N-30D 1 0001.txt ANNUAL REPORT Dreyfus Premier State Municipal Bond Fund, Connecticut Series ANNUAL REPORT April 30, 2000 (reg.tm) ================================================================================ The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Fund Performance 8 Statement of Investments 13 Statement of Assets and Liabilities 14 Statement of Operations 15 Statement of Changes in Net Assets 17 Financial Highlights 20 Notes to Financial Statements 25 Report of Independent Auditors 26 Important Tax Information FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Connecticut Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this annual report for Dreyfus Premier State Municipal Bond Fund, Connecticut Series, covering the 12-month period from May 1, 1999 through April 30, 2000. 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, Samuel Weinstock. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. While higher interest rates generally led to an erosion of municipal bond prices during much of the reporting period, the tax-exempt bond market showed renewed signs of strength during the first four months of 2000. Municipal bonds were also influenced by supply-and-demand considerations. These technical influences have caused the yields of tax-exempt bonds to rise to very attractive levels compared to the after-tax yields of taxable bonds of comparable maturity and credit quality, making tax-exempt bonds especially attractive for investors in the higher federal and state income tax brackets. We appreciate your confidence over the past year, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Connecticut Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation May 15, 2000 DISCUSSION OF FUND PERFORMANCE Samuel Weinstock, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Connecticut Series, perform during the period? For the 12-month period ended April 30, 2000, the fund's Class A shares provided a -3.06% total return, its Class B shares provided a -3.66% total return and its Class C shares provided a -3.89% total return.(1) In comparison, the Lipper Connecticut Municipal Debt Funds category average provided a -2.61% total return for the same period.(2) In a rising interest-rate environment, which caused most municipal bond prices to decline during the reporting period, the fund's relative performance lagged that of its category average. We attribute our underperformance to the fund's focus on income. Because of this focus, the fund's total return tends to outperform the averages during declining markets, but may lag during rallies such as the one that prevailed during the first quarter of 2000. What is the fund's investment approach? Our goal is to seek as high a level of federal and Connecticut tax-exempt income as is practical without undue risk from a diversified portfolio of municipal bonds. To achieve this objective, we employ four primary strategies. First, we strive to identify the maturity range that we believe will provide the most favorable returns over the next two years. Second, we evaluate issuers' credit quality to find bonds that we believe provide high yields at attractive prices. Third, we look for bonds with attractive high interest payments, even if they sell at a premium to face value. Fourth, we assess individual bonds' early redemption features, focusing on those that cannot be redeemed soon by their issuers. Typically, the bonds we select for the portfolio will have several of these qualities. We also use computer models to evaluate the likely performance of bonds under various market scenarios, including a .25% rise in interest rates and a .50% decline. When we find securities that we believe The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) will provide participation when the market rises and some protection against declines, we tend to hold them for the long term. What other factors influenced the fund's performance? Although the fund's performance was hurt by a difficult investment environment during the final two months of 1999, the first four months of 2000 generally provided better market conditions and a market rally. While the fund's performance lagged that of its peer group, this rally helped offset most -- but not all -- of 1999's decline. When the reporting period began on May 1, 1999, investors had become concerned that strong economic growth might rekindle long-dormant inflationary pressures, especially from rising wages in a tight job market. In an attempt to ease these pressures and forestall a reacceleration of inflation, the Federal Reserve Board raised short-term interest rates five times during the reporting period, causing most bond prices to fall, for a total increase of 1.25 percentage points. Municipal bond prices also fell during November and December, 1999, because of adverse supply-and-demand influences. For a variety of reasons, institutional investors such as insurance companies and mutual funds participated less in the tax-exempt market. Despite strong demand from individual investors, the absence of institutional buyers helped reduce overall demand and drove municipal bond prices down. During the first quarter of 2000, however, issuance of municipal bonds nationally declined approximately 20%, as compared to the same period in 1999. This supply reduction, combined with robust demand from individual investors, helped support a rebound of municipal bond prices. What is the fund's current strategy? We have changed the balance of assets in the fund from approximately 85% income-oriented bonds and about 15% total return-oriented bonds to a target of 75% and 25% , respectively. This shift is part of our continuing effort to upgrade the fund's liquidity profile by gradually moving away from the types of bonds that may have underperformed the market over the past six months. Accordingly, we have sold some of our longer term, lower rated holdings, including bonds issued by industrial development regions (IDRs) and health care facilities. We have attempted to invest the proceeds of these sales in shorter term bonds with greater protection from early redemptions. We have found such opportunities primarily among insured bonds that we believe will appeal to retail investors if and when the time comes to sell them. We have also found attractive opportunities among non-callable Puerto Rico bonds, which are tax-exempt for Connecticut residents. These changes in the fund's asset mix have modestly affected our duration management strategy. At about 8.35 years as of April 30, the fund's average duration -- a measure of sensitivity to changing interest rates -- is slightly longer than it was when the reporting period began. May 15, 2000 (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 CHARGE 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 FOR NON-CONNECTICUT RESIDENTS 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 ANALYTICAL SERVICES, INC. The Fund FUND PERFORMANCE Comparison of change in value of $10,000 investment in Dreyfus Premier State Municipal Bond Fund, Connecticut Series Class A shares and the Lehman Brothers Municipal Bond Index ((+)) SOURCE: LIPPER ANALYTICAL SERVICES, 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 STATE MUNICIPAL BOND FUND, CONNECTICUT SERIES (THE "FUND") ON 4/30/90 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 CONNECTICUT 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 IS NOT LIMITED TO INVESTMENTS PRINCIPALLY IN CONNECTICUT MUNICIPAL OBLIGATIONS AND DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. THE INDEX, UNLIKE THE FUND, 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. THESE FACTORS 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 4/30/00 Inception From Date 1 Year 5 Years 10 Years Inception ------------------------------------------------------------------------------------------------------------------------------------ CLASS A SHARES WITH SALES CHARGE (4.5%) 5/28/87 (7.44)% 4.30% 6.12% -- WITHOUT SALES CHARGE 5/28/87 (3.06)% 5.26% 6.61% -- CLASS B SHARES WITH REDEMPTION((+)) 1/15/93 (7.31)% 4.37% -- 4.81% WITHOUT REDEMPTION 1/15/93 (3.66)% 4.69% -- 4.81% CLASS C SHARES WITH REDEMPTION((+)(+)) 8/15/95 (4.80)% -- -- 4.24% WITHOUT REDEMPTION 8/15/95 (3.89)% -- -- 4.24% PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. ((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS A SHARES. ((+)(+)) 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 April 30, 2000 STATEMENT OF INVESTMENTS STATEMENT OF INVESTMENTS Principal LONG-TERM MUNICIPAL INVESTMENTS--99.0% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ CONNECTICUT--72.5% Connecticut: 4.954%, 3/15/2012 5,000,000 (a,b) 4,715,950 5%, 3/15/2012 70,000 68,012 5.25%, 3/1/2012 3,000,000 2,985,420 5.125%, 3/15/2013 4,450,000 4,343,645 5.50%, 5/15/2014 1,900,000 1,912,825 5.25%, 3/1/2016 2,700,000 2,600,019 (Clean Water Fund) Revenue: 5.25%, 7/15/2012 15,000 14,846 5.454%, 7/15/2012 4,850,000 (a) 4,750,187 Special Tax Obligation Revenue (Transportation Infrastructure): 5.50%, Series A, 11/1/2007 (Insured; FSA) 4,580,000 4,694,500 5.50%, Series B, 11/1/2007 (Insured; FSA) 5,000,000 5,125,000 7.125%, 6/1/2010 3,400,000 3,869,404 6.75%, 6/1/2011 (Prerefunded 6/1/2003) 8,500,000 (c) 8,944,295 Connecticut Development Authority, Revenue: First Mortgage Gross: (Health Care Project, Church Homes Inc.): 5.70%, 4/1/2012 1,240,000 1,102,273 5.80%, 4/1/2021 3,000,000 2,505,450 (Health Care Project, Elim Park Baptist Home) 5.375%, 12/1/2018 2,300,000 1,870,314 Life Care Facilities (Seabury Project) 8.75%, 9/1/2006 1,625,000 1,742,163 Pollution Control (Light and Power) 5.85%, 9/1/2028 10,150,000 9,166,668 Water Facilities (Bridgeport Hydraulic) 6.15%, 4/1/2035 (Insured; AMBAC) 2,750,000 2,754,813 Connecticut Health and Educational Facilities Authority, Revenue: (Danbury Hospital) 5.75%, 7/1/2029 (Insured; AMBAC) 3,000,000 2,939,460 (Greenwich Academy) 5.75%, 3/1/2026 (Insured; FSA) 3,130,000 3,078,042 (Greenwich Hospital) 5.80%, 7/1/2026 (Insured; MBIA) 665,000 653,083 (Hartford University): 6.75%, 7/1/2012 3,500,000 3,568,180 6.80%, 7/1/2022 8,500,000 8,551,765 (Hospital for Special Care) 5.375%, 7/1/2017 4,430,000 3,676,058 (Johnson Evergreen Corp.) 8.50%, 7/1/2022 4,500,000 4,688,280 (Loomis Chaffee School Project) 6%, 7/1/2025 (Insured; MBIA) 1,000,000 1,007,720 (Middlesex Hospital) 6.25%, 7/1/2022 (Insured; MBIA) (Prerefunded 7/1/2002) 3,500,000 (c) 3,662,400 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ CONNECTICUT (CONTINUED) Connecticut Health and Educational Facilities Authority, Revenue (continued): (New Britian General Hospital) 6.125%, 7/1/2014 (Insured; AMBAC) 1,000,000 1,034,110 (New Britain Memorial Hospital) 7.75%, 7/1/2022 (Prerefunded 7/1/2002) 11,000,000 (c) 11,851,620 (Norwalk Hospital) 6.25%, 7/1/2022 (Insured; MBIA) (Prerefunded 7/1/2002) 3,860,000 (c) 4,039,104 (Nursing Home Program - 3030 Park Fairfield Health Center Project) 6.25%, 11/1/2021 2,500,000 2,481,000 (Quinnipiac College): 6%, 7/1/2013 (Prerefunded 7/1/2003) 4,100,000 (c) 4,285,689 6%, 7/1/2013 2,445,000 2,410,868 (Sacred Heart University): 6.50%, 7/1/2016 (Prerefunded 7/1/2006) 1,465,000 (c) 1,588,529 6.125%, 7/1/2017 (Prerefunded 7/1/2007) 1,000,000 (c) 1,068,250 6.625%, 7/1/2026 (Prerefunded 7/1/2006) 2,720,000 (c) 2,967,139 (Trinity College) 5.875%, 7/1/2026 (Insured; MBIA) 2,500,000 2,489,825 (University of New Haven): 6.625%, 7/1/2016 4,050,000 4,083,777 6.70%, 7/1/2026 8,605,000 8,610,851 (William W. Backus Hospital) 5.75%, 7/1/2027 (Insured; AMBAC) 2,500,000 2,437,075 (Windham Community Memorial Hospital) 6%, 7/1/2020 1,000,000 844,700 (Yale, New Haven Hospital) 5.70%, 7/1/2025 (Insured; MBIA) 7,970,000 7,732,095 Connecticut Housing Finance Authority (Housing Mortgage Finance Program): 6.125%, 5/15/2018 (Insured; MBIA) 1,655,000 1,680,917 6.45%, 5/15/2022 4,535,000 4,580,758 6.70%, 11/15/2022 6,030,000 6,193,172 6.75%, 11/15/2023 5,010,000 5,242,815 5.45%, 11/15/2029 5,805,000 5,254,396 6%, Subseries F-2, 11/15/2027 4,645,000 4,583,221 6%, Series G, 11/15/2027 4,000,000 3,946,800 5.85%, Subseries B-2, 11/15/2028 9,875,000 9,529,770 5.85%, Subseries C-2, 11/15/2028 6,360,000 6,063,560 5.50%, 11/15/2035 325,000 290,361 Connecticut Resource Recovery Authority, RRR 5.90%, 11/15/2000 6,750,000 6,766,740 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ CONNECTICUT (CONTINUED) Eastern Connecticut Resource Recovery Authority: Solid Waste Revenue: 5.66%, 1/1/2014 5,000,000 (a) 3,465,850 (Wheelabrator Lisbon Project): 5.50%, 1/1/2014 50,000 42,329 5.50%, 1/1/2020 9,380,000 7,596,862 Greenwich Housing Authority, MFHR (Greenwich Close) 6.25%, 9/1/2017 4,840,000 4,528,740 Sprague, Environmental Improvement Revenue (International Paper Company Project) 5.70%, 10/1/2021 1,350,000 1,223,087 Stamford 6.60%, 1/15/2010 2,750,000 3,086,160 University of Connecticut: 5.75%, 3/1/2013 (Insured; FGIC) 1,850,000 1,920,152 5.75%, 3/1/2015 (Insured; FGIC) 1,770,000 1,815,082 5.75%, 3/1/2016 (Insured; FGIC) 2,500,000 2,553,400 U. S. RELATED--26.5% Commonwealth of Puerto Rico: 5.65%, 7/1/2015 (Insured; MBIA) 6,690,000 6,889,897 (Public Improvement): 5.50%, 7/1/2013 (Insured; MBIA) 8,000,000 8,176,400 5.25%, 7/1/2014 (Insured; MBIA) 3,925,000 3,891,794 5.25%, 7/1/2015 (Insured; MBIA) 1,000,000 985,030 6%, 7/1/2015 (Insured; MBIA) 2,000,000 2,134,840 Zero Coupon, 7/1/2017 (Insured; MBIA) 3,800,000 1,452,170 6.80%, 7/1/2021 (Prerefunded 7/1/2002) 6,000,000 (c) 6,358,320 Puerto Rico Aqueduct and Sewer Authority, Revenue 6.25%, 7/1/2013 (Insured; MBIA) 9,000,000 9,860,850 Puerto Rico Electric Power Authority, Power Revenue: 5%, 7/1/2012 (Insured; MBIA) 50,000 48,773 5.003%, 7/1/2012 2,000,000 (a,b) 1,901,820 Puerto Rico Highway and Transportation Authority, Highway Revenue: 6.254%, 7/1/2010 3,200,000 (a) 3,224,000 5.50%, 7/1/2013 (Insured; MBIA) 10,000 10,220 6.003%, 7/1/2013 2,290,000 (a) 2,390,989 6.625%, 7/1/2018 (Prerefunded 7/1/2002) 5,000,000 (c) 5,280,700 5.50%, 7/1/2026 (Insured; FSA) 2,375,000 2,274,823 5%, 7/1/2036 2,500,000 2,105,950 5.50%, 7/1/2036 5,000,000 4,672,350 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ U. S. RELATED (CONTINUED) Puerto Rico Industrial Tourist, Educational, Medical and Environmental Control Facilities Financing Authority, Revenue: (Ana G. Mendez University System Project) 5.375%, 2/1/2029 2,250,000 1,936,485 (Teachers Retirement System): 5.50%, 7/1/2016 1,150,000 1,148,068 5.50%, 7/1/2021 800,000 770,408 Puerto Rico Ports Authority, Special Facilities Revenue (American Airlines): 6.30%, 6/1/2023 2,000,000 1,978,280 6.25%, 6/1/2026 6,155,000 6,053,504 University of Puerto Rico, University Revenue 5.50%, 6/1/2015 (Insured; MBIA) 5,000,000 5,009,900 Virgin Islands Public Finance Authority, Revenue, Gross Receipts Taxes Loan Note 6.375%, 10/1/2019 5,000,000 5,011,750 Virgin Islands Water and Power Authority, Refunding (Electric Systems) 5.30%, 7/1/2021 2,000,000 1,724,840 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $321,985,164) 99.0% 318,571,737 CASH AND RECEIVABLES (NET) 1.0% 3,073,247 NET ASSETS 100.0% 321,644,984 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Summary of Abbreviations AMBAC American Municipal Bond Assurance Corporation FGIC Financial Guaranty Insurance Company FSA Financial Security Assurance MBIA Municipal Bond Investors Assurance Insurance Corporation MFHR Multi-Family Housing Revenue RRR Resources Recovery Revenue Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 42.6 AA Aa AA 20.4 A A A 2.5 BBB Baa BBB 23.4 BB Ba BB 2.9 F1 MIG1/P1 SP1/A1 2.1 Not Rated(d) Not Rated(d) Not Rated(d) 6.1 100.0 (A) INVERSE FLOATER SECURITY-THE INTEREST RATE IS SUBJECT TO CHANGE PERIODICALLY. (B) 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, 2000, THESE SECURITIES AMOUNTED TO $6,617,770 OR 2.1% OF NET ASSETS. (C) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. (D) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES April 30, 2000 Cost Value -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 321,985,164 318,571,737 Interest receivable 6,624,689 Receivable for shares of Beneficial Interest subscribed 67,506 Prepaid expenses 7,844 325,271,776 -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 233,185 Cash overdraft due to Custodian 3,033,509 Payable for shares of Beneficial Interest redeemed 288,015 Accrued expenses 72,083 3,626,792 -------------------------------------------------------------------------------- NET ASSETS ($) 321,644,984 -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 328,286,859 Accumulated net realized gain (loss) on investments (3,228,448) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (3,413,427) -------------------------------------------------------------------------------- NET ASSETS ($) 321,644,984 NET ASSET VALUE PER SHARE Class A Class B Class C ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 274,962,106 42,282,650 4,400,228 Shares Outstanding 24,532,895 3,775,921 393,310 ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 11.21 11.20 11.19 SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF OPERATIONS Year Ended April 30, 2000 -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 20,861,106 EXPENSES: Management fee--Note 3(a) 1,918,534 Shareholder servicing costs--Note 3(c) 1,089,343 Distribution fees--Note 3(b) 278,348 Custodian fees 37,229 Professional fees 31,907 Prospectus and shareholders' reports 27,383 Registration fees 24,919 Trustees' fees and expenses--Note 3(d) 4,853 Loan commitment fees--Note 2 3,575 Interest expense--Note 2 132 Miscellaneous 23,416 TOTAL EXPENSES 3,439,639 INVESTMENT INCOME--NET 17,421,467 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (1,719,512) Net unrealized appreciation (depreciation) on investments (28,371,812) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (30,091,324) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (12,669,857) SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Year Ended April 30, ------------------------------- 2000 1999 -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 17,421,467 18,451,596 Net realized gain (loss) on investments (1,719,512) 4,383,270 Net unrealized appreciation (depreciation) on investments (28,371,812) 1,477,323 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (12,669,857) 24,312,189 -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (15,000,075) (15,578,898) Class B shares (2,233,944) (2,715,809) Class C shares (187,448) (156,889) Net realized gain on investments: Class A shares (2,204,487) (4,072,493) Class B shares (348,427) (834,380) Class C shares (32,235) (50,867) TOTAL DIVIDENDS (20,006,616) (23,409,336) -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 39,436,556 43,274,085 Class B shares 8,125,689 11,921,647 Class C shares 1,173,941 2,477,619 Dividends reinvested: Class A shares 9,873,750 11,453,214 Class B shares 1,622,454 2,410,797 Class C shares 121,987 118,461 Cost of shares redeemed: Class A shares (64,785,036) (47,956,181) Class B shares (21,106,153) (15,340,812) Class C shares (1,450,758) (194,500) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (26,987,570) 8,164,330 TOTAL INCREASE (DECREASE) IN NET ASSETS (59,664,043) 9,067,183 -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 381,309,027 372,241,844 END OF PERIOD 321,644,984 381,309,027 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) Year Ended April 30, ------------------------------- 2000 1999 -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 3,412,262 3,505,138 Shares issued for dividends reinvested 862,286 925,802 Shares redeemed (5,663,577) (3,878,849) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (1,389,029) 552,091 -------------------------------------------------------------------------------- CLASS B(A) Shares sold 697,009 963,796 Shares issued for dividends reinvested 141,580 194,981 Shares redeemed (1,828,104) (1,244,687) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (989,515) (85,910) -------------------------------------------------------------------------------- CLASS C Shares sold 102,199 200,538 Shares issued for dividends reinvested 10,718 9,591 Shares redeemed (125,428) (15,793) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (12,511) 194,336 (A) DURING THE PERIOD ENDED APRIL 30, 2000, 972, 594 CLASS B SHARES REPRESENTING $11,219,924 WERE AUTOMATICALLY CONVERTED TO 972,092 CLASS A SHARES SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Year Ended April 30, ------------------------------------------------------------------- CLASS A SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.26 12.23 11.81 11.90 11.76 Investment Operations: Investment income--net .58 .61 .62 .64 .66 Net realized and unrealized gain (loss) on investments (.96) .19 .47 .16 .14 Total from Investment Operations (.38) .80 1.09 .80 .80 Distributions: Dividends from investment income--net (.58) (.61) (.62) (.64) (.66) Dividends from net realized gain on investments (.09) (.16) (.05) (.25) - Total Distributions (.67) (.77) (.67) (.89) (.66) Net asset value, end of period 11.21 12.26 12.23 11.81 11.90 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (3.06) 6.70 9.44 6.84 6.85 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .90 .89 .90 .93 .92 Ratio of net investment income to average net assets 5.08 4.94 5.12 5.32 5.45 Portfolio Turnover Rate 35.12 21.95 33.31 30.66 28.83 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 274,962 317,923 310,343 313,881 321,559 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Year Ended April 30, ------------------------------------------------------------------- CLASS B SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.26 12.23 11.80 11.89 11.76 Investment Operations: Investment income--net .52 .55 .56 .57 .60 Net realized and unrealized gain (loss) on investments (.97) .19 .48 .16 .13 Total from Investment Operations (.45) .74 1.04 .73 .73 Distributions: Dividends from investment income--net (.52) (.55) (.56) (.57) (.60) Dividends from net realized gain on investments (.09) (.16) (.05) (.25) - Total Distributions (.61) (.71) (.61) (.82) (.60) Net asset value, end of period 11.20 12.26 12.23 11.80 11.89 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (3.66) 6.15 8.97 6.28 6.20 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.42 1.40 1.42 1.45 1.44 Ratio of net investment income to average net assets 4.55 4.42 4.59 4.79 4.92 Portfolio Turnover Rate 35.12 21.95 33.31 30.66 28.83 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 42,283 58,416 59,315 54,661 38,838 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, ------------------------------------------------------------------- CLASS C SHARES 2000 1999 1998 1997 1996(a) ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.25 12.22 11.79 11.89 11.84 Investment Operations: Investment income--net .50 .52 .53 .54 .40 Net realized and unrealized gain (loss) on investments (.97) .19 .48 .15 .05 Total from Investment Operations (.47) .71 1.01 .69 .45 Distributions: Dividends from investment income--net (.50) (.52) (.53) (.54) (.40) Dividends from net realized gain on investments (.09) (.16) (.05) (.25) - Total Distributions (.59) (.68) (.58) (.79) (.40) Net asset value, end of period 11.19 12.25 12.22 11.79 11.89 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (3.89) 5.88 8.68 5.93 5.31(c) ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.66 1.65 1.68 1.70 1.64(c) Ratio of net investment income to average net assets 4.31 4.15 4.29 4.56 4.31(c) Portfolio Turnover Rate 35.12 21.95 33.31 30.66 28.83 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 4,400 4,970 2,583 1,290 1,007 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund NOTES TO FINANCIAL STATEMENTS NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act") as a non-diversified, open-end management investment company, and operates as a series company currently offering thirteen series including the Connecticut Series (the "fund"). The fund's investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned subsidiary of the Manager, became the distributor of the fund's shares. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund is authorized to issue an unlimited number of $.001 par value shares in the following classes of shares: Class A, Class B and Class C shares. Class A shares are subject to a sales charge imposed at the time of purchase, Class B shares are subject to a contingent deferred sales charge ("CDSC") imposed on Class B share redemptions made within six years of purchase (five years for shareholders beneficially owning Class B shares on November 30, 1996) and Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. 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 Trust 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 fund's financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund receives net earnings credits based on available cash balances left on deposit. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code 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. 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 at rates based on prevailing market rates in effect at the time of borrowings. During the period ended April 30, 2000, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (A) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund's average daily net assets and is payable monthly. DSC retained $2,300 during the period ended April 30, 2000, 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, 2000, Class B and Class C shares were charged $245,714 and $32,634, respectively, pursuant to the Plan, of which $23,310 and $3,488 for Class B and Class C shares, respectively, were paid to DSC. (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 their average daily net assets 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, 2000, Class A, Class B and Class C shares were charged $738,326, $122,857 and $10,878, respectively, pursuant to the Shareholder Services Plan, of which $75,994, $11,655 and $1,163 for Class A, Class B and Class C shares, respectively, were paid to DSC. The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended April 30, 2000, the fund was charged $134,347 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"). Effective April 13, 2000, each Board member receives an annual fee of $50,000 and a fee of $6,500 for each meeting held in person 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. Prior to April 13, 2000, each Board member who was not an "affiliated person" as defined in the Act received from the Trust an annual fee of $2,500 and an attendance fee of $250 per meeting. The Chairman of the Board received an additional 25% of such compensation. Subject to the fund' s Director Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the Trust's annual retainer fee and per meeting fee paid at the time the Board member achieved 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, 2000, amounted to $119,953,930 and $160,709,100, respectively. At April 30, 2000, accumulated net unrealized depreciation on investments was $3,413,427, consisting $6,880,309 gross unrealized appreciation and $10,293,736 gross unrealized depreciation. At April 30, 2000, 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). REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Trustees Dreyfus Premier State Municipal Bond Fund, Connecticut Series We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Premier State Municipal Bond Fund, Connecticut Series (one of the funds constituting the Dreyfus Premier State Municipal Bond Fund) as of April 30, 2000, 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 and financial highlights. Our procedures included confirmation of securities owned as of April 30, 2000, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier State Municipal Bond Fund, Connecticut Series at April 30, 2000, the results of its perations 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 9, 2000 The Fund IMPORTANT TAX INFORMATION (Unaudited) In accordance with Federal tax law, the fund hereby makes the following designations regarding its fiscal year ended April 30, 2000: -- all the dividends paid from investment income-net are "exempt-interest dividends" (not subject to regular Federal and, for individuals who are Connecticut residents, Connecticut personal income taxes), and -- the fund hereby designates $.0854 per share as a long-term capital gain distribution paid on December 8, 1999. 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 gains distributions (if any) paid for the 2000 calendar year on form 1099-DIV which will be mailed by January 31, 2001. NOTES For More Information Dreyfus Premier State Municipal Bond Fund, Connecticut 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 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 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) 2000 Dreyfus Service Corporation 064AR004 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Florida Series ANNUAL REPORT April 30, 2000 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Fund Performance 8 Statement of Investments 12 Statement of Assets and Liabilities 13 Statement of Operations 14 Statement of Changes in Net Assets 16 Financial Highlights 19 Notes to Financial Statements 24 Report of Independent Auditors 25 Important Tax Information FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Florida Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this annual report for Dreyfus Premier State Municipal Bond Fund, Florida Series, covering the 12-month period from May 1, 1999 through April 30, 2000. 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, Douglas Gaylor. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. While higher interest rates generally led to an erosion of municipal bond prices during much of the reporting period, the tax-exempt bond market showed renewed signs of strength during the first four months of 2000. Municipal bonds were also influenced by supply-and-demand considerations. These technical influences have caused the yields of tax-exempt bonds to rise to very attractive levels compared to the after-tax yields of taxable bonds of comparable maturity and credit quality, making tax-exempt bonds especially attractive for investors in the higher federal and state income tax brackets. We appreciate your confidence over the past year, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Florida Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation May 15, 2000 DISCUSSION OF FUND PERFORMANCE Douglas Gaylor, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Florida Series, perform during the period? For the 12-month period ended April 30, 2000, the fund's Class A shares provided a -3.19% total return, its Class B shares provided a -3.68% total return and its Class C shares provided a -3.97% total return.(1) In comparison, the Lipper Florida Municipal Debt Funds category average provided a -3.18% total return for the same period.(2) We attribute the fund's negative absolute returns during the reporting period to a rising interest-rate environment, which caused most municipal bond prices to decline. What is the fund's investment approach? Our goal is to seek as high a level of federally tax-exempt income as is practical without undue risk from a diversified portfolio of municipal bonds. To achieve this objective, we employ two primary strategies. First, for between one-half and three-quarters of the total fund, we look for bonds that can potentially offer attractive current income. We typically look for bonds that can provide consistently high current yields. We also try to ensure that we select bonds that are most likely to obtain attractive prices if and when we decide to sell them in the secondary market. Second, for the remainder of the fund, we try to look for bonds that we believe have the potential to offer attractive total returns. We typically look for bonds that are selling at a discount to face value because they may be temporarily out of favor among investors. Our belief is that these bonds' prices will rise as they return to favor over time. What other factors influenced the fund's performance? Although the fund's performance was hurt by a difficult investment environment from the beginning of the reporting period throughout 1999, the first four months of 2000 generally provided better market The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) conditions and a market rally. This rally helped offset most -- but not all -- of the decline in the last eight months of 1999. When the reporting period began on May 1, 1999, investors had become concerned that strong economic growth might rekindle long-dormant inflationary pressures, especially from rising wages in a tight job market. In an attempt to ease these pressures and forestall a reacceleration of inflation, the Federal Reserve Board raised short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. This caused most bond prices to fall. During 1999 municipal bond prices also fell because of adverse supply-and-demand influences. For a variety of reasons, institutional investors such as insurance companies and mutual funds participated less in the tax-exempt market. Despite strong demand from individual investors, the absence of institutional buyers helped reduce overall demand and drove municipal bond prices down. During the first quarter of 2000, however, issuance of municipal bonds nationally declined approximately 20% compared to the same period in 1999. This supply reduction, combined with robust demand from individual investors, helped support a rebound of municipal bond prices. What is the fund's current strategy? Our current strategy has been to maintain as high a level of income as practical while reducing volatility and protecting assets in a rising interest-rate environment. Accordingly, we have slowly and modestly begun to reduce the portfolio' s average duration -- a measure of sensitivity to changing interest rates -- in an attempt to protect our holdings from the brunt of potential price depreciation and capture higher yields as they may become available. In doing so, we have shifted assets from municipal bonds with maturities of 20 to 30 years into bonds with maturities in the 10- to 20-year range. In addition to helping us reduce the fund' s sensitivity to rising interest rates, these intermediate-term holdings are also more likely to attract the interest of individual investors when the time comes to sell. From a security selection perspective, we have focused primarily on tax-exempt bonds that have recently been out of favor among investors, including bonds selling at deep discounts and modest premiums to their face values. Because they are currently unpopular, these types of bonds are available with attractive yields, in our view, compared to other types of bonds that investors currently favor. We believe that these holdings have the potential to boost the fund's performance when deep-discount and modest-premium bonds return to favor among investors. May 15, 2000 (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 CHARGE 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. SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE. RETURN FIGURES PROVIDED REFLECT THE ABSORPTION OF FUND EXPENSES BY THE DREYFUS CORPORATION PURSUANT TO AN AGREEMENT IN EFFECT THROUGH APRIL 30, 2001, AT WHICH TIME IT MAY BE EXTENDED, TERMINATED OR MODIFIED. HAD THESE EXPENSES NOT BEEN ABSORBED, THE FUND'S RETURN WOULD HAVE BEEN LOWER. (2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. The Fund FUND PERFORMANCE Comparison of change in value of $10,000 investment in Dreyfus Premier State Municipal Bond Fund, Florida Series Class A shares and the Lehman Brothers Municipal Bond Index ((+)) SOURCE: LIPPER ANALYTICAL SERVICES, 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 STATE MUNICIPAL BOND FUND, FLORIDA SERIES (THE "FUND") ON 4/30/90 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 FLORIDA 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 IS NOT LIMITED TO INVESTMENTS PRINCIPALLY IN FLORIDA MUNICIPAL OBLIGATIONS AND DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. THE INDEX, UNLIKE THE FUND, 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. THESE FACTORS 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 4/30/00 Inception From Date 1 Year 5 Years 10 Years Inception ------------------------------------------------------------------------------------------------------------------------------------ CLASS A SHARES WITH SALES CHARGE (4.5%) 5/28/87 (7.54)% 2.96% 5.82% -- WITHOUT SALES CHARGE 5/28/87 (3.19)% 3.91% 6.31% -- CLASS B SHARES WITH REDEMPTION((+)) 1/15/93 (7.36)% 3.06% -- 4.08% WITHOUT REDEMPTION 1/15/93 (3.68)% 3.37% -- 4.08% CLASS C SHARES WITH REDEMPTION((+)(+)) 8/15/95 (4.89)% -- -- 2.78% WITHOUT REDEMPTION 8/15/95 (3.97)% -- -- 2.78% PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. ((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS A SHARES. ((+)(+)) 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, 2000 STATEMENT OF INVESTMENTS Principal LONG-TERM MUNICIPAL INVESTMENTS--95.1% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA--88.7% Bay County, Sales Tax Revenue 4.75%, 9/1/2023 (Insured; FSA) 3,160,000 2,664,259 Brevard County, IDR (Nui Corp. Project) 6.40%, 10/1/2024 (Insured; AMBAC) 1,000,000 1,030,940 Broward County Health Facilities Authority, Revenue (Broward County Nursing Home) 7.50%, 8/15/2020 (LOC; Allied Irish Bank) 1,000,000 1,039,060 Broward County Housing Finance Authority, MFHR (Bridgewater Place Apartments) 5.40%, 10/1/2029 2,000,000 1,750,620 Charlotte County: Healthcare Facilities Revenue (Charlotte Community Health Project) 9.25%, 7/1/2020 1,550,000 1,585,774 Utility Revenue 5%, 10/1/2023 (Insured; FGIC) 2,500,000 2,197,500 Dade County, Aviation Revenue 6.60%, 10/1/2022 (Insured; MBIA) 1,000,000 1,039,970 Dade County Housing Finance Authority, SFMR 6.70%, 4/1/2028 (Collateralized: FNMA, GNMA) 4,500,000 4,663,215 Duval County Housing Finance Authority, SFMR: 7.85%, 12/1/2022 (Collateralized; GNMA) 1,625,000 1,658,719 7.70%, 9/1/2024 (Collateralized; GNMA, Insured; FGIC) 710,000 730,867 Florida Board of Education: Capital Outlay (Public Education): 4.50%, 6/1/2019 (Insured; FSA) 7,000,000 5,819,240 4.50%, 6/1/2022 (Insured; FSA) 3,700,000 3,000,145 4.75%, 6/1/2023 (Insured; MBIA) 3,000,000 2,527,500 Lottery Revenue 4.50%, 7/1/2017 (Insured; FGIC) 2,110,000 1,782,486 Florida Department of Juvenile Justice (Juvenile Residential) 5.20%, 6/15/2019 (Insured; MBIA) 5,984,000 5,686,535 Florida, Housing Finance Agency: (Brittany Rosemont Apartments) 7%, 2/1/2035 (Insured; AMBAC) 6,000,000 6,355,500 Single Family Mortgage: 6.65%, 1/1/2024 (Collateralized: FNMA, GNMA) 2,325,000 2,409,444 6.65%, 7/1/2026 (Insured; MBIA) 1,345,000 1,390,811 Hillsborough County, Utility Revenue 6.625%, 8/1/2011 4,000,000 4,104,000 Hillsborough County Aviation Authority, Revenue (Delta Airlines) 6.80%, 1/1/2024 2,500,000 2,510,475 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA (CONTINUED) Lee County Housing Finance Authority SFMR: 6.30%, 3/1/2029 (Collateralized: FNMA, GNMA) 970,000 992,213 (Multi-County Program) 7.45%, 9/1/2027 (Collateralized: FNMA, GNMA) 970,000 1,075,507 Marion County, Hospital District Revenue, Improvement (Munroe Regional Hospital) 5.625%, 10/1/2024 2,500,000 2,240,875 Miami-Dade County Housing Finance Authority, MFMR (Villa Esperanza Apartments Project) 5.35%, 10/1/2028 1,000,000 866,760 Orange County, Tourist Development Tax Revenue 4.75%, 10/1/2024 (Insured; AMBAC) 9,160,000 7,686,156 Orange County Housing Finance Authority, MFHR (Seminole Pointe Project) 5.75%, 12/1/2023 2,840,000 2,616,634 Osceola County Industrial Development Authority, Revenue (Community Provider Pooled Loan Program) 7.75%, 7/1/2017 5,235,000 5,344,359 Palm Beach County, Solid Waste Industrial Development Revenue: (Okeelanta Power LP Project) 6.85%, 2/15/2021 7,500,000 (b) 4,059,375 (Osceola Power LP) 6.85%, 1/1/2014 5,800,000 (b) 3,074,000 Palm Beach County Housing Finance Authority Single Family Mortgage Purchase Revenue 6.55%, 4/1/2027 (Collateralized: FNMA, GNMA) 1,900,000 1,958,330 Pinellas County Housing Finance Authority, SFMR: 7.70%, 8/1/2022 (Collateralized; GNMA) 1,505,000 1,546,403 (Multi-County Program) 6.70%, 2/1/2028 (Collateralized: FNMA, GNMA) 4,040,000 4,187,945 Polk County Industrial Development Authority, IDR (IMC Fertilizer) 7.525%, 1/1/2015 5,000,000 5,131,400 Seminole, Water Control District 6.75%, 8/1/2022 2,000,000 1,916,600 Seminole County, Sales Tax Revenue 4.625%, 10/1/2022 (Insured; MBIA) 2,015,000 1,668,239 Tampa: Alleghany Health System Revenue (St. Joseph) 6.50%, 12/1/2023 (Insured; MBIA, Prerefunded 12/1/2004) 1,000,000 (a) 1,074,400 Utility Tax Zero Coupon, 4/1/2017 (Insured; AMBAC) 2,110,000 786,692 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA (CONTINUED) Tampa Bay Water, Utility System Revenue: 4.75%, Series A, 10/1/2027 (Insured; FGIC) 5,875,000 4,886,531 4.75%, Series B, 10/1/2027 (Insured; FGIC) 3,500,000 2,911,125 Tarpon Springs Health Facilities Authority, Hospital Revenue (Helen Ellis Memorial Hospital Project) 7.625%, 5/1/2021 3,990,000 3,950,858 Village Center Community Development District, Recreational Revenue: 5%, 11/1/2021 (Insured; MBIA) 5,000,000 4,397,550 5%, 11/1/2023 (Insured; MBIA) 2,000,000 1,741,760 U.S. RELATED--6.4% Guam Power Authority, Revenue 5%, 10/1/2024 (Insured; AMBAC) 1,000,000 876,670 Commonwealth of Puerto Rico, Public Improvement 4.50%, 7/1/2023 (Insured; FSA) 2,920,000 2,367,448 Puerto Rico Electric Power Authority, Power Revenue 5%, 7/1/2028 (Insured; FSA) 6,000,000 5,265,840 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $136,269,200) 126,570,730 ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM MUNICIPAL INVESTMENTS--3.6% ------------------------------------------------------------------------------------------------------------------------------------ Hillsborough County Industrial Development Authority, PCR, VRDN (Tampa Electric Co. Gannon) 6.05% 2,300,000 (c) 2,300,000 Jacksonville Electric Authority, Electric System Revenue, VRDN 5.80% (SBPA; Landesbank Hessen Thurgen) 1,500,000 (c) 1,500,000 Saint Lucie County, PCR, VRDN (Florida Power and Light Co.) 5.80% 1,000,000 (c) 1,000,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $4,800,000) 4,800,000 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $141,069,200) 98.7% 131,370,730 CASH AND RECEIVABLES (NET) 1.3% 1,790,471 NET ASSETS 100.0% 133,161,201 The Fund Summary of Abbreviations AMBAC American Municipal Bond Assurance Corporation FGIC Financial Guaranty Insurance Company FNMA Federal National Mortgage Association FSA Financial Security Assurance GNMA Government National Mortgage Association IDR Industrial Development Revenue LOC Letter of Credit MBIA Municipal Bond Investors Assurance Insurance Corporation MFHR Multi-Family Housing Revenue MFMR Multi-Family Mortgage Revenue PCR Pollution Control Revenue SBPA Standby Bond Purchase Agreement SFMR Single Family Mortgage Revenue VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 65.8 A A A 9.6 BBB Baa BBB 5.8 BB Ba BB 3.0 F1 Mig1 SP1 3.7 Not Rated(d) Not Rated(d) Not Rated(d) 12.1 100.0 (A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. (B) NON-INCOME PRODUCING SECURITY; INTEREST PAYMENT IN DEFAULT. (C) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE. (D) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF ASSETS AND LIABLITIES April 30, 2000 Cost Value -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 141,069,200 131,370,730 Cash 37,218 Interest receivable 2,020,223 Prepaid expenses 5,554 133,433,725 -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 77,148 Payable for shares of Beneficial Interest redeemed 71,691 Accrued expenses 123,685 272,524 -------------------------------------------------------------------------------- NET ASSETS ($) 133,161,201 -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 142,847,577 Accumulated net realized gain (loss) on investments 12,094 Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (9,698,470) -------------------------------------------------------------------------------- NET