-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LTQopMseRN3fWQ8k5ZXtOEtdVUSDXMC8SXC1iPvM8s4BKrGFXgSf8vcQFF4cay2K JACyF8J2WDr/Hr/aZC53Uw== 0000797923-02-000002.txt : 20020625 0000797923-02-000002.hdr.sgml : 20020625 20020625171407 ACCESSION NUMBER: 0000797923-02-000002 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020430 FILED AS OF DATE: 20020625 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DREYFUS PREMIER MUNICIPAL BOND FUND CENTRAL INDEX KEY: 0000797923 STATE OF INCORPORATION: NY FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04764 FILM NUMBER: 02686827 BUSINESS ADDRESS: STREET 1: 200 PARK AVENUE STREET 2: THE DREYFUS CORPORATION CITY: NEW YORK STATE: NY ZIP: 10166 BUSINESS PHONE: 2129226840 MAIL ADDRESS: STREET 1: C/O DREYFUS CORP STREET 2: 200 PARK AVENUE, 8TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10166 FORMER COMPANY: FORMER CONFORMED NAME: PREMIER MUNICIPAL BOND FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PREMIER TAX EXEMPT BOND FUND DATE OF NAME CHANGE: 19900916 FORMER COMPANY: FORMER CONFORMED NAME: GARDEN CITY TAX EXEMPT BOND FUND DATE OF NAME CHANGE: 19860910 N-30D 1 pn30d-022.txt ANNUAL REPORT Dreyfus Premier Municipal Bond Fund ANNUAL REPORT April 30, 2002 The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund. Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND - -------------------------------------------------- 2 Letter from the Chairman 3 Discussion of Fund Performance 6 Fund Performance 8 Statement of Investments 16 Statement of Assets and Liabilities 17 Statement of Operations 18 Statement of Changes in Net Assets 20 Financial Highlights 23 Notes to Financial Statements 29 Report of Independent Auditors 30 Important Tax Information 31 Board Members Information 33 Officers of the Fund FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier Municipal Bond Fund LETTER FROM THE CHAIRMAN Dear Shareholder: We present this annual report for Dreyfus Premier Municipal Bond Fund, covering the 12-month period from May 1, 2001 through April 30, 2002. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio manager, James Welch. Over the past year, we've seen economic conditions ranging from recession to steps toward recovery. Events during the reporting period included the September 11 terrorist attacks, the bankruptcies of major U.S. corporations, an energy crisis in California and the first calendar quarter of U.S. economic contraction in about 10 years. Municipal bonds generally benefited from some of these events and were hurt by others. Many investors who attempted to profit from the market's short-term gyrations found that the market moved faster than they could. Indeed, as many professionals can attest, the municipal bond market's direction becomes clearer only when viewed from a perspective measured in years, not weeks or months. Although you may become excited about the tax-exempt income opportunities or worried about the challenges presented under current market conditions, we encourage you to consider your long-term goals first. And, as always, we urge you to solicit the advice of a financial advisor who can help you navigate the right course to financial security for yourself and your family. For our part, and as we have for more than 50 years, we at The Dreyfus Corporation are ready to serve you with a full range of investment alternatives and experienced teams of portfolio managers. Thank you for your continued confidence and support. Sincerely, Stephen E. Canter Chairman and Chief Executive Officer The Dreyfus Corporation May 15, 2002 DISCUSSION OF FUND PERFORMANCE James Welch, Portfolio Manager How did Dreyfus Premier Municipal Bond Fund perform relative to its benchmark? For the 12-month period ended April 30, 2002, the fund achieved a total return of 4.13% for Class A shares, 3.60% for Class B shares and 3.35% for Class C shares.(1) In comparison, the Lehman Brothers Municipal Bond Index, the fund's benchmark, achieved a total return of 7.00% for the same period.(2) Additionally, the fund is reported in the Lipper General Municipal Debt Funds category. Over the reporting period, the average total return for all funds reported in the category was 6.07% .(3) During much of the reporting period, the fund benefited from price appreciation as interest rates fell. However, market weakness late in the reporting period offset some of those gains. The fund's returns lagged those of its benchmark and Lipper category, primarily because of poor performance among a limited number of corporate securities that the fund held, which were hurt by the recession and the September 11 terrorist attacks. What is the fund's investment approach? The fund seeks to maximize current income exempt from federal income tax to the extent consistent with the preservation of capital. To achieve this goal, we employ two primary strategies. First, we evaluate interest-rate trends and supply-and-demand factors in the bond market. Based on that assessment, we select the individual tax-exempt bonds that we believe are most likely to provide the highest returns with the least risk. We look at such criteria as the bond's yield, price, age, the creditworthiness of its issuer and any provisions for early redemption. Second, we actively manage the fund's average duration in anticipation of temporary supply-and-demand changes. If we expect the supply of newly issued bonds to increase temporarily, we may reduce the The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) fund's average duration to make cash available for the purchase of higher yielding securities. Conversely, if we expect demand for municipal bonds to surge at a time when we anticipate little issuance, we may increase the fund's average duration to maintain current yields for as long as practical. What other factors influenced the fund's performance? The weakening U.S. economy affected the fund's performance both positively and negatively during the reporting period. On the positive side, economic deterioration throughout much of the reporting period led to lower interest rates. The combination of reduced capital spending, eroding corporate earnings and rising unemployment -- all of which were intensified by the September 11 terrorist attacks -- prompted the Federal Reserve Board (the "Fed") to take action. In an attempt to stimulate renewed economic growth, the Fed aggressively reduced short-term interest rates to their lowest level in 40 years. As interest rates and bond yields declined, municipal bond prices generally rose. That's because yields of newly issued bonds fell along with interest rates, making existing, higher yielding securities more valuable. In addition, bond prices moved higher as demand for high quality, fixed-income investments surged from investors seeking a more stable alternative to a volatile stock market. By maintaining the fund's weighted average maturity at a point that was modestly longer than that of its Lipper category, we enhanced the benefits of this favorable market environment by locking in existing yields for as long as practical. On the other hand, economic deterioration hurt the fund's performance when it adversely affected the business fundamentals of corporate issuers in a number of industries. These effects were particularly severe among steel companies, which were hurt by low commodity prices amid industry consolidation, and airlines, which suffered when business and vacation travel slowed dramatically in the aftermath of the terrorist attacks. As is consistent with its income objective, the fund held a number of relatively high yielding, tax-exempt corporate bonds. While most of these bonds have since rebounded from their lows, they have not yet reached pre-attack price levels. In the meantime, they continue to pay highly competitive levels of tax-exempt income. What is the fund's current strategy? Although we expect the steel, airline and other affected industries to weather the current economic storm, we have recently taken steps to improve the fund's overall credit quality. We have attempted to achieve a more equitable balance among income, total return and risk through broader diversification among corporate and government issuers. We have also intensified the fund's focus on highly rated securities. Although we have seen signs of economic recovery, we do not believe that interest-rate hikes are imminent. Nonetheless, we have adopted a more conservative strategy -- focusing on securities with 20-year maturities, toward the short end of the fund's range -- to protect against the possibility of higher interest rates later this year. May 15, 2002 (1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID, AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGES IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION, FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES, AND SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE. (2) SOURCE: LIPPER INC. -- REFLECTS REINVESTMENT OF DIVIDENDS AND, WHERE APPLICABLE, CAPITAL GAIN DISTRIBUTIONS. THE LEHMAN BROTHERS MUNICIPAL BOND INDEX IS A WIDELY ACCEPTED, UNMANAGED TOTAL RETURN PERFORMANCE BENCHMARK FOR THE LONG-TERM, INVESTMENT-GRADE, TAX-EXEMPT BOND MARKET. INDEX RETURNS DO NOT REFLECT FEES AND EXPENSES ASSOCIATED WITH OPERATING A MUTUAL FUND. (3) SOURCE: LIPPER INC. -- CATEGORY AVERAGE RETURNS REFLECT THE FEES AND EXPENSES OF THE FUNDS COMPRISING THE AVERAGE. The Fund FUND PERFORMANCE Comparison of change in value of $10,000 investment in Dreyfus Premier Municipal Bond Fund Class A shares and the Lehman Brothers Municipal Bond Index ((+)) SOURCE: LIPPER INC. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN CLASS A SHARES OF DREYFUS PREMIER MUNICIPAL BOND FUND ON 4/30/92 TO A $10,000 INVESTMENT MADE IN THE LEHMAN BROTHERS MUNICIPAL BOND INDEX (THE "INDEX") ON THAT DATE. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED. PERFORMANCE FOR CLASS B AND CLASS C SHARES WILL VARY FROM THE PERFORMANCE OF CLASS A SHARES SHOWN ABOVE DUE TO DIFFERENCES IN CHARGES AND EXPENSES. THE FUND INVESTS PRIMARILY IN MUNICIPAL SECURITIES AND ITS PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT THE MAXIMUM INITIAL SALES CHARGE ON CLASS A SHARES AND ALL OTHER APPLICABLE FEES AND EXPENSES. THE INDEX, UNLIKE THE FUND, IS AN UNMANAGED TOTAL RETURN PERFORMANCE BENCHMARK FOR THE LONG-TERM, INVESTMENT-GRADE, TAX-EXEMPT BOND MARKET, CALCULATED BY USING MUNICIPAL BONDS SELECTED TO BE REPRESENTATIVE OF THE MUNICIPAL MARKET OVERALL. THE INDEX DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES WHICH CAN CONTRIBUTE TO THE INDEX POTENTIALLY OUTPERFORMING OR UNDERPERFORMING THE FUND. FURTHER INFORMATION RELATING TO FUND PERFORMANCE, INCLUDING EXPENSE REIMBURSEMENTS, IF APPLICABLE, IS CONTAINED IN THE FINANCIAL HIGHLIGHTS SECTION OF THE PROSPECTUS AND ELSEWHERE IN THIS REPORT. Average Annual Total Returns AS OF 4/30/02 Inception From Date 1 Year 5 Years 10 Years Inception - ----------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES WITH MAXIMUM SALES CHARGE (4.5%) (0.56)% 3.31% 5.24% WITHOUT SALES CHARGE 4.13% 4.26% 5.73% CLASS B SHARES WITH APPLICABLE REDEMPTION CHARGE ((+)) 1/15/93 (0.35)% 3.42% -- 4.90% ((+)(+)) WITHOUT REDEMPTION 1/15/93 3.60% 3.74% -- 4.90% ((+)(+)) CLASS C SHARES WITH APPLICABLE REDEMPTION CHARGE ((+)(+)(+)) 7/13/95 2.36% 3.49% -- 3.79% WITHOUT REDEMPTION 7/13/95 3.35% 3.49% -- 3.79% PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. ((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4%. AFTER SIX YEARS CLASS B SHARES CONVERT TO CLASS A SHARES. ((+)(+)) ASSUMES THE CONVERSION OF CLASS B SHARES TO CLASS A SHARES AT THE END OF THE SIXTH YEAR FOLLOWING THE DATE OF PURCHASE. ((+)(+)(+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS 1% FOR SHARES REDEEMED WITHIN ONE YEAR OF THE DATE OF PURCHASE.
