acquisition of
assets.
10. 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.
11. 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 featur e 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.
For purposes of Investment Restriction No. 7, 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 investmen ts 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.
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, and
Cognizant Corporation, a service provider of marketing information and
information technology, 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 54 years old and her address is c/o New York
University School of Law, 249 Sullivan Street, New York, New York 10011.
JOSEPH S. DiMARTINO, Chairman of the Board. Since January 1995, Chairman of
the Board of various funds in the Dreyfus Family of Funds. He also is
Chairman of the Board of Directors of Noel Group, Inc., a venture capital
company, and Staffing Resources, Inc. a temporary placement agency. Mr.
DiMartino also serves as a director of The Muscular Dystrophy Association;
HealthPlan Services Corporation, a provider of marketing, administrative
and risk management services to health and other benefit programs; Carlyle
Industries, Inc. (formerly, Belding Heminway Company, Inc.), a button
packager and distributor; and Curtis Industries, Inc., a national
distributor of security products, chemicals and automotive and other
hardware. 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
24, 1994, the Fund's distributor. From August 1994 to December 31, 1994,
he was a director of Mellon Bank Corporation. He is 53 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,
including President of the New York Psychoanalytic Society, and has
published many articles on subjects in the field of psychoanalysis. He is
64 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 Nove mber 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 Economis t 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 77 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 an d 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 Housin g
Maintenance for New York City from 1972 to 1973. Mr. Leventhal also
served as Chairman of Citizens Union, an organization which strives to
reform and modernize city and state governments from June 1994 to June
1997. He is 54 years old and his add ress 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 me mbers 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,
1997, 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,
1996, 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. $4,250 $ 82,436 (17)
Peggy C. Davis $4,250 $ 73,084 (15)
Joseph S. DiMartino $5,313 $517,075 (94)
Ernest Kafka $4,250 $ 69,584 (15)
Saul B. Klaman $4,250 $ 73,584 (15)
Nathan Leventhal $4,000 $ 71,084 (15)
* Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $3,026 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 39 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. He
is 33 years old.
RICHARD W. INGRAM, Vice President and Assistant Treasurer. 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, he was Vice President, Assistant
Treasurer and Tax Director -Mutual Funds of The Boston Company, Inc. He
is 41 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 Septembe r 1989 to July 1994, she was
an Assistant Vice President and Client Manager for The Boston Company,
Inc. She is 33 years old.
MICHAEL S. PETRUCELLI, Vice President and Assistant Treasurer. Director of
Strategic Client Initiatives for Funds Distributor, Inc. and an officer
of other investment companies advised or administered by the Manager.
From December 1989 through Nove mber 1996, he was employed by GE
Investments where he held various financial, business development and
compliance positions. He also served as Treasurer of the GE Funds and as
Director of GE Investment Services. He is 36 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 Aug ust 1994, he was employed by The Boston
Company, Inc. where he held various management positions in the
Corporate Finance and Treasury areas. He is 35 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 28 years old.
MARK A. KARPE, Vice President and Assistant Secretary. Senior Paralegal of
the Distributor and an officer of other investment companies advised or
administered by the Manager. Prior to August 1993, he was employed as an
Associate Examiner at the Na tional Association of Securities Dealers,
Inc. He is 28 years old.
ELIZABETH A. KEELEY, Vice President and Assistant Secretary. Assistant Vice
President of the Distributor since September 1995, and an officer of
other investment companies advised or administered by the Manager. She
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 June 27, 1997.
As of June 27, 1997, 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 - 9.2%;
Florida Series - Merri ll Lynch Pierce Fenner & Smith, Inc., Jacksonville, FL
- - 5.8%; Georgia Series - Fubs & Co. FEBO George W. Taylor Irrevocable Trust,
Valdosta, Georgia - 6.9%; Judith Alexander, New York, N.Y. - 5.5%; Michigan
Series - Merrill Lynch Pierce Fenner & Smi th, Inc., Jacksonville FL - 8.2%;
Minnesota Series - Merrill Lynch Pierce Fenner & Smith, Inc., Jacksonville, FL
- - 5.8%; New Jersey Series - Bernard Stern & Rhoda Stern, Cranbury, NJ - 7.3%;
Joan B. Scannell, Upper Montclair, NJ - 5.6%; Stuart G. Man n and Susan B.
Mann, Cedar Knolls, NJ - 5.2%; North Carolina Series - Merrill Lynch Pierce
Fenner & Smith, Jacksonville, FL - 6.7%; Pennsylvania Series - Mary Alice
Morrissey & James D. Morrissey, Huntingdon Valley, PA - 5.8%; Virginia Series
- - Merri ll Lynch Pierce Fenner & Smith, Jacksonville, FL - 6.4%. Class B:
Connecticut Series - Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL -
6.1%; Florida Series - Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL -
11.8%; Georgia Series - Mer rill Lynch Pierce Fenner & Smith, Jacksonville, FL
- - 15.6%; Maryland Series - Merrill Lynch Pierce Fenner & Smith, Jacksonville,
FL - 7.2%; Massachusetts Series - Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL - 6.5%; Michigan Series - Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL - 10.4%; New Jersey Series - Lakeview Developers LTD,
Fort Lee, NJ - 11.2%; Merrill Lynch Pierce, Fenner & Smith, Jacksonville, FL -
7.5%; Virginia Series - Merrill Lynch Pierce Fenner & Smith, Jacksonvi lle, FL
- - 8.8%. Class C: Connecticut Series - US Clearing Corp, New York, NY - 16.7%;
Reloads Inc., Manchester, CT - 8.0%; Carol C. Keenan, Wethersfield, CT - 6.5%;
Paul L. Lutson, Stratford, CT - 5.9%; Edward J. Sicard, Jr., Coventry, CT -
5.7%; US Clearing Corp., New York, NY - 5.3%; Florida Series - Merrill Lynch
Pierce Fenner & Smith, Jacksonville, FL - 53.5%; PaineWebber for the benefit
of The Erick Stern Revocable Living Trust, Fort Lee, NJ - 31.6%; Frederick
Carleton & Helen Carleton, Boynton Beach, Fl - 10.6; Georgia Series - Selvin
L. Smith, Jr., Atlanta, GA - 43.3%; Merrill Lynch Pierce Fenner & Smith, Inc.
- - 24.7%; Elton Roberts, Marietta GA - 24.6%; Maryland Series - C. Owen Al len
Rev Trust, Potomac, MD - 19.8%; Nina May Allen Rev Trust, Potomac, MD - 19.8%;
Rufus C. Ling and Alice H. Ling Living Trust, Silver Spring, MD - 13.4%;
Donaldson Lufkin Jenrette Securities Corporation Inc., Jersey City, NJ -
10.5%; Isadore Glazer TTEE and Brian Barkley TTEE Living Trust, Potomac, MD -
9.4%; Charles R. Brenner & Louise M. Brenner, Severna Park, MD - 5.7%;
Galileo Petrosillo and Leona Kircher, Baltimore, MD - 5.2%; Galileo
Petrosillio and Catherine Hodgeman, Baltimore, MD - 5. 2%; Galileo Petrosillo
and Louisa Petrosillo, Baltimore, MD - 5.2%; Massachusetts Series - Premier
Mutual Fund Services, Boston, MA - 100%; Michigan Series - Merrill Lynch
Pierce Fenner & Smith, Inc., Jacksonville, FL - 55.9%; Murvale L. Huston & Cat
herine Ann Huston, Saint Clair, MI - 21.9%; 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 - 6.0%; Minnesota Series - Merrill Lynch
Pierce Fenner & Smith, Jacksonville, FL -59.5%; Lawrence McConnell, Chatfield,
MN - 23.1%; Wexford Clearing Services Corp. FBO Marie Reinfrs and Virginia Van
Derostyne, Canby, MN - 9.0%; New Jersey Series - Lloyd E. Moore, Irvington, NJ
- - 89.8%, Premier Mutual Fund Services, Inc., Boston, MA - 9.2%; North Carolina
Series - William L. Crowe & C. Elizabeth Crowe, Cary, NC - 90.2%; Premier
Mutual Fund Services, Inc. Boston, MA - 9.8%; Ohio Series - Ramco Specialties
Inc., Hudson, OH - 72.3%; Max Weisbrod & Sylvia Weisbrod, Canton, OH - 15.0%;
JoAnn Robedeau, Toledo, OH - 5.1%; Pennsylvania Series - Charles R. Weikert &
Mary Jane Weikert, Fairfield, PA - 65.5%; Robert Hoffman & Dorothy Hoffman,
Norristown, PA -18.2%; Merrill Lynch Pierce Fenner & Smith, Jack sonville, FL
- - 12.8%; Texas Series - Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL
- - 99.1%; Virginia Series; Merrill Lynch Pierce Fenner & Smith, Jacksonville,
FL -37.7%; US Clearing Corp, New York, NY - 22.0%; Stephens Inc., Little Rock,
AR - 12.4%; Wheat First FBO David Rode and Doris C. Rode, Lynchburg, VA -
11.6%; Stephens Inc., Little Rock, AR -11.6%. A shareholder who beneficially
owned, directly or indirectly, 25% or more of a Series' v oting 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, a s 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; William T. Sandalls, Jr.,
Senior Vice President and Chief Financial Officer; 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; William V. Healey, Assistant
Sec retary; and Mandell L. Berman, Burton C. Borgelt and Frank V. Cahouet,
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 por tfolio managers who are authorized by the Board to
execute purchases and sales of securities. The Fund's portfolio managers are
Joseph P. Darcy, A. Paul Disidier, Douglas J. Gaylor, Karen M. Hand, Stephen
C. Kris, Richard J. Moynihan, W. Michael Pet ty, 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 and for other funds
advised by the Manager.
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 Cl ass 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 al located
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, 1995, 199 6 and 1997, the management fee payable, the reduction in
such fee pursuant to undertakings in effect, and the net management fee paid
by each Series was as set forth below:
<TABLE>
<CAPTION>
Series Management Fee Payable Reduction in Fee Net Fee Paid
1995 1996 1997 1995 1996 1997 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Connecticut $2,082,924 $2,045,864 $1,972,181 $ 35,533 $ 0 $ 0 $2,047,391 $2,045,864 $1,972,181
Florida 1,599,553 1,504,679 1,318,540 27,718 0 0 1,571,835 1,504,679 1,318,540
Georgia 149,119 160,860 147,484 149,119 59,898 0 0 100,962 147,484
Maryland 1,901,194 1,852,002 1,755,487 32,614 0 0 1,868,580 1,852,002 1,755,487
Massachusetts 426,673 423,126 404,124 7,190 0 0 419,483 423,126 404,124
Michigan 1,074,186 1,067,900 1,003,722 18,112 0 0 1,056,074 1,067,900 1,003,722
Minnesota 943,548 924,716 874,105 15,888 0 0 927,660 924,716 874,105
New Jersey 38,710(1) 74,073(2) 56,351(3) 38,710(1) 10,732(2) 9,656(3) 0(1) 63,341(2) 46,695(3)
North Carolina 535,236 517,799 481,809 297,996 20,032 0 237,240 497,767 481,809
Ohio 1,707,720 1,684,215 1,617,417 28,783 0 0 1,678,937 1,684,215 1,617,417
Pennsylvania 1,589,232 1,600,235 1,553,060 26,631 0 0 1,562,601 1,600,235 1,553,060
Texas 485,593 464,591 437,938 485,593 464,591 437,938 0 0 0
Virginia 496,788 522,229 534,594 496,788 522,229 534,594 0 0 0
______________________
1. The fiscal year ended was July 31, 1995.
2. The fiscal year ended was July 31, 1996.
3. Effective August 1, 1996, the New Jersey Series changed its fiscal year end from July 31 to April 30. The information
provided is from August 1, 1996 through April 30, 1997.
</TABLE>
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 ex penses, 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 Dreyfus
Premier Family of Fu nds, for the funds in the Dreyfus Family of Funds and for
certain other investment companies.
For the fiscal years ended April 30, 1996 and 1997, 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 and
Class C, of each Series:
Series Class A Class B Class C
1996 1997 1996 1997 1996* 1997
Connecticut $25,153 $22,875 $57,412 $91,437 $ -0- $4,291
Florida 21,041 8,377 62,568 67,358 -0- -0-
Georgia 1,369 215 36,034 41,536 -0- -0-
Maryland 24,087 17,726 63,161 83,431 -0- -0-
Massachusetts 6,837 5,320 3,841 14,492 -0- -0-
Michigan 16,807 12,046 34,324 54,072 -0- -0-
Minnesota 13,055 9,460 43,202 50,144 -0- -0-
New Jersey 3,492(1) 137(2) 15,006(1) 10,000(2) -0-(3) -0-(2)
North Carolina 5,070 3,281 72,256 72,766 -0- -0-
Ohio 23,198 13,993 52,134 84,422 -0- -0-
Pennsylvania 21,816 12,886 133,577 123,667 -0- -0-
Texas 4,008 3,327 25,002 27,930 -0- -0-
Virginia 10,873 8,159 38,249 65,396 -0- -0-
___________________
* From August 15, 1995 (commencement of initial offering of Class C
shares) to April 30, 1996.
1 The fiscal year ended was July 31, 1996.
2 Effective August 1, 1996, The New Jersey Series changed its fiscal
year end from July 31 to April 30. The information provided is from
August 1, 1996 through April 30, 1997.
3 From December 4, 1995 (commencement of initial offering of Class C
shares) to July 31, 1996. The fiscal year ended was July 31, 1996.
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, 1997.
<TABLE>
<CAPTION>
Connecticut Florida Georgia Maryland
Series Series Series Series
<S> <C> <C> <C> <C>
Class A Shares:
NET ASSET VALUE, per share $11.81 $14.06 $13.22 $12.70
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 .66 .62 .60
------ ------ ------ ------
Offering price to public........... $12.37 $14.72 $13.84 $13.30
====== ====== ====== ======
North
Massachusetts Michigan Minnesota New Jersey Carolina
Series Series Series Series Series
Class A Shares:
NET ASSET VALUE, per share $11.40 $15.14 $15.03 $12.63 $13.23
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 .71 .59 .62
______ ______ ______ ______ ______
Offering price to public $11.94 $15.85 $15.74 $13.22 $13.85
====== ====== ====== ====== ======
Ohio Pennsylvania Texas Virginia
Series Series Series Series
Class A Shares:
NET ASSET VALUE, per share $12.65 $16.23 $20.99 $16.61
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 .99 .78
______ ______ ______ ______
Offering price to public $13.24 $16.99 $21.98 $17.39
====== ====== ====== ======
</TABLE>
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 credite d 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 or ders 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 pr oceeds 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. 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, 1997, each Series 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 $211,666 $7,860
Florida 134,127 376
Georgia 95,780 732
Maryland 216,650 719
Massachusetts 28,938 9
Michigan 96,920 1,638
Minnesota 129,908 3,300
New Jersey* 32,737 32
North Carolina 215,796 54
Ohio 212,043 1,196
Pennsylvania 360,738 217
Texas 87,452 640
Virginia 173,397 3,586
_______________________________
* Effective August 1, 1996, the New Jersey Series changed its fiscal
year end from July 31 to April 30. The information provided is from
August 1, 1996 through April 30, 1997.
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 S hareholder 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 wit hthe Shareholder Services Plan.
For the fiscal year ended April 30, 1997, each Series 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 $787,993 $105,833 $2,620
Florida 532,147 67,064 125
Georgia 18,904 47,890 244
Maryland 689,384 108,325 240
Massachusetts 169,221 14,469 3
Michigan 407,231 48,460 546
Minnesota 331,267 64,954 1,100
New Jersey* 9,235 16,369 10
North Carolina 111,088 107,898 18
Ohio 628,770 106,021 399
Pennsylvania 525,495 180,369 72
Texas 155,124 43,726 213
Virginia 155,104 86,698 1,195
_______________________________
* Effective August 1, 1996, the New Jersey Series changed its fiscal
year end from July 31 to April 30. The information provided is from
August 1, 1996 through April 30, 1997.
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 n umber 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 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 Fu nd 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 Tr ansfer Agent to act on
telephonic instructions (including over The Dreyfus Touchr 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 Trans fer
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-I RAs 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
Premier Family of Funds or 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 Dreyfus 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 shar es 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 1-800-554-4611. 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 t he 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.
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 Dreyfus
Premier Family of Funds or 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 deter mine 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 S hareholder
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 o f 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 qualified for the fiscal year
ended April 30, 1997 as a "regulated 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 p rovisions 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.
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. In addition, 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.
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 pe rsonal property. The tax treatment of
"straddles" is governed by Sections 1092 and 1258 of the Code, which, in
certain circumstances, override or modify the provisions of Section 1256 of
the Code. As such, all or a portion of any short- or long-ter m 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 th e 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 distribut ions 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 a re 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 undisclos ed 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 w ith 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 reduc e 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."
The current yield for the 30-day period ended April 30, 1997, 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 4.89% -
Florida 4.69 -
Georgia 4.45 -
Maryland 5.01 -
Massachusetts 4.87 -
Michigan 4.57 -
Minnesota 4.57 -
New Jersey 4.47 4.44%
North Carolina 4.90 -
Ohio 4.55 -
Pennsylvania 5.01 -
Texas 5.29 4.76
Virginia 5.33 4.80
____________________________
(1) This column sets forth current yield had certain expenses for the
indicated Series not been absorbed.
Current Net of Absorbed
Series Yield Expenses(1)
________ __________ _____________________
Class B:
Connecticut 4.54% -
Florida 4.33 -
Georgia 4.17 -
Maryland 4.71 -
Massachusetts 4.60 -
Michigan 4.28 -
Minnesota 4.27 -
New Jersey 4.18 4.16%
North Carolina 4.63 -
Ohio 4.25 -
Pennsylvania 4.73 -
Texas 5.03 4.48
Virginia 5.07 4.52
Current Net of Absorbed
Series Yield Expenses(1)
_______ __________ ______________________
Class C:
Connecticut 4.23% -
Florida 4.05 -
Georgia 3.79 -
Maryland 4.53 -
Massachusetts 4.33 -
Michigan 3.99 -
Minnesota 4.00 -
New Jersey 3.94 2.79%
North Carolina 4.43 -
Ohio 4.00 -
Pennsylvania 4.27 -
Texas 4.68 4.13
Virginia 4.86 4.31
____________________________
(1) This column sets forth current yield had certain expenses for the
indicated Series 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 acco rdance 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 1997 combined (except where noted) Federal and
applicable State tax rate specified below, the tax equivalent yield for the
30-day period ended April 30, 1997 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% 8.48% -
Florida(2) 39.60 7.76 -
Georgia 43.22 7.84 -
Maryland 42.62 8.73 -
Massachusetts 46.85 9.16 -
Michigan 42.26 7.91 -
Minnesota 44.73 8.27 -
New Jersey 43.45 7.90 7.85%
North Carolina 44.28 8.79 -
Ohio 43.83 8.10 -
Pennsylvania 41.29 8.53 -
Texas(2) 39.60 8.76 7.88
Virginia 43.07 9.36 8.43
Class B:
Connecticut 42.32% 7.87% -
Florida(2) 39.60 7.17 -
Georgia 43.22 7.34 -
Maryland 42.62 8.21 -
Massachusetts 46.85 8.65 -
Michigan 42.26 7.41 -
Minnesota 44.73 7.73 -
New Jersey 43.45 7.39 7.36%
North Carolina 44.28 8.31 -
Ohio 43.83 7.57 -
Pennsylvania 41.29 8.06 -
Texas(2) 39.60 8.33 7.42
Virginia 43.07 8.91 7.94
___________________________
(1) This column sets forth tax equivalent yield had certain expenses for
the indicated Series not been absorbed.
(2) Federal tax rate only. No state personal income tax imposed during
1997.
Tax Equivalent Net of Absorbed
Series Tax Rate Yield Expenses(1)
________ ___________ _______________ _______________
Class C:
Connecticut 42.32% 7.33% -
Florida(2) 39.60 6.71 -
Georgia 43.22 6.67 -
Maryland 42.62 7.89 -
Massachusetts 46.85 8.15 -
Michigan 42.26 6.91 -
Minnesota 44.73 7.24 -
New Jersey 43.45 6.97 4.93%
North Carolina 44.28 7.95 -
Ohio 43.83 7.12 -
Pennsylvania 41.29 7.27 -
Texas(2) 39.60 7.75 6.84
Virginia 43.07 8.54 7.57
_________________________
(1) This column sets forth tax equivalent yield had certain expenses for
the indicated Series not been absorbed.
(2) Federal tax rate only. No state personal income tax imposed during
1997.
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 ta x-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 9.926-year period
Series ended April 30, 1997 ended April 30, 1997 ended April 30, 1997
Connecticut 2.04% 5.89% 7.11%
Florida 0.04 5.57 8.56
Georgia 1.43 5.70(1) -
Maryland 2.08 5.75 6.59
Massachusetts 2.28 5.70 6.58
Michigan 2.10 6.42 8.44
Minnesota 1.35 5.66 7.56
New Jersey 1.13 4.26(2) -
North Carolina 2.94 6.03 6.72(3)
Ohio 2.12 6.03 5.15
Pennsylvania 2.09 6.23 7.54(4)
Texas 2.91 6.92 10.14
Virginia 3.14 6.55 7.20(3)
____________________________
(1) For the 4.658 year period ended April 30, 1997.
(2) For the 2.99 year period ended April 30, 1997
(3) For the 5.748 year period ended April 30, 1997.
(4) For the 9.753 year period ended April 30, 1997.
The average annual total return for the periods indicated since the
initial offering for Class B of each Series was as follows:
1-year period 4.290-year period
Series ended April 30, 1997 ended April 30, 1997
Connecticut 2.31% 5.06%
Florida 0.33 4.87
Georgia 1.55 5.44
Maryland 2.34 5.26
Massachusetts 2.66 4.95
Michigan 2.28 5.75
Minnesota 1.60 5.22
New Jersey 1.34 4.44(1)
North Carolina 3.27 5.13
Ohio 2.27 5.34
Pennsylvania 2.41 5.62
Texas 3.15 6.36
Virginia 3.41 5.56
____________________________
(1) For the 2.99 year period ended April 30, 1997.
The average annual total return for the periods indicated since the
initial offering for Class C of each Series was as follows:
1-year period 1.710-year period
Series ended April 30, 1997 ended April 30, 1997
Connecticut 4.94% 5.70%
Florida 2.98 4.27
Georgia 4.30 5.74
Maryland 5.16 5.94
Massachusetts 5.56 5.40
Michigan 4.94 6.05
Minnesota 4.34 5.29
New Jersey 4.19 1.38(1)
North Carolina 6.00 6.58
Ohio 5.07 5.93
Pennsylvania 4.92 6.28
Texas 5.79 7.04
Virginia 6.18 6.57
____________________________
(1) For the 1.41 year period ended April 30, 1997.
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 Cl
ass 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, 1997
(except where indicated) for Class A of each Series was as follows:
Based on Maximum Based on Net Asset
Series Offering Price Value
Connecticut 97.78 107.13
Florida 126.03 136.76
Georgia(1) 29.47 35.58
Maryland 88.42 97.32
Massachusetts 88.20 97.05
Michigan 123.59 134.05
Minnesota 106.26 116.04
New Jersey(2) 13.34 18.68
North Carolina(3) 45.35 52.26
Ohio 64.62 72.32
Pennsylvania(4) 103.07 112.68
Texas 160.92 173.19
Virginia(3) 49.19 56.23
____________________________
(1) For the period from September 3, 1992 (commencement of operations)
through April 30, 1997.
(2) For the period from May 4, 1994 (commencement of operations) through
April 30, 1997.
(3) For the period from August 1, 1991 (commencement of operations)
through April 30, 1997.
(4) For the period from July 30, 1987 (commencement of operations) through
April 30, 1997.
The total return for the period January 15, 1993 to April 30, 1997
(except where indicated) for Class B of each Series was as follows:
Based on Net Asset Based on
Series Value Maximum CDSC
Connecticut 25.59% 23.61%
Florida 24.55 22.62
Georgia 27.50 25.50
Maryland 26.58 24.58
Massachusetts 24.98 23.04
Michigan 29.08 27.09
Minnesota 26.41 24.41
New Jersey(1) 16.94 13.94
North Carolina 25.93 23.93
Ohio 26.98 24.98
Pennsylvania 28.43 26.43
Texas 32.26 30.26
Virginia 28.11 26.11
___________________________________
(1) For the period May 4, 1994 (commencement of operations) to April 30,
1997.
The total return for the period August 15, 1995 to April 30, 1997
(except where indicated) for Class C of each Series was as follows:
Based on Net Asset
Series Value*
Connecticut 9.94%
Florida 7.42
Georgia 10.01
Maryland 10.36
Massachusetts 9.40
Michigan 10.56
Minnesota 9.21
New Jersey(1) 1.95
North Carolina 11.52
Ohio 10.35
Pennsylvania 10.98
Texas 12.33
Virginia 11.49
___________________________________
* No CDSC is charged Class C shares after one year of purchase.
(1) For the period December 4, 1995 (commencement of operations) to April
30, 1997.
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 c alculation
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.
On March 31, 1997, the New Jersey Series commenced operations through
a transfer of assets from the New Jersey Series of Premier Insured Municipal
Bond Fund (the "Insured New Jersey Fund"). The performance information
provided above for peri ods prior to such date for the New Jersey Series is
for the Insured New Jersey Fund and reflects the fact that for such periods,
the Insured New Jersey Fund was required to invest (i) at least 65% of the
value of its total assets in Municipal Obligations insured as to timely
payment of principal and interest by recognized insurers of Municipal
Obligations and (ii) in Municipal Obligations rated no lower than Baa by
Moody's or BBB by S&P and Fitch.
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, and to Morningstar
ratings and related analysis supporting suc h 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, cur rent 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
$25 billion 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 a rranges 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 Ag ent 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 fiscal year ended April 30, 1997, the Fund paid the
Transfer Agent $1,012,323.
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 LLP, 180 Maiden Lane, New York, New York
10038-4982, 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 t he 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-44
Florida Series..........................................B-47
Georgia Series..........................................B-51
Maryland Series.........................................B-54
Massachusetts Series....................................B-56
Michigan Series.........................................B-58
Minnesota Series........................................B-62
New Jersey Series.......................................B-68
North Carolina Series...................................B-70
Ohio Series.............................................B-75
Pennsylvania Series.....................................B-81
Texas Series............................................B-88
Virginia Series.........................................B-93
Connecticut Series
Connecticut's manufacturing industry, which has historically been of
prime economic importance to the State, its municipalities and its residents,
has been in decline for several years. Although Connecticut's manufacturing
industry is divers ified between transportation equipment (primarily aircraft
engines, helicopters and submarines), non-electrical machinery, fabricated
metal products and electrical machinery, defense-related business represents a
relatively high proportion of manufacturing receipts. As a result,
reductions in defense spending have had a substantial adverse effect on
Connecticut's manufacturing industry.
Connecticut's manufacturing employment peaked in 1970 at over 441,000
workers but had declined 36.5% by 1995. Although the loss of manufacturing
jobs was partially offset by a 69.7% rise in other non-agricultural employment
during the same period, Connecticut's growth in non-manufacturing employment
has lagged behind the New England region and the nation as a whole. Moreover,
Connecticut's largest defense contractors have announced plans to reduce their
labor forces substantially over the next few years.
From 1986 through 1995, Connecticut's unemployment rate was generally
lower than the unemployment rate for the U.S. as a whole, and average per
capita personal income of Connecticut residents was higher than that of
residents of other states. The average unemployment rate (seasonally
adjusted) in Connecticut increased from a low of 3.0% in 1988 to 7.5% in
1992 and, after a number of important changes in the method of calculation,
was reported to be 5.0% in 1996. Average per capita pers onal income of
Connecticut residents increased in every year from 1985 to 1995, rising from
$18,268 to $31,776. However, pockets of significant unemployment and
poverty exist in some Connecticut cities and towns, and Connecticut is now
in a recession, the depth and duration of which are uncertain.
For the four fiscal years ended June 30, 1991, the General Fund ran
operating deficits of approximately $115.6 million, $28.0 million, $259.0
million and $808.5 million, respectively. At the end of the 1990-1991 fiscal
year, the General Fund had an accumulated unappropriated deficit of
$965,712,000. For the five fiscal years ended June 30, 1996, the General
Fund ran operating surpluses of approximately $110.2 million, $113.5 million,
$19.7 million, $80.5 million, and $250.0 million, re spectively. General
Fund budgets for the biennium ending June 30, 1997, were adopted in 1995.
General Fund expenditures and revenues are budgeted to be approximately $9.2
billion for the 1996-1997 fiscal year.
In 1991, to address the General Fund's growing deficit, legislation
was enacted by which the State imposed an income tax on individuals, trusts
and estates for taxable years generally commencing in 1992. For each fiscal
year starting with th e 1991-1992 fiscal year, the General Fund has operated
at a surplus with over 60% of the State's tax revenues being generated by the
income tax and the sales and use tax. However, the State's budgeted
expenditures have almost doubled from approximat ely $4.3 billion for the
1986-1987 fiscal year to approximately $9.2 billion for the 1996-1997 fiscal
year.
The 1991 legislation also authorized the State Treasurer to issue
Economic Recovery Notes to fund the General Fund's accumulated deficit of
$965.7 million as of June 30, 1991, and during 1991 the State issued a total
of $965.7 million Economi c Recovery Notes, of which $196.6 million were
outstanding as of May 1, 1997. The notes were to be payable no later than
June 30, 1996, but as part of the budget adopted for the biennium ending June
30, 1997, payment of the remaining notes scheduled to be paid during the 1995-
96 fiscal year was rescheduled to be paid over the four fiscal years ending
June 30, 1999.
The State's primary method for financing capital projects is through
the sale of general obligation bonds. As of May 1, 1997, the State had
authorized general obligation bonds totaling $10,813,448,000, of which
$9,673,240,000 had been approved for issuance by the State Bond Commission,
$8,797,072,000 had been issued, and $6,384,716,267 were outstanding.
In 1995, the State established the University of Connecticut as a
separate corporate entity to issue bonds and construct certain infrastructure
improvements. The improvements are to be financed by $18.0 million of
general obligation bonds of the State and $962.0 million bonds of the
University. The University's bonds will be secured by a State debt service
commitment, the aggregate amount of which is limited to $382.0 million for
the four fiscal years ending June 30, 1999, and $580.0 m illion for the six
fiscal years ending June 30, 2005.
In addition to the bonds described above, the State has limited or
contingent liability on a significant amount of other bonds. Such bonds have
been issued by the following quasi-public agencies: the Connecticut Housing
Finance Authority, t he Connecticut Development Authority, the Connecticut
Higher Education Supplemental Loan Authority, the Connecticut Resources
Recovery Authority and the Connecticut Health and Educational Facilities
Authority. Such bonds have also been issued by the cities of Bridgeport and
West Haven and the Southeastern Connecticut Water Authority. As of October
15, 1996, the amount of bonds outstanding on which the State has limited or
contingent liability totaled $3,985,400,000.
In 1984, the State established a program to plan, construct and
improve the State's transportation system (other than Bradley International
Airport). The total cost of the program through June 30, 2000, is currently
estimated to be $11.2 billion, to be met from federal, state, and local
funds. The State expects to finance most of its $4.7 billion share of such
cost by issuing $4.2 billion of special tax obligation ("STO") bonds. The STO
bonds are payable solely from specified motor fu el taxes, motor vehicle
receipts, and license, permit and fee revenues pledged therefor and credited
to the Special Transportation Fund, which was established to budget and
account for such revenues.
As of October 15, 1996, the General Assembly had authorized
$4,157,900,000 of such STO bonds, of which $3,594,700,000 new money borrowings
had been issued. It is anticipated that additional STO bonds will be
authorized annually in amounts ne cessary to finance and to complete the
infrastructure program. Such additional bonds may have equal rank with the
outstanding bonds provided certain pledged revenue coverage requirements are
met. The State expects to continue to offer bonds for thi s program.
On March 29, 1990, S&P reduced its ratings of the State's general
obligation bonds from AA+ to AA, and on April 9, 1990, Moody's reduced its
ratings from Aa1 to Aa. On September 13, 1991, S&P further reduced its
ratings of the State's genera l obligation bonds and certain obligations that
depend in part on the creditworthiness of the State to AA-. On March 17,
1995, Fitch reduced its ratings of the State's general obligation bonds from
AA+ to AA.
The State, its officers and its employees are defendants in numerous
lawsuits. Although it is not possible to determine the outcome of these
lawsuits, the Attorney General has opined that an adverse decision in any of
the following cases mig ht have a significant impact on the State's financial
position: (i) a class action by the Connecticut Criminal Defense Lawyers
Association claiming a campaign of illegal surveillance activity and seeking
damages and injunctive relief; (ii) an action on behalf of all persons with
traumatic brain injury, claiming that their constitutional rights are violated
by placement in State hospitals alleged not to provide adequate treatment and
training, and seeking placement in community residential settings with
appropriate support services; and (iii) litigation involving claims by Indian
tribes to portions of the State's land.
As a result of litigation on behalf of black and Hispanic school
children in the City of Hartford seeking "integrated education" within the
Greater Hartford metropolitan area, on July 9, 1996, the State Supreme Court
directed the legislature to develop appropriate measures to remedy the racial
and ethnic segregation in the Hartford public schools. The fiscal impact of
this decision might be significant but is not determinable at this time.
General obligation bonds issued by municipalities are payable
primarily from ad valorem taxes on property located in the municipality. A
municipality's property tax base is subject to many factors outside the
control of the municipality, inc luding the decline in Connecticut's
manufacturing industry. In addition to general obligation bonds backed by the
full faith and credit of the municipality, certain municipal authorities
finance projects by issuing bonds that are not considered to b e debts of the
municipality. Such bonds may be repaid only from revenues of the financed
project, the revenues from which may be insufficient to service the related
debt obligations.
In recent years, certain Connecticut municipalities have experienced
severe fiscal difficulties and have reported operating and accumulated
deficits. The most notable of these is the City of Bridgeport, which filed a
bankruptcy petition on June 7, 1991. The State opposed the petition. The
United States Bankruptcy Court for the District of Connecticut held that
Bridgeport has authority to file such a petition but that its petition should
be dismissed on the grounds that Bridgeport was not insolvent when the
petition was filed.
Regional economic difficulties, reductions in revenues and increases
in expenses could lead to further fiscal problems for the State and its
political subdivisions, authorities and agencies. Difficulties in payment of
debt service on borrowin gs could result in declines, possibly severe, in the
value of their outstanding obligations, increases in their future borrowing
costs, and impairment of their ability to pay debt service on their
obligations.
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 F und 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 1996-1997 fiscal year, the State revenues allowed
under the amendment for the prior fiscal year shall equal the State revenues
collected for the 1995-1996 fiscal year. Florida personal income will be
determined by the Legislature, from informat ion 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 sup port 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 Florid a 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 1994-95 and 1995-96 with General Revenue
plus Working Capital Funds unencumbered reserves of approximately $319.5
million and $293.3 million, respectively. Estimated fiscal year 1995-96
General Revenue plus Working Capital Funds available total $16.68 billion.
Total effective appropriations for the 1996-97 fiscal year are estimated at
$15.536 billion, resulting in estimated unencumbered reserves of $148.6
million at the end of the fiscal year.
In fiscal year 1995-96, the State derived approximately 60% 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 62%, 6% and 2.8%, 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 1995-96, expenditures from the General Revenue Fund
for education, health a nd welfare and public safety amounted to approximately
43.1%, 34.2% and 15%, 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 per sonal 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 distributio n, 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 r eferendum)
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 expressw ay 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 e ither 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 pr oduce 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 residentia l 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 wh ich ended June 30, 1996, receipts from this source were
$12.016 billion, an increase of 14% from fiscal year 1994-95.
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, 1996, were $1.376 billion. However,
these revenues are al most 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 t he 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 $542.2 million in State fiscal year ended
June 30, 1996. Alcohol ic 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 ce nts per twelve ounces of beer. Most of these proceeds are
deposited into the General Revenue Fund. In fiscal 1995-96 a total of $97.4
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 inc ome 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, 1996, receipts from this
source were $1.087 billion, a decrease of 14% from fiscal year 1994-95.
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 $791.3 million during fiscal year
1995-96, posting a 13% increase from the previous fiscal year. The General
Revenue Fund receives approximately 61% of doc umentary 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 Ed ucation Capital Outlay and Debt Service Trust Fund.
In fiscal year 1995-96, gross receipts utilities tax collections totalled
$546.8 million, an increase of 10.7% 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 mis cellaneous 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 1995-96 total intangible personal property tax collections
were $938.6 million, a 7% decrease 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
$45.6 million during fiscal year 1995-96, down 19% 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 l east 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 1995-96 produced ticket sales of $2.073 billion of which
education received approximately $818.6 million.
Georgia Series
Georgia's economy grew rapidly in the 1980s, resulting in a general
fund reserve. Although the State's economy incurred a slowdown in the early
1990's which effectively eliminated the general fund reserve, revenues once
again began to exceed appropriations in fiscal 1993. The State's revenue
shortfall reserve at the end of Fiscal 1996 was approximately $313 million,
and revenues are estimated to exceed expenditures for Fiscal 1997.
Georgia's unemployment rate was 4.5% for 1996 (January- November
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, s ervices, manufacturing and government. Per
capita income levels are less than the U.S. average (92.9% of the U.S. average
in 1994), 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 immediatel y 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 un der 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) guara nteed 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, institut ions 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 publi c 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 de bt, 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 ent ering 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 7% in fiscal year 1996
from fiscal year 1995, and that these revenue sources generated the following
percentages of total Georgia State revenue in fiscal year 1996:
Sales Tax 34.13%
Income Tax 44.42%
Motor Fuels Tax 4.80%
Lottery 5.00%
Other Taxes 11.65%
TOTAL 100.0%
State expenditures are classified by major policy category for
budgetary purposes. In the fiscal year 1997 operating budget, Georgia
expenditures for educational development, human resources, protection of
persons and property, and transport ation amounted to 54.2%, 24%, 8.5%, and
4.8%, respectively, of total budgeted expenditures. Debt service for issued
obligations accounts for 3.7% of total budgeted expenditures for fiscal year
1997.
The aggregate general obligation debt and guaranteed revenue debt
authorized by the State General Assembly as of February 28, 1997 is $7.9
billion and $193 million, respectively. The aggregate amount of general
obligation debt and guaranteed revenue debt actually outstanding, as of
February 28, 1997, is $4.7 billion. Of this outstanding debt, 30.2% is due
and payable on or before February 28, 2002 and 60.4% is due and payable on or
before February 28, 2007.
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) Two suits for refund
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 (468 US 263)
statute, O.C.G.A. Section 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 addit ional $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, at
the discovery stage.
DeKalb County v. State of Georgia. This suit against the State School
Superintendent and the State of Georgia is based on a claim that the State's
funding formula for pupil transportation is unconstitutional and that the
State should finance the major portion of the cost of a local school board's
desegregation program. The Plaintiffs are seeking approximately $67.5
million in restitution. The Federal District court ruled that the State's
funding formula for pupil transportation was co ntrary to State law, but
ruled in the State's favor on the desegregation costs issue. This ruling
would require a State payment of a state law funding entitlement in the
amount of approximately $34.0 million. Motions to reconsider and amend the
Cour t's judgment were filed by both parties. The State's motion was
granted, in part, which reduced the required State payment to approximately
$28.0 million. Notices of appeal to the Eleventh Circuit Court of Appeals
were filed, and oral arguments wer e heard in October 1996. This case is
still pending. There are approximately five other school districts which
might file similar claims.
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 o r 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 gran ted 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 separat e 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 .0
million, based on best estimates currently available.
Maryland Series
The State's total expenditures for the fiscal years ending June 30,
1994, 1995 and 1996 were $12.351 billion, $13.528 billion and $14.169 billion,
respectively. As of February 26, 1997, it was estimated that total
expenditures for fiscal year 1997 would be $15.080 billion. The State's
general fund had unreserved surpluses of $60 million, $132.5 million and $13.1
million in fiscal years 1994, 1995 and 1996, respectively. The State
Constitution mandates a balanced budget.
In April 1996, the General Assembly approved the $14.631 billion 1997
Fiscal Year Budget. The Budget includes $2.9 billion in aid to local
governments (reflecting a $121.5 million increase in funding over 1996 that
provides for increases in education, health and police aid) and $13.2 million
in general fund deficiency appropriations for fiscal year 1996. The 1997
Budget does not include any proposed expenditures dependent on additional
revenue from new or broad-based taxes. Legislatio n enacted by the 1996
General Assembly reorganized the State's personnel system and reformed the
welfare and Medicaid programs; estimated fiscal year 1997 savings of $29
million ($19.5 million general funds) are incorporated into the fiscal year
1997 Budget. When the 1997 Budget was enacted, it was estimated that the
general fund surplus on a budgetary basis at June 30, 1997, would be
approximately $22.5 million. As of February 26, 1997, it is estimated that
the general fund surplus on a budge tary basis at June 30, 1997, will be
$102.7 million.
In January 1997, the Governor submitted his proposed 1998 Fiscal Year
Budget to the General Assembly. The Budget includes $3.1 billion in aid to
local governments (reflecting a $169 million increase over 1997) and $0.4
million in general fun d deficiency appropriations for fiscal year 1997. As
of February 26, 1997, it is estimated that the general fund surplus on a
budgetary basis at June 30, 1998 will be $7.6 million and that the balance in
the Revenue Stabilization Account of the Stat e Reserve Fund also at June 30,
1998 will be $631 million.
The public indebtedness of Maryland and its instrumentalities is
divided into three basis types. The State issues general obligation bonds for
capital improvements and for various State-sponsored projects. The Department
of Transportation o f Maryland issues limited special obligation bonds for
transportation purposes payable primarily from specific, fixed-rate excise
taxes and other revenue 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 May 1997, 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 fi nance highway, port, transit, rail or aviation
facilities, as of May 1997, 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 May 1997.
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 "Aa3" 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 Allegany County and Garrett County, the bonds of which are
rated "Baa2" and "Baa3," respectively, by Moody's. The Washington Suburban
Sanitary district, a bi-county agency providing water and sewerage services in
Montgomery and Price George's Counties, issues general obligation bonds rated
"Aal" by Moody's and "AA" by S&P as of May 1997. Additionally, some of the
large municipal corporations in Maryland (such as the cities of Rockville and
Annapolis) have issued general obligation bonds.
Massachusetts Series
The economy of the Commonwealth of Massachusetts is experiencing
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 employm ent 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 man ufacturing. 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, and expects to
do so again at the close of fiscal 1997.
In recent years, health 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 and 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, in fiscal
1995 they were $3.398 billion, and in fiscal 1996 they were $3.415 billion.
The average annual growth from fiscal 1992 to fiscal 1996 was 3.9% 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
rate of 7.6% from $75 1.5 million in fiscal 1992 to $1.005 billion in fiscal
1996.
Payments for debt service on Massachusetts general obligation bonds
and notes have risen at an average annual rate of 10.27% from $649.8 million
in fiscal 1989 to $1.184 billion in fiscal 1996. Debt service payments were
$898.3 million in fi scal 1992, $1.14 billion in fiscal 1993, $1.15 billion in
fiscal 1994, $1.23 billion in fiscal 1995 and $1.18 billion in fiscal 1996.
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 $9.256 billion of long-term general obligation debt
outstanding and short-term direct obligations of the Commo nwealth totalled
$240 million.