ASSETS ($) 133,161,201 NET ASSET VALUE PER SHARE Class A Class B Class C ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 118,352,152 14,352,716 456,333 Shares Outstanding 9,191,063 1,115,120 35,434 ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 12.88 12.87 12.88 SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS Year ended April 30, 2000 -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 8,862,364 EXPENSES: Management fee--Note 3(a) 834,475 Shareholder servicing costs--Note 3(c) 491,452 Distribution fees--Note 3(b) 99,779 Legal fees 78,198 Registration fees 28,254 Prospectus and shareholders' reports 25,063 Custodian fees 15,778 Auditing fees 3,405 Trustees' fees and expenses--Note 3(d) 2,015 Loan commitment fees--Note 2 1,361 Miscellaneous 4,586 TOTAL EXPENSES 1,584,366 Less--reduction in management fee due to undertaking--Note 3(a) (85,069) NET EXPENSES 1,499,297 INVESTMENT INCOME-NET 7,363,067 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments 179,407 Net unrealized appreciation (depreciation) on investments (13,406,888) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (13,227,481) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (5,864,414) SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS Year Ended April 30, --------------------------------- 2000 1999 -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 7,363,067 8,448,485 Net realized gain (loss) on investments 179,407 2,468,854 Net unrealized appreciation (depreciation) on investments (13,406,888) (1,559,597) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (5,864,414) 9,357,742 -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (6,493,321) (7,184,648) Class B shares (853,129) (1,247,785) Class C shares (16,617) (16,052) Net realized gain on investments: Class A shares (497,191) (2,111,066) Class B shares (67,970) (426,489) Class C shares (1,344) (6,465) TOTAL DIVIDENDS (7,929,572) (10,992,505) -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 10,538,667 6,795,289 Class B shares 2,058,808 1,932,433 Class C shares 255,886 289,864 Dividends reinvested: Class A shares 2,582,873 3,582,522 Class B shares 252,506 564,491 Class C shares 5,682 6,371 Cost of shares redeemed: Class A shares (32,055,233) (27,626,849) Class B shares (12,789,483) (8,078,977) Class C shares (167,078) (261,074) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (29,317,372) (22,795,930) TOTAL INCREASE (DECREASE) IN NET ASSETS (43,111,358) (24,430,693) -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 176,272,559 200,703,252 END OF PERIOD 133,161,201 176,272,559 SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, --------------------------------- 2000 1999 -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 787,995 477,800 Shares issued for dividends reinvested 196,289 250,751 Shares redeemed (2,426,603) (1,932,468) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (1,442,319) (1,203,917) -------------------------------------------------------------------------------- CLASS B(A) Shares sold 154,959 134,751 Shares issued for dividends reinvested 19,156 39,521 Shares redeemed (962,486) (567,781) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (788,371) (393,509) -------------------------------------------------------------------------------- CLASS C Shares sold 19,716 20,218 Shares issued for dividends reinvested 435 446 Shares redeemed (12,836) (18,353) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 7,315 2,311 (A) DURING THE PERIOD ENDED APRIL 30, 2000, 451,916 CLASS B SHARES REPRESENTING $6,002,921 WERE AUTOMATICALLY CONVERTED TO 451,819 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Year Ended April 30, -------------------------------------------------------------------- CLASS A SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 14.03 14.17 14.06 14.48 14.51 Investment Operations: Investment income--net .65 .65 .66 .76 .79 Net realized and unrealized gain (loss) on investments (1.10) .05 .26 (.08) .17 Total from Investment Operations (.45) .70 .92 .68 .96 Distributions: Dividends from investment income--net (.65) (.65) (.66) (.76) (.79) Dividends from net realized gain on investments (.05) (.19) (.15) (.34) (.20) Total Distributions (.70) (.84) (.81) (1.10) (.99) Net asset value, end of period 12.88 14.03 14.17 14.06 14.48 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (3.19) 5.00 6.73 4.74 6.63 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .92 .92 .91 .92 .91 Ratio of net investment income to average net assets 4.92 4.53 4.67 5.27 5.29 Decrease reflected in above expense ratios due to undertaking by The Dreyfus Corporation .06 -- -- -- -- Portfolio Turnover Rate 29.04 88.48 91.18 71.68 54.37 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 118,352 149,185 167,793 202,503 227,478 A EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, ------------------------------------------------------------------- CLASS B SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 14.02 14.17 14.05 14.47 14.51 Investment Operations: Investment income--net .58 .57 .59 .69 .71 Net realized and unrealized gain (loss) on investments (1.10) .04 .27 (.08) .16 Total from Investment Operations (.52) .61 .86 .61 .87 Distributions: Dividends from investment income--net (.58) (.57) (.59) (.69) (.71) Dividends from net realized gain on investments (.05) (.19) (.15) (.34) (.20) Total Distributions (.63) (.76) (.74) (1.03) (.91) Net asset value, end of period 12.87 14.02 14.17 14.05 14.47 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (3.68) 4.40 6.26 4.21 6.01 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.43 1.42 1.41 1.42 1.41 Ratio of net investment income to average net assets 4.41 4.02 4.16 4.76 4.77 Decrease reflected in above expense ratios due to undertaking by The Dreyfus Corporation .06 -- -- -- -- Portfolio Turnover Rate 29.04 88.48 91.18 71.68 54.37 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 14,353 26,693 32,545 35,802 27,023 A EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (continued) Year Ended April 30, ------------------------------------------------------------------- CLASS C SHARES 2000 1999 1998 1997 1996(a) ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 14.03 14.17 14.05 14.47 14.65 Investment Operations: Investment income--net .54 .53 .55 .65 .48 Net realized and unrealized gain (loss) on investments (1.10) .05 .27 (.08) .02 Total from Investment Operations (.56) .58 .82 .57 .50 Distributions: Dividends from investment income--net (.54) (.53) (.55) (.65) (.48) Dividends from net realized gain on investments (.05) (.19) (.15) (.34) (.20) Total Distributions (.59) (.72) (.70) (.99) (.68) Net asset value, end of period 12.88 14.03 14.17 14.05 14.47 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (3.97) 4.13 5.94 3.95 4.69(c) ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.73 1.75 1.71 1.97 1.99(c) Ratio of net investment income to average net assets 4.11 3.69 3.69 4.60 4.20(c) Decrease reflected in above expense ratios due to undertaking by The Dreyfus Corporation .10 -- -- -- -- Portfolio Turnover Rate 29.04 88.48 91.18 71.68 54.37 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 456 394 366 58 35 A FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. B EXCLUSIVE OF SALES CHARGE. C ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company, and operates as a series company currently offering thirteen series, including the Florida Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned subsidiary of the Manager, became the distributor of the fund's shares. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund is authorized to issue an unlimited number of $.001 par value shares in the following classes of shares: Class A, Class B and Class C shares. Class A shares are subject to a sales charge imposed at the time of purchase, Class B shares are subject to a contingent deferred sales charge ("CDSC") imposed on Class B share redemptions made within six years of purchase (five years for shareholders beneficially owning Class B shares on November 30, 1996) and Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. 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 Trust 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 fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) (a) Portfolio valuation: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $9,082 during the period ended April 30, 2000, based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (c) Dividends to shareholders: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the " Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (d) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $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 at rates based on prevailing market rates in effect at the time of borrowings. During the period ended April 30, 2000, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (a) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund's average daily net assets and is payable monthly. The Manager has undertaken from January 26, 2000 through April 30, The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2001, to reduce the management fee paid by the fund to the extent that the fund' s aggregate annual expenses, exclusive of Rule 12b-1 Distribution Plan fees, taxes, brokerage fees, interest on borrowings and extraordinary expenses, but including litigation expenses related to the Series' holdings of (a) Palm Beach County, Florida Solid Waste Industrial Development Revenue Bonds (Okeelanta Power Limited Partnership Project) Series 1993A; and (b) Palm Beach County, Florida Solid Waste Industrial Development Revenue Bonds (Osceola Power Limited Partnership Project) Series 1994A and 1994B, exceed an annual rate of . 92 of 1% of the value of the fund's average daily net assets. The reduction in management fee, pursuant to the undertaking, amounted to $85,069 during the period ended April 30, 2000. DSC retained $1,662 during the period ended April 30, 2000 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, 2000, Class B and Class C shares were charged $96,745 and $3,034, respectively, pursuant to the Plan, of which $8,111 and $377 for Class B and Class C shares, respectively, were paid to DSC. (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 their average daily net assets 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, 2000, Class A, Class B and Class C shares were charged $329,923, $48,373 and $1,011, respectively, pursuant to the Shareholder Services Plan, of which $32,818, $4,055 and $126 for Class A, Class B and Class C shares, respectively, were paid to DSC. 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, 2000, the fund was charged $75,307 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"). Effective April 13, 2000, each Board member receives an annual fee of $50,000 and a fee of $6,500 for each meeting held in person 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. Prior to April 13, 2000, each Board member who was not an "affiliated person" as defined in the Act received from the Trust an annual fee of $2,500 and an attendance fee of $250 per meeting. The Chairman of the Board received an additional 25% of such compensation. Subject to the fund' s Director Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the Trust's annual retainer fee and per meeting fee paid at the time the Board member achieved 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, 2000, amounted to $43,450,069 and $74,565,027, respectively. At April 30, 2000, accumulated net unrealized depreciation on investments was $9,698,470, consisting of $2,164,001 gross unrealized appreciation and $11,862,471 gross unrealized depreciation. At April 30, 2000, 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). The Fund REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Trustees Dreyfus Premier State Municipal Bond Fund, Florida Series We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Premier State Municipal Bond Fund, Florida Series (one of the Funds constituting the Dreyfus Premier State Municipal Bond Fund) as of April 30, 2000, 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 and financial highlights. Our procedures included confirmation of securities owned as of April 30, 2000, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier State Municipal Bond Fund, Florida Series at April 30, 2000, 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 9, 2000 IMPORTANT TAX INFORMATION (Unaudited) In accordance with Federal tax law, the fund hereby makes the following designations regarding its fiscal year ended April 30, 2000: --all the dividends paid from investment income-net are "exempt-interest dividends" (not subject to regular Federal income tax, and for individuals who are Florida residents, not subject to taxation by Florida), and --the fund hereby designates $.0501 per share as a long-term capital gain distribution paid on December 8, 1999. 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 gains distributions (if any) paid for the 2000 calendar year on form 1099-DIV which will be mailed by January 31, 2001. The Fund For More Information Dreyfus Premier State Municipal Bond Fund, Florida 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 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 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) 2000 Dreyfus Service Corporation 051AR004 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Georgia Series ANNUAL REPORT April 30, 2000 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Fund Performance 8 Statement of Investments 11 Statement of Assets and Liabilities 12 Statement of Operations 13 Statement of Changes in Net Assets 15 Financial Highlights 18 Notes to Financial Statements 24 Report of Independent Auditors 25 Important Tax Information FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Georgia Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this annual report for Dreyfus Premier State Municipal Bond Fund, Georgia Series, covering the 12-month period from May 1, 1999 through April 30, 2000. 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, Paul Disdier. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. While higher interest rates generally led to an erosion of municipal bond prices during much of the reporting period, the tax-exempt bond market showed renewed signs of strength during the first four months of 2000. Municipal bonds were also influenced by supply-and-demand considerations. These technical influences have caused the yields of tax-exempt bonds to rise to very attractive levels compared to the after-tax yields of taxable bonds of comparable maturity and credit quality, making tax-exempt bonds especially attractive for investors in the higher federal and state income tax brackets. We appreciate your confidence over the past year, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Georgia Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation May 15, 2000 DISCUSSION OF FUND PERFORMANCE Paul Disdier, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Georgia Series, perform during the period? For the 12-month period ended April 30, 2000, the fund's Class A shares provided a -2.76% total return, its Class B shares provided a -3.31% total return and its Class C shares provided a -3.51% total return.(1) In comparison, the Lipper Georgia Municipal Debt Funds category average provided a -3.02% total return for the same period.(2) We attribute the fund' s absolute performance to a rising interest-rate environment, which caused most municipal bond prices to decline during November and December of 1999. These negative returns were not completely offset during the market rally that began in the first quarter of 2000. The fund's relative performance was primarily a result of its duration management strategy, which included a longer AVERAGE DURATION -- a measure of the fund's sensitivity to changes in interest rates -- than most of its peers. The fund's relatively long average duration hurt performance during the final two months of 1999, but generally helped performance during the first four months of 2000 as the market rallied. What is the fund's investment approach? Our goal is to seek as high a level of federal and Georgia tax-exempt income as is practical without undue risk from a diversified portfolio of municipal bonds. To achieve this objective, we look for bonds that we expect to provide consistently high income streams. We strive to find such opportunities through rigorous analyses of individual bonds' structures. Within the context of our bond structure analysis, we pay particularly close attention to each bond's maturity and early redemption features. In addition, we conduct extensive credit analyses of our holdings in an attempt to avoid potential defaults on interest and principal payments. The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) What other factors influenced the fund's performance? Although the fund's performance was hurt by a difficult investment environment during the last two months of 1999, the first four months of 2000 provided better market conditions and a market rally. When the reporting period began on May 1, 1999, investors had become concerned that strong economic growth might rekindle long-dormant inflationary pressures. In fact, in an attempt to forestall a reacceleration of inflation, the Federal Reserve Board raised short-term interest rates five times during the reporting period, causing most bond prices to fall, for a total increase of 1.25 percentage points since last summer. Nationally, municipal bond prices also fell during 1999 because of adverse supply-and-demand influences. For a variety of reasons, institutional investors participated less in the tax-exempt market. Despite strong demand from individual investors, the absence of institutional buyers helped reduce overall demand in the national market and drove municipal bond prices down. In addition, during the first quarter of 2000, issuance of municipal bonds nationally declined approximately 20%, as compared to the same period in 1999. This supply reduction, combined with robust demand from individual investors, helped support a rebound of municipal bond prices, including bonds from Georgia issuers, and especially among longer term bonds. What is the fund's current strategy? We have continued to follow our strategy of attempting to maximize the income produced by a diversified portfolio of investment-grade municipal bonds from Georgia issuers. To that end, we have gradually been reducing the fund's average duration, primarily by selling some of our longer term holdings and raising cash in a volatile market. As of April 30, 2000, cash and cash equivalents -- such as tax-exempt money market securities -- comprised about 10% of the portfolio. We may redeploy much of our cash reserve if it becomes clearer to us that market volatility is subsiding. In addition, we have been continually attempting to upgrade the portfolio whenever opportunities to do so have arisen. We have focused primarily on high quality securities that provide competitive yields and have some protection from early redemption by their issuers, such as non-callable general obligation bonds from the state of Georgia. On the other hand, we have avoided certain market sectors that we believe may be subject to credit concerns, such as bonds issued by some health care facilities. However, our ability to make these portfolio adjustments as quickly as we might have liked has been constrained by the recent scarcity of new municipal bond issuance in Georgia. May 15, 2000 (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 CHARGE 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 FOR NON-GEORGIA RESIDENTS 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 ANALYTICAL SERVICES, INC. The Fund FUND PERFORMANCE Comparison of change in value of $10,000 investment in Dreyfus Premier State Municipal Bond Fund, Georgia Series Class A shares and the Lehman Brothers Municipal Bond Index ((+)) SOURCE: LIPPER ANALYTICAL SERVICES, 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 STATE MUNICIPAL BOND FUND, GEORGIA SERIES (THE "FUND") ON 9/3/92 (INCEPTION DATE) TO A $10,000 INVESTMENT MADE IN THE LEHMAN BROTHERS MUNICIPAL BOND INDEX (THE "INDEX") ON THAT DATE. FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 8/31/92 IS USED AS THE BEGINNING VALUE ON 9/3/92. 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 GEORGIA 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 IS NOT LIMITED TO INVESTMENTS PRINCIPALLY IN GEORGIA MUNICIPAL OBLIGATIONS AND DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. THE INDEX, UNLIKE THE FUND, 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. THESE FACTORS 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 4/30/00 Inception From Date 1 Year 5 Years Inception ------------------------------------------------------------------------------------------------------------------------------------ CLASS A SHARES WITH SALES CHARGE (4.5%) 9/3/92 (7.12)% 3.78% 4.82% WITHOUT SALES CHARGE 9/3/92 (2.76)% 4.74% 5.46% CLASS B SHARES WITH REDEMPTION((+)) 1/15/93 (7.02)% 3.88% 4.72% WITHOUT REDEMPTION 1/15/93 (3.31)% 4.22% 4.72% CLASS C SHARES WITH REDEMPTION((+)(+)) 8/15/95 (4.44)% -- 3.64% WITHOUT REDEMPTION 8/15/95 (3.51)% -- 3.64% PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. ((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS A SHARES. ((+)(+)) 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, 2000 Principal LONG-TERM MUNICIPAL INVESTMENTS--90.4% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ Atlanta, Airport Revenue 5.50%, 1/1/2022 (Insured; FGIC) 750,000 719,250 Brunswick & Glynn County Development Authority, Revenue (Pacific Corp. Project) 5.55%, 3/1/2026 1,000,000 848,730 Cherokee County, Water and Sewer Revenue, 4.75%, 8/1/2028 (Insured; FGIC) 1,000,000 825,960 Clayton County and Clayton County Water Authority, Water and Sewer Revenue 5.10%, 5/1/2016 500,000 476,080 Columbia County, Water and Sewer Revenue 5.40%, 6/1/2011 (Insured; AMBAC) 750,000 755,587 Fayette County School District 6.125%, 3/1/2015 500,000 527,220 Fulton County, Water and Sewer Revenue 6.375%, 1/1/2014 (Insured; FGIC, Escrowed to Maturity) 260,000 284,398 Fulton County Development Authority, Special Facility Revenue (Delta Airlines, Inc. Project) 5.45%, 5/1/2023 1,000,000 850,240 Fulton County Facilities Corporation, COP (Fulton County Public Purpose Project) 5.50%, 11/1/2018 (Insured; AMBAC) 750,000 728,393 Gainesville, Water and Sewer Revenue 6%, 11/15/2012 (Insured; FGIC) 300,000 318,918 Georgia: 5.65%, 3/1/2012 1,000,000 1,035,490 5.80%, 11/1/2015 710,000 734,957 5.75%, 8/1/2016 500,000 517,360 Georgia Housing and Finance Authority, SFMR 6.50%, 12/1/2017 (Insured; FHA) 1,000,000 1,017,490 Georgia Municipal Gas Authority, Gas Revenue (Warner Robins Project) 5.80%, 1/1/2015 (Insured; MBIA) 1,000,000 1,013,180 Georgia Municipal Electric Authority, Power Revenue 5.50%, 1/1/2012 (Insured; AMBAC) 1,000,000 1,011,520 Marietta Development Authority, Revenue (First Mortgage-Life College) 5.75%, 9/1/2014 (Insured; FSA) 850,000 861,339 Marietta School 4.50%, 2/1/2019 1,000,000 832,890 Meriwether County School District 5.50%, 2/1/2016 (Insured; FSA) 750,000 740,212 Metropolitan Atlanta Rapid Transportation Authority, Sales Tax Revenue 6.25%, 7/1/2020 (Insured; AMBAC) 300,000 319,416 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ Private Colleges and Universities Authority, Revenue (Emory University Project) 5.50%, 11/1/2019 750,000 732,900 (Spellman College Project) 6.20%, 6/1/2014 (Insured; FGIC) 1,000,000 1,042,840 Royston Hospital Authority, HR (Ty Cobb Healthcare System, Inc.) 6.50%, 7/1/2027 700,000 626,213 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $16,986,519) 16,820,583 ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM MUNICIPAL INVESTMENTS--8.1% ------------------------------------------------------------------------------------------------------------------------------------ GEORGIA--2.7% Hapeville Development Authority, VRDN (Hapeville Hotel, Ltd.) 6.05% 500,000 (a) 500,000 U. S. RELATED--5.4% Puerto Rico Commonwealth Highway and Transportation Authority, VRDN 4.90% 1,000,000 (a) 1,000,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $1,500,000) 1,500,000 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $18,486,519) 98.5% 18,320,583 CASH AND RECEIVABLES (NET) 1.5% 286,963 NET ASSETS 100.0% 18,607,546 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Summary of Abbreviations AMBAC American Municipal Bond Assurance Corporation COP Certificate of Participation FGIC Financial Guaranty Insurance Company FHA Federal Housing Administration FSA Financial Security Assurance HR Hospital Revenue MBIA Municipal Bond Investors Assurance Insurance Corporation SFMR Single Family Mortgage Revenue VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 65.1 AA Aa AA 14.0 BBB Baa BBB 12.7 F1+, F-1 MIG1, VMIG1 & P1 SP1, A1 8.2 100.0 (A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF ASSETS AND LIABILITIES April 30, 2000 Cost Value -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 18,486,519 18,320,583 Cash 22,952 Interest receivable 327,602 Prepaid expenses 5,107 18,676,244 -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 14,256 Payable for shares of Beneficial Interest redeemed 45,105 Accrued expenses 9,337 68,698 -------------------------------------------------------------------------------- NET ASSETS ($) 18,607,546 -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 19,010,714 Accumulated net realized gain (loss) on investments (237,232) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (165,936) -------------------------------------------------------------------------------- NET ASSETS ($) 18,607,546 NET ASSET VALUE PER SHARE Class A Class B Class C ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 11,838,500 6,680,860 88,186 Shares Outstanding 922,763 520,584 6,878 NET ASSET VALUE PER SHARE ($) 12.83 12.83 12.82 SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF OPERATIONS Year Ended April 30, 2000 -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 1,062,549 EXPENSES: Management fee--Note 3(a) 106,141 Shareholder servicing costs--Note 3(c) 63,163 Distribution fees--Note 3(b) 43,258 Registration fees 30,077 Professional fees 18,138 Prospectus and shareholders' reports 13,326 Custodian fees 3,593 Trustees' fees and expenses--Note 3(d) 299 Loan commitment fees--Note 2 194 Miscellaneous 6,131 TOTAL EXPENSES 284,320 Less--reduction in management fee due to undertaking--Note 3(a) (58,144) NET EXPENSES 226,176 INVESTMENT INCOME--NET 836,373 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (169,957) Net unrealized appreciation (depreciation) on investments (1,301,091) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (1,471,048) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (634,675) SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Year Ended April 30, -------------------------------- 2000 1999 -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 836,373 904,128 Net realized gain (loss) on investments (169,957) 544,900 Net unrealized appreciation (depreciation) on investments (1,301,091) (214,880) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (634,675) 1,234,148 -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (489,538) (290,432) Class B shares (344,586) (612,746) Class C shares (2,249) (950) TOTAL DIVIDENDS (836,373) (904,128) -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 5,413,341 3,073,890 Class B shares 2,217,910 630,199 Class C shares 109,675 35,401 Dividends reinvested: Class A shares 299,966 186,394 Class B shares 199,528 298,894 Class C shares 639 409 Cost of shares redeemed: Class A shares (1,924,109) (784,843) Class B shares (7,580,619) (6,162,616) Class C shares (65,267) (32,325) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (1,328,936) (2,754,597) TOTAL INCREASE (DECREASE) IN NET ASSETS (2,799,984) (2,424,577) -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 21,407,530 23,832,107 END OF PERIOD 18,607,546 21,407,530 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) Year Ended April 30, -------------------------------- 2000 1999 -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A (A) Shares sold 408,892 220,547 Shares issued for dividends reinvested 23,161 13,383 Shares redeemed (144,231) (56,295) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 287,822 177,635 -------------------------------------------------------------------------------- CLASS B (A) Shares sold 164,950 45,364 Shares issued for dividends reinvested 15,350 21,439 Shares redeemed (571,205) (443,237) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (390,905) (376,434) -------------------------------------------------------------------------------- CLASS C Shares sold 8,400 2,553 Shares issued for dividends reinvested 49 29 Shares redeemed (4,941) (2,305) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 3,508 277 (A) DURING THE PERIOD ENDED APRIL 30, 2000, 271,943 CLASS B SHARES REPRESENTING $3,559,075 WERE AUTOMATICALLY CONVERTED TO 272,136 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Year Ended April 30, ------------------------------------------------------------------- CLASS A SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.81 13.63 13.22 13.05 12.80 Investment Operations: Investment income--net .59 .60 .61 .62 .66 Net realized and unrealized gain (loss) on investments (.98) .18 .41 .17 .25 Total from Investment Operations (.39) .78 1.02 .79 .91 Distributions: Dividends from investment income--net (.59) (.60) (.61) (.62) (.66) Net asset value, end of period 12.83 13.81 13.63 13.22 13.05 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (2.76) 5.74 7.76 6.16 7.14 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .94 .99 .95 .98 .74 Ratio of net investment income to average net assets 4.57 4.27 4.44 4.71 5.00 Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation .32 -- -- -- .21 Portfolio Turnover Rate 54.72 69.13 36.64 50.96 33.09 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 11,839 8,769 6,232 6,598 8,346 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Year Ended April 30, ------------------------------------------------------------------- CLASS B SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.82 13.63 13.22 13.06 12.80 Investment Operations: Investment income--net .53 .53 .54 .56 .59 Net realized and unrealized gain (loss) on investments (.99) .19 .41 .16 .26 Total from Investment Operations (.46) .72 .95 .72 .85 Distributions: Dividends from investment income--net (.53) (.53) (.54) (.56) (.59) Net asset value, end of period 12.83 13.82 13.63 13.22 13.06 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (3.31) 5.29 7.24 5.55 6.69 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.45 1.49 1.44 1.47 1.24 Ratio of net investment income to average net assets 4.02 3.79 3.94 4.20 4.46 Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation .28 -- -- -- .20 Portfolio Turnover Rate 54.72 69.13 36.64 50.96 33.09 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 6,681 12,592 17,558 18,211 20,106 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, -------------------------------------------------------------------- CLASS C SHARES 2000 1999 1998 1997 1996(a) ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.80 13.62 13.22 13.05 12.85 Investment Operations: Investment income--net .49 .44 .47 .51 .38 Net realized and unrealized gain (loss) on investments (.98) .18 .40 .17 .20 Total from Investment Operations (.49) .62 .87 .68 .58 Distributions: Dividends from investment income--net (.49) (.44) (.47) (.51) (.38) Net asset value, end of period 12.82 13.80 13.62 13.22 13.05 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (3.51) 4.59 6.61 5.30 6.28(c) ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.65 1.99 1.91 1.80 1.98(c) Ratio of net investment income to average net assets 3.82 3.28 3.48 3.87 3.73(c) Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation .30 -- -- -- -- Portfolio Turnover Rate 54.72 69.13 36.64 50.96 33.09 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 88 47 42 105 88 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund NOTES TO FINANCIAL STATEMENTS NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified, open-end management investment company, and operates as a series company currently offering thirteen series including the Georgia Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. On April 12, 2000, the Board of Trustees approved, subject to approval by the shareholders of the fund, an Agreement and Plan of Reorganization providing for the transfer of all of the assets and liabilities of the fund in a tax free exchange of shares of beneficial interest of the Dreyfus Premier Municipal Bond Fund at net asset value and the assumption of stated liabilities. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned subsidiary of the Manager, became the distributor of the fund's shares. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund is authorized to issue an unlimited number of $.001 par value shares in the following classes of shares: Class A, Class B and Class C shares. Class A shares are subject to a sales charge imposed at the time of purchase, Class B shares are subject to a contingent deferred sales charge ("CDSC") imposed on Class B share redemptions made within six years of purchase (five years for shareholders beneficially owning Class B shares on November 30, 1996) and Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. 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 Trust 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 fund's financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (a) Portfolio valuation: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) 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 $1,865 during the period ended April 30, 2000 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (c) Dividends to shareholders: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code 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. The fund has an unused capital loss carryover of approximately $42,000 available for Federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to April 30, 2000. This amount is calculated based on Federal income tax regulations which may differ from financial reporting in accordance with generally accepted accounting principles. If not applied, $25,000 of the carryover expires in fiscal 2004 and $17,000 expires in fiscal 2005. 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 at rates based on prevailing market rates in effect at the time of borrowings. During the period ended April 30, 2000, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (a) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the funds' average daily net assets and is payable monthly. The Manager had undertaken from July 29, 1999 through April 30, 2000, to reduce the management fee paid by the fund, to the extent that the fund's aggregate expenses, excluding 12b-1 distribution fees, taxes, brokerage fees, commitment fees, interest on borrowings and extraordinary expenses, exceeded an annual rate of .89 of 1% of the value of the fund' s average daily net assets. The reduction in management fee, pursuant to the undertaking, amounted to $58,144 during the period ended April 30, 2000. (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, 2000, Class B and Class C shares were charged $42,818 and $440, respectively, pursuant to the Plan of which $3,728 and $73 for Class B and Class C, respectively, were paid to DSC. (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 Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) their average daily net assets 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, 2000, Class A, Class B and Class C shares were charged $26,690, $21,409 and $147, respectively, pursuant to the Shareholder Services Plan of which $3,253, $1,864 and $24 for Class A, Class B and Class C, respectively, were paid to DSC. 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, 2000, the fund was charged $8,728 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"). Effective April 13, 2000, each Board member receives an annual fee of $50,000 and a fee of $6,500 for each meeting held in person 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. Prior to April 13, 2000, each Board member who was not an "affiliated person" as defined in the Act received from the Trust an annual fee of $2,500 and an attendance fee of $250 per meeting. The Chairman of the Board received an additional 25% of such compensation. Subject to the fund' s Director Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the Trust's annual retainer fee and per meeting fee paid at the time the Board member achieved 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, 2000, amounted to $9,841,240 and $11,656,845, respectively. At April 30, 2000, accumulated net unrealized depreciation on investments was $165,936, consisting of $312,640 gross unrealized appreciation and $478,576 gross unrealized depreciation. At April 30, 2000, 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). The Fund REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Trustees Dreyfus Premier State Municipal Bond Fund, Georgia Series We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Premier State Municipal Bond Fund, Georgia Series (one of the Funds constituting the Dreyfus Premier State Municipal Bond Fund) as of April 30, 2000, 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 and financial highlights. Our procedures included confirmation of securities owned as of April 30, 2000, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier State Municipal Bond Fund, Georgia Series at April 30, 2000, 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 9, 2000 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, 2000 as "exempt-interest dividends" (not subject to regular Federal and, for individuals who are Georgia residents, Georgia personal income taxes). 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 gains distributions (if any) paid for the 2000 calendar year on form 1099-DIV which will be mailed by January 31, 2001. The Fund For More Information Dreyfus Premier State Municipal Bond Fund, Georgia 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 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 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) 2000 Dreyfus Service Corporation 068AR004 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Maryland Series ANNUAL REPORT April 30, 2000 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Fund Performance 8 Statement of Investments 12 Statement of Assets and Liabilities 13 Statement of Operations 14 Statement of Changes in Net Assets 16 Financial Highlights 19 Notes to Financial Statements 24 Report of Independent Auditors 25 Important Tax Information FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Maryland Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this annual report for Dreyfus Premier State Municipal Bond Fund, Maryland Series, covering the 12-month period from May 1, 1999 through April 30, 2000. 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, Douglas Gaylor. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. While higher interest rates generally led to an erosion of municipal bond prices during much of the reporting period, the tax-exempt bond market showed renewed signs of strength during the first four months of 2000. Municipal bonds were also influenced by supply-and-demand considerations. These technical influences have caused the yields of tax-exempt bonds to rise to very attractive levels compared to the after-tax yields of taxable bonds of comparable maturity and credit quality, making tax-exempt bonds especially attractive for investors in the higher federal and state income tax brackets. We appreciate your confidence over the past year, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Maryland Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation May 15, 2000 DISCUSSION OF FUND PERFORMANCE Douglas Gaylor, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Maryland Series, perform during the period? For the 12-month period ended April 30, 2000, the fund's Class A shares provided a -3.61% total return, its Class B shares provided a -4.12% total return and its Class C shares provided a -4.32% total return.(1) In comparison, the Lipper Maryland Municipal Debt Funds category average provided a -2.46% total return for the same period.