PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to provide you with this report on the Premier Insured
Municipal Bond Fund, California Series. For its annual reporting period ended
July 31, 1996, your Fund earned a total return, including bond price changes
and interest income, of 7.77% for Class A shares, 7.30% for Class B shares
and, since inception on December 4, 1995, -.07% for Class C shares.* Income
dividends, exempt from Federal and State of California personal income taxes,
of approximately $.500 per share for Class A shares, $.438 per share for
Class B shares and $.260 per share for Class C shares were paid to
shareholders.** This is equivalent to an annualized tax-free distribution
rate per share of 3.99% for Class A shares, 3.65% for Class B shares and
3.29% for Class C shares.+
THE ECONOMY
Strong second-quarter growth, a tightening labor market and signs of
upward pressure on wages have, in the words of Chairman Alan Greenspan,
placed the Federal Reserve Board (the "Fed") in a state of "heightened
surveillance" regarding signs of potentially higher inflation. So far,
inflation reports have been benign. Through July, the Consumer Price Index
rose 3.0% for the preceding 12 months, generally consistent with its trend
over the past several years. Wholesale prices have been similarly well-behaved,
while commodity prices have been in decline since early spring. As
favorable as these reports have been, the Fed looks deeper into the economy
for signs of strain that could result in increased inflation. Before the Fed
began its last round of interest rate increases in early 1994, there was
little actual evidence of inflation. Yet, concerned that a number of
indicators suggested that inflation could surge later on, the Federal Reserve
applied the monetary brakes. Now it seems that the Fed's attention is drawn
to indications that continued strong reports of job growth and rising wages
may fuel unacceptable increases in the rate of inflation. The investment
markets have been anticipating a Fed tightening. (The last rise in the
Federal Funds rate occurred on February 1, 1995. Since then all of the moves
by the Fed have been to lower rates; the last reduction to 5.25% occurred on
January 31, 1996.)
Investor fears that the Fed would raise short-term interest rates
resulted in a rise in long-term interest rates of a full percentage point
since January. Ironically, this rise might have stayed the Fed's hand from
being more aggressive. The effect of the rise on consumer spending and
housing, according to one growing view, may contribute to a moderation of
economic growth over the second half of the year. Yet, little evidence of a
potential slowdown has emerged so far. Higher mortgage rates have not tempered
growth in the housing market and construction starts of new homes are at
their highest level since April 1994. Retail sales growth remains solid
despite rises in consumer installment debt and credit card delinquencies. On
the manufacturing side of the economy, industrial production continues to
gain without any sign of strain to keep up with demand. Capacity utilization
(83.2% of potential output at midyear) remains below the 85% level that most
economists believe indicates a potential for inflationary bottlenecks. Still,
we remain alert to signs of inflationary pressures that might trigger a rise
in interest rates.
MARKET ENVIRONMENT
The municipal market experienced a dramatic decline beginning in the
first quarter of 1996. Precipitating this decline was the surprising growth
in employment and brisk increase in retail sales. The market reaction to the
growth in these numbers was swift and sure. In a matter of weeks, interest
rates as measured by long-maturity U.S. Government bonds rose from below 6%
to above 7%-a rise of about 16% in yield. This negative price action pulled
municipals down in value, albeit to a somewhat lesser extent. Inflation,
however, has yet to show any troubling rise with staying power. Each harmful
statistic indicating a return to inflation is quickly followed by data
suggesting a slowing economy and a failing or stable inflationary trend.
Beginning in April, the market began to stabilize in this new, lower
trading range. Recently, the market moved out of this range to the upside-a
positive development. While we are pleased to see this movement to higher
price levels, the market remains vulnerable to further downward pressure
should further economic strength appear. Economic weakness, on the other
hand, would prove beneficial to long-term security prices, relieving
immediate fears of renewed inflation. On a positive note, the municipal market
continues to benefit from lower supplies of new issues and less discussion
of a flat tax, both of which had produced weakness in prior periods.