Certain independent authorities and agencies within the State are
statutorily authorized to use 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 dire ct 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 voter approval at a general or special election. Propositions
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 wat er 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 19.2% 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 $3.246 billion in fiscal 1996. Recent increases are largely a result of
comprehensive education reform legislation enacted in 1993 that requires
annual increase 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 $867
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 m ost 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 Massac husetts 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 effects, 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 728,60 0 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 wa s 5.3% and for 1996 was 4.9%.
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 o f 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 includ ed 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 obligati on 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 tran sferred 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 1994-95.
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 sett lement, 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 appr oximately $97 million less than
constitutionally required and an amount at least this large was appropriated
to the State's local government payment fund in the fiscal year 1996-97.
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 January 1997 foreca st is summarized below.
The State's economic forecast for calendar year 1997 projects modest
growth. Real GDP is projected to grow 2.4% in 1997, on a calendar year basis.
Car and light truck sales are expected to total 15 million units in 1997.
The forecast assumes moderate inflation, accompanied by steady
interest rates. Ninety-day T-Bill rates are expected to average 5.0% for
1997. The United States' unemployment rate is projected to decline to an
average of 5.3% for 1997.
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 1997. This growth reflects the ongoing diversification of the Michigan
economy. The unemployme nt rate is projected to average 5.0% in 1997,
continuing the recent trend to Michigan's unemployment rate being below the
national average compared to the 15-year history of having higher
unemployment.
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 Budget recommendation totaled $8.247 billion. The
budget passed by the Legislature totaled $8.225 billion, approximately $16
billion of which was vetoed by the Governor. An additional $4.3 million was
appropriated in a supplemental appropriation.
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 wh ich 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 milla ge 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 decre ased 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 p
artially 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 distr ict 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 emerge ncies. Calculated on an accrual basis, the
unreserved ending accrued balance of the Budget Stabilization Fund on
September 30, 1995 was $987.9 million and on September 30, 1996 was $614.5
mllion (net of a $529.1 million reserve for future education funding).
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 (ii i) 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 du ring 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 an d 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, 1996, the
outstanding principal amount of all State general obligation bonds was $685
million. On February 12, 1997, 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, 1997.
As of December 31, 1996, approximately $6.27 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 Departm ent 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 securi ty, 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 November 1, 1996, the outstanding principal amount of all
Minnesota general obligation bonds was approximately $2.129 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 w hich 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 t axes, 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% 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 authori zed 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 assumption s 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 A ccount 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 the fiscal year ended 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
million.
For the fiscal year ended 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 o f $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 the fiscal year ended June 30, 1997, total revenues are estimated
to have been approximately $9.215 billion. Total expenditures and transfers
are estimated at $9.488 billion and after deducting a Cash Flow Account
appropriations carry fo rward 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 million will remain.
As of February 1997 total revenues for the next biennium, which begins
on July 1, 1997 and ends on June 30, 1999, are estimated to be approximately
$10.163 billion for fiscal year 1998 and $10.589 billion for fiscal year 1999.
Further revenu e estimates for the next biennium will be available in the
middle part of June 1997.
In 1992 the Minnesota Legislature established the MinnesotaCarer
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 ensur e 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 MinnesotaCarer 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 stat e 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 MinnesotaCarer, 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 th at 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 October 1, 1996, there were
approximately $190 million of certificates of indebtedness enrolled in the
program, all of which will mature before the end of the 1997 calendar year.
The State has not had to make any debt service payments on behalf of school
districts under the program and does not expect to make any payments in the
future. The state expects that school districts will issue certificates of
indebtedness in 1998 and will enroll these certificates in the program in
about the same amount of principle as 1997.
School districts may issue certificates of indebtedness or capital
notes to purchase certain equipment. The certificates or notes may be issued
by resolution of the Board, are general obligations of the school district and
must be payable in not more than five years. As of October 1, 1996 there are
approximately $12 million principal amount of certificates and notes enrolled
in the program.
School districts are authorized to issue general obligation bonds only
when authorized by school district electors or special law, and only after
levying a direct, irrevocable ad valorem tax on all taxable property in the
school district for the years and in amounts sufficient to produce sums not
less than 5% in excess of the principal of an interest on the bonds when due.
As of October 1, 1996, the total amount of principal on certificates and
capital notes issued for equipment and bon ds, plus the interest on these
obligations, through the year 2026, is approximately $3.5 billion.
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 referr ed 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 exp ansion 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% of Minnesota's non-durable goods employment was
concentrated in food and kindred industries, and approximately 18.8% in paper
and allied industries. This compares to approximately 21.7% and 8.9%,
respectively, for comparable sectors in the national economy. Both of these
industries rely heavily on renewable resou rces 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 comp onents, 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%, 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 indus tries 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%. In comparison, U.S.
population grew at an annual compound rate of .9% during this period.
Minnesota population is curr ently forecast by the U.S. Department of Commerce
to grow at an annual compound rate of .8% 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. c ounterpart 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% as compared to 20.1%
nationally. Most of Minnesota's slower growth can be associated with
declining agricultural emplo yment and two recessions in the 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 19 82. In the period
1990 to 1995, non-farm employment growth in Minnesota exceeded national
growth. Minnesota's non-farm employment grew 11.5% compared to 6.6%
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 spite 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% in 1995, as com pared to the national average of 5.2%.
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 prod uce 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), constr uction 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 industri al 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, utiliti es 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
205,200 from May 1992 to October 1996, a recovery of 78% 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 6.2% during the
first ten months of 1995.
The revised estimate as shown in the Governor's Fiscal Year 1998
Budget forecasts Sales and Use Tax collections for Fiscal Year 1997 as $4.390
billion, a 4.0% increase from Fiscal Year 1996 revenue. The Fiscal Year 1998
estimate of $4.56 bil lion, is a 3.9% increase from the Fiscal Year 1997
estimate.
The revised estimate as shown in the Governor's Fiscal Year 1998
Budget forecasts Gross Income Tax collections for Fiscal Year 1997 of $4.71
billion, a 4.4% increase from Fiscal Year 1996 revenue. The estimate for
fiscal year 1998 as shown i n the Governor's Fiscal Year 1998 Budget of $4.830
billion, is a 2.5% increase from the Fiscal Year 1997 estimate. Included in
the Fiscal Year 1998 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).
Fiscal Year 1998 revenues are $200 million lower than they would have been if
the 1996 property tax deduction for local property taxes had not been enacted.
The revised estimate as shown in the Governor's Fiscal Year 1998
Budget forecasts Corporation Business Tax collections for Fiscal Year 1997 of
$1.120 billion. Included in the Corporation Business Tax forecast is a
reduction in the Corporatio n Business Tax rate from 9.375% to 9.0% of net New
Jersey income as well as two policy changes enacted into law in 1995 which (i)
effective June 30, 1997, allow corporations with multi-state operations to
allocate income to New Jersey using a formula which double weights the sales
receipts factor to give a tax preference to corporations that have a higher
concentration of payroll and facilities in New Jersey and (ii) provide a 7.5%
rather than a 9% tax rate for corporations that have net income up to
$100,000. The Fiscal Year 1998 forecast as shown in the Governor's Fiscal
1998 Budget of $1.13 billion, represents a 1.2% increase from the Fiscal Year
1997 estimate.
The revised estimate as shown in the Governor's Fiscal Year 1998
Budget forecasts Other Miscellaneous Taxes Fees and Revenues collections for
Fiscal Year 1997 as $1.932 billion, a decrease from fiscal year 1996 revenue.
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 ens ure 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 $16.109 billion and $15.978
billion for Fiscal 1996 and 1997, respectively. Of the $15.978 billion
appropriated in Fiscal Year 1997 from the General Fund, the Property Tax
Relief Fund, the Casino Control Fund, the Casino Revenue Fund and
Gubernatorial Elections Fund, $6.385 billion (39.9%) is appropriated for State
aid to local governments, $3.751 billion (23.5%) 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), $5.043 billion (31.6%) for Direct State services, $447.0
million (2.8%) for debt service on State general obligation bonds and $352.0
milli on (2.2%) 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
1997 and for Fiscal year 1998 reflect the amounts contained in the Governor's
Fiscal Year 1998 Budget.
The State has made appropriations for principal and interest payments
for general obligation bonds for fiscal years 1994 through 1997 in the amounts
of $119.9 million, $103.6 million, $466.3 million and $447.0 million,
respectively. The Gove rnor's Fiscal Year 1998 Budget for Fiscal Year 1998
includes an appropriation in the amount of $491.2 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 3,555,200
jobs in 1996, of which appro ximately 846,800 were in manufacturing.
According to the North Carolina Bureau of Labor Statistics, in December, 1996,
the State ranked eleventh in non-agricultural employment and eighth in
manufacturing employment. During the period from 1980 to 1995, per capita
income in the State grew from $7,999, to $21,103, an increase of 163.8%. The
North Carolina Employment Security Commission estimated the December 1996
seasonally adjusted unemployment rate to be 3.8%, as compared with a national
unemployment rate of 5.3%.
Agriculture is a basic element in North Carolina's economy. Gross
agricultural income in 1995 reached nearly $7.0 billion, placing the State
eighth in the nation in gross agricultural income. The poultry industry is the
leading source of agricultural income, accounting for 29% of gross
agricultural income. The pork industry continues to expand and North Carolina
is now the second largest pork-producing State. Pork production accounts for
18% of gross agricultural income. The tobacco industry remains important to
North Carolina, providing over $1.0 billion of gross agricultural income.
North Carolina's agricultural diversity and a continuing emphasis on
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 has the third most
diversified agricultural economy in the nation. In 1995, there were
approximately 58,000 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, contribu tes over $45
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 3,721,300 in 1995, an increase of 30.3%.
The Travel and Tourism Division of the North Carolina Department of
Commerce has estimated that approximately $9.2 billion was spent on tourism in
the State in 1995, an increase of approximately 8.1% over 1994, two-thirds of
which was derived from out-of-state travelers. The Travel and Tourism
Division estimates approximately 161,000 people were employed in tourism-
related jobs in the State. The effects of severe hurricanes in 1996 may have
an adverse effect in certain areas of the Sta te as to tourism related
activities.
Revenue Structure. North Carolina's three major operating funds which
receive revenues and from which monies are expended are the General Fund, the
Highway Fund and the Highway Trust Fund. The 1989 General Assembly 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 prohibit ion 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
short-term 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, a highway use tax o n long term rentals and retail
sales of motor vehicles, and a 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 Trea sury at the beginning of the period.
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.
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 General Statute Section 14 3-25 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 p olicy of this
Article is to provide and insure 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
requ ired 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.
In November 1996, the voters of the State approved a Constitutional
amendment giving the Governor the power to veto budgetary and certain other
legislative matters.
Actual General Fund tax collections totaled $9.459 billion in 1995-96,
an increase of 1.0% over 1994-95. This modest growth rate was the result of a
comprehensive tax reduction package enacted by the 1995 Session of the General
Assembly. The individual income tax personal exemption was increased from
$2,000 to $2,250 for 1995 and further to $2,500 for 1996 and beyond. In
addition, a $60 child tax credit was enacted beginning with the 1995 tax year.
The remaining portion of the State i ntangibles tax was also repealed as of
January 1,1995. The 1995 tax package was estimated to lower State taxes by
$358.8 million in 1995-96 and $377.6 million in 1996-97. Additionally, the
portions of the State alcoholic beverage tax and utility gr oss receipts
franchise tax which are shared with local governments were earmarked from
State General Fund revenue beginning in 1995-96. These funds were
appropriated from the General Fund in 1994-95. This change reduced State
General Fund Tax revenue by an estimated $151.5 million in 1995-96 and $160.0
million in 1996-97. Adjusting for the 1995 tax reductions and the earmarking
of locally-shared taxes, State General Fund tax revenue would have grown by an
estimated 6.4% during 1995-96 accordi ng to the Office of State Budget and
Management.
The General Assembly reduced State taxes further during its 1996
Session. The State sales and use tax rate on food consumed at home was
reduced from 4.0% to 3.0% beginning January 1, 1997. The State corporate
income tax rate will be reduced from 7.75% to 7.5% in 1997, 7.25% in 1998,
7.0% in 1999, and 6.9% in 2000. The State homestead exemption was increased,
decreasing the ad valorem tax base for counties. Most privilege license taxes
were eliminated as of January 1, 1997. The State soft drink tax will also be
phased out over three years beginning July 1, 1997.
Additionally, the General Assembly eliminated the individual income
tax credit for North Carolina dividends and repealed the corporate income tax
deduction for North Carolina dividends.
Overall, the 1996 tax reduction package lowered State General Fund tax
revenue by approximately $85.2 million in 1995-96, and is estimated by the
Office of State Budget and Management to be $237.5 million in 1996-97, growing
to $339.5 million in 2000-01.
The Highway Fund revenue collections totaled $1.049 billion in fiscal
year 1995-96, $26.3 million above budgeted revenues. Sources of revenues for
the Highway Fund include taxes on the sale of motor fuels as well as
registration and licensin g 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. The Highway
Trust Fund was budgeted to collect $698.4 million in 1995-96. However,
revenue collections exceeded the budgeted amount by $53.3 million in that
year.
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 taxs 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 therefor. Furthermore, no
legislation has been ena cted 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 s ystem 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 State filed
a motion to dismiss, w hich was denied at the trial court level. An appeal
from the decision is pending with the North Carolina Supreme Court. 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 w ho 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 comp laint 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 ha s
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 or iginal 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, ma ny 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 violati on
of several State constitutional provisions.
On May 31, 1995, the Superior Court issued an order ruling in favor of
the plaintiffs. Under the terms of the order, the Superior Court found that
the act of the General Assembly that repealed the tax exemption on state and
local government retirement benefits is null, void and unenforceable and that
retirement benefits which were vested before August 1989 are exempt from
taxation. An appeal from this order is pending in the North Carolina Supreme
Court.
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. In addition, it is anticipated that the decision reached in
this case will gover n the resolution of tax refund claims made by retired
state and local government employees for taxes paid on retirement benefit
income for tax years after 1991. Furthermore, if the order of the Superior
Court is upheld, its provisions would apply pr ospectively to prevent future
taxation of State and local government retirement benefits that were vested
before August of 1989. 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 st ate 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 a nd $15 million
or more in Woodward, all ultimately payable, at least initially, from the
funds of the Retirement Systems. The North Carolina Court of Appeals and
Supreme Court dismissed the fiduciary claims for failure to state a claim and
certain c onstitutional claims as barred by the statute of limitations. The
primary claim for unconstitutional impairment of contract was tried in
Superior Court in May, 1995. The Superior Court issued an order ruling in
favor of plaintiffs. The Order has b een appealed to the Supreme Court of
North Carolina and oral arguments were heard in September, 1996. The
plaintiffs also have filed actions in Federal Court asserting the same claims,
along with claims for violations of constitutional rights in the taxation of
disability benefits. The Federal Court actions have been stayed pending
resolution of the actions in State Court. The Attorney General's Office
believes that sound legal arguments support the State's position in these
cases.
5. Patton case -- Federal Retirees. Federal retirees filed a
class action suit in Wake County Superior Court in 1995 seeking monetary
relief for taxes paid since 1989. This action is being held in abeyance
pending the outcome in Bailey . Should plaintiffs prevail in Bailey, such a
result, these Federal retirees allege, would re-establish the disparity of
treatment between state and Federal pension income which was held
unconstitutional in Davis v. Michigan (1989). In Davis, the U nited States
Supreme Court ruled that a Michigan income tax statute which taxed federal
retirement benefits while exempting those paid by state and local governments
violated the constitutional doctrine of intergovernmental tax immunity. At
the time of the Davis decision, North Carolina law contained similar
exemptions in favor of state and local retirees. Those exemptions were
repealed prospectively, beginning with the 1989 tax year. Potential refunds
exceed $300 million. The repeal of the e xemptions is challenged by state and
local government retirees in the Bailey case.
6. 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 th e 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 s
tatute beginning with the 1994 tax year. The effect of this ruling was to
increase collections by rendering all stock taxable on 100% of its value. The
North Carolina Supreme Court reversed the Court of Appeals and held that the
tax is valid and co nstitutional. On February 21, 1996, the United States
Supreme Court reversed the decision of the Supreme Court of North Carolina and
held that the intangibles tax on out-of-state stock shares violated the
Commerce Clause. It remanded the case to th e North Carolina Supreme Court
for consideration of possible remedies, including refunds. On February 2,
1997, the North Carolina Supreme Court issued a decision determining that the
unconstitutional portion of the statute is severable and referred the matter
to the North Carolina General Assembly for legislative action. Legislative
options available to the General Assembly include paying refunds to taxpayers
who paid the tax, but took appropriate steps to claim that a refund was due.
The estimated cost of paying such refunds is approximately $150 million.
Ohio Series
State Economy and Budget. Non-manufacturing industries now employ
approximately 79% of all non-agricultural payroll workers in the State of
Ohio. Economic activity in Ohio, as in many other industrially developed
states, tends to be more cyclical t han in some other states and in the nation
as a whole. Agriculture and related agricultural sectors combined also is an
important segment of the Ohio economy. The financial condition of the State
has fluctuated in a pattern related to national econ omic 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 sin ce
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 S tate 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 prima rily of personal income and sales-use taxes. The GRF
ending (June 30) biennial 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 $1.1385 billion ending fund and cash balances, respectively, for
the GRF for fiscal year ended June 30, 1996. In addition, at the end of
April, 1997, the Budget Stabili zation 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 increa se over those for the 1994-95 fiscal
biennium. The June 30, 1996 GRF ending fund balance was over $781 million,
which was higher than forecasted. In accordance with Ohio General Assembly
direction, $100 million was transferred from the GRF to the S choolNet Plus
Fund, a fund providing for the elementary and secondary school computer
network, and $30 million to the State Infra-Structure Bank Fund, a new fund
established for state transportation infrastructure. Approximately $400.8
million is se rving as a basis for temporary 1996 personal income tax
reductions aggregating that amount.
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 and as of April 30, 1997, the
TOF cash balance was $4.9 678 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 approximately $742 million in December 1995. GRF cash flow
deficiencies have occurred in four months of the current fiscal year ending
June 30, 1997, the highest being $565.7 million in December 1996.
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 of $750,000 and (ii)
repel invasion, suppress insurrec tion or defend the State in war.
From 1921 to March 27, 1997, the voters of Ohio, by fifteen
constitutional amendments, have authorized the incurrence of state debt to
which taxes or excises were pledged for payment, all of which related to
capital facilities financing, except for t hree funding veterans' bonuses.
The only such tax-supported debt still authorized to be incurred are highway
and local Infrastructure Bonds.
A 1995 constitutional amendment extended the local Infrastructure Bond
program. As of March 27, 1997, the General Assembly had authorized
approximately $1.855 billion of such bonds, approximately $110 million of
which the authority to issue expired on December 31, 1996. The amendment
authorizes not more than $1.2 billion to be outstanding at any 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 milli on of Coal Development Bonds. As of March 27,
1997, $95 million of Coal Development Bonds were issued, of which $32.35
million were outstanding.
A 1987 state constitutional amendment authorized the issuance of $1.2
billion of state full faith and credit obligations for general obligation
Infrastructure Bonds to finance local infrastructure improvements of which no
more than $120 million may b e issued in any calendar year. A 1995
constitutional amendment extended this authority by authorizing an additional
$1.2 billion to be issued over ten years. As of March 27, 1997, approximately
$1.08 billion of such obligations were issued, of whic h approximately $880
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 a nd 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 million in state general obligation bonds to be outstanding for parks,
recreation and natural resource purposes (no more than $50 million to be
issued in any one fiscal year). The Commissioners of the Sinking Fund, as of
March 27, 1997, had authorization to issue the following additional general
obligation bonds: $55 million coal development, $290 million highway capital
improvements and $130 million natural resources.
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 c redits, 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.
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. Suc h 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 March 27, 1997, the OPFC had i ssued approximately
$4.121 billion for higher education facilities, approximately $2.126 billion
of which were outstanding, approximately $1.038 billion for mental health
facilities, approximately $417.7 million of which were outstanding and $184.75
million for parks and recreation facilities, approximately $100 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 o f 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 by 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. A
1996 issue o f $168.74 million of taxable bonds refunded the outstanding bonds
and provided additional funds for the program. The highest future fiscal year
debt service on those bonds, which are payable through 2022 is approximately
$16.167 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 primari ly by lease-rental supported obligations such
as those issued by OPFC and OBA.
The general capital appropriations act for the 1997-1998 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 amoun ts $559 million for higher education
capital facilities projects (a substantial number of which are renovations of
equipment and improvements to existing facilities), $68.4 million for mental
health and retardation facilities projects, and $22.7 mill ion for parks and
recreation facilities. It also authorizes the OBA to issue obligations in the
amounts of $197.4 million for local jails and prisons, $37.8 million for
Department of Youth Services facilities, $125.65 million for Department of
Admin istrative Services facilities, $80.7 million for Ohio Arts Facilities
Commission facilities, $75.8 million for Department of Public Safety and
$27.75 million for Ohio Department of Transportation facilities. In addition,
the Treasurer of State has b een authorized to issue bonds to finance
approximately $238.64 million of capital improvements for elementary and
secondary public school facilities ($68.64 issued). As of March 27, 1997, the
Commissioners of the Sinking Fund had additional General Assembly
authorization to issue $55.0 million of additional Coal Development Bonds,
$290 million of highway obligation bonds, and $130 million of Natural
Resources Bonds.
Capital appropriations legislation provides for two new categories of
revenue-type financing. The Ohio Building Authority is authorized to issue
lease revenue obligations to assist in the financing of up to 15% of the
estimated cost of certain Ohio sports facilities. In addition, a revolving
fund is created to assist in financing local multimodal and intermodal
transportation facilities, initially funded with a deposit of $30 million of
GRF moneys.
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 prede cessor
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 wi th 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 high way use receipts) of the State after provision
for the payment of certain other State obligations. The Ohio Department of
Transportation appropriations bill for the 1998-1999 biennium, as now passed
by both Houses and signed by the Governor repeals the "full faith and credit"
and use of state revenue provisions.
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 pu rposes; 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. The State also
is party to certain litigation questioning the constitutionality of the
State's system of school fundin g, which question recently was decided by the
Ohio Supreme Court. The Ohio Supreme Court concluded in a decision released
March 24, 1997 that major aspects of the system are unconstitutional. The
Court also found the R.C. Chapter 3318 school facili ties program
constitutionally infirm, but only "to the extent it is underfunded. " It
ordered the State to provide for and fund sufficiently a system complying with
the Ohio Constitution, staying its order for a year to permit time for
responsive co rrective actions by the General Assembly. In response to a
state motion for reconsideration and clarification, the Court on April 25,
1997 indicated that property taxes may still play a role in, but "can no
longer be the primary means" of, school fu nding. The Court also confirmed
that contractual repayment provisions of certain debt obligations issued for
school funding will remain valid after the stay terminates.
The outstanding state bonds issued by the OPFC are rated AA- by S&P
and Aa3 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 Aa1 by Moody's.
State Employees and Retirement Systems. The State has established five
public retirement systems to provide retirement, disability retirement and
survivor benefits. The Public Employees Retirement System ("PERS"), the
largest of the five, covers bo th 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 the most recent year reported by the particular system, the
unfunded accrued liabilities of STRS and SERS were $8.0038 billion and $1.5581
billion, respectively, and the unfunded accrued liabilities of PERS, HPRS and
PFPDS were $4.4422 billion, $5 3.9 million and $1.2075 billion, 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 ove r 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 fina nce 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 elimina te 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 st
ated standards and controls, permits the State to purchase limited amounts of
the municipality's short-term obligations (used only once, in 1980).
As of 1996, the act has been applied to 11 cities and to 13 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
3 villages remain under the procedure. A new "fiscal watch" status has
recently been added, with the city of Youngstown the first to be placed in
this status.
The fiscal emergency legislation was recently amended to extend its
potential application to counties (88 in the State) and townships. This
extension is on an "if and as needed" basis, and not aimed at particular
existing fiscal problems of those su bdivisions.
New legislation addresses larger school districts in financial
straits. It is similar to that for municipal "fiscal emergencies," but is
particularly tailored to certain school districts and their present and
potential fiscal problems. It has been applied to 4 districts, and 8
districts have been placed on preliminary "fiscal watch" status.
Federal courts have ruled that the State shared joint liability with
the local school districts for segregation in public schools in Cincinnati,
Cleveland, Columbus, Dayton and Lorain. Subsequent trial court orders
directed that remedial costs be sh ared equally by the State and the
respective local districts. For that purpose approximately $75.8 million was
expended in the 1992-93 biennium and approximately $119 million in the 1994-95
biennium, and approximately $144.8 million appropriated for the current
biennium, and approximately $90.8 million included in the pending
appropriations bill for the 1998-99 biennium.
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 resu lting 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 of the Commonwealth's
economic structure, with nearly one-fourth of the Commonwealth's total land
area devoted to cropland, pasture and farm woodlands.
In 1996, the population of Pennsylvania was 12.1 million people,
ranking fifth in the nation. According to the U.S. Bureau of the Census,
Pennsylvania experienced a slight increase in population from the 1985
estimate of 11.8 million. Pennsylvania has a high proportion of persons 65 or
older, and 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 stati stical areas,
together comprise approximately 50% of the Commonwealth's total population.
The State's workforce is estimated at 5.9 million people, ranking as
the sixth largest labor pool in the nation. Pennsylvania's average annual
unemployment rate remained below the national average between 1986 and 1990.
Slower economic growth cause d 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 7.1% in 1993. Seasonally adjusted data
for January 1997 shows an unemployment rate of 4. 7%, compared to an
unemployment rate of 5.4% 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 administ rative 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 i n 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 depart ments, 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 t he 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 s tatements 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 Fun d 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, au gmentations 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 us e tax (34.8% of General
Fund revenues in fiscal 1996), the 2.8% personal income tax (32.9% of General
Fund revenues in fiscal 1996) and the 9.99% corporate net income tax (10.0% of
General Fund revenues in fiscal 1996). 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. Revenu es 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 ($6.67
billion of fiscal 1995 expenditures, $6.99 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 fi scal 1995 expenditures, $12.9 billion of the
fiscal 1996 expenditures and $13.2 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 program s 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-undesigna ted 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 through 1996 fiscal years. As of June 30, 1996, the
fund bal ance totaled $1.986 billion, including an unreserved-undesignated
fund balance of $378.2 million.
General Fund: Financial Condition/Results of Operations.
Five Year Overview (GAAP Basis). For the five year period fiscal 1992
through fiscal 1996, total revenues and other sources rose at a 4.6% average
annual rate while total expenditures and other uses grew by 6.0% annually.
The majority of the increa se 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. A reduction in debt servic e costs at an
average annual rate of 29.1% over the five year period is a result of reduced
short-term borrowing for cash flow purposes. Improved financial results and
structural cash flow modifications contributed to the lower borrowing.
Program areas having the largest increase in costs for the fiscal 1992
to fiscal 1996 period were for protection of persons and property, due to an
expansion of state prisons, and for public health and welfare, due to rising
caseloads, program utiliz ation and increased prices. Efforts to control costs
for various social welfare programs and the presence of favorable economic
conditions have led to a modest 5.6% increase for public health and welfare
costs for the five year period.
Fiscal 1995 Financial Results (GAAP Basis). Revenues and other
sources totaled $23.772 billion, an increase of $1.135 billion (5.0%) over the
prior fiscal year. The greatest increase was $817.9 million in taxes which
represents a 5.6% increase over taxes in the prior fiscal year. Expenditures
and other uses rose by $1.364 billion to $23.821 billion, 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. Two items predominately contributed to
the fund balance decline. First, a more comprehensive procedure was used for
fiscal 1995 to compute the liabilities for certain public welfa re programs
leading to an increase for the year-end accruals. Second, a change to the
methodology used to calculate the year-end accrual for corporate tax payables
increased the tax refund liability by $72 million for the 1995 fiscal year
when compared to the previous fiscal year.
Fiscal 1995 Financial Results (Budgetary Basis). Commonwealth
revenues for the 1995 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, an increase of $204.2 million over the fiscal 1994 cl osing
unappropriated surplus prior to transfers. Commonwealth revenues were $459.4
million, 2.9%, above the estimate of revenues used at the time the budget was
enacted. Corporation taxes contributed $329.4 million of the additional
receipts due la rgely to higher receipts from the corporate net income tax.
Sales and use tax revenues also showed strong year-over-year growth that
produced above-estimate revenue collections. Sales and use tax revenues were
$5.527 billion, $128.8 million above t he enacted budget estimate and 7.9%
over fiscal 1994 collections. Personal income tax receipts for fiscal 1995
were slightly above the budgeted estimate. 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 that were higher than expected and translated
into above-estimate tax revenues.
Fiscal 1996 Financial Results (GAAP Basis): For fiscal 1996 the fund
balance was drawn down $53.1 million from the balance at the end of fiscal
1995 to $635.2 million. A planned draw down of the budgetary unappropriated
surplus during fiscal 1996 c ontributed to expenditures and other uses
exceeding revenues and other sources by $28.0 million. Consequently, the
unreserved fund balance declined by $61.1 million, reducing the balance to
$381.8 million at the end of fiscal 1996. Total revenues a nd other sources
increased by 8.7% for the fiscal year led by a 24.2% increase in
intergovernmental revenues.
Fiscal 1996 Financial Results (Budgetary Basis): Commonwealth
revenues for the fiscal year were above estimate and exceeded fiscal year
expenditures and encumbrances. Prior to reserves for transfer to the Tax
Stabilization Reserve Fund, the fiscal 1996 closing unappropriated surplus was
$183.8 million, $65.5 million above estimate. Commonwealth revenues (prior to
tax refunds) for the fiscal year increased by $113.9 million over the prior
fiscal year to $16.339 billion representing a growth r ate of 0.7%. Tax rate
reductions and other tax law changes substantially reduced the amount and rate
of revenue growth for the fiscal year. Sales and use tax revenues were $5.682
billion or 2.8% over fiscal 1995 collections. Personal income tax re ceipts
for fiscal 1996 totaled $5.374 billion, or 5.7% over collections for fiscal
1995. Included in that increase was $67 million in net receipts from a tax
amnesty program that was available for a portion of the 1996 fiscal year.
Some portion of the tax amnesty receipts represent normal collections of
delinquent taxes. The tax amnesty program is not expected to be repeated.
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, representi ng approximately 1.1% of general fund annual
commonwealth revenues.
Fiscal 1997 Budget: The enacted fiscal 1997 budget provided for
expenditures from commonwealth revenues of $16.376 billion, a 0.6% increase
over total appropriations from commonwealth revenues in fiscal 1996. The
appropriations increase for fiscal 1997 is one of the lowest rates in recent
years. The revenue estimate for fiscal 1997 includes provision for a $15
million tax credit program enacted with the fiscal 1997 budget for businesses
creating new jobs.
Increased authorized spending for fiscal 1997 is driven largely by
increased costs of the corrections and the probation and parole programs.
Continuation of the trend of a rapidly rising inmate population increases
operating costs for correctional f acilities and requires the opening of new
facilities. The fiscal 1997 budget contains an appropriation increase in
excess of $110 million for these programs. The approved budget also contains
some departmental restructurings.
A major reform of the current welfare system was enacted in May 1996 to
encourage recipients toward self-sufficiency through work requirements, to
provide temporary support for families showing personal responsibility and to
maintain safeguards for t hose who cannot help themselves. Net savings to the
fiscal 1997 budget of $176.5 million is anticipated. Many of these savings
are redirected in the fiscal 1997 budget toward providing additional support
services to those working and seeking work.
Fiscal 1998 Proposed Budget: Revenue estimates in the proposed budget
were developed using a national economic forecast with projected annual growth
rates below 2%. Total commonwealth revenues before reductions for refunds and
proposed tax changes are estimated to be $17.339 billion, 2.4% above revised
estimates for fiscal 1997. Proposed appropriations against those revenues
total $16.916 billion, a 2.7% increase over currently estimated fiscal 1997
appropriations. The actual budget, as enac ted, for fiscal 1997-98 is $17.1
billion, and provides over $170 million in tax cuts for Pennsylvania
businesses and individuals.
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 proje cts 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 $5.055 billion at June 30, 1996. Over
the 10-year period ended June 30, 1996, total outstanding general obligation
debt increased at an annual rate of 1.1%. All outstanding general obligation
bonds of the Commonwealt h 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, m ay not exceed an 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 fund ed within the
succeeding fiscal year's budget. Pennsylvania issued a total of $550.0
million of tax anticipation notes for the account of the General Fund in
fiscal 1997, all of which matured on June 30, 1997, to be paid from fiscal
1997 General Fun d 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. As of March 1997, t here were $24.7 million of 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 ass ets 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 deb t currently
outstanding as of December 31, 1996: Delaware River Joint Toll Bridge
Commission ($53.9 million), Delaware River Port Authority ($523.8 million),
Pennsylvania Economic Development Financing Authority ($1.372 billion),
Pennsylvania Energy Development Authority ($118.0 million), Pennsylvania
Higher Education Assistance Agency ($1.409 billion), Pennsylvania Higher
Educational Facilities Authority ($2.667 billion), Pennsylvania Industrial
Development Authority ($416.2 million), Pennsylv ania Infrastructure
Investment Authority ($205.9 million), Pennsylvania Turnpike Commission
($1.206 billion), Philadelphia Regional Port Authority ($61.1 million), and
the State Public School Building Authority ($324.0 million). In addition, the
Gov ernor 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 ($2.358 b illion of revenue bonds as of December 31, 1996), 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 Philadelphi a ($1.34 million of the loan
principal was outstanding as of December 31, 1996).
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 s uits 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 1997); (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 d istrict 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 fundi ng of the judicial system was
in conflict with the Pennsylvania Constitution but stayed judgment 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 three-year court monitored settlement which will expire in January
1998; (e) Actions have been filed in both state and federal court by an
association of rural and small schools and several individual school districts
and parents challenging the cons titutionality of the Commonwealth's system
for funding local school districts. The federal case has been stayed pending
resolution of the state case. The state trial was held in January 1997, and
the record remains open. There is no available esti mate 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
Commonw ealth, 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 21, 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
in tervening 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 pursue new
constitutional challeng es in the Commonwealth Court; however, the
Commonwealth Court has previously examined and confirmed the Act's
constitutionality; (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
re gions 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 Decemb er 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 installmen t payments through
1998; and (h) In November 1995, the Commonwealth and the Governor, along with
the City of Philadelphia and its Mayor, were joined as additional respondents
in an enforcement action commenced in Commonwealth Court in 1973 by the Pen
nsylvania Human Relations Commission against the School District of
Philadelphia pursuant to the Pennsylvania Human Relations Act. The
enforcement action was pursued to remedy unintentional conditions of
segregation in the public schools of Philadel phia. The Commonwealth and the
City were joined in the "remedial phase" of the proceeding to determine their
liability, if any, and to pay additional costs necessary to remedy the
unlawful conditions found to exist in the Philadelphia public schools . After
trial, Judge Smith issued an Opinion and Order, granting in relevant part,
judgement in favor of the School District of Philadelphia and ASPIRA and
against the Commonwealth and Governor. The Commonwealth appealed and
requested the Supreme C ourt to enter judgements in favor of the Commonwealth
and the Governor on all claims. Briefs have been filed, and the matter is
awaiting argument before the Supreme Court.
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
as 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 199 1. 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 coop
eration 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 30, 1996.
PICA has issued $1,761,710,000 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 Jun e 30, 1992, of $224.9 million. The audited General
Fund balance as of June 30, 1996, showed a surplus of approximately $118.5
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 m illion, 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, 1995 and 1996
with surpluses in the General Revenue Fund of $2 95 million, $768 million,
$1.006 billion, $615.3 million, $1.633 billion, $2.239 billion, $2.101
billion, and $2.271 billion, respectively. Since the early l990's, the
State's economy has rebounded in several areas and has, to a large extent,
signif icantly improved its performance since the deep recession of the
1980's.
In the past decade, the Texas economy has seen a major shift from oil
and gas industry reliance to diversification into the technology and computer
industry. In 1981, the gas, oil and chemical industry accounted for 26% of
the State's total output of goods and services. Today, those businesses
account for only 10% of the State's economy.
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 1995, the
unemployment rate h ad declined to just over 6.0% and by September 1996, it
had again declined to 5.7%. As of February 1997, the unemployment rate was
5.5%.
In the overall race for new job growth, Texas has been the national
leader for most of the l990's. Total employment in Texas has been steadily
improving since 1991. Total non-farm employment stood at 8.237 million in
1996. This was an incr ease of 128,000 non-farm jobs in a one-year time span.
Since 1990, 1.143 million jobs have been created, of which approximately 40%
were created in the service sector.
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 excee d 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 Constitu tion does
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 c onstitute "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. I n some cases, the authorized indebtedness may not be
issued without the approval of the Legislature, but in other cases, the
constitutional amendments are self-operating and the debt may be issued
without specific legislative action. The total amount of general obligation
bonds that have been authorized by the voters is in excess of $8.64 billion.
Bond income during the State's fiscal year ending August 31, 1996 stabilized
from a trend toward increased issuance of non-self supporting Texas bond s
whereby income from such bonds has declined from $656,915,000 for fiscal year
1994 to $430,293,000 for fiscal year 1995 and increased slightly to
$451,857,000 in 1996. On August 31, 1996, Texas had $3.04 billion in bonds
outstanding which must be paid back from the State's general revenue fund.
This is approximately the same amount of such bonds outstanding at the end of
fiscal 1995 and 1994, and is up from $2.3 billion in such bonds outstanding at
the end of fiscal 1993, $1.8 billion outsta nding 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 by 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 importa nce 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 27.5%
of total revenue during fiscal year 1996. Sales taxes are t he State's
second largest source of revenues (and by far the largest source of tax
revenue), accounting for approximately 26.8% of the State's total revenues
during fiscal year 1996. Licenses, fees and permits, motor fuels taxes and
net lottery proc eeds, accounted for approximately 9.5%, 5.7% and 4.2%,
respectively, of the State's total revenue in fiscal year 1996. The
remainder of the State's revenues are derived primarily from other taxes.
The State has no personal income tax. The State do es 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 1996. The corporate franchise tax is, in essence, based
up on 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, 1995 and 1996 amounted to approximately $23.622 billion,
$26.190 billion, $29.647 billion, $33.795 billion, $36.707 billion, $38.682
billion and $40.488 bi llion, 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, $18.859 billion and $19.762 billion, respectively.
The 74th 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 totaling $45.1 billion from general revenue
related funds and $79.9 bi llion from all fund sources. The 1996-97 biennium
budget increased general revenue funding by 10.9%, and increased funding from
all funds by 12.5%. Funding for education was increased by $2.3 billion, or
6.9%, while funding for health and human serv ices was 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 the 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 constituti onal 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
authoriza tion, 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. For example, 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 su bstantial weakness in the oil and gas
industry, mining employment in the State totals approximately 160,800, a
decrease of approximately 14% from July 1990. The shift of drilling activity
to other parts of the world and weak natural gas prices indic ate 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 c ompanies, 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 closin gs 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 subsidi aries of a
single bank holding company). No Texas banks failed in 1994 or 1995; however,
one bank failed in 1996.
The Texas banking industry has made substantial strides toward
recovery during the l990's. Texas bank profits in 1993, 1994, 1995 and 1996
were $2.4 billion, $1.9 billion, $2.3 billion and $2.5 billion, respectively.
Total loans, total equi ty 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 894
banks at the end of September 1996, compared to 991 banks in 1994 and down
from 1,125 banks as of t he end of 1991. It is anticipated that the number of
banking organizations in the State will continue to drop, although the number
of branch locations 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 and 1996 was 1.16% and 1.23%, respectively.
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 fro m 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 1996. However, in terms of profits, after a nearly flat
year in 1991, the State's thrifts have post ed 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 earnings by 59% in 1995. Texas' savings and loan p roblems 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 restricti ons.
The 1995 total value of taxable property in Texas School Districts
(the most recent information available) amounted to approximately $660.5
billion in 1995, according to records compiled by the Property Tax Division of
the Office of the Compt roller (derived from school districts in the State).
This $660 billion valuation total included approximately $256.3 billion of
single-family residences (after allowing for exemptions), a strong 6.6%
increase over the 1994 level. The value of multi -family residential property
values increased 8.4%, and the value of commercial and industrial real estate
increased 2.9% to $134.8 billion in the same period. However, the increase in
valuation for commercial and industrial personal property was 7.7 % in the
same year. The value of vacant lots and rural land was virtually unchanged.
The only real declines were in the utilities and oil and gas industry which
declined 4.6% and 11.8% from 1994 to 1995. The 11.8% decline in the oil and
gas indust ry represented a $4.3 billion decline.
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.
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-t iered education finance structure, known as the
Foundation School Program. Tier 1 provides that each school district is
entitled to basic allotment of $2,300.00 per student, financed by ad valorem
taxes of $.86 per $100.00 valuation on property with in 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, t he 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 action s 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. O n 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 plain tiffs 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 were 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. Property tax reform, which would have resulted in a substantial
reduction in tax rates imposed by school districts, was one of the key
proposals to be put forward during the 1997 legislative session. While both
the House and Senate chambers of the legislature passed proposals that would
have reduced school property tax by differing (although significant) amounts,
the re was such a wide variance between the proposals that no such property
tax reform measure was passed by the Texas legislature during the 1997
session.
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 large st 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 militar y 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 b
udget 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 budge tary 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 m aintained. 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 expecte d revenues in any subsequent forecast. The
Revenue Stabilization Fund consists of an amount not to exceed 10% 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, pu blic 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 f inancial 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 o bligation.
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 r evenues of Virginia; and to redeem a
previous debt obligation of Virginia. Total indebtedness issued pursuant to
this Section may not exceed 30% 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) provides 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 approve d 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 pr eceding 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% 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-third s 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 Accou nts
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 com mitted 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 Transportat ion 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 construction,
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 Developme nt 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 respecti ve 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, 40
incorporated cities, and 190 incorporated towns. Virginia is unique in that
cities and counties are independent, and their land areas do not overlap. The
largest expenditure by local gove rnments 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 bene fits.
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 in 1994, the Virginia General Assembly passed
emergency legislation to provide payments in five annual installments to
Federal retirees in settlement of their claims as a result of Davis. In 1995
and 1996, the General Assembly passed legislation allowing more retirees to
participate in the settlement. As of April 15, 1996, the estimated total cost
to Virginia for the settlement was approximately $316.2 million.
On September 15, 1995, the Supreme Court of Virginia rendered its
decision in Harper, reversing the judgement of the trial court, entering final
judgement in favor of the taxpayers, directing that the amounts unlawfully
collected be refunded with sta tutory interest. Virginia issued refund checks
on November 9, 1995, and interest stopped accruing as of November 3, 1995.
The cost of refunding all Virginia income taxes paid on Federal government
pensions for taxable years 1985, 1986, 1987 and 198 8 to Federal government
pensioners who opted out of the settlement was approximately $78.7 million,
including interest earnings.
The total cost of refunding all Virginia income taxes paid on Federal
pensions on account of the settlement (approximately $316.2 million) and the
judgment ($78.7 million) is approximately $394.9 million, of which $203.2
million ($124.5 million in re spect of the settlement and the entire $78.7
million in respect of the judgment) has been paid, leaving $191.7 million
payable in respect of the settlement - approximately $63.2 million in fiscal
year 1997, $62.5 million on March 31, 1998 and (subjec t to appropriation) $66
million on March 31, 1999.
Most recently, Moody's has rated the long-term general obligation
bonds of Virginia Aaa, and S&P 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 o ther 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.