(2) We attribute the fund's negative absolute returns during the reporting period to a rising interest-rate environment, which caused most municipal bond prices to decline. What is the fund's investment approach? Our goal is to seek as high a level of federal and Maryland tax-exempt income as is practical without undue risk from a diversified portfolio of municipal bonds. To achieve this objective, we employ two primary strategies. First, for between one-half and three-quarters of the total fund, we look for bonds that can potentially offer attractive current income. We typically look for bonds that can provide consistently high current yields. We also try to ensure that we select bonds that are most likely to obtain attractive prices if and when we decide to sell them in the secondary market. Second, for the remainder of the fund, we try to look for bonds that we believe have the potential to offer attractive total returns. We typically look for bonds that are selling at a discount to face value because they may be temporarily out of favor among investors. Our belief is that these bonds' prices will rise as they return to favor over time. What other factors influenced the fund's performance? Although the portfolio's performance was hurt by a difficult investment environment from the beginning of the reporting period throughout 1999, the first four months of 2000 generally provided The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) better market conditions and a market rally. This rally helped offset most -- but not all -- of the decline in the last eight months of 1999. When the reporting period began on May 1, 1999, investors had become concerned that strong economic growth might rekindle long-dormant inflationary pressures, especially from rising wages in a tight job market. In an attempt to ease these pressures and forestall a reacceleration of inflation, the Federal Reserve Board raised short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. This caused most bond prices to fall. During 1999 municipal bond prices also fell because of adverse supply-and-demand influences. For a variety of reasons, institutional investors such as insurance companies and mutual funds participated less in the tax-exempt market. Despite strong demand from individual investors, the absence of institutional buyers helped reduce overall demand and drove municipal bond prices down. During the first quarter of 2000, however, issuance of municipal bonds nationally declined approximately 20% compared to the same period in 1999. This scarcity of supply was especially severe in Maryland, which is typically a low-issuance state compared to other states. The lack of supply, combined with strong demand from individual investors, helped to support the prices of Maryland bonds during the recent market rally. What is the fund's current strategy? Our current strategy has been to maintain as high a level of income as practical while reducing volatility and protecting assets in a rising interest-rate environment. Accordingly, we have slowly and modestly begun to reduce the portfolio' s average duration -- a measure of sensitivity to changing interest rates -- in an attempt to protect our holdings from the brunt of potential price depreciation and capture higher yields as they may become available. Accordingly, we have shifted assets from municipal bonds with maturities of 20 to 30 years into bonds with maturities in the 10- to 20-year range. In addition to helping us reduce the fund's sensitivity to rising interest rates, these intermediate-term holdings are also more likely to attract the interest of individual investors when the time comes to sell. From a security selection perspective, we have focused primarily on tax-exempt bonds that have recently been out of favor among investors, including bonds selling at deep discounts and modest premiums to their face values. Because they are currently unpopular, these types of bonds are available with attractive yields, in our view, compared to other types of bonds that investors currently favor. We believe that these holdings have the potential to boost the fund's performance when deep-discount and modest-premium bonds return to favor among investors. May 15, 2000 (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 CHARGE 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 FOR NON-MARYLAND RESIDENTS 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 ANALYTICAL SERVICES, INC. The Fund FUND PERFORMANCE Comparison of change in value of $10,000 investment in Dreyfus Premier State Municipal Bond Fund, Maryland Series Class A shares and the Lehman Brothers Municipal Bond Index ((+)) SOURCE: LIPPER ANALYTICAL SERVICES, 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 STATE MUNICIPAL BOND FUND, MARYLAND SERIES (THE "FUND") ON 4/30/90 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 MARYLAND 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 IS NOT LIMITED TO INVESTMENTS PRINCIPALLY IN MARYLAND MUNICIPAL OBLIGATIONS AND DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. THE INDEX, UNLIKE THE FUND, 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. THESE FACTORS 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 4/30/00 Inception From Date 1 Year 5 Years 10 Years Inception ------------------------------------------------------------------------------------------------------------------------------------ CLASS A SHARES WITH SALES CHARGE (4.5%) 5/28/87 (7.95)% 4.07% 6.15% -- WITHOUT SALES CHARGE 5/28/87 (3.61)% 5.04% 6.64% -- CLASS B SHARES WITH REDEMPTION((+)) 1/15/93 (7.74)% 4.17% -- 4.70% WITHOUT REDEMPTION 1/15/93 (4.12)% 4.48% -- 4.70% CLASS C SHARES WITH REDEMPTION((+)(+)) 8/15/95 (5.23)% -- -- 4.00% WITHOUT REDEMPTION 8/15/95 (4.32)% -- -- 4.00% PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. ((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS A SHARES. ((+)(+)) 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 STATEMENT OF INVESTMENTS April 30, 2000 Principal LONG-TERM MUNICIPAL INVESTMENTS--97.6% Amount ($) Value ($) ---------------------------------------------------------------------------------------------------------------------------- MARYLAND--86.2% Anne Arundel County: General Improvement 4.50%, 8/1/2018 870,000 737,055 Water and Sewer: 4.50%, 8/1/2018 515,000 436,303 4.50%, 8/1/2019 1,495,000 1,255,142 4.50%, 8/1/2020 1,455,000 1,207,665 Baltimore: (Tindeco Wharf Project) 6.60%, 12/20/2024 (Collateralized; GNMA) 4,250,000 4,361,987 Port Facilities Revenue (Consolidated Coal Sales) 6.50%, 12/1/2010 4,090,000 4,309,674 Baltimore City Housing Corp., MFHR 7.25%, 7/1/2023 (Collateralized; FNMA) 3,085,000 3,122,236 Baltimore County: Mortgage Revenue, Zero Coupon, 9/1/2024 2,280,000 509,717 Nursing Facility Mortgage Revenue (Eastpoint Rehabilitation & Nursing Centers): 6.75%, 4/1/2015 1,000,000 800,000 6.75%, 4/1/2028 1,500,000 1,200,000 PCR (Bethlehem Steel Corp. Project): 7.50%, 6/1/2015 5,785,000 5,873,048 7.55%, 6/1/2017 2,690,000 2,739,469 Carroll County, County Commissioners - Consolidated Public Improvement 4.70%, 10/1/2016 1,000,000 886,880 Gaithersburg, Hospital Facilities Improvement Revenue (Shady Grove) 6.50%, 9/1/2012 (Insured; FSA) 10,000,000 11,023,500 Howard County, COP 8.15%, 2/15/2020 605,000 775,404 Maryland, COP (Aviation Administration Facilities Project): 4.75%, 5/1/2015 565,000 501,144 4.75%, 5/1/2016 750,000 658,965 4.75%, 5/1/2017 1,650,000 1,437,579 4.75%, 5/1/2018 1,730,000 1,494,720 Maryland Community Development Administration, Department of Housing and Community Development: Housing Revenue 5.65%, 7/1/2039 3,800,000 3,431,970 Multi-Family Development (Auburn Manor Project) 5.30%, 10/1/2028 1,000,000 877,970 MFHR: 6.50%, 5/15/2013 3,000,000 3,098,580 6.85%, 5/15/2033 3,075,000 3,148,739 6.70%, 5/15/2036 (Insured; FHA) 7,710,000 7,940,375 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ---------------------------------------------------------------------------------------------------------------------------- Maryland Community Development Administration, Department of Housing and Community Development (continued): Residential 5.25%, 9/1/2029 3,700,000 3,240,719 Single Family Program: 6.95%, 4/1/2011 3,785,000 3,871,752 4.75%, 4/1/2012 2,865,000 2,652,732 4.80%, 4/1/2013 1,700,000 1,558,985 5.15%, 4/1/2018 2,000,000 1,815,180 6.55%, 4/1/2026 7,170,000 7,301,068 6.75%, 4/1/2026 3,880,000 3,940,101 5.25%, 4/1/2029 8,330,000 7,301,661 7.45%, 4/1/2032 1,060,000 1,061,198 Maryland Economic Development Corp., Revenue (Health and Mental Hygiene Providers Facilities Acquisition Program): 8.375%, 3/1/2013 3,900,000 4,051,749 8.75%, 3/1/2017 4,670,000 4,596,121 Maryland Health and Higher Educational Facilities Authority, Revenue: (Calvert Memorial Hospital) 5%, 7/1/2028 1,285,000 1,034,168 (Doctors Community Hospital) 5.50%, 7/1/2024 9,890,000 7,628,651 (Helix Health Issue) 5%, 7/1/2027 (Insured; AMBAC) 5,580,000 4,979,592 (Johns Hopkins Hospital): 4.75%, 5/15/2033 7,100,000 5,748,444 4.50%, 5/15/2035 2,395,000 1,832,319 (Loyola College) 5%, 10/1/2039 3,500,000 2,913,435 (Medlantic Helix Issue) 4.75%, 8/15/2028 (Insured; FSA) 32,385,000 26,595,210 (Upper Chesapeake Hospitals) 5.375%, 1/1/2028 (Insured; FSA) 1,000,000 929,370 (Union Hospital of Cecil County) : 6.70%, 7/1/2009 2,320,000 2,405,886 4.75%, 7/1/2013 1,840,000 1,536,878 5.10%, 7/1/2022 2,500,000 2,013,950 (University of Maryland Medical Systems) 7%, 7/1/2022 (Insured; FGIC) 4,500,000 5,153,130 Maryland Industrial Development Financing Authority, EDR (Medical Waste Association) 8.75%, 11/15/2010 700,000 532,000 Maryland Local Government Insurance Trust, COP 7.125%, 8/1/2009 3,250,000 3,335,312 Montgomery County Housing Opportunities Commission, Multi-Family Mortgage Revenue: 7.05%, 7/1/2032 2,485,000 2,551,275 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ---------------------------------------------------------------------------------------------------------------------------- Montgomery County Housing Opportunities Commission, Multi-Family Mortgage Revenue (continued): 7.375%, 7/1/2032 1,805,000 1,825,757 Single Family Mortgage: 7.375%, 7/1/2017 880,000 894,054 6.625%, 7/1/2026 1,000,000 1,020,150 Zero Coupon, 7/1/2027 12,165,000 2,277,775 Zero Coupon, 7/1/2028 41,975,000 7,513,945 Northeast Waste Disposal Authority, RRR: (Baltimore Resco Retrofit Project) 5%, 1/1/2012 4,235,000 3,480,874 Solid Waste Revenue (Montgomery County Resource Recovery Project): 6%, 7/1/2008 2,690,000 2,745,414 6.20%, 7/1/2010 10,000,000 10,209,200 6.30%, 7/1/2016 14,205,000 14,415,234 Prince Georges County Housing Authority: Mortgage Revenue: (New Keystone Apartment Project) 6.80%, 7/1/2025 (Insured: FHA & MBIA) 4,300,000 4,420,013 (Riverview Terrace) 6.70%, 6/20/2020 (Collateralized; GNMA) 2,000,000 2,078,920 (Stevenson Apartments Project) 6.35%, 7/20/2020 (Collateralized; GNMA) 3,000,000 3,047,250 Revenue (Dimensions Health Corporation Project) 5.30%, 7/1/2024 8,810,000 6,377,118 SFMR 6.60%, 12/1/2025 (Collateralized: FNMA & GNMA) 3,700,000 3,770,115 U. S. RELATED--11.4% Guam Airport Authority, Revenue 6.70%, 10/1/2023 10,000,000 10,124,500 Puerto Rico Commonwealth, Public Improvement: 4.50%, 7/1/2023 (Insured; AMBAC) 5,000,000 4,053,850 5%, 7/1/2026 (Insured; FSA) 1,795,000 1,581,898 Puerto Rico Electric Power Authority, Power Revenue: 4.50%, 7/1/2019 (Insured; FSA) 2,970,000 2,497,651 4.75%, 7/1/2024 1,245,000 1,052,548 5%, 7/1/2028 930,000 797,503 5%, 7/1/2028 8,885,000 7,797,831 Puerto Rico Public Buildings Authority, Revenue 5%, 7/1/2027 (Insured; AMBAC) 4,000,000 3,517,600 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $281,681,821) 267,908,208 Principal SHORT-TERM MUNICIPAL INVESTMENTS--.7% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ Puerto Rico Commonwealth, VRDN 4.90% (cost $2,000,000) 2,000,000(a) 2,000,000 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $283,681,821) 98.3% 269,908,208 CASH AND RECEIVABLES (NET) 1.7% 4,543,545 NET ASSETS 100.0% 274,451,753 Summary of Abbreviations AMBAC American Municipal Bond Assurance Corporation COP Certificate of Participation EDR Economic Development Revenue FGIC Financial Guaranty Insurance Company FHA Federal Housing Administration FNMA Federal National Mortgage Association FSA Financial Security Assurance GNMA Government National Mortgage Association MBIA Municipal Bond Investors Assurance Insurance Corporation MFHR Multi-Family Housing Revenue PCR Pollution Control Revenue RRR Resources Recovery Revenue SFMR Single Family Mortgage Revenue VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 33.0 AA Aa AA 34.1 A A A 16.7 BBB Baa BBB 9.1 Not Rated (b) Not Rated (b) Not Rated (b) 7.1 100.0 A SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE. B SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POORS, HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. C AT APRIL 30, 2000, THE FUND HAD $87,906,086 (32.0% OF NET ASSETS) AND $85,202,253 (31.0% OF NET ASSETS) INVESTED IN SECURITIES WHOSE PAYMENT OF PRINCIPAL AND INTEREST IS DEPENDENT UPON REVENUES GENERATED FROM HEALTH CARE AND HOUSING PROJECTS, RESPECTIVELY. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund The Fund STATEMENT OF ASSETS AND LIABILITIES April 30, 2000 Cost Value -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 283,681,821 269,908,208 Cash 333,233 Interest receivable 4,488,585 Receivable for investment securities sold 95,149 Receivable for shares of Benefical Interest subscribed 70,952 Prepaid expenses 6,127 274,902,254 -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 201,258 Payable for shares of Benefical Interest redeemed 202,123 Accrued expenses 47,120 450,501 -------------------------------------------------------------------------------- NET ASSETS ($) 274,451,753 -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 288,447,748 Accumulated net realized gain (loss) on investments (222,382) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (13,773,613) -------------------------------------------------------------------------------- NET ASSETS ($) 274,451,753 NET ASSET VALUE PER SHARE Class A Class B Class C ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 229,183,973 43,044,435 2,223,345 Shares Outstanding 19,517,155 3,665,004 189,198 ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 11.74 11.74 11.75 SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS Year Ended April 30, 2000 -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 18,386,962 EXPENSES: Management fee--Note 3(a) 1,661,534 Shareholder servicing costs--Note 3(c) 965,478 Distribution fees--Note 3(b) 275,279 Custodian fees 34,447 Registration fees 32,024 Prospectus and shareholders' reports 26,386 Professional fees 23,569 Trustees' fees and expenses--Note 3(d) 4,191 Loan commitment fees--Note 2 3,086 Miscellaneous 20,362 TOTAL EXPENSES 3,046,356 INVESTMENT INCOME--NET 15,340,606 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (227,377) Net unrealized appreciation (depreciation) on investments (27,588,286) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (27,815,663) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (12,475,057) SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS Year Ended April 30, --------------------------------- 2000 1999 -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 15,340,606 15,723,604 Net realized gain (loss) on investments (227,377) 4,875,643 Net unrealized appreciation (depreciation) on investments (27,588,286) (2,906,514) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (12,475,057) 17,692,733 -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (12,863,151) (13,142,319) Class B shares (2,348,233) (2,475,248) Class C shares (129,222) (106,037) Net realized gain on investments: Class A shares (2,150,363) (3,920,985) Class B shares (412,360) (858,010) Class C shares (26,427) (41,411) TOTAL DIVIDENDS (17,929,756) (20,544,010) -------------------------------------------------------------------------------- BENEFICAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 29,986,633 19,034,333 Class B shares 12,404,497 16,708,364 Class C shares 1,029,824 1,950,257 Dividends reinvested: Class A shares 9,283,726 10,945,576 Class B shares 1,669,377 2,138,858 Class C shares 95,038 93,797 Cost of shares redeemed: Class A shares (49,455,500) (26,068,594) Class B shares (25,629,469) (8,588,073) Class C shares (1,823,597) (385,542) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (22,439,471) 15,828,976 TOTAL INCREASE (DECREASE) IN NET ASSETS (52,844,284) 12,977,699 -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 327,296,037 314,318,338 END OF PERIOD 274,451,753 327,296,037 SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, --------------------------------- 2000 1999 -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A (A) Shares sold 2,445,834 1,451,972 Shares issued for dividends reinvested 770,041 834,341 Shares redeemed (4,117,990) (1,987,044) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (902,115) 299,269 -------------------------------------------------------------------------------- CLASS B (A) Shares sold 1,004,505 1,273,167 Shares issued for dividends reinvested 138,189 163,084 Shares redeemed (2,098,431) (657,332) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (955,737) 778,919 -------------------------------------------------------------------------------- CLASS C Shares sold 83,092 148,387 Shares issued for dividends reinvested 7,865 7,148 Shares redeemed (151,541) (29,616) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (60,584) 125,919 (A) DURING THE PERIOD ENDED APRIL 30, 2000, 1,092,388 CLASS B SHARES REPRESENTING $13,370,068 WERE AUTOMATICALLY CONVERTED TO 1,092,760 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Year Ended April 30, ------------------------------------------------------------------ CLASS A SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.94 13.05 12.70 12.69 12.54 Investment Operations: Investment income--net .63 .65 .67 .68 .67 Net realized and unrealized gain (loss) on investments (1.10) .09 .50 .18 .23 Total from Investment Operations (.47) .74 1.17 .86 .90 Distributions: Dividends from investment income--net (.63) (.65) (.67) (.68) (.67) Dividends from net realized gain on investments (.10) (.20) (.15) (.17) (.08) Total Distributions (.73) (.85) (.82) (.85) (0.75) Net asset value, end of period 11.74 12.94 13.05 12.70 12.69 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (3.61) 5.76 9.40 6.91 7.24 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .91 .90 .90 .90 .90 Ratio of net investment income to average net assets 5.16 4.97 5.12 5.29 5.23 Portfolio Turnover Rate 28.37 29.30 18.12 43.63 41.65 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 229,184 264,255 262,560 266,658 283,878 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, ------------------------------------------------------------------- CLASS B SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.94 13.05 12.70 12.69 12.54 Investment Operations: Investment income--net .56 .58 .60 .61 .61 Net realized and unrealized gain (loss) on investments (1.10) .09 .50 .18 .23 Total from Investment Operations (.54) .67 1.10 .79 .84 Distributions: Dividends from investment income--net (.56) (.58) (.60) (.61) (.61) Dividends from net realized gain on investments (.10) (.20) (.15) (.17) (.08) Total Distributions (.66) (.78) (.75) (.78) (.69) Net asset value, end of period 11.74 12.94 13.05 12.70 12.69 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (4.12) 5.20 8.83 6.34 6.66 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.43 1.42 1.42 1.43 1.43 Ratio of net investment income to average net assets 4.62 4.44 4.59 4.75 4.68 Portfolio Turnover Rate 28.37 29.30 18.12 43.63 41.65 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 43,044 59,806 50,141 45,329 41,179 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Year Ended April 30, ------------------------------------------------------------------- CLASS C SHARES 2000 1999 1998 1997 1996(a) ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.95 13.06 12.71 12.69 12.67 Investment Operations: Investment income--net .54 .55 .57 .58 .41 Net realized and unrealized gain (loss) on investments (1.10) .09 .50 .19 .10 Total from Investment Operations (.56) .64 1.07 .77 .51 Distributions: Dividends from investment income--net (.54) (.55) (.57) (.58) (.41) Dividends from net realized gain on investments (.10) (.20) (.15) (.17) (.08) Total Distributions (.64) (.75) (.72) (.75) (.49) Net asset value, end of period 11.75 12.95 13.06 12.71 12.69 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (4.32) 4.93 8.55 6.16 5.57(c) ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.65 1.66 1.67 1.64 1.80(c) Ratio of net investment income to average net assets 4.41 4.15 4.29 4.47 4.59(c) Portfolio Turnover Rate 28.37 29.30 18.12 43.63 41.65 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 2,223 3,235 1,618 202 27 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company and operates as a series company currently offering thirteen series including the Maryland Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned subsidiary of the Manager, became the distributor of the fund's shares. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund is authorized to issue an unlimited number of $.001 par value shares in the following classes of shares: Class A, Class B and Class C shares. Class A shares are subject to a sales charge imposed at the time of purchase, Class B shares are subject to a contingent deferred sales charge ("CDSC") imposed on Class B share redemptions made within six years of purchase (five years for shareholders beneficially owning Class B shares on November 30, 1996) and Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. 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 Trust 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 fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $22,938 during the period ended April 30, 2000 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the " Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (D) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the 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 $205,000 available for Federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to April 30, 2000. This amount is calculated based on Federal income tax regulations which may differ from financial reporting in accordance with generally accepted accounting principles. If not applied, the carryover expires in fiscal 2008. 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 NOTES TO FINANCIAL STATEMENTS (CONTINUED) the fund at rates based on prevailing market rates in effect at the time of the borrowings. During the period ended April 30, 2000, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (A) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund's average daily net assets and is payable monthly. DSC retained $772 during the period ended April 30, 2000, 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, 2000, Class B and Class C shares were charged $253,364 and $21,915, respectively, pursuant to the Plan, of which $27,766 and $2,402 for Class B and Class C shares, respectively, were paid to DSC. (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 their average daily net assets 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, 2000, Class A, Class B and Class C shares were charged $621,255, $126,682 and $7,305, respectively, pursuant to the Shareholder Services Plan, of which $68,083, $13,883 and $801 for Class A, Class B and Class C shares, respectively, were paid to DSC. 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, 2000, the fund was charged $118,824 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"). Effective April 13, 2000, each Board member receives an annual fee of $50,000 and a fee of $6,500 for each meeting held in person 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. Prior to April 13, 2000, each Board member who was not an "affiliated person" as defined in the Act received from the Trust an annual fee of $2,500 and an attendance fee of $250 per meeting. The Chairman of the Board received an additional 25% of such compensation. Subject to the fund' s Director Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the Trust's annual retainer fee and per meeting fee paid at the time the Board member achieved 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, 2000, amounted to $84,306,366 and $112,580,284, respectively. At April 30, 2000, accumulated net unrealized depreciation on investments was $13,773,613, consisting of $3,451,229 gross unrealized appreciation and $17,224,842 gross unrealized depreciation. At April 30, 2000, 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). The Fund REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Trustees Dreyfus Premier State Municipal Bond Fund, Maryland Series We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Premier State Municipal Bond Fund, Maryland Series (one of the Funds constituting the Dreyfus Premier State Municipal Bond Fund) as of April 30, 2000 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 and financial highlights. Our procedures included confirmation of securities owned as of April 30, 2000 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier State Municipal Bond Fund, Maryland Series at April 30, 2000, 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 9, 2000 IMPORTANT TAX INFORMATION (Unaudited) In accordance with Federal tax law, the fund hereby makes the following designations regarding its fiscal year ended April 30, 2000: --all the dividends paid from investment income-net are "exempt-interest dividends" (not subject to regular Federal and, for individuals who are Maryland residents, Maryland personal income taxes), and --the fund hereby designates $.0975 per share as a long-term capital gain distribution of the $.1040 per share paid on December 8, 1999. 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 2000 calendar year on Form 1099-DIV which will be mailed by January 31, 2001. The Fund For More Information Dreyfus Premier State Municipal Bond Fund, Maryland 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 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 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) 2000 Dreyfus Service Corporation 052AR004 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Massachusetts Series ANNUAL REPORT April 30, 2000 (reg.tm) ================================================================================ The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Fund Performance 8 Statement of Investments 11 Statement of Assets and Liabilities 12 Statement of Operations 13 Statement of Changes in Net Assets 15 Financial Highlights 18 Notes to Financial Statements 23 Report of Independent Auditors 24 Important Tax Information FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Massachusetts Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this annual report for Dreyfus Premier State Municipal Bond Fund, Massachusetts Series, covering the 12-month period from May 1, 1999 through April 30, 2000. 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, W. Michael Petty. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. While higher interest rates generally led to an erosion of municipal bond prices during much of the reporting period, the tax-exempt bond market showed renewed signs of strength during the first four months of 2000. Municipal bonds were also influenced by supply-and-demand considerations. These technical influences have caused the yields of tax-exempt bonds to rise to very attractive levels compared to the after-tax yields of taxable bonds of comparable maturity and credit quality, making tax-exempt bonds especially attractive for investors in the higher federal and state income tax brackets. We appreciate your confidence over the past year, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Massachusetts Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation May 15, 2000 DISCUSSION OF FUND PERFORMANCE W. Michael Petty, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Massachusetts Series, perform during the period? For the 12-month period ended April 30, 2000, the fund's Class A shares provided a -3.42% total return, its Class B shares provided a -3.93% total return and its Class C shares provided a -4.16% total return.(1) In comparison, the Lipper Massachusetts Municipal Debt Funds category average provided a -3.21% total return for the same period.(2) We attribute the fund's negative absolute returns to a rising interest-rate environment, which caused most municipal bond prices to decline. What is the fund's investment approach? Our goal is to seek as high a level of federal and Massachusetts tax-exempt income as is practical without undue risk from a diversified portfolio of longer term municipal bonds. To achieve this objective, we employ two primary strategies. First, we evaluate supply-and-demand factors in the bond market that are affected by the relatively few municipal bonds issued by Massachusetts. Based on that assessment, we select the individual Massachusetts 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, creditworthiness of its issuer, insurance, and any provisions for early redemption. Under most circumstances, we look for high yielding bonds that have 10-year call protection and that are selling at a discount to face value. Second, while we do not attempt to predict changes in interest rates, we may tactically manage the fund's average duration -- a measure of sensitivity to changes in interest rates -- in anticipation of temporary supply-and-demand changes. If we expect the supply of newly issued bonds to increase, we may reduce the 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 The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) average duration to maintain current yields for as long as practical. At other times, we try to maintain a "neutral" average duration consistent with other Massachusetts municipal bond funds. What other factors influenced the fund's performance? Although the fund's performance was hurt by a difficult investment environment during the final two months of 1999, the first four months of 2000 generally provided better market conditions and a market rally. This rally helped offset most -- but not all -- of the decline in the first eight months of the reporting period. When the reporting period began on May 1, 1999, investors had become concerned that strong economic growth might rekindle long-dormant inflationary pressures, especially from rising wages in a tight job market. In an attempt to ease these pressures and forestall a reacceleration of inflation, the Federal Reserve Board raised short-term interest rates five times during the reporting period, causing most bond prices to fall, for a total increase of 1.25 percentage points since mid-1999. Municipal bond prices also fell during November and December, because of adverse supply-and-demand influences. For a variety of reasons, institutional investors such as insurance companies and mutual funds participated less in the tax-exempt market. Despite strong demand from individual investors, the absence of institutional buyers helped reduce overall demand and drove municipal bond prices down. During the first quarter of 2000, however, issuance of municipal bonds nationally declined approximately 20% compared to the same period in 1999. This supply reduction, combined with robust demand from individual investors, helped support a rebound of municipal bond prices. What is the fund's current strategy? Our current strategy is to maintain as high a level of income as practical while reducing volatility and protecting assets in a rising interest-rate environment. Accordingly, we have modestly reduced the portfolio's average duration to the neutral range in an attempt to protect our holdings from the brunt of potential price depreciation and capture higher yields as they become available. From a security selection perspective, we have focused primarily on insured bonds with competitive yields. However, our ability to find such opportunities has been constrained by the small size of the Massachusetts marketplace and the reduced supply of newly issued bonds. Consequently, as of April 30, 2000, the fund contained a higher level of cash -- primarily invested in tax-exempt money market instruments -- than is usual. Cash and cash equivalents comprised about 13% of the portfolio, which have helped us reduce the fund's average duration. We hope to put our cash reserves back to work in longer term bonds when we believe that interest rates may have peaked and the Federal Reserve Board is finished tightening monetary policy. May 15, 2000 (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 CHARGE 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 FOR NON-MASSACHUSETTS RESIDENTS 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 ANALYTICAL SERVICES, INC. The Fund FUND PERFORMANCE Comparison of change in value of $10,000 investment in Dreyfus Premier State Municipal Bond Fund, Massachusetts Series Class A shares and the Lehman Brothers Municipal Bond Index ((+)) SOURCE: LIPPER ANALYTICAL SERVICES, 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 STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES (THE "FUND") ON 4/30/90 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 MASSACHUSETTS 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 IS NOT LIMITED TO INVESTMENTS PRINCIPALLY IN MASSACHUSETTS MUNICIPAL OBLIGATIONS AND DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. THE INDEX, UNLIKE THE FUND, 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. THESE FACTORS 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 4/30/00 Inception From Date 1 Year 5 Years 10 Years Inception ------------------------------------------------------------------------------------------------------------------------------------ CLASS A SHARES WITH SALES CHARGE (4.5%) 5/28/87 (7.77)% 3.85% 6.11% -- WITHOUT SALES CHARGE 5/28/87 (3.42)% 4.80% 6.60% -- CLASS B SHARES WITH REDEMPTION((+)) 1/15/93 (7.59)% 3.95% -- 4.55% WITHOUT REDEMPTION 1/15/93 (3.93)% 4.27% -- 4.55% CLASS C SHARES WITH REDEMPTION((+)(+)) 8/15/95 (5.07)% -- -- 3.85% WITHOUT REDEMPTION 8/15/95 (4.16)% -- -- 3.85% PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. ((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS A SHARES. ((+)(+)) 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, 2000 Principal LONG-TERM MUNICIPAL INVESTMENTS--87.0% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ MASSACHUSETTS--68.3% Boston Industrial Development Financing Authority, Sewer Facility Revenue (Harbor Electric Energy Co. Project) 7.375%, 5/15/2015 2,500,000 2,575,100 Lynn Water and Sewer Commission, General Revenue 7.25%, 12/1/2010 (Insured; MBIA, Prerefunded 12/1/2000) 1,000,000 (a) 1,036,230 Massachusetts Bay Transportation Authority, General Transportation Systems 7%, 3/1/2021 1,000,000 1,146,460 Massachusetts Commonwealth 7%, 8/1/2012 (Prerefunded 8/1/2001) 1,850,000 (a) 1,940,965 Massachusetts Development Finance Agency, Revenue (Assumption College) 6%, 3/1/2030 285,000 278,969 Massachusetts Education Loan Authority, Education Loan Revenue 7.75%, 1/1/2008 (Insured; MBIA) 785,000 803,220 Massachusetts Health and Educational Facilities Authority, Revenue: (Boston University) 6%, 5/15/2059 2,500,000 2,371,750 (Medical Center of Central Massachusetts) 7.10%, 7/1/2021 1,000,000 1,048,390 (Milton Hospital) 7%, 7/1/2016 (Insured; MBIA) 2,050,000 2,098,339 (Northeastern University) 5%, 10/1/2029 (Insured; MBIA) 2,500,000 2,142,625 (Stonehill College) 5.25%, 7/1/2028 (Insured; MBIA) 2,500,000 2,249,475 (University Hospital) 7.25%, 7/1/2019 (Insured; MBIA, Prerefunded 7/1/2000) 2,750,000 (a) 2,818,118 (Vinfen Corporation) 5.30%, 11/15/2028 2,670,000 2,218,102 Massachusetts Industrial Finance Agency, Revenue: (College of the Holy Cross) 5%, 9/1/2023 (Insured; MBIA) 3,350,000 2,922,406 (Provider Lease Program) 8.75%, 7/15/2009 120,000 120,140 (Suffolk University) 5.25%, 7/1/2027 (Insured; AMBAC) 1,000,000 902,450 (Water Treatment-American Hingham) 6.95%, 12/1/2035 3,000,000 3,087,240 Health Care Facility (Health Foundation, Inc. Project) 6.75%, 12/1/2027 1,000,000 910,330 Resource Recovery (Ogden Haverhill Project) 5.60%, 12/1/2019 1,000,000 872,050 Massachusetts Port Authority, Revenue Special Project (Harborside Hyatt) 10%, 3/1/2026 3,000,000 3,137,280 Massachusetts Water Pollution Abatement Trust, Water Pollution Abatement Revenue (New Bedford Program) 4.75%, 2/1/2026 (Insured; FGIC) 3,000,000 2,485,470 Massachusetts Water Resource Authority 4%, 12/1/2018 1,100,000 847,726 U.S. RELATED--18.7% Guam Airport Authority, Revenue 6.70%, 10/1/2023 1,500,000 1,518,675 Puerto Rico Commonwealth 6%, 7/1/2014 1,000,000 1,018,150 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ U.S. RELATED (CONTINUED) Puerto Rico Commonwealth Highway and Transportation Authority, Highway Revenue: 6.154%, 7/1/2009 1,000,000 (b) 1,005,000 6.254%, 7/1/2010 1,000,000 (b) 1,007,500 5%, 7/1/2036 2,000,000 1,684,760 Puerto Rico Public Buildings Authority, Guaranteed Government Facilities Revenue 6.25%, 7/1/2015 (Insured; AMBAC) 1,100,000 1,202,498 Virgin Islands Public Finance Authority, Revenue 7.25%, 10/1/2018 (Prerefunded 10/1/2002) 2,750,000 (a) 2,968,185 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $48,762,597) 48,417,603 ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM MUNICIPAL INVESTMENTS--10.7% ------------------------------------------------------------------------------------------------------------------------------------ Massachusetts Health and Educational Facilities Authority, Revenue, VRDN (Capital Assets Program): 6% 4,000,000 (c) 4,000,000 6.05% 2,000,000 (c) 2,000,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $6,000,000) 6,000,000 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $54,762,597) 97.7% 54,417,603 CASH AND RECEIVABLES (NET) 2.3% 1,255,880 NET ASSETS 100.0% 55,673,483 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Summary of Abbreviations AMBAC American Municipal Bond Assurance Corporation FSA Financial Security Assurance FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance Insurance Corporation VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 43.2 AA Aa AA 6.2 A A A 13.4 BBB Baa BBB 18.5 F-1+, F-1 MIG1, VMIG1 & P1 SP1 & A1 11.0 Not Rated(d) Not Rated(d) Not Rated(d) 7.7 100.0 (A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. (B) INVERSE FLOATER SECURITY--THE INTEREST RATE IS SUBJECT TO CHANGE PERIODICALLY. (C) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE. (D) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. (E) AT APRIL 30, 2000, 26.8% OF THE FUND'S NET ASSETS ARE INSURED BY MBIA. SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES April 30, 2000 Cost Value -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 54,762,597 54,417,603 Cash 377,923 Interest receivable 953,510 Receivable for investment securities sold 198,892 Receivable for shares of Beneficial Interest subscribed 1,263 Prepaid expenses 8,127 55,957,318 -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 41,486 Payable for shares of Beneficial Interest redeemed 229,365 Accrued expenses 12,984 283,835 -------------------------------------------------------------------------------- NET ASSETS ($) 55,673,483 -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 57,667,917 Accumulated net realized gain (loss) on investments (1,649,440) Accumulated net unrealized appreciation (depreciation)--Note 4 (344,994) -------------------------------------------------------------------------------- NET ASSETS ($) 55,673,483 NET ASSET VALUE PER SHARE Class A Class B Class C ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 50,884,971 4,647,659 140,853 Shares Outstanding 4,760,538 435,079 13,169 ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 10.69 10.68 10.70 SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF OPERATIONS Year Ended April 30, 2000 -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 3,789,644 EXPENSES: Management fee--Note 3(a) 335,169 Shareholder servicing costs--Note 3(c) 194,225 Distribution fees--Note 3(b) 29,064 Registration fees 24,265 Professional fees 17,803 Prospectus and shareholders' reports 10,213 Custodian fees 7,127 Trustees' fees and expenses--Note 3(d) 889 Loan commitment fees--Note 2 627 Miscellaneous 7,792 TOTAL EXPENSES 627,174 INVESTMENT INCOME--NET 3,162,470 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments and foreign currency transactions (1,652,208) Net unrealized appreciation (depreciation) on investments (3,970,259) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (5,622,467) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (2,459,997) SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Year Ended April 30, ------------------------------- 2000 1999 -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 3,162,470 3,402,500 Net realized gain (loss) on investments (1,652,208) 569,381 Net unrealized appreciation (depreciation) on investments (3,970,259) (43,907) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (2,459,997) 3,927,974 -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (2,893,777) (3,085,284) Class B shares (259,468) (312,675) Class C shares (9,225) (4,541) Net realized gain on investments: Class A shares (69,030) (981,213) Class B shares (6,415) (112,114) Class C shares (209) (3,099) TOTAL DIVIDENDS (3,238,124) (4,498,926) -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 3,182,470 7,581,389 Class B shares 939,541 1,829,019 Class C shares 86,863 341,132 Dividends reinvested: Class A shares 1,761,629 2,550,054 Class B shares 168,615 263,046 Class C shares 5,188 7,326 Cost of shares redeemed: Class A shares (11,874,551) (7,190,547) Class B shares (2,659,322) (1,888,781) Class C shares (274,987) -- INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (8,664,554) 3,492,638 TOTAL INCREASE (DECREASE) IN NET ASSETS (14,362,675) 2,921,686 -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 70,036,158 67,114,472 END OF PERIOD 55,673,483 70,036,158 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) Year Ended April 30, ------------------------------- 2000 1999 -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 289,495 632,649 Shares issued for dividends reinvested 161,649 215,156 Shares redeemed (1,081,816) (607,023) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (630,672) 240,782 -------------------------------------------------------------------------------- CLASS B(A) Shares sold 85,696 154,844 Shares issued for dividends reinvested 15,461 22,203 Shares redeemed (243,009) (160,697) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (141,852) 16,350 -------------------------------------------------------------------------------- CLASS C Shares sold 7,999 28,770 Shares issued for dividends reinvested 469 621 Shares redeemed (24,788) -- NET INCREASE (DECREASE) IN SHARES OUTSTANDING (16,320) 29,391 (A) DURING THE PERIOD ENDED APRIL 30, 2000, 125,833 CLASS B SHARES REPRESENTING $1,379,884 WERE AUTOMATICALLY CONVERTED TO 125,799 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Year Ended April 30, ------------------------------------------------------------------- CLASS A SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 11.68 11.75 11.40 11.50 11.53 Investment Operations: Investment income--net .57 .59 .61 .63 .66 Net realized and unrealized gain (loss) on investments (.98) .11 .40 .17 -- Total from Investment Operations (.41) .70 1.01 .80 .66 Distributions: Dividends from investment income--net (.57) (.59) (.61) (.63) (.66) Dividends from net realized gain on investments (.01) (.18) (.05) (.27) (.03) Total Distributions (.58) (.77) (.66) (.90) (.69) Net asset value, end of period 10.69 11.68 11.75 11.40 11.50 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (3.42) 6.08 9.04 7.08 5.69 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .98 .93 .91 .92 .92 Ratio of net investment income to average net assets 5.22 4.97 5.23 5.46 5.57 Portfolio Turnover Rate 57.94 47.11 48.69 24.45 34.86 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 50,885 62,958 60,529 65,809 68,812 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Year Ended April 30, ------------------------------------------------------------------- CLASS B SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 11.67 11.75 11.40 11.49 11.52 Investment Operations: Investment income--net .52 .53 .55 .57 .60 Net realized and unrealized gain (loss) on investments (.98) .10 .40 .18 -- Total from Investment Operations (.46) .63 .95 .75 .60 Distributions: Dividends from investment income--net (.52) (.53) (.55) (.57) (.60) Dividends from net realized gain on investments (.01) (.18) (.05) (.27) (.03) Total Distributions (.53) (.71) (.60) (.84) (.63) Net asset value, end of period 10.68 11.67 11.75 11.40 11.49 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (3.93) 5.46 8.49 6.63 5.15 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.49 1.43 1.42 1.43 1.43 Ratio of net investment income to average net assets 4.70 4.46 4.71 4.94 5.03 Portfolio Turnover Rate 57.94 47.11 48.69 24.45 34.86 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 4,648 6,733 6,584 6,064 5,255 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, ------------------------------------------------------------------- CLASS C SHARES 2000 1999 1998 1997 1996(a) ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 11.69 11.76 11.41 11.48 11.59 Investment Operations: Investment income--net .49 .50 .52 .54 .40 Net realized and unrealized gain (loss) on investments (.98) .11 .40 .20 (.08) Total from Investment Operations (.49) .61 .92 .74 .32 Distributions: Dividends from investment income--net (.49) (.50) (.52) (.54) (.40) Dividends from net realized gain on investments (.01) (.18) (.05) (.27) (.03) Total Distributions (.50) (.68) (.57) (.81) (.43) Net asset value, end of period 10.70 11.69 11.76 11.41 11.48 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (4.16) 5.28 8.22 6.55 3.76(c) ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.68 1.70 1.64 1.65 1.69(c Ratio of net investment income to average net assets 4.51 4.06 4.51 4.64 4.72(c) Portfolio Turnover Rate 57.94 47.11 48.69 24.45 34.86 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 141 345 1 1 1 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund NOTES TO FINANCIAL STATEMENTS NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company, and operates as a series company currently offering thirteen series including the Massachusetts Series (the " fund" ). The fund's investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.,which is a wholly-owned subsidiary of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service Corpotation ("DSC"), a wholly-owned subsidiary of the Manager, became the distributor of the fund's shares. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund is authorized to issue an unlimited number of $.001 par value shares in the following classes of shares: Class A, Class B and Class C shares. Class A shares are subject to a sales charge imposed at the time of purchase, Class B shares are subject to a contingent deferred sales charge ("CDSC") imposed on Class B share redemptions made within six years of purchase (five years for shareholders beneficially owning Class B shares on November 30, 1996) and Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. 