THE PORTFOLIO
At the beginning of 1996 the Fund was largely composed of defensive
coupon bonds, many of which had short calls. As the year progressed, we
systematically took profits by selling these short call bonds since the
market in general appeared uneasy. We then invested these funds in discount
bonds with very good structural characteristics. This has provided the Fund
with a more favorable balance of premium bonds and discount bonds and further
allowed the Fund to achieve the necessary balance as we moved through the
first half of the year. The duration of the Fund has remained relatively
unchanged. Our primary task this year has focused on the protection of
principal, enhancing liquidity, and the distribution of a high level of tax
exempt income to our shareholders.
Our thought moving forward is to continue with the theme of maintaining a
balance within the portfolio. While we are mindful of the risks associated
with additional declines, we believe that much of the market correction is
behind us and we will operate in a relative range. We are further encouraged
by the recent market moves to higher levels. It remains to be seen, however,
how the market reacts to the upcoming presidential elections as we close in
on the end of the calendar year.
Included in this report is a series of detailed statements about your
Series' holdings and its financial condition. We hope they are informative.
Please know that we greatly appreciate your continued confidence in the Fund
and in The Dreyfus Corporation.
Very truly yours,
[Richard J. Moynihan signature logo]
Richard J. Moynihan
Director, Municipal Portfolio Management
The Dreyfus Corporation
August 15, 1996
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains
paid, without taking into account the maximum initial sales charge in the
case of Class A shares or the applicable contingent deferred sales charge
imposed on redemptions in the case of Class B shares and Class C shares.
**Some income may be subject to the Federal Alternative Minimum Tax (AMT) for
certain shareholders.
+ Annualized distribution rate per share is based upon dividends per share
paid from net investment income during the period, divided by the maximum
offering price at the end of the period in the case of Class A shares or the
net asset value per share at the end of the period in the case of Class B and
Class C shares.
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES JULY 31, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PREMIER INSURED
MUNICIPAL BOND FUND, CALIFORNIA SERIES CLASS A SHARES AND CLASS B SHARES AND
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
[Exhibit A:
$11,475
Lehman Brothers
Municipal Bond Index*
Dollars
$10,760
Premier Insured Municipal Bond Fund, California Series (Class B Shares)
$10,600
Premier Insured Municipal Bond Fund, California Series (Class A Shares)
*Source: Lehman Brothers]
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
______________________________ ______________________________
% Return Reflecting
% Return Applicable Contingent
Reflecting % Return Deferred Sales
% Return Without Maximum Initial Assuming No Charge Upon
PERIOD ENDED 7/31/96 Sales Charge Sales Charge (4.5%) PERIOD ENDED 7/31/96 Redemption Redemption*
____________ ________ _________ ____________ ______ __________
<S> <C> <S> <C> <C> <C>
1 Year 7.77% 2.96% 1 Year 7.30% 4.30%
From Inception (8/19/93) 3.60 1.99 From Inception (8/19/93) 3.13 2.51
ACTUAL AGGREGATE TOTAL RETURNS
CLASS C SHARES
______________________________
% Return Reflecting
Applicable Contingent
% Return Deferred Sales
Assuming Charge Upon
PERIOD ENDED 7/31/96 No Redemption Redemption**
____________ ________ _________
From Inception (12/4/95) (0.07)% (1.05%)
</TABLE>
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in each of the Class A
shares and Class B shares of Premier Insured Municipal Bond Fund, California
Series on 8/19/93 (Inception Date) to a $10,000 investment made in the Lehman
Brothers Municipal Bond Index on that date. For comparative purposes, the
value of the Index on 8/31/93 is used as the beginning value on 8/19/93. All
dividends and capital gain distributions are reinvested. Performance for
Class C shares will vary from the performance of Class A and Class B shares
shown above due to differences in charges and expenses.
The Series invests primarily in California municipal securities, which are
insured as to the timely payment of principal and interest by recognized
insurers of municipal securities. The Series performance shown in the line
graph takes into account the maximum initial sales charge on Class A shares
and the maximum contingent deferred sales charge on Class B shares and all
other applicable fees and expenses. Unlike the Series, the Lehman Brothers
Municipal Bond Index is an unmanaged total return performance benchmark for
the long-term, investment grade, geographically unrestricted tax exempt bond
market, calculated by using municipal bonds selected to be representative of
the municipal market overall; however, the bonds in the Index generally are
not insured. The Index does not take into account charges, fees and other
expenses. Also, unlike the Series which principally limits investments to
California municipal obligations, the Index is not State specific. These
factors can contribute to the Index potentially outperforming the Series.