The Fund STATEMENT OF INVESTMENTS April 30, 2002 Principal LONG-TERM MUNICIPAL INVESTMENTS--96.9% Amount ($) Value ($) - ----------------------------------------------------------------------------------------------------------------------------------- ALABAMA--.8% University of Alabama, HR 5.75%, 9/1/2020 (Insured; MBIA) 3,000,000 3,139,770 CALIFORNIA--8.0% Big Bear Lake, Water Revenue 6%, 4/1/2022 ( Insured; MBIA) 2,000,000 2,264,780 California: 6%, 4/1/2018 3,000,000 3,363,480 5.625%, 5/1/2018 5,550,000 5,862,854 California Pollution Control Financing Authority, PCR (Southern California Edison Company) 7%, 3/1/2005 2,500,000 2,502,275 California Public Works Board, LR (Dept. of Corrections Corcoran) 5.50%, 1/1/2017 (Insured; AMBAC) 5,000,000 5,214,150 Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue 6%, 1/1/2034 (Prerefunded 1/1/2007) 5,000,000 (a) 5,654,600 Los Angeles Unified School District 5%, 7/1/2021 (Insured; FGIC) 3,425,000 3,410,136 Sacramento Municipal Utility District, Electric Revenue 5.25%, 7/1/2028 5,000,000 4,953,950 COLORADO--9.8% Arapahoe County Capital Improvement Trust Fund, Highway Revenue (E-470 Project): Zero Coupon, 8/31/2005 2,530,000 2,277,658 Zero Coupon, 8/31/2007 (Prerefunded 8/31/2005) 4,000,000 (a) 3,213,600 7%, 8/31/2026 (Prerefunded 8/31/2005) 11,000,000 (a) 12,736,900 Denver City and County, Airport Revenue: 6%, 11/15/2017 (Insured; AMBAC) 5,000,000 5,356,550 7.50%, 11/15/2023 (Prerefunded 11/15/2004) 2,060,000 (a) 2,338,121 7.50%, 11/15/2023 9,715,000 10,810,949 Northwest Parkway Public Highway Authority, Revenue: Zero Coupon, 6/15/2027 (Insured; AMBAC) 6,125,000 1,347,133 7.125%, 6/15/2041 (Insured; AMBAC) 2,500,000 2,561,450 CONNECTICUT--8.0% Connecticut: 9.369%, 6/15/2011 4,000,000 (b,c) 4,912,720 8.969%, 12/15/2015 3,700,000 (b,c) 4,529,577 Connecticut Development Authority, PCR (Connecticut Light & Power) 5.85%, 9/1/2028 7,700,000 7,814,191 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ----------------------------------------------------------------------------------------------------------------------------------- CONNECTICUT (CONTINUED) Connecticut Housing Finance Authority 5.85%, 5/15/2031 2,465,000 2,508,483 Mashantucket Western Pequot Tribe, Special Revenue 5.75%, 9/1/2027 8,000,000 (c) 7,873,520 University of Connecticut, Student Fee Revenue 5.75%, 11/15/2029 (Insured; FGIC, Prerefunded 11/15/2010) 5,000,000 (a) 5,688,700 DISTRICT OF COLUMBIA--1.2% District of Columbia Tobacco Settlement Financing Corporation 6.75%, 5/15/2040 5,000,000 5,126,100 DELAWARE--.9% Delaware Housing Authority, MFMR 7%, 5/1/2025 3,725,000 3,875,788 FLORIDA--.6% Highlands County Health Facilities Authority, Revenue (Adventist/Sunbelt) 6%, 11/15/2031 2,500,000 2,515,650 GEORGIA--1.5% Atlanta, Water and Wastewater Revenue 5.50%, 11/1/2022 (Insured; FGIC) 1,000,000 1,067,000 Georgia 5.25%, 7/1/2017 5,000,000 5,182,700 ILLINOIS--1.9% Carol Stream, First Mortgage Revenue (Windsor Park Manor Project) 6.50%, 12/1/2007 2,000,000 2,065,100 Chicago O'Hare International Airport, Special Facility Revenue: (United Airlines Project) 5.20%, 4/1/2011 4,500,000 2,347,245 East Chicago, PCR (Inland Steel Co. Project) 7.125%, 6/1/2007 3,000,000 601,830 Illinois Development Finance Authority, Revenue (Community Rehabilitation Providers Facility): 8.75%, 3/1/2010 122,000 122,867 8.25%, 8/1/2012 2,635,000 2,674,920 INDIANA--.2% Indiana Development Finance Authority Exempt Facilities Revenue (Inland Steel) 5.75%, 10/1/2011 5,000,000 1,001,650 KANSAS--1.3% Wichita, HR (Christi Health System, Inc.): 6.25%, 11/15/2019 2,000,000 2,146,040 6.25%, 11/15/2020 3,000,000 3,204,090 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ----------------------------------------------------------------------------------------------------------------------------------- LOUISIANA--1.0% Louisiana Housing Finance Agency, MFHR (LaBelle Projects) 9.75%, 10/1/2020 3,945,000 4,238,153 MARYLAND--.5% Maryland Energy Financing Administration, SWDR (Wheelabrator Water Projects) 6.45%, 12/1/2016 2,100,000 2,208,255 MASSACHUSETTS--5.3% Massachusetts Health and Educational Facilities Authority, Revenue (Massachusetts Institute of Technology) 5.20%, 1/2/2028 3,500,000 3,559,605 Massachusetts Industrial Finance Agency: Health Care Facility Revenue (Metro Health Foundation, Inc. Project) 6.75%, 12/1/2027 8,000,000 7,346,320 Water Treatment Revenue (American Hingham) 6.95%, 12/1/2035 2,640,000 2,723,926 Route 3 North Transportation Improvement Asscociation, LR: 5.75%, 6/15/2017 (Insured; MBIA) 3,000,000 3,219,960 5.25%, 6/15/2024 (Insured; MBIA) 5,315,000 5,344,339 MICHIGAN--.9% Michigan Hospital Finance Authority, Revenue 8.56%, 11/15/2007 3,225,000 (b,c) 3,642,992 MINNESOTA--1.0% Minneapolis and St. Paul Metropolitan Airports Commission, Airport Revenue 5.75%, 1/1/2014 (Insured, FGIC) 4,000,000 4,271,000 MISSISSIPPI--.7% Mississippi Business Finance Corporation, PCR (System Energy Resources, Inc.) 5.90%, 05/01/2022 3,000,000 2,886,000 MISSOURI--.6% Saint Louis Industrial Development Authority (Saint Louis Convention) 7.25%, 12/15/2035 2,500,000 2,600,550 NEW JERSEY--7.7% New Jersey Economic Development Authority, Revenue: 8.645%, Series A, 6/15/2016 2,495,000 (b,c) 2,762,738 8.645%, Series B, 6/15/2016 2,495,000 (b,c) 2,720,972 (School Facilities-Construction 2001): 5.25%, 6/15/2015 (Insured; AMBAC) 10,000 10,537 5.25%, 6/15/2016 (Insured; AMBAC) 10,000 10,453 Special Facilities (Continental Airlines Inc. Project): 6.25%, 9/15/2019 5,750,000 5,147,343 6.25% 9/15/2029 2,000,000 1,747,240 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ----------------------------------------------------------------------------------------------------------------------------------- NEW JERSEY (CONTINUED) New Jersey Turnpike Authority, Turnpike Revenue: 10.165%, 1/1/2011 6,350,000 (b,c) 8,089,900 5.625%, 1/1/2015 (Insured; MBIA) 4,700,000 5,056,777 5.50%, 1/1/2030 (Insured; MBIA) 6,000,000 6,186,780 NEW MEXICO--.4% Farmington, PCR (Public Service Co.--San Juan Project) 6.375%, 4/1/2022 1,800,000 1,844,298 NEW YORK--7.2% New York City Industrial Development Agency IDR, (Laguardia Associates LP Project) 5.80%, 11/1/2013 4,710,000 3,961,110 New York City Municipal Water Finance Authority Water & Sewer Systems Revenue: 6.50%, 6/15/2031 (Prerefunded 6/15/2010) 2,000,000 (a) 2,396,060 6%, 6/15/2033 (Prerefunded 6/15/2010) 3,085,000 (a) 3,581,716 6%, 6/15/2033 1,915,000 2,200,144 New York State Dormitory Authority, Revenues: (New York University): 5.75%, 7/1/2016 (Insured; MBIA). 2,300,000 2,571,699 6%, 7/1/2017 (Insured; MBIA). 