A
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 i mpair 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 satisfact ory, 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 on e 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. Manag ement 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.
BB
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 capac ity to meet timely interest and principal payment.
B
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 inte rest 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.
CC
The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
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 payme nt. 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.
Aa
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 n ot 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 sug gest 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.
Ba
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.
B
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.
Ca
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.
C
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 cat egories 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 po sitions 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 i nternal 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. Variabili ty 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 t he 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.
AA
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+.
A
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 ci rcumstances 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, howe ver, 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 th e obligor in satisfying its debt service requirements.
B
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 th e 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 c ategories.
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>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1997
Principal
Long-Term Municipal Investments_100.0% Amount Value
__________ __________
<S> <C> <C>
Connecticut_81.9%
Bridgeport 5.25%, 3/1/2017 (Insured; AMBAC)................................. $ 4,800,000 $ 4,553,136
Connecticut:
5.50%, 3/15/2010.......................................................... 3,000,000 3,053,880
6.875%, 7/15/2010 (Prerefunded 7/15/2000) (a)............................. 7,100,000 7,684,330
6.75%, 3/1/2011 (Prerefunded 3/1/2001) (a)................................ 3,000,000 3,260,790
5.50%, 5/15/2014.......................................................... 2,000,000 1,979,240
5.375%, 10/1/2014......................................................... 6,500,000 6,348,875
5.50%, 5/15/2015.......................................................... 3,000,000 2,961,090
5.25%, 3/1/2016........................................................... 5,000,000 4,783,500
Special Tax Obligation Revenue (Transportation Infrastructure):
Refunding 5.375%, 9/1/2008.............................................. 2,500,000 2,546,575
7.125%, 6/1/2010........................................................ 8,400,000 9,828,840
6.75%, 6/1/2011 (Prerefunded 6/1/2003) (a).............................. 8,500,000 9,320,760
5.65%, 4/1/2013 (Insured; FGIC)......................................... 1,500,000 1,502,940
Connecticut Clean Water Fund, Revenue
7%, 1/1/2011 (Prerefunded 1/1/2001) (a)................................... 6,700,000 7,298,980
5.125%, 5/1/2018.......................................................... 7,000,000 6,514,760
Connecticut Development Authority, Revenue:
First Mortgage Gross
(Elim Park Baptist Home Inc. Project) 9%, 12/1/2020..................... 3,565,000 3,823,035
Health Care:
(Jerome Home Project) 8%, 11/1/2019..................................... 1,910,000 1,992,722
(Masonic Charity Foundation of Connecticut) 6.50%, 8/1/2020 (Insured; AMBAC) 4,400,000 4,613,356
Life Care Facilities (Seabury Project):
Refunding 8.75%, 9/1/2006............................................... 1,625,000 1,639,219
10%, 9/1/2021........................................................... 11,175,000 11,857,346
Water Facilities (Bridgeport Hydraulic) 6.15%, 4/1/2035................... 2,750,000 2,754,428
Connecticut Health and Educational Facilities Authority, Revenue:
(Bridgeport Hospital) 6.625%, 7/1/2018 (Insured; MBIA).................... 700,000 746,669
(Bridgeport Hospital) 5.375%, 7/1/2025 (Insured; Connie Lee).............. 2,125,000 1,987,661
(Danbury Hospital) 6.50%, 7/1/2014 (Insured; MBIA)........................ 3,500,000 3,730,895
(Day Kimball Hospital) 5.375%, 7/1/2026 (Insured; FSA).................... 2,000,000 1,895,700
(Greenwich Academy) 5.75%, 3/1/2026 (Insured; FSA)........................ 3,130,000 3,130,970
(Greewich Hospital) 5.80%, 7/1/2026 (Insured; MBIA)....................... 9,365,000 9,331,473
(Hartford University):
6.75%, 7/1/2012......................................................... 3,500,000 3,514,315
6.80%, 7/1/2022......................................................... 8,500,000 8,534,765
(Johnson Evergreen Corp.) 8.50%, 7/1/2022................................. 4,500,000 4,772,385
(Loomis Chaffee School Project):
6%, 7/1/2015 (Insured; MBIA)............................................ 715,000 735,485
6%, 7/1/2025 (Insured; MBIA)............................................ 1,000,000 1,016,260
(Middlesex Hospital) 6.25%, 7/1/2022 (Insured; MBIA)...................... 3,500,000 3,637,725
(New Britian General Hospital) 6.125%, 7/1/2014 (Insured; AMBAC).......... 1,000,000 1,036,070
(New Britain Memorial Hospital) 7.75%, 7/1/2022........................... 16,000,000 17,137,760
(Norwalk Hospital) 6.25%, 7/1/2022 (Insured; MBIA)........................ 3,860,000 4,011,891
(Quinnipiac College) 6%, 7/1/2013......................................... 6,545,000 6,402,057
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
___________ ___________
Connecticut (continued)
Connecticut Health and Educational Facilities Authority, Revenue (continued):
(Refunding-Nursing Home Program_3030 Park Fairfield Health Center Project)
6.25%, 11/1/2021........................................................ $ 2,500,000 $ 2,575,475
(Sacred Heart University):
6.50%, 7/1/2016......................................................... 2,000,000 2,051,680
6.125%, 7/1/2017........................................................ 1,000,000 996,460
6.625%, 7/1/2026........................................................ 3,000,000 3,107,460
(Trinity College) 5.875%, 7/1/2026 (Insured; MBIA)........................ 2,500,000 2,520,125
(University of New Haven):
6.625%, 7/1/2016........................................................ 4,050,000 4,143,515
6.70%, 7/1/2026......................................................... 8,605,000 8,820,211
(Veterans Memorial Medical Center) 5.50%, 7/1/2026 (Insured; MBIA)........ 9,000,000 8,652,060
(William W. Backus Hospital) 5.75%, 7/1/2027 (Insured; AMBAC)............. 2,500,000 2,466,275
(Windham Community Memorial Hospital):
5.75%, 7/1/2011......................................................... 1,000,000 965,450
6%, 7/1/2020............................................................ 1,000,000 963,940
(Yale, New Haven Hospital) 5.70%, 7/1/2025 (Insured; MBIA)................ 5,820,000 5,735,203
Connecticut Housing Finance Authority (Housing Mortgage Finance Program):
7.20%, 11/15/2008......................................................... 7,300,000 7,576,378
6.20%, 5/15/2012 (Insured; MBIA).......................................... 1,000,000 1,031,210
6.40%, 5/15/2015 (Insured; MBIA).......................................... 1,000,000 1,038,870
6.125%, 5/15/2018 (Insured; MBIA)......................................... 1,655,000 1,691,658
6.45%, 5/15/2022.......................................................... 6,000,000 6,137,640
6.70%, 11/15/2022......................................................... 22,035,000 22,770,088
6.75%, 11/15/2023......................................................... 5,260,000 5,444,784
6.30%, 5/15/2024 (Insured; MBIA).......................................... 1,000,000 1,026,570
6%, 11/15/2027............................................................ 5,000,000 4,937,750
Connecticut Municipal Electric Energy Cooperative, Power Supply System
Revenue, Refunding:
5%, 1/1/2011 (Insured; MBIA).............................................. 4,660,000 4,444,242
5%, 1/1/2012 (Insured; MBIA).............................................. 2,000,000 1,901,020
5%, 1/1/2013 (Insured; MBIA).............................................. 2,000,000 1,886,700
Eastern Connecticut Resource Recovery Authority, Solid Waste Revenue
(Wheelabrator Lisbon Project):
5.50%, 1/1/2014......................................................... 10,000,000 9,454,700
5.50%, 1/1/2020......................................................... 7,250,000 6,609,608
New Haven 7.40%, 8/15/2011 (Prerefunded 8/15/2001) (a)...................... 1,500,000 1,673,655
South Central 5.375%, 8/1/2016 (Insured; FGIC).............................. 2,000,000 1,930,080
Stamford 6.60%, 1/15/2010................................................... 2,750,000 3,086,765
University of Connecticut 5%, 2/1/2015 (Insured; FGIC)...................... 1,250,000 1,164,213
U. S. Related_18.1%
Commonwealth of Puerto Rico:
5.40%, 7/1/2025........................................................... 10,750,000 10,049,960
(Public Improvement) 6.80%, 7/1/2021 (Prerefunded 7/1/2002) (a)........... 6,000,000 6,641,160
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
__________ __________
U. S. Related (continued)
Puerto Rico Aqueduct and Sewer Authority, Revenue:
6%, 7/1/2009.............................................................. $ 7,250,000 $ 7,594,158
Refunding 5%, 7/1/2019.................................................... 2,500,000 2,233,450
Puerto Rico Electric Power Authority, Power Revenue
7%, 7/1/2021 (Prerefunded 7/1/2001) (a)................................... 6,775,000 7,495,656
Puerto Rico Highway and Transportation Authority, Highway Revenue:
6.578%, 7/1/2010 (b)...................................................... 3,200,000 2,996,000
6.625%, 7/1/2018 (Prerefunded 7/1/2002) (a)............................... 5,000,000 5,494,550
5.50%, 7/1/2026........................................................... 3,000,000 2,827,680
5.50%, 7/1/2036........................................................... 5,000,000 4,713,450
Puerto Rico Industrial Medical and Environmental Pollution Control Facilities
Financing Authority, Revenue (Motorola Inc. Project) 6.75%, 1/1/2014........ 2,000,000 2,152,219
Puerto Rico Ports Authority, Special Facilities Revenue (American Airlines):
6.30%, 6/1/2023........................................................... 2,000,000 2,021,420
6.25%, 6/1/2026........................................................... 3,250,000 3,288,902
University of Puerto Rico, University Revenue
5.50%, 6/1/2015 (Insured; MBIA)........................................... 5,000,000 4,962,950
5.25%, 6/1/2025 (Insured; MBIA)........................................... 3,400,000 3,207,185
_____________
TOTAL INVESTMENTS (cost $350,546,309)....................................... $362,422,408
==============
</TABLE>
<TABLE>
<CAPTION>
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 35.0%
AA Aa AA 25.7
A A A 15.3
BBB Baa BBB 17.0
Not Rated (d) Not Rated (d) Not Rated (d) 7.0
________
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 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 and Standard &
Poor's have been determined by the Manager to be of comparable quality to
those rated securities in which the Fund may invest.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997
Cost Value
_______________ _______________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $350,546,309 $362,422,408
Interest receivable........................ 7,633,292
Receivable for shares of Beneficial Interest subscribed 659,287
Prepaid expenses........................... 8,731
_______________
370,723,718
_______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 166,245
Due to Distributor......................... 98,751
Cash overdraft due to Custodian............ 280,279
Payable for shares of Beneficial Interest redeemed 245,858
Accrued expenses........................... 100,245
_______________
891,378
_______________
NET ASSETS.................................................................. $369,832,340
===============
REPRESENTED BY: Paid-in capital............................ $357,908,967
Accumulated net realized gain (loss) on investments 47,274
Accumulated net unrealized appreciation (depreciation)
.......on investments_Note 4 11,876,099
_______________
NET ASSETS.................................................................. $369,832,340
===============
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
___________________________
Class A Class B Class C
_____________ _____________ _____________
<S> <C> <C> <C>
Net Assets............................................. $313,881,215 $54,661,269 $1,289,856
Shares Outstanding..................................... 26,585,426 4,632,250 109,399
NET ASSET VALUE PER SHARE.......................... $11.81 $11.80 $11.79
====== ======= =======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1997
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income............................ $22,402,248
EXPENSES: Management fee_Note 3(a)................... $1,972,181
Shareholder servicing costs_Note 3(c)...... 1,095,192
Distribution fees_Note 3(b)................ 219,526
Professional fees.......................... 50,373
Custodian fees............................. 38,790
Prospectus and shareholders' reports....... 26,459
Registration fees.......................... 8,056
Trustees' fees and expenses_Note 3(d)...... 5,088
Loan commitment fees_Note 2................ 2,155
Miscellaneous.............................. 141,372
_______________
Total Expenses....................... 3,559,192
_____________
INVESTMENT INCOME_NET....................................................... 18,843,056
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $3,951,803
Net unrealized appreciation (depreciation) on investments 1,565,956
_______________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 5,517,759
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $24,360,815
=============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
April 30, 1997 April 30, 1996
_______________ ________________
<S> <C> <C>
OPERATIONS:
Investment income_net.......................................... $ 18,843,056 $ 20,116,214
Net realized gain (loss) on investments................................. 3,951,803 5,701,419
Net unrealized appreciation (depreciation) on investments............ 1,565,956 (1,150,970)
_______________ ________________
Net Increase (Decrease) in Net Assets Resulting from Operations...... 24,360,815 24,666,663
_______________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net:
Class A shares......................................................... (16,770,226) (18,231,897)
Class B shares......................................................... (2,025,054) (1,877,253)
Class C shares......................................................... (47,776) (7,064)
Net realized gain on investments:
Class A shares......................................................... (6,524,313) ___
Class B shares......................................................... (881,137) ___
Class C shares......................................................... (21,981) ___
_______________ ________________
Total Dividends...................................................... (26,270,487) (20,116,214)
_______________ ________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares......................................................... 14,824,400 14,645,030
Class B shares......................................................... 6,357,304 5,468,178
Class C shares......................................................... 578,813 1,023,317
Dividends reinvested:
Class A shares......................................................... 13,821,357 10,502,564
Class B shares......................................................... 2,091,292 1,298,271
Class C shares......................................................... 60,960 6,163
Cost of shares redeemed:
Class A shares......................................................... (43,665,745) (43,749,996)
Class B shares......................................................... (6,145,158) (3,727,309)
Class C shares......................................................... (593,525) (1,996)
Net assets received in connection with reorganization_Note 1............. 23,008,697 ___
_______________ ________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 10,338,395 (14,535,778)
_______________ ________________
Total Increase (Decrease) in Net Assets.......................... 8,428,723 (9,985,329)
NET ASSETS:
Beginning of Period..................................................... 361,403,617 371,388,946
_______________ ________________
End of Period............................................................ $369,832,340 $361,403,617
============== ================
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
_____________________________________
Year Ended Year Ended
April 30, 1997 April 30, 1996
______________ ______________
CAPITAL SHARE TRANSACTIONS:
Class A
________
Shares sold............................................................ 1,270,249 1,212,141
Shares issued in connection with reorganization_Note 1................. 797,831 ___
Shares issued for dividends reinvested................................. 1,154,938 869,313
Shares redeemed........................................................ (3,661,035) (3,626,051)
______________ ______________
Net Increase (Decrease) in Shares Outstanding (438,017) (1,544,597)
============= ===============
Class B
________
Shares sold............................................................ 568,724 453,771
Shares issued in connection with reorganization_Note 1................. 1,140,308 ___
Shares issued for dividends reinvested................................ 174,856 107,482
Shares redeemed........................................................ (517,010) (309,036)
______________ ______________
Net Increase (Decrease) in Shares Outstanding 1,366,878 252,217
============= ===============
Class C*
_________
Shares sold............................................................ 48,510 84,387
Shares issued in connection with reorganization_Note 1................. 21,055 ___
Shares issued for dividends reinvested................................. 5,100 515
Shares redeemed........................................................ (50,000) (168)
______________ ______________
Net Increase (Decrease) in Shares Outstanding 24,665 84,734
============= ===============
*From August 15, 1995 (commencement of initial offering) to April 30,
1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 3 of the Fund's Prospectus dated July 16, 1997.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Premier State Municipal Bond Fund (the "Trust") 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 thirteen series including the Connecticut Series (the
"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 Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
On October 31, 1996, the Board of Trustees approved, subject to approval
by the shareholders of the Connecticut Series of the Dreyfus Premier Insured
Municipal Bond Fund ("DPIMBF-Connecticut Series"), an Agreement and Plan of
Reorganization providing for the transfer of all or substantially all of the
DPIMBF-Connecticut Series' assets and liabilities to the Fund in a tax free
exchange for shares of beneficial interest of the Fund at net asset value and
the assumption of stated liabilities (the "Exchange"). The Exchange was
approved by the shareholders of DPIMBF-Connecticut Series on March 25, 1997,
and was consummated after the close of business on April 1, 1997 at which
time 724,521 Class A shares valued at $12.94 per share, 1,033,959 Class B
shares valued at $12.95 per share, and 19,088 Class C shares valued at
$12.94, representing combined net assets of $23,008,697, (including $762,086
net unrealized appreciation on investments) were exchanged by
DPIMBF-Connecticut Series for the respective number of Class A, Class B and
Class C shares of the Fund.
On January 8, 1997, the Trust's Trustees approved a change to the Trust's
name from "Premier State Municipal Bond Fund" to "Dreyfus Premier State
Municipal Bond Fund" which change became effective March 31, 1997.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. The Fund is authorized to issue an unlimited number of
$.001 par value shares in the following classes of shares: 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 ("CDSC") imposed on Class B share redemptions made within six
years of purchase (five years for shareholders beneficially owning Class B
shares on November 30, 1996) and Class C shares are subject to a CDSC imposed
on Class C shares redeemed 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 Trust accounts separately for the assets, liabilities and operations
of each fund. Expenses directly attributable to each fund are charged to that
fund's operations; expenses which are applicable to all funds are allocated
among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (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
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 Fund 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 Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund 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 Fund 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 Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund 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_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended April
30, 1997, the Fund did not borrow under the Facility.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .55 of 1% of the value of the Funds'
average daily net assets and is payable monthly.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $14,680 during the period ended April 30, 1997 from commissions
earned on sales of the Fund's shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Fund pays the Distributor for distributing the Fund's 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 period ended April 30, 1997,
$211,666 was charged to the Fund for the Class B shares and $7,860 was
charged to the Fund for the Class C shares.
(C) Under the Shareholder Services Plan, the Fund 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
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 (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 period ended April 30, 1997, $787,993, $105,833 and $2,620
were charged to Class A, Class B and Class C shares, respectively, by the
Distributor pursuant to the Shareholder Services Plan.
The Fund 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 Fund. Such
compensation amounted to $138,641 during the period ended April 30, 1997.
(D) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Trust 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 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1997
amounted to $108,805,054 and $122,602,672, respectively.
At April 30, 1997, accumulated net unrealized appreciation on investments
was $11,876,099, consisting of $13,605,154 gross unrealized appreciation and
$1,729,055 gross unrealized depreciation.
At April 30, 1997, 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).
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier State Municipal
Bond Fund, Connecticut Series (one of the Funds constituting the Dreyfus
Premier State Municipal Bond Fund) as of April 30, 1997, 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 and financial highlights. Our procedures included
confirmation of securities owned as of April 30, 1997 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 Dreyfus Premier State Municipal Bond Fund, Connecticut Series at
April 30, 1997, 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, 1997
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1997
Principal
Long-Term Municipal Investments_90.2% Amount Value
___________ ___________
<S> <C> <C>
Florida_85.5%
Alachua County Health Facilities Authority, Health Facilities Revenue,
Refunding
(Santa Fe Healthcare Facilities Project)
7.60%, 11/15/2013 (Prerefunded 11/15/2000) (a)............................ $ 3,500,000 $ 3,893,575
Arcadia, Water and Sewer Revenue 7.75%, 12/1/2021 (Prerefunded 12/1/2000) (a) 2,160,000 2,379,780
Boca Raton, Community Redevelopment Agency, Tax Increment Revenue (Miener
Park Project)
5.875%, 3/1/2013.......................................................... 250,000 253,767
Brevard County, IDR (Nui Corp. Project) 6.40%, 10/1/2024.................... 1,000,000 1,041,910
Broward County Health Facilities Authority, Revenue, Refunding....
(Broward County Nursing Home) 7.50%, 8/15/2020 (LOC; Allied Irish Bank) (b) 1,000,000 1,067,410
Celebration, Community Development District 6.10%, 5/1/2016................. 500,000 513,515
Charlotte County, Healthcare Facilities Revenue (Charlotte Community Mental Health Project)
9.25%, 7/1/2020........................................................... 1,615,000 1,759,510
Clay County Housing Finance Authority, SFMR:
8.20%, 6/1/2021 (Collateralized; GNMA).................................... 670,000 698,770
Multi-County Program 5.95%, 10/1/2019..................................... 2,000,000 1,999,880
Cocoa, Water and Sewer Revenue 5.75%, 10/1/2017............................. 2,500,000 2,505,050
Collier County, Revenue, Refunding:
Capital Improvement 6%, 10/1/2012 (Insured; MBIA)......................... 1,000,000 1,039,680
Water and Sewer 5%, 7/1/2016 (Insured; FGIC).............................. 1,000,000 919,480
Dade County:
Aviation Revenue:
6.55%, 10/1/2013 (Insured; MBIA)........................................ 2,225,000 2,374,342
6.125%, 10/1/2020 (Insured; MBIA)....................................... 1,000,000 1,013,500
Special Obligation, Refunding 5%, 10/1/2035 (Insured; AMBAC).............. 12,500,000 11,115,000
Water and Sewer Systems Revenue:
6.25%, 10/1/2011 (Insured; FGIC)........................................ 2,115,000 2,303,383
5.375%, 10/1/2016 (Insured; FGIC)....................................... 5,000,000 4,858,950
5.25%, 10/1/2026 (Insured; FGIC) (c).................................... 7,490,000 6,996,334
Dade County Health Facilities Authority, HR
(South Shore Hospital and Medical Center) 7.60%, 8/1/2024 (Insured; FHA).. 2,220,000 2,378,197
Dade County Housing Finance Authority, Revenue, Refunding:
MFMR (Lincoln Fields Apartments) 6.25%, 7/1/2024 (Insured; MBIA).......... 600,000 611,370
SFMR 6.70%, 4/1/2028 (Collateralized: FNMA & GNMA)........................ 4,500,000 4,651,065
Duval County Housing Finance Authority, SFMR:
7.85%, 12/1/2022 (Collateralized; GNMA)................................... 2,595,000 2,736,168
7.70%, 9/1/2024 (Collateralized; GNMA).................................... 1,380,000 1,463,504
Escambia County:
PCR (Champion International Corp. Project) 6.40%, 9/1/2030................ 6,000,000 6,124,440
Sales Tax Revenue, Refunding 5.80%, 1/1/2015 (Insured; FGIC).............. 500,000 503,120
Escambia County Housing Finance Authority, SFMR 7.80%, 4/1/2022............. 945,000 1,000,122
First Florida Governmental Financing Commission, Revenue:
5.70%, 7/1/2017 (Insured; MBIA) (d)....................................... 3,000,000 2,980,200
Gainesville, Hollywood and St. Petersburg 5.75%, 7/1/2016 (Insured; AMBAC) 2,150,000 2,163,781
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
___________ ___________
Florida (continued)
Florida, Board of Education, Capital Outlay, Refunding 5%, 6/1/2016......... $ 2,750,000 $ 2,544,245
Florida, Correctional Privatization Community, COP:
Bay County Correctional Facility 6%, 8/1/2015 (Insured; MBIA)............. 250,000 256,485
Glades County Correctional Facility 6%, 8/1/2014 (Insured; MBIA).......... 350,000 369,103
Florida, Department of General Services, Facilities Management Revenue
6.125%, 9/1/2023 (Insured; AMBAC)......................................... 1,000,000 1,026,130
Florida, Department of Transportation (Right of Way Acquisition and Bridge)
5.375%, 7/1/2026.......................................................... 2,495,000 2,368,279
Florida, Division of Bond Finance Department, General Services Revenues:
(Department of Environmental Preservation 2000)
5.125%, 7/1/2009 (Insured; AMBAC) (d)................................... 8,000,000 7,885,600
(Department of Natural Resources Preservation 2000)
5.80%, 7/1/2013 (Insured; AMBAC)........................................ 700,000 706,916
Florida, Housing Finance Agency:
(Brittany Rosemont Apartments) 7%, 2/1/2035............................... 6,000,000 6,364,620
Single Family Mortgage:
6.65%, 7/1/2026 (Insured; MBIA) (c)..................................... 1,780,000 1,838,954
Refunding 6.65%, 1/1/2024............................................... 2,415,000 2,496,434
(Turtle Creek Apartment Projects) 6.10%, 5/1/2016 (Insured; AMBAC)........ 1,000,000 1,011,980
Florida Transportation Authority, Turnpike Revenue, Refunding 5%, 7/1/2019 (Insured; FGIC) 1,000,000 908,350
Highlands County Health Facilities Authority, Revenue (Adventist Sunbelt Hospital)
7%, 11/15/2014............................................................ 1,500,000 1,602,210
Hillsborough, Capital Improvement Program, Revenue, Refunding
5%, 8/1/2015 (Insured; FGIC).............................................. 3,325,000 3,093,081
Hillsborough County, Port District Special Revenue, Refunding (Tampa Port Authority)
6%, 6/1/2020 (Insured; FSA)............................................... 1,000,000 1,002,560
Hillsborough County, Utility Revenue, Refunding:
6.625%, 8/1/2011.......................................................... 4,000,000 4,248,120
7%, 8/1/2014.............................................................. 4,765,000 5,123,852
Hillsborough County Aviation Authority, Revenue, Refunding (Delta Airlines):
6.80%, 1/1/2024........................................................... 2,500,000 2,659,575
7.75%, 1/1/2024........................................................... 1,500,000 1,592,910
Tampa International Airport 5.50%, 10/1/2013 (Insured; FGIC).............. 500,000 494,810
Hillsborough County Industrial Development Authority, PCR, Refunding
(Tampa Electric Co. Project) 6.25%, 12/1/2034 (Insured; MBIA)............. 1,000,000 1,045,010
Jacksonville, Excise Taxes Revenue, Refunding 5%, 10/1/2016 (Insured; FGIC). 3,490,000 3,226,330
Jacksonville, Water and Sewer Revenue 5%, 10/1/2020 (Insured; MBIA)......... 3,000,000 2,732,040
Jacksonville Health Facilities Authority, HR:
(Memorial Regional Rehabilitation Center Project) 6.625%, 5/1/2022 (Insured; MBIA) 500,000 546,990
Refunding (St.Luke's Hospital) 7.125%, 11/15/2020......................... 6,700,000 7,303,201
Lee County, Tourist Development Tax Revenue, Refunding 5.625%, 10/1/2011 (Insured; FGIC) 250,000 251,318
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
___________ ___________
Florida (continued)
Lee County Housing Finance Authority, SFMR (Multi-County Program):
7.20%, 3/1/2027........................................................... $ 2,000,000 $ 2,181,960
7.45%, 9/1/2027........................................................... 1,500,000 1,653,810
Miami Health Facilities Authority, Health Facilities Revenue, Refunding (Mercy
Hospital Project)
5.125%, 8/15/2020 (Insured; AMBAC)........................................ 200,000 183,448
Miramar, Public Service Tax Revenue 6.15%, 10/1/2024 (Insured; FGIC)........ 1,000,000 1,023,040
North Miami Health Facilities Authority, Health Facilities Revenue
(Villa Maria Nursing Housing Project) 7.50%, 9/1/2012..................... 2,605,000 2,836,194
Okaloosa County Gas District, Gas System Revenue 5.50%, 10/1/2021 (Insured; MBIA) (c) 2,795,000 2,712,687
Okeechobee, Water and Sewer Revenue
6.50%, 1/1/2017 (Insured; MBIA) (Prerefunded 1/1/2003) (a)................ 1,220,000 1,341,378
Orange County Tourist Development, Tax Revenue:
6.50%, 10/1/2019 (Insured; AMBAC)......................................... 1,000,000 1,075,060
6%, 10/1/2024 (Insured; MBIA)............................................. 200,000 203,514
Orange County Health Facilities Authority, Health Facilities Revenue
(Mental Health Service Project) 9.25%, 7/1/2020 (Prerefunded 7/1/2000) (a) 3,735,000 4,280,945
Osceola County, School Board, COP 5.75%, 6/1/2014 (Insured; AMBAC).......... 250,000 250,950
Osceola County Industrial Development Authority, Revenue
(Community Provider Pooled Loan Program) 7.75%, 7/1/2017.................. 5,235,000 5,404,195
Palm Beach County:
Solid Waste Industrial Development Revenue:
(Okeelanta Power LP Project) 6.85%, 2/15/2021 (e)....................... 10,000,000 7,463,300
(Osceola Power LP) 6.85%, 1/1/2014 (e).................................. 5,800,000 4,438,392
Palm Beach County Housing Finance Authority, Single Family Mortgage,
Purchase Revenue 6.55%, 4/1/2027.......................................... 2,750,000 2,833,518
Pinellas County, PCR, Refunding (Florida Power Corp.) 7.20%, 12/1/2014...... 3,000,000 3,228,600
Pinellas County Housing Finance Authority, SFMR:
7.70%, 8/1/2022........................................................... 2,595,000 2,746,237
(Multi-County Program) 6.70%, 2/1/2028 (Insured; FHA)..................... 5,000,000 5,180,300
Polk County, School Board, COP (Master Lease Program) 5.875%, 1/1/2015 (Insured; MBIA) 1,000,000 1,010,890
Polk County Industrial Development Authority, IDR
(IMC Fertilizer) 7.525% 1/1/2015.......................................... 10,000,000 10,637,700
St. Lucie, SWDR (Florida Power and Light Co. Project) 7.15%, 2/1/2023....... 4,000,000 4,335,200
Santa Rosa Bay Bridge Authority, Revenue:
6.25%, 7/1/2028........................................................... 3,000,000 2,977,290
Zero Coupon, 7/1/2022..................................................... 4,000,000 763,400
Sarasota County, Utility System Revenue, Refunding:
5.25%, 10/1/2016 (Insured; FGIC).......................................... 1,000,000 953,720
5.25%, 10/1/2025 (Insured; FGIC).......................................... 3,500,000 3,281,775
Seminole County, School Board, COP 6.125%, 7/1/2019 (Insured; MBIA)......... 325,000 333,444
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
__________ __________
Florida (continued)
Seminole Water Control District 6.75%, 8/1/2022............................. $ 2,000,000 $ 1,927,120
Tampa, Alleghany Health System Revenue (St. Joseph) 6.50%, 12/1/2023 (Insured; MBIA) 1,000,000 1,069,440
Tampa Sports Authority, Sales Tax Revenue (Tampa Bay Arena Project) 5.75%, 10/1/2025 1,000,000 1,021,880
Volusia County, Sales Tax Revenue 5.75%, 10/1/2013 (Insured; MBIA).......... 500,000 503,120
U.S. Related_4.7%
Commonwealth of Puerto Rico Aqueduct and Sewer Authority, Revenue, Refunding
5%, 7/1/2019.............................................................. 6,410,000 5,890,277
Virgin Islands Public Finance Authority, Revenue, Refunding 7.25%, 10/1/2018 5,400,000 5,846,148
_____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $218,335,193)................... $223,633,838
=============
Short-Term Municipal Investments_9.8%
Florida_8.6%
Dade County Industrial Development Authority, Exempt Facilities Revenue,
Refunding
(Florida Power and Light Co.) VRDN 4.30% (f).............................. $ 8,100,000 $ 8,100,000
Hillsborough County Industrial Development Authority, PCR (Tampa Electric Co.
Project)
VRDN 4.50% (f)............................................................ 3,600,000 3,600,000
Manatee County, PCR, Refunding (Florida Power and Light Co. Project) VRDN 4.45% (f) 7,000,000 7,000,000
St. Lucie County, SWDR (Light and Power Computer Project) VRDN 4.50% (f).... 2,600,000 2,600,000
U.S. Related_1.2%
Puerto Rico Commonwealth, Development Bank, Refunding, VRDN 4.30%
(LOC; Credit Suisse) (b,c,f).............................................. 2,900,000 2,900,000
___________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $24,200,000)................... $ 24,200,000
=============
TOTAL INVESTMENTS_100.0% (cost $242,535,193)................................ $247,833,838
=============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
Summary of Abbreviations
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation IDR Industrial Development Revenue
COP Certificate of Participation LOC Letter of Credit
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
FHA Federal Housing Association Insurance Corporation
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
</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 50.1%
AA Aa AA 11.2
A A A 4.9
BBB Baa BBB 13.0
BB Ba BB 1.7
F1+,F-1 MIG1, VMIG1 & P1 SP1, A1 6.5
Not Rated (h) Not Rated (h) Not Rated (h) 12.6
______
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) Wholly held by the custodian in a segregated account as collateral
for delayed-delivery securities.
(d) Purchased on a delayed-delivery basis.
(e) Subsequent to April 30, 1997, the owners/developers of the power
project filed for protection under the Federal Bankruptcy Code. Although
interest payments remain current, as of June 5, 1997, this event has
resulted in a decline in the market value of this security.
(f) 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.
(g) Fitch currently provides creditworthiness information for a limited
number of investments.
(h) 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 Fund may invest.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997
Cost Value
_____________ __________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $242,535,193 $247,833,838
Interest receivable........................ 3,470,348
Receivable for shares of Beneficial Interest subscribed 15,207
Prepaid expenses........................... 6,402
_______________
251,325,795
_______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 108,106
Due to Distributor......................... 63,947
Cash overdraft due to Custodian............ 244,542
Payable for investment securities purchased 11,788,728
Payable for shares of Beneficial Interest redeemed 662,593
Accrued expenses........................... 94,961
_______________
12,962,877
_______________
NET ASSETS.................................................................. $238,362,918
===============
REPRESENTED BY: Paid-in capital............................ $234,807,412
Accumulated net realized gain (loss) on investments (1,743,139)
Accumulated net unrealized appreciation (depreciation)
on investments_Note 4 5,298,645
_______________
NET ASSETS.................................................................. $238,362,918
===============
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
_________________________________
Class A Class B Class C
_______________ _______________ _______________
<S> <C> <C> <C>
Net Assets................................................. $202,502,592 $35,802,481 $57,845
Shares Outstanding........................................ 14,403,000 2,547,624 4,116
NET ASSET VALUE PER SHARE................................... $14.06 $14.05 $14.05
====== ======= =======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1997
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income............................ $14,829,925
EXPENSES: Management fee_Note 3(a)................... $ 1,318,540
Shareholder servicing costs_Note 3(c)...... 765,722
Distribution fees_Note 3(b)................ 134,503
Professional fees.......................... 45,292
Custodian fees............................. 25,043
Prospectus and shareholders' reports....... 20,038
Trustees' fees and expenses_Note 3(d)...... 3,417
Registration fees.......................... 2,460
Loan commitment fees_Note 2................ 1,459
Miscellaneous.............................. 18,466
_____________
Total Expenses......................... 2,334,940
_____________
INVESTMENT INCOME_NET....................................................... 12,494,985
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $(1,755,627)
Net unrealized appreciation (depreciation)
on investments 1,600,303
_____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... (155,324)
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $12,339,661
=============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
April 30, 1997 April 30, 1996
________________ _________________
OPERATIONS:
Investment income_net.................................................... $ 12,494,985 $ 14,381,328
Net realized gain (loss) on investments.................................. (1,755,627) 6,336,711
Net unrealized appreciation (depreciation) on investments................ 1,600,303 (2,819,982)
________________ _________________
Net Increase (Decrease) in Net Assets Resulting from Operations...... 12,339,661 17,898,057
________________ _________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net:
Class A shares......................................................... (11,216,199) (13,092,008)
Class B shares......................................................... (1,276,479) (1,288,976)
Class C shares......................................................... (2,307) (344)
Net realized gain on investments:
Class A shares......................................................... (4,898,740) (3,306,553)
Class B shares......................................................... (612,636) (370,770)
Class C shares......................................................... (1,328) (14)
________________ _________________
Total Dividends...................................................... (18,007,689) (18,058,665)
________________ _________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares......................................................... 4,244,168 9,844,149
Class B shares......................................................... 1,379,240 4,401,949
Class C shares......................................................... 52,882 36,586
Dividends reinvested:
Class A shares......................................................... 6,607,543 6,539,239
Class B shares......................................................... 669,997 644,364
Class C shares......................................................... 1,243 107
Cost of shares redeemed:
Class A shares......................................................... (43,636,534) (41,280,587)
Class B shares......................................................... (5,732,826) (3,176,969)
Class C shares......................................................... (30,476) ___
Net assets received in connection with reorganization_Note 1............. 25,939,388 ___
________________ _________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (10,505,375) (22,991,162)
________________ _________________
Total Increase (Decrease) in Net Assets............................ (16,173,403) (23,151,770)
NET ASSETS:
Beginning of Period...................................................... 254,536,321 277,688,091
________________ _________________
End of Period..................................................... $238,362,918 $254,536,321
============== =================
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
_________________________________________
Year Ended Year Ended
April 30, 1997 April 30, 1996
__________________ __________________
CAPITAL SHARE TRANSACTIONS:
Class A
________
Shares sold............................................................ 330,094 658,995
Shares issued in connection with reorganization_Note 1................. 938,304 __
Shares issued for dividends reinvested................................. 458,224 437,472
Shares redeemed........................................................ (3,034,221) (2,776,392)
__________________ __________________
Net Increase (Decrease) in Shares Outstanding (1,307,599) (1,679,925)
================== =================
Class B
________
Shares sold............................................................ 127,345 295,615
Shares issued in connection with reorganization_Note 1................. 905,864 __
Shares issued for dividends reinvested................................. 46,491 43,121
Shares redeemed........................................................ (399,263) (214,088)
__________________ __________________
Net Increase (Decrease) in Shares Outstanding 680,437 124,648
================== =================
Class C*
________
Shares sold............................................................ 3,641 2,423
Shares issued in connection with reorganization_Note 1................. 71 __
Shares issued for dividends reinvested................................. 86 7
Shares redeemed........................................................ (2,112) __
__________________ __________________
Net Increase (Decrease) in Shares Outstanding 1,686 2,430
================== =================
*From August 15, 1995 (commencement of initial offering) to April 30,
1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 3 of the Fund's Prospectus dated July 16, 1997.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Premier State Municipal Bond Fund (the "Trust") 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 thirteen series, including the Florida Series (the
"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 Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
On October 31, 1996, the Board Members of the Trust approved, subject to
approval by the shareholders of the Florida Series of Dreyfus Premier Insured
Municipal Bond Fund ("DPIMBF-Florida Series"), an Agreement and Plan of
Reorganization providing for the transfer of all or substantially all of the
DPIMBF-Florida Series' assets and liabilities to the Fund in a tax free
exchange for shares of beneficial interest of the Fund, and the assumption by
the Fund of stated liabilities (the "Exchange"). The Exchange was approved by
the shareholders of DPIMBF-Florida Series on March 25, 1997, and was
consummated after the close of business on April 1, 1997, at which time
1,026,589 Class A shares valued at $12.86 per share, 990,393 Class B shares
valued at $12.86 per share and 78 Class C shares valued at $12.86 per share,
representing combined net assets of $25,939,388, (including $977,489 net
unrealized appreciation on investments) were exchanged by DPIMBF-Florida
Series for the respective number of Class A, Class B and Class C shares of
the Fund.
On January 8, 1997, the Trust's Trustees approved a change to the Trust's
name from "Premier State Municipal Bond Fund" to "Dreyfus Premier State
Municipal Bond Fund," which change became effective March 31, 1997.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. The Fund is authorized to issue an unlimited number of
$.001 par value shares in the following classes of shares: 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 ("CDSC") imposed on Class B share redemptions made within six
years of purchase (five years for shareholders beneficially owning Class B
shares on November 30, 1996) and Class C shares are subject to a CDSC imposed
on Class C shares redeemed within one year of purchase. Other differences
between the classes include the services offered to and the expenses borne by
each class and certain voting rights.
The Trust accounts separately for the assets, liabilities and operations
of each fund. Expenses directly attributable to each fund are charged to that
fund's operations; expenses which are applicable to all funds are allocated
among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (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
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 Fund 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 Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund 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 Fund 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 Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund 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 $1,712,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1997. The
carryover does not include net realized securities losses from November 1,
1996 through April 30, 1997 which are treated, for Federal income tax
purposes, as arising in fiscal 1998. If not applied, the carryover expires in
fiscal 2005.
NOTE 2_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended April
30, 1997, the Fund did not borrow under the Facility.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .55 of 1% of the value of the Fund's
average daily net assets and is payable monthly.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $4,563 during the period ended April 30, 1997 from commissions
earned on sales of the Fund's shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Fund pays the Distributor for distributing the Fund's 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 period ended April 30, 1997,
$134,127 was charged to the Fund for the Class B shares and $376 was charged
to the Fund for the Class C shares.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(C) Under the Shareholder Services Plan, the Fund 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 Fund 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 period ended April 30, 1997,
$532,147, $67,064 and $125 were charged to Class A, Class B and Class C shares,
respectively, by the Distributor pursuant to the Shareholder Services Plan.
The Fund 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 Fund. Such
compensation amounted to $99,680 during the period ended April 30, 1997.
(D) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Trust 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 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1997
amounted to $166,283,397 and $193,710,816, respectively.
At April 30, 1997, accumulated net unrealized appreciation on investments
was $5,298,645, consisting of $9,180,186 gross unrealized appreciation and
$3,881,541 gross unrealized depreciation.
At April 30, 1997, 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).
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, FLORIDA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier State Municipal
Bond Fund, Florida Series (one of the Funds constituting the Dreyfus Premier
State Municipal Bond Fund) as of April 30, 1997, 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 and financial highlights. Our procedures included
confirmation of securities owned as of April 30, 1997 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 Dreyfus Premier State Municipal Bond Fund, Florida Series at
April 30, 1997, 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, 1997
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1997
Principal
Long-Term Municipal Investments_86.2% Amount Value
_______ _______
<S> <C> <C>
Albany, Sewer System Revenue 6.50%, 7/1/2009 (Insured; MBIA)
(Prerefunded 7/1/2002 ) (a)............................................... $ 100,000 $ 109,090
Atlanta:
Airport Facilities Revenue:
5.25%, 1/1/2010 (Insured; AMBAC)........................................ 1,000,000 984,940
6%, 1/1/2014 (Insured; AMBAC)........................................... 1,000,000 1,016,100
GO 6.10%, 12/1/2019....................................................... 1,000,000 1,028,050
Barrow County School District 5.60%, 2/1/2015 (Insured; MBIA)............... 1,000,000 1,001,750
Clayton County and Clayton County Water Authority, Water and Sewer Revenue, Refunding
5.60%, 5/1/2013 (Insured; AMBAC).......................................... 1,200,000 1,197,864
Columbia, Water and Sewer Revenue, Refunding 5.40%, 6/1/2011 (Insured; AMBAC) 750,000 744,630
Colquitt County Hospital Authority, Refunding 5.50%, 3/1/2016............... 1,000,000 973,060
Columbus Hospital Authority, Revenue Certificates (Saint Francis Hospital)
6.20%, 1/1/2010 (Insured; MBIA)........................................... 200,000 207,558
Dekalb County Development Authority, Revenue
(Wesley Homes, Inc.-Budd Terrace Project)
6.75%, 10/1/2013 (LOC; Wachovia Bank of Georgia, N.A.) (b)................ 200,000 208,986
Fayette County School District 6.125%, 3/1/2015............................. 500,000 518,230
Fulton County, Water and Sewer Revenue, Refunding 6.375%, 1/1/2014 (Insured; FGIC) 290,000 317,266
Fulton County Building Authority, Revenue, Refunding
(County Government and Health Facilities Project) 6.125%, 1/1/2011........ 300,000 312,624
Fulton County Development Authority, Special Facilities Revenue, Refunding
(Delta Air Lines Inc. Project) 6.95%, 11/1/2012........................... 245,000 260,690
Gainesville, Water and Sewer Revenue, Refunding 6%, 11/15/2012 (Insured; FGIC) 300,000 318,600
Georgia, GO:
6.65%, 3/1/2009........................................................... 1,000,000 1,132,090
5.65%, 3/1/2012........................................................... 1,000,000 1,024,700
Georgia Housing and Finance Authority, SFMR :
7%, 12/1/2015 (Insured; FSA).............................................. 1,500,000 1,574,580
6.50%, 12/1/2017 (Insured; FSA)........................................... 1,000,000 1,026,120
Georgia Municipal Gas Authority, Gas Revenue (Warner Robins Project)
5.80%, 1/1/2015 (Insured; MBIA)........................................... 1,000,000 1,008,060
Glynn-Brunswick Memorial Hospital Authority (Southeast Georgia Health)
5.25%, 8/1/2013 (Insured; MBIA)........................................... 2,000,000 1,918,560
Hancock County, Various Purpose Asset Guaranty 6.70%, 4/1/2015.............. 1,000,000 1,090,740
Marietta Development Authority, Revenue (First Mortgage-Life College)
5.75%, 9/1/2014 (Insured; CGIC)........................................... 850,000 850,255
Meriwether County School District 5.50%, 2/1/2016........................... 1,000,000 978,740
Metropolitan Atlanta Rapid Transportation Authority, Sales Tax Revenue, Refunding
6.25%, 7/1/2020 (Insured; AMBAC).......................................... 300,000 324,495
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
__________ __________
Private Colleges and Universities Authority, Revenue, Refunding
(Spellman College Project) 6.20%, 6/1/2014 (Insured; FGIC)................ $ 1,000,000 $ 1,046,930
_____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $20,548,098).................... $21,174,708
=============
Short-Term Municipal Investments_13.8%
U.S. Related;
Commonwealth of Puerto Rico, Development Bank, Refunding, VRDN
4.30% (LOC; Credit Suisse) (b,c) (cost $3,400,000)........................ $ 3,400,000 $ 3,400,000
=============
TOTAL INVESTMENTS_100.0% (cost $23,948,098)................................. $24,574,708
=============
</TABLE>
<TABLE>
<CAPTION>
Summary of Abbreviations
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
CGIC Capital Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
FGIC Financial Guaranty Insurance Company Insurance Corporation
GO General Obligation SFMR Single Family Mortgage Revenue
FSA Financial Security Assurance VRDN Variable Rate Demand Notes
</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 61.7%
AA Aa AA 23.4
BBB Baa BBB 1.1
F-1,F-1+ VMIG1,MIG1,P1 SP1,A1 13.8
________
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) Secured by letters of credit.