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 Trust 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 fund's financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $5,315 during the period ended April 30, 2000 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code 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. The fund has an unused capital loss carryover of approximately $282,000 available for Federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to April 30, 2000. This amount is calculated based on Federal income tax regulations which may differ from financial reporting in accordance with generally accepted accounting principles. If not applied, the carryover expires in fiscal 2008. 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 at rates based on prevailing market rates in effect at the time of borrowings. During the period ended April 30, 2000, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (A) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund's average daily net assets and is payable monthly. (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, 2000, Class B and Class C shares were charged $27,533 and $1,531, respectively, pursuant to the Plan, of which $2,650 and $119 for Class B and Class C shares, respectively, were paid to DSC. (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 their average daily net assets 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, 2000, Class A, Class B and Class C shares were charged $138,072, $13,767 and $510, respectively, pursuant to the Shareholder Services Plan, of which $13,999, $1,325 and $40 for Class A, Class B and Class C shares respectively, were paid to DSC. 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 The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) fund. During the period ended April 30, 2000, the fund was charged $20,869 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"). Effective April 13, 2000, each Board member receives an annual fee of $50,000 and a fee of $6,500 for each meeting held in person 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. Prior to April 13, 2000, each Board member who was not an "affiliated person" as defined in the Act received from the Trust an annual fee of $2,500 and an attendance fee of $250 per meeting. The Chairman of the Board received an additional 25% of such compensation. Subject to the fund' s Director Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the Trust's annual retainer fee and per meeting fee paid at the time the Board member achieved 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, 2000, amounted to $33,394,776 and $49,603,164, respectively. At April 30, 2000, accumulated net unrealized depreciation on investment was $344,994, consisting of $1,202,610 gross unrealized appreciation and $1,547,604 gross unrealized depreciation. At April 30, 2000, 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). REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Trustees Dreyfus Premier State Municipal Bond Fund, Massachusetts Series We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Premier State Municipal Bond Fund, Massachusetts Series (one of the Funds constituting the Dreyfus Premier State Municipal Bond Fund) as of April 30, 2000, 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 and the financial highlights. Our procedures included confirmation of securities owned as of April 30, 2000 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier State Municipal Bond Fund, Massachusetts Series at April 30, 2000, 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 9, 2000 The Fund IMPORTANT TAX INFORMATION (Unaudited) In accordance with Federal tax law, the fund hereby makes the following designations regarding its fiscal year ended April 30, 2000: -- all the dividends paid from investment income-net are "exempt-interest dividends" (not subject to regular Federal income tax, and for individuals who are Massachusetts residents, not subject to taxation by Massachusetts), and -- the fund hereby designates $.0040 per share as a long-term capital gain distribution of the $.0138 per share paid on December 8, 1999. In addition, 54.03% of the long-term capital gain distribution is not subject to Massachusetts personal income taxes. 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 2000 calendar year on Form 1099-DIV which will be mailed by January 31, 2001. For More Information Dreyfus Premier State Municipal Bond Fund, Massachusetts 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 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 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) 2000 Dreyfus Service Corporation 063AR004 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Michigan Series ANNUAL REPORT April 30, 2000 (reg.tm) ================================================================================ The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Fund Performance 8 Statement of Investments 13 Statement of Assets and Liabilities 14 Statement of Operations 15 Statement of Changes in Net Assets 17 Financial Highlights 20 Notes to Financial Statements 25 Report of Independent Auditors 26 Important Tax Information FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Michigan Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this annual report for Dreyfus Premier State Municipal Bond Fund, Michigan Series, covering the 12-month period from May 1, 1999 through April 30, 2000. 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, W. Michael Petty. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. While higher interest rates generally led to an erosion of municipal bond prices during much of the reporting period, the tax-exempt bond market showed renewed signs of strength during the first four months of 2000. Municipal bonds were also influenced by supply-and-demand considerations. These technical influences have caused the yields of tax-exempt bonds to rise to very attractive levels compared to the after-tax yields of taxable bonds of comparable maturity and credit quality, making tax-exempt bonds especially attractive for investors in the higher federal and state income tax brackets. We appreciate your confidence over the past year, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Michigan Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation May 15, 2000 DISCUSSION OF FUND PERFORMANCE W. Michael Petty, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Michigan Series, perform during the period? For the 12-month period ended April 30, 2000, the fund's Class A shares provided a -2.56% total return, its Class B shares provided a -2.98% total return and its Class C shares provided a -3.22% total return.(1) In comparison, the Lipper Michigan Municipal Debt Funds category average provided a -2.96% total return for the same period.(2) We attribute the fund's negative absolute returns to a rising interest-rate environment during the period, which caused most municipal bond prices to decline. What is the fund's investment approach? Our goal is to seek as high a level of federal and Michigan tax-exempt income as is practical without undue risk from a diversified portfolio of longer term municipal bonds. To achieve this objective, we employ two primary strategies. First, we evaluate supply-and-demand factors in the bond market that are affected by the relatively few municipal bonds issued by Michigan. Based on that assessment, we select the individual Michigan 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, creditworthiness of its issuer, insurance, and any provisions for early redemption. Under most circumstances, we look for high yielding bonds that have 10-year call protection and that are selling at a discount to face value. Second, while we do not attempt to predict changes in interest rates, we may tactically manage the fund's average duration -- a measure of sensitivity to changes in interest rates -- in anticipation of temporary supply-and-demand changes. If we expect the supply of newly issued bonds to increase, we may reduce the 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 The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) time when we anticipate little issuance, we may increase the fund's average duration to maintain current yields for as long as practical. At other times, we try to maintain a "neutral" average duration consistent with other Michigan municipal bond funds. What other factors influenced the fund's performance? Although the portfolio's performance was hurt by a difficult investment environment during the final two months of 1999, the first four months of 2000 generally provided better market conditions and a market rally. This rally helped offset most -- but not all -- of the decline in the first eight months of the reporting period. When the reporting period began on May 1, 1999, investors had become concerned that strong economic growth might rekindle long-dormant inflationary pressures, especially from rising wages in a tight job market. In an attempt to ease these pressures and forestall a reacceleration of inflation, the Federal Reserve Board raised short-term interest rates five times during the reporting period, causing most bond prices to fall, for a total increase of 1.25 percentage points since mid-1999. Municipal bond prices also fell during November and December, because of adverse supply-and-demand influences. For a variety of reasons, institutional investors such as insurance companies and mutual funds participated less in the tax-exempt market. Despite strong demand from individual investors, the absence of institutional buyers helped reduce overall demand and drove municipal bond prices down. During the first quarter of 2000, however, issuance of municipal bonds nationally declined approximately 20% compared to the same period in 1999. This supply reduction, combined with robust demand from individual investors, helped support a rebound of municipal bond prices. What is the fund's current strategy? Our current strategy is to maintain as high a level of income as practical, while reducing volatility and protecting assets in a rising interest-rate environment. Accordingly, we have modestly reduced the portfolio's average duration to the short end of the neutral range in an attempt to protect our holdings from the brunt of potential price depreciation and capture higher yields as they become available. From a security selection perspective, we have focused primarily on insured bonds with competitive yields. However, our ability to find such opportunities has been constrained by the reduced supply of newly issued bonds in the Michigan marketplace. Consequently, as of April 30, 2000, the fund contained a higher level of cash -- primarily invested in tax-exempt money market instruments -- than is usual. Cash and cash equivalents comprised about 9% of the portfolio and have helped us reduce the fund' s average duration. We hope to put our cash reserves back to work in longer term bonds when we believe that interest rates may have peaked and the Federal Reserve Board is finished tightening monetary policy. May 15, 2000 (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 CHARGE 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 FOR NON-MICHIGAN RESIDENTS 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 ANALYTICAL SERVICES, INC. The Fund FUND PERFORMANCE Comparison of change in value of $10,000 investment in Dreyfus Premier State Municipal Bond Fund, Michigan Series Class A shares and the Lehman Brothers Municipal Bond Index ((+)) SOURCE: LIPPER ANALYTICAL SERVICES, 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 STATE MUNICIPAL BOND FUND, MICHIGAN SERIES (THE "FUND") ON 4/30/90 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 MICHIGAN 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 IS NOT LIMITED TO INVESTMENTS PRINCIPALLY IN MICHIGAN MUNICIPAL OBLIGATIONS AND DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. THE INDEX, UNLIKE THE FUND, 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. THESE FACTORS 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 4/30/00 Inception From Date 1 Year 5 Years 10 Years Inception ------------------------------------------------------------------------------------------------------------------------------------ CLASS A SHARES WITH SALES CHARGE (4.5%) 5/28/87 (6.92)% 4.08% 6.51% -- WITHOUT SALES CHARGE 5/28/87 (2.56)% 5.04% 7.00% -- CLASS B SHARES WITH REDEMPTION((+)) 1/15/93 (6.66)% 4.20% -- 5.06% WITHOUT REDEMPTION 1/15/93 (2.98)% 4.52% -- 5.06% CLASS C SHARES WITH REDEMPTION((+)(+)) 8/15/95 (4.14)% -- -- 4.15% WITHOUT REDEMPTION 8/15/95 (3.22)% -- -- 4.15% PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. ((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS A SHARES. ((+)(+)) 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 STATEMENT OF INVESTMENTS April 30, 2000 Principal LONG-TERM MUNICIPAL INVESTMENTS--91.4% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ Allegan Hospital Finance Authority, HR (Allegan General Hospital): 6.875%, 11/15/2017 4,460,000 4,200,517 7%, 11/15/2021 800,000 756,720 Big Rapids Public School District 4.75%, 5/1/2025 (Insured; FSA) 1,500,000 1,242,735 Brighton Area School District: Zero Coupon, 5/1/2014 (Insured: AMBAC) 8,000,000 3,606,000 Zero Coupon, 5/1/2020 (Insured: AMBAC) 5,000,000 1,514,300 Caledonia Community Schools 4.75%, 5/1/2022 (Insured; FGIC) 2,000,000 1,678,500 Capital Region Airport Authority, Airport Revenue 6.70%, 7/1/2021 (Insured; MBIA) 2,500,000 2,617,225 Chippewa County Hospital Finance Authority, Revenue 5.625%, 11/1/2014 1,625,000 1,410,744 Chippewa Valley Schools: 7%, 5/1/2010 (Prerefunded 5/1/2001) 1,275,000 (a) 1,331,253 5%, 5/1/2027 (Insured; AMBAC) 2,675,000 2,310,531 Clarkston Community School 5.75%, 5/1/2016 (Insured; FGIC) (Prerefunded 5/1/2005) 1,340,000 (a) 1,393,600 Detroit: (Unlimited Tax) 6.35%, 4/1/2014 2,870,000 2,960,749 Water Supply Systems Revenue 8.207%, 7/1/2022 (Insured; FGIC) 1,500,000 (b) 1,554,375 Detroit City School District, School Building and Site Improvement 4.75%, 5/1/2028 (Insured; FGIC) 10,950,000 9,004,732 Dickinson County Healthcare Systems, HR 5.70%, 11/1/2018 3,000,000 2,462,970 Ferris State University of Michigan 5%, 10/1/2028 (Insured; AMBAC) 3,700,000 3,183,702 Fowlerville Community Schools School District 5.60%, 5/1/2016 (Insured; MBIA) 2,995,000 3,083,203 Grand Rapids Charter Township, Revenue (Porter Hills Obligation Group) 5.45%, 7/1/2029 500,000 416,380 Grand Rapids Housing Finance Authority, Multi-Family Revenue 7.625%, 9/1/2023 (Collateralized; FNMA) 1,000,000 1,078,580 Huron Valley School District Zero Coupon, 5/1/2018 (Insured; FGIC) 6,370,000 2,196,758 Kalamazoo Hospital Finance Authority, Hospital Facilities Revenue (Borgess Medical Center) 6.25%, 6/1/2014 (Insured; FGIC) 2,000,000 2,146,660 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ Kent County, Airport Facilities Revenue (Kent County International Airport): 5.90%, 1/1/2012 1,145,000 1,202,387 5.90%, 1/1/2013 1,095,000 1,149,881 6.10%, 1/1/2025 3,000,000 3,175,050 Lake Orion Community School District 5.80%, 5/1/2015 (Insured; AMBAC) 2,085,000 2,105,496 Leslie Public School (Ingham and Jackson Counties School Building and Site) 6%, 5/1/2015 (Insured; AMBAC) (Prerefunded 5/1/2005) 1,000,000 (a) 1,050,950 Lincoln Consolidated School District 5%, 5/1/2028 (Insured; FSA) 1,000,000 860,570 Michigan Building Authority, Lease Revenue 6.75%, 10/1/2007 (Insured; AMBAC) 1,600,000 1,677,184 Michigan Higher Education Student Loan Authority, Student Loan Revenue: 6.875%, 10/1/2007 (Insured; AMBAC) 2,250,000 2,305,687 7.55%, 10/1/2008 (Insured; MBIA) 500,000 513,610 6.125%, 9/1/2010 1,520,000 1,541,782 Michigan Hospital Finance Authority, HR: (Crittenton Hospital) 6.70%, 3/1/2007 2,250,000 2,334,893 (Daughters of Charity National Health Systems--Providence Hospital) 7%, 11/1/2021 (Prerefunded 11/1/2001) 2,700,000 (a) 2,840,184 (Detroit Medical Center) 8.125%, 8/15/2012 75,000 75,093 (Genesys Health Systems) 8.125%, 10/1/2021 (Prerefunded 10/1/2005) 5,000,000 (a) 5,790,200 (Sisters of Mercy Health Corp.) 6.25%, 2/15/2009 (Insured; FSA) 1,065,000 1,099,282 Michigan Housing Development Authority: 6.75%, 12/1/2014 1,625,000 1,673,653 Rental Housing Revenue: 6.50%, 4/1/2006 2,000,000 2,089,080 7.70%, 4/1/2023 (Insured; FSA) 4,185,000 4,335,869 Michigan Housing Representatives, COP: Zero Coupon, 8/15/2022 (Insured; AMBAC) 7,325,000 1,865,238 Zero Coupon, 8/15/2023 (Insured; AMBAC) 2,615,000 624,828 Michigan Municipal Bond Authority, Revenue (State Revolving Fund): 6.50%, 10/1/2014 (Prerefunded 10/1/2004) 2,500,000 (a) 2,683,675 6.50%, 10/1/2017 (Prerefunded 10/1/2004) 3,500,000 (a) 3,757,145 Michigan Strategic Fund, Limited Obligation Revenue: (Northeastern Community Mental Health Foundation) 8.25%, 1/1/2009 1,185,000 1,209,470 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ Michigan Strategic Fund, Limited Obligation Revenue (continued): (Ledyard Association Ltd. Partnership Project) 6.25%, 10/1/2011 (Insured; ITT Lyndon Property Insurance Co.) 3,075,000 3,098,524 SWDR (Genesee Power Station Project) 7.50%, 1/1/2021 3,000,000 3,079,260 Monroe County, PCR (Detroit Edison Project) 6.55%, 6/1/2024 (Insured; MBIA) 1,700,000 1,763,359 Monroe County Economic Development Corp., Ltd. Obligation Revenue (Detroit Edison Co. Project) 6.95%, 9/1/2022 (Insured; FGIC) 2,000,000 2,282,240 Northville, Special Assessment (Wayne County) 7.875%, 1/1/2006 1,685,000 1,706,113 Northwestern Michigan College, Community College Improvement Revenue 7%, 7/1/2011 1,800,000 1,884,636 Plymouth-Canton Community School District 4.75%, 5/1/2023 (Insured; FSA) 1,000,000 833,680 Redford Unified School District 5.50%, 5/1/2015 (Insured; AMBAC) 1,260,000 1,263,188 Romulus Community Schools Zero Coupon 5/1/2020 (Insured; FGIC) 1,385,000 419,461 Romulus Economic Development Corp., Ltd. Obligation EDR (Romulus Hir Ltd. Partnership Project) 7%, 11/1/2015 (Insured; ITT Lyndon Property Insurance Co.) 3,700,000 4,103,818 South Lyon Community Schools (School Building) 6.375%, 5/1/2018 (Prerefunded 5/1/2002) 1,500,000 (a) 1,571,490 Saint John's Public Schools 5%, 5/1/2021 (Insured; FGIC) 1,000,000 890,760 Wayne Charter County, Airport Revenue: (Detroit Metropolitan Wayne County Airport) 5%, 12/1/2022 1,485,000 1,273,863 Special Facilities (Northwest Airlines Inc.) 6.75%, 12/1/2015 5,720,000 5,684,136 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $124,593,073) 125,965,969 Principal SHORT-TERM MUNICIPAL INVESTMENTS--7.0% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ Michigan Strategic Fund, PCR, VRDN (Consumers Power Project) 6.05% (Insured; AMBAC) 1,700,000 (c) 1,700,000 Midland County Economic Development Corp., Economic Development Limited Obligation Revenue, VRDN (Dow Chemical Co. Project) 6.15% 4,500,000 (c) 4,500,000 Royal Oak Hospital Finance Authority, HR, VRDN (William Beaumont Hospital) 5.80% (SBPA; Bank of America) 2,000,000 (c) 2,000,000 University of Michigan, HR, VRDN 5.85% 1,500,000 (c) 1,500,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $9,700,000) 9,700,000 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $134,293,073) 98.4% 135,665,969 CASH AND RECEIVABLES (NET) 1.6% 2,174,109 NET ASSETS 100.0% 137,840,078 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Summary of Abbreviations AMBAC American Municipal Bond Assurance Corporation COP Certificate of Participation EDR Economic Development Revenue FGIC Financial Guaranty Insurance Company FNMA Federal National Mortgage Association FSA Financial Security Assurance HR Hospital Revenue MBIA Municipal Bond Investors Assurance Insurance Corporation PCR Pollution Control Revenue SBPA Standby Bond Purchase Agreement SWDR Solid Waste Disposal Revenue VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 50.7 AA Aa AA 15.0 A A A 6.6 BBB Baa BBB 4.3 F1 Mig1 SP1 7.1 Not Rated(d) Not Rated(d) Not Rated(d) 16.3 100.0 (A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. (B) INVERSE FLOATER SECURITY--THE INTEREST RATE IS SUBJECT TO CHANGE PERIODICALLY. (C) SECURITIES PAYABLE ON DEMAND. VARIABLE RATE INTEREST--SUBJECT TO PERIODIC CHANGE. (D) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES April 30, 2000 Cost Value -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 134,293,073 135,665,969 Interest receivable 2,387,986 Receivable for Beneficial Interest subscribed 65 Prepaid expenses 7,379 138,061,399 -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 100,342 Cash overdraft due to Custodian 75,354 Payable for shares of Beneficial Interest redeemed 19,633 Accrued expenses 25,992 221,321 -------------------------------------------------------------------------------- NET ASSETS ($) 137,840,078 -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 138,716,157 Accumulated net realized gain (loss) on investments (2,248,975) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 1,372,896 ------------------------------------------------------------------------------- NET ASSETS ($) 137,840,078 NET ASSET VALUE PER SHARE Class A Class B Class C ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 123,634,748 13,101,262 1,104,068 Shares Outstanding 8,631,190 914,777 77,057 NET ASSET VALUE PER SHARE ($) 14.32 14.32 14.33 SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF OPERATIONS Year Ended April 30, 2000 -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 9,241,821 EXPENSES: Management fee--Note 3(a) 831,121 Shareholder servicing costs--Note 3(c) 494,747 Distribution fees--Note 3(b) 96,921 Registration fees 30,131 Professional fees 23,934 Custodian fees 16,925 Prospectus and shareholders' reports 12,963 Trustees' fees and expenses--Note 3(d) 2,360 Loan commitment fees--Note 2 1,350 Miscellaneous 8,027 TOTAL EXPENSES 1,518,479 INVESTMENT INCOME (NET) 7,723,342 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4: Net realized gain (loss) on investments (2,252,887) Net unrealized appreciation (depreciation) on investments (10,055,414) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (12,308,301) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,584,959) SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Year Ended April 30, --------------------------------- 2000 1999 -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 7,723,342 8,377,835 Net realized gain (loss) on investments (2,252,887) 1,678,968 Net unrealized appreciation (depreciation) on investments (10,055,414) (357,792) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,584,959) 9,699,011 -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (6,855,425) (7,320,520) Class B shares (805,529) (996,364) Class C shares (62,388) (60,951) Net realized gain on investments: Class A shares (779,580) (1,532,800) Class B shares (96,924) (242,336) Class C shares (7,763) (19,667) TOTAL DIVIDENDS (8,607,609) (10,172,638) -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 12,607,868 10,496,366 Class B shares 1,932,898 6,039,658 Class C shares 172,133 1,596,045 Dividends reinvested: Class A shares 4,300,261 5,128,473 Class B shares 502,087 750,794 Class C shares 25,391 33,463 Cost of shares redeemed: Class A shares (27,570,960) (18,726,345) Class B shares (10,081,039) (5,296,289) Class C shares (835,085) (368,225) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (18,946,446) (346,060) TOTAL INCREASE (DECREASE) IN NET ASSETS (32,139,014) (819,687) -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 169,979,092 170,798,779 END OF PERIOD 137,840,078 169,979,092 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) Year Ended April 30, ---------------------------- 2000 1999 -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 861,443 668,141 Shares issued for dividends reinvested 294,083 324,921 Shares redeemed (1,888,153) (1,188,891) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (732,627) (195,829) -------------------------------------------------------------------------------- CLASS B(A) Shares sold 129,135 382,748 Shares issued for dividends reinvested 34,258 47,574 Shares redeemed (683,893) (336,686) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (520,500) 93,636 -------------------------------------------------------------------------------- CLASS C Shares sold 11,839 100,814 Shares issued for dividends reinvested 1,732 2,120 Shares redeemed (57,083) (23,362) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (43,512) 79,572 (A) DURING THE PERIOD ENDED APRIL 30, 2000, 311,268 CLASS B SHARES REPRESENTING $4,587,179 WERE AUTOMATICALLY CONVERTED TO 311,312 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Year Ended April 30, ------------------------------------------------------------------- CLASS A SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 15.57 15.61 15.14 15.15 15.14 Investment Operations: Investment income--net .76 .78 .80 .81 .83 Net realized and unrealized gain (loss) on investments (1.16) .12 .48 .21 .20 Total from Investment Operations (.40) .90 1.28 1.02 1.03 Distributions: Dividends from investment income--net (.76) (.78) (.80) (.81) (.83) Dividends from net realized gain on investments (.09) (.16) (.01) (.22) (.19) Total Distributions (.85) (.94) (.81) (1.03) (1.02) Net asset value, end of period 14.32 15.57 15.61 15.14 15.15 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (2.56) 5.89 8.55 6.89 6.81 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .94 .92 .92 .91 .93 Ratio of net investment income to average net assets 5.18 4.96 5.12 5.34 5.35 Portfolio Turnover Rate 29.55 36.17 41.46 22.32 56.88 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 123,635 145,764 149,221 155,568 166,538 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Year Ended April 30, ------------------------------------------------------------------- CLASS B SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 15.56 15.61 15.13 15.15 15.13 Investment Operations: Investment income--net .69 .70 .72 .74 .75 Net realized and unrealized gain (loss) on investments (1.15) .11 .49 .20 .21 Total from Investment Operations (.46) .81 1.21 .94 .96 Distributions: Dividends from investment income--net (.69) (.70) (.72) (.74) (.75) Dividends from net realized gain on investments (.09) (.16) (.01) (.22) (.19) Total Distributions (.78) (.86) (.73) (.96) (.94) Net asset value, end of period 14.32 15.56 15.61 15.13 15.15 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (2.98) 5.29 8.08 6.27 6.33 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.44 1.42 1.42 1.42 1.44 Ratio of net investment income to average net assets 4.66 4.44 4.61 4.82 4.82 Portfolio Turnover Rate 29.55 36.17 41.46 22.32 56.88 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 13,101 22,338 20,938 19,338 19,031 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, ------------------------------------------------------------------- CLASS C SHARES 2000 1999 1998 1997 1996(a) ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 15.57 15.61 15.14 15.16 15.18 Investment Operations: Investment income--net .65 .66 .67 .69 .50 Net realized and unrealized gain (loss) on investments (1.15) .12 .48 .20 .17 Total from Investment Operations (.50) .78 1.15 .89 .67 Distributions: Dividends from investment income--net (.65) (.66) (.67) (.69) (.50) Dividends from net realized gain on investments (.09) (.16) (.01) (.22) (.19) Total Distributions (.74) (.82) (.68) (.91) (.69) Net asset value, end of period 14.33 15.57 15.61 15.14 15.16 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (3.22) 5.08 7.70 5.94 6.12(c) ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.69 1.67 1.69 1.72 1.70(c) Ratio of net investment income to average net assets 4.43 4.16 4.26 4.47 4.47(c) Portfolio Turnover Rate 29.55 36.17 41.46 22.32 56.88 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 1,104 1,877 640 241 133 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund NOTES TO FINANCIAL STATEMENTS NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company, and operates as a series company currently offering thirteen series including the Michigan Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A, which is a wholly-owned subsidiary of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned subsidiary of the Manager, became the distributor of the fund's shares. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund is authorized to issue an unlimited number of $.001 par value shares in the following classes of shares: Class A, Class B and Class C shares. Class A shares are subject to a sales charge imposed at the time of purchase, Class B shares are subject to a contingent deferred sales charge ("CDSC") imposed on Class B share redemptions made within six years of purchase (five years for shareholders beneficially owning Class B shares on November 30, 1996) and Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. 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 Trust 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 fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund receives net earnings credits based on available cash balances left on deposit. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code 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. The fund has an unused capital loss carryover of approximately $1,231,000 available for Federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to April 30, 2000. This amount is calculated based on federal income tax regulations which may differ from financial reporting in accordance with generally accepted accounting principles. If not applied, the carryover expires in fiscal 2008. 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 at rates based on prevailing market rates in effect at the time of borrowings. During the period ended April 30, 2000, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (A) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund's average daily net assets and is payable monthly. DSC retained $9,142 during the period ended April 30, 2000, 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, 2000, Class B and Class C shares were charged $86,348 and $10,573, respectively, pursuant to the Plan, of which $7,430 and $908 for Class B and Class C shares, respectively, were paid to DSC. (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 their average daily net assets 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, 2000, Class A, Class B and Class C shares were charged $331,084, $43,174 and $3,524, respectively, pursuant to the Shareholder Services Plan, of which $34,035, $3,715 and $303 for Class A, Class B and Class C shares, respectively, were paid to DSC. 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 The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) fund. During the period ended April 30, 2000, the fund was charged $81,779 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"). Effective April 13, 2000, each Board member receives an annual fee of $50,000 and a fee of $6,500 for each meeting held in person 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. Prior to April 13, 2000, each Board member who was not an "affiliated person" as defined in the Act received from the Trust an annual fee of $2,500 and an attendance fee of $250 per meeting. The Chairman of the Board received an additional 25% of such compensation. Subject to the fund' s Director Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the Trust's annual retainer fee and per meeting fee paid at the time the Board member achieved 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, 2000, amounted to $43,317,395 and $69,249,749, respectively. At April 30, 2000, accumulated net unrealized appreciation on investments was $1,372,896, consisting of $4,721,441 gross unrealized appreciation and $3,348,545 gross unrealized depreciation. At April 30, 2000, 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). REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Trustees Dreyfus Premier State Municipal Bond Fund, Michigan Series We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Premier State Municipal Bond Fund, Michigan Series (the "Fund") (one of the funds constituting the Dreyfus Premier State Municipal Bond Fund) as of April 30, 2000, 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 and financial highlights. Our procedures included confirmation of securities owned as of April 30, 2000 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier State Municipal Bond Fund, Michigan Series at April 30, 2000, 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 9, 2000 The Fund IMPORTANT TAX INFORMATION (Unaudited) In accordance with Federal tax law, the fund hereby makes the following designations regarding its fiscal year ended April 30, 2000: -- all the dividends paid from investment income-net are "exempt-interest dividends" (not subject to regular Federal and, for individuals who are Michigan residents, Michigan personal income taxes) , and -- the fund hereby designates $.0736 per share as a long-term capital gain distribution of the $.0867 per share paid on December 8, 1999. 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 2000 calendar year on Form 1099-DIV which will be mailed by January 31, 2001. NOTES For More Information Dreyfus Premier State Municipal Bond Fund, Michigan 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 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 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) 2000 Dreyfus Service Corporation 053AR004 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Minnesota Series ANNUAL REPORT April 30, 2000 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Fund Performance 8 Statement of Investments 13 Statement of Assets and Liabilities 14 Statement of Operations 15 Statement of Changes in Net Assets 17 Financial Highlights 20 Notes to Financial Statements 25 Report of Independent Auditors 26 Important Tax Information FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover Dreyfus Premier State Municipal Bond Fund, Minnesota Series The Fund LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this annual report for Dreyfus Premier State Municipal Bond Fund, Minnesota Series, covering the 12-month period from May 1, 1999 through April 30, 2000. 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, W. Michael Petty. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. While higher interest rates generally led to an erosion of municipal bond prices during much of the reporting period, the tax-exempt bond market showed renewed signs of strength during the first four months of 2000. Municipal bonds were also influenced by supply-and-demand considerations. These technical influences have caused the yields of tax-exempt bonds to rise to very attractive levels compared to the after-tax yields of taxable bonds of comparable maturity and credit quality, making tax-exempt bonds especially attractive for investors in the higher federal and state income tax brackets. We appreciate your confidence over the past year, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Minnesota Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation May 15, 2000 DISCUSSION OF FUND PERFORMANCE W. Michael Petty, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Minnesota Series, perform during the period? For the 12-month period ended April 30, 2000, the fund's Class A shares provided a -2.48% total return, its Class B shares provided a -2.97% total return and its Class C shares provided a -3.30% total return.(1) In comparison, the Lipper Minnesota Municipal Debt Funds category average provided a -3.11% total return for the same period.(2 )We attribute the fund's negative absolute returns to a rising interest-rate environment during the period, which caused most municipal bond prices to decline. What is the fund's investment approach? Our goal is to seek as high a level of federal and Minnesota tax-exempt income as is practical without undue risk from a diversified portfolio of longer term municipal bonds. To achieve this objective, we employ two primary strategies. First, we evaluate supply-and-demand factors in the bond market that are affected by the relatively few municipal bonds issued by Minnesota. Based on that assessment, we select the individual Minnesota 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, creditworthiness of its issuer, insurance, and any provisions for early redemption. Under most circumstances, we look for high yielding bonds that have 10-year call protection and that are selling at a discount to face value. Second, while we do not attempt to predict changes in interest rates, we may tactically manage the fund' s average duration -- a measure of sensitivity to changes in interest rates -- in anticipation of temporary supply-and-demand changes. If we expect the supply of newly issued bonds to increase, we may reduce the 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 The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) time when we anticipate little issuance, we may increase the fund's average duration to maintain current yields for as long as practical. At other times, we try to maintain a "neutral" average duration consistent with other Minnesota municipal bond funds. What other factors influenced the fund's performance? Although the portfolio's performance was hurt by a difficult investment environment during the final two months of 1999, the first four months of 2000 generally provided better market conditions and a market rally. This rally helped offset most -- but not all -- of the decline in the first eight months of the reporting period. When the reporting period began on May 1, 1999, investors had become concerned that strong economic growth might rekindle long-dormant inflationary pressures, especially from rising wages in a tight job market. In an attempt to ease these pressures and forestall a reacceleration of inflation, the Federal Reserve Board raised short-term interest rates five times during the reporting period, causing most bond prices to fall, for a total increase of 1.25 percentage points since mid-1999. Municipal bond prices also fell during November and December, because of adverse supply-and-demand influences. For a variety of reasons, institutional investors such as insurance companies and mutual funds participated less in the tax-exempt market. Despite strong demand from individual investors, the absence of institutional buyers helped reduce overall demand and drove municipal bond prices down. During the first quarter of 2000, however, issuance of municipal bonds nationally declined approximately 20% compared to the same period in 1999. This supply reduction, combined with robust demand from individual investors, helped support a rebound of municipal bond prices. What is the fund's current strategy? Our current strategy is to maintain as high a level of income as practical, while reducing volatility and protecting assets in a rising interest-rate environment. Accordingly, we have modestly reduced the portfolio's average duration to the neutral range in an attempt to protect our holdings from the brunt of potential price depreciation and capture higher yields as they become available. From a security selection perspective, we have focused primarily on insured bonds with competitive yields. However, our ability to find such opportunities has been constrained by the small size of the Minnesota marketplace and the reduced supply of newly issued bonds. Consequently, as of April 30, 2000, the fund contained a higher level of cash -- primarily invested in tax-exempt money market instruments -- than is usual. Cash and cash equivalents comprised about 6% of the portfolio and have helped us reduce the fund's average duration. We hope to put our cash reserves back to work in longer term bonds when we believe that interest rates may have peaked and the Federal Reserve Board is finished tightening monetary policy. May 15, 2000 (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 CHARGE 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 FOR NON-MINNESOTA RESIDENTS 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 ANALYTICAL SERVICES, INC. The Fund FUND PERFORMANCE Comparison of change in value of $10,000 investment in Dreyfus Premier State Municipal Bond Fund, Minnesota Series Class A shares and the Lehman Brothers Municipal Bond Index ((+)) SOURCE: LIPPER ANALYTICAL SERVICES, 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 STATE MUNICIPAL BOND FUND, MINNESOTA SERIES (THE "FUND") ON 4/30/90 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 MINNESOTA 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 IS NOT LIMITED TO INVESTMENTS PRINCIPALLY IN MINNESOTA MUNICIPAL OBLIGATIONS AND DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. THE INDEX, UNLIKE THE FUND, 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. THESE FACTORS 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 4/30/00 Inception From Date 1 Year 5 Years 10 Years Inception ------------------------------------------------------------------------------------------------------------------------------------ CLASS A SHARES WITH SALES CHARGE (4.5%) 5/28/87 (6.86)% 3.50% 5.94% -- WITHOUT SALES CHARGE 5/28/87 (2.48)% 4.45% 6.43% -- CLASS B SHARES WITH REDEMPTION((+)) 1/15/93 (6.66)% 3.59% -- 4.53% WITHOUT REDEMPTION 1/15/93 (2.97)% 3.92% -- 4.53% CLASS C SHARES WITH REDEMPTION((+)(+)) 8/15/95 (4.22)% -- -- 3.48% WITHOUT REDEMPTION 8/15/95 (3.30)% -- -- 3.48% PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. ((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS A SHARES. ((+)(+)) 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, 2000 STATEMENT OF INVESTMENTS Principal LONG-TERM MUNICIPAL INVESTMENTS--94.3% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ Anoka County: RRR (Northern States Power Co.) 4.50%, 12/1/2007 (Insured; MBIA) 1,000,000 939,460 SWDR (United Power Association Project) 6.95%, 12/1/2008 (Guaranteed; National Rural Utilities Cooperative Finance Corp.) 3,825,000 3,908,347 Brooklyn Park 5.85%, 2/1/2016 (Insured; FSA) 1,425,000 1,444,351 Dakota County Housing and Redevelopment Authority, South Saint Paul Revenue (Single Family-GNMA Program) 8.10%, 9/1/2012 65,000 66,332 Eden Prairie, MFHR: (Eden Investments Project) 7.40%, 8/1/2025 (Insured; FHA) 500,000 511,335 (Welsh Parkway Apartments) 8%, 7/1/2026 (Insured; FHA) 2,735,000 2,820,633 Golden Valley, Revenue (Covenant Retirement Communities) 5.50%, 12/1/2029 2,000,000 1,691,480 Grand Rapids Housing and Redevelopment Authority, Revenue (Governmental Housing-Lakeshore Project) 5.30%, 10/1/2000 1,000,000 877,650 Harmony, MFHR (Zedakah Foundation Project) 5.95 %, 9/1/2020 1,235,000 1,182,969 Hastings, Health Care Facility Revenue (Regina Medical Center) 5.30%, 9/15/2028 (Insured; ACA) 2,000,000 1,688,900 Hibbing Economic Development Authority, Housing Development Revenue 4.70%, 10/1/2028 (Insured; MBIA) 715,000 579,136 Hubbard County, SWDR (Potlatch Corp. Project) 7.375%, 8/1/2013 1,000,000 1,013,120 Inver Grove Heights Independent School District Number 199 5.75%, 2/1/2017 2,225,000 2,237,215 Mahtomedi Independent School District Number 832 Zero Coupon, 2/1/2017 (Insured; MBIA) 1,275,000 483,544 Minneapolis: Zero Coupon, 12/1/2014 1,825,000 808,293 Health Care Facilities Revenue (Shelter Care Foundation): 6%, 4/1/2010 920,000 843,208 6.50%, 4/1/2029 1,000,000 866,730 Home Ownership Program 7.10%, 6/1/2021 375,000 385,391 HR (Lifespan Inc.