3,500,000 3,995,495 New York State Energy Research and Development Authority, Electric Facilities Revenue (Long Island Lighting Co.): 7.15%, 9/1/2019 (Prerefunded 6/15/2002) 1,115,000 (a) 1,144,369 7.15%, 6/1/2020 2,980,000 3,053,755 7.15%, 12/1/2020 1,320,000 1,352,670 Scotia Housing Authority, Housing Revenue (Coburg Village, Inc. Project) 3.05%, 7/1/2018 4,000,000 3,259,640 Triborough Bridge and Tunnel Authority, Revenue 5%, 1/1/2032 2,500,000 2,386,475 NORTH CAROLINA--1.0% North Carolina Eastern Municipal Power Agency, Power System Revenue 7%, 1/1/2013 3,500,000 4,030,775 OHIO--1.9% Ohio Water Development Authority, Pollution Control Facilites Revenue (Cleveland Electric) 6.10%, 8/1/2020 4,300,000 4,343,387 Rickenbacker Port Authority, Capital Funding Revenue (Oasbo Expanded Asset Pooled) 5.375%, 1/1/2032 3,500,000 3,411,100 OKLAHOMA--3.2% Holdenville Industrial Authority, Correctional Facility Revenue: 6.60%, 7/1/2010 (Prerefunded 7/1/2006) 2,045,000 (a) 2,354,000 6.70%, 7/1/2015 (Prerefunded 7/1/2006) 4,625,000 (a) 5,341,783 The Fund The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ----------------------------------------------------------------------------------------------------------------------------------- OKLAHOMA (CONTINUED) Tulsa Municipal Airport Trust Revenue (American Airlines) 5.65%, 12/1/2008 6,100,000 5,500,797 PENNSYLVANIA--1.8% Montgomery County Higher Education and Health Authority First Mortgage Revenue (AHF/Montgomery, Inc. Project) 10.50%, 9/1/2020 3,310,000 3,365,542 Pennsylvania Intergovernmental Cooperative Authority Special Tax Revenue (Philadelphia Funding Program) 6.80%, 6/15/2022 (Prerefunded 6/15/2002) 2,000,000 (a) 2,013,060 Sayre Health Care Facilities Authority, Revenue (Guthrie Health) 6.25%, 12/1/2015 2,000,000 2,126,480 RHODE ISLAND--.8% Providence, Special Tax Increment Obligation 6.65%, 6/1/2016 3,000,000 3,160,380 SOUTH CAROLINA--1.7% Tobacco Settlement Revenue Management Authority Tobacco Settlement Revenue 6.375%, 5/15/2028 7,000,000 7,035,770 TENNESSEE--3.6% Knox County Health Educational and Housing Facilities Board Hospital Facilities Revenue (East Tennessee Baptist Health Systems) 6.375%, 4/15/2022 3,500,000 3,501,225 Memphis Center Revenue Finance Corporation, Sports Facility Revenue (Memphis Redbirds) 6.50%, 9/1/2028 8,000,000 7,955,120 Shelby County Health Educational and Housing Facilities, Multi-Family Housing Board Revenue (Cameron Kirby) 7.25%, 7/1/2023 2,950,000 2,927,521 TEXAS--6.4% Alliance Airport Authority, Special Facilities Revenue 10.191%, 4/1/2021 2,500,000 (b,c) 2,629,450 (Federal Express Corp. Project) 6.375%, 4/1/2021 40,000 41,086 Dallas-Fort Worth International Airport Facility Improvement Corporation, Revenue (American Airlines, Inc.) 6.375%, 5/1/2035 5,900,000 4,695,987 Gulf Coast Waste Disposal Authority, Revenue (Waste Disposal--Valero Energy Corp.) 5.60%, 4/1/2032 6,000,000 5,569,980 Harris County Health Facilities Development Corporation, Revenue (St. Luke's Episcopal Hospital) 5.375%, 2/15/2026 2,000,000 1,944,900 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ----------------------------------------------------------------------------------------------------------------------------------- TEXAS (CONTINUED) Houston Airport System Improvement Revenue (Special Facilities--Continental Airline Terminal) 6.75%, 7/1/2029 (Insured; MBIA) 5,000,000 4,553,550 Sabine River Authority, PCR (TXU Electric Company Project) 5.50%, 11/1/2011 2,500,000 2,524,300 Texas Public Property Finance Corp., Revenue (Mental Health and Retardation Center) 8.20%, 10/1/2012 (Prerefunded 10/1/2002) 1,700,000 (a) 1,780,359 Tyler Health Facilities Development Corporation, HR (Mother Frances Hospital) 5.625%, 7/1/2013 2,680,000 2,679,571 UTAH--2.8% Carbon County, SWDR: (East Carbon Development Corp.) 9%, 7/1/2012 3,500,000 3,509,520 (Sunnyside Cogeneration--A) 7.10%, 8/15/2023 7,175,000 7,304,652 (Sunnyside Cogeneration--B) Zero Coupon, 8/15/2024 2,320,000 592,366 VIRGINIA--2.0% Virginia Housing Development Authority, Commonwealth Mortgage 5.80%, 1/1/2018 6,180,000 6,461,808 West Point Industrial Development Authority, SWDR (Chesapeake Corp.) 6.375%, 3/1/2019 2,000,000 1,735,940 WEST VIRGINIA--1.7% Upshur County, SWDR (TJ International Project) 7%, 7/15/2025 3,500,000 3,672,375 West Virginia Hospital Finance Authority, HR (Charleston Area Medical Center) 6%, 9/1/2012 3,030,000 3,261,795 U.S. RELATED--10.5% Commonwealth of Puerto Rico: 6.25%, 7/1/2013 (Insured; MBIA) 3,000,000 3,545,100 5.65%, 7/1/2015 (Insured; MBIA) 4,000,000 4,508,320 Public Improvement: 5.25%, 7/1/2013 (Insured; MBIA) 6,000,000 6,559,560 6.50%, 7/1/2014 (Insured; MBIA) 5,000,000 6,041,400 Puerto Rico Public Finance Corporation 6%, 8/1/2026 13,000,000 14,317,940 Puerto Rico Infrastructure Financing Authority 5.50%, 10/1/2040 4,000,000 4,152,880 Puerto Rico Telephone Authority, Revenue 9.08%, 1/25/2007 (Insured; MBIA, Prerefunded 1/1/2003) 3,950,000 (a,b,c) 4,248,339 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $394,455,177) 401,185,916 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal SHORT-TERM INVESTMENTS--1.7% Amount ($) Value ($) - ----------------------------------------------------------------------------------------------------------------------------------- CALIFORNIA--.7% Newport Beach, Revenue, VRDN (Hoag Memorial Hospital) 1.70% 3,000,000 (d) 3,000,000 PENNSYLVANIA--.8% Schuylkill County Industrial Development Authority, VRDN RRR (Northeastern Power Company) 1.70% (LOC; Dexia Credit Local De France) 3,250,000 (d) 3,250,000 TENNESSEE--.2% Blount County Public Building Authority, VRDN (Local Government Public Improvement) 1.75% (Insured: AMBAC) 1,000,000 (d) 1,000,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $7,250,000) 7,250,000 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $401,705,177) 98.6% 408,435,916 CASH AND RECEIVABLES (NET) 1.4% 5,901,158 NET ASSETS 100.0% 414,337,074 Summary of Abbreviations AMBAC American Municipal Bond Assurance Corporation FGIC Financial Guaranty Insurance Company HR Hospital Revenue IDR Industrial Development Revenue LOC Letter of Credit LR Lease Revenue MBIA Municipal Bond Investors Assurance Insurance Corporation MFHR Multi-Family Housing Revenue MFMR Multi-Family Mortgage Revenue PCR Pollution Control Revenue RRR Resources Recovery Revenue SWDR Solid Waste Disposal Revenue VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) - ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 39.8 AA Aa AA 9.2 A A A 15.3 BBB Baa BBB 12.6 BB Ba BB 7.2 B B B .6 CCC Caa CCC .1 F-1+, F-1 