(c) 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.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997
Cost Value
_____________ _____________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $23,948,098 $24,574,708
Cash....................................... 45,734
Interest receivable........................ 385,542
Receivable for shares of Beneficial Interest subscribed 3,313
Prepaid expenses........................... 1,391
_____________
25,010,688
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 11,303
Due to Distributor......................... 12,737
Payable for shares of Beneficial Interest redeemed 51,989
Accrued expenses........................... 21,090
_____________
97,119
_____________
NET ASSETS.................................................................. $24,913,569
==============
REPRESENTED BY: Paid-in capital............................ $24,951,417
Accumulated net realized gain (loss) on investments (664,458)
Accumulated net unrealized appreciation (depreciation)
on investments_Note 4...................... 626,610
_____________
NET ASSETS.................................................................. $24,913,569
==============
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
_________________________________
Class A Class B Class C
_______________ _______________ _______________
<S> <C> <C> <C>
Net Assets............................................ $6,597,741 $18,211,184 $104,644
Shares Outstanding.......................................... 499,155 1,377,147 7,916
NET ASSET VALUE PER SHARE................................... $13.22 $13.22 $13.22
====== ======= =======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1997
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income............................ $1,523,447
EXPENSES: Management fee_Note 3(a)................... $147,484
Distribution fees_Note 3(b)................ 96,512
Shareholder servicing costs_Note 3(c)...... 84,983
Professional fees.......................... 7,574
Prospectus and shareholders' reports....... 5,210
Custodian fees............................. 3,409
Registration fees.......................... 2,545
Trustees' fees and expenses_Note 3(d)...... 367
Loan commitment fees_Note 2................ 147
Miscellaneous.............................. 9,567
___________
Total Expenses......................... 357,798
____________
INVESTMENT INCOME_NET....................................................... 1,165,649
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $ 69,477
Net unrealized appreciation (depreciation)
on investments......................... 293,070
___________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 362,547
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,528,196
============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
April 30, 1997 April 30, 1996
____________________ ________________
OPERATIONS:
Investment income_net.................................................. $ 1,165,649 $ 1,353,288
Net realized gain (loss) on investments................................ 69,477 (205,254)
Net unrealized appreciation (depreciation) on investments.............. 293,070 774,119
____________________ ________________
Net Increase (Decrease) in Net Assets Resulting from Operations.. 1,528,196 1,922,153
____________________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net:
Class A shares....................................................... (356,396) (443,972)
Class B shares....................................................... (805,477) (908,818)
Class C shares....................................................... (3,776) (498)
____________________ ________________
Total Dividends.................................................. (1,165,649) (1,353,288)
____________________ ________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares....................................................... 212,279 326,483
Class B shares....................................................... 709,076 2,305,085
Class C shares....................................................... 12,238 88,634
Dividends reinvested:
Class A shares....................................................... 260,106 316,447
Class B shares....................................................... 396,438 438,970
Class C shares....................................................... 3,525 498
Cost of shares redeemed:
Class A shares....................................................... (2,334,070) (1,482,789)
Class B shares....................................................... (3,248,467) (2,436,019)
____________________ ________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (3,988,875) (442,691)
____________________ ________________
Total Increase (Decrease) in Net Assets........................ (3,626,328) 126,174
NET ASSETS:
Beginning of Period.................................................... 28,539,897 28,413,723
____________________ ________________
End of Period.......................................................... $24,913,569 $28,539,897
=================== ================
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
_________________________________________
Year Ended Year Ended
April 30, 1997 April 30, 1996
__________________ __________________
CAPITAL SHARE TRANSACTIONS:
Class A
_____
Shares sold.......................................................... 16,032 24,765
Shares issued for dividends reinvested............................... 19,634 23,848
Shares redeemed...................................................... (175,973) (111,113)
__________________ __________________
Net Increase (Decrease) in Shares Outstanding (140,307) (62,500)
================== ==================
Class B
_______
Shares sold.......................................................... 53,684 173,357
Shares issued for dividends reinvested............................... 29,914 33,082
Shares redeemed...................................................... (246,421) (183,789)
__________________ __________________
Net Increase (Decrease) in Shares Outstanding (162,823) 22,650
================== ==================
Class C*
_______
Shares sold.......................................................... 927 6,685
Shares issued for dividends reinvested............................... 266 38
__________________ __________________
Net Increase (Decrease) in Shares Outstanding 1,193 6,723
================== ==================
__________________________
*From August 15, 1995 (commencement of initial offering) to April 30,
1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 3 of the Fund's Prospectus dated July 16, 1997.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Premier State Municipal Bond Fund (the "Trust") 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 thirteen series including the Georgia Series (the "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 Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
On January 8, 1997, the Trust's Trustees approved a change to the Trust's
name from "Premier State Municipal Bond Fund" to "Dreyfus Premier State
Municipal Bond Fund" which change became effective March 31, 1997.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. The Fund is authorized to issue an unlimited number of
$.001 par value shares in the following classes of shares: 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 ("CDSC") imposed on Class B share redemptions made within six
years of purchase (five years for shareholders beneficially owning Class B
shares on November 30, 1996) and Class C shares are subject to a CDSC imposed
on Class C shares redeemed within one year of purchase. Other differences
between the classes include the services offered to and the expenses borne by
each class and certain voting rights.
The Trust accounts separately for the assets, liabilities and operations
of each fund. Expenses directly attributable to each fund are charged to that
fund's operations; expenses which are applicable to all funds are allocated
among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (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.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund 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 Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund 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 Fund 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 Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund 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 $665,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1997. If not
applied, $15,000 of the carryover expires in fiscal 2002, $367,000 expires in
fiscal 2003, $267,000 expires in fiscal 2004 and $16,000 expires in fiscal
2005.
NOTE 2_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended April
30, 1997, the Fund did not borrow under the Facility.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .55 of 1% of the value of the Fund's
average daily net assets and is payable monthly.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $208 during the period ended April 30, 1997, from commissions earned
on sales of the Fund's shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Fund pays the Distributor for distributing the Fund's 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 period ended April 30, 1997,
$95,780 was charged to the Fund for the Class B shares and $732 was charged
to the Fund for the Class C shares.
(C) Under the Shareholder Services Plan, the Fund 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 Fund 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
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
period ended April 30, 1997, $18,904, $47,890 and $244 were charged to Class
A, Class B and Class C shares, respectively, by the Distributor pursuant to
the Shareholder Services Plan.
The Fund 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 Fund. Such
compensation amounted to $12,217 during the period ended April 30, 1997.
(D) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Trust 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 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1997
amounted to $13,295,255 and $20,504,290, respectively.
At April 30, 1997, accumulated net unrealized appreciation on investments
was $626,610, consisting of $649,761 gross unrealized appreciation and
$23,151 gross unrealized depreciation.
At April 30, 1997, 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).
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, GEORGIA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier State Municipal
Bond Fund, Georgia Series (one of the Funds constituting the Dreyfus Premier
State Municipal Bond Fund) as of April 30, 1997, 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 and financial highlights. Our procedures included
confirmation of securities owned as of April 30, 1997 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 Dreyfus Premier State Municipal Bond Fund, Georgia Series at
April 30, 1997, 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, 1997
<TABLE>
<CAPTION>
Dreyfus Premier State Municipal Bond Fund, Maryland Series
Statement of Investments April 30, 1997
Principal
Long-Term Municipal Investments_99.9% Amount Value
_____________ _____________
<S> <C> <C>
Maryland_78.3%
Baltimore:
7%, 10/15/2007 (Insured; MBIA).......................................... $ 1,500,000 $ 1,721,535
7.15%, 10/15/2008....................................................... 1,275,000 1,469,782
Mortgage Revenue, Refunding (Tindeco Wharf Project)
6.60%, 12/20/2024 (Collateralized; GNMA).............................. 4,250,000 4,446,393
Port Facilities Revenue (Consolidated Coal Sales) 6.50%, 12/1/2010...... 9,740,000 10,467,188
Baltimore City Housing Corp., MFHR, Refunding
7.25%, 7/1/2023 (Collateralized; FNMA).................................. 3,200,000 3,315,392
Baltimore County:
Mortgage Revenue (First Mortgage-Pickersgill)
7.70%, 1/1/2021 (Prerefunded 1/1/2002) (a)............................ 3,000,000 3,389,670
PCR, Refunding (Bethlehem Steel Corp. Project):
7.50%, 6/1/2015....................................................... 5,750,000 6,072,402
7.55%, 6/1/2017....................................................... 2,540,000 2,690,978
Gaithersburg, Hospital Facilities Improvement Revenue, Refunding (Shady
Grove)
6.50%, 9/1/2012 (Insured; FSA).......................................... 10,000,000 11,086,500
Howard County:
COP 8.15%, 2/15/2020.................................................... 605,000 792,913
EDR, Refunding (M.O.R. XIV Associates Project) 7.75%, 6/1/2012.......... 2,500,000 2,610,050
Howard County Metropolitan District 6.125%, 5/15/2023....................... 2,000,000 2,104,840
Kent County, College Revenue, Refunding (Washington College Project)
7.70%, 7/1/2018......................................................... 1,750,000 1,883,472
Maryland Community Development Administration,
Department of Housing and Community Development:
MFHR:
6.50%, 5/15/2013.................................................. 3,000,000 3,115,770
8.875%, 5/15/2021................................................. 15,000 15,083
7.30%, 5/15/2023.................................................. 2,205,000 2,308,679
6.85%, 5/15/2033.................................................. 5,000,000 5,171,500
6.70%, 5/15/2036 (Insured; FHA)................................... 7,710,000 7,977,229
Single Family Program:
7.40%, 4/1/2009................................................... 1,000,000 1,046,040
6.95%, 4/1/2011................................................... 5,810,000 6,098,350
7.70%, 4/1/2015................................................... 3,365,000 3,500,778
6.55%, 4/1/2026................................................... 7,420,000 7,637,480
6.75%, 4/1/2026................................................... 3,645,000 3,788,103
7.375%, 4/1/2026.................................................. 2,000,000 2,062,320
Zero Coupon, 4/1/2029............................................. 85,075,000 6,830,672
7.625%, 4/1/2029.................................................. 7,240,000 7,510,921
7.45%, 4/1/2032................................................... 5,915,000 6,195,903
Maryland Economic Development Corp., Revenue
(Health and Mental Hygiene Providers Facilities Acquisition Program):
8.375%, 3/1/2013...................................................... 4,300,000 4,556,495
8.75%, 3/1/2017....................................................... 5,050,000 5,423,649
Dreyfus Premier State Municipal Bond Fund, Maryland Series
Statement of Investments (continued) April 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
__________ __________
U.S. Related (continued)
Maryland Health and Higher Educational Facilities Authority, Revenue:
(Frederick Memorial Hospital) 5%, 7/1/2023 (Insured; FGIC).............. $ 2,870,000 $ 2,574,993
(Refunding_Doctors Community Hospital) 5.50%, 7/1/2024.................. 4,735,000 4,291,946
(Refunding_Francis Scott Key Medical Center) 5%, 7/1/2023 (Insured; FGIC) 1,500,000 1,345,815
(Refunding_Howard County General Hospital) 5.50%, 7/1/2025.............. 2,000,000 1,805,380
(Refunding_John Hopkins) 5%, 7/1/2023................................... 11,895,000 10,628,182
(Refunding_Memorial Hospital of Cumberland) 6.50%, 7/1/2017 (Insured; MBIA) 2,000,000 2,122,460
(Refunding_Roland Park Project) 7.75%, 7/1/2012......................... 2,230,000 2,343,797
(Refunding_Suburban Hospital) 5.125%, 7/1/2021.......................... 2,250,000 2,052,360
(Refunding_University of Maryland Medical Systems) 5%, 7/1/2020 (Insured; FGIC) 17,450,000 15,753,511
(Union Hospital of Cecil County) 6.70%, 7/1/2009........................ 2,320,000 2,468,503
(University of Maryland Medical Systems) 7%, 7/1/2022 (Insured; FGIC)... 4,500,000 5,306,805
Maryland Industrial Development Financing Authority, EDR
(Medical Waste Association) 8.75%, 11/15/2010........................... 740,000 743,175
Maryland Local Government Insurance Trust, Capitalization Program, COP
7.125%, 8/1/2009........................................................ 3,250,000 3,534,050
Maryland Stadium Authority, Sports Facility LR 7.60%, 12/15/2019............ 5,250,000 5,712,368
Montgomery County Housing Opportunities Commission, Revenue:
Multi-Family Mortgage:
7.05%, 7/1/2032....................................................... 2,485,000 2,593,793
7.375%, 7/1/2032...................................................... 2,140,000 2,206,297
Single Family Mortgage:
7.375%, 7/1/2017...................................................... 1,835,000 1,924,181
6.625%, 7/1/2026...................................................... 1,015,000 1,049,388
Northeast Waste Disposal Authority, Solid Waste Revenue
(Montgomery County Resource Recovery Project):
6%, 7/1/2008.......................................................... 2,690,000 2,737,936
6.20%, 7/1/2010....................................................... 12,385,000 12,561,858
6.30%, 7/1/2016....................................................... 12,080,000 12,290,554
Prince Georges County:
Consolidated Public Improvement, Refunding
6.75%, 7/1/2010 (Prerefunded 7/1/2001) (a)............................ 1,170,000 1,278,810
Revenue, Refunding (Dimensions Health Corp.) 5.30%, 7/1/2024............ 4,000,000 3,629,080
Prince Georges County Housing Authority:
Mortgage Revenue, Refunding:
(New Keystone Apartment Project) 6.80%, 7/1/2025 (Insured: FHA & MBIA) 4,300,000 4,469,592
(Riverview Terrace) 6.70%, 6/20/2020 (Collateralized; GNMA)........... 2,000,000 2,108,640
(Stevenson Apartments Project) 6.35%, 7/20/2020 (Collateralized; GNMA) 3,000,000 3,063,780
SFMR 6.60%, 12/1/2025 (Collateralized: FNMA & GNMA)..................... 4,660,000 4,807,256
U. S. Related_21.6%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 10,000,000 10,234,700
Puerto Rico Commonwealth:
5.85%, 7/1/2009......................................................... 5,000,000 5,139,350
6.50%, 7/1/2023......................................................... 1,000,000 1,057,980
Dreyfus Premier State Municipal Bond Fund, Maryland Series
Statement of Investments (continued) April 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
__________ __________
Maryland (continued)
Puerto Rico Commonwealth Aqueduct and Sewer Authority, Revenue, Refunding
5%, 7/1/2019............................................................ $ 15,870,000 $ 14,177,941
Puerto Rico Commonwealth Highway and Transportation Authority, Highway
Revenue:
5.40%, 7/1/2006 (Insured; FSA).......................................... 4,000,000 4,073,600
5.50%, 7/1/2026......................................................... 16,500,000 15,552,240
Refunding 5%, 7/1/2022 (Insured; MBIA).................................. 5,080,000 4,635,805
Puerto Rico Electric Power Authority, Power Revenue:
5.50%, 7/1/2020......................................................... 3,000,000 2,836,560
6.375%, 7/1/2024........................................................ 8,275,000 8,695,949
___________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $298,420,324)................... $307,098,722
===============
Short-Term Municipal Investments_.1%
Maryland:
Northeast Waste Disposal Authority, RRR, Refunding, VRDN
(Harford County Resource) 4.40% (Insured; AMBAC) (b) (cost $425,000).... $ 425,000 $ 425,000
===============
TOTAL INVESTMENTS_100.0% (cost $298,845,324)................................ $307,523,722
===============
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
<TABLE>
<CAPTION>
Dreyfus Premier State Municipal Bond Fund, Maryland Series
Summary of Abbreviations
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LR Lease Revenue
COP Certificate of Participation MBIA Municipal Bond Investors Assurance
EDR Economic Development Revenue Insurance Corporation
FGIC Financial Guaranty Insurance Company MFHR Multi-Family Housing Revenue
FHA Federal Housing Administration PCR Pollution Control Revenue
FNMA Federal National Mortgage Association RRR Resources Recovery 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)
Fitch (c) or Moody's or Standard & Poor's Percentage of Value
____ ______ ________________ ____________________
<S> <C> <C> <C>
AAA Aaa AAA 23.0%
AA Aa AA 30.9
A A A 26.4
BBB Baa BBB 10.5
F1+ & F1 MIG1, VMIG1 & P1 SP1 & A1 .1
Not Rated (d) Not Rated (d) Not Rated (d) 9.1
______
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) 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.
(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 Fund may invest.
(e) At April 30, 1997, the Fund had $78,779,146 (25.2% of net assets)
and $93,243,539 (29.9% of net assets) invested in securities whose payment
of principal and interest is dependent upon revenues generated from health
care projects and housing projects, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
Dreyfus Premier State Municipal Bond Fund, Maryland Series
Statement of Assets and Liabilities April 30, 1997
Cost Value
______________ ______________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $298,845,324 $307,523,722
Cash....................................... 434,793
Receivable for investment securities sold.. 5,946,059
Interest receivable........................ 5,497,943
Receivable for shares of Beneficial Interest subscribed 165,654
Prepaid expenses........................... 7,900
______________
319,576,071
______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 146,097
Due to Distributor......................... 82,318
Payable for investment securities purchased 6,739,990
Payable for shares of Beneficial Interest redeemed 370,049
Accrued expenses........................... 47,860
______________
7,386,314
______________
NET ASSETS.................................................................. $312,189,757
===============
REPRESENTED BY: Paid-in capital............................ $301,399,522
Accumulated net realized gain (loss) on investments 2,111,837
Accumulated net unrealized appreciation (depreciation)
on investments_Note 4...................... 8,678,398
______________
NET ASSETS.................................................................. $312,189,757
===============
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
_________________________________
Class A Class B Class C
_______________ _______________ _______________
<S> <C> <C> <C>
Net Assets........................................... $266,658,110 $45,329,176 $202,471
Shares Outstanding..................................... 20,992,868 3,568,109 15,929
NET ASSET VALUE PER SHARE.................................. $12.70 $12.70 $12.71
====== ======= =======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
Dreyfus Premier State Municipal Bond Fund, Maryland Series
Statement of Operations Year Ended April 30, 1997
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income............................ $19,738,047
EXPENSES: Management fee_Note 3(a)................... $ 1,755,487
Shareholder servicing costs _Note 3(c)..... 998,016
Distribution fees_Note 3(b)................ 217,369
Professional fees.......................... 48,692
Custodian fees............................. 33,000
Prospectus and shareholders' reports....... 16,530
Registration fees.......................... 7,814
Trustees' fees and expenses_Note 3(d)...... 4,238
Loan commitment fees_Note 2................ 1,784
Miscellaneous.............................. 19,950
_______________
Total Expenses....................... 3,102,880
_______________
INVESTMENT INCOME_NET....................................................... 16,635,167
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $ 3,361,910
Net unrealized appreciation (depreciation)
on investments 1,226,032
_______________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 4,587,942
_______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $21,223,109
================
SEE NOTES TO FINANCIAL STATEMENTS.
Dreyfus Premier State Municipal Bond Fund, Maryland Series
Statement of Changes in Net Assets
Year Ended Year Ended
April 30, 1997 April 30, 1996
_________________ ________________
OPERATIONS:
Investment income_net............................................... $ 16,635,167 $ 17,434,321
Net realized gain (loss) on investments......................... 3,361,910 4,318,992
Net unrealized appreciation (depreciation) on investments.................... 1,226,032 1,867,438
_________________ ________________
Net Increase (Decrease) in Net Assets Resulting from Operations..... 21,223,109 23,620,751
_________________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net:
Class A shares............................................................. (14,573,442) (15,612,512)
Class B shares............................................................. (2,057,437) (1,821,592)
Class C shares............................................................. (4,288) (217)
Net realized gain on investments:
Class A shares............................................................. (3,655,383) (1,739,958)
Class B shares............................................................. (581,957) (229,505)
Class C shares............................................................. (584) (6)
_________________ ________________
Total Dividends........................................................ (20,873,091) (19,403,790)
_________________ ________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares.......................................................... 9,339,601 11,106,487
Class B shares......................................................... 7,677,403 7,992,863
Class C shares............................................................. 172,500 27,000
Dividends reinvested:
Class A shares...................................................... 11,942,183 11,154,241
Class B shares............................................................. 1,775,213 1,358,026
Class C shares.......................................................... 4,210 219
Cost of shares redeemed:
Class A shares............................................................. (38,844,650) (44,093,946)
Class B shares............................................................. (5,310,474) (3,601,826)
_________________ ________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (13,244,014) (16,056,936)
_________________ ________________
Total Increase (Decrease) in Net Assets.............................. (12,893,996) (11,839,975)
NET ASSETS:
Beginning of Period......................................................... 325,083,753 336,923,728
_________________ ________________
End of Period.................................................. $312,189,757 $325,083,753
================ ==================
SEE NOTES TO FINANCIAL STATEMENTS.
Dreyfus Premier State Municipal Bond Fund, Maryland Series
Statement of Changes in Net Assets (continued)
Shares
________________________________________
Year Ended Year Ended
April 30, 1997 April 30, 1996
_________________ __________________
CAPITAL SHARE TRANSACTIONS:
Class A
______
Shares sold............................................................ 728,876 860,692
Shares issued for dividends reinvested................................. 932,487 863,509
Shares redeemed........................................................ (3,035,640) (3,429,459)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding.............. (1,374,277) (1,705,258)
================= =================
Class B
________
Shares sold............................................................ 601,011 620,596
Shares issued for dividends reinvested................................. 138,596 105,093
Shares redeemed........................................................ (415,927) (279,793)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding............... 323,680 445,896
================= =================
Class C*
_________
Shares sold............................................................ 13,506 2,077
Shares issued for dividends reinvested................................. 329 17
_________________ _________________
Net Increase (Decrease) in Shares Outstanding............... 13,835 2,094
================= =================
_________________________
* From August 15, 1995 (commencement of initial offering) to April 30, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
Dreyfus Premier State Municipal Bond Fund, Maryland Series
Financial Highlights
Reference is made to page 3 of the Fund's Prospectus dated July 16, 1997.
Dreyfus Premier State Municipal Bond Fund, Maryland Series
NOTES TO FINANCIAL STATEMENTS
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Premier State Municipal Bond Fund (the "Trust") 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 thirteen series including the Maryland Series (the
"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 Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
On January 8, 1997, the Trust's Trustees approved a change to the Trust's
name from "Premier State Municipal Bond Fund" to "Dreyfus Premier State
Municipal Bond Fund" which change became effective March 31, 1997.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. The Fund is authorized to issue an unlimited number of
$.001 par value shares in the following classes of shares: 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 ("CDSC") imposed on Class B share redemptions made within six
years of purchase (five years for shareholders beneficially owning Class B
shares on November 30, 1996) and Class C shares are subject to a CDSC imposed
on Class C shares redeemed within one year of purchase. Other differences
between the classes include the services offered to and the expenses borne by
each class and certain voting rights.
The Trust accounts separately for the assets, liabilities and operations
of each fund. Expenses directly attributable to each fund are charged to that
fund's operations; expenses which are applicable to all funds are allocated
among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (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 Fund 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 Fund.
Dreyfus Premier State Municipal Bond Fund, Maryland Series
NOTES TO FINANCIAL STATEMENTS (continued)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund 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 Fund 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 Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund 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_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended April
30, 1997, the Fund did not borrow under the Facility.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .55 of 1% of the value of the Fund's
average daily net assets and is payable monthly.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $1,539 during the period ended April 30, 1997, from commissions
earned on sales of the Fund's shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Fund pays the Distributor for distributing the Fund's 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 period ended April 30, 1997,
$216,650 was charged to the Fund for the Class B shares and $719 was charged
to the Fund for the Class C shares.
(C) Under the Shareholder Services Plan, the Fund 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 Fund 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 period ended April 30, 1997,
$689,384, $108,325 and $240 were charged to Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
The Fund 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 Fund. Such
compensation amounted to $147,810 during the period ended April 30, 1997.
(D) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Trust 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.
Dreyfus Premier State Municipal Bond Fund, Maryland Series
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1997
amounted to $135,629,075 and $148,131,328, respectively.
At April 30, 1997, accumulated net unrealized appreciation on investments
was $8,678,398, consisting of $10,021,384 gross unrealized appreciation and
$1,342,986 gross unrealized depreciation.
At April 30, 1997, 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).
Dreyfus Premier State Municipal Bond Fund, Maryland Series
Report of Ernst & Young LLP, Independent Auditors
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MARYLAND SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier State Municipal
Bond Fund, Maryland Series (one of the Funds constituting the Dreyfus Premier
State Municipal Bond Fund) as of April 30, 1997, 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 and financial highlights. Our procedures included
confirmation of securities owned as of April 30, 1997 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 Dreyfus Premier State Municipal Bond Fund, Maryland Series at
April 30, 1997, 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, 1997
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1997
Principal
Long-Term Municipal Investments_98.6% Amount Value
_____________ _____________
<S> <C> <C>
Massachusetts_73.3%
Boston Industrial Development Financing Authority, Sewer Facility Revenue
(Harbor Electric Energy Co. Project) 7.375%, 5/15/2015.................. $ 2,500,000 $ 2,676,850
Leominster 7.50%, 4/1/2009 (Insured; MBIA, Prerefunded 4/1/2000) (a)........ 1,275,000 1,398,114
Lynn Water and Sewer Commission, General Revenue
7.25%, 12/1/2010 (Insured; MBIA, Prerefunded 12/1/2000) (a)............. 1,000,000 1,102,400
Massachusetts Bay Transportation Authority:
7%, 3/1/2021............................................................ 1,000,000 1,167,500
7.222%, 3/1/2021 (Insured; MBIA) (b,c).................................. 2,300,000 2,058,500
Massachusetts Commonwealth 7%, 8/1/2012 (Prerefunded 8/1/2001) (a).......... 1,850,000 2,037,572
Massachusetts Education Loan Authority, Education Loan Revenue
7.75%, 1/1/2008 (Insured; MBIA)......................................... 1,115,000 1,139,630
Massachusetts Health and Educational Facilities Authority, Revenue:
(Baystate Medical Center) 6%, 7/1/2026 (Insured; FSA)................... 2,000,000 2,010,300
(Cooley Dickinson Hospital):
5.50%, 11/15/2018 (Insured; AMBAC).................................... 3,500,000 3,357,165
5.50%, 11/15/2025 (Insured; AMBAC).................................... 1,500,000 1,422,555
(Medical Center of Central Massachusetts) 7.10%, 7/1/2021............... 1,000,000 1,060,320
(New England Deaconess Hospital) 6.875%, 4/1/2022....................... 4,000,000 4,281,840
(Refunding_Lowell General Hospital) 5.25%, 6/1/2016 (Insured; FSA)...... 2,000,000 1,884,920
(Refunding_Milton Hospital) 7%, 7/1/2016 (Insured; MBIA)................ 2,050,000 2,196,493
(South Shore Hospital) 7.50%, 7/1/2020
(Insured; MBIA, Prerefunded 7/1/2000) (a)............................. 2,000,000 2,199,640
(University Hospital) 7.25%, 7/1/2019 (Insured; MBIA)................... 2,750,000 2,966,370
Massachusetts Housing Finance Agency, SFHR:
7.80%, 12/1/2005........................................................ 815,000 874,462
7.90%, 6/1/2014......................................................... 785,000 844,370
7.95%, 6/1/2023......................................................... 1,885,000 2,006,733
Massachusetts Industrial Finance Agency, Revenue:
(Provider Lease Program) 8.75%, 7/15/2009............................... 675,000 700,657
(Refunding_Phillips Academy) 5.375%, 9/1/2023........................... 1,250,000 1,195,663
(Water Treatment_American Hingham) 6.95%, 12/1/2035..................... 3,000,000 3,114,480
Massachusetts Port Authority, Special Project Revenue
(Harborside Hyatt) 10%, 3/1/2026........................................ 3,000,000 3,339,060
Massachusetts Water Pollution Abatement Trust
(Pool Loan Program) 5.40%, 2/1/2011..................................... 175,000 174,095
Massachusetts Water Resources Authority:
5%, 12/1/2016 (Insured; MBIA)........................................... 3,000,000 2,752,320
5%, 12/1/2025 (Insured; MBIA)........................................... 3,375,000 3,019,511
South Essex Sewer District, Refunding 5.25%, 6/15/2024 (Insured; MBIA)...... 1,000,000 932,310
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
_____________ _____________
U. S. Related_25.3%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ $ 1,500,000 $ 1,535,205
Puerto Rico Commonwealth:
Public Improvement 5.375%, 7/1/2025..................................... 2,500,000 2,335,150
Refunding:
6%, 7/1/2014.......................................................... 2,000,000 2,015,420
5.375%, 7/1/2022 (Insured; MBIA)...................................... 2,500,000 2,399,950
Puerto Rico Commonwealth Highway and Transportation Authority,
Highway Revenue:
6.478%, 7/1/2009 (b).................................................. 1,000,000 947,500
6.578%, 7/1/2010 (b).................................................. 1,000,000 936,250
Puerto Rico Housing Finance Corporation, MFMR
7.50%, 4/1/2022 (LOC; Government Development Bank) (d).................. 3,355,000 3,530,332
Puerto Rico Public Buildings Authority,
Guaranteed Government Facilities Revenue 6.25%, 7/1/2015 (Insured; AMBAC) 1,100,000 1,195,920
Virgin Islands Public Finance Authority, Revenue, Refunding
7.25%, 10/1/2018........................................................ 2,750,000 2,977,205
_____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $67,707,424).................... $69,786,762
=============
Short-Term Municipal Investments_1.4%
Massachusetts:
Massachusetts Health and Educational Facilities Authority, Revenue, VRDN
(Saint Elizabeth's Hospital) 3.24% (Insured; FSA) (b) (cost $1,000,000). $ 1,000,000 $ 1,000,000
=============
TOTAL INVESTMENTS_100.0% (cost $68,707,424)................................. $70,786,762
=============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
Summary of Abbreviations
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation MFMR Multi-Family Mortgage Revenue
FSA Financial Security Assurance SFHR Single Family Housing Revenue
LOC Letter of Credit VRDN Variable Rate Demand Notes
MBIA Municipal Bond Investors Assurance
Insurance Corporation
</TABLE>
<TABLE>
<CAPTION>
Summary of Combined Ratings (Unaudited)
Fitch (e) or Moody's or Standard & Poor's Percentage of Value
____ _______ __________________ ____________________
<S> <C> <C> <C>
AAA Aaa AAA 46.9%
AA Aa AA 12.0
A A A 18.2
BBB Baa BBB 13.0
Not Rated (f) Not Rated (f) Not Rated (f) 9.9
______
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. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30,
1997, this security amounted to $2,058,500 or 2.9% of net assets.
(d) Secured by letters of credit.
(e) Fitch currently provides creditworthiness information for a limited
number of investments.
(f) 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 Fund may invest.
(g) At April 30, 1997, 30.8% of the Fund's net assets are insured by
MBIA.
(h) At April 30, 1997, the Fund had $20,319,283 (28.3% 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>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997
Cost Value
_____________ _____________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $68,707,424 $70,786,762
Interest receivable........................ 1,287,856
Prepaid expenses........................... 4,649
_____________
72,079,267
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 33,202
Due to Distributor......................... 17,169
Cash overdraft due to Custodian............ 66,189
Payable for shares of Beneficial Interest redeemed 58,609
Accrued expenses........................... 30,219
_____________
205,388
_____________
NET ASSETS.................................................................. $71,873,879
================
REPRESENTED BY: Paid-in capital............................ $69,784,902
Accumulated net realized gain (loss) on investments 9,639
Accumulated net unrealized appreciation (depreciation)
....................... on investments_Note 4 2,079,338
_____________
NET ASSETS.................................................................. $71,873,879
================
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
_________________________________
Class A Class B Class C
_______________ _______________ _______________
<S> <C> <C> <C>
Net Assets............................................. $65,808,545 $6,064,240 $1,094
Shares Outstanding............................... 5,771,154 532,146 95.867
NET ASSET VALUE PER SHARE....................... $11.40 $11.40 $11.41
====== ======= =======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1997
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income............................ $4,688,815
EXPENSES: Management fee_Note 3(a)................... $ 404,124
Shareholder servicing costs_Note 3(c)...... 229,135
Distribution fees_Note 3(b)................ 28,947
Professional fees.......................... 13,696
Custodian fees............................. 7,806
Prospectus and shareholders' reports....... 7,232
Registration fees.......................... 5,782
Trustees' fees and expenses_Note 3(d)...... 1,130
Loan commitment fees_Note 2................ 416
Miscellaneous.............................. 8,107
____________
Total Expenses....................... 706,375
______________
INVESTMENT INCOME_NET....................................................... 3,982,440
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $ 6,502
Net unrealized appreciation (depreciation)
on investments 1,082,966
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 1,089,468
______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $5,071,908
==============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
April 30, 1997 April 30, 1996
___________________ ___________________
OPERATIONS:
Investment income_net................................................... $ 3,982,440 $ 4,274,002
Net realized gain (loss) on investments................................. 6,502 2,354,880
Net unrealized appreciation (depreciation) on investments............. 1,082,966 (2,363,586)
___________________ ___________________
Net Increase (Decrease) in Net Assets Resulting from Operations... 5,071,908 4,265,296
___________________ ___________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net:
Class A shares........................................................ (3,696,455) (4,029,063)
Class B shares........................................................ (285,931) (244,904)
Class C shares........................................................ (54) (35)
Net realized gain on investments:
Class A shares........................................................ (1,546,112) (164,269)
Class B shares........................................................ (134,987) (11,333)
Class C shares........................................................ (24) (2)
___________________ ___________________
Total Dividends................................................... (5,663,563) (4,449,606)
___________________ ___________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 3,547,855 2,996,973
Class B shares.................................................... 1,371,567 1,256,028
Class C shares........................................................ ___ 1,000
Dividends reinvested:
Class A shares........................................................ 3,020,218 2,291,472
Class B shares........................................................ 264,120 142,581
Class C shares........................................................ 75 37
Cost of shares redeemed:
Class A shares........................................................ (9,033,997) (9,062,697)
Class B shares........................................................ (771,968) (324,846)
___________________ ___________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (1,602,130) (2,699,452)
___________________ ___________________
Total Increase (Decrease) in Net Assets......................... (2,193,785) (2,883,762)
NET ASSETS:
Beginning of Period..................................................... 74,067,664 76,951,426
___________________ ___________________
End of Period........................................................... $71,873,879 $74,067,664
================ ====================
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
_________________________________________
Year Ended Year Ended
April 30, 1997 April 30, 1996
_________________ __________________
CAPITAL SHARE TRANSACTIONS:
Class A
________
Shares sold............................................................ 306,570 255,371
Shares issued for dividends reinvested............................ 260,724 194,345
Shares redeemed........................................................ (781,555) (771,980)
_________________ __________________
Net Increase (Decrease) in Shares Outstanding (214,261) (322,264)
================= ====================
Class B
_______
Shares sold......................................................... 118,977 106,403
Shares issued for dividends reinvested.......................... 22,810 12,098
Shares redeemed...................................................... (66,988) (27,545)
_________________ __________________
Net Increase (Decrease) in Shares Outstanding 74,799 90,956
================= ====================
Class C*
_________
Shares sold............................................................ ____ 86
Shares issued for dividends reinvested................................. 7 3
_________________ __________________
Net Increase (Decrease) in Shares Outstanding 7 89
================= ====================
__________________________
*From August 15, 1995 (commencement of initial offering) to April 30, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated July 16, 1997.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Premier State Municipal Bond Fund (the "Trust") 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 thirteen series including the Massachusetts Series (the
"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 Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
On January 8, 1997, the Trust's Trustees approved a change to the Trust's
name from "Premier State Municipal Bond Fund" to "Dreyfus Premier State
Municipal Bond Fund" which change became effective March 31, 1997.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. The Fund is authorized to issue an unlimited number of
$.001 par value shares in the following classes of shares: 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 ("CDSC") imposed on Class B share redemptions made within six
years of purchase (five years for shareholders beneficially owning Class B
shares on November 30, 1996) and Class C shares are subject to a CDSC imposed
on Class C shares redeemed within one year of purchase. Other differences
between the classes include the services offered to and the expenses borne by
each class and certain voting rights.
The Trust accounts separately for the assets, liabilities and operations
of each fund. Expenses directly attributable to each fund are charged to that
fund's operations; expenses which are applicable to all funds are allocated
among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (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.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund 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 Fund.
(c) Dividends to shareholders: It is the policy of the Fund 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 Fund 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 Fund not to distribute such gain.
(d) Federal income taxes: It is the policy of the Fund 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_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended April
30, 1997, the Fund did not borrow under the Facility.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .55 of 1% of the value of the Fund's
average daily net assets and is payable monthly.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $831 during the period ended April 30, 1997, from commissions earned
on sales of the Fund's shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Fund pays the Distributor for distributing the Fund's 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 period ended April 30, 1997,
$28,938 was charged to the Fund for the Class B shares and $9 was charged to
the Fund for the Class C shares.
(c) Under the Shareholder Services Plan, the Fund 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 Fund 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 period ended April 30, 1997,
$169,221, $14,469 and $3 were charged to Class A, Class B and Class C shares,
respectively, by the Distributor pursuant to the Shareholder Services Plan.
The Fund 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 Fund. Such
compensation amounted to $32,505 during the period ended April 30, 1997.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(d) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Trust 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 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1997
amounted to $17,662,134 and $19,031,186, respectively.
At April 30, 1997, accumulated net unrealized appreciation on investments
was $2,079,338, consisting of $2,785,719 gross unrealized appreciation and
$706,381 gross unrealized depreciation.
At April 30, 1997, 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).