Further information relating to Series performance, including expense
reimbursements, if applicable, is contained in the Financial Highlights
section of the Prospectus and elsewhere in this report. Neither the Series
shares nor the market value of its portfolio securities are insured.
*The maximum contingent deferred sales charge for Class B shares is 3%
and is reduced to 0% after five years.
** The maximum contingent deferred sales charge for Class C shares is
1% for shares redeemed within one year of the date of purchase.
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
STATEMENT OF INVESTMENTS JULY 31, 1996
PRINCIPAL
LONG-TERM MUNICIPAL INVESTMENTS-100.0% AMOUNT VALUE
______ ______
<S> <C> <C>
Burbank Wastewater Treatment, Revenue 5.50%, 6/1/2025 (Insured; FGIC)....... $ 500,000 $ 481,435
California 6.60%, 2/1/2010 (Insured; AMBAC)................................. 400,000 449,076
California Health Facilities Financing Authority, Revenue
(Children's Hospital of San Diego) 6.50%, 7/1/2020 (Insured; MBIA)...... 200,000 218,816
California Maritime Infrastructure Authority, Airport Revenue
(San Diego Unified Port District Airport) 5%, 11/1/2020 (Insured; AMBAC) 250,000 224,263
California State University, Fresno Association Inc., Revenue
Auxiliary Residence (Student Project) 6.25%, 2/1/2017 (Insured; MBIA)... 300,000 310,308
Campbell Unified School District 6.25%, 8/1/2019 (Insured; MBIA)........... 500,000 515,935
Central Coast Water Authority, Revenue (Water Project Regional Facilities)
6.60%, 10/1/2022 (Insured; AMBAC)....................................... 200,000 215,580
East Bay Municipal Utility District, Wastewater Treatment System Revenue,
Refunding 5.55%, 6/1/2020 (Insured; AMBAC).................................. 200,000 188,892
Fairfield, Water Revenue, Refunding 5.375%, 4/1/2017 (Insured; AMBAC)....... 250,000 239,455
Fresno, Sewer Revenue (Fowler Avenue Project) 6.25%, 8/1/2011 (Insured; AMBAC) 500,000 523,465
Port Oakland, Port Revenue 6.50%, 11/1/2016 (Insured; MBIA)................. 200,000 209,522
Riverside County Transportation Commission, Sales Tax Revenue
5.75%, 6/1/2008 (Insured; AMBAC)........................................ 300,000 313,746
San Diego County, COP, Regional Communications System
5.50%, 8/15/2013 (Insured; AMBAC)....................................... 400,000 392,408
San Francisco, City and County Airports Commission, International Airport
Revenue:
6.25%, 5/1/2012 (Insured; FGIC)......................................... 150,000 156,432
5.70%, 5/1/2026 (Insured; MBIA) ........................................ 500,000 489,090
San Mateo County Joint Powers Financing Authority, LR (Capital Projects)
5.75%, 7/15/2017 (Insured; FSA)......................................... 200,000 200,074
University of California, Revenues, Hospital-UC Davis Medical Center
5.75%, 7/1/2012 (Insured; AMBAC)........................................ 500,000 508,825
Victor, Elementary School District, Zero Coupon, 6/1/2015 (Insured; MBIA)... 1,000,000 329,050
_____
TOTAL INVESTMENTS (cost $5,848,930)......................................... $5,966,372
=====
</TABLE>
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
SUMMARY OF ABBREVIATIONS
<S> <C> <S> <C>
AMBAC American Municipal Bond Assurance Corporation FSA Financial Security Assurance
COP Certificate of Participation LR Lease Revenue
FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance
Insurance Corporation
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF COMBINED RATINGS (UNAUDITED)
<S> <C> <C> <C>
FITCH (A) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE
_____ _____ __________ ____________
AAA Aaa AAA 100.0%
====
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Fitch currently provides creditworthiness information for a limited
number of investments.
(b) At July 31, 1996, 41.9% of the Series' net assets are insured by
AMBAC and 28.4% are insured by MBIA.