VMIG1,MIG1,P1 SP1,A1 1.8 Not Rated (e) Not Rated (e) Not Rated (e) 13.4 100.0 (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) SECURITIES EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF 1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT APRIL 30, 2002, THESE SECURITIES AMOUNTED TO $41,410,208 OR 10.0% OF NET ASSETS. (D) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE. (E) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S, HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF ASSETS AND LIABILITIES April 30, 2002 Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 401,705,177 408,435,916 Receivable for investment securities sold 11,172,756 Interest receivable 7,827,739 Receivable for shares of Beneficial Interest subscribed 686,569 Prepaid expenses 30,411 428,153,391 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 293,966 Cash overdraft due to Custodian 3,609,339 Payable for investment securities purchased 9,635,198 Payable for shares of Beneficial Interest redeemed 151,264 Accrued expenses 126,550 13,816,317 - -------------------------------------------------------------------------------- NET ASSETS ($) 414,337,074 - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 439,249,271 Accumulated net realized gain (loss) on investments (31,642,936) Accumulated net unrealized appreciation (depreciation) on investments 6,730,739 - -------------------------------------------------------------------------------- NET ASSETS ($) 414,337,074 NET ASSET VALUE PER SHARE Class A Class B Class C - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 361,701,110 43,092,439 9,543,525 Shares Outstanding 27,853,209 3,317,329 733,743 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 12.99 12.99 13.01 SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS Year Ended April 30, 2002 - -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 25,255,958 EXPENSES: Management fee--Note 3(a) 2,268,271 Shareholder servicing costs--Note 3(c) 1,328,328 Distribution fees--Note 3(b) 273,086 Professional fees 51,642 Custodian fees 46,894 Registration fees 45,453 Prospectus and shareholders' reports 18,610 Trustees' fees and expenses--Note 3(d) 14,766 Loan commitment fees--Note 2 5,845 Miscellaneous 24,218 TOTAL EXPENSES 4,077,113 INVESTMENT INCOME--NET 21,178,845 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (5,373,179) Net unrealized appreciation (depreciation) on investments 734,517 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (4,638,662) NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 16,540,183 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS Year Ended April 30, ----------------------------------- 2002 2001 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 21,178,845 20,496,123 Net realized gain (loss) on investments (5,373,179) (8,801,010) Net unrealized appreciation (depreciation) on investments 734,517 21,015,558 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 16,540,183 32,710,671 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (18,710,976) (18,074,829) Class B shares (2,161,336) (2,231,704) Class C shares (249,451) (189,590) TOTAL DIVIDENDS (21,121,763) (20,496,123) - -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 340,387,516 132,537,116 Class B shares 13,593,354 9,420,935 Class C shares 7,358,813 3,915,107 Dividends reinvested: Class A shares 10,070,982 10,154,427 Class B shares 1,093,466 1,117,924 Class C shares 145,893 89,797 Cost of shares redeemed: Class A shares (334,112,802) (165,565,861) Class B shares (18,088,421) (17,914,938) Class C shares (1,935,376) (4,533,558) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 18,513,425 (30,779,051) TOTAL INCREASE (DECREASE) IN NET ASSETS 13,931,845 (18,564,503) - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 400,405,229 418,969,732 END OF PERIOD 414,337,074 400,405,229 SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, ---------------------------------- 2002 2001 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 26,025,843 10,163,785 Shares issued for dividends reinvested 766,918 780,581 Shares redeemed (25,526,222) (12,706,866) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,266,539 (1,762,500) - -------------------------------------------------------------------------------- CLASS B(A) Shares sold 1,030,757 721,846 Shares issued for dividends reinvested 83,220 85,972 Shares redeemed (1,374,429) (1,382,746) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (260,452) (574,928) - -------------------------------------------------------------------------------- CLASS C Shares sold 562,403 302,995 Shares issued for dividends reinvested 11,151 6,898 Shares redeemed (146,370) (349,622) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 427,184 (39,729) (A) DURING THE PERIOD ENDED APRIL 30, 2002, 589,771 CLASS B SHARES REPRESENTING $7,810,947 WERE AUTOMATICALLY CONVERTED TO 589,912 CLASS A SHARES AND DURING THE PERIOD ENDED APRIL 30, 2001, 493,694 CLASS B SHARES REPRESENTING $6,398,705 WERE AUTOMATICALLY CONVERTED TO 493,976 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Year Ended April 30, ------------------------------------------------------------------------- CLASS A SHARES 2002(a) 2001 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.14 12.75 14.33 14.69 14.11 Investment Operations: Investment income--net .68(b) .66 .70 .72 .79 Net realized and unrealized gain (loss) on investments (.15) .39 (1.42) (.15) .66 Total from Investment Operations .53 1.05 (.72) .57 1.45 Distributions: Dividends from investment income--net (.68) (.66) (.70) (.72) (.79) Dividends from net realized gain on investments -- -- (.16) (.21) (.08) Total Distributions (.68) (.66) (.86) (.93) (.87) Net asset value, end of period 12.99 13.14 12.75 14.33 14.69 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(C) 4.13 8.42 (5.01) 3.96 10.52 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .92 .98 .93 .91 .91 Ratio of net investment income to average net assets 5.20 5.09 5.28 4.96 5.42 Portfolio Turnover Rate 49.90 58.03 70.39 46.84 26.33 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 361,701 349,345 361,567 432,276 447,869 (A) AS REQUIRED, EFFECTIVE MAY 1, 2001, THE FUND HAS ADOPTED THE PROVISIONS OF THE AICPA