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Premier State Municipal Bond Fund, Massachusetts Series
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier State Municipal
Bond Fund, Massachusetts Series (one of the Funds constituting the Dreyfus
Premier State Municipal Bond Fund) as of April 30, 1997, 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 and financial highlights. Our procedures included
confirmation of securities owned as of April 30, 1997 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 Dreyfus Premier State Municipal Bond Fund, Massachusetts Series
at April 30, 1997, 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, 1997
<TABLE>
<CAPTION>
Dreyfus Premier State Municipal Bond Fund, Michigan Series
Statement of Investments April 30, 1997
Principal
Long-Term Municipal Investments_94.8% Amount Value
_____________ __________
<S> <C> <C>
Michigan_93.3%
Armada Area Schools 5.625%, 5/1/2017 (Insured; FSA)......................... $ 2,485,000 $ 2,455,627
Brighton Area School District, Refunding:
Zero Coupon, 5/1/2014 (Insured; AMBAC).................................. 8,000,000 3,011,280
Zero Coupon, 5/1/2020 (Insured; AMBAC).................................. 5,000,000 1,292,100
Capital Region Airport Authority, Airport Revenue
6.70%, 7/1/2021 (Insured; MBIA)......................................... 2,500,000 2,655,000
Chippewa Valley Schools, Refunding 7%, 5/1/2010 (Prerefunded 5/1/2001) (a).. 1,275,000 1,394,455
Clarkston Community School 5.75%, 5/1/2016 (Insured; FGIC).................. 1,340,000 1,343,256
Detroit:
(Development Area No. 1) 7.60%, 7/1/2010 (Prerefunded 7/1/1999) (a)..... 4,150,000 4,490,300
(Unlimited Tax) 6.35%, 4/1/2014......................................... 3,220,000 3,295,123
Water Supply Systems Revenue, Refunding
8.562%, 7/1/2022 (Insured; FGIC) (b).................................. 1,500,000 1,648,125
Ferris State University, Revenue, Refunding 5.25%, 10/1/2020 (Insured; MBIA) 1,200,000 1,115,244
Grand Rapids Housing Finance Authority, Multi-Family Revenue, Refunding
7.625%, 9/1/2023 (Collateralized; FNMA)................................. 1,000,000 1,086,530
Huron Valley School District, Refunding
Zero Coupon, 5/1/2018 (Insured; FGIC)................................... 6,370,000 1,866,856
Iron Mountain City School District, Refunding:
5.125%, 5/1/2016 (Insured; AMBAC)....................................... 2,000,000 1,873,100
5.125%, 5/1/2021 (Insured; AMBAC)....................................... 1,000,000 919,790
Kalamazoo Hospital Finance Authority, Hospital Facilities Revenue, Refunding:
(Borgess Medical Center) 6.25%, 6/1/2014 (Insured; FGIC)................ 2,000,000 2,140,520
(Bronson Methodist Hospital) 5.75%, 5/15/2016 (Insured; MBIA)........... 2,500,000 2,478,525
Kenowa Hills Public Schools 5.875%, 5/1/2021 (Insured; MBIA)................ 3,360,000 3,376,296
Kent County, Airport Facilities Revenue (Kent County International Airport):
5.90%, 1/1/2012......................................................... 1,145,000 1,153,782
5.90%, 1/1/2013......................................................... 1,095,000 1,099,380
6.10%, 1/1/2025......................................................... 3,000,000 3,086,850
Lake Orion Community School District, Refunding 5.80%, 5/1/2015 (Insured; AMBAC) 2,085,000 2,099,657
Lapeer Economic Development Corp., Ltd. Obligation Revenue
(Lapeer Health Services Project) 8.625%, 2/1/2020 (Prerefunded 2/1/2000) (a) 2,000,000 2,233,900
Leslie Public School (Ingham and Jackson Counties School Building and Site)
Refunding 6%, 5/1/2015 (Insured; AMBAC)................................. 1,000,000 1,027,620
Michigan Building Authority, Lease Revenue 6.75%, 10/1/2007 (Insured; AMBAC) 1,600,000 1,743,760
Michigan Higher Education Student Loan Authority, Student Loan Revenue:
6.875%, 10/1/2007 (Insured; AMBAC)...................................... 2,250,000 2,300,400
7.55%, 10/1/2008 (Insured; MBIA)........................................ 1,150,000 1,183,016
6.125%, 9/1/2010........................................................ 1,520,000 1,530,549
Michigan Hospital Finance Authority, HR:
(Crittenton Hospital) 6.70%, 3/1/2007................................... 2,250,000 2,373,255
(Daughters of Charity National Health Systems_Providence Hospital) 7%, 11/1/2021 2,700,000 2,915,946
Dreyfus Premier State Municipal Bond Fund, Michigan Series
Statement of Investments (continued) April 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
__________ __________
Michigan (continued)
Michigan Hospital Finance Authority, HR (continued):
Refunding:
(Daughters of Charity National Health Systems-Providence Hospital)
5.25%, 11/1/2015.................................................. $ 2,200,000 $ 2,088,922
(Detroit Medical Center) 8.125%, 8/15/2012............................ 220,000 233,156
(Genesys Health Systems) 8.125%, 10/1/2021............................ 5,000,000 5,696,150
(Henry Ford Health System) 5.25%, 11/15/2025.......................... 2,000,000 1,848,680
(Middle Michigan Obligation Group) 6.625%, 6/1/2010................... 2,000,000 2,046,160
(Saint John Hospital and Medical Center) 5.25%, 5/15/2026 (Insured; AMBAC) 3,000,000 2,763,600
(Sinai Hospital of Greater Detroit) 6.70%, 1/1/2026................... 2,500,000 2,588,325
(Sisters of Mercy Health Corp.):
6.25%, 2/15/2009 (Insured; FSA)................................... 1,065,000 1,117,952
5.375%, 8/15/2014 (Insured; MBIA)................................. 1,340,000 1,303,150
Michigan Housing Development Authority:
(Home Improvement Program) 7.65%, 12/1/2012............................. 1,755,000 1,824,656
MFHR 8.375%, 7/1/2019 (Insured; FGIC) (Prerefunded 7/1/1997) (a)........ 1,305,000 1,353,794
Rental Housing Revenue:
6.50%, 4/1/2006....................................................... 2,000,000 2,109,180
7.70%, 4/1/2023 (Insured; FSA)........................................ 4,185,000 4,484,186
SFMR:
7.55%, 12/1/2014...................................................... 105,000 105,488
7.50%, 6/1/2015....................................................... 2,355,000 2,471,855
5.95%, 12/1/2016...................................................... 2,365,000 2,366,821
7.75%, 12/1/2019...................................................... 1,090,000 1,095,603
6.95%, 12/1/2020...................................................... 1,640,000 1,718,540
Michigan Municipal Bond Authority, Revenue (State Revolving Fund):
6.50%, 10/1/2014 (Prerefunded 10/1/2004) (a)............................ 2,500,000 2,768,725
6.50%, 10/1/2017 (Prerefunded 10/1/2004) (a)............................ 3,500,000 3,876,215
5.625%, 10/1/2019....................................................... 5,450,000 5,294,293
Michigan Strategic Fund:
Ltd. Obligation Revenue:
(Northeastern Community Mental Health Foundation) 8.25%, 1/1/2009..... 1,425,000 1,487,600
Refunding (Ledyard Association Ltd. Partnership Project)
6.25%, 10/1/2011 (Insured; ITT Lyndon Property Insurance Co.)..... 3,075,000 3,209,101
SWDR, Refunding (Genesee Power Station Project) 7.50%, 1/1/2021......... 3,000,000 3,070,440
Monroe County:
PCR (Detroit Edison Project):
7.50%, 12/1/2019 (Insured; AMBAC)..................................... 4,650,000 5,055,387
7.875%, 12/1/2019..................................................... 2,720,000 2,934,717
7.65%, 9/1/2020 (Insured; FGIC)....................................... 2,250,000 2,453,445
6.55%, 6/1/2024 (Insured; MBIA)....................................... 1,700,000 1,782,943
Water Supply Systems (Frenchtown Charter Township Water Treatment
and Distribution Systems) 6.50%, 5/1/2013 (Prerefunded 5/1/2000) (a).. 2,500,000 2,670,700
Monroe County Economic Development Corp., Ltd. Obligation Refunding, Revenue
(Detroit Edison Co. Project) 6.95%, 9/1/2022 (Insured; FGIC)............ 2,000,000 2,346,300
Dreyfus Premier State Municipal Bond Fund, Michigan Series
Statement of Investments (continued) April 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
__________ __________
Michigan (continued)
Northville, Special Assessment (Wayne County) 7.875%, 1/1/2006.............. $ 1,685,000 $ 1,800,254
Northwestern Michigan College, Community College Improvement Revenue, Refunding
7%, 7/1/2011............................................................ 1,800,000 1,939,446
Oakland County Economic Development Corp., Ltd. Obligation Revenue
(Pontiac Osteopathic Hospital Project)
9.625%, 1/1/2020 (Prerefunded 1/1/2000) (a)............................. 1,575,000 1,791,783
Oxford Area Community School District, Building and Site
5.40%, 5/1/2025 (Insured; FGIC)......................................... 1,000,000 950,910
Rockford Public Schools, Refunding (Kent County School Building and Site)
7.375%, 5/1/2019 (Prerefunded 5/1/2000) (a)............................. 2,000,000 2,162,400
Romulus Community Schools, Refunding
5.125%, 5/1/2017 (Insured; FGIC)........................................ 4,650,000 4,346,448
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 3,985,714
South Lyon Community Schools (School Building) 6.375%, 5/1/2018............. 1,500,000 1,577,910
Thornapple Kellogg School District 5.375%, 5/1/2022 (Insured; FGIC)......... 2,500,000 2,365,400
Wayne Charter County, Special Airport Facilities Revenue, Refunding
(Northwest Airlines Inc.) 6.75%, 12/1/2015.............................. 5,750,000 5,927,157
U.S. Related_1.5%
Puerto Rico Housing Finance Corp., MFMR
7.50%, 4/1/2022 (LOC; Government Development Bank) (c).................. 2,510,000 2,641,173
__________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $154,883,289)..................................................... $162,844,921
=============
Short-Term Municipal Investments_5.2%
Michigan:
Michigan Strategic Fund, Limited Obligation Revenue, Refunding, VRDN
(Detroit Edison Co.) 4.30% (LOC; Barclays Bank) (c,d)................... $ 5,000,000 $ 5,000,000
Monroe County Economic Development Corp., Limited Obligation Revenue,
Refunding, VRDN (Detroit Edison Co.) 4.50% (LOC; Barclays Bank) (c,d)....... 4,000,000 4,000,000
__________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $9,000,000)....................................................... $ 9,000,000
=============
TOTAL INVESTMENTS_100.0%
(cost $163,883,289)..................................................... $171,844,921
=============
Dreyfus Premier State Municipal Bond Fund, Michigan Series
</TABLE>
<TABLE>
<CAPTION>
Summary of Abbreviations
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation MFHR Multi-Family Housing Revenue
EDR Economic Development Revenue MFMR Multi-Family Mortgage Revenue
FGIC Financial Guaranty Insurance Company PCR Pollution Control Revenue
FNMA Federal National Mortgage Association SFMR Single Family Mortgage Revenue
FSA Financial Security Assurance SWDR Solid Waste Disposal Revenue
HR Hospital Revenue VRDN Variable Rate Demand Notes
LOC Letter of Credit
MBIA Municipal Bond Investors Assurance
Insurance Corporation
</TABLE>
<TABLE>
<CAPTION>
Summary of Combined Ratings (Unaudited)
Fitch (e) or Moody's or Standard & Poor's Percentage of Value
____ ________ _________________ ______________________
<S> <C> <C> <C>
AAA Aaa AAA 38.9%
AA Aa AA 17.9
A A A 14.8
BBB Baa BBB 9.8
F1 Mig1 SP1 5.2
Not Rated (f) Not Rated (f) Not Rated (f) 13.4
________
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 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 is subject to change
periodically.
(c) Secured by letters of credit.
(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) Fitch currently provides creditworthiness information for a limited
number of investments.
(f) 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 Fund may invest.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
Dreyfus Premier State Municipal Bond Fund, Michigan Series
Statement of Assets and Liabilities April 30, 1997
Cost Value
____________ ____________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $163,883,289 $171,844,921
Cash....................................... 365,364
Interest receivable........................ 3,171,863
Receivable for shares of Beneficial Interest subscribed 27,352
Prepaid expenses........................... 6,889
_______________
175,416,389
_______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 78,950
Due to Distributor......................... 43,939
Payable for shares of Beneficial Interest redeemed 114,091
Accrued expenses........................... 32,501
_______________
269,481
_______________
NET ASSETS.................................................................. $175,146,908
===============
REPRESENTED BY: Paid-in capital............................ $167,809,295
Accumulated net realized gain (loss) on investments (624,019)
Accumulated net unrealized appreciation (depreciation)
....................... on investments_Note 4 7,961,632
_______________
NET ASSETS.................................................................. $175,146,908
===============
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
_________________________________
Class A Class B Class C
_______________ _______________ _______________
<S> <C> <C> <C>
Net Assets........................................ $155,567,938 $19,337,678 $241,292
Shares Outstanding................................ 10,277,933 1,277,842 15,936
NET ASSET VALUE PER SHARE................................ $15.14 $15.13 $15.14
====== ======= =======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
Dreyfus Premier State Municipal Bond Fund, Michigan Series
Statement of Operations Year Ended April 30, 1997
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income............................ $11,405,927
EXPENSES: Management fee_Note 3(a)................... $ 1,003,722
Shareholder servicing costs _Note 3(c)..... 588,405
Distribution fees_Note 3(b)................ 98,558
Professional fees.......................... 24,318
Custodian fees............................. 19,068
Prospectus and shareholders' reports....... 9,885
Registration fees.......................... 4,589
Trustees' fees and expenses_Note 3(d)...... 2,433
Loan commitment fees_Note 2................ 1,019
Miscellaneous.............................. 17,743
_____________
Total Expenses....................... 1,769,740
_____________
INVESTMENT INCOME_NET....................................................... 9,636,187
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $ (627,210)
Net unrealized appreciation (depreciation)
on investments 3,129,851
_____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 2,502,641
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $12,138,828
==============
SEE NOTES TO FINANCIAL STATEMENTS.
Dreyfus Premier State Municipal Bond Fund, Michigan Series
Statement of Changes in Net Assets
Year Ended Year Ended
April 30, 1997 April 30, 1996
________________ ________________
OPERATIONS:
Investment income_net............................................ $ 9,636,187 $ 10,289,932
Net realized gain (loss) on investments................................ (627,210) 4,253,950
Net unrealized appreciation (depreciation) on investments............ 3,129,851 (1,629,095)
________________ ________________
Net Increase (Decrease) in Net Assets Resulting from Operations.. 12,138,828 12,914,787
________________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net:
Class A shares....................................................... (8,691,679) (9,401,220)
Class B shares....................................................... (934,756) (886,953)
Class C shares....................................................... (9,752) (1,759)
Net realized gain on investments:
Class A shares....................................................... (2,310,672) (2,113,095)
Class B shares....................................................... (280,992) (230,061)
Class C shares....................................................... (3,342) (13)
________________ ________________
Total Dividends.................................................. (12,231,193) (12,633,101)
________________ ________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares....................................................... 5,737,268 6,590,274
Class B shares................................................. 2,530,630 4,290,323
Class C shares.................................................. 202,082 135,546
Dividends reinvested:
Class A shares....................................................... 6,502,642 6,818,746
Class B shares....................................................... 755,630 688,066
Class C shares....................................................... 6,387 1,816
Cost of shares redeemed:
Class A shares....................................................... (23,142,080) (23,824,458)
Class B shares....................................................... (2,955,952) (2,354,777)
Class C shares....................................................... (99,257) __
________________ ________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (10,462,650) (7,654,464)
________________ ________________
Total Increase (Decrease) in Net Assets........................ (10,555,015) (7,372,778)
NET ASSETS:
Beginning of Period.................................................... 185,701,923 193,074,701
________________ ________________
End of Period......................................................... $175,146,908 $185,701,923
=============== =================
SEE NOTES TO FINANCIAL STATEMENTS.
Dreyfus Premier State Municipal Bond Fund, Michigan Series
Statement of Changes in Net Assets (continued)
Shares
_____________________________________
Year Ended Year Ended
April 30, 1997 April 30, 1996
_________________ _________________
CAPITAL SHARE TRANSACTIONS:
Class A
________
Shares sold...................................................... 376,125 424,521
Shares issued for dividends reinvested............................ 424,804 437,436
Shares redeemed........................................................ (1,515,387) (1,537,548)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding (714,458) (675,591)
================= =================
Class B
________
Shares sold......................................................... 165,789 276,378
Shares issued for dividends reinvested........................ 49,375 44,106
Shares redeemed................................................... (193,563) (152,659)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding 21,601 167,825
================= =================
Class C*
_____
Shares sold.................................................. 13,302 8,647
Shares issued for dividends reinvested........................ 418 117
Shares redeemed................................................... (6,548) ___
_________________ _________________
Net Increase (Decrease) in Shares Outstanding 7,172 8,764
================= =================
* From August 15, 1995 (commencement of initial offering) to April 30, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
Dreyfus Premier State Municipal Bond Fund, Michigan Series
Financial Highlights
Reference is made to page 4 of the Fund's Prospectus dated July 16, 1997.
Dreyfus Premier State Municipal Bond Fund, Michigan Series
NOTES TO FINANCIAL STATEMENTS
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Premier State Municipal Bond Fund (the "Trust") 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 thirteen series including the Michigan Series (the
"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 Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
On January 8, 1997, the Trust's Trustees approved a change to the Trust's
name from "Premier State Municipal Bond Fund" to "Dreyfus Premier State
Municipal Bond Fund" which change became effective March 31, 1997.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. The Fund is authorized to issue an unlimited number of
$.001 par value shares in the following classes of shares: 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 ("CDSC") imposed on Class B share redemptions made within six
years of purchase (five years for shareholders beneficially owning Class B
shares on November 30, 1996) and Class C shares are subject to a CDSC imposed
on Class C shares redeemed within one year of purchase. Other differences
between the classes include the services offered to and the expenses borne by
each class and certain voting rights.
The Trust accounts separately for the assets, liabilities and operations
of each fund. Expenses directly attributable to each fund are charged to that
fund's operations; expenses which are applicable to all funds are allocated
among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (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 Fund 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 Fund.
Dreyfus Premier State Municipal Bond Fund, Michigan Series
NOTES TO FINANCIAL STATEMENTS (continued)
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund 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 Fund 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 Fund not to
distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund 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 $461,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1997. The
carryover does not include net realized securities losses from November 1,
1996 through April 30, 1997 which are treated, for Federal income tax
purposes, as arising in fiscal 1998. If not applied, the carryover expires in
fiscal 2005.
NOTE 2_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended April
30, 1997, the Fund did not borrow under the Facility.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .55 of 1% of the value of the Fund's
average daily net assets and is payable monthly.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $1,387 during the period ended April 30, 1997, from commissions
earned on sales of the Fund's shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Fund pays the Distributor for distributing the Fund's 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 period ended April 30, 1997,
$96,920 was charged to the Fund for the Class B shares and $1,638 was charged
to the Fund for the Class C shares.
(C) Under the Shareholder Services Plan, the Fund 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 Fund 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 period ended April 30, 1997,
$407,231, $48,460 and $546 were charged to Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
The Fund 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 Fund. Such
compensation amounted to $96,075 during the period ended April 30, 1997.
Dreyfus 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 Trust 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 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1997
amounted to $39,320,428 and $59,703,721, respectively.
At April 30, 1997, accumulated net unrealized appreciation on investments
was $7,961,632, consisting of $8,512,793 gross unrealized appreciation and
$551,161 gross unrealized depreciation.
At April 30, 1997, 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).
Dreyfus Premier State Municipal Bond Fund, Michigan Series
Report of Ernst & Young LLP, Independent Auditors
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MICHIGAN SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier State Municipal
Bond Fund, Michigan Series (one of the Funds constituting the Dreyfus Premier
State Municipal Bond Fund) as of April 30, 1997, 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 and financial highlights. Our procedures included
confirmation of securities owned as of April 30, 1997 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 Dreyfus Premier State Municipal Bond Fund, Michigan Series at
April 30, 1997, 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, 1997
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1997
Principal
Long-Term Municipal Investments_97.8% Amount Value
___________ ___________
<S> <C> <C>
Anoka County:
RRR (Northen States Power Co.) 7.15%, 12/1/2008......................... $ 1,150,000 $ 1,223,910
SWDR (United Power Association Project)
6.95%, 12/1/2008 (Guaranteed; National Rural Utilities Cooperative Finance Corp.) 3,825,000 4,100,974
Brooklyn Park 5.85%, 2/1/2016 (Insured; FSA)................................ 1,425,000 1,449,738
Burnsville, MFHR Refunding (Conventry Court Apartments) 7.50%, 9/1/2027 (Insured; FHA) 2,250,000 2,346,952
Burnsville Independent School District Number 191, 5.125%, 2/1/2015......... 3,875,000 3,709,189
Dakota County Housing and Redevelopment Authority, South-Saint Paul Revenue, Refunding
(Single Family-GNMA Program) 8.10%, 9/1/2012............................ 125,000 131,219
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 2,787,450
Eagan, MFHR Refunding (Forest Ridge Apartments) 7.50%, 9/1/2017 (Insured; FHA) 1,000,000 1,048,650
Eden Prairie, MFHR, Refunding:
(Eden Investments Project) 7.40%, 8/1/2025 (Insured; FHA)............... 500,000 523,295
(Welsh Parkway Apartments) 8%, 7/1/2026 (Insured; FHA).................. 2,830,000 3,021,506
Edina:
Hospital Systems Revenue (Fairview Hospital) 7.125%, 7/1/2006........... 1,000,000 1,072,720
Housing Development Revenue, Refunding (Edina Park Plaza Project)
7.70%, 12/1/2028 (Insured; FHA)....................................... 2,500,000 2,618,000
Hubbard County, SWDR (Potlatch Corp. Project)
7.375%, 8/1/2013........................................................ 1,000,000 1,062,450
Inver Grove Heights Independent School District Number 199, 5.75%, 2/1/2017. 2,225,000 2,231,608
Mahtomedi Independent School District Number 832
Zero Coupon, 2/1/2017 (Insured; MBIA)................................... 1,275,000 408,982
Minneapolis:
Zero Coupon, 12/1/2014.................................................. 1,825,000 680,378
Home Ownership Program 7.10%, 6/1/2021.................................. 720,000 751,234
HR (Lifespan Inc.-Minneapolis Children's Medical Center Project)
7%, 12/1/2020 (Prerefunded 6/1/2001) (a).............................. 5,650,000 6,211,215
MFHR Refunding (Churchill Apartments Project) 7.05%, 10/1/2022 (Insured; FSA) 4,000,000 4,168,960
MFMR (Seward Towers Project) 7.375%, 12/20/2030 (Collateralized; GNMA).. 2,350,000 2,476,877
Refunding (Sports Arena Project):
5.125%, 10/1/2020..................................................... 1,000,000 942,750
5.20%, 10/1/2024...................................................... 6,000,000 5,653,380
Minneapolis Community Development Agency, Ltd. Tax Support
Development Revenue:
8.375%, 6/1/2007...................................................... 2,500,000 2,639,025
8%, 12/1/2009......................................................... 300,000 315,306
7.75%, 12/1/2019...................................................... 2,805,000 3,084,210
7.40%, 12/1/2021...................................................... 2,000,000 2,109,240
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
___________ ___________
Minneapolis-Saint Paul Housing and Redevelopment Authority,
Health Care Systems Revenue:
8%, 8/15/2014 (Prerefunded 8/15/2000) (a)............................. $ 3,000,000 $ 3,353,250
(Group Health Plan Inc., Project) 6.75%, 12/1/2013.................... 2,750,000 2,961,447
Minneapolis-Saint Paul Housing Finance Board, SFMR:
8.875%, 11/1/2018 (Collateralized; GNMA)................................ 115,000 117,766
8.30%, 8/1/2021 (Collateralized; GNMA).................................. 345,000 358,162
7.30%, 8/1/2031 (Collateralized; GNMA).................................. 5,970,000 6,258,112
Minneapolis-Saint Paul Metropolitan Apartments Community 7.80%, 1/1/2014.... 3,000,000 3,210,150
Minneapolis Special School District Number 001, COP:
5.375%, 1/1/2014 (Insured; MBIA)........................................ 1,000,000 978,310
5.90%, 2/1/2017 (Insured; MBIA)......................................... 4,400,000 4,482,280
5.65%, 2/1/2018 (Insured; MBIA)......................................... 1,300,000 1,297,504
State of Minnesota (Duluth Airport) 6.25%, 8/1/2014......................... 2,500,000 2,623,625
Minnesota Agricultural and Economic Development Board,
Minnesota Small Business Development Loan Revenue:
9%, Series B, 8/1/2008................................................ 75,000 76,433
9%, Series C, 8/1/2008................................................ 245,000 249,680
8.125%, Lot 2, 8/1/2009............................................... 500,000 511,900
8.125%, Lot 3, 8/1/2009............................................... 815,000 834,397
8.20%, 8/1/2009....................................................... 655,000 686,938
8.375%, 8/1/2010...................................................... 1,385,000 1,445,469
Minnesota Housing Finance Agency, Revenue:
Rental Housing 6.10%, 8/1/2009.......................................... 2,080,000 2,102,734
Single Family Mortgage:
7.35%, 7/1/2016....................................................... 1,430,000 1,502,372
7.30%, 1/1/2017....................................................... 760,000 797,856
7.90%, 7/1/2019....................................................... 1,540,000 1,600,337
7.45%, 7/1/2022 (Insured; FHA)........................................ 2,830,000 2,971,811
7.95%, 7/1/2022....................................................... 1,595,000 1,679,088
6.95%, 7/1/2026....................................................... 2,900,000 3,031,979
Minnesota Public Facilities Authority, Water Pollution Control Revenue:
7.10%, 3/1/2012 (Prerefunded 3/1/2000) (a).............................. 2,350,000 2,548,598
6.95%, 3/1/2013 (Prerefunded 3/1/2001) (a).............................. 3,000,000 3,287,160
6.50%, 3/1/2014......................................................... 5,200,000 5,609,396
New Prague Independent School District 5%, 2/1/2016 (Insured; MBIA)......... 2,000,000 1,856,120
Northern Municipal Power Agency, Electric System Revenue, Refunding
7.25%, 1/1/2016......................................................... 3,500,000 3,701,810
North Saint Paul Maplewood Independent School District, Refunding 5.125%, 2/1/2025 2,500,000 2,331,850
Ramsey County:
5.375%, 2/1/2015........................................................ 1,100,000 1,072,885
5.375%, 2/1/2016........................................................ 1,160,000 1,129,179
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
__________ __________
City of Red Wing, Health Care Facilities Revenue, Refunding
(River Region Obligation Group) 6.50%, 9/1/2022......................... $ 3,445,000 $ 3,516,277
Rosemount Independent School District Number 196,
Zero Coupon, 4/1/2014 (Insured; MBIA)................................... 3,000,000 1,142,130
Saint Cloud, Revenue:
Hospital Facilities (The Saint Cloud Hospital)
7%, 7/1/2020 (Insured; AMBAC) (Prerefunded 7/1/2001) (a).............. 1,000,000 1,100,760
Hydroelectric, Refunding 5.25%, 12/1/2014 (Insured; MBIA)............... 1,000,000 957,340
Saint Paul Housing and Redevelopment Authority, SFMR, Refunding
6.90%, 12/1/2021 (Insured; FNMA)........................................ 2,615,000 2,720,018
Saint Paul Independent School District Number 625,
COP 5.25%, 2/1/2015..................................................... 1,450,000 1,356,852
Saint Paul Port Authority, IDR, Refunding
(Hampden Building Project) 9.25%, 6/1/2011.............................. 1,065,000 985,668
Sartell, PCR, Refunding (Champion International Corp. Project) 6.95%, 10/1/2012 5,000,000 5,320,550
Seaway Port Authority of Duluth,
Industrial Development Dock and Wharf Revenues, Refunding (Cargill Inc. Project)
6.80%, 5/1/2012......................................................... 3,000,000 3,263,520
Southern Minnesota Municipal Power Agency, Power Supply System Revenue:
Zero Coupon, 1/1/2025 (Insured; MBIA)................................... 5,255,000 1,043,118
Zero Coupon, 1/1/2026 (Insured; MBIA)................................... 15,530,000 2,883,610
Refunding Zero Coupon, 1/1/2027 (Insured; MBIA)......................... 4,800,000 839,952
Wayzata Independent School District Number 284 5.50%, 2/1/2017.............. 2,000,000 1,956,240
Western Minnesota Municipal Power Agency, Electric Power and Light Revenue
Refunding 5.50%, 1/1/2012 (Insured; AMBAC).............................. 1,000,000 997,430
___________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $142,842,753)..................................................... $149,521,281
=============
Short-Term Municipal Investments_2.2%
Cloquet, PCR, Refunding VRDN (Potlatch Corporation Project)
4.50% (LOC; Credit Suisse) (b,c)........................................ $ 1,000,000 $ 1,000,000
Golden Valley, IDR, Refunding VRDN (Graco Inc. Project)
4.75% (LOC; Fuji Bank Ltd.) (b,c)....................................... 2,380,000 2,380,000
___________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $3,380,000)....................................................... $ 3,380,000
===========
TOTAL INVESTMENTS_100.0%
(cost $146,222,753)..................................................... $152,901,281
===========
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
Summary of Abbreviations
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance
COP Certificate of Participation 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 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 VRDN Variable Rate Demand Notes
</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 53.7%
AA Aa AA 24.8
A A A 11.1
BBB Baa BBB 5.8
F1 MIG1 SP1 1.5
Not Rated(e) Not Rated(e) Not Rated(e) 3.1
______
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) Secured by letters of credit.
(c) 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.
(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 Fund may invest.
(f) At April 30, 1997, the Fund had $39,475,695 (25.4% 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>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997
Cost Value
____________ ____________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $146,222,753 $152,901,281
Interest receivable........................ 2,628,209
Receivable for shares of Beneficial Interest subscribed 3,344
Prepaid expenses........................... 2,887
____________
155,535,721
____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 69,971
Due to Distributor......................... 42,683
Cash overdraft due to Custodian............ 14,208
Payable for shares of Beneficial Interest redeemed 37,183
Accrued expenses........................... 29,569
____________
193,614
____________
NET ASSETS.................................................................. $155,342,107
=============
REPRESENTED BY: Paid-in capital............................ $149,305,069
Accumulated net realized gain (loss) on investments (641,490)
Accumulated net unrealized appreciation (depreciation)
......on investments_Note 4 6,678,528
____________
NET ASSETS.................................................................. $155,342,107
=============
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
_________________________________
Class A Class B Class C
_______________ _______________ _______________
<S> <C> <C> <C>
Net Assets........................................... $129,031,403 $26,003,642 $307,062
Shares Outstanding.......................................... 8,582,111 1,726,760 20,395
NET ASSET VALUE PER SHARE................................... $15.03 $15.06 $15.06
======= ======= ========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1997
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income............................ $10,073,157
EXPENSES: Management fee_Note 3(a)................... $ 874,105
Shareholder servicing costs_Note 3(c)...... 498,944
Distribution fees_Note 3(b)................ 133,208
Professional fees.......................... 26,413
Custodian fees............................. 18,603
Prospectus and shareholders' reports....... 15,832
Registration fees.......................... 2,421
Trustees' fees and expenses_Note 3(d)...... 1,303
Loan commitment fees_Note 2................ 871
Miscellaneous.............................. 19,244
_______________
Total Expenses....................... 1,590,944
_______________
INVESTMENT INCOME-NET....................................................... 8,482,213
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $ (646,676)
Net unrealized appreciation (depreciation)
on investments.......................... 1,631,040
_______________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 984,364
_______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 9,466,577
================
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
April 30, 1997 April 30, 1996
___________________ ___________________
OPERATIONS:
Investment income_net............................................. $ 8,482,213 $ 8,958,989
Net realized gain (loss) on investments........................... (646,676) 1,903,251
Net unrealized appreciation (depreciation) on investments......... 1,631,040 (911,785)
___________________ ___________________
Net Increase (Decrease) in Net Assets Resulting from Operations 9,466,577 9,950,455
___________________ ___________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net:
Class A shares.................................................. (7,188,410) (7,756,084)
Class B shares.................................................. (1,273,471) (1,199,994)
Class C shares.................................................. (20,332) (2,911)
Net realized gain on investments:
Class A shares.................................................. (301,648) --
Class B shares.................................................. (60,551) --
Class C shares.................................................. (1,243) --
___________________ ___________________
Total Dividends............................................. (8,845,655) (8,958,989)
___________________ ___________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares.................................................. 7,615,027 8,018,049
Class B shares.................................................. 2,280,709 4,260,990
Class C shares.................................................. 232,695 376,197
Dividends reinvested:
Class A shares.................................................. 4,853,932 5,052,267
Class B shares.................................................. 874,682 781,540
Class C shares.................................................. 18,406 2,715
Cost of shares redeemed:
Class A shares.................................................. (22,037,210) (21,377,789)
Class B shares.................................................. (2,851,658) (2,719,337)
Class C shares.................................................. (312,743) --
___________________ ___________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (9,326,160) (5,605,368)
=================== ===================
Total Increase (Decrease) in Net Assets................... (8,705,238) (4,613,902)
NET ASSETS:
Beginning of Period............................................... 164,047,345 168,661,247
___________________ ___________________
End of Period..................................................... $155,342,107 $164,047,345
=================== ===================
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
_____________________________________
Year Ended Year Ended
April 30, 1997 April 30, 1996
_________________ _________________
CAPITAL SHARE TRANSACTIONS:
Class A
________
Shares sold............................................................ 503,203 525,972
Shares issued for dividends reinvested................................. 321,163 331,830
Shares redeemed........................................................ (1,455,677) (1,405,368)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding............... (631,311) (547,566)
================= ==================
Class B
________
Shares sold............................................................ 150,960 279,091
Shares issued for dividends reinvested................................. 57,774 51,250
Shares redeemed........................................................ (188,834) (179,050)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding............... 19,900 151,291
================= ==================
Class C*
_________
Shares sold............................................................ 15,195 24,654
Shares issued for dividends reinvested................................. 1,215 180
Shares redeemed........................................................ (20,849) ___
_________________ _________________
Net Increase (Decrease) in Shares Outstanding (4,439) 24,834
================= ==================
* From August 15, 1995 (commencement of initial offering) to April 30, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated July 16, 1997.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1_Significant Accounting Policies:
Dreyfus Premier State Municipal Bond Fund (the "Trust") 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 thirteen series including the Minnesota Series (the
"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 Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
On January 8, 1997, the Trust's Trustees approved a change to the Trust's
name from "Premier State Municipal Bond Fund" to "Dreyfus Premier State
Municipal Bond Fund" which change became effective March 31, 1997.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. The Fund is authorized to issue an unlimited number of
$.001 par value shares in the following classes of shares: 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 ("CDSC") imposed on Class B share redemptions made within six
years of purchase (five years for shareholders beneficially owning Class B
shares on November 30, 1996) and Class C shares are subject to a CDSC imposed
on Class C shares redeemed within one year of purchase. Other differences
between the classes include the services offered to and the expenses borne by
each class and certain voting rights.
The Trust accounts separately for the assets, liabilities and operations
of each fund. Expenses directly attributable to each fund are charged to that
fund's operations; expenses which are applicable to all funds are allocated
among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (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.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund 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 Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund 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 Fund 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 Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund 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 $601,000
available for Federal income tax purposes to be applied against future net
securities profits, if any realized subsequent to April 30, 1997. The
carryover does not include net realized securities losses from November 1,
1996 through April 30, 1997 which are treated, for Federal income tax
purposes, as arising in fiscal 1998. If not applied, the carryover expires in
fiscal 2005.
NOTE 2_Bank Line of Credit:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended April
30, 1997, the Fund did not borrow under the Facility.
NOTE 3_Management Fee and Other Transactions With Affiliates:
(a) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .55 of 1% of the value of the Fund's
average daily net assets and is payable monthly.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $712 during the period ended April 30, 1997, from commissions earned
on sales of the Fund's shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Fund pays the Distributor for distributing the Fund's 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 period ended April 30, 1997,
$129,908 was charged to the Fund for the Class B shares and $3,300 was
charged to the Fund for the Class C shares.
(c) Under the Shareholder Services Plan, the Fund 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 Fund 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 period ended April 30, 1997,
$331,267, $64,954 and $1,100 were charged to Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund 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 Fund. Such compensation
amounted to $71,103 during the period ended April 30, 1997.
(d) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Trust 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 4_Securities Transactions:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1997
amounted to $39,997,629 and $52,574,796, respectively.
At April 30, 1997, accumulated net unrealized appreciation on investments
was $6,678,528, consisting of $7,137,284 gross unrealized appreciation and
$458,756 gross unrealized depreciation.
At April 30, 1997, 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).
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, MINNESOTA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Premier State Municipal Bond Fund, Minnesota Series
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier State Municipal
Bond Fund, Minnesota Series (one of the Funds constituting the Dreyfus
Premier State Municipal Bond Fund) as of April 30, 1997, 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 and financial highlights. Our procedures included
confirmation of securities owned as of April 30, 1997 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 Dreyfus Premier State Municipal Bond Fund, Minnesota Series at
April 30, 1997, 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, 1997
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NEW JERSEY SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1997
Principal
Long-Term Municipal Investments_100.0% Amount Value
_____________ _____________
<S> <C> <C>
New Jersey_85.4%
Camden County Improvement Authority, Revenue (Health Care Redevelopment
Project_Cooper Health System Obligation Group)
5.875%, 2/15/2015......................................................... $ 500,000 $ 486,935
Camden County Municipal Utilities Authority, Sewer Revenue, Refunding
5.125%, 7/15/2017 (Insured; FGIC) (a)..................................... 650,000 611,000
Camden County Pollution Control Financing Authority, Solid Waste Disposal
and Resource Recovery System Revenue
7.50%, 12/1/2009.......................................................... 500,000 510,040
Mercer County Improvement Authority, Solid Waste Revenue, Refunding
6.70%, 4/1/2013 (Insured; FGIC) (Prerefunded 5/15/1997) (b)............... 500,000 500,610
New Jersey Building Authority, State Building Revenue, Refunding
5%, 6/15/2015............................................................. 150,000 137,190
New Jersey Economic Development Authority, Water Facilities Revenue
(New Jersey American Water Co. Inc. Project)
6.50%, 4/1/2022 (Insured; FGIC)........................................... 500,000 520,405
New Jersey Educational Facilities Authority, Revenue, Refunding
(Trenton State College) 6%, 7/1/2019 (Insured; AMBAC)..................... 500,000 507,945
New Jersey Health Care Facilities Financing Authority, Revenue:
(Deborah Heart and Lung Center) 6.20%, 7/1/2013........................... 500,000 506,235
(General Hospital Center at Passaic) 6.75%, 7/1/2019 (Insured; FSA)....... 550,000 597,168
Refunding:
(Holy Name Hospital Issue) 6%, 7/1/2025................................. 500,000 494,855
(Saint Elizabeth Hospital Obligation Group) 6%, 7/1/2020................ 2,225,000 2,220,082
New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue
6.05%, 10/1/2028 (Insured; MBIA).......................................... 500,000 498,125
Passaic County Utilities Authority, Solid Waste System Revenue
7%, 11/15/2007............................................................ 575,000 579,738
Port Authority of New York and New Jersey:
5.20%, 7/15/2016 (Insured; AMBAC)......................................... 500,000 475,530
Special Obligation Revenue, Special Project
(JFK International Air Terminal) 5.75%, 12/1/2022 (Insured; MBIA) (c)... 585,000 572,317
Salem County Industrial Pollution Control Financing Authority, Revenue
(Public Service Electric and Gas) 5.45%, 2/1/2032 (Insured; MBIA)......... 500,000 461,010
South Jersey Transportation Authority, LR
(Raytheon Aircraft Service Inc. Project) 6.15%, 1/1/2022.................. 500,000 501,270
Union County Utilities Authority, Solid Waste Revenue
7.10%, 6/15/2006.......................................................... 1,625,000 1,676,658
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NEW JERSEY SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
_____________ ____________
U.S. Related_14.6%
Puerto Rico Housing Bank and Finance Agency, SFMR
6.25%, 4/1/2029........................................................... $ 500,000 $ 506,230
Puerto Rico Ports Authority, Special Facility Revenue
(American Airlines) 6.30%, 6/1/2023....................................... 1,500,000 1,516,065
___________
TOTAL INVESTMENTS (cost $13,755,519)........................................ $13,879,408
=============
</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 SFMR Single Family Mortgage Revenue
LR Lease 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 37.6%
AA Aa AA 1.0
A A A 15.8
BBB Baa BBB 41.4
BB Ba BB 4.2
________
100.0%
</TABLE>
Notes to Statement of Investments:
(a) Wholly held by custodian as collateral for 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) Purchased on a delayed-delivery basis.
(d) Fitch currently provides creditworthiness information for a limited
number of investments.
(e) At April 30, 1997, the Fund had $4,305,275 (31.8% 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>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NEW JERSEY SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997
Cost Value
_____________ ____________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $13,755,519 $13,879,408
Cash....................................... 73,909
Receivable for shares of Beneficial Interest subscribed 466,867
Interest receivable........................ 245,393
Prepaid expenses........................... 28,511
_______________
14,694,088
_______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 7,036
Due to Distributor......................... 6,167
Payable for investment securities purchased 1,066,465
Payable for shares of Beneficial Interest redeemed 53,403
Accrued expenses........................... 42,946
_______________
1,176,017
_______________
NET ASSETS.................................................................. $13,518,071
===============
REPRESENTED BY: Paid-in capital............................ $13,360,533
Accumulated net realized gain (loss) on investments 33,649
Accumulated net unrealized appreciation (depreciation)
...... on investments_Note 4 123,889
_______________
NET ASSETS.................................................................. $13,518,071
===============
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
_________________________________
Class A Class B Class C
_______________ _______________ _______________
<S> <C> <C> <C>
Net Assets........................................ $4,836,573 $8,680,366 $1,132
Shares Outstanding..................................... 382,923 687,235 89.516
NET ASSET VALUE PER SHARE............................... $12.63 $12.63 $12.64
====== ======= =======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NEW JERSEY SERIES
STATEMENT OF OPERATIONS
Nine Months Ended Year Ended
April 30, 1997* July 31, 1996
____________________ ____________________
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME Interest Income.......................... $571,482 $767,023
____________________ ____________________
EXPENSES: Management fee_Note 3(a).................. $ 56,351 $ 74,073
Shareholder servicing costs_Note 3(c)..... 37,814 52,216
Distribution fees_Note 3(b)............... 32,769 41,682
Registration fees......................... 9,334 3,996
Auditing fees............................. 6,543 14,745
Prospectus and shareholders' reports...... 6,290 2,861
Legal fees................................ 5,950 4,204
Trustees' fees and expenses_Note 3(d)..... 1,604 1,781
Custodian fees............................ 1,359 1,987
Loan commitment fees_Note 2............... 78 ___
Miscellaneous............................. 6,865 8,036
____________________ ____________________
Total Expenses...................... 164,957 205,581
Less_reduction in management fee due to
undertaking_Note 3(a)................. (9,656) (10,732)
____________________ ____________________
Net Expenses........................ 155,301 194,849
____________________ ____________________
INVESTMENT INCOME_NET...................................................... 416,181 572,174
____________________ ____________________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments... $ 46,136 $150,113
Net unrealized appreciation (depreciation)
on investments........................ (39,245) (76,768)
____________________ ____________________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS..................... 6,891 73,345
____________________ ____________________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $423,072 $645,519
==================== ====================
* The Fund has changed its fiscal year end from July 31 to April 30.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NEW JERSEY SERIES
STATEMENT OF CHANGES IN NET ASSETS
Nine Months Ended Year Ended Year Ended
April 30, 1997* July 31, 1996 July 31, 1995
__________________ ______________ ________________
<S> <C> <C> <C>
OPERATIONS:
Investment income_net.......................... $ 416,181 $ 572,174 $ 371,134
Net realized gain (loss) on investments................... 46,136 150,113 (5,270)
Net unrealized appreciation (depreciation) on investments. (39,245) (76,768) 221,333
_______________ ____________ ______________
Net Increase (Decrease) in Net Assets
Resulting from Operations 423,072 645,519 587,197
_______________ ____________ ______________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net:
Class A shares.......................................... (161,823) (234,320) (176,046)
Class B shares.......................................... (254,207) (337,766) (195,088)
Class C shares........................................ (151) (88) ____
Net realized gain on investments:
Class A shares.......................................... (55,413) ____ ____
Class B shares.......................................... (101,848) ____ ____
Class C shares.......................................... (69) ____ ____
_______________ ____________ ______________
Total Dividends....................................... (573,511) (572,174) (371,134)
_______________ ____________ ______________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares..................................... 294,836 977,750 3,591,050
Class B shares..................................... 1,349,856 3,045,391 5,060,548
Class C shares.......................................... 18 6,000 ____
Dividends reinvested:
Class A shares.................................... 134,012 134,625 97,360
Class B shares...................................... 209,733 176,239 81,648
Class C shares.......................................... 203 88 ____
Cost of shares redeemed:
Class A shares......................................... (746,605) (927,041) (1,128,148)
Class B shares.......................................... (1,696,406) (1,191,057) (776,686)
Class C shares.......................................... (5,000) ____ ____
_______________ ____________ ______________
Increase (Decrease) in Net Assets from
Beneficial Interest Transactions.................... (459,353) 2,221,995 6,925,772
_______________ ____________ ______________
Total Increase (Decrease) in Net Assets............. (609,792) 2,295,340 7,141,835
NET ASSETS:
Beginning of Period................................... 14,127,863 11,832,523 4,690,688
_______________ ____________ ______________
End of Period.................................. $13,518,071 $14,127,863 $11,832,523
=============== ============= ================
*The Fund has changed its fiscal year end from July 31 to April 30.
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NEW JERSEY SERIES
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
__________________________________________________________
Nine Months Ended Year Ended Year Ended
CAPITAL SHARE TRANSACTIONS: April 30, 1997(1) July 31, 1996 July 31, 1995
__________________ ______________ ________________
Class A
________
Shares sold...................................... 23,143 76,280 291,207
Shares issued for dividends reinvested.............. 10,476 10,439 7,845
Shares redeemed.......................................... (58,150) (71,136) (91,442)
__________________ ______________ ______________
Net Increase (Decrease) in
Shares Outstanding (24,531) 15,583 207,610
================== ============== ==============
Class B
________
Shares sold............................................. 106,673 236,936 406,583
Shares issued for dividends reinvested............. 16,392 13,678 6,544
Shares redeemed.......................................... (132,446) (93,155) (62,636)
__________________ ______________ ______________
Net Increase (Decrease) in
Shares Outstanding (9,381) 157,459 350,491
================== ============== ==============
Class C(2)
_________
Shares sold.............................................. 1 466 ___
Shares issued for dividends reinvested................ 16 7 ___
Shares redeemed.......................................... (401) ___ ___
__________________ ______________ ______________
Net Increase (Decrease) in
Shares Outstanding (384) 473 ___
================== ============== ==============
(1) The Fund has changed its fiscal year end from July 31 to April 30.