-Minneapolis Children's Medical Project) 7%, 12/1/2020 (Prerefunded 6/1/2001) 5,650,000 (a) 5,906,058 MFHR (Churchill Apartments Project) 7.05%, 10/1/2022 (Insured; FSA) 4,000,000 4,159,240 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ Minneapolis (continued) MFMR (Seward Towers Project) 7.375%, 12/20/2030 (Collateralized; GNMA) 2,350,000 2,408,656 Minneapolis and Saint Paul Metropolitan Airports Commission, Airport Revenue: 5%, 1/1/2030 (Insured; AMBAC) 1,915,000 1,652,071 5.125%, 1/1/2031 (Insured; FGIC) 2,150,000 1,894,494 Minneapolis Community Development Agency, Ltd. Tax Support Development Revenue: 8%, 12/1/2009 300,000 306,399 7.75%, 12/1/2019 2,650,000 2,734,164 7.40%, 12/1/2021 2,000,000 2,106,480 Minneapolis-Saint Paul Housing and Redevelopment Authority, Health Care Systems Revenue (Group Health Plan Inc., Project) 6.75%, 12/1/2013 2,750,000 2,729,512 Minneapolis-Saint Paul Housing Finance Board, SFMR: 8.875%, 11/1/2018 (Collateralized; GNMA) 30,000 30,352 8.30%, 8/1/2021 (Collateralized; GNMA) 155,000 155,835 7.30%, 8/1/2031 (Collateralized; GNMA) 4,075,000 4,166,361 State of Minnesota (Duluth Airport) 6.25%, 8/1/2014 2,500,000 2,582,625 Minnesota Agricultural and Economic Development Board Revenue: Fairview Health Care Systems 6.375%, 11/15/2029 2,500,000 2,405,225 Minnesota Small Business Development Loan 8.125%, 8/1/2009 500,000 501,765 Minnesota Higher Education Facilities Authority: Adjustable Demand Revenue (Bethel College and Seminary) 5.10%, 4/1/2019 (LOC; Allied Irish Bank PLC) 4,100,000 3,686,556 College and University Revenue: (College at Saint Benedict) 5.35%, 3/1/2020 1,000,000 902,050 (University of Saint Thomas): 5.35%, 4/1/2017 1,000,000 939,640 5.40%, 4/1/2022 2,200,000 2,031,766 Mortgage Revenue (Augsburg College) 5.30%, 10/1/2027 2,395,000 2,050,072 Minnesota Housing Finance Agency, Revenue: Rental Housing 6.10%, 8/1/2009 1,975,000 1,977,726 Single Family Mortgage: 7.45%, 7/1/2022 (Insured; FHA) 910,000 929,702 6.95%, 7/1/2026 2,140,000 2,195,019 Minnesota Public Facilities Authority, Water Pollution Control Revenue 6.50%, 3/1/2014 (Prerefunded 3/1/2001) 4,200,000 (a) 4,402,944 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ New Hope, Housing and Health Care Facilities Revenue (Masonic Home - North Ridge): 5.90, 3/1/2019 1,000,000 841,160 5.875%, 3/1/2029 3,000,000 2,422,950 Northern Municipal Power Agency, Electric System Revenue 5.365%, 1/1/2016 (Insured; FSA ) 5,000,000 (b,c) 4,770,900 City of Red Wing, Health Care Facilities Revenue (River Region Obligation Group) 6.50%, 9/1/2022 3,445,000 3,231,134 Rosemount Independent School District Number 196 Zero Coupon, 4/1/2014 (Insured; MBIA) 3,000,000 1,377,210 Saint Cloud, Hospital Facilities Revenue (The Saint Cloud Hospital) 7%, 7/1/2020 (Insured; AMBAC) (Prerefunded 7/1/2001) 1,000,000 (a) 1,046,430 Saint Paul Housing and Redevelopment Authority, Revenue: Hospital (HealthEast Project): 5.70%, 11/1/2015 (Insured; ACA) 2,000,000 1,901,080 5.85%, 11/1/2017 (Insured; ACA) 1,000,000 952,780 Single Family Mortgage 6.90%, 12/1/2021 (Insured; FNMA) 1,955,000 1,999,574 Sartell, PCR (Champion International Corp. Project) 6.95%, 10/1/2012 5,000,000 5,164,300 Seaway Port Authority of Duluth, Industrial Development Dock and Wharf Revenues(Cargill Inc. Project) 6.80%, 5/1/2012 3,000,000 3,127,860 Southern Municipal Power Agency, Power Supply System Revenue: Zero Coupon, 1/1/2016 (Insured; MBIA) 1,270,000 1,172,985 Zero Coupon, 1/1/2021 (Insured; MBIA) 8,000,000 2,342,400 Zero Coupon, 1/1/2025 (Insured; MBIA) 5,255,000 1,195,880 Zero Coupon, 1/1/2026 (Insured; MBIA) 15,530,000 3,328,390 Zero Coupon, 1/1/2027 (Insured; MBIA) 4,800,000 968,832 University of Minnesota, College and University Revenue 5.50%, 7/1/2021 5,925,000 5,776,283 Washington County Housing and Redevelopment Authority, Hospital Facility Revenue (Healtheast Project): 5.375%, 11/15/2018 (Insured; ACA) 5,000,000 4,480,450 5.50%, 11/15/2027 (Insured; ACA) 2,455,000 2,148,002 Western Minnesota Municipal Power Agency, Electric and Light Revenue 5.50%, 1/1/2012 (Insured; AMBAC) 1,000,000 1,007,690 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $128,069,759) 124,459,096 Principal SHORT-TERM MUNICIPAL INVESTMENTS--6.0% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ Beltrami County, Environmental Control Revenue, VRDN (Northwood Panelboard Co. Project) 6.10% (LOC; Union Bank of Switzerland) 1,900,000 (d) 1,900,000 Cohasset, Revenue, VRDN (Minnesota Power and Light Co. Project) 6% (LOC; ABN Amro Bank N.V.) 4,000,000 (d) 4,000,000 Minneapolis-Saint Paul Housing and Redevelopment Authority, Health Care Systems Revenue, VRDN (Children's Health Care) 6.05% (Insured; FSA) 2,000,000 (d) 2,000,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $7,900,000) 7,900,000 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $135,969,759) 100.3% 132,359,096 LIABILITIES, LESS CASH AND RECEIVABLES (.3%) (354,335) NET ASSETS 100.0% 132,004,761 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Summary of Abbreviations ACA American Capital Access AMBAC American Municipal Bond Assurance Corporation FGIC Financial Guaranty Insurance Company FHA Federal Housing Administration FNMA Federal National Mortgage Association FSA Financial Security Assurance GNMA Government National Mortgage Association HR Hospital Revenue LOC Letter of Credit 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 SFMR Single Family Mortgage 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 37.3 AA Aa AA 13.2 A A A 21.6 BBB Baa BBB 11.4 F1 MIG1 SP1 8.8 Not Rated(e) Not Rated(e) Not Rated(e) 7.7 100.0 (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) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF 1933. THIS SECURITY MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT APRIL 30, 2000, THIS SECURITY AMOUNTED TO $4,770,900 OR 3.6% OF NET ASSETS. (D) SECURITIES PAYABLE ON DEMAND. VARIABLE RATE INTEREST-SUBJECT TO PERIODIC CHANGE. (E) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. ( )SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES April 30, 2000 Cost Value -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 135,969,759 132,359,096 Cash 53,830 Interest receivable 2,111,193 Receivable for shares of Beneficial Interest subscribed 30,000 Prepaid expenses 7,695 134,561,814 -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 96,739 Payable for investment securities purchased 2,386,775 Payable for shares of Beneficial Interest redeemed 48,368 Accrued expenses 25,171 2,557,053 -------------------------------------------------------------------------------- NET ASSETS ($) 132,004,761 -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 136,053,950 Accumulated net realized gain (loss) on investments (438,526) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (3,610,663) -------------------------------------------------------------------------------- NET ASSETS ($) 132,004,761 NET ASSET VALUE PER SHARE Class A Class B Class C ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 116,260,723 14,670,540 1,073,498 Shares Outstanding 8,237,961 1,037,792 75,955 ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 14.11 14.14 14.13 SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF OPERATIONS Year Ended April 30, 2000 -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 9,066,461 EXPENSES: Management fee--Note 3(a) 814,463 Shareholder servicing costs--Note 3(c) 466,310 Distribution fees--Note 3(b) 112,538 Registration fees 29,765 Professional fees 20,244 Prospectus and shareholders' reports 18,547 Custodian fees 16,807 Loan commitment fees--Note 2 1,284 Trustees' fees and expenses--Note 3(d) 442 Miscellaneous 16,954 TOTAL EXPENSES 1,497,354 INVESTMENT INCOME--NET 7,569,107 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (447,921) Net unrealized appreciation (depreciation) on investments (11,735,245) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (12,183,166) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,614,059) SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Year Ended April 30, ---------------------------------- 2000 1999 -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 7,569,107 8,002,206 Net realized gain (loss) on investments (447,921) 1,265,513 Net unrealized appreciation (depreciation) on investments (11,735,245) (1,000,899) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,614,059) 8,266,820 -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (6,551,289) (6,587,991) Class B shares (971,307) (1,370,327) Class C shares (46,511) (43,888) Net realized gain on investments: Class A shares (504,105) (303,409) Class B shares (72,260) (72,456) Class C shares (2,995) (2,946) TOTAL DIVIDENDS (8,148,467) (8,381,017) -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 16,089,847 15,840,640 Class B shares 1,911,126 6,424,682 Class C shares 486,001 759,136 Dividends reinvested: Class A shares 4,327,654 4,269,607 Class B shares 649,087 925,393 Class C shares 31,502 38,489 Cost of shares redeemed: Class A shares (27,782,707) (11,847,645) Class B shares (15,466,061) (6,315,442) Class C shares (777,728) (31,617) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (20,531,279) 10,063,243 TOTAL INCREASE (DECREASE) IN NET ASSETS (33,293,805) 9,949,046 -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 165,298,566 155,349,520 END OF PERIOD 132,004,761 165,298,566 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) Year Ended April 30, ---------------------------------- 2000 1999 -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 1,102,831 1,027,749 Shares issued for dividends reinvested 301,122 276,384 Shares redeemed (1,942,658) (767,790) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (538,705) 536,343 -------------------------------------------------------------------------------- CLASS B(A) Shares sold 129,739 414,987 Shares issued for dividends reinvested 44,882 59,803 Shares redeemed (1,065,330) (409,838) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (890,709) 64,952 -------------------------------------------------------------------------------- CLASS C Shares sold 34,530 48,848 Shares issued for dividends reinvested 2,176 2,489 Shares redeemed (53,552) (2,051) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (16,846) 49,286 (A) DURING THE PERIOD ENDED APRIL 30, 2000, 656,217 CLASS B SHARES REPRESENTING $9,496,629 WERE AUTOMATICALLY CONVERTED TO 657,231 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Year Ended April 30, ---------------------------------------------------------------- CLASS A SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 15.30 15.30 15.03 14.98 14.90 Investment Operations: Investment income--net .75 .78 .82 .82 .82 Net realized and unrealized gain (loss) on investments (1.13) .04 .27 .09 .08 Total from Investment Operations (.38) .82 1.09 .91 .90 Distributions: Dividends from investment income--net (.75) (.78) (.82) (.82) (.82) Dividends from net realized gain on investments (.06) (.04) -- (.04) -- Total Distributions (.81) (.82) (.82) (.86) (.82) Net asset value, end of period 14.11 15.30 15.30 15.03 14.98 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (2.48) 5.41 7.36 6.16 6.11 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .93 .91 .90 .91 .90 Ratio of net investment income to average net assets 5.20 5.05 5.32 5.42 5.41 Portfolio Turnover Rate 13.45 41.27 13.37 25.82 35.47 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 116,261 134,314 126,115 129,031 138,058 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Year Ended April 30, ---------------------------------------------------------------- CLASS B SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 15.33 15.33 15.06 15.01 14.92 Investment Operations: Investment income--net .67 .70 .74 .74 .74 Net realized and unrealized gain (loss) on investments (1.13) .04 .27 .09 .09 Total from Investment Operations (.46) .74 1.01 .83 .83 Distributions: Dividends from investment income--net (.67) (.70) (.74) (.74) (.74) Dividends from net realized gain on investments (.06) (.04) -- (.04) -- Total Distributions (.73) (.74) (.74) (.78) (.74) Net asset value, end of period 14.14 15.33 15.33 15.06 15.01 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (2.97) 4.86 6.79 5.60 5.62 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.46 1.43 1.42 1.44 1.43 Ratio of net investment income to average net assets 4.64 4.52 4.79 4.90 4.87 Portfolio Turnover Rate 13.45 41.27 13.37 25.82 35.47 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 14,671 29,562 28,568 26,004 25,617 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, ---------------------------------------------------------------- CLASS C SHARES 2000 1999 1998 1997 1996(a) ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 15.33 15.33 15.06 15.01 14.96 Investment Operations: Investment income--net .63 .65 .69 .70 .50 Net realized and unrealized gain (loss) on investments (1.14) .04 .27 .09 .05 Total from Investment Operations (.51) .69 .96 .79 .55 Distributions: Dividends from investment income--net (.63) (.65) (.69) (.70) (.50) Dividends from net realized gain on investments (.06) (.04) -- (.04) -- Total Distributions (.69) (.69) (.69) (.74) (.50) Net asset value, end of period 14.13 15.33 15.33 15.06 15.01 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (3.30) 4.53 6.46 5.34 5.15(c) ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.73 1.74 1.73 1.67 1.42(c) Ratio of net investment income to average net assets 4.38 4.16 4.40 4.62 4.00(c) Portfolio Turnover Rate 13.45 41.27 13.37 25.82 35.47 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 1,073 1,422 667 307 373 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund NOTES TO FINANCIAL STATEMENTS NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company and operates as a series company currently offering thirteen series, including the Minnesota Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned subsidiary of the Manager, became the distributor of the fund's shares. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund is authorized to issue an unlimited number of $.001 par value shares in the following classes of shares: Class A, Class B and Class C shares. Class A shares are subject to a sales charge imposed at the time of purchase, Class B shares are subject to a contingent deferred sales charge ("CDSC") imposed on Class B share redemptions made within six years of purchase (five years for shareholders beneficially owning Class B shares on November 30, 1996) and Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. 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 Trust 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 fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $7,195 during the period ended April 30, 2000 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code 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. The fund has an unused capital loss carryover of approximately $158,000 available for Federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to April 30, 2000. This amount is calculated based on Federal income tax regulations which may differ from financial reporting in accordance with generally accepted accounting principles. If not applied, the carryover expires in fiscal 2008. 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 at rates based on prevailing market rates in effect at the time of borrowings. During the period ended April 30, 2000, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (A) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund's average daily net assets and is payable monthly. DSC retained $308 during the period ended April 30, 2000, 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, 2000, Class B and Class C shares were charged $104,577 and $7,961, respectively, pursuant to the Plan, of which $8,172 and $888 for Class B and Class C shares, respectively, were paid to DSC. (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 for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such 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, 2000, Class A, Class B and Class C shares were charged $315,268, $52,289 and $2,654, respectively, pursuant to the Shareholder Services Plan, of which $32,068, $4,086 and $296, respectively, were paid to DSC. The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended April 30, 2000, the fund was charged $67,882 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"). Effective April 11, 2000, each Board member receives an annual fee of $50,000 and a fee of $6,500 for each meeting held in person 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. Prior to April 11, 2000, each Board member who was not an "affiliated person" as defined in the Act received from the Trust an annual fee of $2,500 and an attendance fee of $250 per meeting. The Chairman of the Board received an additional 25% of such compensation. Subject to the fund' s Director Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the Trust's annual retainer fee and per meeting fee paid at the time the Board member achieved emeritus status. NOTE 4--Securities Transactions: The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period April 30, 2000, amounted to $19,351,656 and $50,942,592, respectively. At April 30, 2000, accumulated net unrealized depreciation on investments was $3,610,663, consisting of $2,086,606 gross unrealized appreciation and $5,697,269 gross unrealized depreciation. At April 30, 2000, 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). REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Trustees Dreyfus Premier State Municipal Bond Fund, Minnesota Series We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Premier State Municipal Bond Fund, Minnesota Series (one of the Funds constituting the Dreyfus Premier State Municipal Bond Fund) as of April 30, 2000, 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 periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with 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 and financial highlights. Our procedures included confirmation of securities owned as of April 30, 2000 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier State Municipal Bond Fund, Minnesota Series at April 30, 2000, 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 periods, in conformity with accounting principles generally accepted in the United States. New York, New York June 9, 2000 The Fund IMPORTANT TAX INFORMATION (Unaudited) In accordance with Federal tax law, the fund hereby makes the following designations regarding its fiscal year ended April 30, 2000: --all the dividends paid from investment income--net are "exempt -interest dividends" (not subject to regular Federal and, for individuals who are Minnesota residents, Minnesota personal income taxes), and --the fund hereby designates $.0370 per share as a long-term capital gain distribution of the $.0560 per share paid on December 8, 1999. 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 2000 calendar year on Form 1099-DIV which will be mailed by January 31, 2001. NOTES For More Information Dreyfus Premier State Municipal Bond Fund, Minnesota 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 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 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) 2000 Dreyfus Service Corporation 055AR004 ================================================================================ Dreyfus Premier State Municipal Bond Fund, New Jersey Series ANNUAL REPORT April 30, 2000 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Fund Performance 8 Statement of Investments 11 Statement of Assets and Liabilities 12 Statement of Operations 13 Statement of Changes in Net Assets 15 Financial Highlights 18 Notes to Financial Statements 23 Report of Independent Auditors 24 Important Tax Information FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, New Jersey Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this annual report for Dreyfus Premier State Municipal Bond Fund, New Jersey Series, covering the 12-month period from May 1, 1999 through April 30, 2000. 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, W. Michael Petty. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. While higher interest rates generally led to an erosion of municipal bond prices during much of the reporting period, the tax-exempt bond market showed renewed signs of strength during the first four months of 2000. Municipal bonds were also influenced by supply-and-demand considerations. These technical influences have caused the yields of tax-exempt bonds to rise to very attractive levels compared to the after-tax yields of taxable bonds of comparable maturity and credit quality, making tax-exempt bonds especially attractive for investors in the higher federal and state income tax brackets. We appreciate your confidence over the past year, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, New Jersey Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation May 15, 2000 DISUSSION OF FUND PERFORMANCE W. Michael Petty, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, New Jersey Series, perform during the period? For the 12-month period ended April 30, 2000, the fund's Class A shares provided a -4.96% total return, its Class B shares provided a -5.45% total return and its Class C shares provided a -5.66% total return.(1) In comparison, the Lipper New Jersey Municipal Debt Funds category average provided a -3.54% total return for the same period.(2) We attribute the fund's negative absolute returns to a rising interest-rate environment during the period, which caused most municipal bond prices to decline. What is the fund's investment approach? Our goal is to seek as high a level of federal and New Jersey tax-exempt income as is practical without undue risk from a diversified portfolio of longer term municipal bonds. To achieve this objective, we employ two primary strategies. First, we evaluate supply-and-demand factors in the bond market that are affected by the relatively few municipal bonds issued by New Jersey. Based on that assessment, we select the individual New Jersey 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, creditworthiness of its issuer, insurance, and any provisions for early redemption. Under most circumstances, we look for high yielding bonds that have 10-year call protection and that are selling at a discount to face value. Second, while we do not attempt to predict changes in interest rates, we may tactically manage the fund's average duration -- a measure of sensitivity to changes in interest rates -- in anticipation of temporary supply-and-demand changes. If we expect the supply of newly issued bonds to increase, we may reduce the fund's average duration to make cash available for the purchase of higher yielding securities. The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) 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. At other times, we try to maintain a neutral average duration consistent with other New Jersey municipal bond funds. What other factors influenced the fund's performance? Although the fund's performance was hurt by a difficult investment environment during the final two months of 1999, the first four months of 2000 generally provided better market conditions and a market rally. This rally helped offset most -- but not all -- of the decline in the first eight months of the reporting period. When the reporting period began on May 1, 1999, investors had become concerned that strong economic growth might rekindle long-dormant inflationary pressures, especially from rising wages in a tight job market. In an attempt to ease these pressures and forestall a reacceleration of inflation, the Federal Reserve Board raised short-term interest rates five times during the reporting period, causing most bond prices to fall, for a total increase of 1.25 percentage points since mid-1999. Municipal bond prices also fell during November and December, because of adverse supply-and-demand influences. For a variety of reasons, institutional investors such as insurance companies and mutual funds participated less in the tax-exempt market. Despite strong demand from individual investors, the absence of institutional buyers helped reduce overall demand and drove municipal bond prices down. During the first quarter of 2000, however, issuance of municipal bonds nationally declined approximately 20% compared to the same period in 1999. This supply reduction, combined with robust demand from individual investors, helped support a rebound of municipal bond prices. What is the fund's current strategy? Our current strategy is to maintain as high a level of income as practical while reducing volatility and protecting assets in a rising interest-rate environment. Accordingly, we have modestly reduced the portfolio's average duration in an attempt to protect our holdings from the brunt of potential price depreciation and capture higher yields as they become available From a security selection perspective, we have reduced our holdings of discount bonds and we have enlarged our holdings of insured bonds with competitive yields. While our ability to find such opportunities has been constrained by the small size of the New Jersey municipal marketplace and by the reduced supply of newly issued bonds, our move to higher yielding securities has helped offset some of the price decline caused by rising interest rates. May 15, 2000 (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 CHARGE 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 FOR NON-NEW JERSEY RESIDENTS 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 ANALYTICAL SERVICES, INC. The Fund FUND PERFORMANCE Comparison of change in value of $10,000 investment in Dreyfus Premier State Municipal Bond Fund, New Jersey Series Class A shares and Class B shares and the Lehman Brothers Municipal Bond Index ((+)) SOURCE: LIPPER ANALYTICAL SERVICES, INC. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. ON MARCH 31, 1997, THE NEW JERSEY SERIES COMMENCED OPERATIONS THROUGH A TRANSFER OF ASSETS FROM THE NEW JERSEY SERIES OF PREMIER INSURED MUNICIPAL BOND FUND. THE FINANCIAL DATA PROVIDED ABOVE PRIOR TO SUCH DATE IS FOR THE NEW JERSEY SERIES OF PREMIER INSURED MUNICIPAL BOND FUND. THE ABOVE GRAPH COMPARES A $10,000 INVESTMENT MADE IN EACH OF THE CLASS A SHARES AND CLASS B SHARES OF DREYFUS PREMIER STATE MUNICIPAL BOND FUND, NEW JERSEY SERIES (THE "FUND") ON 5/4/94 (INCEPTION DATE) TO A $10,000 INVESTMENT MADE IN THE LEHMAN BROTHERS MUNICIPAL BOND INDEX (THE "INDEX") ON THAT DATE. FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 4/30/94 IS USED AS THE BEGINNING VALUE ON 5/4/94. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED. PERFORMANCE FOR CLASS C SHARES WILL VARY FROM THE PERFORMANCE OF BOTH CLASS A AND CLASS B SHARES SHOWN ABOVE DUE TO DIFFERENCES IN CHARGES AND EXPENSES. THE FUND INVESTS PRIMARILY IN NEW JERSEY MUNICIPAL SECURITIES AND ITS 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. THE INDEX IS NOT LIMITED TO INVESTMENTS PRINCIPALLY IN NEW JERSEY MUNICIPAL OBLIGATIONS AND DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. THE INDEX, UNLIKE THE FUND, 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. THESE FACTORS 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 4/30/00 Inception From Date((+)) 1 Year 5 Years Inception ------------------------------------------------------------------------------------------------------------------------------------ CLASS A SHARES WITH SALES CHARGE (4.5%) 5/4/94 (9.24)% 3.22% 3.72% WITHOUT SALES CHARGE 5/4/94 (4.96)% 4.17% 4.52% CLASS B SHARES WITH REDEMPTION((+)(+)) 5/4/94 (9.03)% 3.33% 3.87% WITHOUT REDEMPTION 5/4/94 (5.45)% 3.65% 4.00% CLASS C SHARES WITH REDEMPTION((+)(+)(+)) 12/4/95 (6.55)% -- 2.04% WITHOUT REDEMPTION 12/4/95 (5.66)% -- 2.04% PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. ((+)) ON MARCH 31, 1997, THE NEW JERSEY SERIES COMMENCED OPERATIONS THROUGH A TRANSFER OF ASSETS FROM THE NEW JERSEY SERIES OF PREMIER INSURED MUNICIPAL BOND FUND. THE FINANCIAL DATA PROVIDED ABOVE PRIOR TO SUCH DATE IS FOR THE NEW JERSEY SERIES OF PREMIER INSURED MUNICIPAL BOND FUND. ((+)(+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS A SHARES . ((+)(+)(+)) 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, 2000 STATEMENT OF INVESTMENTS Principal LONG-TERM MUNICIPAL INVESTMENTS--85.1% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY--75.8% Camden County Improvement Authority, Revenue (Health Care Redevelopment Project--Cooper Health System (Obligation Group) 5.875%, 2/15/2015 100,000 74,042 Carteret Board of Education, COP 6%, 1/15/2024 (Insured; MBIA) 440,000 451,317 Mercer County Improvement Authority, Revenue (County Courthouse Project) 5.75%, 11/1/2017 500,000 504,920 New Jersey Economic Development Authority, Revenue (Educational Testing Service) 4.75%, 5/15/2025 (Insured; MBIA) 900,000 756,657 First Mortgage: (The Evergreens): 6%, 10/1/2017 650,000 559,663 6%, 10/1/2022 700,000 584,500 (Fellowship Village) 5.50%, 1/1/2018 450,000 364,874 Special Facility (Continental Airlines Inc. Project) 6.25%, 9/15/2019 1,320,000 1,228,920 State Lease (State Office Buildings Projects): 6.125%, 6/15/2018 (Insured; AMBAC) 1,000,000 1,037,510 (Department of Human Services) 6.25%, 7/1/2024 1,000,000 1,006,250 Water Facilities: (New Jersey American Water Co. Inc. Project) 6.50%, 4/1/2022 (Insured; FGIC) 500,000 510,785 New Jersey Health Care Facilities Financing Authority, Revenue: (Burdette Tomlin Memorial Hospital) 5.50%, 7/1/2019 500,000 450,905 (General Hospital Center at Passaic) 6.75%, 7/1/2019 (Insured; FSA) 550,000 613,954 (Saint Barnabas) Zero Coupon, 7/1/2023 (Insured; MBIA) 1,000,000 241,560 (Saint Elizabeth Hospital Obligation Group) 6%, 7/1/2020 75,000 61,674 (Virtua Health Issue) 4.50%, 7/1/2028 (Insured; FSA) 250,000 194,527 New Jersey Highway Authority, Garden State Parkway General Revenue 6%, 1/1/2019 640,000 669,126 New Jersey Turnpike Authority, Turnpike Revenue 6.50%, 1/1/2016 220,000 240,000 South Jersey Transportation Authority, LR (Raytheon Aircraft Service Inc. Project) 6.15%, 1/1/2022 500,000 456,255 West Orange Board of Education, COP 6%, 10/1/2024 (Insured; MBIA) 500,000 509,705 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ U.S. RELATED--9.3% Puerto Rico Housing Bank and Finance Agency, SFMR 6.25%, 4/1/2029 (Insured; GNMA) 285,000 285,442 Virgin Islands Public Finance Authority, Gross Receipts Taxes Lien Note Gross Receipts Taxes Lien Note 6.50%, 10/1/2024 1,000,000 1,007,550 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $12,439,652) 11,810,136 ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM MUNICIPAL INVESTMENTS--13.0% ------------------------------------------------------------------------------------------------------------------------------------ New Jersey Economic Development Authority, VRDN: EDR (El Dorado Terminal) 6% 400,000 (a) 400,000 Natural Gas Facilities Revenue (NUI Corp. Project) (Insured; AMBAC) 5.75% 400,000 (a) 400,000 Water Facilities Revenue (United Water New Jersey Inc. Project) (Insured; AMBAC) 5.95% 400,000 (a) 400,000 Port Authority of New York and New Jersey, Special Obligation Revenue, VRDN (Versatile Structure Obligation): 6.10% 500,000 (a) 500,000 6% 100,000 (a) 100,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $1,800,000) 1,800,000 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $14,239,652) 98.1% 13,610,136 CASH AND RECEIVABLES (NET) 1.9% 261,706 NET ASSETS 100.0% 13,871,842 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Summary of Abbreviations AMBAC American Municipal Bond Assurance Corporation COP Certificate of Participation EDR Economic Development Revenue FGIC Financial Guaranty Insurance Company FSA Financial Security Assurance GNMA Government National Mortgage Association LR Lease Revenue MBIA Municipal Bond Investors Assurance Insurance Corporation SFMR Single Family Mortgage Revenue VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 38.8 AA Aa AA 3.7 A A A 12.5 BBB Baa BBB 13.9 BB Ba BB 9.0 B B B .5 F1 MIG1/P1 SP1/A1 13.2 Not Rated(b) Not Rated(b) Not Rated(b) 8.4 100.0 (A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE. (B) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES April 30, 2000 Cost Value -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 14,239,652 13,610,136 Cash 88,121 Interest receivable 179,762 Prepaid expenses 7,046 13,885,065 -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 7,856 Accrued expenses 5,367 13,223 -------------------------------------------------------------------------------- NET ASSETS ($) 13,871,842 -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 14,992,972 Accumulated net realized gain (loss) on investments (491,614) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (629,516) -------------------------------------------------------------------------------- NET ASSETS ($) 13,871,842 NET ASSET VALUE PER SHARE Class A Class B Class C ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 4,945,887 8,488,204 437,751 Shares Outstanding 421,328 723,308 37,249 ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 11.74 11.74 11.75 SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF OPERATIONS Year Ended April 30, 2000 -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 890,000 EXPENSES: Management fee--Note 3(a) 85,582 Shareholder servicing costs--Note 3(c) 55,079 Distribution fees--Note 3(b) 53,568 Registration fees 18,813 Prospectus and shareholders' reports 14,958 Auditing fees 14,017 Custodian fees 3,165 Legal fees 485 Trustees' fees and expenses--Note 3(d) 285 Loan commitment fees--Note 2 156 Miscellaneous 12,433 TOTAL EXPENSES 258,541 Less--reduction in management fee due to undertaking--Note 3(a) (65,782) NET EXPENSES 192,759 INVESTMENT INCOME--NET 697,241 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (491,965) Net unrealized appreciation (depreciation) on investments (1,130,979) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (1,622,944) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (925,703) SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Year Ended April 30, --------------------------------- 2000 1999 -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 697,241 642,885 Net realized gain (loss) on investments (491,965) 231,591 Net unrealized appreciation (depreciation) on investments (1,130,979) (73,816) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (925,703) 800,660 -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (242,137) (212,301) Class B shares (443,125) (424,424) Class C shares (11,979) (6,160) Net realized gain on investments: Class A shares (64,561) (32,649) Class B shares (135,112) (72,679) Class C shares (2,550) (1,052) TOTAL DIVIDENDS (899,464) (749,265) -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 1,037,158 1,206,947 Class B shares 975,090 2,694,789 Class C shares 422,771 254,987 Dividends reinvested: Class A shares 191,033 155,326 Class B shares 369,450 318,957 Class C shares 8,141 5,677 Cost of shares redeemed: Class A shares (893,433) (648,145) Class B shares (3,261,000) (1,962,099) Class C shares (307,408) (28,097) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (1,458,198) 1,998,342 TOTAL INCREASE (DECREASE) IN NET ASSETS (3,283,365) 2,049,737 -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 17,155,207 15,105,470 END OF PERIOD 13,871,842 17,155,207 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) Year Ended April 30, ------------------------------- 2000 1999 -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 85,133 90,729 Shares issued for dividends reinvested 15,905 11,685 Shares redeemed (73,722) (49,056) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 27,316 53,358 -------------------------------------------------------------------------------- CLASS B(A) Shares sold 80,244 203,083 Shares issued for dividends reinvested 30,723 24,002 Shares redeemed (272,697) (147,804) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (161,730) 79,281 -------------------------------------------------------------------------------- CLASS C Shares sold 36,111 19,197 Shares issued for dividends reinvested 663 428 Shares redeemed (26,027) (2,111) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 10,747 17,514 (A) DURING THE PERIOD ENDED APRIL 30, 2000, 11,326 CLASS B SHARES REPRESENTING $134,440 WERE AUTOMATICALLY CONVERTED TO 11,330 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Nine Months Ended Year Ended April 30, April 30, Year Ended July 31, ___________________________ _________________ CLASS A SHARES 2000 1999 1998 1997(a) 1996 1995 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.14 13.08 12.63 12.79 12.71 12.58 Investment Operations: Investment income-net .59 .57 .61 .42 .59 .71 Net realized and unrealized gain (loss) on investments (1.24) .15 .56 (.02) .08 .13 Total from Investment Operations (.65) .72 1.17 .40 .67 .84 Distributions: Dividends from investment income-net (.59) (.57) (.61) (.42) (.59) (.71) Dividends from net realized gain on investments (.16) (.09) (.11) (.14) -- -- Total Distributions (.75) (.66) (.72) (.56) (.59) (.71) Net asset value, end of period 11.74 13.14 13.08 12.63 12.79 12.71 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (4.96) 5.52 9.48 4.25(c) 5.31 7.01 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .88 1.08 1.02 1.20(c) 1.14 .10 Ratio of net investment income to average net assets 4.84 4.28 4.73 4.39(c) 4.55 5.60 Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation .44 -- .03 .10(c) .08 1.35 Portfolio Turnover Rate 120.61 64.40 50.78 110.12(d) 28.14 43.48 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 4,946 5,179 4,454 4,837 5,212 4,981 (A) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO APRIL 30. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. (D) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Nine Months Ended Year Ended April 30, April 30, Year Ended July 31, ___________________________ _________________ CLASS B SHARES 2000 1999 1998 1997(a) 1996 1995 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.14 13.07 12.63 12.79 12.71 12.58 Investment Operations: Investment income-net .53 .50 .55 .37 .52 .65 Net realized and unrealized gain (loss) on investments (1.24) .16 .55 (.02) .08 .13 Total from Investment Operations (.71) .66 1.10 .35 .60 .78 Distributions: Dividends from investment income-net (.53) (.50) (.55) (.37) (.52) (.65) Dividends from net realized gain on investments (.16) (.09) (.11) (.14) -- -- Total Distributions (.69) (.59) (.66) (.51) (.52) (.65) Net asset value, end of period 11.74 13.14 13.07 12.63 12.79 12.71 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (5.45) 5.08 8.85 3.74(c) 4.79 6.48 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.40 1.58 1.53 1.69(c) 1.63 .61 Ratio of net investment income to average net assets 4.32 3.78 4.20 3.88(c) 4.04 5.00 Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation .42 -- .03 .09(c) .08 1.29 Portfolio Turnover Rate 120.61 64.40 50.78 110.12(d) 28.14 43.48 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 8,488 11,628 10,533 8,680 8,910 6,852 (A) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO APRIL 30. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. (D) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. Nine Months Year Ended Ended Year Ended April 30, April 30, July 31, --------------------------------------- CLASS C SHARES 2000 1999 1998 1997(a) 1996(b) ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE DATA ($): Net asset value, beginning of period 13.15 13.09 12.64 12.78 13.21 Investment Operations: Investment income--net .50 .46 .50 .35 .32 Net realized and unrealized gain (loss) on investments (1.24) .15 .56 -- (.43) Total from Investment Operations (.74) .61 1.06 .35 (.11) Distributions: Dividends from investment income--net (.50) (.46) (.50) (.35) (.32) Dividends from net realized gain on investments (.16) (.09) (.11) (.14) -- Total Distributions (.66) (.55) (.61) (.49) (.32) Net asset value, end of period 11.75 13.15 13.09 12.64 12.78 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(C) (5.66) 4.67 8.55 3.72(d) (1.21)(d) ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA ($): Ratio of expenses to average net assets 1.63 1.88 1.91 1.97(d) 1.95(d) Ratio of net investment income to average net assets 4.05 3.42 3.65 3.62(d) 3.68(d) Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation .41 -- .06 .76(d) .02(d) Portfolio Turnover Rate 120.61 64.40 50.78 110.12(e) 28.14 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 438 349 118 1 6 (A) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO APRIL 30. (B) FROM DECEMBER 4, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO JULY 31, 1996. (C) EXCLUSIVE OF SALES CHARGE. (D) ANNUALIZED. (E) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund NOTES TO FINANCIAL STATEMENTS NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified, open-end management investment company, and operates as a series company currently offering thirteen series, including the New Jersey Series (the "fund") . The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A, which is a wholly-owned subsidiary of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned subsidiary of the Manager, became the distributor of the fund's shares. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund is authorized to issue an unlimited number of $.001 par value shares in the following classes of shares: Class A, Class B and Class C shares. Class A shares are subject to a sales charge imposed at the time of purchase, Class B shares are subject to a contingent deferred sales charge ("CDSC") imposed on Class B share redemptions made within six years of purchase (five years for shareholders beneficially owning Class B shares on November 30, 1996) and Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. 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 Trust 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 fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $654 during the period ended April 30, 2000 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code 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. The fund has an unused capital loss carryover of approximately $367,000 available for Federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to April 30, 2000. This amount is calculated based on Federal income tax regulations which may differ from financial reporting in accordance with generally accepted accounting principles. If not applied, the carryover expires in fiscal 2008. 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 at rates based on prevailing market rates in effect at the time of borrowings. During the period ended April 30, 2000, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (A) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund's average daily net assets and is payable monthly. The Manager had undertaken from July 29, 1999 to April 30, 2000, to reduce the management fee paid by the fund, to the extent that the fund' s aggregate expenses, excluding 12b-1 distribution fees, taxes, brokerage fees, commitment fees, interest on borrowings and extraordinary expenses, exceeded an annual rate of .77 of 1% of the value of the fund' s average daily net assets. The reduction in management fee, pursuant to the undertaking, amounted to $65,782 during the period ended April 30, 2000. (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, 2000, Class B and Class C shares were charged $51,350 and $2,218, respectively, pursuant to the Plan, of which $4,781 and $258 for Class B and Class C shares, respectively, were paid to DSC. (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 their average daily net assets 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, 2000, Class A, Class B and Class C shares were charged $12,487, $25,675 and $739, respectively, pursuant to the Shareholder The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) Services Plan, of which $1,351, $2,391 and $86 for Class A, Class B and Class C shares, respectively, were paid to DSC. 