AUDIT AND ACCOUNTING GUIDE FOR INVESTMENT COMPANIES AND BEGAN AMORTIZING DISCOUNT OR PREMIUM ON A SCIENTIFIC BASIS FOR DEBT SECURITIES ON A DAILY BASIS. THE EFFECT OF THIS CHANGE FOR THE PERIOD ENDED APRIL 30, 2002 WAS TO INCREASE NET INVESTMENT INCOME PER SHARE AND DECREASE NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS PER SHARE BY LESS THAN $.01 AND INCREASE THE RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS FROM 5.19% TO 5.20%. PER SHARE DATA AND RATIOS/SUPPLEMENTAL DATA FOR PERIODS PRIOR TO MAY 1, 2001 HAVE NOT BEEN RESTATED TO REFLECT THIS CHANGE IN PRESENTATION. (B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END. (C) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, ------------------------------------------------------------------------ CLASS B SHARES 2002(a) 2001 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.14 12.76 14.33 14.69 14.11 Investment Operations: Investment income--net .61(b) .60 .63 .65 .72 Net realized and unrealized gain (loss) on investments (.15) .38 (1.41) (.15) .66 Total from Investment Operations .46 .98 (.78) .50 1.38 Distributions: Dividends from investment income--net (.61) (.60) (.63) (.65) (.72) Dividends from net realized gain on investments -- -- (.16) (.21) (.08) Total Distributions (.61) (.60) (.79) (.86) (.80) Net asset value, end of period 12.99 13.14 12.76 14.33 14.69 - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (%)(C) 3.60 7.93 (5.51) 3.43 9.95 - ---------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.43 1.49 1.45 1.42 1.42 Ratio of net investment income to average net assets 4.69 4.63 4.71 4.44 4.89 Portfolio Turnover Rate 49.90 58.03 70.39 46.84 26.33 - ---------------------------------------------------------------------------------------------------------------------------------- Net Assets, end of period ($ x 1,000) 43,092 47,026 52,979 112,583 119,457 (A) AS REQUIRED, EFFECTIVE MAY 1, 2001, THE FUND HAS ADOPTED THE PROVISIONS OF THE AICPA AUDIT AND ACCOUNTING GUIDE FOR INVESTMENT COMPANIES AND BEGAN AMORTIZING DISCOUNT OR PREMIUM ON A SCIENTIFIC BASIS FOR DEBT SECURITIES ON A DAILY BASIS. THE EFFECT OF THIS CHANGE FOR THE PERIOD ENDED APRIL 30, 2002 WAS TO INCREASE NET INVESTMENT INCOME PER SHARE AND DECREASE NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS PER SHARE BY LESS THAN $.01 AND INCREASE THE RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS FROM 4.68% TO 4.69%. PER SHARE DATA AND RATIOS/SUPPLEMENTAL DATA FOR PERIODS PRIOR TO MAY 1, 2001 HAVE NOT BEEN RESTATED TO REFLECT THIS CHANGE IN PRESENTATION. (B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END. (C) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Year Ended April 30, ------------------------------------------------------------------------- CLASS C SHARES 2002(a) 2001 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.16 12.77 14.35 14.71 14.12 Investment Operations: Investment income--net .57(b) .57 .60 .61 .68 Net realized and unrealized gain (loss) on investments (.14) .39 (1.42) (.15) .67 Total from Investment Operations .43 .96 (.82) .46 1.35 Distributions: Dividends from investment income--net (.58) (.57) (.60) (.61) (.68) Dividends from net realized gain on investments -- -- (.16) (.21) (.08) Total Distributions (.58) (.57) (.76) (.82) (.76) Net asset value, end of period 13.01 13.16 12.77 14.35 14.71 - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (%)(C) 3.35 7.63 (5.71) 3.16 9.73 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.66 1.72 1.68 1.67 1.69 Ratio of net investment income to average net assets 4.45 4.36 4.52 4.11 4.55 Portfolio Turnover Rate 49.90 58.03 70.39 46.84 26.33 - ----------------------------------------------------------------------------------------------------------------------------------- Net Assets, end of period ($ x 1,000) 9,544 4,035 4,424 8,095 3,019 (A) AS REQUIRED, EFFECTIVE MAY 1, 2001, THE FUND HAS ADOPTED THE PROVISIONS OF THE AICPA AUDIT AND ACCOUNTING GUIDE FOR INVESTMENT COMPANIES AND BEGAN AMORTIZING DISCOUNT OR PREMIUM ON A SCIENTIFIC BASIS FOR DEBT SECURITIES ON A DAILY BASIS. THE EFFECT OF THIS CHANGE FOR THE PERIOD ENDED APRIL 30, 2002 WAS TO INCREASE NET INVESTMENT INCOME PER SHARE AND DECREASE NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS PER SHARE BY LESS THAN $.01 AND INCREASE THE RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS FROM 4.42% TO 4.45%. PER SHARE DATA AND RATIOS/SUPPLEMENTAL DATA FOR PERIODS PRIOR TO MAY 1, 2001 HAVE NOT BEEN RESTATED TO REFLECT THIS CHANGE IN PRESENTATION. (B) BASED ON AVERAGE SHARES OUTSTANDING AT EACH MONTH END. (C) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS NOTE 1--Significant Accounting Policies: Dreyfus Premier Municipal Bond Fund (the "fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified open-end management investment company. The fund's investment objective is to maximize current income exempt from Federal income tax to the extent consistent with the preservation of capital. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A, which is a wholly-owned subsidiary of Mellon Financial Corporation Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares. The fund is authorized to issue an unlimited number of $.001 par value shares of Beneficial Interest in each of 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. Class B shares automatically convert to Class A shares after six years.Other differences between the classes include the services offered to and the expenses borne by each class and certain voting rights. The fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States, 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 The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) 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. (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 premium and discount 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. Under the terms of the custody agreement, the fund received net earnings credits of $10,471 during the period ended April 30, 2002 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. (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, if any, 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 of 1986, as amended (the " 