See notes to financial statements.
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
STATEMENT OF ASSETS AND LIABILITIES JULY 31, 1996
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $5,848,930)-see statement....................................... $5,966,372
Cash.................................................................... 747,178
Receivable for investment securities sold............................... 460,286
Interest receivable..................................................... 104,083
Receivable for shares of Beneficial Interest subscribed................. 20,000
Prepaid expenses........................................................ 27,779
Due from The Dreyfus Corporation........................................ 573
_____
7,326,271
LIABILITIES:
Due to Distributor...................................................... $ 3,251
Accrued expenses and other liabilities.................................. 30,663 33,914
____ _____
NET ASSETS.................................................................. $7,292,357
=====
REPRESENTED BY:
Paid-in capital......................................................... $7,269,619
Accumulated net realized (loss) on investments.......................... (94,704)
Accumulated net unrealized appreciation on investments-Note 3........... 117,442
_____
NET ASSETS at value......................................................... $7,292,357
=====
Shares of Beneficial Interest outstanding:
Class A Shares
(unlimited number of $.001 par value shares authorized)............... 264,003
=====
Class B Shares
(unlimited number of $.001 par value shares authorized)............... 345,382
=====
Class C Shares
(unlimited number of $.001 par value shares authorized)............... 84
=====
NET ASSET VALUE per share:
Class A Shares
($3,156,089 / 264,003 shares)......................................... $11.95
=====
Class B Shares
($4,135,263 / 345,382 shares)......................................... $11.97
=====
Class C Shares
($1,005.40 / 84 shares)............................................... $11.97
=====
See notes to financial statements.
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
STATEMENT OF OPERATIONS YEAR ENDED JULY 31, 1996
INVESTMENT INCOME:
INTEREST INCOME......................................................... $388,923
EXPENSES:
Management fee-Note 2(a).............................................. $ 39,781
Shareholder servicing costs-Note 2(c)................................. 33,012
Distribution fees-Note 2(b)........................................... 19,357
Organization expenses................................................. 11,040
Prospectus and shareholders' reports.................................. 6,167
Registration fees..................................................... 5,049
Custodian fees........................................................ 1,127
Professional fees..................................................... 979
Trustees' fees and expenses-Note 2(d)................................. 877
Miscellaneous......................................................... 7,367
_____
TOTAL EXPENSES.................................................. 124,756
Less-reduction in management fee due to undertakings-Note 2(a)........ 19,320
_____
NET EXPENSES.................................................... 105,436
_____
INVESTMENT INCOME-NET........................................... 283,487
REALIZED AND UNREALIZED GAIN ON INVESTMENTS-Note 3:
Net realized (loss) on investments...................................... $ (83,146)
Net unrealized appreciation on investments.............................. 334,442
_____
NET REALIZED AND UNREALIZED GAIN ON INVESMENTS.................. 251,296
_____
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $534,783
=====
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JULY 31,
______________________________
1995 1996
______ ______
<S> <C> <C>
OPERATIONS:
Investment income-net................................................... $ 317,088 $ 283,487
Net realized (loss) on investments...................................... (11,558) (83,146)
Net unrealized appreciation on investments for the year................. 67,281 334,442
______ ______
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 372,811 534,783
______ ______
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net:
Class A shares........................................................ (157,005) (141,525)
Class B shares........................................................ (160,083) (141,941)
Class C shares........................................................ - (21)
______ ______
TOTAL DIVIDENDS................................................... (317,088) (283,487)
______ ______
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold:
Class A shares........................................................ 2,395,751 239,140
Class B shares........................................................ 1,798,008 748,137
Class C shares........................................................ - 1,000
Dividends reinvested:
Class A shares........................................................ 52,720 42,498
Class B shares........................................................ 99,361 106,237
Class C shares........................................................ - 21
Cost of shares redeemed:
Class A shares........................................................ (441,885) (780,827)
Class B shares........................................................ (771,920) (633,353)
______ ______
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS........................................... 3,132,035 (277,147)
______ ______
TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 3,187,758 (25,851)
NET ASSETS:
Beginning of year....................................................... 4,130,450 7,318,208
______ ______
End of year............................................................. $7,318,208 $7,292,357
====== ======
</TABLE>
<TABLE>
<CAPTION>
SHARES
______________________________________________________________________________
CLASS A CLASS B CLASS C
____________________________ ____________________________ ____________
YEAR ENDED JULY 31, YEAR ENDED JULY 31, YEAR ENDED
____________________________ ____________________________ JULY 31,
CAPITAL SHARE TRANSACTIONS: 1995 1996 1995 1996 1996*
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C>
Shares sold............. 211,279 19,872 158,840 62,126 82
Shares issued for dividends
reinvested............ 4,664 3,545 8,762 8,868 2
Shares redeemed......... (38,340) (64,393) (69,492) (53,525) -
______ ______ ______ ______ ______
NET INCREASE
(DECREASE) IN SHARES
OUTSTANDING..... 177,603 (40,976) 98,110 17,469 84
====== ====== ====== ====== ======
*From December 4, 1995 (commencement of initial offering) to July 31,
1996.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each year indicated. This
information has been derived from the Series' financial statements.