(2) From December 4, 1995 (commencement of initial offering) to July 31, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NEW JERSEY SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 4 of the Fund's Prospectus dated July 16, 1997.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NEW JERSEY SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Premier State Municipal Bond Fund (the "Trust") 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 thirteen series, including the New Jersey Series (the
"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 Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
On October 31, 1996, the Board Members of the Trust approved, subject to
approval by the shareholders of the New Jersey Series of Dreyfus Premier
Insured Municipal Bond Fund ("DPIMBF-New Jersey Series"), an Agreement and
Plan of Reorganization providing for the transfer of all or substantially all
of the DPIMBF-New Jersey Series' assets and liabilities to the Fund in a tax
free exchange for shares of beneficial interest of the Fund, and the
assumption by the Fund of stated liabilities (the "Exchange"). The Exchange
was approved by the shareholders of DPIMBF-New Jersey Series on March 10,
1997, and was consummated after the close of business on April 1, 1997, at
which time 380,977 Class A shares valued at $12.48 per share, 651,905 Class B
shares valued at $12.48 per share and 89 Class C shares valued at $12.49 per
share, representing combined net assets of $12,888,744, were exchanged by
DPIMBF-New Jersey Series for the respective Class A, Class B and Class C
shares of the Fund.
The Fund was declared effective by the SEC on December 16, 1996. On
January 8, 1997, the Trust's Trustees approved a change to the Trust's name
from "Premier State Municipal Bond Fund" to "Dreyfus Premier State Municipal
Bond Fund" which change became effective March 31, 1997.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. The Fund is authorized to issue an unlimited number of
$.001 par value shares in the following classes of shares: 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 ("CDSC") imposed on Class B share redemptions made within six
years of purchase (five years for shareholders beneficially owning Class B
shares on November 30, 1996) and Class C shares are subject to a CDSC imposed
on Class C shares redeemed within one year of purchase. Other differences
between the classes include the services offered to and the expenses borne by
each class and certain voting rights.
The Trust accounts separately for the assets, liabilities and operations
of each fund. Expenses directly attributable to each fund are charged to that
fund's operations; expenses which are applicable to all funds are allocated
among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
The Fund has changed its fiscal year end from July 31 to April 30.
(a) Portfolio valuation: Investments in securities (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
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NEW JERSEY SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 Fund 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 Fund.
(c) Dividends to shareholders: It is the policy of the Fund 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 Fund not to distribute such gain.
(d) Federal income taxes: It is the policy of the Fund 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_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended April
30, 1997, the Fund did not borrow under the Facility.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .55 of 1% of the value of the Fund's
average daily net assets and is payable monthly. The Manager has undertaken
from August 1, 1996 through April 30, 1998, to reduce the management fees
paid by the Fund, to the extent that the Fund's aggregate annual expenses
(excluding 12b-1 distribution plan fees, taxes, brokerage, interest on
borrowings and extraordinary expenses) exceed an annual rate of 1.25% of the
value of the Fund's average daily net assets. The reduction in management
fee, pursuant to the undertaking, amounted to $9,656 during the period ended
April 30, 1997.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Fund pays the Distributor for distributing the Fund's 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 period ended April 30, 1997,
$32,737 was charged to the Fund for the Class B shares and $32 was charged to
the Fund for the Class C shares.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NEW JERSEY SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(c) Under the Shareholder Services Plan, the Fund 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 Fund 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 period ended April 30, 1997,
$9,235, $16,369 and $10 were charged to Class A, B and C shares, respectively,
by the Distributor pursuant to the Shareholder Services Plan.
The Fund 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 Fund. Such
compensation amounted to $5,132 during the period ended April 30, 1997.
(d) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Trust 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 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1997
amounted to $14,793,924 and $14,067,222 respectively.
At April 30, 1997, accumulated net unrealized appreciation on investments
was $123,889, consisting of $170,412 gross unrealized appreciation and
$46,523 gross unrealized depreciation.
At April 30, 1997, 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).
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NEW JERSEY SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Premier State Municipal Bond Fund, New Jersey Series
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier State Municipal
Bond Fund, New Jersey Series (one of the Funds constituting the Dreyfus
Premier State Municipal Bond Fund) as of April 30, 1997, and the related
statement of operations for the nine months ended April 30, 1997 and for the
year ended July 31, 1996, the statement of changes in net assets for the nine
months ended April 30, 1997 and for each of the two years in the period ended
July 31, 1996, and financial highlights for each of the periods 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 and financial highlights. Our procedures included
confirmation of securities owned as of April 30, 1997 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 Dreyfus Premier State Municipal Bond Fund, New Jersey Series at
April 30, 1997, the results of its operations for the nine months ended April
30, 1997 and for the year ended July 31, 1996, the changes in its net assets
for the nine months ended April 30, 1997 and for each of the two years in the
period then ended July 31, 1996, and the financial highlights for each of the
indicated periods, in conformity with generally accepted accounting
principles.
[Ernst & Young LLP signature logo]
New York, New York
June 5, 1997
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1997
Principal
Long-Term Municipal Investments_100.0% Amount Value
_____________ _____________
<S> <C> <C>
North Carolina_78.5%
Asheville, Water System Revenue 5.70%, 8/1/2025 (Insured; FGIC)............. $ 1,000,000 $ 993,650
Board of Governors of the University of North Carolina, HR
(University of North Carolina Hospitals at Chapel Hill) 5%, 2/15/2029... 4,000,000 3,524,440
Buncombe County Metropolitan Sewage District, Sewage System Revenue
6.75%, 7/1/2022 (Prerefunded 7/1/2002) (a).............................. 500,000 551,590
Charlotte-Mecklenberg Hospital Authority, Health Care System Revenue
5.75%, 1/15/2021........................................................ 3,000,000 2,967,180
Columbus County Industrial Facilities and Pollution Control Finance Authority,
Industrial Revenue (International Paper Co. Project):
5.85%, 12/1/2020...................................................... 2,500,000 2,449,150
6.15%, 4/1/2021....................................................... 1,500,000 1,513,530
Haywood County, Environmental Improvement Revenue, Refunding
(Champion International Corp. Project) 6.25%, 9/1/2025.................. 2,000,000 2,018,880
Martin County Industrial Facilities and Pollution Control Financing Authority,
Industrial Revenue (Solid Waste Disposal-Weyerhaeuser Company Project)
6%, 11/1/2025........................................................... 2,000,000 2,004,000
New Hanover County, HR (New Hanover Regional Medical Center Project)
5.75%, 10/1/2026 (Insured; AMBAC)....................................... 2,000,000 1,981,680
New Hanover County Industrial Facilities and Pollution Control Financing Authority, SWDR
(Occidental Petroleum) 6.50%, 8/1/2014.................................. 1,000,000 1,030,550
North Carolina Eastern Municipal Power Agency, Power System Revenue:
5.75%, 12/1/2016........................................................ 1,865,000 1,765,409
Refunding:
5.125%, 1/1/2012 (Insured; AMBAC)..................................... 3,000,000 2,858,490
5.875%, 1/1/2013...................................................... 3,000,000 2,917,470
6%, 1/1/2013.......................................................... 2,500,000 2,463,600
6%, 1/1/2022.......................................................... 1,000,000 980,360
North Carolina Educational Assistance Authority, Guaranteed Student Loan Revenue
6.35%, 7/1/2016......................................................... 3,875,000 3,925,607
North Carolina Housing Finance Agency, Single Family Revenue:
6.10%, 9/1/2025 (Insured; FHA).......................................... 3,140,000 3,238,847
6.50%, 9/1/2026......................................................... 4,260,000 4,346,308
6.70%, 9/1/2026......................................................... 2,180,000 2,257,564
North Carolina Medical Care Commission, Health Service Facilities Revenue:
(Carolina Medicorp Project) 5.25%, 5/1/2026............................. 4,000,000 3,664,200
(Duke University Hospital Project) 7%, 6/1/2021 (Prerefunded 6/1/2001) (a) 1,500,000 1,648,995
Refunding:
(Annie Penn Memorial Hospital Project) 7.50%, 8/15/2021............... 3,750,000 4,009,425
(Wilson Memorial Hospital Project):
Zero Coupon, 11/1/2016 (Insured; AMBAC)........................... 3,055,000 994,158
5.25%, 11/1/2020 (Insured; AMBAC)................................. 1,000,000 934,160
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
_____________ ____________
North Carolina (continued)
North Carolina Municipal Power Agency Number 1, Catawba Electric Revenue:
5%, 1/1/2015 (Insured; MBIA)............................................ $ 1,000,000 $ 925,230
5.75%, 1/1/2015 (Insured; MBIA)......................................... 1,750,000 1,752,765
5.375%, 1/1/2020 (Insured; AMBAC)....................................... 2,500,000 2,380,325
Pitt County, Health Hospital and Nursing Home Revenue, Refunding
(Pitt County Memorial Hospital) 5.25%, 12/1/2021........................ 2,000,000 1,850,580
Raleigh, Water and Sewer Revenue 5.125%, 3/1/2022........................... 2,500,000 2,324,150
Shelby, Combined Enterprise System Revenue, Refunding 5.625%, 5/1/2014...... 1,000,000 982,830
Wake County, Hospital System Revenue, Refunding
Zero Coupon, 10/1/2010 (Insured; MBIA).................................. 2,200,000 1,036,200
U.S. Related_21.5%
Guam Airport Authority, Airport and Marina Revenue 6.70%, 10/1/2023......... 2,000,000 2,046,940
Guam Power Authority, Electric Power and Light Revenues 6.30%, 10/1/2022.... 2,000,000 2,007,500
Commonwealth of Puerto Rico:
6.80%, 7/1/2021 (Prerefunded 7/1/2002) (a).............................. 600,000 664,116
5.375%, 7/1/2025........................................................ 2,500,000 2,335,150
Puerto Rico Ports Authority, Special Facilities Revenue (American Airlines)
6.25%, 6/1/2026 (Guaranteed; AMR Corp.)................................. 2,950,000 2,985,312
Virgin Islands Territory, Hugo Insurance Claims Fund Program
7.75%, 10/1/2006........................................................ 1,565,000 1,687,915
Virgin Islands Public Finance Authority, Revenues, Refunding,
Matching Fund Loan Notes 7.25%, 10/1/2018............................... 4,000,000 4,330,480
Virgin Islands Water and Power Authority, Electric System Revenue, Refunding
7.40%, 7/1/2011......................................................... 2,000,000 2,122,680
____________
TOTAL INVESTMENTS
(cost $83,426,780)...................................................... $84,471,416
=============
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA 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 SWDR Solid Waste Disposal Revenue
HR Hospital Revenue
</TABLE>
<TABLE>
<CAPTION>
Summary of Combined Ratings (Unaudited)
Fitch (b) or Moody's or Standard & Poor's Percentage of Value
____ __________ __________________ ____________________
<S> <C> <C> <C>
AAA Aaa AAA 19.8%
AA Aa AA 28.6
A A A 17.7
BBB Baa BBB 26.8
Not Rated (c) Not Rated (c) Not Rated (c) 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) 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 Fund may invest.
(d) At April 30, 1997, the Fund had $22,590,985 (26.2% 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>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997
Cost Value
_____________ _____________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $83,426,780 $84,471,416
Cash....................................... 317,562
Interest receivable........................ 1,329,060
Receivable for shares of Beneficial Interest subscribed 152,325
Prepaid expenses........................... 2,622
_____________
86,272,985
_____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 38,500
Due to Distributor......................... 35,334
Payable for shares of Beneficial Interest redeemed 26,508
Accrued expenses........................... 52,483
_____________
152,825
_____________
NET ASSETS.................................................................. $86,120,160
=============
REPRESENTED BY: Paid-in capital............................ $86,316,101
Accumulated net realized gain (loss) on investments (1,240,577)
Accumulated net unrealized appreciation (depreciation)
on investments_Note 4...................... 1,044,636
_____________
NET ASSETS.................................................................. $86,120,160
=============
NET ASSET VALUE PER SHARE
_________________________________
Class A Class B Class C
___________ ____________ ___________
Net Assets................................................. $42,129,656 $43,979,094 $11,410
Shares Outstanding................................... 3,185,014 3,327,305 863
NET ASSET VALUE PER SHARE............................. $13.23 $13.22 $13.22
======= ======= =======
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1997
INVESTMENT INCOME
INCOME Interest Income............................ $5,373,798
EXPENSES: Management fee_Note 3(a)................... $ 481,809
Shareholder servicing costs_Note 3(c)...... 293,622
Distribution fees_Note 3(b)................ 215,850
Professional fees.......................... 13,522
Prospectus and shareholders' reports....... 9,986
Custodian fees............................. 9,411
Registration fees.......................... 2,458
Trustees' fees and expenses_Note 3(d)...... 1,178
Loan commitment fees_Note 2................ 490
Miscellaneous.............................. 99,861
____________
Total Expenses....................... 1,128,187
______________
INVESTMENT INCOME_NET....................................................... 4,245,611
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $ 488,466
Net unrealized appreciation (depreciation)
on investments 1,698,984
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 2,187,450
______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $6,433,061
==============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
April 30, 1997 April 30, 1996
_________________ _________________
OPERATIONS:
Investment income_net................................................. $ 4,245,611 $ 4,585,731
Net realized gain (loss) on investments................................. 488,466 874,881
Net unrealized appreciation (depreciation) on investments............... 1,698,984 520,983
_________________ _________________
Net Increase (Decrease) in Net Assets Resulting from Operations... 6,433,061 5,981,595
_________________ _________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net:
Class A shares........................................................ (2,265,810) (2,589,575)
Class B shares........................................................ (1,979,492) (1,996,124)
Class C shares........................................................ (309) (32)
_________________ _________________
Total Dividends................................................... (4,245,611) (4,585,731)
_________________ _________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 1,377,620 3,323,717
Class B shares........................................................ 3,817,475 3,025,081
Class C shares........................................................ 10,000 1,000
Dividends reinvested:
Class A shares........................................................ 1,151,054 1,291,521
Class B shares........................................................ 1,157,711 1,177,707
Class C shares........................................................ 309 32
Cost of shares redeemed:
Class A shares........................................................ (8,578,407) (8,574,929)
Class B shares........................................................ (4,713,736) (4,444,067)
_________________ _________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (5,777,974) (4,199,938)
_________________ _________________
Total Increase (Decrease) in Net Assets......................... (3,590,524) (2,804,074)
NET ASSETS:
Beginning of Period..................................................... 89,710,684 92,514,758
_________________ _________________
End of Period........................................................... $86,120,160 $89,710,684
=============== ==================
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
______________________________________
Year Ended Year Ended
April 30, 1997 April 30, 1996
_________________ _________________
CAPITAL SHARE TRANSACTIONS:
Class A
________
Shares sold............................................................ 104,713 254,297
Shares issued for dividends reinvested.............................. 87,065 98,177
Shares redeemed........................................................ (651,059) (653,564)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding (459,281) (301,090)
================ ==================
Class B
________
Shares sold............................................................ 289,117 229,111
Shares issued for dividends reinvested............................. 87,620 89,591
Shares redeemed....................................................... (357,345) (338,431)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding 19,392 (19,729)
================ ==================
Class C*
_________
Shares sold............................................................ 759 78
Shares issued for dividends reinvested................................. 23 3
_________________ _________________
Net Increase (Decrease) in Shares Outstanding 782 81
================ ==================
* From August 15, 1995 (commencement of initial offering) to April 30, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 5 of the Fund's Prospectus dated July 16, 1997.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Premier State Municipal Bond Fund (the "Trust") 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 thirteen series including the North Carolina Series (the
"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 Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
On January 8, 1997, the Trust's Trustees approved a change to the Trust's
name from "Premier State Municipal Bond Fund" to "Dreyfus Premier State
Municipal Bond Fund" which change became effective March 31, 1997.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. The Fund is authorized to issue an unlimited number of
$.001 par value shares in the following classes of shares: 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 ("CDSC") imposed on Class B share redemptions made within six
years of purchase (five years for shareholders beneficially owning Class B
shares on November 30, 1996) and Class C shares are subject to a CDSC imposed
on Class C shares redeemed 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 Trust accounts separately for the assets, liabilities and operations
of each fund. Expenses directly attributable to each fund are charged to that
fund's operations; expenses which are applicable to all funds are allocated
among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumption. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (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.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund 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 Fund.
(c) Dividends to shareholders: It is the policy of the Fund 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 Fund 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 Fund not to distribute such gain.
(d) Federal income taxes: It is the policy of the Fund 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 $1,241,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1997. If not
applied, $1,046,000 of the carryover expires in fiscal 2003 and $195,000
expires in 2004.
NOTE 2_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended April
30, 1997, the Fund did not borrow under the Facility.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .55 of 1% of the value of the Fund's
average daily net assets and is payable monthly.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $344 during the period ended April 30, 1997, from commissions earned
on sales of the Fund's shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Fund pays the Distributor for distributing the Fund's 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 period ended April 30, 1997,
$215,796 was charged to the Fund for the Class B shares and $54 was charged
to the Fund for the Class C shares.
(c) Under the Shareholder Services Plan, the Fund 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 Fund 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 period ended April 30, 1997,
$111,088, $107,898 and $18 were charged to Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund 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 Fund. Such compensation amounted to $45,229 during the period ended April
30, 1997.
(d) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Trust 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 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1997
amounted to $39,672,662 and $42,948,646, respectively.
At April 30, 1997, accumulated net unrealized appreciation on investments
was $1,044,636, consisting of $1,796,552 gross unrealized appreciation and
$751,916 gross unrealized depreciation.
At April 30, 1997, 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).
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Premier State Municipal Bond Fund, North Carolina Series
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier State Municipal
Bond Fund, North Carolina Series (one of the Funds constituting the Dreyfus
Premier State Municipal Bond Fund) as of April 30, 1997, 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 and financial highlights. Our procedures included
confirmation of securities owned as of April 30, 1997 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 Dreyfus Premier State Municipal Bond Fund, North Carolina Series
at April 30, 1997, 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, 1997
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1997
Principal
Long-Term Municipal Investments_95.7% Amount Value
_____________ _____________
<S> <C> <C>
Adams County Valley Local School District 5.25%, 12/1/2021 (Insured; MBIA).. $ 1,000,000 $ 943,980
Akron, Sewer Systems Revenue 5.875%, 12/1/2016 (Insured; MBIA).............. 1,200,000 1,220,748
Akron-Wilbeth Housing Development Corp., First Mortgage Revenue
7.90%, 8/1/2003 (Insured; FHA)............................................ 1,805,000 2,056,942
Allen County, Industrial First Mortgage Revenue, Refunding
6.75%, 11/15/2008 (Guaranteed; K-Mart Corp.).............................. 1,280,000 1,302,771
Breckville-Broadview Heights City School District,
School Improvement 5.25%, 12/1/2021 (Insured; FGIC)....................... 5,000,000 4,726,200
City of Barberton, Hospital Facilities Revenue
(The Barberton Citizens Hospital Co. Project) 7.25%, 1/1/2012............. 2,400,000 2,667,192
Buckeye Valley Local School District
5.25%, 12/1/2020 (Insured; MBIA).......................................... 3,140,000 2,967,520
Butler County, Hospital Facilities Revenue, Refunding and Improvement
(Fort Hamilton Hughes Group) 7.25%, 1/1/2001.............................. 3,300,000 3,407,085
City of Cambridge, HR, Refunding (Guernsey Memorial Hospital Project)
8%, 12/1/2006............................................................. 2,000,000 2,205,580
Clermont County, Hospital Facilities Revenue, Refunding (Mercy Health Systems):
5.625%, 9/1/2016 (Insured; AMBAC)......................................... 4,250,000 4,190,543
7.50%, 9/1/2019 (Prerefunded 9/1/2001) (Insured; AMBAC) (a)............... 180,000 199,213
City of Cleveland:
COP (Motor Vehicle, Motorized and Communication Equipment) 7.10%, 7/1/2002 2,000,000 2,090,900
Parking Facility Improvement Revenue 8%, 9/15/2012........................ 5,000,000 5,784,600
School District 8%, 12/1/2001............................................. 1,675,000 1,874,560
Waterworks First Mortgage Revenue 5.50%, 1/1/2021 (Insured; MBIA)......... 11,700,000 11,554,101
Cleveland-Cuyahoga County Port Authority, Revenue, Refunding
(Rock & Roll Hall of Fame) 5.40%, 12/1/2015 (Insured; AMBAC).............. 2,540,000 2,451,227
Cuyahoga County:
HR:
(Meridia Health Systems):
7.25%, 8/15/2019...................................................... 4,715,000 5,036,469
7%, 8/15/2023......................................................... 1,750,000 1,865,238
Refunding:
(Cleveland Clinic Foundation) 8%, 12/1/2015........................... 1,000,000 1,033,300
Improvement (University Hospitals Health) 5.625%, 1/15/2015 (Insured; MBIA) 3,695,000 3,649,810
(Mount Sinai Medical Center) 8.125%, 11/15/2014....................... 1,000,000 1,042,230
Jail Facilities 7%, 10/1/2013 (Prerefunded 10/1/2001)(a).................. 6,125,000 6,745,891
MFHR (National Terminal Apartments Project) 6.40%, 7/1/2016 (Collateralized; FNMA) 2,000,000 2,060,940
Dayton, Airport Revenue, Refunding (James M. Cox International Airport)
5.25%, 12/1/2015 (Insured; AMBAC)......................................... 2,500,000 2,384,325
Eaton, IDR Refunding (Baxter International Inc. Project) 6.50%, 12/1/2012... 1,500,000 1,593,165
Euclid City School District, Improvement:
7.10%, 12/1/2011 (Prerefunded 12/1/2001)(a)............................... 1,000,000 1,112,110
Library and School, Refunding 5.125%, 12/1/2015 (Insured; AMBAC).......... 1,420,000 1,340,437
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
_____________ _____________
Village of Evendale, IDR Refunding (Ashland Oil Inc. Project) 6.90%, 11/1/2010 $ 2,000,000 $ 2,101,460
Fairfield City School District, School Improvement Unlimited Tax:
7.20%, 12/1/2011 (Insured; FGIC).......................................... 1,000,000 1,149,160
7.20%, 12/1/2012 (Insured; FGIC).......................................... 1,250,000 1,429,888
6.10%, 12/1/2015 (Insured; FGIC).......................................... 2,000,000 2,063,880
6%, 12/1/2020 (Insured; FGIC)............................................. 2,000,000 2,038,140
Fairlawn, Health Care Facilities Revenue (Village at Saint Edward Project)
8.75%, 10/1/2019.......................................................... 2,420,000 2,581,124
Findlay 5.875%, 7/1/2017.................................................... 2,000,000 2,004,680
Franklin, Water System Revenue 5.75%, 12/1/2016 (Insured; MBIA)............. 1,000,000 1,007,090
Franklin County:
HR:
Holy Cross Health Systems Corp.:
(Mount Carmel Health) 6.75%, 6/1/2019 (Insured; MBIA)................. 2,500,000 2,696,200
Refunding and Improvement 5.80%, 6/1/2016............................. 2,000,000 2,000,200
Refunding and Improvement:
(The Children's Hospital Project) 6.60%, 5/1/2013..................... 4,000,000 4,304,400
(Worthington Christian Village Congregate Care Project):
10.25%, 8/1/2015.................................................... 765,000 832,580
7.80%, 2/1/2017 (Insured; FHA)...................................... 5,690,000 6,211,489
5.375%, 12/1/2020................................................... 9,780,000 9,437,504
Gallia County Local School District, 7.375%, 12/1/2004...................... 570,000 649,737
Greater Cleveland Gateway Economic Development Corp.:
Senior Lien Excise Tax Revenue 6.875%, 9/1/2005 (Insured; FSA)............ 1,500,000 1,623,330
Stadium Revenue 7.50%, 9/1/2005........................................... 5,675,000 6,225,532
Greater Cleveland Regional Transit Authority 5.65%, 12/1/2016 (Insured; FGIC) 5,445,000 5,428,719
Hamilton County:
Hospital Facilities Improvement Revenue, Refunding (Deaconess Hospital)
7%, 1/1/2012............................................................ 2,570,000 2,733,940
Mortgage Revenue (Judson Care Center)
7.80%, 8/1/2019 (Prerefunded 8/1/2000) (Insured; FHA, LOC; Citibank) (a,b) 3,970,000 4,380,855
Hilliard School District, School Improvement
Zero Coupon, 12/1/2013 (Insured; FGIC).................................... 1,655,000 655,777
Zero Coupon, 12/1/2014 (Insured; FGIC).................................... 1,655,000 614,899
5.75%, 12/1/2019 (Insured; FGIC).......................................... 2,500,000 2,502,800
5%, 12/1/2020 (Insured; FGIC)............................................. 3,345,000 3,057,330
Kent State University, University Revenue, 5.50%, 5/1/2017 (Insured; MBIA).. 1,000,000 978,060
Kirtland Local School District 7.50%, 12/1/2009............................. 760,000 819,660
Knox County, IDR (Weyerhaeuser Co. Project) 9%, 10/1/2007................... 1,000,000 1,272,240
Lakota Local School District 6.125%, 12/1/2017 (Insured; AMBAC)............. 1,075,000 1,112,625
Lorain, Water System Revenue 5.20%, 4/1/2016 (Insured; AMBAC)............... 2,260,000 2,146,390
Lowellville, Sanitary Sewer Systems Revenue (Browning-Ferris Industries Inc.)
7.25%, 6/1/2006........................................................... 1,300,000 1,382,485
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
_____________ _____________
Mahoning County, Health Care Facilities Revenue
(Youngstown Osteopathic Hospital Project)
7.60%, 8/1/2010 (LOC; Marine Midland Bank) (b)............................ $ 3,775,000 $ 4,022,980
Marion County, Health Care Facilities Revenue, Refunding and Improvement
(United Church Homes Inc.) 6.375%, 11/15/2010............................. 3,000,000 3,047,790
Miami County, Hospital Facilities Revenue, Refunding (Upper Valley Medical Center)
8.375%, 5/1/2013.......................................................... 525,000 535,563
Montgomery County, Limited General Obligation and Sewer Revenue
5.60%, 12/1/2016.......................................................... 1,380,000 1,374,880
Moraine, SWDR (General Motors Corp. Project) 6.75%, 7/1/2014................ 5,000,000 5,581,300
North Royalton City School District 6.10%, 12/1/2019 (Insured; MBIA)........ 2,500,000 2,599,250
State of Ohio:
Economic Development Revenue:
Ohio Enterprise Bond Fund (VSM Corp. Project) 7.375%, 12/1/2011......... 885,000 943,578
(Sponge Inc. Project) 8.375%, 6/1/2014.................................. 1,600,000 1,740,400
Mortgage Revenue (Odd Fellows Home Ohio Inc. Project)
8.15%, 8/1/2017 (Insured; FHA).......................................... 350,000 364,203
PCR (Standard Oil Co. Project)
6.75%, 12/1/2015 (Guaranteed; British Petroleum Co. p.l.c.)............. 2,700,000 3,041,523
Ohio Air Quality Development Authority, Revenue:
8.10%, 9/1/2018........................................................... 1,000,000 1,030,450
Pollution Control, Refunding:
(Cleveland Electric Illuminating Co. Project) 6.85%, 7/1/2023........... 5,250,000 5,244,855
(Ohio Edison) 7.45%, 3/1/2016 (Insured; FGIC)........................... 3,500,000 3,778,355
Refunding:
(Ohio Power Co. Project) 7.40%, 8/1/2009................................ 1,500,000 1,570,020
Ohio Building Authority, State Facilities (Juvenile Correctional Projects)
6.60%, 10/1/2014 (Insured; AMBAC)......................................... 1,660,000 1,810,711
Ohio Capital Corp. for Housing, MFHR Refunding
7.60%, 11/1/2023 (Collateralized; FNMA)................................... 1,250,000 1,320,363
Ohio Higher Educational Facility Commission, Revenue:
(Case Western Reserve Project):
7.70%, 10/1/2018 (Prerefunded 10/1/1997) (a)............................ 485,000 501,539
7.70%, 10/1/2018........................................................ 15,000 15,482
(Denison University Project) 5.30%, 11/1/2021............................. 2,000,000 1,888,760
Ohio Housing Finance Agency:
Mortgage Revenue (Saint Francis Court Apartment Project)
8%, 10/1/2026 (Insured; FHA)............................................ 695,000 743,212
SFMR (GNMA Mortgage Backed Securities Program):
8.25%, 12/15/2019....................................................... 140,000 148,092
Zero Coupon, 9/1/2021................................................... 15,570,000 2,424,560
7.85%, 9/1/2021......................................................... 1,460,000 1,544,811
7.65%, 3/1/2029......................................................... 1,900,000 1,998,268
7.80%, 3/1/2030......................................................... 2,465,000 2,585,612
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
___________ ___________
Ohio Water Development Authority, Revenue:
(Fresh Water) 5.90%, 12/1/2015 (Insured; AMBAC)........................... $ 4,650,000 $ 4,734,258
Pollution Control Facilities:
(Cleveland Electric Illuminating Project) 8%, 10/1/2023................. 5,800,000 5,955,614
(Ohio Edison) 8.10%, 10/1/2023.......................................... 3,700,000 3,914,859
(Pennsylvania Power Co. Project) 8.10%, 9/1/2018........................ 2,000,000 2,060,760
Refunding:
(Ohio Edison) 7.625%, 7/1/2023.......................................... 5,000,000 5,235,750
(Toledo Edison Co.):
7.55%, 6/1/2023....................................................... 2,000,000 2,083,220
8%, 10/1/2023......................................................... 3,635,000 3,791,741
Ottawa County, Sanitary Sewer Systems Special Assessment
(Portage-Catawba Island Sewer Project) 7%, 9/1/2011 (Insured; AMBAC)...... 1,000,000 1,090,080
Shelby County, Hospital Facilities Revenue, Refunding and Improvement
(The Shelby County Memorial Hospital Association) 7.70%, 9/1/2018......... 2,500,000 2,701,350
South Euclid, Recreation Facilities 7%, 12/1/2011........................... 2,285,000 2,473,718
Southwest Regional Water District, Water Revenue:
6%, 12/1/2015 (Insured; MBIA)............................................. 1,600,000 1,643,904
6%, 12/1/2020 (Insured; MBIA)............................................. 1,250,000 1,275,013
Springboro Community City School District, Refunding
5.10%, 12/1/2023 (Insured; AMBAC)......................................... 6,000,000 5,552,280
Student Loan Funding Corp.:
Student Loan Revenue, Refunding 7.20%, 8/1/2003........................... 2,495,000 2,653,607
Student Loan Senior Subordinated Revenue 6.15%, 8/1/2010.................. 6,775,000 6,728,795
Toledo 5.625%, 12/1/2011 (Insured; AMBAC)................................... 1,000,000 1,011,830
University of Cincinnati:
5.375%, 6/1/2020 (Insured; MBIA).......................................... 4,625,000 4,447,446
COP:
6.75%, 12/1/2009 (Insured; MBIA)........................................ 750,000 819,158
(University Center Project) 5.125%, 6/1/2024 (Insured; MBIA)............ 2,500,000 2,301,100
Warren 7.75%, 11/1/2010 (Prerefunded 11/1/2000) (a)......................... 2,785,000 3,111,903
Wauseon Exempted Village School District, Refunding and School Improvement
5.50%, 12/1/2022 (Insured; MBIA).......................................... 2,500,000 2,424,800
West Holmes Local School District 5.375%, 12/1/2023 (Insured; MBIA)......... 1,860,000 1,773,974
_____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $259,666,238)....................................................... $270,590,968
============
Short-Term Municipal Investments_4.3%
Ohio_2.8%
Ohio State Air Quality Development Authority, Revenue, Refunding, VRDN
(Cincinnati Gas & Electric) 4.30% (LOC; Canadian Imperial Bank) (b,c)..... $ 5,100,000 $ 5,100,000
Twinsburg, IDR, VRDN
(United Stationers Supply Company) 4.65% (LOC; PNC Bank) (b,c)............ 2,700,000 2,700,000
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Short-Term Municipal Investments (continued) Amount Value
__________ __________
U.S. Related_1.5%
Puerto Rico Commonwealth Government Development Bank,
Refunding, VRDN 4.30% (LOC; Credit Suisse) (b,c).......................... $ 1,750,000 $ 1,750,000
Puerto Rico Electric Power Authority, Revenue 3.48% (Insured; FSA) (d)...... 2,500,000 2,500,000
_____________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $12,050,000)........................................................ $ 12,050,000
============
TOTAL INVESTMENTS_100.0%
(cost $271,716,238)....................................................... $282,640,968
============
</TABLE>
<TABLE>
<CAPTION>
Summary of Abbreviations
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit
COP Certificates 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 (e) or Moody's or Standard & Poor's Percentage of Value
____ _______ __________________ ______________________
<S> <C> <C> <C>
AAA Aaa AAA 46.9%
AA Aa AA 7.3
A A A 18.3
BBB Baa BBB 13.7
BB Ba BB 6.5
F1 MIG1 SP1 3.4
Not Rated(f) Not Rated(f) Not Rated(f) 3.9
_______
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 bank prime rates or an index of market interest
rates.
(d) Inverse floater security_the interest rate is subject to change
periodically.
(e) Fitch currently provides creditworthiness information for a limited
number of investments.
(f) 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 Fund may invest.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997
Cost Value
______________ ______________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $271,716,238 $282,640,968
Cash....................................... 535,515
Receivable for shares of Beneficial Interest subscribed 35,365
Interest receivable........................ 5,114,439
Prepaid expenses........................... 3,919
____________
288,330,206
____________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 186,613
Due to Distributor......................... 18,590
Payable for shares of Beneficial Interest redeemed 63,493
Accrued expenses........................... 49,892
____________
318,588
____________
NET ASSETS.................................................................. $288,011,618
===============
REPRESENTED BY: Paid-in capital............................ $275,263,529
Accumulated net realized gain (loss) on investments 1,823,359
Accumulated net unrealized appreciation (depreciation)
....................... on investments_Note 4 10,924,730
____________
NET ASSETS.................................................................. $288,011,618
===============
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
_________________________________
Class A Class B Class C
_______________ _______________ _______________
<S> <C> <C> <C>
Net Assets............................................ $242,571,398 $44,745,835 $694,385
Shares Outstanding....................................... 19,181,560 3,537,051 54,857
NET ASSET VALUE PER SHARE................................... $12.65 $12.65 $12.66
========= ========= =========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1997
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income............................ $18,544,211
EXPENSES: Management fee_Note 3(a)................... $ 1,617,417
Shareholder servicing costs_Note 3(c)...... 924,474
Distribution fees_Note 3(b)................ 213,239
Professional fees.......................... 46,141
Custodian fees............................. 31,581
Prospectus and shareholders' reports....... 20,053
Registration fees.......................... 4,084
Trustees' fees and expenses_Note 3(d)...... 3,981
Loan commitment fees_Note 2................ 1,652
Miscellaneous.............................. 22,441
_______________
Total Expenses....................... 2,885,063
_______________
INVESTMENT INCOME_NET....................................................... 15,659,148
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $ 2,316,643
Net unrealized appreciation (depreciation)
on investments 1,485,293
_______________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 3,801,936
_______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $19,461,084
===============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
April 30, 1997 April 30, 1996
________________ ________________
OPERATIONS:
Investment income_net............................................... $ 15,659,148 $ 16,611,363
Net realized gain (loss) on investments............................. 2,316,643 6,261,292
Net unrealized appreciation (depreciation) on investments........... 1,485,293 (2,957,977)
________________ ________________
Net Increase (Decrease) in Net Assets Resulting from Operations. 19,461,084 19,914,678
________________ ________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net:
Class A shares.................................................... (13,586,634) (14,787,880)
Class B shares.................................................... (2,065,437) (1,823,448)
Class C shares.................................................... (7,077) (35)
Net realized gain on investments:
Class A shares.................................................... (1,899,479) (3,773,931)
Class B shares.................................................... (321,573) (523,745)
Class C shares.................................................... (1,122) (15)
________________ ________________
Total Dividends................................................. (17,881,322) (20,909,054)
________________ ________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares.................................................... 7,049,583 9,363,475
Class B shares.................................................... 7,342,791 9,283,699
Class C shares.................................................... 694,789 1,000
Dividends reinvested:
Class A shares.................................................... 10,239,228 12,469,387
Class B shares.................................................... 1,692,942 1,692,992
Class C shares.................................................... 7,422 48
Cost of shares redeemed:
Class A shares.................................................... (33,748,310) (36,740,008)
Class B shares.................................................... (4,952,156) (2,982,178)
Class C shares.................................................... (10,071) __
________________ ________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (11,683,782) (6,911,585)
________________ ________________
Total Increase (Decrease) in Net Assets....................... (10,104,020) (7,905,961)
NET ASSETS:
Beginning of Period................................................. 298,115,638 306,021,599
________________ ________________
End of Period....................................................... $288,011,618 $298,115,638
================ ================
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
_____________________________________
Year Ended Year Ended
April 30, 1997 April 30, 1996
_________________ _________________
CAPITAL SHARE TRANSACTIONS:
Class A
________
Shares sold......................................................... 555,615 724,402
Shares issued for dividends reinvested................................. 804,030 964,492
Shares redeemed........................................................ (2,659,323) (2,853,615)
________________ ________________
Net Increase (Decrease) in Shares Outstanding (1,299,678) (1,164,721)
================= =================
Class B
________
Shares sold..................................................... 577,283 718,846
Shares issued for dividends reinvested........................... 132,861 130,834
Shares redeemed........................................................ (388,961) (230,753)
________________ ________________
Net Increase (Decrease) in Shares Outstanding 321,183 618,927
================= =================
Class C*
_________
Shares sold............................................................ 54,985 79
Shares issued for dividends reinvested................................. 582 3
Shares redeemed........................................................ (792) ___
________________ ________________
Net Increase (Decrease) in Shares Outstanding 54,775 82
================= =================
* From August 15, 1995 (commencement of initial offering) to April 30, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 5 of the Fund's Prospectus dated July 16, 1997.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Premier State Municipal Bond Fund (the "Trust") 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 thirteen series including the Ohio Series (the "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 Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
On January 8, 1997, the Trust's Trustees approved a change to the Trust's
name from "Premier State Municipal Bond Fund" to "Dreyfus Premier State
Municipal Bond Fund", which change became effective March 31, 1997.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. The Fund is authorized to issue an unlimited number of
$.001 par value shares in the following classes of shares: 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 ("CDSC") imposed on Class B share redemptions made within six
years of purchase (five years for shareholders beneficially owning Class B
shares on November 30, 1996) and Class C shares are subject to a CDSC imposed
on Class C shares redeemed 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 Trust accounts separately for the assets, liabilities and operations
of each fund. Expenses directly attributable to each fund are charged to that
fund's operations; expenses which are applicable to all funds are allocated
among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (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 Fund 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 Fund.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(c) Dividends to shareholders: It is the policy of the Fund 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 Fund 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 Fund not
to distribute such gain.
(d) Federal income taxes: It is the policy of the Fund 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_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary and
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended April
30, 1997, the Fund did not borrow under the Facility.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .55 of 1% of the value of the Fund's
average daily net assets and is payable monthly.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $2,683 during the period ended April 30, 1997, from commissions
earned on sales of the Fund's shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Fund pays the Distributor for distributing the Fund's 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 period ended April 30, 1997,
$212,043 was charged to the Fund for the Class B shares and $1,196 was
charged to the Fund for the Class C shares.
(c) Under the Shareholder Services Plan, the Fund 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 Fund 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 period ended April 30, 1997,
$628,770, $106,021 and $399 were charged to Class A, B and C shares,
respectively, by the Distributor pursuant to the Shareholder Services Plan.
The Fund 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 Fund. Such
compensation amounted to $133,247 during the period ended April 30, 1997.
(d) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Trust 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.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1997
amounted to $84,865,773 and $109,577,726, respectively.
At April 30, 1997, accumulated net unrealized appreciation on investments
was $10,924,730, consisting of $11,571,231 gross unrealized appreciation and
$646,501 gross unrealized depreciation.
At April 30, 1997, 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).