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 Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. At April 30, 2002, the components of accumulated earnings on a tax basis were as follows: accumulated capital losses $25,491,614 and unrealized appreciation $6,686,654. In addition, the portfolio had $6,033,992 of capital losses realized after October 31, 2001 which were deferred for tax purposes to the first day of the following fiscal year. The accumulated capital losses are available to be applied against future net securities profits, if any, realized subsequent to April 30, 2002. If not applied, $11,182,708 of the carryover expires in fiscal 2008, $9,553,959 expires in fiscal 2009 and $4,754,947 expires in fiscal 2010. The tax character of distributions paid to shareholders during the fiscal periods ended April 30, 2002 and April 30, 2001, were as follows: tax exempt income $21,121,763 and $20,496,123, respectively. During the period ended April 30, 2002, as a result of permanent book to tax differences, the fund decreased accumulated undistributed investment income-net by $79,857, decreased accumualated net realized gain (loss) on investments by $90,484 and increased paid-in capital by $170,341. Net assets were not affected by this reclassification. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $500 million redemption credit facility (the "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 based on prevailing market rates in effect at the time of borrowings. During the period ended April 30, 2002, the fund did not borrow under the Facility. The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) 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 Distributor retained $199,263 during the period April 30, 2002 from commissions earned on sales of the fund's shares. (B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Class B and Class C shares pay the Distributor for distributing their 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, 2002, Class B and Class C shares were charged $230,801 and $42,285, respectively, pursuant to the Plan. (C) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay the Distributor at an annual rate of .25 of 1% of the value of the average daily net assets of their 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, 2002 Class A, Class B and Class C shares were charged $901,536, $115,400 and $14,095, respectively, 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. During the period ended April 30, 2002, the fund was charged $184,080 pursuant to the transfer agency agreement. (D) Each Board member also serves as a Board member of other funds within the Dreyfus complex (collectively, the "Fund Group"). Each Board member who is not an "affiliated person" as defined in the Act receives an annual fee of $50,000 and an attendance fee of $6,500 for each in person meeting and $500 for telephone meetings.These fees are allocated among the funds in the Fund Group. The Chairman of the Board receives an additional 25% of such compensation. Subject to the fund's Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the annual retainer fee and per meeting fee paid at the time the Board member achieves emeritus status. NOTE 4--Securities Transactions: The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended April 30, 2002, amounted to $214,559,537 and $199,938,899, respectively. At April 30, 2002, the cost of investments for Federal income tax purposes was $401,749,263; accordingly, accumulated net unrealized appreciation on investments was $6,686,654, consisting of $19,965,815 gross unrealized appreciation and $13,279,161 gross unrealized depreciation. The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 5--Change in Accounting Principle: As required, effective May 1, 2001, the fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing discount or premium on a scientific basis for debt securities on a daily basis. Prior to May 1, 2001, the fund amortized premiums on debt securities on a scientific basis but recognized market discount upon disposition. The cumulative effect of this accounting change had no impact on total net assets of the fund, but resulted in a $22,775 increase in accumulated undistributed investment income-net and a corresponding $22,775 decrease in accumulated net unrealized appreciation (depreciation) , based on securities held by the fund on April 30, 2001. The effect of this change for the period ended April 30, 2002 was to increase net investment income by $57,082, decrease net unrealized appreciation (depreciation) by $50,470 and decrease net realized gains (losses) by $6,612. The statement of changes in net assets and financial highlights for the prior periods have not been restated to reflect this change in presentation. REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Trustees Dreyfus Premier Municipal Bond Fund We have audited the accompanying statement of assets and liabilities of Dreyfus Premier Municipal Bond Fund, including the statement of investments, as of April 30, 2002 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 auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 2002 by correspondence with the custodian and others. 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 Municipal Bond Fund at April 30, 2002, 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 accounting principles generally accepted in the United States. New York, New York June 3, 2002 The Fund IMPORTANT TAX INFORMATION (Unaudited) In accordance with Federal tax law, the fund hereby designates all the dividends paid from investment income-net during its fiscal year ended April 30, 2002 as "exempt-interest dividends" (not generally subject to regular Federal income tax). As required by Federal tax law rules, shareholders will receive notification of their portion of the fund's taxable ordinary dividends (if any) and capital gain distributions (if any) paid for the 2002 calendar year on Form 1099-DIV which will be mailed by January 31, 2003. BOARD MEMBERS INFORMATION (Unaudited) Joseph S. DiMartino (58) Chairman of the Board (1995) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Corporate Director and Trustee OTHER DIRECTORSHIPS AND AFFILIATIONS: * The Muscular Dystrophy