CLASS A SHARES
__________________________________
YEAR ENDED JULY 31,
__________________________________
PER SHARE DATA: 1994(1) 1995 1996
____ ____ ____
<S> <C> <C> <C>
Net asset value, beginning of year.................................... $12.50 $11.56 $11.56
____ ____ ____
INVESTMENT OPERATIONS:
Investment income-net................................................. .62 .64 .50
Net realized and unrealized gain (loss) on investments................ (.94) - .39
____ ____ ____
TOTAL FROM INVESTMENT OPERATIONS.................................... (.32) .64 .89
____ ____ ____
DISTRIBUTIONS;
Dividends from investment income-net.................................. (.62) (.64) (.50)
____ ____ ____
Net asset value, end of year.......................................... $11.56 $11.56 $11.95
==== ==== ====
TOTAL INVESTMENT RETURN(2)................................................ (2.79%)(3) 5.80% 7.77%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............................... - .08% 1.18%
Ratio of net investment income to average net assets.................. 5.30%(3) 5.56% 4.20%
Decrease reflected in above expense ratios due to undertakings
by the Manager (limited to the expense limitation provision
of the management agreement)........................................ 2.50%(3) 1.49% .26%
Portfolio Turnover Rate............................................... - 3.86% 58.47%
Net Assets, end of year (000's Omitted)............................... $1,473 $3,525 $3,156
(1) From August 19, 1993 (commencement of operations) to July 31, 1994.
(2) Exclusive of sales load.
(3) Annualized.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
FINANCIAL HIGHLIGHTS (CONTINUED)
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each year indicated. This
information has been derived from the Series' financial statements.
CLASS B SHARES CLASS C SHARES
_______________________________ _________
YEAR ENDED
YEAR ENDED JULY 31, JULY 31,
____________________________
PER SHARE DATA: 1994(1) 1995 1996 1996(2)
____ ____ ____ ______
<S> <C> <C> <C> <C>
Net asset value, beginning of year...................... $12.50 $11.57 $11.57 $12.24
____ ____ ____ ____
INVESTMENT OPERATIONS:
Investment income-net................................... .56 .58 .44 .26
Net realized and unrealized gain (loss) on investments.. (.93) - .40 (.27)
____ ____ ____ ____
TOTAL FROM INVESTMENT OPERATIONS...................... (.37) .58 .84 (.01)
____ ____ ____ ____
DISTRIBUTIONS;
Dividends from investment income-net.................... (.56) (.58) (.44) (.26)
____ ____ ____ ____
Net asset value, end of year............................ $11.57 $11.57 $11.97 $11.97
==== ==== ==== ====
TOTAL INVESTMENT RETURN(3).................................. (3.20%)(4) 5.27% 7.30% (.11%)(4)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................. .50%(4) .57% 1.70% 2.04%(4)
Ratio of net investment income to average net assets.... 4.78%(4) 5.10% 3.66% 3.19%(4)
Decrease reflected in above expense ratios due to undertakings
by the Manager (limited to the expense limitation provision
of the management agreement).......................... 2.50%(4) 1.55% .27% 1.21%(4)
Portfolio Turnover Rate................................. - 3.86% 58.47% 58.47%
Net Assets, end of year (000's Omitted)................. $2,658 $3,793 $4,135 $1
(1) From August 19, 1993 (commencement of operations) to July 31, 1994.