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, 2000, the fund was charged $7,336 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"). Effective April 13, 2000, each Board member receives an annual fee of $50,000 and a fee of $6,500 for each meeting held in person 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. Prior to April 13, 2000, each Board member who was not an "affiliated person" as defined in the Act received from the Trust an annual fee of $2,500 and an attendance fee of $250 per meeting. The Chairman of the Board received an additional 25% of such compensation. Subject to the fund' s Director Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the Trust's annual retainer fee and per meeting fee paid at the time the Board member achieved 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, 2000, amounted to $17,840,324 and $21,139,986, respectively. At April 30, 2000, accumulated net unrealized depreciation on investments was $629,516, consisting of $95,462 gross unrealized appreciation and $724,978 gross unrealized depreciation. At April 30, 2000, 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). REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Trustees Dreyfus Premier State Municipal Bond Fund, New Jersey Series We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Premier State Municipal Bond Fund, New Jersey Series (one of the Funds constituting the Dreyfus Premier State Municipal Bond Fund) as of April 30, 2000, 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 periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund' s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with 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 and financial highlights. Our procedures included confirmation of securities owned as of April 30, 2000 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier State Municipal Bond Fund, New Jersey Series at April 30, 2000, 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 periods, in conformity with accounting principles generally accepted in the United States. New York, New York June 9, 2000 The Fund IMPORTANT TAX INFORMATION (Unaudited) In accordance with Federal tax law, the fund hereby makes the following designations regarding its fiscal year ended April 30, 2000: --all the dividends paid from investment income--net are "exempt-interest dividends" (not subject to regular Federal and, for individuals who are New Jersey residents, New Jersey personal income taxes), and --the fund hereby designates $.1329 per share as a long-term capital gain distribution of the $.1568 per share paid on December 8, 1999. 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 2000 calendar year on Form 1099-DIV which will be mailed by January 31, 2001. For More Information Dreyfus Premier State Municipal Bond Fund, New Jersey 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 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 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) 2000 Dreyfus Service Corporation 380AR004 ================================================================================ Dreyfus Premier State Municipal Bond Fund, North Carolina Series ANNUAL REPORT April 30, 2000 (reg.tm) ================================================================================ The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Fund Performance 8 Statement of Investments 12 Statement of Assets and Liabilities 13 Statement of Operations 14 Statement of Changes in Net Assets 16 Financial Highlights 19 Notes to Financial Statements 24 Report of Independent Auditors 25 Important Tax Information FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, North Carolina Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this annual report for Dreyfus Premier State Municipal Bond Fund, North Carolina Series, covering the 12-month period from May 1, 1999 through April 30, 2000. 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, W. Michael Petty. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. While higher interest rates generally led to an erosion of municipal bond prices during much of the reporting period, the tax-exempt bond market showed renewed signs of strength during the first four months of 2000. Municipal bonds were also influenced by supply-and-demand considerations. These technical influences have caused the yields of tax-exempt bonds to rise to very attractive levels compared to the after-tax yields of taxable bonds of comparable maturity and credit quality, making tax-exempt bonds especially attractive for investors in the higher federal and state income tax brackets. We appreciate your confidence over the past year, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, North Carolina Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation May 15, 2000 DISCUSSION OF FUND PERFORMANCE W. Michael Petty, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, North Carolina Series, perform during the period? For the 12-month period ended April 30, 2000, the fund's Class A shares provided a -3.38% total return, its Class B shares provided a -3.88% total return and its Class C shares provided a -4.10% total return.(1) In comparison, the Lipper North Carolina Municipal Debt Funds category average provided a -3.05% total return for the same period.(2) We attribute the fund's negative absolute returns to a rising interest-rate environment during the period, which caused most municipal bond prices to decline. What is the fund's investment approach? Our goal is to seek as high a level of federal and North Carolina tax-exempt income as is practical without undue risk from a diversified portfolio of longer term municipal bonds. To achieve this objective, we employ two primary strategies. First, we evaluate supply-and-demand factors in the bond market that are affected by the relatively few municipal bonds issued by North Carolina. Based on that assessment, we select the individual North Carolina 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, creditworthiness of its issuer, insurance, and any provisions for early redemption. Under most circumstances, we look for high yielding bonds that have 10-year call protection and that are selling at a discount to face value. Second, while we do not attempt to predict changes in interest rates, we may tactically manage the fund' s average duration -- a measure of sensitivity to changes in interest rates -- in anticipation of temporary supply-and-demand changes. If we expect the supply of newly issued bonds to increase, we may reduce the 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 The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) time when we anticipate little issuance, we may increase the fund's average duration to maintain current yields for as long as practical. At other times, we try to maintain a "neutral" average duration consistent with other North Carolina municipal bond funds. What other factors influenced the fund's performance? Although the fund's performance was hurt by a difficult investment environment during the final two months of 1999, the first four months of 2000 generally provided better market conditions and a market rally. This rally helped offset most -- but not all -- of the decline in the first eight months of the reporting period. When the reporting period began on May 1, 1999, investors had become concerned that strong economic growth might rekindle long-dormant inflationary pressures, especially from rising wages in a tight job market. In an attempt to ease these pressures and forestall a reacceleration of inflation, the Federal Reserve Board raised short-term interest rates five times during the reporting period, causing most bond prices to fall, for a total increase of 1.25 percentage points since mid-1999. Municipal bond prices also fell during November and December, because of adverse supply-and-demand influences. For a variety of reasons, institutional investors such as insurance companies and mutual funds participated less in the tax-exempt market. Despite strong demand from individual investors, the absence of institutional buyers helped reduce overall demand and drove municipal bond prices down. During the first quarter of 2000, however, issuance of municipal bonds nationally declined approximately 20% compared to the same period in 1999. This supply reduction, combined with robust demand from individual investors, helped support a rebound of municipal bond prices. What is the fund's current strategy? Our current strategy is to maintain as high a level of income as practical, while reducing volatility and protecting assets in a rising interest-rate environment. Accordingly, we have modestly reduced the portfolio' s average duration to the short end of the neutral range in an attempt to protect our holdings from the brunt of potential price depreciation and capture higher yields as they become available. From a security selection perspective, we have focused primarily on insured bonds with competitive yields. However, our ability to find such opportunities has been constrained by the reduced supply of newly issued bonds in the North Carolina marketplace. Consequently, as of April 30, 2000, the fund contained a higher level of cash -- primarily invested in tax-exempt money market instruments -- than is usual. Cash and cash equivalents comprised about 10% of the portfolio and have helped us reduce the fund's average duration. We hope to put our cash reserves back to work in longer term bonds when we believe that interest rates may have peaked and the Federal Reserve Board is finished tightening monetary policy. May 15, 2000 (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 CHARGE 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 FOR NON-NORTH CAROLINA RESIDENTS 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 ANALYTICAL SERVICES, INC. The Fund FUND PERFORMANCE Comparison of change in value of $10,000 investment in Dreyfus Premier State Municipal Bond Fund, North Carolina Series Class A shares and the Lehman Brothers Municipal Bond Index ((+)) SOURCE: LIPPER ANALYTICAL SERVICES, 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 STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES (THE "FUND") ON 8/1/91 (INCEPTION DATE) TO A $10,000 INVESTMENT MADE IN THE LEHMAN BROTHERS MUNICIPAL BOND INDEX (THE "INDEX") ON THAT DATE. FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 7/31/91 IS USED AS THE BEGINNING VALUE ON 8/1/91. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED. PERFORMANCE FOR CLASS B AND CLASS C SHARES WILL VARY FROM THE PERFORMANCE OF CLASS A SHARES SHOWN ABOVE DUE TO DIFFERENCES IN CHARGES AND EXPENSES. THE FUND INVESTS PRIMARILY IN NORTH CAROLINA 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 IS NOT LIMITED TO INVESTMENTS PRINCIPALLY IN NORTH CAROLINA MUNICIPAL OBLIGATIONS AND DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. THE INDEX, UNLIKE THE FUND, 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. THESE FACTORS 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 4/30/00 Inception From Date 1 Year 5 Years Inception ------------------------------------------------------------------------------------------------------------------------------------ CLASS A SHARES WITH SALES CHARGE (4.5%) 8/1/91 (7.74)% 4.37% 5.80% WITHOUT SALES CHARGE 8/1/91 (3.38)% 5.34% 6.36% CLASS B SHARES WITH REDEMPTION((+)) 1/15/93 (7.55)% 4.48% 4.77% WITHOUT REDEMPTION 1/15/93 (3.88)% 4.81% 4.77% CLASS C SHARES WITH REDEMPTION((+)(+)) 8/15/95 (5.01)% -- 4.51% WITHOUT REDEMPTION 8/15/95 (4.10)% -- 4.51% PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. ((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS A SHARES. ((+)(+)) 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 STATEMENT OF INVESTMENTS April 30, 2000 Principal LONG-TERM MUNICIPAL INVESTMENTS--90.2% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ NORTH CAROLINA--68.1% Appalachian State University, Utility System Revenue 5%, 5/15/2024 (Insured; MBIA) 1,160,000 1,017,958 Buncombe County Metropolitan Sewage District, Sewage System Revenue 6.75%, 7/1/2022 (Prerefunded 7/1/2002) 500,000 (a) 529,045 Charlotte, Special Facilities Revenue (Charlotte-Douglas International Airport) 5.60%, 7/1/2027 3,450,000 2,753,859 Dare County, Utility System Revenue 4.75%, 6/1/2024 (Insured; MBIA) 750,000 628,387 Monroe, Combined Enterprise System Revenue 4.50%, 3/1/2023 2,630,000 2,099,713 New Hanover County Industrial Facilities and Pollution Control Financing Authority (Occidental Petroleum) 6.50%, 8/1/2014 1,000,000 996,650 North Carolina Eastern Municipal Power Agency, Power System Revenue: 6%, 1/1/2013 2,500,000 2,449,850 6%, 1/1/2022 1,000,000 931,230 6.75%, 1/1/2026 3,000,000 3,024,570 North Carolina Educational Assistance Authority, Guaranteed Student Loan Revenue 6.35%, 7/1/2016 4,375,000 4,456,244 North Carolina Housing Finance Agency Single Family Revenue 6.50%, 9/1/2026 4,125,000 4,183,534 North Carolina Medical Care Commission, Health, Hospital and Nursing Home Revenue: (Annie Penn Memorial Hospital Project) 7.50%, 8/15/2021 3,750,000 3,981,150 (Deerfield Episcopal Hospital): 6%, 11/1/2019 1,670,000 1,413,154 6%, 11/1/2027 500,000 412,445 (Depaul Community Facilities Project) 7.625%, 11/1/2029 2,115,000 2,029,998 (Firsthealth of the Carolinas) 4.75%, 10/1/2026 400,000 319,160 (Halifax Regional Medical Center) 5%, 8/15/2024 800,000 595,272 (North Carolina Housing Foundation Inc.) 6.625%, 8/15/2030 (Insured; ACA) 3,000,000 3,024,720 (Pitt County Memorial Hospital) 4.75%, 12/1/2028 (Insured; MBIA) 2,740,000 2,203,124 (Southeast Regional Medical Center) 6.25%, 6/1/2029 2,000,000 1,933,620 (Wilson Memorial Hospital Project) Zero Coupon, 11/1/2016 (Insured; AMBAC) 3,055,000 1,173,609 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ NORTH CAROLINA (CONTINUED) North Carolina Municipal Power Agency Number 1, Catawba Electric Revenue 5.50%, 1/1/2015 (Insured; MBIA) 4,000,000 3,969,840 Sampson Area Development Corp., Installment Payment Revenue 4.75%, 6/1/2024 (Insured; MBIA) 1,000,000 833,420 Shelby, Combined Enterprise System Revenue 5.625%, 5/1/2014 1,000,000 993,300 University of North Carolina, Multiple Utility Revenues: Zero Coupon, 8/1/2018 2,500,000 863,175 4.50%, 10/1/2018 1,500,000 1,245,990 4.50%, 10/1/2023 1,580,000 1,257,775 University of North Carolina Hospitals at Chapel Hill, Revenue 5%, 2/15/2024 (Insured; AMBAC) 1,000,000 873,490 Winston-Salem, Water and Sewer System Revenue 5%, 6/1/2016 2,000,000 1,846,760 U.S. RELATED--22.1% Guam Airport Authority, Airport and Marina Revenue 6.70%, 10/1/2023 2,000,000 2,024,900 Guam Power Authority, Electric Power and Light Revenues 6.30%, 10/1/2022 2,000,000 2,115,900 Commonwealth of Puerto Rico 6.80%, 7/1/2021 (Prerefunded 7/1/2002) 600,000 (a) 635,832 Commonwealth of Puerto Rico Infrastructure Financing Authority 5%, 7/1/2015 (Insured; AMBAC) 3,880,000 3,668,424 Puerto Rico Ports Authority, Special Facilities Revenue (American Airlines): 6.30%, 6/1/2023 (Guaranteed; AMR Corp.) 1,000,000 989,140 6.25%, 6/1/2026 (Guaranteed; AMR Corp.) 160,000 157,362 Virgin Islands Territory, Hugo Insurance Claims Fund Program 7.75%, 7/1/2011 1,160,000 1,211,318 Virgin Islands Public Finance Authority, Revenues, Matching Fund Loan Notes 7.25%, 10/1/2018 4,000,000 4,317,360 Virgin Islands Water and Power Authority, Electric System Revenue 7.40%, 7/1/2011 1,690,000 1,761,183 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $70,804,600) 68,922,461 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal SHORT-TERM MUNICIPAL INVESTMENTS--7.3% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ Person County Industrial Facilities and Pollution Control Financing Authority, SWDR, VRDN (Carolina Power and Light Co. Project) 6.15% (LOC; Suntrust Bank) 1,100,000 (b) 1,100,000 Wake County Industrial Facilities and Pollution Control Financing Authority, Revenue, VRDN (Carolina Power and Light Co. Project) 6.10% (LOC; Bank of New York) 4,500,000 (b) 4,500,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $5,600,000) 5,600,000 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $76,404,600) 97.5% 74,522,461 CASH AND RECEIVABLES (NET) 2.5% 1,886,504 NET ASSETS 100.0% 76,408,965 Summary of Abbreviations ACA American Capital Access AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit MBIA Municipal Bond Investors Assurance Insurance Corporation SWDR Solid Waste Disposal Revenue VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 35.7 AA Aa AA 9.7 A A A 14.8 BBB Baa BBB 21.9 F1 MIG1 SP1 6.0 F2 MIG2 SP2 1.4 Not Rated(c) Not Rated(c) Not Rated(c) 10.5 100.0 (A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. (B) SECURITIES PAYABLE ON DEMAND. VARIABLE RATE INTEREST--SUBJECT TO PERIODIC CHANGE. (C) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF ASSETS AND LIABILITIES April 30, 2000 Cost Value -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 76,404,600 74,522,461 Cash 512,971 Interest receivable 1,241,859 Receivable for investment securities sold 223,533 Receivable for shares of Beneficial Interest subscribed 14,499 Prepaid expenses 7,961 76,523,284 -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 59,043 Payable for shares of Beneficial Interest redeemed 40,836 Accrued expenses 14,440 114,319 -------------------------------------------------------------------------------- NET ASSETS ($) 76,408,965 -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 79,284,752 Accumulated net realized gain (loss) on investments (993,648) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (1,882,139) -------------------------------------------------------------------------------- NET ASSETS ($) 76,408,965 NET ASSET VALUE PER SHARE Class A Class B Class C ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 55,883,278 19,854,450 671,237 Shares Outstanding 4,367,993 1,553,150 52,444 ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 12.79 12.78 12.80 SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS Year Ended April 30, 2000 -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 4,822,272 EXPENSES: Management fee--Note 3(a) 447,702 Shareholder servicing costs--Note 3(c) 265,320 Distribution fees--Note 3(b) 135,403 Registration fees 27,995 Professional fees 17,497 Prospectus and shareholders' reports 11,591 Custodian fees 8,539 Trustees' fees and expenses--Note 3(d) 1,187 Loan commitment fees--Note 2 720 Miscellaneous 8,909 TOTAL EXPENSES 924,863 INVESTMENT INCOME--NET 3,897,409 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (944,064) Net unrealized appreciation (depreciation) on investments (6,184,731) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (7,128,795) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (3,231,386) SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS Year Ended April 30, --------------------------------- 2000 1999 -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 3,897,409 3,869,834 Net realized gain (loss) on investments (944,064) 908,096 Net unrealized appreciation (depreciation) on investments (6,184,731) (152,616) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (3,231,386) 4,625,314 -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (2,714,734) (1,969,580) Class B shares (1,159,710) (1,894,185) Class C shares (22,965) (6,069) Net realized gain on investments: Class A shares (154,335) (212,660) Class B shares (65,459) (248,449) Class C shares (1,171) (540) TOTAL DIVIDENDS (4,118,374) (4,331,483) -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 19,895,728 9,826,910 Class B shares 3,458,755 6,026,320 Class C shares 536,777 415,737 Dividends reinvested: Class A shares 1,521,432 1,147,257 Class B shares 727,452 1,337,827 Class C shares 7,805 2,035 Cost of shares redeemed: Class A shares (8,658,982) (4,905,844) Class B shares (21,222,657) (13,287,728) Class C shares (270,201) (25,569) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (4,003,891) 536,945 TOTAL INCREASE (DECREASE) IN NET ASSETS (11,353,651) 830,776 -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 87,762,616 86,931,840 END OF PERIOD 76,408,965 87,762,616 SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, --------------------------------- 2000 1999 -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 1,491,337 701,323 Shares issued for dividends reinvested 117,049 81,450 Shares redeemed (665,463) (348,339) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 942,923 434,434 -------------------------------------------------------------------------------- CLASS B(A) Shares sold 258,146 428,998 Shares issued for dividends reinvested 55,751 95,019 Shares redeemed (1,596,342) (947,962) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (1,282,445) (423,945) -------------------------------------------------------------------------------- CLASS C Shares sold 41,378 29,569 Shares issued for dividends reinvested 599 145 Shares redeemed (20,613) (1,805) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 21,364 27,909 (A) DURING THE PERIOD ENDED APRIL 30, 2000, 1,104,632 CLASS B SHARES REPRESENTING $14,624,314 WERE AUTOMATICALLY CONVERTED TO 1,104,109 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Year Ended April 30, ------------------------------------------------------------------- CLASS A SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.95 13.91 13.23 12.91 12.72 Investment Operations: Investment income--net .65 .66 .67 .67 .67 Net realized and unrealized gain (loss) on investments (1.12) .11 .68 .32 .19 Total from Investment Operations (.47) .77 1.35 .99 .86 Distributions: Dividends from investment income--net (.65) (.66) (.67) (.67) (.67) Dividends from net realized gain on investments (.04) (.07) -- -- -- Total Distributions (.69) (.73) (.67) (.67) (.67) Net asset value, end of period 12.79 13.95 13.91 13.23 12.91 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (3.38) 5.63 10.39 7.81 6.79 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .97 .94 .87 1.04 .98 Ratio of net investment income to average net assets 4.97 4.68 4.89 5.10 5.11 Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation -- -- -- -- .02 Portfolio Turnover Rate 39.92 41.15 32.28 44.91 47.15 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 55,883 47,794 41,592 42,130 47,042 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, ------------------------------------------------------------------- CLASS B SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.94 13.90 13.22 12.90 12.71 Investment Operations: Investment income--net .58 .59 .60 .60 .60 Net realized and unrealized gain (loss) on investments (1.12) .11 .68 .32 .19 Total from Investment Operations (.54) .70 1.28 .92 .79 Distributions: Dividends from investment income--net (.58) (.59) (.60) (.60) (.60) Dividends from net realized gain on investments (.04) (.07) -- -- -- Total Distributions (.62) (.66) (.60) (.60) (.60) Net asset value, end of period 12.78 13.94 13.90 13.22 12.90 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (3.88) 5.10 9.84 7.27 6.25 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.48 1.44 1.38 1.54 1.49 Ratio of net investment income to average net assets 4.42 4.16 4.39 4.59 4.59 Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation -- -- -- -- .02 Portfolio Turnover Rate 39.92 41.15 32.28 44.91 47.15 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 19,854 39,535 45,296 43,979 42,668 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Year Ended April 30, ------------------------------------------------------------------- CLASS C SHARES 2000 1999 1998 1997 1996(a) ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.96 13.90 13.22 12.90 12.76 Investment Operations: Investment income--net .55 .56 .57 .57 .40 Net realized and unrealized gain (loss) on investments (1.12) .13 .68 .32 .14 Total from Investment Operations (.57) .69 1.25 .89 .54 Distributions: Dividends from investment income--net (.55) (.56) (.57) (.57) (.40) Dividends from net realized gain on investments (.04) (.07) -- -- -- Total Distributions (.59) (.63) (.57) (.57) (.40) Net asset value, end of period 12.80 13.96 13.90 13.22 12.90 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (4.10) 5.02 9.58 7.00 5.92(c) ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.72 1.63 1.62 1.77 1.73(c) Ratio of net investment income to average net assets 4.22 3.83 4.08 4.31 4.31(c) Portfolio Turnover Rate 39.92 41.15 32.28 44.91 47.15 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 671 434 44 11 1 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company, and operates as a series company currently offering thirteen series including the North Carolina Series (the " fund" ). The fund's investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A which is a wholly-owned subsidiary of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned subsidiary of the Manager, became the distributor of the fund's shares. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund is authorized to issue an unlimited number of $.001 par value shares in the following classes of shares: Class A, Class B and Class C shares. Class A shares are subject to a sales charge imposed at the time of purchase, Class B shares are subject to a contingent deferred sales charge ("CDSC") imposed on Class B share redemptions made within six years of purchase (five years for shareholders beneficially owning Class B shares on November 30, 1996) and Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. 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 Trust 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 fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) management estimates and assumptions. Actual results could differ from those estimates. (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $7,321 during the period ended April 30, 2000 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the "Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (D) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the 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 $306,000 available for Federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to April 30, 2000. This amount is calculated based on federal income tax regulations which may differ from financial reporting in accordance with generally accepted accounting principles. If not applied, the carryover expires in fiscal 2008. 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 NOTES TO FINANCIAL STATEMENTS (CONTINUED) the fund at rates based on prevailing market rates in effect at the time of borrowings. During the period ended April 30, 2000, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (A) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund's average daily net assets and is payable monthly. DSC retained $39 during the period ended April 30, 2000, 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 the fund's Class B and Class C shares at an annual rate of .50 of 1% of the value of the average daily net assets of Class B shares and .75 of 1% of the value of the average daily net assets of Class C shares. During the period ended April 30, 2000, Class B and Class C shares were charged $131,323 and $4,080, respectively, pursuant to the Plan, of which $11,102 and $582 for Class B and Class C shares, respectively, were paid to DSC. (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 their average daily net assets 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, 2000, Class A, Class B and Class C shares were charged $136,480, $65,661 and $1,360 respectively, pursuant to the Shareholder Services Plan, of which $15,314, $5,551 and $194 for Class A, Class B and Class C shares, respectively, were paid to DSC. 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, 2000, the fund was charged $42,952 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"). Effective April 13, 2000, each Board member receives an annual fee of $50,000 and a fee of $6,500 for each meeting held in person 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. Prior to April 13, 2000, each Board member who was not an "affiliated person" as defined in the Act received from the Trust an annual fee of $2,500 and an attendance fee of $250 per meeting. The Chairman of the Board received an additional 25% of such compensation. Subject to the fund' s Director Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the Trust's annual retainer fee and per meeting fee paid at the time the Board member achieved 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, 2000, amounted to $30,630,505 and $40,504,280, respectively. At April 30, 2000, accumulated net unrealized depreciation on investments was $1,882,139, consisting of $1,194,643 gross unrealized appreciation and $3,076,782 gross unrealized depreciation. At April 30, 2000, 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). The Fund REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Trustees Dreyfus Premier State Municipal Bond Fund, North Carolina Series We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Premier State Municipal Bond Fund, North Carolina Series (one of the Funds constituting the Dreyfus Premier State Municipal Bond Fund) as of April 30, 2000, 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 and financial highlights. Our procedures included confirmation of securities owned as of April 30, 2000 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier State Municipal Bond Fund, North Carolina Series at April 30, 2000, 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 9, 2000 IMPORTANT TAX INFORMATION (Unaudited) In accordance with Federal tax law, the fund hereby makes the following designations regarding its fiscal year ended April 30, 2000: -- all the dividends paid from investment income-net are "exempt-interest dividends" (not subject to regular Federal income tax, and for individuals who are North Carolina residents, not subject to taxation by North Carolina), and -- the fund hereby designates $.0282 per share as a long-term capital gain distribution of the $.0354 per share paid on December 9, 1999. 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 2000 calendar year on Form 1099-DIV which will be mailed by January 31, 2001. The Fund For More Information Dreyfus Premier State Municipal Bond Fund, North Carolina 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 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 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) 2000 Dreyfus Service Corporation 065AR004 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Ohio Series ANNUAL REPORT April 30, 2000 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Fund Performance 8 Statement of Investments 14 Statement of Assets and Liabilities 15 Statement of Operations 16 Statement of Changes in Net Assets 18 Financial Highlights 21 Notes to Financial Statements 26 Report of Independent Auditors 27 Important Tax Information FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Ohio Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this annual report for Dreyfus Premier State Municipal Bond Fund, Ohio Series, covering the 12-month period from May 1, 1999 through April 30, 2000. 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, W. Michael Petty. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. While higher interest rates generally led to an erosion of municipal bond prices during much of the reporting period, the tax-exempt bond market showed renewed signs of strength during the first four months of 2000. Municipal bonds were also influenced by supply-and-demand considerations. These technical influences have caused the yields of tax-exempt bonds to rise to very attractive levels compared to the after-tax yields of taxable bonds of comparable maturity and credit quality, making tax-exempt bonds especially attractive for investors in the higher federal and state income tax brackets. We appreciate your confidence over the past year, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Ohio Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation May 15, 2000 DISCUSSION OF FUND PERFORMANCE W. Michael Petty, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Ohio Series, perform during the period? For the 12-month period ended April 30, 2000, the fund's Class A shares provided a -2.08% total return, its Class B shares provided a -2.66% total return and its Class C shares provided a -2.90% total return.(1) In comparison, the Lipper Ohio Municipal Debt Funds category average provided a -2.84% total return for the same period.(2) We attribute the fund's negative absolute returns to a rising interest-rate environment during the period, which caused most municipal bond prices to decline. What is the fund's investment approach? Our goal is to seek as high a level of federal and Ohio tax-exempt income as is practical without undue risk from a diversified portfolio of longer term municipal bonds. To achieve this objective, we employ two primary strategies. First, we evaluate supply-and-demand factors in the bond market that are affected by the relatively few municipal bonds issued by Ohio. Based on that assessment, we select the individual Ohio 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, creditworthiness of its issuer, insurance, and any provisions for early redemption. Under most circumstances, we look for high yielding bonds that have 10-year call protection and that are selling at a discount to face value. Second, while we do not attempt to predict changes in interest rates, we may tactically manage the fund' s average duration -- a measure of sensitivity to changes in interest rates -- in anticipation of temporary supply-and-demand changes. If we expect the supply of newly issued bonds to increase, we may reduce the 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 The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) time when we anticipate little issuance, we may increase the fund's average duration to maintain current yields for as long as practical. At other times, we try to maintain a "neutral" average duration consistent with other Ohio municipal bond funds. What other factors influenced the fund's performance? Although the portfolio' s performance was hurt by a difficult investment environment during the final two months of 1999, the first four months of 2000 generally provided better market conditions and a market rally. This rally helped offset most -- but not all -- of the decline in the first eight months of the reporting period. When the reporting period began on May 1, 1999, investors had become concerned that strong economic growth might rekindle long-dormant inflationary pressures, especially from rising wages in a tight job market. In an attempt to ease these pressures and forestall a reacceleration of inflation, the Federal Reserve Board raised short-term interest rates five times during the reporting period, causing most bond prices to fall, for a total increase of 1.25 percentage points since mid-1999. Municipal bond prices also fell during November and December, because of adverse supply-and-demand influences. For a variety of reasons, institutional investors such as insurance companies and mutual funds participated less in the tax-exempt market. Despite strong demand from individual investors, the absence of institutional buyers helped reduce overall demand and drove municipal bond prices down. During the first quarter of 2000, however, issuance of municipal bonds nationally declined approximately 20% compared to the same period in 1999. This supply reduction, combined with robust demand from individual investors, helped support a rebound of municipal bond prices. What is the fund's current strategy? Our current strategy is to maintain as high a level of income as practical, while reducing volatility and protecting assets in a rising interest-rate environment. Accordingly, we have modestly reduced the portfolio' s average duration to the short end of the neutral range in an attempt to protect our holdings from the brunt of potential price depreciation and capture higher yields as they become available. From a security selection perspective, we have focused primarily on insured bonds with competitive yields. However, our ability to find such opportunities has been constrained by the reduced supply of newly issued bonds in the Ohio marketplace. Consequently, as of April 30, 2000, the fund contained a higher level of cash -- primarily invested in tax-exempt money market instruments -- than is usual. Cash and cash equivalents comprised about 7% of the portfolio and have helped us reduce the fund' s average duration. We hope to put our cash reserves back to work in longer term bonds when we believe that interest rates may have peaked and the Federal Reserve Board is finished tightening monetary policy. May 15, 2000 (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 CHARGE 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 FOR NON-OHIO RESIDENTS 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 ANALYTICAL SERVICES, INC. The Fund FUND PERFORMANCE Comparison of change in value of $10,000 investment in Dreyfus Premier State Municipal Bond Fund, Ohio Series Class A shares and the Lehman Brothers Municipal Bond Index ((+)) SOURCE: LIPPER ANALYTICAL SERVICES, 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 STATE MUNICIPAL BOND FUND, OHIO SERIES (THE "FUND") ON 4/30/90 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 OHIO 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 IS NOT LIMITED TO INVESTMENTS PRINCIPALLY IN OHIO MUNICIPAL OBLIGATIONS AND DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. THE INDEX, UNLIKE THE FUND, 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. THESE FACTORS 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 4/30/00 Inception From Date 1 Year 5 Years 10 Years Inception ------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES WITH SALES CHARGE (4.5%) 5/28/87 (6.46)% 4.06% 6.32% -- WITHOUT SALES CHARGE 5/28/87 (2.08)% 5.02% 6.80% -- CLASS B SHARES WITH REDEMPTION((+)) 1/15/93 (6.37)% 4.14% -- 4.81% WITHOUT REDEMPTION 1/15/93 (2.66)% 4.45% -- 4.81% CLASS C SHARES WITH REDEMPTION((+)(+)) 8/15/95 (3.83)% -- -- 4.07% WITHOUT REDEMPTION 8/15/95 (2.90)% -- -- 4.07% PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. ((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS A SHARES. ((+)(+)) 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, 2000 STATEMENT OF INVESTMENTS Principal LONG-TERM MUNICIPAL INVESTMENTS--92.8% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ OHIO--91.6% Akron: 6%, 12/1/2012 1,380,000 1,467,202 Pension Revenue 4.75%, 12/1/2023 (Insured; AMBAC) 1,330,000 1,113,449 Sewer Systems Revenue 5.875%, 12/1/2016 (Insured; MBIA) 1,200,000 1,220,484 Akron-Wilbeth Housing Development Corp., First Mortgage Revenue 7.90%, 8/1/2003 (Insured; FHA) 1,295,000 1,381,920 Allen County, Industrial First Mortgage Revenue 6.75%, 11/15/2008 (Guaranteed; K-Mart Corp.) 1,280,000 1,288,448 City of Barberton, Hospital Facilities Revenue (The Barberton Citizens Hospital Co. Project) 7.25%, 1/1/2012 (Prerefunded 1/1/2002) 2,400,000 (a) 2,531,880 Board of Education of the Cleveland City School District 8%, 12/1/2001 750,000 775,927 Butler County, Hospital Facilities Improvement Revenue (Fort Hamilton Hughes Group) 7.25%, 1/1/2001 910,000 909,791 City of Cambridge, HR (Guernsey Memorial Hospital Project) 8%, 12/1/2006 2,000,000 2,086,180 Clermont County, Hospital Facilities Revenue (Mercy Health Systems): 5.625%, 9/1/2016 (Insured; AMBAC) 4,250,000 4,231,682 7.50%, 9/1/2019 (Prerefunded 9/1/2001) (Insured; AMBAC) 180,000 (a) 186,593 City of Cleveland: Airport Special Revenue (Continental Airlines Inc. Project) 5.375%, 9/15/2027 5,000,000 3,939,650 COP: (Motor Vehicle, Motorized and Communication Equipment) 7.10%, 7/1/2002 890,000 901,276 (Stadium Project) 5.25%, 11/15/2022 (Insured; AMBAC) 5,000,000 4,600,400 Parking Facility Improvement Revenue 8%, 9/15/2012 (Prerefunded 9/15/2002) 5,000,000 (a) 5,430,050 Waterworks Revenue 5.50%, 1/1/2021 (Insured; MBIA) 8,000,000 7,801,680 Cleveland-Cuyahoga County Port Authority, Revenue: (Capital Improvements Project) 5.375%, 5/15/2019 1,000,000 848,560 (Port of Cleveland) 5.375%, 5/15/2018 2,775,000 2,410,171 Cleveland Public Power System, Revenue 4.807%, 11/15/2018 5,000,000 (b,c) 4,225,100 Cuyahoga County: HR: Improvement: (MetroHealth Systems Project) 6.125%, 2/15/2024 4,845,000 4,528,864 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ OHIO (CONTINUED) Cuyahoga County (continued): HR (continued): Improvement (continued): (University Hospitals Health) 5.625%, 1/15/2015 (Insured; MBIA) 1,505,000 1,492,975 (Meridia Health Systems) 7%, 8/15/2023 (Prerefunded 8/15/2001) 1,750,000 (a) 1,835,277 Jail Facilities 7%, 10/1/2013 (Prerefunded 10/1/2001) 6,125,000 (a) 6,435,231 Delaware County, Sewer Disposal Improvement 4.75%, 12/1/2024 (Insured; MBIA) 1,000,000 831,900 Eaton, IDR (Baxter International Inc. Project) 6.50%, 12/1/2012 1,500,000 1,569,720 Euclid City School District, Improvement 7.10%, 12/1/2011 (Prerefunded 12/1/2001) 1,000,000 (a) 1,054,990 Village of Evendale, IDR (Ashland Oil Inc. Project) 6.90%, 11/1/2010 2,000,000 2,051,500 Fairfield City School District, School Improvement Unlimited Tax: 7.20%, 12/1/2011 (Insured; FGIC) 1,000,000 1,113,750 7.20%, 12/1/2012 (Insured; FGIC) 1,250,000 1,390,575 6.10%, 12/1/2015 (Insured; FGIC) 2,000,000 2,056,680 6%, 12/1/2020 (Insured; FGIC) 2,000,000 2,024,920 Findlay 5.875%, 7/1/2017 2,000,000 2,032,220 Franklin County: Health Care Facilities Revenue, Improvement (Friendship Village of Columbus) 5.375%, 8/15/2028 (Insured; ACA) 5,000,000 4,282,550 HR: (Children's Hospital Project): 6.60%, 5/1/2013 4,000,000 4,204,760 5%, 5/1/2018 2,610,000 2,246,401 Holy Cross Health Systems Corp.: Improvement 5.80%, 6/1/2016 2,000,000 2,005,640 (Mount Carmel Health) 6.75%, 6/1/2019 (Insured; MBIA) (Prerefunded 6/1/2002) 2,500,000 (a) 2,640,125 Improvement (Worthington Christian Village Congregate Care Project): 10.25%, 8/1/2015 635,000 656,412 7.80%, 2/1/2017 (Insured; FHA) 5,690,000 5,852,165 Gahanna-Jefferson Public Schools 4.75%, 12/1/2021 1,325,000 1,120,950 Gallia County Local School District 7.375%, 12/1/2004 570,000 620,194 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ OHIO (CONTINUED) Greater Cleveland Gateway Economic Development Corp.: Senior Lien Excise Tax Revenue 6.875%, 9/1/2005 (Insured; FSA) 1,500,000 1,559,625 Stadium Revenue 7.50%, 9/1/2005 5,675,000 5,941,271 Greater Cleveland Regional Transit Authority 5.65%, 12/1/2016 (Insured; FGIC) 5,445,000 5,666,720 Hamilton County: Hospital Facilities Improvement Revenue (Deaconess Hospital) 7%, 1/1/2012 2,570,000 2,681,846 Mortgage Revenue (Judson Care Center) 7.80%, 8/1/2019 (Prerefunded 8/1/2000) (Insured; FHA, LOC; Citibank) 3,970,000 (a) 4,053,052 Hilliard School District, School Improvement: Zero Coupon, 12/1/2013 (Insured; FGIC) 1,655,000 774,044 Zero Coupon, 12/1/2014 (Insured; FGIC) 1,655,000 726,777 Kirtland Local School District 7.50%, 12/1/2009 760,000 776,743 Knox County, IDR (Weyerhaeuser Co. Project) 9%, 10/1/2007 1,000,000 1,190,110 Lakota Local School District 6.125%, 12/1/2017 (Insured; AMBAC) (Prerefunded 12/1/2005) 1,075,000 (a) 1,133,566 Lorain County, HR (Catholic Healthcare Partners) 5.50%, 9/1/2027 (Insured; MBIA) 6,685,000 6,282,296 Lowellville, Sanitary Sewer Systems Revenue (Browning-Ferris Industries Inc.) 7.25%, 6/1/2006 1,000,000 992,410 Lucas County, HR (Promedia Healthcare Obligation Group) 5.375%, 11/15/2023 (Insured; AMBAC) 630,000 581,786 Mahoning County, Health Care Facilities Revenue (Youngstown Osteopathic Hospital Project) 7.60%, 8/1/2010 (LOC; Marine Midland Bank) 3,775,000 3,895,725 Marion County, Health Care Facilities Revenue, Improvement (United Church Homes Inc.) 6.375%, 11/15/2010 2,825,000 2,665,614 Middleburg Heights 4.375%, 12/1/2018 5,725,000 4,704,748 Moraine, SWDR (General Motors Corp. Project): 6.75%, 7/1/2014 5,000,000 5,507,850 5.65%, 7/1/2024 3,800,000 3,620,374 North Royalton City School District 6.10%, 12/1/2019 (Insured; MBIA) 2,500,000 2,589,625 State of Ohio: Economic Development Revenue: Ohio Enterprise Bond Fund (VSM Corp. Project) 7.375%, 12/1/2011 885,000 919,320 (Sponge Inc. Project) 8.375%, 6/1/2014 1,465,000 1,497,787 Environmental Improvement Revenue (USX Corp. Project) 5.625%, 5/1/2029 1,000,000 873,340 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ OHIO (CONTINUED) State of Ohio (continued): PCR (Standard Oil Co. Project) 6.75%, 12/1/2015 (Guaranteed; British Petroleum Co. p.l.c.) 2,700,000 3,030,426 Ohio Air Quality Development Authority, PCR (Cleveland Electric Illuminating Co. Project) 6.85%, 7/1/2023 5,250,000 5,192,250 Ohio Building Authority, State Facilities (Juvenile Correctional Projects) 6.60%, 10/1/2014 (Insured; AMBAC) 1,660,000 1,793,281 Ohio Housing Finance Agency: Residential Mortgage