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, OHIO SERIES
REPORT TO ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Premier State Municipal Bond Fund, Ohio Series
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier State Municipal
Bond Fund, Ohio Series (one of the Funds constituting the Dreyfus Premier
State Municipal Bond Fund) as of April 30, 1997, 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 and financial highlights. Our procedures included
confirmation of securities owned as of April 30, 1997 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 Dreyfus Premier State Municipal Bond Fund, Ohio Series at April
30, 1997, 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, 1997
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1997
Principal
Long-Term Municipal Investments_98.5% Amount Value
___________ ___________
<S> <C> <C>
Pennsylvania_90.9%
Allegheny County Higher Educational Building Authority, University Revenue
(Duquesne University Project) 5%, 3/1/2021 (Insured; AMBAC)............... $ 2,000,000 $ 1,807,720
Allegheny County Industrial Development Authority, Revenue:
Commercial Development, Refunding
(Kaufmann Medical Office Building) 6.80%, 3/1/2015 (Insured; MBIA)...... 3,500,000 3,773,070
Medical Center, Refunding (Presbyterian Medical Center of
Oakmont Pennsylvania, Inc.) 6.75%, 2/1/2026 (Insured; FHA).............. 1,900,000 1,989,965
Allegheny County Residential Finance Authority, SFMR:
7.40%, 12/1/2022.......................................................... 1,880,000 1,982,798
7.95%, 6/1/2023........................................................... 1,315,000 1,381,394
Beaver County Industrial Development Authority, PCR, Refunding:
(Ohio Edison Project) 7.75%, 9/1/2024..................................... 3,150,000 3,304,539
(Pennsylvania Power Company Mansfield Project) 7.15%, 9/1/2021............ 3,000,000 3,121,560
Berks County Municipal Authority, Revenue
(Phoebe Berks Village, Inc. Project) 8.25%, 5/15/2022..................... 2,445,000 2,586,541
Bethlehem Authority, Water Revenue, Refunding
5.20%, 11/15/2021 (Insured; MBIA)......................................... 8,350,000 7,652,441
Blair County Hospital Authority, Revenue (Altoona Hospital Project)
6.375%, 7/1/2013 (Insured; AMBAC)......................................... 5,000,000 5,272,500
Bradford County Industrial Development Authority, SWDR
(International Paper Company Projects) 6.60%, 3/1/2019.................... 4,250,000 4,442,738
Butler County Hospital Authority, Health Center Revenue, Refunding,
(Saint Francis Health Care Project) 6%, 5/1/2008.......................... 1,860,000 1,890,690
Cambria County Industrial Development Authority, RRR
(Cambria Cogen Project):
7.75%, 9/1/2019, Series F-1 (LOC; Fuji Bank) (a)........................ 1,750,000 1,796,235
7.75%, 9/1/2019, Series F-2 (LOC; Fuji Bank) (a)........................ 2,750,000 2,822,655
Delaware County Authority, Health Care Revenue, Refunding
(Mercy Health Corp. Southeastern):
5.125%, 11/15/2012...................................................... 2,200,000 2,050,268
5.375%, 11/15/2023...................................................... 2,050,000 1,882,126
Harrisburg Parking Authority, Revenue, Refunding
5.125%, 8/1/2016 (Insured; AMBAC)......................................... 3,230,000 2,980,579
Lancaster County Hospital Authority, Revenue, Refunding
(Health Center_Masonic Homes Project)
5%, 11/15/2020 (Insured; AMBAC)........................................... 1,625,000 1,439,198
Lehigh County General Purpose Authority, Revenue:
Hospital (Saint Luke's Hospital Bethlehem) 6.25%, 7/1/2022 (Insured; AMBAC) 10,000,000 10,339,800
(Wiley House):
8.75%, 11/1/2014........................................................ 3,785,000 3,935,000
9.50%, 11/1/2016........................................................ 4,930,000 5,298,468
Luzerne County Industrial Development Authority, Exempt Facilities Revenue, Refunding
(Pennsylvania Gas and Water Company Project) 7.125%, 12/1/2022............ 4,000,000 4,220,440
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
___________ ___________
Pennsylvania (continued)
Mc Keesport Area School District
6%, 10/1/2025 (Insured; FSA).............................................. $ 1,400,000 $ 1,417,486
Meadville 5.25%, 10/1/2025 (Insured; AMBAC)................................. 3,155,000 2,920,773
Montgomery County Higher Educational and Health Authority Revenue:
First Mortgage (Montgomery Income Project) 10.50%, 9/1/2020............... 2,965,000 3,202,259
(Northwestern Corporation):
8.375%, 6/1/2009........................................................ 2,685,000 2,884,173
7.125%, 6/1/2018........................................................ 2,050,000 2,124,374
Montgomery County Industrial Development Authority, RRR
7.50%, 1/1/2012 (LOC; Banque Paribas) (a)................................. 11,715,000 12,540,673
New Kensington Arnold School District, Refunding
5.375%, 5/15/2026 (Insured; AMBAC)........................................ 4,225,000 3,965,670
Norristown Municipal Waste Authority, Sewer Revenue
5.125%, 11/15/2023 (Insured; FGIC)........................................ 6,400,000 5,782,336
Northampton County Industrial Development Authority, PCR, Refunding
(Bethlehem Steel) 7.55%, 6/1/2017......................................... 5,700,000 6,038,808
Pennsylvania:
5.375%, 5/15/2015 (Insured; FGIC)......................................... 1,500,000 1,454,490
COP, Refunding 5%, 7/1/2015 (Insured; AMBAC).............................. 14,835,000 13,589,602
Pennsylvania Economic Development Financing Authority:
Exempt Facilities Revenue (Macmillan Ltd. Partnership Project) 7.60%, 12/1/2020 3,500,000 3,893,365
RRR (Northampton Generating Project):
6.40%, 1/1/2009......................................................... 2,500,000 2,479,475
6.50%, 1/1/2013......................................................... 6,500,000 6,415,175
Wastewater Treatment Revenue (Sun Co. Inc._R and M Project) 7.60%, 12/1/2024 4,240,000 4,712,887
Pennsylvania Higher Education Assistance Agency, Student Loan Revenue
7.05%, 10/1/2016 (Insured; AMBAC)......................................... 2,500,000 2,645,425
Pennsylvania Housing Finance Agency:
6.50%, 7/1/2023........................................................... 2,750,000 2,833,710
Single Family Mortgage:
6.75%, 4/1/2016......................................................... 3,000,000 3,142,920
6.85%, 4/1/2016 (Insured; FHA).......................................... 3,700,000 3,899,245
7.875%, 10/1/2020....................................................... 1,435,000 1,493,419
6.90%, 4/1/2025......................................................... 6,250,000 6,541,500
Philadelphia:
5%, 5/15/2020 (Insured; MBIA)............................................. 2,250,000 2,037,285
Gas Works Revenue:
5.25%, 8/1/2024 (Insured; FSA).......................................... 5,000,000 4,590,050
6.375%, 7/1/2026 (Insured; CMAC)........................................ 6,885,000 7,163,980
Water and Wastewater Revenue, Refunding:
5.625%, 6/15/2008 (Insured; FSA)........................................ 5,000,000 5,124,350
5.75%, 6/15/2013 (Insured; MBIA)........................................ 2,000,000 2,006,920
5.25%, 6/15/2023 (Insured; MBIA)........................................ 15,255,000 14,045,736
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Municipal Investments (continued) Amount Value
___________ ___________
Pennsylvania (continued)
Philadelphia Hospital and Higher Education Facilities Authority:
HR:
(Albert Einstein Medical Center) 7%, 10/1/2021.......................... $ 1,500,000 $ 1,579,245
(Refunding-Children's Hospital) 5%, 2/15/2021 (Insured; MBIA)........... 10,565,000 9,362,703
(Refunding-Temple University Hospital) 6.625%, 11/15/2023............... 16,240,000 16,805,964
Revenue (Northwestern Corporation) 8.375%, 6/1/2009....................... 1,885,000 2,015,517
Pittsburgh Urban Redevelopment Authority:
Mortgage Revenue:
7.05%, 4/1/2023......................................................... 1,785,000 1,851,813
(Refunding_Sidney Square Project) 6.65%, 9/1/2028....................... 3,350,000 3,401,557
Single Family Mortgage 7.40%, 4/1/2024.................................... 860,000 897,591
Schuylkill County Industrial Development Authority,
First Mortgage Revenue, Refunding (Valley Health Concerns) 8.75%, 3/1/2012 2,500,000 2,618,424
Washington County Industrial Development Authority, Revenue, Refunding
(Presbyterian Medical Center) 6.75%, 1/15/2023 (Insured; FHA)............. 3,000,000 3,166,530
U.S. Related_7.6%
Guam Airport Authority, Revenue, Refunding 6.50%, 10/1/2023................. 2,000,000 2,034,180
Guam Government 5.375%, 11/15/2013.......................................... 4,000,000 3,682,840
Puerto Rico Electric Power Authority, Power Revenue
5.50%, 7/1/2020........................................................... 3,000,000 2,836,560
Puerto Rico Highway and Transportation Authority, Highway Revenue:
5.40%, 7/1/2006........................................................... 5,000,000 4,964,000
5.50%, 7/1/2026........................................................... 2,000,000 1,885,120
Puerto Rico Public Buildings Authority, Guaranteed Public Education and
Health
Facilities, Refunding 5.70%, 7/1/2009 (Insured; FSA)...................... 5,000,000 5,226,150
___________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $261,037,751)................... $267,245,005
===============
Short-Term Municipal Investments_1.5%
Pennsylvania:
Philadelphia Regional Port Authority, LR, Refunding
3.59% (Insured; MBIA) (b)................................................. $ 2,150,000 $ 2,150,000
Schuylkill County Industrial Development Authority, RRR, VRDN
(Westwood Energy Property Project) 4.55% (LOC; Fuji Bank Ltd.) (a,c)...... 2,000,000 2,000,000
___________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $4,150,000).................... $ 4,150,000
===============
TOTAL INVESTMENTS_100% (cost $265,187,751).................................. $271,395,005
===============
</TABLE>
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
Summary of Abbreviations
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation LR Lease Revenue
CMAC Capital Market Assurance Corporation MBIA Municipal Bond Investors Assurance
COP Certificate of Participation Insurance Corporation
FGIC Financial Guaranty Insurance Company PCR Pollution Control Revenue
FHA Federal Housing Administration RRR Resources Recovery Revenue
FSA Financial Security Assurance SFMR Single Family Mortgage Revenue
HR Hospital Revenue SWDR Solid Waste Disposal Revenue
LOC Letter of Credit VRDN Variable Rate Demand Notes
</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 50.9%
AA Aa AA 5.6
A A A 19.5
BBB Baa BBB 9.5
F1 MIG1/P1 SP1/A1 .7
Not Rated(e) Not Rated(e) Not Rated(e) 13.8
________
100.0%
=========
</TABLE>
Notes to Statement of Investments:
(a) Secured by letters of credit.
(b) Inverse Floater Security_the interest rate is subject to change
periodically.
(c) 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.
(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 Fund may invest.
(f) At April 30, 1997, the Fund had $80,281,816 (29.4% of net assets)
invested in securities whose principal and interest is dependent upon
revenue generated from health care projects.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997
Cost Value
_______________ _______________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $265,187,751 $271,395,005
Receivable for shares of Beneficial Interest subscribed 29,703
Interest receivable........................ 5,503,442
Prepaid expenses........................... 13,474
_______________
276,941,624
_______________
LIABILITIES: Due to The Dreyfus Corporation and affiliates 122,589
Due to Distributor......................... 84,947
Cash overdraft due to Custodian............ 327,119
Payable for investment securities purchased 3,390,599
Payable for shares of Beneficial Interest redeemed 48,301
Accrued expenses........................... 36,431
_______________
4,009,986
_______________
NET ASSETS.................................................................. $272,931,638
================
REPRESENTED BY: Paid-in capital............................ $264,825,724
Accumulated net realized gain (loss) on investments 1,898,660
Accumulated net unrealized appreciation (depreciation)
on investments_Note 4...................... 6,207,254
_______________
NET ASSETS.................................................................. $272,931,638
================
NET ASSET VALUE PER SHARE
_________________________________
Class A Class B Class C
___________ ____________ ___________
Net Assets.............................................. $201,228,571 $71,670,786 $32,281
Shares Outstanding.................................... 12,395,441 4,416,569 1,989
NET ASSET VALUE PER SHARE................................. $16.23 $16.23 $16.23
======= ========= =========
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1997
INVESTMENT INCOME
INCOME Interest Income............................ $17,341,533
EXPENSES: Management fee_Note 3(a)................... $1,553,060
Shareholder servicing costs_Note 3(c)...... 934,879
Distribution fees_Note 3(b)................ 360,955
Professional fees.......................... 31,222
Custodian fees............................. 30,869
Prospectus and shareholders' reports....... 20,729
Registration fees.......................... 5,661
Trustees' fees and expenses_Note 3(d)...... 3,810
Loan commitment fees_Note 2................ 1,575
Miscellaneous.............................. 16,708
____________
Total Expenses......................... 2,959,468
_____________
INVESTMENT INCOME_NET....................................................... 14,382,065
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $3,061,864
Net unrealized appreciation (depreciation)
on investments 1,228,255
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 4,290,119
_____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $18,672,184
=============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
April 30, 1997 April 30, 1996
_________________ _________________
OPERATIONS:
Investment income_net.................................................... $ 14,382,065 $ 15,026,178
Net realized gain (loss) on investments.................................. 3,061,864 3,624,514
Net unrealized appreciation (depreciation) on investments................ 1,228,255 2,233,089
_________________ _________________
Net Increase (Decrease) in Net Assets Resulting from Operations...... 18,672,184 20,883,781
_________________ _________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net:
Class A shares......................................................... (10,984,092) (11,560,546)
Class B shares......................................................... (3,396,735) (3,465,577)
Class C shares......................................................... (1,238) (55)
Net realized gain on investments:
Class A shares......................................................... (2,286,800) (3,548,917)
Class B shares......................................................... (787,181) (1,187,046)
Class C shares......................................................... (349) (17)
_________________ _________________
Total Dividends...................................................... (17,456,395) (19,762,158)
_________________ _________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares....................................................... 6,058,242 20,084,706
Class B shares......................................................... 4,097,969 6,829,157
Class C shares......................................................... 10,076 21,000
Dividends reinvested:
Class A shares......................................................... 7,168,317 8,442,622
Class B shares......................................................... 2,677,413 2,978,350
Class C shares......................................................... 1,162 73
Cost of shares redeemed:
Class A shares......................................................... (29,721,693) (32,654,140)
Class B shares......................................................... (8,008,709) (7,401,867)
_________________ _________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (17,717,223) (1,700,099)
_________________ _________________
Total Increase (Decrease) in Net Assets............................ (16,501,434) (578,476)
NET ASSETS:
Beginning of Period...................................................... 289,433,072 290,011,548
_________________ _________________
End of Period............................................................ $272,931,638 $289,433,072
================ ==================
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
______________________________________
Year Ended Year Ended
April 30, 1997 April 30, 1996
_________________ _________________
CAPITAL SHARE TRANSACTIONS:
Class A
______
Shares sold............................................................ 371,907 1,227,069
Shares issued for dividends reinvested................................. 438,548 508,499
Shares redeemed........................................................ (1,823,622) (1,973,350)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding (1,013,167) (237,782)
================= =================
Class B
______
Shares sold........................................................ 251,681 412,949
Shares issued for dividends reinvested................................. 163,853 179,443
Shares redeemed........................................................ (491,416) (448,471)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding (75,882) 143,921
================= =================
Class C*
_____
Shares sold............................................................ 616 1,298
Shares issued for dividends reinvested................................. 71 4
_________________ _________________
Net Increase (Decrease) in Shares Outstanding 687 1,302
================= =================
*From August 15, 1995 (commencement of initial offering) to April 30,
1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 5 of the Fund's Prospectus dated July 16, 1997.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Premier State Municipal Bond Fund (the "Trust") 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 thirteen series including the Pennsylvania Series (the
"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 Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
On January 8, 1997, the Trust's Trustees approved a change to the Trust's
name from "Premier State Municipal Bond Fund" to "Dreyfus Premier State
Municiapal Bond Fund", which change became effective March 31, 1997.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. The Fund is authorized to issue an unlimited number of
$.001 par value shares in the following classes of shares: 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 ("CDSC") imposed on Class B share redemptions made within six
years of purchase (five years for shareholders beneficially owning Class B
shares on November 30, 1996) and Class C shares are subject to a CDSC imposed
on Class C shares redeemed within one year of purchase. Other differences
between the classes include the services offered to and the expenses borne by
each class and certain voting rights.
The Trust accounts separately for the assets, liabilities and operations
of each fund. Expenses directly attributable to each fund are charged to that
fund's operations; expenses which are applicable to all funds are allocated
among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(A) PORTFOLIO VALUATION: Investments in securities (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.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Fund 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 Fund.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund 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 Fund 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 Fund not to distribute such gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund 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_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary and
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended April
30, 1997, the Fund did not borrow under the Facility.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .55 of 1% of the value of the Fund's
average daily net assets and is payable monthly.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $2,535 during the period ended April 30, 1997, from commissions
earned on sales of the Fund's shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Fund pays the Distributor for distributing the Fund's 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 period ended April 30, 1997,
$360,738 was charged to the Fund for the Class B shares and $217 was charged
to the Fund for the Class C shares.
(C) Under the Shareholder Services Plan, the Fund 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 Fund 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 period ended April 30, 1997,
$525,495, $180,369 and $72 were charged to Class A, B and C shares,
respectively, by the Distributor pursuant to the Shareholder Services Plan.
The Fund 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 Fund. Such
compensation amounted to $157,412 during the period ended April 30, 1997.
DREYFUS 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 Trust 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 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1997
amounted to $165,307,394 and $171,571,142, respectively.
At April 30, 1997, accumulated net unrealized appreciation on investments
was $6,207,254, consisting of $7,076,946 gross unrealized appreciation and
$869,692 gross unrealized depreciation.
At April 30, 1997, 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).
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier State Municipal
Bond Fund, Pennsylvania Series (one of the Funds constituting the Dreyfus
Premier State Municipal Bond Fund) as of April 30, 1997, 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 and financial highlights. Our procedures included
confirmation of securities owned as of April 30, 1997 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 Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series at
April 30, 1997, 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, 1997
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS APRIL 30, 1997
Principal
Long-Term Muncipal Investments_97.1% Amount Value
_____________ _____________
<S> <C> <C>
Texas_90.4%
Allen Independent School District Building (Permanent School Fund Guaranteed)
5.20%, 2/15/2021........................................................ $ 2,030,000 $ 1,879,861
Amarillo Health Facilities Corp., HR (High Plains Baptist Hospital)
6.562%, 1/3/2022 (Insured; FSA)......................................... 4,500,000 4,747,815
Bexar County Health Facilities Development Corp., HR Refunding
(Baptist Memorial Hospital System Project) 6.625%, 2/15/2011 (Insured; MBIA) 2,690,000 2,915,019
Brazos Higher Education Authority Inc., Student Loan Revenue, Refunding
6.80%, 12/1/2004........................................................ 850,000 906,882
Clear Creek Independent School District (Permanent School Fund Guaranteed)
4.25%, 2/1/2013......................................................... 1,575,000 1,314,227
Clint Independent School District, Refunding (Permanent School Fund Guaranteed)
7%, 3/1/2015............................................................ 750,000 780,413
Coastal Water Authority, Water Conveyance System Revenue, Refunding
6.25%, 12/15/2017 (Insured; AMBAC)...................................... 5,885,000 6,239,512
Dallas-Fort Worth Regional Airport, Joint Revenue
6.625%, 11/1/2021 (Insured; FGIC)....................................... 1,250,000 1,313,500
Denison Hospital Authority, HR
(Texoma Medical Center Project) 6.125%, 8/15/2017....................... 1,000,000 982,580
Dripping Springs Independent School District (Permanent School Fund Guaranteed)
6%, 8/15/2021........................................................... 1,900,000 1,916,492
El Paso Housing Authority, Multi-Family Revenue
(Section 8 Projects) 6.25%, 12/1/2009................................... 2,510,000 2,566,099
Grape Creek-Pulliam Independent School District
Public Facility Corp., School Facility Lease Revenue
7.25%, 5/15/2021........................................................ 2,200,000 2,308,152
Grapevine-Colleyville Independent School District (Permanent School Fund Guaranteed)
5.125%, 8/15/2022....................................................... 3,000,000 2,745,810
Gulf Coast Waste Disposal Authority, SWDR
(Champion International Corp. Project) 7.25%, 4/1/2017.................. 1,000,000 1,058,590
Gunter Independent School District, Refunding (Permanent School Fund Guaranteed)
6.05%, 8/15/2026........................................................ 1,020,000 1,031,801
Harris County (Toll Road) Senior Lien 6.375%, 8/15/2024 (Insured; MBIA)..... 3,000,000 3,154,140
Harris County Health Facilities Development Corp., Health Care System Revenue
(Sisters of Charity) 7.10%, 7/1/2021 (Prerefunded 7/1/2001) (a)......... 1,000,000 1,104,100
Houston, Water and Sewer System Revenue, Refunding (Junior Lien)
5.25%, 12/1/2025 (Insured; FGIC)........................................ 2,625,000 2,443,481
Houston Independent School District (Permanent School Fund Guaranteed)
Zero Coupon, 8/15/2015.................................................. 3,000,000 1,039,320
Keller Independent School District,
Unlimited Tax School Building and Refunding (Permanent School Fund Guaranteed)
5.125%, 8/15/2025....................................................... 3,900,000 3,583,905
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Muncipal Investments (continued) Amount Value
_____________ _____________
Texas (continued)
Leander 6.75%, 8/15/2016.................................................... $ 2,325,000 $ 2,414,652
Leon County, PCR, Refunding (Nucor Corp. Project) 7.375%, 8/1/2009.......... 750,000 821,325
Matagorda County Navigation District No. 1, PCR
(Collateralized Houston Lighting and Power) 7.875%, 2/1/2019............ 500,000 520,745
Montgomery County Health Facilities Development Corp., Hospital Mortgage Revenue
(Woodlands Medical Center Project) 8.85%, 8/15/2014 (Prerefunded 8/15/1999) (a) 575,000 628,383
North Texas Higher Education Authority, Inc., Student Loan Revenue
7.25%, 4/1/2003 (Insured; AMBAC)........................................ 1,000,000 1,050,660
Port of Bay City Authority, Matagorda County Revenue
(Hoechst Celanese Corp. Project) 6.50%, 5/1/2026........................ 3,500,000 3,650,920
San Antonio Electric and Gas Revenue, Refunding
5%, 2/1/2017............................................................ 1,700,000 1,540,234
Southwest Higher Education Authority, Inc., Higher Education Revenue
(Southern Methodist University Project) 5.125%, 10/1/2026 (Insured; FSA) 1,000,000 908,480
Texas (Veterans Housing Assistance) 6.80%, 12/1/2023........................ 2,870,000 2,983,107
Texas Department Housing and Community Affairs, MFHR
(Harbors and Plumtree) 6.35%, 7/1/2016.................................. 1,300,000 1,323,803
Texas Higher Education Coordinating Board, College Student Loan Revenue
7.30%, 10/1/2003........................................................ 665,000 703,271
Texas National Research Laboratory Commission Financing Corp., LR
(Superconducting Super Collider)
6.95%, 12/1/2012........................................................ 700,000 797,433
Texas Public Property Finance Corp., Revenue
(Mental Health and Retardation) 8.875%, 9/1/2011 (Prerefunded 9/1/2001) (a) 455,000 531,763
Tomball Hospital Authority, Revenue, Refunding 6%, 7/1/2013................. 5,000,000 4,882,350
Tyler Texas Health Facility Development Corp., HR
(East Texas Medical Center Regional Health) 6.625%, 11/1/2011........... 1,755,000 1,806,404
West Side Calhoun County Navigation District, SWDR
(Union Carbide Chemical and Plastics) 8.20%, 3/15/2021.................. 500,000 555,115
U.S. Related_6.7%
Puerto Rico Electric Power Authority, Power Revenue:
5.50%, 7/1/2020......................................................... 1,520,000 1,437,190
5.25%, 7/1/2021......................................................... 2,000,000 1,825,140
Puerto Rico Highway and Transportation Authority, Highway Revenue, Refunding
5.25%, 7/1/2020 (Insured; MBIA)......................................... 2,000,000 1,895,940
____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $72,435,283)...................................................... $74,308,614
===============
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Short-Term Muncipal Investments_2.9% Amount Value
_____________ _____________
Texas_2.2%
Brazos River Authority, Revenue, Refunding, VRDN
(Houston Lighting and Power Co.) 4% (Insured; AMBAC) (b)................ $ 1,700,000 $ 1,700,000
U.S. Related_.7%
Commonwealth of Puerto Rico Government Development Bank, Refunding, VRDN
4.20% (LOC; Credit Suisse) (b,c)........................................ 500,000 500,000
____________
TOTAL SHORT-TERM MUNICIPAL INVESTMENTS
(cost $2,200,000)....................................................... $ 2,200,000
===============
TOTAL INVESTMENTS_100.0%
(cost $74,635,283)...................................................... $76,508,614
===============
</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 MFHR Multi-Family Housing Revenue
HR Hospital Revenue PCR Pollution Control Revenue
LOC Letter of Credit SWDR Solid Waste Disposal Revenue
LR Lease Revenue VRDN Variable Rate Demand Notes
</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 54.2%
AA Aa AA 8.4
A A A 12.6
BBB Baa BBB 19.4
F1 MIG1/P1 SP1/A1 .7
Not Rated (e) Not Rated (e) Not Rated (e) 4.7
________
100.0%
==========
</TABLE>
Notes to Statement of Investments:
(a) Bonds which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and
interest on the municipal issue and to retire the bonds in full at the
earliest refunding date.
(b) 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.
(c) Secured by letters of credit.
(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 Fund may invest.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1997
Cost Value
_____________ _____________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $74,635,283 $76,508,614
Cash....................................... 658,309
Interest receivable........................ 1,320,412
Prepaid expenses........................... 5,738
_______________
78,493,073
_______________
LIABILITIES: Due to Distributor......................... 23,162
Payable for shares of Beneficial Interest redeemed 72,574
Accrued expenses........................... 23,045
_______________
118,781
_______________
NET ASSETS.................................................................. $78,374,292
================
REPRESENTED BY: Paid-in capital............................ $75,863,357
Accumulated net realized gain (loss) on investments 637,604
Accumulated net unrealized appreciation (depreciation)
....................... on investments_Note 4 1,873,331
_______________
NET ASSETS.................................................................. $78,374,292
================
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
_________________________________
Class A Class B Class C
_______________ _______________ _______________
<S> <C> <C> <C>
Net Assets.............................................. $60,849,127 $17,396,138 $129,027
Shares Outstanding............................... 2,899,300 829,014 6,152
NET ASSET VALUE PER SHARE.......................... $20.99 $20.98 $20.97
====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1997
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income............................ $4,705,877
EXPENSES: Management fee_Note 3(a)................... $ 437,938
Shareholder servicing costs _Note 3(c)..... 239,256
Distribution fees_Note 3(b)................ 88,092
Registration fees.......................... 23,729
Professional fees.......................... 12,545
Custodian fees............................. 9,029
Prospectus and shareholders' reports....... 3,986
Trustees' fees and expenses_Note 3(d)...... 1,083
Loan commitment fees_Note 2................ 441
Miscellaneous.............................. 7,118
____________
Total Expenses....................... 823,217
Less_management fee waived due to
undertaking_Note 3(a).................. (437,938)
____________
Net Expenses......................... 385,279
______________
INVESTMENT INCOME_NET....................................................... 4,320,598
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $1,098,393
Net unrealized appreciation (depreciation)
on investments 479,971
____________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 1,578,364
______________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $5,898,962
===============
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
April 30, 1997 April 30, 1996
____________________ ____________________
OPERATIONS:
Investment income_net................................................. $ 4,320,598 $ 4,690,413
Net realized gain (loss) on investments............................... 1,098,393 1,514,366
Net unrealized appreciation (depreciation) on investments............. 479,971 400,100
____________________ ____________________
Net Increase (Decrease) in Net Assets Resulting from Operations. 5,898,962 6,604,879
____________________ ____________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net:
Class A shares...................................................... (3,437,549) (3,789,456)
Class B shares...................................................... (879,151) (900,921)
Class C shares...................................................... (3,898) (36)
Net realized gain on investments:
Class A shares...................................................... (760,523) (937,967)
Class B shares...................................................... (216,482) (248,855)
Class C shares...................................................... (1,075) (15)
____________________ ____________________
Total Dividends................................................. (5,298,678) (5,877,250)
____________________ ____________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares...................................................... 3,978,717 1,598,276
Class B shares...................................................... 911,552 1,221,189
Class C shares...................................................... 126,161 1,014
Dividends reinvested:
Class A shares...................................................... 1,975,780 2,309,470
Class B shares...................................................... 636,270 668,539
Class C shares...................................................... 65 51
Cost of shares redeemed:
Class A shares...................................................... (8,445,756) (9,766,053)
Class B shares...................................................... (1,734,371) (1,355,717)
____________________ ____________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions (2,551,582) (5,323,231)
____________________ ____________________
Total Increase (Decrease) in Net Assets....................... (1,951,298) (4,595,602)
NET ASSETS:
Beginning of Period................................................... 80,325,590 84,921,192
____________________ ____________________
End of Period........................................................ $78,374,292 $80,325,590
=================== ====================
SEE NOTES TO FINANCIAL STATEMENTS.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Shares
_________________________________________
Year Ended Year Ended
April 30, 1997 April 30, 1996
__________________ __________________
CAPITAL SHARE TRANSACTIONS:
Class A
________
Shares sold............................................................ 191,082 75,223
Shares issued for dividends reinvested................................. 93,562 108,052
Shares redeemed........................................................ (401,583) (458,438)
__________________ __________________
Net Increase (Decrease) in Shares Outstanding (116,939) (275,163)
=================== ==================
Class B
________
Shares sold............................................................ 43,488 57,381
Shares issued for dividends reinvested................................. 30,139 31,283
Shares redeemed........................................................ (82,480) (63,720)
__________________ __________________
Net Increase (Decrease) in Shares Outstanding (8,853) 24,944
=================== ==================
Class C*
_________
Shares sold............................................................ 6,098 49
Shares issued for dividends reinvested................................. 3 2
__________________ __________________
Net Increase (Decrease) in Shares Outstanding 6,101 51
=================== ==================
* From August 15, 1995 (commencement of initial offering) to April 30, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
FINANCIAL HIGHLIGHTS
Reference is made to page 5 of the Fund's Prospectus dated July 16, 1997.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Premier State Municipal Bond Fund (the "Trust") 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 thirteen series including the Texas Series (the "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 Dreyfus Corporation
(the "Manager") serves as the Fund's investment adviser. The Manager is a
direct subsidiary of Mellon Bank, N.A.
On January 8, 1997, the Trust's Trustees approved a change to the Trust's
name from "Premier State Municipal Bond Fund" to "Dreyfus Premier State
Municipal Bond Fund" which change became effective March 31, 1997.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. The Fund is authorized to issue an unlimited number of
$.001 par value shares in the following classes of shares: Class A, Class B
and Class C. 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
("CDSC") imposed on Class B share redemptions made within six years of
purchase (five years for shareholders beneficially owning Class B shares on
November 30, 1996) and Class C shares are subject to a CDSC imposed on Class
C shares redeemed 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 Trust accounts separately for the assets, liabilities and operations
of each fund. Expenses directly attributable to each fund are charged to that
fund's operations; expenses which are applicable to all funds are allocated
among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (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 Fund 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 Fund.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(c) Dividends to shareholders: It is the policy of the Fund 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 Fund 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 Fund not
to distribute such gain.
(d) Federal income taxes: It is the policy of the Fund 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_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary and
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended April
30, 1997, the Fund did not borrow under the Facility.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .55 of 1% of the value of the Fund's
average daily net assets and is payable monthly. The Manager has undertaken
from May 1, 1996 to waive receipt of the management fee payable to it by the
Fund until such time as the net assets of the Fund exceed $100 million,
regardless of whether they remain at that level. The management fee waived,
pursuant to the undertaking, amounted to $437,938 during the period ended
April 30, 1997.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Fund pays the Distributor for distributing the Fund's 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 period ended April 30, 1997,
$87,452 was charged to the Fund for the Class B shares and $640 was charged
to the Fund for the Class C shares.
(c) Under the Shareholder Services Plan, the Fund 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 Fund 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 period ended April 30, 1997,
$155,124, $43,726 and $213 were charged to Class A, B and C shares,
respectively, by the Distributor pursuant to the Shareholder Services Plan.
The Fund 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 Fund. Such
compensation amounted to $27,201 during the period ended April 30, 1997.
(d) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Trust 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.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1997
amounted to $46,764,186 and $51,989,008, respectively.
At April 30, 1997, accumulated net unrealized appreciation on investments
was $1,873,331, consisting of $2,096,251 gross unrealized appreciation and
$222,920 gross unrealized depreciation.
At April 30, 1997, 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).
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, TEXAS SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Dreyfus Premier State Municipal Bond Fund, Texas Series
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier State Municipal
Bond Fund, Texas Series (one of the Funds constituting the Dreyfus Premier
State Municipal Bond Fund) as of April 30, 1997, 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 and financial highlights. Our procedures included
confirmation of securities owned as of April 30, 1997 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 Dreyfus Premier State Municipal Bond Fund, Texas Series at April
30, 1997, 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, 1997
<TABLE>
<CAPTION>
Dreyfus Premier State Municipal Bond Fund, Virginia Series
Statement of Investments April 30, 1997
Principal
Long-Term Municipal Investments_97.6% Amount Value
___________ ___________
<S> <C> <C>
Virginia_65.2%
Alexandria Redevelopment and Housing Authority,
Multi-Family Housing Mortgage Revenue (Buckingham Village Apartments)
6.125%, 7/1/2021.......................................................... $ 3,000,000 $ 3,007,830
Augusta County Industrial Development Authority, HR
(Augusta Hospital Corp. Project) 7%, 9/1/2021 (Prerefunded 9/1/2001) (a).. 2,750,000 3,024,862
Capital Region Airport Commission, Airport Revenue
(Richmond International Airport Projects) 5.625%, 7/1/2025 (Insured; AMBAC) 2,500,000 2,437,725
Chesapeake, Water and Sewer System Revenue, Refunding 6.50%, 7/1/2012....... 1,000,000 1,053,960
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 1,099,500
Fairfax County Redevelopment and Housing Authority, MFHR, Refunding
(Paul Spring Retirement Center):
5.90%, 6/15/2017 (Insured; FHA)....................................... 200,000 200,164
6%, 12/15/2028 (Insured; FHA)......................................... 600,000 599,106
Fairfax County Park Authority, Park Facilities Revenue
6.625%, 7/15/2020......................................................... 2,665,000 2,741,006
Fairfax County Water Authority, Water Revenue
7.730%, 4/1/2029 (b,c).................................................... 2,000,000 1,945,000
Hanover County Industrial Development Authority, HR
(Memorial Regional Medical Center Project) 5.50%, 8/15/2025 (Insured; MBIA) 1,000,000 948,480
Industrial Development Authority of the City of Fredericksburg,
Hospital Facilities Revenue, Refunding (Medicorp Health System Obligated Group)
5.25%, 6/15/2023 (Insured; AMBAC)......................................... 2,000,000 1,859,120
Industrial Development Authority of Giles County,
Exempt Facility Revenue (Hoechst Celanese Corp. Project)
5.95%, 12/1/2025.......................................................... 3,000,000 2,999,820
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 3,463,845
Industrial Development Authority of the County of Prince William, Revenue:
Hospital Facility (Potomac Hospital Corp. of Prince William)
6.85%, 10/1/2025...................................................... 1,000,000 1,058,330
Refunding (Potomac Place) 6.25%, 12/20/2027............................... 700,000 705,551
Residential Care Facility (First Mortgage-Westminster Lake Ridge)
6.625%, 1/1/2026...................................................... 3,500,000 3,472,035
Industrial Development Authority of the Town of West Point, SWDR
(Chesapeake Corp. Project) 6.375%, 3/1/2019............................... 2,500,000 2,546,325
Loudoun County Sanitation Authority, Water and Sewer Revenue, Refunding
5.125%, 1/1/2026 (Insured; FGIC).......................................... 4,750,000 4,356,700
Norfolk, Parking System Revenue 5.55%, 2/1/2027 (Insured; MBIA)............. 2,225,000 2,147,904
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Muncipal Investments (continued) Amount Value
_____________ ____________
Virginia (continued)
Prince William County Park Authority, Revenue
6.875%, 10/15/2016........................................................ $ 3,000,000 $ 3,210,720
Richmond Industrial Development Authority, HR (Retreat Hospital)
7.35%, 7/1/2021 (Prerefunded 7/1/2001) (a)................................ 1,900,000 2,107,157
Staunton Industrial Development Authority,
Educational Facilities Revenue, Refunding (Mary Baldwin College)
6.75%, 11/1/2021.......................................................... 3,145,000 3,139,370
University of Virginia, University Revenue
5.75%, 5/1/2021........................................................... 2,325,000 2,299,634
Upper Occoquan Sewer Authority, Regional Sewer Revenue:
5.15%, 7/1/2020 (Insured; MBIA)........................................... 2,000,000 1,853,280
5%, 7/1/2025 (Insured; MBIA).............................................. 4,000,000 3,601,560
Virginia Beach Development Authority, Nursing Home Revenue
(Sentara Life Care Corp.) 7.75%, 11/1/2021................................ 1,000,000 1,097,400
Virginia Housing Development Authority
Commonwealth Mortgage:
6.60%, 7/1/2020....................................................... 2,900,000 2,986,362
6.85%, 1/1/2027....................................................... 2,000,000 2,063,300
U. S. Related_32.4%
Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 2,000,000 2,046,940
Guam Power Authority, Revenue 6.30%, 10/1/2022.............................. 1,750,000 1,756,563
Commonwealth of Puerto Rico:
5.40%, 7/1/2025........................................................... 1,250,000 1,168,600
(Public Improvement):
6.80%, 7/1/2021 (Prerefunded 7/1/2002)(a)............................. 1,000,000 1,106,860
6%, 7/1/2026.......................................................... 1,500,000 1,513,395
Puerto Rico Aqueduct and Sewer Authority, Revenue, Refunding
5%, 7/1/2019.............................................................. 2,500,000 2,233,450
Puerto Rico Highway and Transportation Authority, Highway Revenue:
6.625%, 7/1/2018 (Prerefunded 7/1/2002)(a)................................ 2,000,000 2,197,820
5.50%, 7/1/2026........................................................... 5,000,000 4,712,800
Puerto Rico Industrial Tourist Educational, Medical and Environmental
Control Facilities Financing Authority,
Industrial Revenue (Teachers Retirement Systems):
5.50%, 7/1/2016....................................................... 1,150,000 1,127,886
5.50%, 7/1/2021....................................................... 1,800,000 1,733,508
Puerto Rico Ports Authority, Special Facilities Revenue
(American Airlines) 6.25%, 6/1/2026....................................... 3,000,000 3,035,910
Virgin Islands Public Finance Authority, Revenue, Refunding, Matching Fund Loan Notes
7.25%, 10/1/2018.......................................................... 4,000,000 4,330,480
Virgin Islands Territory (Hugo Insurance Claims Fund Program)
7.75%, 10/1/2006.......................................................... 1,550,000 1,671,737
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1997
Principal
Long-Term Muncipal Investments (continued) Amount Value
_____________ _____________
U. S. Related (continued)
Virgin Islands Water and Power Authority, Electric System
7.40%, 7/1/2011........................................................... $ 2,000,000 $ 2,122,680
_____________
TOTAL LONG-TERM MUNICIPAL INVESTMENTS
(cost $90,955,787)........................................................ $92,784,675
==============
Short-Term Municipal Investment_2.4%
Virginia Housing Development Authority, Housing Revenue, VRDN
(AHC Service Corp.) 4.50% (LOC; Mitsubishi Trust and Banking Corp.) (d,e)
(cost $2,300,000)......................................................... $ 2,300,000 $ 2,300,000
==============
TOTAL INVESTMENTS_100.0%
(cost $93,255,787)........................................................ $95,084,675
==============
</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
LOC Letter of Credit VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
Summary of Combined Ratings (Unaudited)
Fitch (f) or Moody's or Standard & Poor's Percentage of Value
____ ________ _________________ ____________________
<S> <C> <C> <C>
AAA Aaa AAA 26.2%
AA Aa AA 10.9
A A A 30.0
BBB Baa BBB 15.0
F1 MIG1/P1 SP1/A1 2.4
Not Rated (g) Not Rated (g) Not Rated (g) 15.5
________
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) Security exempt from registration under Rule 144A of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30,
1997, this security amounted to $1,945,000 or 2.0% of net assets.
(d) Secured by letters of credit.
(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) Fitch currently provides creditworthiness information for a limited
number of investments.
(g) 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 Fund may invest.
SEE NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
Dreyfus Premier State Municipal Bond Fund, Virginia Series
Statement of Assets and Liabilities April 30, 1997
Cost Value
_____________ __________
<S> <C> <C> <C>
ASSETS: Investments in securities_See Statement of Investments $93,255,787 $95,084,675
Cash....................................... 792,577
Interest receivable........................ 1,705,396
Receivable for shares of Beneficial Interest subscribed 196,009
Prepaid expenses........................... 2,692
_____________
97,781,349
_____________
LIABILITIES: Due to Distributor......................... 34,769
Payable for shares of Beneficial Interest redeemed 142,644
Accrued expenses........................... 43,842
_____________
221,255
_____________
NET ASSETS.................................................................. $97,560,094
===============
REPRESENTED BY: Paid-in capital............................ $96,340,624
Accumulated net realized gain (loss) on investments (609,418)
Accumulated net unrealized appreciation (depreciation)
on investments_Note 4...................... 1,828,888
_____________
NET ASSETS.................................................................. $97,560,094
===============
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER SHARE
_________________________________
Class A Class B Class C
_______________ _______________ _______________
<S> <C> <C> <C>
Net Assets.................................................. $61,099,485 $35,786,744 $673,865
Shares Outstanding.......................................... 3,679,574 2,155,249 40,595
NET ASSET VALUE PER SHARE................................... $16.61 $16.60 $16.60
====== ======== =======
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
Dreyfus Premier State Municipal Bond Fund, Virginia Series
Statement of Operations Year Ended April 30, 1997
INVESTMENT INCOME
<S> <C> <C> <C>
INCOME Interest Income............................ $5,884,416
EXPENSES: Management fee_Note 3(a)................... $ 534,594
Shareholder servicing costs_Note 3(c)...... 322,136
Distribution fees_Note 3(b)................ 176,983
Professional fees.......................... 14,270
Custodian fees............................. 10,386
Prospectus and shareholders' reports....... 7,120
Registration fees.......................... 3,140
Trustees' fees and expenses_Note 3(d)...... 1,326
Loan commitment fee_Note 2................. 548
Miscellaneous.............................. 26,515
_______________
Total Expenses....................... 1,097,018
Less_management fee waived due to
undertaking_Note 3(a).................. (534,594)
_______________
Net Expenses......................... 562,424
____________
INVESTMENT INCOME_NET....................................................... 5,321,992
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS_Note 4:
Net realized gain (loss) on investments.... $ (341,501)
Net unrealized appreciation (depreciation)
on investments 2,331,865
_______________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................... 1,990,364
____________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $7,312,356
=============
SEE NOTES TO FINANCIAL STATEMENTS.
Dreyfus Premier State Municipal Bond Fund, Virginia Series
Statement of Changes in Net Assets
Year Ended Year Ended
April 30, 1997 April 30, 1996
___________________ ___________________
OPERATIONS:
Investment income_net.............................................. $ 5,321,992 $ 5,146,160
Net realized gain (loss) on investments............................... (341,501) 1,771,595
Net unrealized appreciation (depreciation) on investments............. 2,331,865 (539,154)
___________________ ___________________
Net Increase (Decrease) in Net Assets Resulting from Operations. 7,312,356 6,378,601
___________________ ___________________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income_net:
Class A shares...................................................... (3,513,103) (3,546,219)
Class B shares...................................................... (1,785,791) (1,598,256)
Class C shares...................................................... (23,098) (1,685)
Net realized gain on investments:
Class A shares...................................................... (6,744) ____
Class B shares...................................................... (3,721) ____
Class C shares...................................................... (61) ____
___________________ ___________________
Total Dividends................................................. (5,332,518) (5,146,160)
___________________ ___________________
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares...................................................... 3,784,403 4,126,648
Class B shares...................................................... 5,136,405 5,468,182
Class C shares...................................................... 546,213 171,138
Dividends reinvested:
Class A shares...................................................... 1,749,202 1,849,325
Class B shares...................................................... 885,330 812,093
Class C shares...................................................... 6,653 1,041
Cost of shares redeemed:
Class A shares...................................................... (6,856,666) (8,185,998)
Class B shares...................................................... (4,058,701) (2,280,799)
Class C shares...................................................... (47,351) ____
___________________ ___________________
Increase (Decrease) in Net Assets from Beneficial Interest Transactions 1,145,488 1,961,630
___________________ ___________________
Total Increase (Decrease) in Net Assets..................... 3,125,326 3,194,071
NET ASSETS:
Beginning of Period.............................................. 94,434,768 91,240,697
___________________ ___________________
End of Period....................................................... $97,560,094 $94,434,768
==================== ====================
SEE NOTES TO FINANCIAL STATEMENTS.
Dreyfus Premier State Municipal Bond Fund, Virginia Series
Statement of Changes in Net Assets (continued)
Shares
_____________________________________
Year Ended Year Ended
April 30, 1997 April 30, 1996
_________________ _________________
CAPITAL SHARE TRANSACTIONS:
Class A
________
Shares sold...................................................... 227,942 249,234
Shares issued for dividends reinvested................................. 105,123 111,225
Shares redeemed........................................................ (412,500) (494,748)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding (79,435) (134,289)
================== ==================
Class B
________
Shares sold............................................................ 309,753 328,113
Shares issued for dividends reinvested............................. 53,201 48,831
Shares redeemed........................................................ (243,884) (137,908)
_________________ _________________
Net Increase (Decrease) in Shares Outstanding 119,070 239,036
================== ==================
Class C*
________
Shares sold.......................................................... 32,891 10,131
Shares issued for dividends reinvested................................. 400 63
Shares redeemed........................................................ (2,890) ___
_________________ _________________
Net Increase (Decrease) in Shares Outstanding 30,401 10,194
================== ==================
*From August 15, 1995 (commencement of initial offering) to April 30,
1996.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
Dreyfus Premier State Municipal Bond Fund, Virginia Series
Financial Highlights
Reference is made to page 6 of the Fund's Prospectus dated July 16, 1997.