(2) From December 4, 1995 (commencement of initial offering) to July 31, 1996.
(3) Exclusive of sales load.
(4) Annualized.
See notes to financial statements.
</TABLE>
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Premier Insured Municipal Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940 ("Act") as a non-diversified open-end
management investment company and operates as a series company currently
offering six series including the California Series (the "Series"). The
Fund's investment objective is to maximize current income exempt from Federal
and, where applicable, from State personal income taxes to the extent
consistent with the preservation of capital. The Dreyfus Corporation
("Manager") serves as the Fund's investment adviser. The Manager is a
direct subsidiary of Mellon Bank, N.A.
Premier Mutual Fund Services, Inc. (the "Distributor") acts as the
distributor of the Fund's shares. The Series offers Class A, Class B and
Class C shares. Class A shares are subject to a sales charge imposed at the
time of purchase, Class B shares are subject to a contingent deferred sales
charge imposed at the time of redemption on redemptions made within five
years of purchase and Class C shares are subject to a contingent deferred
sales charge imposed at the time of redemption on redemptions made within one
year of purchase. Other differences between the three Classes include the
services offered to and the expenses borne by each Class and certain voting
rights.
The Fund accounts separately for the assets, liabilities and operations
of each series. Expenses directly attributable to each series are charged to
that series' operations; expenses which are applicable to all series are
allocated among them on a pro rata basis.
The Series' 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: The Series' investments (excluding options and
financial futures on municipal and U.S. treasury securities) are valued each
business day by an independent pricing service ("Service") approved by the
Board of Trustees. Investments for which quoted bid prices are readily
available and are representative of the bid side of the market in the
judgment of the Service are valued at the mean between the quoted bid prices
(as obtained by the Service from dealers in such securities) and asked prices
(as calculated by the Service based upon its evaluation of the market for
such securities). Other investments (which constitute a majority of the
portfolio securities) are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
municipal securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Options
and financial futures on municipal and U.S. treasury securities are valued at
the last sales price on the securities exchange on which such securities are
primarily traded or at the last sales price on the national securities market
on each business day. Investments not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, adjusted for amortization of premiums and original issue discounts on
investments, is earned from settlement date and recognized on the accrual
basis. Securities purchased or sold on a when-issued or delayed-delivery
basis may be settled a month or more after the trade date.
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Series follows an investment policy of investing primarily in municipal
obligations of one state. Economic changes affecting the state and certain of
its public bodies and municipalities may affect the ability of issuers within
the state to pay interest on, or repay principal of, municipal obligations
held by the Series.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Series may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Series not to distribute such
gain.
(D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the applicable provisions of the Internal
Revenue Code, and to make distributions of income and net realized capital
gain sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $17,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to July 31, 1996. The
carryover does not include net realized securities losses from November 1,
1995 through July 31, 1996 which are treated, for Federal income tax
purposes, as arising in fiscal 1997. If not applied, the carryover expires in
fiscal 2004.
NOTE 2-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .55 of 1% of the value
of the Series' average daily net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Series'
aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Series for any full fiscal year. The most stringent
state expense limitation applicable to the Series presently requires
reimbursement of expenses in any full fiscal year that such expenses
(excluding distribution expenses and certain expenses as described above)
exceed 2-1\2% of the first $30 million, 2% of the next $70 million and 1-1\2%
of the excess over $100 million of the value of the Series' average daily net
assets in accordance with California "blue sky" regulations. However, the
Manager had undertaken from August 1, 1995 through September 28, 1995, to
reduce the management fee and reimburse such excess expenses paid by the
Series, to the extent that the Series' aggregate expenses (exclusive of
certain expenses as described above) exceeded specified annual percentages of
the Series' average daily net assets. The Manager has currently undertaken
from September 29, 1995 through September 30, 1996, to reduce the management
fee and reimburse such excess expenses paid by the Series, to the extent that
the Series' aggregate annual expenses (excluding 12b-1 distribution plan fees
and certain expenses as described above) exceed an annual rate of 1.25% of
the value of the Series' average daily net assets. The reduction in
management fee, pursuant to the undertakings, amounted to $19,320 during the
year ended July 31, 1996.