Revenue: 6.35%, 9/1/2031 (Guaranteed; GNMA) 5,000,000 5,070,450 6.05%, 9/1/2017 (Guaranteed; GNMA) 2,955,000 2,958,901 SFMR (GNMA Mortgage Backed Securities Program) Zero Coupon, 9/1/2021 7,130,000 1,356,197 Ohio Turnpike Commission, Turnpike Revenue, Highway Improvements: 4.50%, 2/15/2024 (Insured; FGIC) 4,650,000 3,719,396 5.75%, 2/15/2024 (Prerefunded 2/15/2004) 6,100,000 (a) 6,366,814 4.75%, 2/15/2028 (Insured; FGIC) 2,600,000 2,145,858 Ohio Water Development Authority, Revenue (Fresh Water) 5.90%, 12/1/2015 (Insured; AMBAC) 4,650,000 4,751,463 Ottawa County, Sanitary Sewer Systems Special Assessment (Portage-Catawba Island Sewer Project) 7%, 9/1/2011 (Insured; AMBAC) (Prerefunded 9/1/2001) 1,000,000 (a) 1,050,430 Parma, Hospital Improvement Revenue (Parma Community General Hospital Association) 5.375%, 11/1/2029 4,000,000 3,269,600 Shelby County, Hospital Facilities Revenue, Improvement (The Shelby County Memorial Hospital Association) 7.70%, 9/1/2018 2,500,000 2,690,375 South Euclid, Recreation Facilities 7%, 12/1/2011 (Prerefunded 12/1/2001) 2,285,000 (a) 2,409,830 South-Western City School District (Franklin and Pickway Counties) School Building Construction 4.75%, 12/1/2026 (Insured; AMBAC) 2,500,000 2,074,200 Southwest Regional Water District, Water Revenue: 6%, 12/1/2015 (Insured; MBIA) 1,600,000 1,639,648 6%, 12/1/2020 (Insured; MBIA) 1,250,000 1,265,163 Springboro, Water System Revenue 4.75%, 12/1/2023 (Insured; AMBAC) 2,600,000 2,170,974 Student Loan Funding Corp., Student Loan Revenue 7.20%, 8/1/2003 235,000 236,318 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ OHIO (CONTINUED) Toledo 5.625%, 12/1/2011 (Insured; AMBAC) 1,000,000 1,024,570 University of Cincinnati, University and College Revenue, COP 6.75%, 12/1/2009 (Prerefunded 12/1/2001) (Insured; MBIA) 750,000 (a) 787,770 Warren: 7.75%, 11/1/2010 (Prerefunded 11/1/2000) 2,785,000 (a) 2,887,210 Waterworks Revenue 5.50%, 11/1/2015 (Insured; FGIC) 1,450,000 1,452,248 Wauseon Exempted Village School District, School Improvement 5.50%, 12/1/2022 (Insured; MBIA) 950,000 917,206 Westerville, Improvement 4.50%, 12/1/2018 4,650,000 3,909,116 West Holmes Local School District 5.375%, 12/1/2023 (Insured; MBIA) 1,860,000 1,748,753 U.S. RELATED--1.2% Virgin Islands Public Finance Authority, Revenue 6.375%, 10/1/2019 3,000,000 3,007,050 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $229,485,488) 226,958,368 ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM MUNICIPAL INVESTMENTS--4.8% ------------------------------------------------------------------------------------------------------------------------------------ OHIO--3.5% Cayuhoga County, HR, VRDN (University Hospital of Cleveland) 5.95% (LOC; Chase Manhattan Bank) 1,995,000 (d) 1,995,000 Ohio Air Quality Development Authority, Revenue, VRDN (Cincinnati Gas and Electric): 5.85% 1,400,000 (d) 1,400,000 6.10% (LOC; Union Bank of Switzerland) 2,950,000 (d) 2,950,000 State of Ohio, Solid Waste Revenue, VRDN (BP Exploration and Oil Project) 6.20% 2,300,000 (d) 2,300,000 U.S. RELATED--1.3% Puerto Rico Highway and Transportation Authority, Transportation Revenue, VRDN 4.90% 3,100,000 (d) 3,100,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $11,745,000) 11,745,000 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $241,230,488) 97.6% 238,703,368 CASH AND RECEIVABLES (NET) 2.4% 5,810,714 NET ASSETS 100.0% 244,514,082 Summary of Abbreviations ACA American Capital Access AMBAC American Municipal Bond Assurance Corporation COP Certificate of Participation FGIC Financial Guaranty Insurance Company FHA Federal Housing Administration FSA Financial Security Assurance GNMA Government National Mortgage Association HR Hospital Revenue IDR Industrial Development Revenue LOC Letter of Credit MBIA Municipal Bond Investors Assurance Insurance Corporation PCR Pollution Control Revenue SFMR Single Family Mortgage 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 44.0 AA Aa AA 13.1 A A A 17.8 BBB Baa BBB 9.9 BB Ba BB 4.8 F1 MIG1 SP1 4.9 Not Rated(e) Not Rated(e) Not Rated(e) 5.5 100.0 (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) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF 1933. THIS SECURITY MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT APRIL 30, 2000, THIS SECURITY AMOUNTED TO $4,225,100 OR 1.7% OF NET ASSETS. (D) SECURITIES PAYABLE ON DEMAND. VARIABLE RATE INTEREST-SUBJECT TO PERIODIC CHANGE. (E) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF ASSETS AND LIABILITIES April 30, 2000 Cost Value -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 241,230,488 238,703,368 Cash 642,486 Interest receivable 4,551,272 Receivable for investment securities sold 933,955 Receivable for shares of Beneficial Interest subscribed 123,400 Prepaid expenses 6,176 244,960,657 -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 179,195 Payable for shares of Beneficial Interest redeemed 217,391 Accrued expenses 49,989 446,575 -------------------------------------------------------------------------------- NET ASSETS ($) 244,514,082 -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 249,627,596 Accumulated net realized gain (loss) on investments (2,586,394) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (2,527,120) -------------------------------------------------------------------------------- NET ASSETS ($) 244,514,082 NET ASSET VALUE PER SHARE Class A Class B Class C ------------------------------------------------------------------------------------------------------------------------------------ > Net Assets ($) 201,974,161 39,444,567 3,095,354 Shares Outstanding 17,002,459 3,319,596 260,252 ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 11.88 11.88 11.89 SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS Year Ended April 30, 2000 -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 16,459,968 EXPENSES: Management fee--Note 3(a) 1,481,538 Shareholder servicing costs--Note 3(c) 846,752 Distribution fees--Note 3(b) 249,938 Professional fees 28,439 Custodian fees 27,663 Registration fees 26,395 Prospectus and shareholders' reports 21,775 Trustees' fees and expenses--Note 3(d) 3,616 Loan commitment fees--Note 2 2,431 Miscellaneous 15,546 TOTAL EXPENSES 2,704,093 INVESTMENT INCOME--NET 13,755,875 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (2,585,658) Net unrealized appreciation (depreciation) on investments (18,256,668) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (20,842,326) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (7,086,451) SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS Year Ended April 30, ----------------------------------- 2000 1999 -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 13,755,875 14,414,062 Net realized gain (loss) on investments (2,585,658) 2,281,303 Net unrealized appreciation (depreciation) on investments (18,256,668) (767,158) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (7,086,451) 15,928,207 -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (11,481,786) (11,917,210) Class B shares (2,164,842) (2,449,931) Class C shares (109,247) (46,921) Net realized gain on investments: Class A shares (331,315) (2,494,992) Class B shares (66,227) (594,108) Class C shares (3,915) (11,846) TOTAL DIVIDENDS (14,157,332) (17,515,008) -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 21,382,144 17,942,916 Class B shares 7,765,705 12,817,223 Class C shares 1,821,593 1,297,795 Dividends reinvested: Class A shares 7,451,787 9,379,044 Class B shares 1,505,465 2,144,631 Class C shares 77,434 49,513 Cost of shares redeemed: Class A shares (46,590,037) (26,701,239) Class B shares (20,973,075) (10,126,784) Class C shares (432,787) (115,318) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (27,991,771) 6,687,781 TOTAL INCREASE (DECREASE) IN NET ASSETS (49,235,554) 5,100,980 -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 293,749,636 288,648,656 END OF PERIOD 244,514,082 293,749,636 SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, --------------------------------- 2000 1999 -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 1,746,590 1,387,167 Shares issued for dividends reinvested 617,430 723,830 Shares redeemed (3,878,095) (2,065,623) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (1,514,075) 45,374 -------------------------------------------------------------------------------- CLASS B(A) Shares sold 634,572 988,648 Shares issued for dividends reinvested 124,511 165,437 Shares redeemed (1,728,996) (785,050) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (969,913) 369,035 -------------------------------------------------------------------------------- CLASS C Shares sold 150,041 100,043 Shares issued for dividends reinvested 6,425 3,821 Shares redeemed (36,124) (8,879) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 120,342 94,985 (A) DURING THE PERIOD ENDED APRIL 30, 2000, 906,408 CLASS B SHARES REPRESENTING $11,001,478 WERE AUTOMATICALLY CONVERTED TO 907,005 CLASS A SHARES SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Year Ended April 30, ------------------------------------------------------------------- CLASS A SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.80 12.86 12.65 12.58 12.62 Investment Operations: Investment income--net .63 .65 .67 .69 .71 Net realized and unrealized gain (loss) on investments (.90) .08 .34 .17 .14 Total from Investment Operations (.27) .73 1.01 .86 .85 Distributions: Dividends from investment income--net (.63) (.65) (.67) (.69) (.71) Dividends from net realized gain on investments (.02) (.14) (.13) (.10) (.18) Total Distributions (.65) (.79) (.80) (.79) (.89) Net asset value, end of period 11.88 12.80 12.86 12.65 12.58 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (2.08) 5.72 8.09 6.91 6.77 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .91 .91 .90 .91 .89 Ratio of net investment income to average net assets 5.20 5.00 5.17 5.40 5.49 Portfolio Turnover Rate 26.70 40.36 24.73 29.65 43.90 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 201,974 237,027 237,618 242,572 257,639 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, ------------------------------------------------------------------- CLASS B SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.81 12.87 12.65 12.59 12.63 Investment Operations: Investment income--net .57 .58 .60 .62 .64 Net realized and unrealized gain (loss) on investments (.91) .08 .35 .16 .14 Total from Investment Operations (.34) .66 .95 .78 .78 Distributions: Dividends from investment income--net (.57) (.58) (.60) (.62) (.64) Dividends from net realized gain on investments (.02) (.14) (.13) (.10) (.18) Total Distributions (.59) (.72) (.73) (.72) (.82) Net asset value, end of period 11.88 12.81 12.87 12.65 12.59 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (2.66) 5.17 7.62 6.27 6.19 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.42 1.42 1.41 1.42 1.42 Ratio of net investment income to average net assets 4.68 4.47 4.65 4.87 4.94 Portfolio Turnover Rate 26.70 40.36 24.73 29.65 43.90 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 39,445 54,929 50,453 44,746 40,476 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Year Ended April 30, ------------------------------------------------------------------- CLASS C SHARES 2000 1999 1998 1997 1996(a) ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.82 12.88 12.66 12.59 12.68 Investment Operations: Investment income--net .54 .55 .57 .59 .43 Net realized and unrealized gain (loss) on investments (.91) .08 .35 .17 .09 Total from Investment Operations (.37) .63 .92 .76 .52 Distributions: Dividends from investment income--net (.54) (.55) (.57) (.59) (.43) Dividends from net realized gain on investments (.02) (.14) (.13) (.10) (.18) Total Distributions (.56) (.69) (.70) (.69) (.61) Net asset value, end of period 11.89 12.82 12.88 12.66 12.59 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (2.90) 4.92 7.35 6.07 5.66(c) ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.67 1.66 1.66 1.64 1.63(c) Ratio of net investment income to average net assets 4.41 4.20 4.38 4.44 4.66(c) Portfolio Turnover Rate 26.70 40.36 24.73 29.65 43.90 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 3,095 1,793 579 694 1 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company, and operates as a series company currently offering thirteen series including the Ohio Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A which is a wholly-owned subsidiary of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned subsidiary of the Manager, became the distributor of the fund's shares. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund is authorized to issue an unlimited number of $.001 par value shares in the following classes of shares: Class A, Class B and Class C shares. Class A shares are subject to a sales charge imposed at the time of purchase, Class B shares are subject to a contingent deferred sales charge ("CDSC") imposed on Class B share redemptions made within six years of purchase (five years for shareholders beneficially owning Class B shares on November 30, 1996) and Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. 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 Trust 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 fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $11,618 during the period ended April 30, 2000 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code 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. The Fund has an unused capital loss carryover of approximately $1,283,000 available for Federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to April 30, 2000. This amount is calculated based on federal income tax regulations which may differ from financial reporting in accordance with generally accepted accounting principles. If not applied, the carryover expires in fiscal 2008. 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 at rates based on prevailing market rates in effect at the time of borrowings. During the period ended April 30, 2000, 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. DSC retained $2,768 during the period ended April 30, 2000, 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, 2000, Class B and Class C shares were charged $231,357 and $18,581, respectively, pursuant to the Plan, of which $21,801 and $2,487 for Class B and Class C shares, respectively, were paid to DSC. (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 their average daily net assets 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, 2000, Class A, Class B and Class C shares were charged $551,554, $115,679 and $6,193, respectively, pursuant to the Shareholder Services Plan, of which $55,750, $10,901 and $829 for Class A, Class B and Class C shares, respectively, were paid to DSC. The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for provid ing personnel and facilities to perform transfer agency services for the fund. During the period ended April 30, 2000, the fund was charged $123,938 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"). Effective April 13, 2000, each Board member receives an annual fee of $50,000 and a fee of $6,500 for each meeting held in person 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. Prior to April 13, 2000, each Board member who was not an "affiliated person" as defined in the Act received from the Trust an annual fee of $2,500 and an attendance fee of $250 per meeting. The Chairman of the Board received an additional 25% of such compensation. Subject to the fund' s Director Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the Trust's annual retainer fee and per meeting fee paid at the time the Board member achieved 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, 2000, amounted to $69,818,397 and $115,550,504, respectively. At April 30, 2000, accumulated net unrealized depreciation on investments was $2,527,120, consisting of $5,189,513 gross unrealized appreciation and $7,716,633 gross unrealized depreciation. At April 30, 2000, 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). The Fund REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Trustees Dreyfus Premier State Municipal Bond Fund, Ohio Series We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Premier State Municipal Bond Fund, Ohio Series (one of the Funds constituting the Dreyfus Premier State Municipal Bond Fund) as of April 30, 2000, 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 and financial highlights. Our procedures included confirmation of securities owned as of April 30, 2000 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier State Municipal Bond Fund, Ohio Series at April 30, 2000, 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 9, 2000 IMPORTANT TAX INFORMATION (Unaudited) In accordance with Federal tax law, the fund hereby makes the following designations regarding its fiscal year ended April 30, 2000: --all the dividends paid from investment income-net are "exempt-interest dividends" (not subject to regular Federal and, for individuals who are Ohio residents, Ohio personal income taxes), and --the fund hereby designates $.0062 per share as a long-term capital gain distribution of the $.0179 per share paid on December 8, 1999. 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 2000 calendar year on Form 1099-DIV which will be mailed by January 31, 2001. The Fund NOTES For More Information Dreyfus Premier State Municipal Bond Fund, Ohio 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 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 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) 2000 Dreyfus Service Corporation 057AR004 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series ANNUAL REPORT April 30, 2000 (reg.tm) ================================================================================ The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Fund Performance 8 Statement of Investments 13 Statement of Assets and Liabilities 14 Statement of Operations 15 Statement of Changes in Net Assets 17 Financial Highlights 20 Notes to Financial Statements 25 Report of Independent Auditors 26 Important Tax Information FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this annual report for Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series, covering the 12-month period from May 1, 1999 through April 30, 2000. 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, Douglas Gaylor. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. While higher interest rates generally led to an erosion of municipal bond prices during much of the reporting period, the tax-exempt bond market showed renewed signs of strength during the first four months of 2000. Municipal bonds were also influenced by supply-and-demand considerations. These technical influences have caused the yields of tax-exempt bonds to rise to very attractive levels compared to the after-tax yields of taxable bonds of comparable maturity and credit quality, making tax-exempt bonds especially attractive for investors in the higher federal and state income tax brackets. We appreciate your confidence over the past year, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation May 15, 2000 DISCUSSION OF FUND PERFORMANCE Douglas Gaylor, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series, perform during the period? For the 12-month period ended April 30, 2000, the fund's Class A shares provided a -3.24% total return, its Class B shares provided a -3.75% total return and its Class C shares provided a -3.98% total return.(1) In comparison, the Lipper Pennsylvania Municipal Debt Funds category average provided a -3.65% total return for the same period.(2) We attribute the fund's negative absolute returns during the reporting period to a rising interest-rate environment, which caused most municipal bond prices to decline. What is the fund's investment approach? Our goal is to seek as high a level of federal and Pennsylvania state tax-exempt income as is practical without undue risk from a diversified portfolio of municipal bonds. To achieve this objective, we employ two primary strategies. First, for between one-half and three-quarters of the total fund, we look for bonds that can potentially offer attractive current income. We typically look for bonds that can provide consistently high current yields. We also try to ensure that we select bonds that are most likely to obtain attractive prices if and when we decide to sell them in the secondary market. Second, for the remainder of the fund, we try to look for bonds that we believe have the potential to offer attractive total returns. We typically look for bonds that are selling at a discount to face value because they may be temporarily out of favor among investors. Our belief is that these bonds' prices will rise as they return to favor over time. What other factors influenced the fund's performance? Although the portfolio' s performance was hurt by a difficult investment environment from the beginning of the reporting period throughout 1999, the first four months of 2000 generally provided The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) better market conditions and a market rally. This rally helped offset most -- but not all -- of the decline in the last eight months of 1999. When the reporting period began on May 1, 1999, investors had become concerned that strong economic growth might rekindle long-dormant inflationary pressures, especially from rising wages in a tight job market. In an attempt to ease these pressures and forestall a reacceleration of inflation, the Federal Reserve Board raised short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. This caused most bond prices to fall. During 1999 municipal bond prices also fell because of adverse supply-and-demand influences. For a variety of reasons, institutional investors such as insurance companies and mutual funds participated less in the tax-exempt market. Despite strong demand from individual investors, the absence of institutional buyers helped reduce overall demand and drove municipal bond prices down. During the first quarter of 2000, however, issuance of municipal bonds nationally declined approximately 20% compared to the same period in 1999. This scarcity of supply was especially severe in Pennsylvania, which is typically a high-issuance state compared to other states. The lack of supply, combined with strong demand from individual investors, helped to support the prices of Pennsylvania bonds during the recent market rally. What is the fund's current strategy? Our current strategy has been to maintain as high a level of income as practical while reducing volatility and protecting assets in a rising interest-rate environment. Accordingly, we have slowly and modestly begun to reduce the portfolio' s average duration -- a measure of sensitivity to changing interest rates -- in an attempt to protect our holdings from the brunt of potential price depreciation and capture higher yields as they may become available. In doing so, we have shifted assets from municipal bonds with maturities of 20 to 30 years into bonds with maturities in the 10- to 20-year range. In addition to helping us reduce the fund's sensitivity to rising interest rates, these intermediate-term holdings are also more likely to attract the interest of individual investors when the time comes to sell. From a security selection perspective, we have focused primarily on tax-exempt bonds that have recently been out of favor among investors, including bonds selling at deep discounts and modest premiums to their face values. Because they are currently unpopular, these types of bonds are available with attractive yields, in our view, compared to other types of bonds that investors currently favor. We believe that these holdings have the potential to boost the fund's performance when deep-discount and modest-premium bonds return to favor among investors. May 15, 2000 (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 CHARGE 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 FOR NON-PENNSYLVANIA RESIDENTS 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 ANALYTICAL SERVICES, INC. The Fund FUND PERFORMANCE Comparison of change in value of $10,000 investment in Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series Class A shares and the Lehman Brothers Municipal Bond Index ((+)) SOURCE: LIPPER ANALYTICAL SERVICES, 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 STATE MUNICIPAL BOND FUND, PENNSYLVANIA SERIES (THE "FUND") ON 4/30/90 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 PENNSYLVANIA 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 IS NOT LIMITED TO INVESTMENTS PRINCIPALLY IN PENNSYLVANIA MUNICIPAL OBLIGATIONS AND DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. THE INDEX, UNLIKE THE FUND, 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. THESE FACTORS 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 4/30/00 Inception From Date 1 Year 5 Years 10 Years Inception --------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES WITH SALES CHARGE (4.5%) 7/30/87 (7.59)% 4.32% 6.57% -- WITHOUT SALES CHARGE 7/30/87 (3.24)% 5.28% 7.06% -- CLASS B SHARES WITH REDEMPTION((+)) 1/15/93 (7.36)% 4.43% -- 5.06% WITHOUT REDEMPTION 1/15/93 (3.75)% 4.74% -- 5.06% CLASS C SHARES WITH REDEMPTION((+)(+)) 8/15/95 (4.88)% -- -- 4.32% WITHOUT REDEMPTION 8/15/95 (3.98)% -- -- 4.32% PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. ((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS A SHARES. ((+)(+)) 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, 2000 Principal LONG-TERM MUNICIPAL INVESTMENTS--97.6% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA--93.6% Allegheny County Hospital Development Authority, Revenue (Health Center - UPMC Health System): 4.50%, 8/1/2015 (Insured; MBIA) 2,000,000 1,666,580 4.75%, 12/15/2016 (Insured; AMBAC) 2,245,000 1,911,034 5%, 11/1/2018 1,000,000 878,460 (Hospital - South Hills Health) 5.125%, 5/1/2029 3,000,000 2,353,140 Allegheny County Industrial Development Authority, Medical Center Revenue (Presbyterian Medical Center of Oakmont Pennsylvania, Inc.) 6.75%, 2/1/2026 (Insured; FHA) 1,760,000 1,837,915 Allegheny County Residential Finance Authority, SFMR: 7.40%, 12/1/2022 1,290,000 1,323,024 7.95%, 6/1/2023 740,000 755,629 Bangor Area School District: 4.50%, 3/15/2016 (Insured; FSA) 2,040,000 1,726,554 4.50%, Series A, 3/15/2017 (Insured; FSA) 1,205,000 1,010,778 4.50%, Series B, 3/15/2017 (Insured; FSA) 2,130,000 1,786,687 Beaver County Industrial Development Authority, PCR (Pennsylvania Power Company Mansfield Project) 7.15%, 9/1/2021 3,000,000 3,088,530 Berks County Municipal Authority, Revenue (Phoebe - Devitt Homes Project): 5.50%, 5/15/2015 780,000 639,132 5.75%, 5/15/2022 1,500,000 1,224,495 Bradford County Industrial Development Authority, SWDR (International Paper Company Projects) 6.60%, 3/1/2019 4,250,000 4,240,437 Butler Area School District, 4.75%, 10/1/2022 (Insured; FGIC) 2,190,000 1,832,373 Charleroi Area School Authority, School Revenue Zero Coupon, 10/1/2020 (Insured; FGIC) 2,000,000 587,320 Chester County Health and Education Facilities Authority, Health System Revenue (Jefferson Health System) 5.375%, 5/15/2027 2,000,000 1,679,200 Coatesville Area School District 4.50%, 10/1/2016 (Insured; FSA) 6,855,000 5,767,728 Dauphin County General Authority, Revenue (Office and Parking, Riverfront Office) 6%, 1/1/2025 3,000,000 2,709,540 East Whiteland Township 5%, 9/1/2019 (Insured; FSA) 2,820,000 2,512,902 Erie: Zero Coupon, 11/15/2019 (Insured; FSA) 1,685,000 520,598 Zero Coupon, 11/15/2020 (Insured; FSA) 2,110,000 610,212 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA (CONTINUED) Erie County Higher Education Building Authority, College Revenue (Mercyhurst College Project) 5.75%, 3/15/2020 2,000,000 1,818,220 Erie School District Zero Coupon, 9/1/2015 (Insured; FSA) 1,135,000 464,442 Franklin County Industrial Development Authority, HR (The Chambersburg Hospital) 5%, 07/01/2018 (Insured; AMBAC) 1,200,000 1,055,508 Gettysburg Municipal Authority, College Revenue (Gettysburg College) 4.75%, 8/15/2023 (Insured; AMBAC) 2,000,000 1,667,460 Girtys Run Joint Sewer Authority, Sewer Revenue 4.50%, 11/1/2020 (Insured; FSA) 4,580,000 3,735,906 Harrisburg Authority, Office and Parking Revenue 6%, 5/1/2019 2,000,000 1,824,740 Harrisburg Redevelopment Authority, Revenue: Zero Coupon, 5/1/2018 (Insured; FSA) 2,750,000 923,835 Zero Coupon, 11/1/2018 (Insured; FSA) 2,750,000 896,280 Zero Coupon, 11/1/2019 (Insured; FSA) 2,750,000 838,805 Zero Coupon, 5/1/2020 (Insured; FSA) 2,750,000 808,940 Zero Coupon, 11/1/2020 (Insured; FSA) 2,750,000 784,602 Lancaster Area Sewer Authority, Revenue 4.50%, 4/1/2018 (Insured; MBIA) 5,730,000 4,757,848 Luzerne County Industrial Development Authority, Exempt Facilities Revenue, (Pennsylvania Gas and Water Company Project) 7.125%, 12/1/2022 4,000,000 4,220,760 McKeesport Area School District, GO Zero Coupon, 10/1/2021 (Insured; AMBAC) 3,455,000 949,572 Montgomery County Higher Educational and Health Authority, Revenue First Mortgage (Montgomery Income Project) 10.50%, 9/1/2020 2,875,000 2,977,954 Montgomery County Industrial Development Authority, RRR 7.50%, 1/1/2012 (LOC; Banque Paribas) 14,715,000 15,103,476 Montour School District, Notes: Zero Coupon, 1/1/2024 (Insured; FGIC) 1,155,000 266,574 Zero Coupon, 1/1/2025 (Insured; FGIC) 2,015,000 436,086 Norristown (Asset Guarantee) Zero Coupon, 12/15/2014 1,465,000 612,516 Northampton County Industrial Development Authority, PCR (Bethlehem Steel) 7.55%, 6/1/2017 5,700,000 5,765,151 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA (CONTINUED) Pennsylvania Economic Development Financing Authority: RRR (Northampton Generating Project) 6.50%, 1/1/2013 6,500,000 6,340,685 Wastewater Treatment Revenue (Sun Co. Inc. - R and M Project) 7.60%, 12/1/2024 4,240,000 4,492,365 Pennsylvania Housing Finance Agency: 6.50%, 7/1/2023 2,750,000 2,773,595 Single Family Mortgage: 6.75%, 4/1/2016 3,000,000 3,040,590 6.85%, 4/1/2016 (Insured; FHA) 3,700,000 3,747,804 6.90%, 4/1/2025 6,250,000 6,448,188 Pennsylvania Higher Education Assistance Agency, Student Loan Revenue 7.05%, 10/1/2016 (Insured; AMBAC) 2,500,000 2,660,825 Pennsylvania State Higher Educational Facilities Authority, Revenue: (State System Higher Education): 5%, 6/15/2019 (Insured; AMBAC) 2,000,000 1,787,700 5%, 6/15/2024 (Insured; FSA) 1,770,000 1,540,643 (UPMC Health System) 4.875%, 8/1/2019 (Insured; FSA) 1,250,000 1,052,150 Pennsylvania State University 5%, 8/15/2017 500,000 454,355 Pennsylvania Turnpike Commission, Oil Franchise Tax Revenue 5%, 12/01/2023 (Insured AMBAC) 2,000,000 1,743,500 Philadelphia: 4.75%, 5/15/2020 (Insured; FGIC) 8,900,000 7,525,128 Gas Works Revenue: 5%, 7/1/2017 (Insured; FSA) 2,500,000 2,272,750 5%, 7/1/2018 (Insured; FSA) 3,500,000 3,149,580 5%, 7/1/2023 (Insured; FSA) 6,000,000 5,209,740 6.375%, 7/1/2026 (Insured; CMAC) 1,000,000 1,023,270 Philadelphia Hospitals and Higher Education Facilities Authority: Revenue(Jefferson Health System) 5%, 5/15/2011 2,000,000 1,803,340 HR(Temple University Hospital) 6.625%, 11/15/2023 14,490,000 13,156,485 Philadelphia School District 4.50%, 4/1/2023 (Insured; MBIA) 16,625,000 13,354,696 Pittsburgh and Allegheny County Public Auditorium Authority, Excise Tax Revenue (Hotel Room) 5%, 2/1/2024 (Insured, AMBAC) 2,250,000 1,955,340 Pittsburgh Urban Redevelopment Authority Mortgage Revenue: 7.05%, 4/1/2023 1,785,000 1,816,220 (Sidney Square Project) 6.65%, 9/1/2028 3,350,000 3,377,303 Pittsburgh Water and Sewer Authority, Water and Sewer Systems Revenue 5%, 9/1/2017 1,400,000 1,272,026 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA (CONTINUED) Pottstown School District 4.75%, 6/1/2022 (Insured; MBIA) 3,760,000 3,150,316 Schuylkill County Industrial Development Authority First Mortgage Revenue (Valley Health Concerns) 8.75%, 3/1/2012 2,500,000 2,502,925 Southeast Delco School District: Zero Coupon, 2/1/2020 (Insured; MBIA) 2,055,000 623,302 Zero Coupon, 2/1/2023 (Insured; MBIA) 2,055,000 512,065 Southeastern Transportation Authority, Special Revenue 4.75%, 3/1/2024 (Insured; FGIC) 2,775,000 2,308,745 Spring-Ford Area School District 4.75%, 3/1/2022 (Insured; FGIC) 8,935,000 7,493,874 State Public School Building Authority, School Revenue (School District of York Project) 4.75%, 2/15/2014 (Insured; FGIC) 1,655,000 1,480,497 Washington County Industrial Development Authority: PCR (West Pennsylvania Power Company Mitchell) 6.05%, 4/1/2014 (Insured; AMBAC) 3,000,000 3,091,200 Revenue (Presbyterian Medical Center) 6.75%, 1/15/2023 (Insured; FHA) 3,000,000 3,141,900 U.S. RELATED--4.0% Commonwealth of Puerto Rico (Public Improvement) 4.50%, 7/1/2023 5,000,000 4,053,850 Puerto Rico Electric Power Authority, Power Revenue 5%, 7/1/2023 5,500,000 4,827,020 TOTAL LONG-TERM INVESTMENTS (cost $227,277,749) 215,754,915 ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM MUNICIPAL INVESTMENTS--.5% ------------------------------------------------------------------------------------------------------------------------------------ Delaware County Industrial Development Authority, PCR, VRDN (British Petroleum Oil Inc. Project) 5.80% (cost $1,000,000) 1,000,000 (a) 1,000,000 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $228,277,749) 98.1% 216,754,915 CASH AND RECEIVABLES (NET) 1.9% 4,247,492 NET ASSETS 100.0% 221,002,407 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Summary of Abbreviations AMBAC American Municipal Bond Assurance Corporation CMAC Capital Market Assurance Corporation FGIC Financial Guaranty Insurance Company FHA Federal Housing Administration FSA Financial Security Assurance GO General Obligation HR Hospital Revenue LOC Letter of Credit MBIA Municipal Bond Investors Assurance Insurance Corporation PCR Pollution Control Revenue RRR Resources Recovery Revenue SFMR Single Family Mortgage Revenue SWDR Solid Waste Disposal Revenue VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 57.9 AA Aa AA 8.2 A A A 12.0 BBB Baa BBB 13.3 F1 MIG1/P1 SP1/A1 .5 Not Rated(b) Not Rated(b) Not Rated(b) 8.1 100.0 (A) SECURITIES PAYABLE ON DEMAND. VARIABLE RATE INTEREST-SUBJECT TO PERIODIC CHANGE. (B) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST.
SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF ASSETS AND LIABILITIES April 30, 2000 Cost Value ------------------------------------------------------------------------------ ASSETS ($): Investments in securities--See Statement of Investments 228,277,749 216,754,915 Cash 291,037 Interest receivable 3,618,963 Receivable for investment securities sold 529,353 Receivable for shares of Beneficial Interest subscribed 146,612 Prepaid expenses 7,816 221,348,696 -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 164,129 Payable for shares of Beneficial Interest redeemed 136,552 Accrued expenses 45,608 346,289 -------------------------------------------------------------------------------- NET ASSETS ($) 221,002,407 -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 233,058,657 Accumulated net realized gain (loss) on investments (533,416) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (11,522,834) -------------------------------------------------------------------------------- NET ASSETS ($) 221,002,407 NET ASSET VALUE PER SHARE Class A Class B Class C ------------------------------------------------------------------------------------------------------------------------------------ Net Assets 180,760,304 38,968,005 1,274,098 Shares Outstanding 12,099,489 2,610,794 85,247 ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 14.94 14.93 14.95 SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF OPERATIONS Year Ended April 30, 2000 -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 14,593,847 EXPENSES: Management fee--Note 3(a) 1,326,793 Shareholder servicing costs--Note 3(c) 817,985 Distribution fees--Note 3(b) 263,746 Custodian fees 27,528 Professional fees 27,221 Registration fees 23,217 Prospectus and shareholders' reports 23,127 Trustees' fees and expenses--Note 3(d) 3,244 Loan commitment fees--Note 2 2,482 Miscellaneous 17,187 TOTAL EXPENSES 2,532,530 INVESTMENT INCOME--NET 12,061,317 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments 452,220 Net unrealized appreciation (depreciation) on investments (21,787,858) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (21,335,638) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (9,274,321) SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Year Ended April 30, ---------------------------------- 2000 1999 -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 12,061,317 12,843,754 Net realized gain (loss) on investments 452,220 5,906,216 Net unrealized appreciation (depreciation) on investments (21,787,858) (3,365,196) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (9,274,321) 15,384,774 -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (9,678,252) (9,548,326) Class B shares (2,339,115) (3,269,922) Class C shares (43,950) (25,507) Net realized gain on investments: Class A shares (3,547,348) (3,137,642) Class B shares (861,532) (1,225,935) Class C shares (19,855) (9,155) TOTAL DIVIDENDS (16,490,052) (17,216,487) -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 31,806,266 15,324,595 Class B shares 9,233,839 9,317,671 Class C shares 809,497 888,826 Dividends reinvested: Class A shares 7,038,799 6,692,004 Class B shares 2,185,100 2,958,657 Class C shares 44,344 12,609 Cost of shares redeemed: Class A shares (33,930,306) (21,037,691) Class B shares (35,538,987) (17,742,150) Class C shares (376,973) (460,642) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (18,728,421) (4,046,121) TOTAL INCREASE (DECREASE) IN NET ASSETS (44,492,794) (5,877,834) -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 265,495,201 271,373,035 END OF PERIOD 221,002,407 265,495,201 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) Year Ended April 30, --------------------------------- 2000 1999 -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 2,029,925 918,902 Shares issued for dividends reinvested 460,266 398,920 Shares redeemed (2,211,504) (1,253,979) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 278,687 63,843 -------------------------------------------------------------------------------- CLASS B(A) Shares sold 590,695 556,572 Shares issued for dividends reinvested 142,505 176,403 Shares redeemed (2,283,203) (1,062,694) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (1,550,003) (329,719) -------------------------------------------------------------------------------- CLASS C Shares sold 52,892 53,260 Shares issued for dividends reinvested 2,914 752 Shares redeemed (24,746) (27,571) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 31,060 26,441 (A) DURING THE PERIOD ENDED APRIL 30, 2000, 1,477,344 CLASS B SHARES REPRESENTING $22,894,751 WERE AUTOMATICALLY CONVERTED TO 1,476,804 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Year Ended April 30, -------------------------------------------------------------- CLASS A SHARES 2000 1999 1998 1997 1996 ---------------------------------------------------------------------------------------------------------------------------- PER SHARE DATA ($): Net asset value, beginning of period 16.56 16.68 16.23 16.17 16.12 Investment Operations: Investment income--net .79 .82 .85 .85 .87 Net realized and unrealized gain (loss) on investments (1.33) .16 .71 .24 .32 Total from Investment Operations (.54) .98 1.56 1.09 1.19 Distributions: Dividends from investment income--net (.79) (.82) (.85) (.85) (.87) Dividends from net realized gain on investments (.29) (.28) (.26) (.18) (.27) Total Distributions (1.08) (1.10) (1.11) (1.03) (1.14) Net asset value, end of period 14.94 16.56 16.68 16.23 16.17 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (3.24) 5.97 9.83 6.89 7.46 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .94 .92 .92 .92 .92 Ratio of net investment income to average net assets 5.12 4.90 5.09 5.22 5.28 Portfolio Turnover Rate 34.29 48.14 34.82 60.57 52.69 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 180,760 195,728 196,055 201,229 216,802 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Year Ended April 30, -------------------------------------------------------------- CLASS B SHARES 2000 1999 1998 1997 1996 ---------------------------------------------------------------------------------------------------------------------------- PER SHARE DATA ($): Net asset value, beginning of period 16.55 16.67 16.23 16.16 16.11 Investment Operations: Investment income--net .71 .74 .77 .77 .79 Net realized and unrealized gain (loss) on investments (1.33) .16 .70 .25 .32 Total from Investment Operations (.62) .90 1.47 1.02 1.11 Distributions: Dividends from investment income--net (.71) (.74) (.77) (.77) (.79) Dividends from net realized gain on investments (.29) (.28) (.26) (.18) (.27) Total Distributions (1.00) (1.02) (1.03) (.95) (1.06) Net asset value, end of period 14.93 16.55 16.67 16.23 16.16 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (3.75) 5.43 9.20 6.41 6.92 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.46 1.43 1.43 1.43 1.43 Ratio of net investment income to average net assets 4.57 4.39 4.57 4.71 4.76 Portfolio Turnover Rate 34.29 48.14 34.82 60.57 52.69 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 38,968 68,869 74,855 71,671 72,610 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, ------------------------------------------------------------------------- CLASS C SHARES 2000 1999 1998 1997 1996(a) ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 16.57 16.69 16.23 16.16 16.18 Investment Operations: Investment income--net .67 .69 .70 .69 .53 Net realized and unrealized gain (loss) on investments (1.33) .16 .72 .25 .25 Total from Investment Operations (.66) .85 1.42 .94 .78 Distributions: Dividends from investment income--net (.67) (.69) (.70) (.69) (.53) Dividends from net realized gain on investments (.29) (.28) (.26) (.18) (.27) Total Distributions (.96) (.97) (.96) (.87) (.80) Net asset value, end of period 14.95 16.57 16.69 16.23 16.16 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (3.98) 5.16 8.91 5.92 6.71(c) ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.70 1.69 1.69 1.83 1.70(c) Ratio of net investment income to average net assets 4.35 4.07 3.98 4.28 4.46(c) Portfolio Turnover Rate 34.29 48.14 34.82 60.57 52.69 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 1,274 898 463 32 21 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund NOTES TO FINANCIAL STATEMENTS NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company and operates as a series company currently offering thirteen series including the Pennsylvania Series (the " fund" ). The fund's investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned subsidiary of the Manager, became the distributor of the fund's shares. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund is authorized to issue an unlimited number of $.001 par value shares in the following classes of shares: Class A, Class B and Class C shares. Class A shares are subject to a sales charge imposed at the time of purchase, Class B shares are subject to a contingent deferred sales charge ("CDSC") imposed on Class B share redemptions made within six years of purchase (five years for shareholders beneficially owning Class B shares on November 30, 1996) and Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. 