Dreyfus Premier State Municipal Bond Fund, Virginia Series
NOTES TO FINANCIAL STATEMENTS
NOTE 1_SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Premier State Municipal Bond Fund (the "Trust") 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 thirteen series including the Virginia Series (the
"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 Dreyfus Corporation (the "Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
On January 8, 1997, the Trust's Trustees approved a change to the Trust's
name from "Premier State Municipal Bond Fund" to "Dreyfus Premier State
Municipal Bond Fund", which change became effective March 31, 1997.
Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor
of the Fund's shares. The Fund is authorized to issue an unlimited number of
$.001 par value shares in the following classes of shares: Class A, Class B
and Class C. 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
("CDSC") imposed on Class B share redemptions made within six years of
purchase (five years for shareholders beneficially owning Class B shares on
November 30, 1996) and Class C shares are subject to a CDSC imposed on Class
C shares redeemed 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 Trust accounts separately for the assets, liabilities and operations
of each fund. Expenses directly attributable to each fund are charged to that
fund's operations; expenses which are applicable to all funds are allocated
among them on a pro rata basis.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
(a) Portfolio valuation: Investments in securities (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 Fund 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 Fund.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(c) Dividends to shareholders: It is the policy of the Fund 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 Fund 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 Fund not to
distribute such gain.
(d) Federal income taxes: It is the policy of the Fund 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 $314,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to April 30, 1997. The
carryover does not include net realized securities losses from November 1,
1996 through April 30, 1997 which are treated, for Federal income tax
purposes, as arising in fiscal 1998. If not applied, $148,000 of the
carryover expires in fiscal 2003 and $166,000 expires in fiscal 2005.
NOTE 2_BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility ("Facility") to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion
of the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. For the period ended April
30, 1997, the Fund did not borrow under the Facility.
NOTE 3_MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) Pursuant to a management agreement with the Manager, the management
fee is computed at the annual rate of .55 of 1% of the value of the Fund's
average daily net assets and is payable monthly. The manager has undertaken
from May 1, 1996 to waive receipt of the management fee payable to it by the
Fund until such time as the net assets of the Fund exceed $100 million,
regardless of whether they remain at that level. The management fee waived,
pursuant to the undertaking, amounted to $534,594 during the period ended
April 30, 1997.
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $70 during the period ended April 30, 1997, from commissions earned
on sales of the Fund's shares.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Fund pays the Distributor for distributing the Fund's 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 period ended April 30, 1997,
$173,397 was charged to the Fund for the Class B shares and $3,586 was
charged to the Fund for the Class C shares.
(c) Under the Shareholder Services Plan, the Fund 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 Fund 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
DREYFUS PREMIER STATE MUNICIPAL BOND FUND, VIRGINIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
period ended April 30, 1997, $155,104, $86,698 and $1,195 were charged to
Class A, B and C shares, respectively, by the Distributor pursuant to the
Shareholder Services Plan.
The Fund 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 Fund. Such
compensation amounted to $46,071 during the period ended April 30, 1997.
(d) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Trust 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 4_SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the period ended April 30, 1997
amounted to $43,383,585 and $44,396,817, respectively.
At April 30, 1997, accumulated net unrealized appreciation on investments
was $1,828,888, consisting of $2,582,296 gross unrealized appreciation and
$753,408 gross unrealized depreciation.
At April 30, 1997, 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).
Dreyfus Premier State Municipal Bond Fund, Virginia Series
Report of Ernst & Young LLP, Independent Auditors
Shareholders and Board of Trustees
Dreyfus Premier State Municipal Bond Fund, Virginia Series
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Dreyfus Premier State Municipal
Bond Fund, Virginia Series (one of the Funds constituting the Dreyfus Premier
State Municipal Bond Fund) as of April 30, 1997, 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 and financial highlights. Our procedures included
confirmation of securities owned as of April 30, 1997 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 Dreyfus Premier State Municipal Bond Fund, Virginia Series at
April 30, 1997, 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, 1997
DREYFUS PREMIER STATE MUNICIPAL BOND FUND
PART C. OTHER INFORMATION
_________________________
Item 24. Financial Statements and Exhibits. - List
_______ _________________________________________
(a) Financial Statements:
Included in Part A of the Registration Statement
Condensed Financial Information for the period from May 28,
1987 (commencement of operations for the Connecticut Series,
Florida Series, Maryland Series, Massachusetts
Series, Michigan Series, Minnesota Series, Ohio Series and
Texas Series, except the Pennsylvania Series (which commenced
operations on July 30, 1987)) to April 30, 1988 and for each
of the nine years ended April 30, 1997 for such Series; for
the North Carolina Series and Virginia Series for the period
from August 1, 1991 (commencement of operations) to April
30, 1992 and for each of the five years ended April 30, 1997;
for the Georgia Series for the period from September 3, 1992
(commencement of operations) to April 30, 1993 and for the
four years ended April 30, 1997; for the New Jersey Series
for the period from May 4, 1994 (commencement of operations)
to July 31, 1994, for each of the two years ended July 30,
1996, and for the nine month period from August 1, 1996 to
April 30, 1997.
Included in Part B of the Registration Statement:
Statement of Investments-- April 30, 1997.
Statement of Assets and Liabilities-- April 30, 1997.
Statement of Operations-- year ended April 30, 1997;
for the New Jersey Series for the year ended July 31,
1996 and for the nine months ended April 30, 1997.
Statement of Changes in Net Assets-- for each of the
years ended April 30, 1996 and 1997 for all series,
except the New Jersey Series; for the New Jersey Series
for each of the years ended July 31, 1995 and
1996 and for the nine months ended April 30, 1997.
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors, dated
June 5, 1997.
All schedules and other financial statement information, for which provision
is made in the applicable accounting regulations of the Securities and
Exchange Commission, are either omitted because they are not required under
the related instructions, they are inapplicable, or the required information
is presented in the financial statements or notes thereto which are included
in Part B of the Registration Statement.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(b) Exhibits:
(1) Registrant's Amended and Restated Agreement and Declaration
of Trust is incorporated by reference to Exhibit (1) of Post-
Effective Amendment No. 21 to the Registration Statement on Form N-
1A, filed on August 11, 1995.
(2) Registrant's By-Laws, as amended are incorporated by
reference to Exhibit (2) of Post-Effective Amendment No. 21 to the
Registration Statement on Form N-1A, filed on August 11, 1995.
(5) Management Agreement.
(6)(a) Distribution Agreement is incorporated by reference to Exhibit
(6)(a) of Post-Effective Amendment No. 21 to the Registration
Statement on Form N-1A, filed on August 11, 1995.
(6)(b) Forms of Shareholder Services Plan Agreements are incorporated by
reference to Exhibit (6)(b) of Post-Effective Amendment No. 21 to
the Registration Statement on Form N-1A, filed on August 11, 1995.
(6)(c) Forms of Distribution Plan Agreements are incorporated
by reference to Exhibit (6)(c) of Post-Effective Amendment No. 21
to the Registration Statement on Form N-1A, filed on August 11,
1995.
(8)(a) Custody Agreement is incorporated by reference to
Exhibit (8)(a) of Post-Effective Amendment No. 28 to the
Registration Statement on Form N-1A, filed on June 16, 1997.
(8)(b) Sub-Custodian Agreements are incorporated by reference
to Exhibit (8)(b) of Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A, filed on August 18, 1994.
(9) Shareholder Services Plan.
(10) Opinion and consent of Registrant's counsel is incorporated
by reference to Exhibit (10) of Post-Effective Amendment No. 21 to
the Registration Statement on Form N-1A, filed on August 11, 1995.
(11) Consent of Independent Auditors.
(15) Distribution Plan.
(16) Schedules of Computation of Performance Data are incorporated by
reference to Exhibit (16) of Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A, filed on August 18, 1994.
(17) Financial Data Schedules.
Item 24. Financial Statements and Exhibits. - List (continued)
_______ _____________________________________________________
(18) Registrant's Rule 18f-3 Plan is incorporated by reference to
Exhibit (18) of Post-Effective Amendment No. 24 to the
Registration Statement on Form N-1A, filed on July 18, 1996.
Other Exhibits
______________
(a) Powers of Attorney of the Trustees and officers is
incorporated by reference to Exhibit (18)(a) of Post
Effective Amendment No. 28 to the Registration Statement
on Form N-1A, filed on June 16, 1997.
(b) Certificate of Assistant Secretary is incorporated by
reference to Exhibit (18)(b) of Post Effective Amendment
No. 28 to the Registration Statement on Form N-1A, filed
on June 16, 1997.
Item 25. Persons Controlled by or under Common Control with Registrant.
_______ ______________________________________________________________
Not Applicable
Item 26. Number of Holders of Securities.
_______ ________________________________
(1) (2)
Number of Record
Title of Class Holders as of June 27, 1997
______________ _____________________________
Shares of
beneficial interest,
par value $.001 per share Class A Class B Class C
Connecticut Series- 6,230 1,705 39
Florida Series- 4,673 814 4
Georgia Series- 202 406 5
Maryland Series- 6,385 1,636 13
Massachusetts Series- 1,535 150 1
Michigan Series- 4,154 571 7
Number of Record
Title of Class Holders as of June 27, 1997
______________ _____________________________
Shares of
beneficial interest,
par value of $.001 per share Class A Class B Class C
Minnesota Series- 2,939 910 7
New Jersey 156 220 3
North Carolina Series- 1,038 1,261 2
Ohio Series- 5,680 1,359 9
Pennsylvania Series- 5,796 2,556 6
Texas Series- 1,042 406 2
Virginia Series- 1,535 981 8
Item 27. Indemnification
_______ _______________
Reference is made to Article VIII of the Registrant's Amended and
Restated Declaration of Trust incorporated by reference to Exhibit
(1) of Post-Effective Amendment No. 21 to the Registration
Statement on Form N-1A, filed on August 11, 1995.
The application of these provisions is limited by Article 10 of
the Registrant's By-Laws, as amended, incorporated by reference to
Exhibit (2) of Post-Effective Amendment No. 21 to the Registration
Statement on Form N-1A, filed on August 11, 1995, and by the
following undertaking set forth in the rules promulgated by the
Securities and Exchange Commission:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In
the event that a claim for indemnification is against such
liabilities (other than the payment by the registrant of
expenses incurred or paid by a trustee, officer or controlling
person of the registrant in the successful defense of any such
action, suit or proceeding) is asserted by such trustee,
officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in such Act and will be
governed by the final adjudication of such issue.
Reference is also made to the Distribution Agreement attached as
Exhibit (6)(a) of Post-Effective Amendment No. 21 to the
Registration Statement on Form N-1A, filed on August 11, 1995.
Item 28. Business and Other Connections of Investment Adviser.
_______ ____________________________________________________
The Dreyfus Corporation ("Dreyfus") and subsidiary companies
comprise a financial service organization whose business consists
primarily of providing investment management services as the
investment adviser and manager for sponsored investment companies
registered under the Investment Company Act of 1940 and as an
investment adviser to institutional and individual accounts.
Dreyfus also serves as sub-investment adviser to and/or
administrator of other investment companies. Dreyfus Service
Corporation, a wholly-owned subsidiary of Dreyfus, serves
primarily as a registered broker-dealer of shares of investment
companies sponsored by Dreyfus and of other investment companies
for which Dreyfus acts as investment adviser, sub-investment
adviser or administrator. Dreyfus Management, Inc., another
wholly-owned subsidiary, provides investment management services
to various pension plans, institutions and individuals.
Item 28. Business and Other Connections of Investment Adviser (continued)
________ ________________________________________________________________
Officers and Directors of Investment Adviser
____________________________________________
Name and Position
with Dreyfus Other Businesses
_________________ ________________
MANDELL L. BERMAN Real estate consultant and private investor
Director 29100 Northwestern Highway, Suite 370
Southfield, Michigan 48034;
Past Chairman of the Board of Trustees:
Skillman Foundation;
Member of The Board of Vintners Intl.
BURTON C. BORGELT Chairman Emeritus of the Board and
Director Past Chairman, Chief Executive Officer and
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405;
Director:
DeVlieg-Bullard, Inc.
1 Gorham Island
Westport, Connecticut 06880
Mellon Bank Corporation***;
Mellon Bank, N.A.***
FRANK V. CAHOUET Chairman of the Board, President and
Director Chief Executive Officer:
Mellon Bank Corporation***;
Mellon Bank, N.A.***;
Director:
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103;
Saint-Gobain Corporation
750 East Swedesford Road
Valley Forge, Pennsylvania 19482;
Teledyne, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
W. KEITH SMITH Chairman and Chief Executive Officer:
Chairman of the Board The Boston Company****;
Vice Chairman of the Board:
Mellon Bank Corporation***;
Mellon Bank, N.A.***;
Director:
Dentsply International, Inc.
570 West College Avenue
York, Pennsylvania 17405
CHRISTOPHER M. CONDRON Vice Chairman:
President, Chief Mellon Bank Corporation***;
Executive Officer, The Boston Company****;
Chief Operating Deputy Director:
Officer and a Mellon Trust***;
Director Chief Executive Officer:
The Boston Company Asset Management,
Inc.****;
President:
Boston Safe Deposit and Trust Company****
STEPHEN E. CANTER Director:
Vice Chairman and The Dreyfus Trust Company++;
Chief Investment Officer, Formerly, Chairman and Chief Executive Officer:
and a Director Kleinwort Benson Investment Management
Americas Inc.*
LAWRENCE S. KASH Chairman, President and Chief
Vice Chairman-Distribution Executive Officer:
and a Director The Boston Company Advisors, Inc.
53 State Street
Exchange Place
Boston, Massachusetts 02109;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.**;
Director:
Dreyfus America Fund+++;
The Dreyfus Consumer Credit Corporation*;
The Dreyfus Trust Company++;
Dreyfus Service Corporation*;
World Balanced Fund++++;
President:
The Boston Company****;
Laurel Capital Advisors***;
Boston Group Holdings, Inc.;
Executive Vice President:
Mellon Bank, N.A.***;
Boston Safe Deposit and Trust
Company****
WILLIAM T. SANDALLS, JR. Director:
Senior Vice President and Dreyfus Partnership Management, Inc.*;
Chief Financial Officer Seven Six Seven Agency, Inc.*;
President and Director:
Lion Management, Inc.*;
Executive Vice President and Director:
Dreyfus Service Organization, Inc.*;
Vice President, Chief Financial Officer and
Director:
Dreyfus America Fund+++;
World Balanced Fund++++;
Vice President and Director:
The Dreyfus Consumer Credit Corporation*;
The Truepenny Corporation*;
Treasurer, Financial Officer and Director:
The Dreyfus Trust Company++;
Treasurer and Director:
Dreyfus Management, Inc.*;
Dreyfus Service Corporation*;
Formerly, President and Director:
Sandalls & Co., Inc.
MARK N. JACOBS Vice President, Secretary and Director:
Vice President, Secretary:
General Counsel The Dreyfus Consumer Credit Corporation*;
and Secretary Dreyfus Management, Inc.*;
Assistant Secretary:
Dreyfus Service Organization, Inc.**;
Major Trading Corporation*;
The Truepenny Corporation*
PATRICE M. KOZLOWSKI None
Vice President-
Corporate Communications
MARY BETH LEIBIG None
Vice President-
Human Resources
JEFFREY N. NACHMAN President and Director:
Vice President-Mutual Fund Dreyfus Transfer, Inc.
Accounting One American Express Plaza
Providence, Rhode Island 02903
ANDREW S. WASSER Vice President:
Vice President-Information Mellon Bank Corporation***
Services
WILLIAM V. HEALEY
Assistant Secretary
President:
The Truepenny Corporation
Vice President and Director:
The Dreyfus Consumer Credit Corporation
Secretary and Director:
Dreyfus Partnership Management Inc.
Director:
The Dreyfus Trust Company
Assistant Secretary:
Dreyfus Service Corporation
Dreyfus Investment Advisors, Inc.
Assistant Clerk:
Dreyfus Insurance Agency of Massachusetts,
Inc.
______________________________________
* The address of the business so indicated is 200 Park Avenue, New
York, New York 10166.
** The address of the business so indicated is 131 Second Street, Lewes,
Delaware 19958.
*** The address of the business so indicated is One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
**** The address of the business so indicated is One Boston Place, Boston,
Massachusetts 02108.
+ The address of the business so indicated is Atrium Building, 80 Route
4 East, Paramus, New Jersey 07652.
++ The address of the business so indicated is 144 Glenn Curtiss
Boulevard, Uniondale, New York 11556-0144.
+++ The address of the business so indicated is 69, Route 'd'Esch,
L-1470 Luxembourg.
++++ The address of the business so indicated is 69, Route 'd'Esch,
L-2953 Luxembourg.
Item 29. Principal Underwriters
________ ______________________
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or
exclusive distributor:
1) Comstock Partners Funds, Inc.
2) Dreyfus A Bonds Plus, Inc.
3) Dreyfus Appreciation Fund, Inc.
4) Dreyfus Asset Allocation Fund, Inc.
5) Dreyfus Balanced Fund, Inc.
6) Dreyfus BASIC GNMA Fund
7) Dreyfus BASIC Money Market Fund, Inc.
8) Dreyfus BASIC Municipal Fund, Inc.
9) Dreyfus BASIC U.S. Government Money Market Fund
10) Dreyfus California Intermediate Municipal Bond Fund
11) Dreyfus California Tax Exempt Bond Fund, Inc.
12) Dreyfus California Tax Exempt Money Market Fund
13) Dreyfus Cash Management
14) Dreyfus Cash Management Plus, Inc.
15) Dreyfus Connecticut Intermediate Municipal Bond Fund
16) Dreyfus Connecticut Municipal Money Market Fund, Inc.
17) Dreyfus Florida Intermediate Municipal Bond Fund
18) Dreyfus Florida Municipal Money Market Fund
19) The Dreyfus Fund Incorporated
20) Dreyfus Global Bond Fund, Inc.
21) Dreyfus Global Growth Fund
22) Dreyfus GNMA Fund, Inc.
23) Dreyfus Government Cash Management
24) Dreyfus Growth and Income Fund, Inc.
25) Dreyfus Growth and Value Funds, Inc.
26) Dreyfus Growth Opportunity Fund, Inc.
27) Dreyfus Income Funds
28) Dreyfus Institutional Money Market Fund
29) Dreyfus Institutional Short Term Treasury Fund
30) Dreyfus Insured Municipal Bond Fund, Inc.
31) Dreyfus Intermediate Municipal Bond Fund, Inc.
32) Dreyfus International Funds, Inc.
33) Dreyfus Investment Grade Bond Funds, Inc.
34) The Dreyfus/Laurel Funds, Inc.
35) The Dreyfus/Laurel Funds Trust
36) The Dreyfus/Laurel Tax-Free Municipal Funds
37) Dreyfus LifeTime Portfolios, Inc.
38) Dreyfus Liquid Assets, Inc.
39) Dreyfus Massachusetts Intermediate Municipal Bond Fund
40) Dreyfus Massachusetts Municipal Money Market Fund
41) Dreyfus Massachusetts Tax Exempt Bond Fund
42) Dreyfus MidCap Index Fund
43) Dreyfus Money Market Instruments, Inc.
44) Dreyfus Municipal Bond Fund, Inc.
45) Dreyfus Municipal Cash Management Plus
46) Dreyfus Municipal Money Market Fund, Inc.
47) Dreyfus New Jersey Intermediate Municipal Bond Fund
48) Dreyfus New Jersey Municipal Bond Fund, Inc.
49) Dreyfus New Jersey Municipal Money Market Fund, Inc.
50) Dreyfus New Leaders Fund, Inc.
51) Dreyfus New York Insured Tax Exempt Bond Fund
52) Dreyfus New York Municipal Cash Management
53) Dreyfus New York Tax Exempt Bond Fund, Inc.
54) Dreyfus New York Tax Exempt Intermediate Bond Fund
55) Dreyfus New York Tax Exempt Money Market Fund
56) Dreyfus 100% U.S. Treasury Intermediate Term Fund
57) Dreyfus 100% U.S. Treasury Long Term Fund
58) Dreyfus 100% U.S. Treasury Money Market Fund
59) Dreyfus 100% U.S. Treasury Short Term Fund
60) Dreyfus Pennsylvania Intermediate Municipal Bond Fund
61) Dreyfus Pennsylvania Municipal Money Market Fund
62) Dreyfus Premier California Municipal Bond Fund
63) Dreyfus Premier Equity Funds, Inc.
64) Dreyfus Premier Global Investing, Inc.
65) Dreyfus Premier GNMA Fund
66) Dreyfus Premier Worldwide Growth Fund, Inc.
67) Dreyfus Premier Insured Municipal Bond Fund
68) Dreyfus Premier Municipal Bond Fund
69) Dreyfus Premier New York Municipal Bond Fund
70) Dreyfus Premier State Municipal Bond Fund
71) Dreyfus Premier Value Fund
72) Dreyfus S&P 500 Index Fund
73) Dreyfus Short-Intermediate Government Fund
74) Dreyfus Short-Intermediate Municipal Bond Fund
75) The Dreyfus Socially Responsible Growth Fund, Inc.
76) Dreyfus Stock Index Fund, Inc.
77) Dreyfus Tax Exempt Cash Management
78) The Dreyfus Third Century Fund, Inc.
79) Dreyfus Treasury Cash Management
80) Dreyfus Treasury Prime Cash Management
81) Dreyfus Variable Investment Fund
82) Dreyfus Worldwide Dollar Money Market Fund, Inc.
83) General California Municipal Bond Fund, Inc.
84) General California Municipal Money Market Fund
85) General Government Securities Money Market Fund, Inc.
86) General Money Market Fund, Inc.
87) General Municipal Bond Fund, Inc.
88) General Municipal Money Market Fund, Inc.
89) General New York Municipal Bond Fund, Inc.
90) General New York Municipal Money Market Fund
(b)
Positions and
Name and principal Positions and offices with offices with
business address the Distributor Registrant
__________________ ___________________________ _____________
Marie E. Connolly+ Director, President, Chief President and
Executive Officer and Compliance Treasurer
Officer
Joseph F. Tower, III+ Senior Vice President, Treasurer Vice President
and Chief Financial Officer and Assistant
Treasurer
John E. Pelletier+ Senior Vice President, General Vice President
Counsel, Secretary and Clerk and Secretary
Richard W. Ingram Senior Vice President Vice President
and Assistant
Treasurer
Roy M. Moura+ First Vice President None
Elizabeth A. Keeley++ Vice President Vice President
and Assistant
Secretary
Dale F. Lampe+ Vice President None
Mary A. Nelson+ Vice President Vice President
and Assistant
Treasurer
Paul Prescott+ Vice President None
Jean M. O'Leary+ Assistant Secretary and None
Assistant Clerk
John W. Gomez+ Director None
William J. Nutt+ Director None
________________________________
+ Principal business address is 60 State Street, Boston, Massachusetts
02109.
++ Principal business address is 200 Park Avenue, New York, New York 10166.
Item 30. Location of Accounts and Records
________________________________
1. First Data Investor Services Group, Inc.,
a subsidiary of First Data Corporation
P.O. Box 9671
Providence, Rhode Island 02940-9671
2. The Bank of New York
90 Washington Street
New York, New York 10286
3. Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, Rhode Island 02940-9671
4. The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Item 31. Management Services
_______ ___________________
Not Applicable
Item 32. Undertakings
________ ____________
(1) To call a meeting of shareholders for the purpose of voting upon
the question of removal of a Board member or Board members when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares and in connection with such
meeting to comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder
communications.
(2) To furnish each person to whom a prospectus is delivered with a
copy of the Fund's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New
York, and State of New York on the 16th day of July, 1997.
DREYFUS PREMIER STATE MUNICIPAL BOND FUND
BY: /s/Marie E. Connolly*
----------------------------
Marie E. Connolly, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.
Signatures Title Date
___________________________ ______________________________ ___________
/s/Marie E. Connolly* President (Principal Executive 7/16/97
______________________________ Officer)
Marie E. Connolly
/s/Joseph F. Tower, III* Assistant Treasurer (Principal 7/16/97
______________________________ Accounting and Financial Officer)
Joseph F. Tower, III
/s/Clifford L. Alexander, Jr.* Director 7/16/97
______________________________
Clifford L. Alexander, Jr.
/s/Peggy C. Davis* Director 7/16/97
______________________________
Peggy C. Davis
/s/Joseph S. DiMartino* Chairman of the Board of 7/16/97
______________________________ Directors
Joseph S. DiMartino
/s/Ernst Kafka* Director 7/16/97
______________________________
Ernest Kafka
/s/Saul B. Klaman* Director 7/16/97
______________________________
Saul B. Klaman
/s/Nathan Leventhal* Director 7/16/97
______________________________
Nathan Leventhal
*BY: __________________________
Elizabeth A. Keeley,
Attorney-in-Fact
INDEX OF EXHIBITS
__________________
ITEM PAGE
____ ____
(b) Exhibits:
(5) Management Agreement
(9) Shareholder Services Plan
(11) Consent of Independent Auditors
(15) Distribution Plan
(17) Financial Data Schedules
MANAGEMENT AGREEMENT
DREYFUS PREMIER STATE MUNICIPAL BOND FUND
200 Park Avenue
New York, New York 10166
August 24, 1994
As Revised, March 31, 1997
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Dear Sirs:
The above-named investment company (the "Fund")
consisting of the series named on Schedule 1 hereto, as such
Schedule may be revised from time to time (each, a "Series"),
herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing
and reinvesting the same in investments of the type and in
accordance with the limitations specified in its charter
documents and in its Prospectus and Statement of Additional
Information as from time to time in effect, copies of which have
been or will be submitted to you, and in such manner and to such
extent as from time to time may be approved by the Fund's Board.
The Fund desires to employ you to act as its investment
adviser.
In this connection it is understood that from time to
time you will employ or associate with yourself such person or
persons as you may believe to be particularly fitted to assist
you in the performance of this Agreement. Such person or
persons may be officers or employees who are employed by both
you and the Fund. The compensation of such person or persons
shall be paid by you and no obligation may be incurred on the
Fund's behalf in any such respect.
Subject to the supervision and approval of the Fund's
Board, you will provide investment management of each Series'
portfolio in accordance with such Series' investment objectives
and policies as stated in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect. In
connection therewith, you will obtain and provide investment
research and will supervise each Series' investments and conduct
a continuous program of investment, evaluation and, if
appropriate, sale and reinvestment of such Series' assets. You
will furnish to the Fund such statistical information, with
respect to the investments which a Series may hold or
contemplate purchasing, as the Fund may reasonably request. The
Fund wishes to be informed of important developments materially
affecting any Series' portfolio and shall expect you, on your
own initiative, to furnish to the Fund from time to time such
information as you may believe appropriate for this purpose.
In addition, you will supply office facilities (which
may be in your own offices), data processing services, clerical,
accounting and bookkeeping services, internal auditing and legal
services, internal executive and administrative services, and
stationery and office supplies; prepare reports to each Series'
stockholders, tax returns, reports to and filings with the
Securities and Exchange Commission and state Blue Sky
authorities; calculate the net asset value of each Series'
shares; and generally assist in all aspects of the Fund's
operations. You shall have the right, at your expense, to
engage other entities to assist you in performing some or all of
the obligations set forth in this paragraph, provided each such
entity enters into an agreement with you in form and substance
reasonably satisfactory to the Fund. You agree to be liable for
the acts or omissions of each such entity to the same extent as
if you had acted or failed to act under the circumstances.
You shall exercise your best judgment in rendering the
services to be provided to the Fund hereunder and the Fund
agrees as an inducement to your undertaking the same that you
shall not be liable hereunder for any error of judgment or
mistake of law or for any loss suffered by one or more Series,
provided that nothing herein shall be deemed to protect or
purport to protect you against any liability to the Fund or a
Series or to its security holders to which you would otherwise
be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties hereunder, or by
reason of your reckless disregard of your obligations and duties
hereunder.
In consideration of services rendered pursuant to this
Agreement, the Fund will pay you on the first business day of
each month a fee at the rate set forth opposite each Series'
name on Schedule 1 hereto. Net asset value shall be computed on
such days and at such time or times as described in the Fund's
then-current Prospectus and Statement of Additional Information.
Upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated
according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of termination
of this Agreement.
For the purpose of determining fees payable to you,
the value of each Series' net assets shall be computed in the
manner specified in the Fund's charter documents for the
computation of the value of each Series' net assets.
You will bear all expenses in connection with the
performance of your services under this Agreement. All other
expenses to be incurred in the operation of the Fund will be
borne by the Fund, except to the extent specifically assumed by
you. The expenses to be borne by the Fund include, without
limitation, the following: organizational costs, taxes,
interest, loan commitment fees, interest and distributions paid
on securities sold short, brokerage fees and commissions, if
any, fees of Board members who are not your officers, directors
or employees or holders of 5% or more of your outstanding voting
securities, 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 stockholders, costs of stockholders' reports and
meetings, and any extraordinary expenses.
As to each Series, if in any fiscal year the aggregate
expenses of the Fund (including fees pursuant to this Agreement,
but excluding interest, taxes, brokerage and, with the prior
written consent of the necessary state securities commissions,
extraordinary expenses) exceed the expense limitation of any
state having jurisdiction over the Series, the Fund may deduct
from the fees to be paid hereunder, or you will bear, such
excess expense to the extent required by state law. Your
obligation pursuant hereto will be limited to the amount of your
fees hereunder. Such deduction or payment, if any, will be
estimated daily, and reconciled and effected or paid, as the
case may be, on a monthly basis.
The Fund understands that you now act, and that from
time to time hereafter you may act, as investment adviser to one
or more other investment companies and fiduciary or other
managed accounts, and the Fund has no objection to your so
acting, provided that when the purchase or sale of securities of
the same issuer is suitable for the investment objectives of two
or more companies or accounts managed by you which have
available funds for investment, the available securities will be
allocated in a manner believed by you to be equitable to each
company or account. It is recognized that in some cases this
procedure may adversely affect the price paid or received by one
or more Series or the size of the position obtainable for or
disposed of by one or more Series.
In addition, it is understood that the persons
employed by you to assist in the performance of your duties
hereunder will not devote their full time to such service and
nothing contained herein shall be deemed to limit or restrict
your right or the right of any of your affiliates to engage in
and devote time and attention to other businesses or to render
services of whatever kind or nature.
You shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates,
except for a loss resulting from willful misfeasance, bad faith
or gross negligence on your part in the performance of your
duties or from reckless disregard by you of your obligations and
duties under this Agreement. Any person, even though also your
officer, director, partner, employee or agent, who may be or
become an officer, Board member, employee or agent of the Fund,
shall be deemed, when rendering services to the Fund or acting
on any business of the Fund, to be rendering such services to or
acting solely for the Fund and not as your officer, director,
partner, employee or agent or one under your control or
direction even though paid by you.
As to each Series, this Agreement shall continue until
the date set forth opposite such Series' name on Schedule 1
hereto (the "Reapproval Date") and thereafter shall continue
automatically for successive annual periods ending on the day of
each year set forth opposite the Series' name on Schedule 1
hereto (the "Reapproval Day"), provided such continuance is
specifically approved at least annually by (i) the Fund's Board
or (ii) vote of a majority (as defined in the Investment Company
Act of 1940) of such Series' outstanding voting securities,
provided that in either event its continuance also is approved
by a majority of the Fund's Board members who are not
"interested persons" (as defined in said Act) of any party to
this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. As to each Series, this
Agreement is terminable without penalty, on 60 days' notice, by
the Fund's Board or by vote of holders of a majority of such
Series' shares or, upon not less than 90 days' notice, by you.
This Agreement also will terminate automatically, as to the
relevant Series, in the event of its assignment (as defined in
said Act).
The Fund recognizes that from time to time your
directors, officers and employees may serve as directors,
trustees, partners, officers and employees of other
corporations, business trusts, partnerships or other entities
(including other investment companies) and that such other
entities may include the name "Dreyfus" as part of their name,
and that your corporation or its affiliates may enter into
investment advisory or other agreements with such other
entities. If you cease to act as the Fund's investment adviser,
the Fund agrees that, at your request, the Fund will take all
necessary action to change the name of the Fund to a name not
including "Dreyfus" in any form or combination of words.
This Agreement has been executed on behalf of the Fund
by the undersigned officer of the Fund in his capacity as an
officer of the Fund. The obligations of this Agreement shall
only be binding upon the assets and property of the Fund and
shall not be binding upon any Board member, officer or investor
of the Fund individually and no Board member, officer or
investor of the Fund shall be individually liable for any of
said obligations.
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
DREYFUS PREMIER STATE MUNICIPAL
BOND FUND
By:_______________________________
Accepted:
THE DREYFUS CORPORATION
By:_______________________________
SCHEDULE 1
Annual Fee as
a Percentage
of Average
Daily Net
Name of Series Assets Reapproval Date Reapproval Day
Connecticut Series .55 of 1% September 5, 1997 September 5th
Florida Series .55 of 1% September 5, 1997 September 5th
Georgia Series .55 of 1% September 5, 1997 September 5th
Maryland Series .55 of 1% September 5, 1997 September 5th
Massachusetts Series .55 of 1% September 5, 1997 September 5th
Michigan Series .55 of 1% September 5, 1997 September 5th
Minnesota Series .55 of 1% September 5, 1997 September 5th
New Jersey Series .55 of 1% September 5, 1998 September 5th
North Carolina Series .55 of 1% September 5, 1997 September 5th
Ohio Series .55 of 1% September 5, 1997 September 5th
Pennsylvania Series .55 of 1% September 5, 1997 September 5th
Texas Series .55 of 1% September 5, 1997 September 5th
Virginia Series .55 of 1% September 5, 1997 September 5th
DREYFUS PREMIER STATE MUNICIPAL BOND FUND
SHAREHOLDER SERVICES PLAN
Introduction: It has been proposed that the above-
captioned investment company (the "Fund") adopt a Shareholder
Services Plan under which the Fund would pay the Fund's
distributor (the "Distributor") for providing services to (a)
shareholders of each series of the Fund or class of Fund shares
set forth on Exhibit A hereto, as such Exhibit may be revised
from time to time, or (b) if no series or classes are set forth
on such Exhibit, shareholders of the Fund. The Distributor would
be permitted to pay certain financial institutions, securities
dealers and other industry professionals (collectively, "Service
Agents") in respect of these services. The Plan is not to be
adopted pursuant to Rule 12b-1 under the Investment Company Act
of 1940, as amended (the "Act"), and the fee under the Plan is
intended to be a "service fee" as defined in Article III, Section
26, of the NASD Rules of Fair Practice.
The Fund's Board, in considering whether the Fund
should implement a written plan, has requested and evaluated such
information as it deemed necessary to an informed determination
as to whether a written plan should be implemented and has
considered such pertinent factors as it deemed necessary to form
the basis for a decision to use Fund assets for such purposes.
In voting to approve the implementation of such a plan,
the Board has concluded, in the exercise of its reasonable
business judgment and in light of applicable fiduciary duties,
that there is a reasonable likelihood that the plan set forth
below will benefit the Fund and its shareholders.
The Plan: The material aspects of this Plan are as
follows:
1. The Fund shall pay to the Distributor a fee at the
annual rate set forth on Exhibit A in respect of the provision of
personal services to shareholders and/or the maintenance of
shareholder accounts. The Distributor shall determine the
amounts to be paid to Service Agents and the basis on which such
payments will be made. Payments to a Service Agent are subject
to compliance by the Service Agent with the terms of any related
Plan agreement between the Service Agent and the Distributor.
2. For the purpose of determining the fees payable
under this Plan, the value of the net assets of the Fund or the
net assets attributable to each series or class of Fund shares
identified on Exhibit A, as applicable, shall be computed in the
manner specified in the Fund's charter documents for the
computation of net asset value.
3. The Board shall be provided, at least quarterly,
with a written report of all amounts expended pursuant to this
Plan. The report shall state the purpose for which the amounts
were expended.
4. This Plan will become effective immediately upon
approval by a majority of the Board members, including a majority
of the Board members who are not "interested persons" (as defined
in the Act) of the Fund and have no direct or indirect financial
interest in the operation of this Plan or in any agreements
entered into in connection with this Plan, pursuant to a vote
cast in person at a meeting called for the purpose of voting on
the approval of this Plan.
5. This Plan shall continue for a period of one year
from its effective date, unless earlier terminated in accordance
with its terms, and thereafter shall continue automatically for
successive annual periods, provided such continuance is approved
at least annually in the manner provided in paragraph 4 hereof.
6. This Plan may be amended at any time by the Board,
provided that any material amendments of the terms of this Plan
shall become effective only upon approval as provided in
paragraph 4 hereof.
7. This Plan is terminable without penalty at any
time by vote of a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and have
no direct or indirect financial interest in the operation of this
Plan or in any agreements entered into in connection with this
Plan.
8. The obligations hereunder and under any related
Plan agreement shall only be binding upon the assets and property
of the Fund or the affected series or class, as the case may be,
and shall not be binding upon any Board member, officer or
shareholder of the Fund individually.
Dated: October 19, 1992
Amended: January 26, 1994
Revised: March 31, 1997
EXHIBIT A
Fee as a Percentage of
Name of Series and Class Average Daily Net Assets
Connecticut Series
Class A .25 of 1%
Class B .25 of 1%
Class C .25 of 1%
Florida Series
Class A .25 of 1%
Class B .25 of 1%
Class C .25 of 1%
Georgia Series
Class A .25 of 1%
Class B .25 of 1%
Class C .25 of 1%
Maryland Series
Class A .25 of 1%
Class B .25 of 1%
Class C .25 of 1%
Massachusetts Series
Class A .25 of 1%
Class B .25 of 1%
Class C .25 of 1%
Michigan Series
Class A .25 of 1%
Class B .25 of 1%
Class C .25 of 1%
Minnesota Series
Class A .25 of 1%
Class B .25 of 1%
Class C .25 of 1%
New Jersey Series
Class A .25 of 1%
Class B .25 of 1%
Class C .25 of 1%
North Carolina Series
Class A .25 of 1%
Class B .25 of 1%
Class C .25 of 1%
Ohio Series
Class A .25 of 1%
Class B .25 of 1%
Class C .25 of 1%
Pennsylvania Series
Class A .25 of 1%
Class B .25 of 1%
Class C .25 of 1%
Texas Series
Class A .25 of 1%
Class B .25 of 1%
Class C .25 of 1%
Virginia Series
Class A .25 of 1%
Class B .25 of 1%
Class C .25 of 1%
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed
Financial Information" and "Transfer and Dividend Disbursing Agent,
Custodian, Counsel and Independent Auditors" and to the use of our reports
dated June 5, 1997, in this Registration Statement (Form N-1A 33-10238)
of Dreyfus Premier State Municipal Bond Fund.
ERNST & YOUNG LLP
New York, New York
July 14, 1997
DREYFUS PREMIER STATE MUNICIPAL BOND FUND
DISTRIBUTION PLAN
Introduction: It has been proposed that the above-
captioned investment company (the "Fund") adopt a Distribution
Plan (the "Plan") in accordance with Rule 12b-1, promulgated
under the Investment Company Act of 1940, as amended (the
"Act"). The Plan would pertain to each class set forth on
Exhibit A hereto, as such Exhibit may be revised from time to
time (each, a "Class"). Under the Plan, the Fund would pay the
Fund's distributor (the "Distributor") for distributing shares
of each Class. If this proposal is to be implemented, the Act
and said Rule 12b-1 require that a written plan describing all
material aspects of the proposed financing be adopted by the
Fund.
The Fund's Board, in considering whether the Fund
should implement a written plan, has requested and evaluated
such information as it deemed necessary to an informed
determination as to whether a written plan should be implemented
and has considered such pertinent factors as it deemed necessary
to form the basis for a decision to use assets attributable to
each Class for such purposes.
In voting to approve the implementation of such a
plan, the Board members have concluded, in the exercise of their
reasonable business judgment and in light of their respective
fiduciary duties, that there is a reasonable likelihood that the
plan set forth below will benefit the Fund and shareholders of
each Class.
The Plan: The material aspects of this Plan are as
follows:
1. The Fund shall pay to the Distributor for
distribution a fee in respect of each Class at the annual rate
set forth on Exhibit A.
2. For the purposes of determining the fees payable
under this Plan, the value of the Fund's net assets attributable
to each Class shall be computed in the manner specified in the
Fund's charter documents as then in effect for the computation
of the value of the Fund's net assets attributable to such
Class.
3. The Fund's Board shall be provided, at least
quarterly, with a written report of all amounts expended
pursuant to this Plan. The report shall state the purpose for
which the amounts were expended.
4. As to each Class, this Plan will become effective
upon approval by (a) holders of a majority of the outstanding
shares of such Class, and (b) a majority of the Board members,
including a majority of the Board members who are not
"interested persons" (as defined in the Act) of the Fund and
have no direct or indirect financial interest in the operation
of this Plan or in any agreements entered into in connection
with this Plan, pursuant to a vote cast in person at a meeting
called for the purpose of voting on the approval of this Plan.
5. This Plan shall continue for a period of one year
from its effective date, unless earlier terminated in accordance
with its terms, and thereafter shall continue automatically for
successive annual periods, provided such continuance is approved
at least annually in the manner provided in paragraph 4(b)
hereof.
6. As to each Class, this Plan may be amended at any
time by the Fund's Board, provided that (a) any amendment to
increase materially the costs which such Class may bear pursuant
to this Plan shall be effective only upon approval by a vote of
the holders of a majority of the outstanding shares of such
Class, and (b) any material amendments of the terms of this Plan
shall become effective only upon approval as provided in
paragraph 4(b) hereof.
7. As to each Class, this Plan is terminable without
penalty at any time by (a) vote of a majority of the Board
members who are not "interested persons" (as defined in the Act)
of the Fund and have no direct or indirect financial interest in
the operation of this Plan or in any agreements entered into in
connection with this Plan, or (b) vote of the holders of a
majority of the outstanding shares of such Class.
8. The obligations hereunder and under any related
Plan agreement shall only be binding upon the assets and
property of the Fund or the affected series or Class, as the
case may be, and shall not be binding upon any Board member,
officer or shareholder of the Fund individually.
Dated: May 26, 1994
Revised: March 31, 1997
EXHIBIT A
Fee as a Percentage of
Name of Series and Class Average Daily Net Assets
Connecticut Series
Class B .50 of 1%
Class C .75 of 1%
Florida Series
Class B .50 of 1%
Class C .75 of 1%
Georgia Series
Class B .50 of 1%
Class C .75 of 1%
Maryland Series
Class B .50 of 1%
Class C .75 of 1%
Massachusetts Series
Class B .50 of 1%
Class C .75 of 1%
Michigan Series
Class B .50 of 1%
Class C .75 of 1%
Minnesota Series
Class B .50 of 1%
Class C .75 of 1%
New Jersey Series
Class B .50 of 1%
Class C .75 of 1%
North Carolina Series
Class B .50 of 1%
Class C .75 of 1%
Ohio Series
Class B .50 of 1%
Class C .75 of 1%
Pennsylvania Series
Class B .50 of 1%
Class C .75 of 1%
Texas Series
Class B .50 of 1%
Class C .75 of 1%
Virginia Series
Class B .50 of 1%
Class C .75 of 1%
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