The undertaking may be extended, modified or terminated by the Manager,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager,
retained $258 during the year ended July 31, 1996 from commissions earned on
sales of the Series' shares.
(B) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the
Act, the Series pays the Distributor for distributing the Series' Class B and
Class C shares at an annual rate of .50 of 1% of the value of the average
daily net assets of Class B shares and .75 of 1% of the value of the average
daily net assets of Class C shares. During the period ended July 31, 1996,
$19,352 was charged to the Series for the Class B shares and $5 was charged
to the Series for the Class C shares.
(C) Under the Shareholder Services Plan, the Series pays the Distributor
at an annual rate of .25 of 1% of the value of the average daily net assets
of Class A, Class B and Class C shares for the provision of certain services.
The services provided may include personal services relating to shareholder
accounts, such as answering shareholder inquiries regarding the Series and
providing reports and other information, and services related to the
maintenance of shareholder accounts. The Distributor may make payments to
Service Agents (a securities dealer, financial institution or other industry
professional) in respect of these services. The Distributor determines the
amounts to be paid to Service Agents. During the period ended July 31, 1996,
$8,404, $9,676 and $2 were charged to the Class A, Class B and Class C
shares, respectively, by the Distributor pursuant to the Shareholder Services
Plan.
Effective December 1, 1995, the Series compensates Dreyfus Transfer,
Inc., a wholly-owned subsidiary of the Manager, under a transfer agency
agreement for providing personnel and facilities to perform transfer agency
services for the Series. Such compensation amounted to $2,214 during the
period ended July 31, 1996.
(D) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
excluding short-term securities, during the year ended July 31, 1996 amounted
to $3,725,154 and $4,391,372 , respectively.
At July 31, 1996, accumulated net unrealized appreciation on investments
was $117,442, consisting of $139,052 gross unrealized appreciation and
$21,610 gross unrealized depreciation.
At July 31, 1996, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Premier Insured Municipal Bond
Fund, California Series (one of the Series constituting the Premier Insured
Municipal Bond Fund) as of July 31, 1996, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and financial highlights
for each of the years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 1996 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Premier Insured Municipal Bond Fund, California Series at July
31, 1996, the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
[Ernst and Young LLP signature logo]
New York, New York
September 4, 1996
PREMIER INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES
IMPORTANT TAX INFORMATION (UNAUDITED)
In accordance with Federal tax law, the Series hereby designates all the
dividends paid from investment income-net during the fiscal year ended July
31, 1996 as "exempt-interest dividends" (not subject to regular Federal and,
for individuals who are California residents, California personal income
taxes).
As required by Federal tax law rules, shareholders will receive
notification of their portion of the Series' taxable ordinary dividends (if
any) and capital gain distributions (if any) paid for the 1996 calendar year
on Form 1099-DIV which will be mailed by January 31, 1997.
PREMIER INSURED MUNICIPAL
BOND FUND, CALIFORNIA SERIES
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 076/629AR967
[Dreyfus lion/2hres logo]
Annual Report
Premier Insured
Municipal Bond Fund
California Series
July 31, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PREMIER
INSURED MUNICIPAL BOND FUND, CALIFORNIA SERIES CLASS A SHARES
AND CLASS B SHARES AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
_____________________________________________________________________
| | | | |
| | | PREMIER INSURED | PREMIER INSURED |
| PERIOD | LEHMAN BROTHERS |MUNICIPAL BOND FUND,|MUNICIPAL BOND FUND,|
| | MUNICIPAL | CALIFORNIA SERIES | CALIFORNIA SERIES |
| | BOND INDEX * | (CLASS A SHARES) | (CLASS B SHARES) |
|---------|-----------------|--------------------|--------------------|
| 8/19/93 | 10,000 | 9,549 | 10,000 |
| 7/31/94 | 9,979 | 9,296 | 9,696 |
| 7/31/95 | 10,765 | 9,835 | 10,206 |
| 7/31/96 | 11,475 | 10,600 | 10,760 |
|_________|_________________|____________________|____________________|
*Source: Lehman Brothers