Association, Director * Carlyle Industries, Inc., a button packager and distributor, Director * Century Business Services, Inc., a provider of outsourcing functions for small and medium size companies, Director * The Newark Group, a provider of a national market of paper recovery facilities, paperboard mills and paperboard converting plants, Director * QuikCAT.com, a developer of high speed movement, routing, storage and encryption of data, Director NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 190 -------------- Clifford L. Alexander (68) Board Member (1986) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * President of Alexander & Associates, Inc., a management consulting firm (January 1981-present) * Chairman of the Board of Moody's Corporation (October 2000--Present) * Chairman of the Board and Chief Executive Officer (October 1999--September 2000) and Director (February 1993--September 1999) of The Dun and Bradstreet Corporation OTHER DIRECTORSHIPS AND AFFILIATIONS: * Wyeth (formerly, American Home Products Corporation), a global leader in pharmaceuticals, consumer healthcare products and animal health products, Director * IMS Health, a service provider of marketing information and information technology, Director * Mutual of America Life Insurance Company, Director NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 49 -------------- Peggy C. Davis (58) Board Member (1990) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Shad Professor of Law, New York University School of Law (1983-present) * 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 NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 28 The Fund BOARD MEMBERS INFORMATION (Unaudited) (CONTINUED) Ernest Kafka (69) Board Member (1986) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Physician engaged in private practice specializing in psychoanalysis of adults and adolescents (1962--present) * Instructor at the New York Psychoanalytic Institute (1981--present) * Associate Clinical Professor of Psychiatry at Cornell Medical School (1987--2002) NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 28 -------------- Nathan Leventhal (58) Board Member (1987) PRINCIPAL OCCUPATION DURING PAST 5 YEARS: * Chairman of the Avery- Fisher Artist Program (November 1997--Present) * President of Lincoln Center for the Performing Arts, Inc (March 1984--December 2000) NO. OF PORTFOLIOS FOR WHICH BOARD MEMBER SERVES: 28 -------------- ONCE ELECTED ALL BOARD MEMBERS SERVE FOR AN INDEFINITE TERM. ADDITIONAL INFORMATION ABOUT THE BOARD MEMBERS, INCLUDING THEIR ADDRESS IS AVAILABLE IN THE FUND'S STATEMENT OF ADDITIONAL INFORMATION WHICH CAN BE OBTAINED FROM DREYFUS FREE OF CHARGE BY CALLING THIS TOLL FREE NUMBER: 1-800-554-4611. SAUL B. KLAMAN, EMERITUS BOARD MEMBER OFFICERS OF THE FUND (Unaudited) STEPHEN E. CANTER, PRESIDENT SINCE MARCH 2000. Chairman of the Board, Chief Executive Officer and Chief Operating Officer of the Manager, and an officer of 93 investment companies (comprised of 187 portfolios) managed by the Manager. Mr. Canter also is a Director or an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 56 years old, and has been an employee of the Manager since May 1995. MARK N. JACOBS, VICE PRESIDENT SINCE MARCH 2000. Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 94 investment companies (comprised of 201 portfolios) managed by the Manager. He is 56 years old, and has been an employee of the Manager since June 1977. STEVEN F. NEWMAN, SECRETARY SINCE MARCH 2000. Associate General Counsel and Assistant Secretary of the Manager, and an officer of 94 investment companies (comprised of 201 portfolios) managed by the Manager. He is 52 years old, and has been an employee of the Manager since July 1980. MICHAEL A. ROSENBERG, ASSISTANT SECRETARY SINCE MARCH 2000. Associate General Counsel of the Manager, and an officer of 93 investment companies (comprised of 199 portfolios) managed by the Manager. He is 42 years old, and has been an employee of the Manager since October 1991. JANETTE E. FARRAGHER, ASSISTANT SECRETARY SINCE MARCH 2000. Associate General Counsel of the Manager, and an officer of 15 investment companies (comprised of 26 portfolios) managed by the Manager. She is 39 years old, and has been an employee of the Manager since February 1984. JAMES WINDELS, TREASURER SINCE NOVEMBER 2001. Director of Mutual Fund Treasury Accounting of the Manager, and an officer of 94 investment companies (comprised of 201 portfolios) managed by the Manager. He is 43 years old, and has been an employee of the Manager since April 1985. GREGORY S. GRUBER, ASSISTANT TREASURER SINCE MARCH 2000. Senior Accounting Manager - Municipal Bond Funds of the Manager, and an officer of 29 investment companies (comprised of 59 portfolios) managed by the Manager. He is 43 years old, and has been an employee of the Manager since August 1981. KENNETH SANDGREN, ASSISTANT TREASURER SINCE NOVEMBER 2001. Mutual Funds Tax Director of the Manager, and an officer of 94 investment companies (comprised of 201 portfolios) managed by the Manager. He is 47 years old, and has been an employee of the Manager since June 1993. The Fund For More Information Dreyfus Premier Municipal Bond Fund 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 15 Broad Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9263 Boston, MA 02205-8501 Distributor Dreyfus Service Corporation 200 Park Avenue New York, NY 10166 To obtain information: BY TELEPHONE Call your financial representative or 1-800-554-4611 BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 (c) 2002 Dreyfus Service Corporation 022AR0402 EX-99.A 3 gin30d-022.txt GRAPH IN THE PRESIDENT'S LETTER OF THE AN. REPORT Comparison of change in value of $10,000 investment in Dreyfus Premier Municipal Bond Fund Class A shares and the Lehman Brothers Municipal Bond Index EXHIBIT A: Dreyfus Premier Lehman Municipal Brothers PERIOD Bond Fund Municipal (Class A Bond shares) Index * 4/30/92 9,549 10,000 4/30/93 10,863 11,265 4/30/94 11,063 11,508 4/30/95 11,806 12,274 4/30/96 12,525 13,249 4/30/97 13,531 14,128 4/30/98 14,954 15,442 4/30/99 15,546 16,515 4/30/00 14,767 16,363 4/30/01 16,010 18,060 4/30/02 16,671 19,325 * Source: Lipper Inc. -----END PRIVACY-ENHANCED MESSAGE-----