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 Trust 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 fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $12,500 during the period ended April 30, 2000 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the " Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (D) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $500 million redemption credit facility (the "Facility") to be utilized for temporary and emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the fund at rates based on prevailing market rates in effect at the time of borrowings. During the period ended April 30, 2000, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (A) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund's average daily net assets and is payable monthly. DSC retained $4,017 during the period ended April 30, 2000, 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, 2000, Class B and Class C shares were charged $256,167 and $7,579, respectively, pursuant to the Plan, of which $21,873 and $1,031 for Class B and Class C shares, respectively, were paid to DSC. (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 their average daily net assets 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, 2000 Class A, Class B and Class C shares were charged $472,478, $128,084, and $2,526, respectively, pursuant to the Shareholder Services Plan, of which $49,985, $10,937 and $344 for Class A, Class B and Class C shares, respectively, were paid to DSC. 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, 2000, the fund was charged $136,293 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" ). The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) Effective April 13, 2000, each Board member receives an annual fee of $50,000 and a fee of $6,500 for each meeting held in person 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. Prior to April 13, 2000, each Board member who was not an "affiliated person" as defined in the Act received from the Trust an annual fee of $2,500 and an attendance fee of $250 per meeting. The Chairman of the Board received an additional 25% of such compensation. Subject to the fund's Director Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the Trust's annual retainer fee and per meeting fee paid at the time the Board member achieved 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, 2000, amounted to $81,579,527 and $106,477,905 respectively. At April 30, 2000, accumulated net unrealized depreciation on investments was $11,522,834, consisting of $1,875,931 gross unrealized appreciation and $13,398,765 gross unrealized depreciation. At April 30, 2000, 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). REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Trustees Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series (one of the funds constituting the Dreyfus Premier State Municipal Bond Fund) as of April 30, 2000, 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 and financial highlights. Our procedures included confirmation of securities owned as of April 30, 2000 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series at April 30, 2000, 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 9, 2000 The Fund IMPORTANT TAX INFORMATION (Unaudited) In accordance with Federal tax law, the fund hereby makes the following designations regarding its fiscal year ended April 30, 2000: --all the dividends paid from investment income-net are "exempt-interest dividends" (not subject to regular Federal and, for individuals who are Pennsylvania residents, Pennsylvania personal income taxes), and --the fund hereby designates $.2724 per share as a long-term capital gain distribution of the $.2853 per share paid on December 8, 1999. 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 2000 calendar year on Form 1099-DIV which will be mailed by January 31, 2001. NOTES For More Information Dreyfus Premier State Municipal Bond Fund, Pennsylvania 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 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 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) 2000 Dreyfus Service Corporation 058AR004 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Texas Series ANNUAL REPORT April 30, 2000 (reg.tm) ================================================================================ The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Fund Performance 8 Statement of Investments 12 Statement of Assets and Liabilities 13 Statement of Operations 14 Statement of Changes in Net Assets 16 Financial Highlights 19 Notes to Financial Statements 24 Report of Independent Auditors 25 Important Tax Information FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover Dreyfus Premier State Municipal Bond Fund, Texas Series The Fund LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this annual report for Dreyfus Premier State Municipal Bond Fund, Texas Series, covering the 12-month period from May 1, 1999 through April 30, 2000. 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, Douglas Gaylor. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. While higher interest rates generally led to an erosion of municipal bond prices during much of the reporting period, the tax-exempt bond market showed renewed signs of strength during the first four months of 2000. Municipal bonds were also influenced by supply-and-demand considerations. These technical influences have caused the yields of tax-exempt bonds to rise to very attractive levels compared to the after-tax yields of taxable bonds of comparable maturity and credit quality, making tax-exempt bonds especially attractive for investors in the higher federal and state income tax brackets. We appreciate your confidence over the past year, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Texas Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation May 15, 2000 DISCUSSION OF FUND PERFORMANCE Douglas Gaylor, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Texas Series, perform during the period? For the 12-month period ended April 30, 2000, the fund's Class A shares provided a -3.62% total return, its Class B shares provided a -4.14% total return and its Class C shares provided a -4.33% total return.(1) In comparison, the Lipper Texas Municipal Debt Funds category average provided a -3.99% total return for the same period.(2) We attribute the fund's negative absolute returns during the reporting period to a rising interest-rate environment, which caused most municipal bond prices to decline. What is the fund's investment approach? Our goal is to seek as high a level of federal and Texas tax-exempt income as is practical without undue risk from a diversified portfolio of municipal bonds. To achieve this objective, we employ two primary strategies. First, for between one-half and three-quarters of the total fund, we look for bonds that can potentially offer attractive current income. We typically look for bonds that can provide consistently high current yields. We also try to ensure that we select bonds that are most likely to obtain attractive prices if and when we decide to sell them in the secondary market. Second, for the remainder of the fund, we try to look for bonds that we believe have the potential to offer attractive total returns. We typically look for bonds that are selling at a discount to face value because they may be temporarily out of favor among investors. Our belief is that these bonds' prices will rise as they return to favor over time. What other factors influenced the fund's performance? Although the fund's performance was hurt by a difficult investment environment from the beginning of the reporting period throughout 1999, the first four months of 2000 generally provided better market The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) conditions and a market rally. This rally helped offset most -- but not all -- of the decline in the last eight months of 1999. When the reporting period began on May 1, 1999, investors had become concerned that strong economic growth might rekindle long-dormant inflationary pressures, especially from rising wages in a tight job market. In an attempt to ease these pressures and forestall a reacceleration of inflation, the Federal Reserve Board raised short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. This caused most bond prices to fall. During 1999 municipal bond prices also fell because of adverse supply-and-demand influences. For a variety of reasons, institutional investors such as insurance companies and mutual funds participated less in the tax-exempt market. Despite strong demand from individual investors, the absence of institutional buyers helped reduce overall demand and drove municipal bond prices down. During the first quarter of 2000, however, issuance of municipal bonds nationally declined approximately 20% compared to the same period in 1999. In addition, the fund and the Texas marketplace were adversely affected by a change in the state laws governing insurance companies. These companies are no longer required to hold Texas municipal bonds in their portfolios as a prerequisite to doing business in the state. As a result, demand from institutional investors in Texas has fallen, constraining the rise of the state's bond prices during the recent market rally. What is the fund's current strategy? Our current strategy has been to maintain as high a level of income as practical while reducing volatility and protecting assets in a rising interest-rate environment. Accordingly, we have slowly and modestly begun to reduce the portfolio' s average duration -- a measure of sensitivity to changing interest rates -- in an attempt to protect our holdings from the brunt of potential price depreciation and capture higher yields as they may become available. In doing so, we have shifted assets from municipal bonds with maturities of 20 to 30 years into bonds with maturities in the 10- to 20-year range. In addition to helping us reduce the fund' s sensitivity to rising interest rates, these intermediate-term holdings are also more likely to attract the interest of individual investors when the time comes to sell. From a security selection perspective, we have focused primarily on tax-exempt bonds that have recently been out of favor among investors, including bonds selling at deep discounts and modest premiums to their face values. Because they are currently unpopular, these types of bonds are available with attractive yields, in our view, compared to other types of bonds that investors currently favor. We believe that these holdings have the potential to boost the fund's performance when deep-discount and modest-premium bonds return to favor among investors. May 15, 2000 (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 CHARGE 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 FOR NON-TEXAS RESIDENTS AND SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE. RETURN FIGURES PROVIDED REFLECT THE ABSORPTION OF FUND EXPENSES BY THE DREYFUS CORPORATION PURSUANT TO AN UNDERTAKING IN EFFECT THAT MAY BE EXTENDED, TERMINATED OR MODIFIED AT ANY TIME. HAD THESE EXPENSES NOT BEEN ABSORBED, THE FUND'S RETURN WOULD HAVE BEEN LOWER. (2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. The Fund FUND PERFORMANCE Comparison of change in value of $10,000 investment in Dreyfus Premier State Municipal Bond Fund, Texas Series Class A shares and the Lehman Brothers Municipal Bond Index ((+)) SOURCE: LIPPER ANALYTICAL SERVICES, 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 STATE MUNICIPAL BOND FUND, TEXAS SERIES (THE "FUND") ON 4/30/90 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 TEXAS 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 IS NOT LIMITED TO INVESTMENTS PRINCIPALLY IN TEXAS MUNICIPAL OBLIGATIONS AND DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. THE INDEX, UNLIKE THE FUND, 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. THESE FACTORS 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 4/30/00 Inception From Date 1 Year 5 Years 10 Years Inception --------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES WITH SALES CHARGE (4.5%) 5/28/87 (7.96)% 4.50% 6.84% -- WITHOUT SALES CHARGE 5/28/87 (3.62)% 5.46% 7.34% -- CLASS B SHARES WITH REDEMPTION((+)) 1/15/93 (7.75)% 4.61% -- 5.42% WITHOUT REDEMPTION 1/15/93 (4.14)% 4.92% -- 5.42% CLASS C SHARES WITH REDEMPTION((+)(+)) 8/15/95 (5.24)% -- -- 4.51% WITHOUT REDEMPTION 8/15/95 (4.33)% -- -- 4.51% PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. ((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS A SHARES. ((+)(+)) 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, 2000 STATEMENT OF INVESTMENTS Principal LONG-TERM MUNICIPAL INVESTMENTS--96.5% Amount ($) Value ($) --------------------------------------------------------------------------------------------------------------------------------- TEXAS--95.2% Aledo Independent School District, Unlimited Tax School Building (Permanent School Fund Guaranteed) Zero Coupon, 2/15/2014 1,225,000 553,614 Brazos Higher Education Authority Inc., Student Loan Revenue 6.80%, 12/1/2004 700,000 733,523 Clear Creek Independent School District (Permanent School Fund Guaranteed) 4.25%, 2/1/2013 1,475,000 1,270,167 Coastal Water Authority, Water Conveyance System 6.25%, 12/15/2017 (Insured; AMBAC) 5,885,000 5,945,615 Dallas-Fort Worth Regional Airport, Joint Revenue 6.625%, 11/1/2021 (Insured; FGIC) 1,250,000 1,285,025 Denison Hospital Authority, HR (Texoma Medical Center Project) 6.125%, 8/15/2017 750,000 640,875 Eanes Independent School District (Permanent School Fund Guaranteed) 4.50%, 8/1/2017 1,400,000 1,163,498 El Paso Housing Authority, Multi-Family Revenue (Section 8 Projects) 6.25%, 12/1/2009 2,510,000 2,543,584 Grape Creek-Pulliam Independent School District Public Facility Corp., School Facility LR 7.25%, 5/15/2021 2,200,000 2,300,342 Grapevine-Colleyville Independent School District, Unlimited Tax School Building (Permanent School Fund Guaranteed): Zero Coupon, 8/15/2017 2,590,000 928,411 Zero Coupon, 8/15/2018 2,390,000 800,244 Gulf Coast Waste Disposal Authority, SWDR (Champion International Corp. Project) 7.25%, 4/1/2017 560,000 579,303 Houston, Public Improvement 4.75%, 3/1/2016 1,160,000 1,011,358 Houston Independent School District (Permanent School Fund Guaranteed): Zero Coupon, 8/15/2015 3,000,000 1,230,780 4.75%, 2/15/2022 2,500,000 2,094,500 Irving Independent School District (Permanent School Fund Guaranteed): Zero Coupon, 2/15/2010 1,985,000 1,154,377 Zero Coupon, 2/15/2016 1,000,000 394,830 Katy Independent School District, Limited Tax Refunding and School Building (Permanent School Fund Guaranteed) 4.75%, 2/15/2021 1,295,000 1,092,449 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) --------------------------------------------------------------------------------------------------------------------------------- TEXAS (CONTINUED) La Porte Independent School District (Permanent School Fund Guaranteed) 4.50%, 2/15/2017 1,000,000 835,540 Lakeway Municipal Utility District Zero Coupon, 9/1/2013 (Insured; FGIC) 1,850,000 863,876 Leon County, PCR (Nucor Corp. Project) 7.375%, 8/1/2009 750,000 784,020 Lower Colorado River Authority, Revenue, Junior Lein 4.50%, 1/1/2017 (Insured; FSA) 1,410,000 1,232,791 North Texas Higher Education Authority, Inc., Student Loan Revenue 7.25%, 4/1/2003 (Insured; AMBAC) (Prerefunded 6/1/2000) 1,000,000 (a) 1,022,460 Round Rock Independent School District (Permanent School Fund Guaranteed) 4.50%, 8/1/2016 1,950,000 1,658,728 Texas: (Veterans Housing Assistance) 6.80%, 12/1/2023 2,145,000 2,214,048 (Water Development) 5%, 8/1/2020 750,000 666,293 Texas Department Housing and Community Affairs, MFHR (Harbors and Plumtree) 6.35%, 7/1/2016 1,300,000 1,308,905 Texas Higher Education Coordinating Board, College Student Loan Revenue 7.30%, 10/1/2003 315,000 328,255 Texas National Research Laboratory Commission Financing Corp., LR (Superconducting Super Collider) 6.95%, 12/1/2012 700,000 791,644 Texas Public Finance Authority, Building Revenue (State Preservation Board Project): 4.50%, 2/1/2018 (Insured; AMBAC) 2,805,000 2,328,795 4.50%, 2/1/2019 (Insured; AMBAC) 2,165,000 1,784,068 Texas Public Property Finance Corp., Revenue (Mental Health and Retardation) 8.875%, 9/1/2011 (Prerefunded 9/1/2001) 455,000 (a) 487,018 Texas Water Development Board, Revenue, State Revolving Fund 4.75%, 7/15/2020 1,695,000 1,444,208 Tomball Hospital Authority, Revenue 6%, 7/1/2013 5,000,000 4,545,650 Tomball Independent School District (Permanent School Fund Guaranteed) 4.75%, 2/15/2020 2,515,000 2,134,003 Tyler Health Facility Development Corp., HR (East Texas Medical Center Regional Health) 6.625%, 11/1/2011 1,525,000 1,362,832 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) --------------------------------------------------------------------------------------------------------------------------------- TEXAS (CONTINUED) University of Texas (Financing System) University Revenues 3.75%, 8/15/2018 5,000,000 3,703,750 Victoria, Utility System Revenue 4.75%, 12/1/2022 (Insured; MBIA) 1,105,000 921,537 Waxahachie Community Development Corp., Sales Tax Revenue: Zero Coupon, 8/1/2020 (Insured; MBIA) 1,430,000 408,608 Zero Coupon, 8/1/2023 (Insured; MBIA) 1,000,000 233,650 West Side Calhoun County Navigation District, SWDR (Union Carbide Chemical and Plastics) 8.20%, 3/15/2021 500,000 518,890 U.S. RELATED--1.3% Puerto Rico (Public Improvement) 4.50%, 7/1/2023 (Insured; FSA) 1,000,000 810,770 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $61,259,366) 58,112,834 ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM MUNICIPAL INVESTMENT--1.7% ------------------------------------------------------------------------------------------------------------------------------------ Brazos River Authority, PCR, VRDN (Utility Electric Co.) 6.25% (LOC; Morgan Guaranty Trust Co. of New York) (cost $1,000,000) 1,000,000 (b) 1,000,000 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $62,259,366) 98.2% 59,112,834 CASH AND RECEIVABLES (NET) 1.8% 1,098,119 NET ASSETS 100.0% 60,210,953 Summary of Abbreviations AMBAC American Municipal Bond Assurance Corporation FGIC Financial Guaranty Insurance Company FSA Financial Security Assurance HR Hospital Revenue LOC Letter of Credit LR Lease Revenue MBIA Municipal Bond Investors Assurance Insurance Corporation MFHR Multi-Family Housing Revenue PCR Pollution Control Revenue SWDR Solid Waste Disposal Revenue VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 64.5 AA Aa AA 7.9 A A A 8.3 BBB Baa BBB 14.5 BBB B B 2.3 F1 MIG1/P1 SP1/A1 1.7 Not Rated(c) Not Rated(c) Not Rated(c) .8 100.0 (A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. (B) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE. (C) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. (D) AT APRIL 30, 2000, 25.4% OF THE FUND'S NET ASSETS ARE GUARANTEED BY PERMANENT SCHOOL FUND. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF ASSETS AND LIABILITIES April 30, 2000 Cost Value -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 62,259,366 59,112,834 Cash 559,405 Interest receivable 965,642 Receivable for shares of Beneficial Interest subscribed 11,843 Prepaid expenses 8,022 60,657,746 -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 35,956 Payable for shares of Beneficial Interest redeemed 393,842 Accrued expenses 16,995 446,793 -------------------------------------------------------------------------------- NET ASSETS ($) 60,210,953 -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 63,468,849 Accumulated net realized gain (loss) on investments (111,364) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (3,146,532) -------------------------------------------------------------------------------- NET ASSETS ($) 60,210,953 NET ASSET VALUE PER SHARE Class A Class B Class C ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 52,463,659 7,482,772 264,522 Shares Outstanding 2,714,675 387,282 13,695 ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 19.33 19.32 19.31 SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS Year Ended April 30, 2000 -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 3,930,364 EXPENSES: Management fee--Note 3(a) 373,352 Shareholder servicing costs--Note 3(c) 206,299 Distribution fees--Note 3(b) 61,118 Registration fees 37,631 Professional fees 23,758 Prospectus and shareholders' reports 15,250 Custodian fees 7,647 Trustees' fees and expenses--Note 3(d) 969 Loan commitment fees--Note 2 612 Miscellaneous 10,209 TOTAL EXPENSES 736,845 Less--reduction in management fee due to undertaking--Note 3(a) (98,727) NET EXPENSES 638,118 INVESTMENT INCOME--NET 3,292,246 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4: Net realized gain (loss) on investments 211,363 Net unrealized appreciation (depreciation) on investments (6,522,846) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (6,311,483) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (3,019,237) SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS Year Ended April 30, ---------------------------------- 2000 1999 -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 3,292,246 3,580,223 Net realized gain (loss) on investments 211,363 1,655,520 Net unrealized appreciation (depreciation) on investments (6,522,846) (902,285) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (3,019,237) 4,333,458 -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (2,765,973) (2,750,126) Class B shares (504,058) (815,258) Class C shares (22,215) (14,839) Net realized gain on investments: Class A shares (774,143) (1,392,005) Class B shares (135,906) (491,551) Class C shares (8,474) (9,650) TOTAL DIVIDENDS (4,210,769) (5,473,429) -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 7,421,968 6,902,174 Class B shares 924,779 3,131,814 Class C shares 248,924 472,618 Dividends reinvested: Class A shares 1,661,140 2,017,842 Class B shares 401,134 874,269 Class C shares 20,594 10,434 Cost of shares redeemed: Class A shares (11,288,329) (7,312,717) Class B shares (9,561,557) (7,146,330) Class C shares (555,206) (115,404) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (10,726,553) (1,165,300) TOTAL INCREASE (DECREASE) IN NET ASSETS (17,956,559) (2,305,271) -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 78,167,512 80,472,783 END OF PERIOD 60,210,953 78,167,512 SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, ------------------------------- 2000 1999 -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 368,896 318,580 Shares issued for dividends reinvested 84,082 92,816 Shares redeemed (569,598) (335,978) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (116,620) 75,418 -------------------------------------------------------------------------------- CLASS B(A) Shares sold 44,887 143,855 Shares issued for dividends reinvested 20,194 40,204 Shares redeemed (474,815) (330,498) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (409,734) (146,439) -------------------------------------------------------------------------------- CLASS C Shares sold 12,088 21,872 Shares issued for dividends reinvested 1,034 482 Shares redeemed (28,464) (5,370) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (15,342) 16,984 (A) DURING THE PERIOD ENDED APRIL 30, 2000, 279,353 CLASS B SHARES REPRESENTING $5,593,499 WERE AUTOMATICALLY CONVERTED TO 279,364 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS The following table describes the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Year Ended April 30, -------------------------------------------------------------------------- CLASS A SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 21.37 21.68 20.99 20.84 20.69 Investment Operations: Investment income--net .98 1.00 1.08 1.17 1.20 Net realized and unrealized gain (loss) on investments (1.77) .21 .99 .41 .45 Total from Investment Operations (.79) 1.21 2.07 1.58 1.65 Distributions: Dividends from investment income--net (.98) (1.00) (1.08) (1.17) (1.20) Dividends from net realized gain on investments (.27) (.52) (.30) (.26) (.30) Total Distributions (1.25) (1.52) (1.38) (1.43) (1.50) Net asset value, end of period 19.33 21.37 21.68 20.99 20.84 --------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (%)(A) (3.62) 5.66 10.03 7.74 8.06 --------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .85 .85 .72 .37 .37 Ratio of net investment income to average net assets 4.95 4.59 4.96 5.54 5.64 Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation .14 .07 .18 .55 .55 Portfolio Turnover Rate 22.70 49.67 27.18 61.22 49.24 --------------------------------------------------------------------------------------------------------------------------------- Net Assets, end of period ($ x 1,000) 52,464 60,516 59,758 60,849 62,864 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, -------------------------------------------------------------------------- CLASS B SHARES 2000 1999 1998 1997 1996 --------------------------------------------------------------------------------------------------------------------------------- PER SHARE DATA ($): Net asset value, beginning of period 21.37 21.68 20.98 20.84 20.69 Investment Operations: Investment income--net .88 .89 .97 1.06 1.09 Net realized and unrealized gain (loss) on investments (1.78) .21 1.00 .40 .45 Total from Investment Operations (.90) 1.10 1.97 1.46 1.54 Distributions: Dividends from investment income--net (.88) (.89) (.97) (1.06) (1.09) Dividends from net realized gain on investments (.27) (.52) (.30) (.26) (.30) Total Distributions (1.15) (1.41) (1.27) (1.32) (1.39) Net asset value, end of period 19.32 21.37 21.68 20.98 20.84 --------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (%)(A) (4.14) 5.13 9.53 7.15 7.51 --------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.35 1.35 1.23 .88 .88 Ratio of net investment income to average net assets 4.41 4.09 4.44 5.03 5.13 Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation .16 .08 .18 .55 .55 Portfolio Turnover Rate 22.70 49.67 27.18 61.22 49.24 --------------------------------------------------------------------------------------------------------------------------------- Net Assets, end of period ($ x 1,000) 7,483 17,031 20,454 17,396 17,461 (A) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Year Ended April 30, -------------------------------------------------------------------------- CLASS C SHARES 2000 1999 1998 1997 1996(a) ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 21.36 21.67 20.97 20.83 20.78 Investment Operations: Investment income--net .84 .83 .91 .99 .73 Net realized and unrealized gain (loss) on investments (1.78) .21 1.00 .40 .35 Total from Investment Operations (.94) 1.04 1.91 1.39 1.08 Distributions: Dividends from investment income--net (.84) (.83) (.91) (.99) (.73) Dividends from net realized gain on investments (.27) (.52) (.30) (.26) (.30) Total Distributions (1.11) (1.35) (1.21) (1.25) (1.03) Net asset value, end of period 19.31 21.36 21.67 20.97 20.83 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (4.33) 4.86 9.24 6.79 7.29(c) ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.60 1.60 1.52 1.19 1.18(c) Ratio of net investment income to average net assets 4.15 3.79 4.10 4.57 4.77(c) Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation .15 .11 .15 .54 .58(c) Portfolio Turnover Rate 22.70 49.67 27.18 61.22 49.24 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 265 620 261 129 1 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company, and operates as a series company currently offering thirteen series including the Texas Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A, which is a wholly-owned subsidiary of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned subsidiary of the Manager, became the distributor of the fund's shares. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund is authorized to issue an unlimited number of $.001 par value shares in the following classes of shares: Class A, Class B and Class C shares. Class A shares are subject to a sales charge imposed at the time of purchase, Class B shares are subject to a contingent deferred sales charge ("CDSC") imposed on Class B share redemptions made within six years of purchase (five years for shareholders beneficially owning Class B shares on November 30, 1996) and Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. 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 Trust 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 fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) management estimates and assumptions. Actual results could differ from those estimates. (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $3,832 during the period ended April 30, 2000 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the " Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (D) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $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 at rates based on prevailing market rates in effect at the time of borrowings. During the period ended April 30, 2000, 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 Manager had undertaken from May 1, 1999 through April 30, 2000 to reduce the management fee paid by the fund, to the extent that the fund' s aggregate expenses, excluding 12b-1 distribution fees, taxes, brokerage fees, commitment fees, interest on borrowings and extraordinary expenses, exceeded an annual rate of .85 of 1% of the value of the fund' s average daily net assets. The reduction in management fee, pursuant to the undertaking, amounted to $98,727 during the period ended April 30, 2000. (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, 2000, Class B and Class C shares were charged $57,107 and $4,011, respectively, pursuant to the Plan, of which $4,319 and $203 for Class B and Class C shares, respectively, were paid to DSC. (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 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, 2000, Class A, Class B and Class C shares were charged $139,815, $28,554 and $1,337, respectively, pursuant to the Shareholder Services Plan, of which $14,525, $2,160 and $68 for Class A, Class B and Class C shares, respectively, were paid to DSC. 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, 2000, the fund was charged $24,541 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"). Effective April 13, 2000, each Board member receives an annual fee of $50,000 and a fee of $6,500 for each meeting held in person 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. Prior to April 13, 2000, each Board member who was not an "affiliated person" as defined in the Act received from the Trust an annual fee of $2,500 and an attendance fee of $250 per meeting. The Chairman of the Board received an additional 25% of such compensation. Subject to the fund' s Director Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the Trust's annual retainer fee and per meeting fee paid at the time the Board member achieved 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, 2000, amounted to $14,978,580 and $26,683,259, respectively. At April 30, 2000, accumulated net unrealized depreciation on investments was $3,146,532, consisting of $574,784 gross unrealized appreciation and $3,721,316 gross unrealized depreciation. At April 30, 2000, 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). The Fund REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Trustees Dreyfus Premier State Municipal Bond Fund, Texas Series We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Premier State Municipal Bond Fund, Texas Series (one of the funds constituting the Dreyfus Premier State Municipal Bond Fund) as of April 30, 2000, 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 and the financial highlights. Our procedures included confirmation of securities owned as of April 30, 2000 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier State Municipal Bond Fund, Texas Series at April 30, 2000, 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 9, 2000 IMPORTANT TAX INFORMATION (Unaudited) In accordance with Federal tax law, the fund hereby makes the following designations regarding its fiscal year ended April 30, 2000: -- all the dividends paid from investment income-net are "exempt-interest dividends" (not subject to regular Federal income tax, and for individuals who are Texas residents, not subject to taxation by Texas), and -- the fund hereby designates $.2135 per share as a long-term capital gain distribution of the $.2747 per share paid on December 8, 1999. 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 2000 calendar year on Form 1099-DIV which will be mailed by January 31, 2001. The Fund For More Information Dreyfus Premier State Municipal Bond Fund, Texas 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 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 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) 2000 Dreyfus Service Corporation 061AR004 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Virginia Series ANNUAL REPORT April 30, 2000 (reg.tm) ================================================================================ The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Contents THE FUND -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Fund Performance 8 Statement of Investments 12 Statement of Assets and Liabilities 13 Statement of Operations 14 Statement of Changes in Net Assets 16 Financial Highlights 19 Notes to Financial Statements 24 Report of Independent Auditors 25 Important Tax Information FOR MORE INFORMATION --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Virginia Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this annual report for Dreyfus Premier State Municipal Bond Fund, Virginia Series, covering the 12-month period from May 1, 1999 through April 30, 2000. 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, Samuel Weinstock. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates five times during the reporting period, for a total increase of 1.25 percentage points. While higher interest rates generally led to an erosion of municipal bond prices during much of the reporting period, the tax-exempt bond market showed renewed signs of strength during the first four months of 2000. Municipal bonds were also influenced by supply-and-demand considerations. These technical influences have caused the yields of tax-exempt bonds to rise to very attractive levels compared to the after-tax yields of taxable bonds of comparable maturity and credit quality, making tax-exempt bonds especially attractive for investors in the higher federal and state income tax brackets. We appreciate your confidence over the past year, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Virginia Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation May 15, 2000 DISCUSSION OF FUND PERFORMANCE Samuel Weinstock, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Virginia Series, perform during the period? For the 12-month period ended April 30, 2000, the fund's Class A shares provided a -3.65% total return, its Class B shares provided a -4.21% total return and its Class C shares provided a -4.37% total return.(1) In comparison, the Lipper Virginia Municipal Debt Funds category average provided a -2.49% total return for the same period.(2 In a rising interest-rate environment, which caused most municipal bond prices to decline over the past year, the fund's relative performance lagged compared to that of its category average. We attribute our underperformance to the fund's focus on income. Because of this focus, the fund's total return tends to outperform the averages during declining markets, but may lag during rallies such as the one that prevailed during the first quarter of 2000. What is the fund's investment approach? Our goal is to seek as high a level of federal and Virginia tax-exempt income as is practical without undue risk from a diversified portfolio of municipal bonds. To achieve this objective, we employ four primary strategies. First, we strive to identify the maturity range that we believe will provide the most favorable returns over the next two years. Second, we evaluate issuers' credit quality to find bonds that we believe provide high yields at attractive prices. Third, we look for bonds with attractive high interest payments, even if they sell at a premium to face value. Fourth, we assess individual bonds' early redemption features, focusing on those that cannot be redeemed soon by their issuers. Typically, the bonds we select for the portfolio will have several of these qualities. We also use computer models to evaluate the likely performance of bonds under various market scenarios, including a 0.25 percentage- The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) point rise in interest rates and a 0.50 percentage-point decline. When we find securities that we believe will provide participation when the market rises and some protection against declines, we tend to hold them for the long term. What other factors influenced the fund's performance? Although the fund's performance was hurt by a difficult investment environment during the final two months of 1999, the first four months of 2000 generally provided better market conditions and a market rally. While the fund's performance lagged that of its peer group, this rally helped offset most -- but not all -- of 1999's decline. When the reporting period began on May 1, 1999, investors had become concerned that strong economic growth might rekindle long-dormant inflationary pressures, especially from rising wages in a tight job market. In an attempt to ease these pressures and forestall a reacceleration of inflation, the Federal Reserve Board raised short-term interest rates five times during the reporting period, causing most bond prices to fall, for a total increase of 1.25 percentage points. Municipal bond prices also fell during November and December, 1999, because of adverse supply-and-demand influences. For a variety of reasons, institutional investors such as insurance companies and mutual funds participated less in the tax-exempt market. Despite strong demand from individual investors, the absence of institutional buyers helped reduce overall demand and drove municipal bond prices down. During the first quarter of 2000, however, issuance of municipal bonds nationally declined approximately 20%, as compared to the same period in 1999. This supply reduction, combined with robust demand from individual investors, helped support a rebound of municipal bond prices. What is the fund's current strategy? We have changed the balance of assets in the fund from approximately 85% income-oriented bonds and about 15% total return-oriented bonds to a target of 75% and 25% , respectively. This shift is part of our continuing effort to upgrade the fund's liquidity profile by gradually moving away from the types of bonds that may have underperformed the market over the past six months. Accordingly, we have sold some of our longer term, lower rated holdings, including bonds issued by industrial development regions (IDRs) and health care facilities. We have attempted to invest the proceeds of these sales in shorter term bonds with greater protection from early redemptions. We have found such opportunities primarily among insured bonds that we believe will appeal to retail investors if and when the time comes to sell them. These changes in the fund's asset mix have modestly affected our duration management strategy. At about eight years as of April 30, the fund's average duration -- a measure of sensitivity to changing interest rates -- is slightly longer than it was when the reporting period began. May 15, 2000 (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 CHARGE 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 FOR NON-VIRGINIA RESIDENTS, 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 ANALYTICAL SERVICES, INC. The Fund FUND PERFORMANCE Comparison of change in value of $10,000 investment in Dreyfus Premier State Municipal Bond Fund, Virginia Series Class A shares and the Lehman Brothers Municipal Bond Index ((+)) SOURCE: LIPPER ANALYTICAL SERVICES, 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 STATE MUNICIPAL BOND FUND, VIRGINIA SERIES (THE "FUND") ON 8/1/91 (INCEPTION DATE) TO A $10,000 INVESTMENT MADE IN THE LEHMAN BROTHERS MUNICIPAL BOND INDEX (THE "INDEX") ON THAT DATE. FOR COMPARATIVE PURPOSES, THE VALUE OF THE INDEX ON 7/31/91 IS USED AS THE BEGINNING VALUE ON 8/1/91. ALL DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ARE REINVESTED. PERFORMANCE FOR CLASS B AND CLASS C SHARES WILL VARY FROM THE PERFORMANCE OF CLASS A SHARES SHOWN ABOVE DUE TO DIFFERENCES IN CHARGES AND EXPENSES. THE FUND INVESTS PRIMARILY IN VIRGINIA MUNICIPAL SECURITIES AND ITS PERFORMANCE SHOWN IN THE LINE GRAPH TAKES INTO ACCOUNT THE MAXIMUM INITIAL SALES CHARGE ON CLASS A SHARES AND ALL OTHER APPLICABLE FEES AND EXPENSES. THE INDEX IS NOT LIMITED TO INVESTMENTS PRINCIPALLY IN VIRGINIA MUNICIPAL OBLIGATIONS AND DOES NOT TAKE INTO ACCOUNT CHARGES, FEES AND OTHER EXPENSES. THE INDEX, UNLIKE THE FUND, 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. THESE FACTORS 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 4/30/00 Inception From Date 1 Year 5 Years Inception ------------------------------------------------------------------------------------------------------------------------------------ CLASS A SHARES WITH SALES CHARGE (4.5%) 8/1/91 (8.01)% 4.46% 6.08% WITHOUT SALES CHARGE 8/1/91 (3.65)% 5.43% 6.64% CLASS B SHARES WITH REDEMPTION((+)) 1/15/93 (7.86)% 4.55% 5.00% WITHOUT REDEMPTION 1/15/93 (4.21)% 4.88% 5.00% CLASS C SHARES WITH REDEMPTION((+)(+)) 8/15/95 (5.28)% -- 4.40% WITHOUT REDEMPTION 8/15/95 (4.37)% -- 4.40% PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. ((+)) THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 4% AND IS REDUCED TO 0% AFTER SIX YEARS, AT WHICH TIME CLASS B SHARES CONVERT TO CLASS A SHARES. ((+)(+)) 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, 2000 Principal LONG-TERM MUNICIPAL INVESTMENTS--92.4% Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ VIRGINIA--59.2% Alexandria Redevelopment and Housing Authority, Multi-Family Housing Mortgage Revenue (Buckingham Village Apartments) 6.125%, 7/1/2021 3,000,000 3,011,520 Beford County Industrial Development Authority, IDR (Nekossa Packaging Corp. Project) 5.60%, 12/1/2025 3,500,000 3,020,080 Chesapeake Bay Bridge and Tunnel Commission District, Revenue, General Resolution 5.50%, 7/1/2025 (Insured; MBIA) 2,500,000 2,415,550 Chesapeake Toll Road, Expressway Revenue 5.625%, 7/15/2019 1,250,000 1,179,837 Dinwiddie County Industrial Development Authority, LR (Dinwiddie County School Facilities Project) 6%, 2/1/2018 500,000 481,205 Dulles Town Center Community Development Authority, Special Assessment Tax (Dulles Town Center Project) 6.25%, 3/1/2026 3,000,000 2,793,240 Fairfax County Park Authority, Park Facilities Revenue 6.625%, 7/15/2020 2,665,000 2,710,332 Fairfax County Redevelopment and Housing Authority, MFHR (Paul Spring Retirement Center): 5.90%, 6/15/2017 (Insured; FHA) 200,000 196,810 6%, 12/15/2028 (Insured; FHA) 600,000 587,898 Fairfax County Water Authority, Water Revenue: 5.75%, 4/1/2029 (Prerefunded 4/1/2002) 1,525,000 (a) 1,552,541 5.75%, 4/1/2029 1,000,000 986,760 Hampton Redevelopment and Housing Authority, First Mortgage Revenue (Olde Hampton Hotel Associates Project) 6.50%, 7/1/2016 2,640,000 2,436,113 Industrial Development Authority of the City of Hopewell, Health Care Facility Revenue: (Colonial Heights Convalescent Center Project) 5.60%, 10/1/2003 205,000 201,505 (Forest Hill Convalescent Center Project): 6%, 10/1/2006 (Prerefunded 10/1/2002) 260,000 (a) 275,051 6.15%, 10/1/2007 (Prerefunded 10/1/2002) 280,000 (a) 297,158 6.25%, 10/1/2008 (Prerefunded 10/1/2002) 115,000 (a) 122,306 (Westport Convalescent Center Project): 5.90%, 10/1/2005 315,000 308,042 6.15%, 10/1/2007 175,000 170,765 6.25%, 10/1/2008 410,000 399,857 Industrial Development Authority of the County of Henrico, SWDR (Browning-Ferris Industries of South Atlantic, Inc. Project) 5.45%, 1/1/2014 3,500,000 2,897,685 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ VIRGINIA (CONTINUED) Industrial Development Authority of the County of Prince William, Revenue: Hospital Facility (Potomac Hospital Corp. of Prince William) 6.85%, 10/1/2025 (Prerefunded 10/1/2005) 1,000,000 (a) 1,102,960 (Potomac Place) 6.25%, 12/20/2027 700,000 718,438 Residential Care Facility (First Mortgage-Westminster Lake Ridge) 6.625%, 1/1/2026 1,500,000 1,429,755 Industrial Development Authority of the Town of West Point, SWDR (Chesapeake Corp. Project) 6.375%, 3/1/2019 2,500,000 2,349,975 Isle Wight County Industrial Development Authority, Solid Waste Disposal Facilities Revenue (Union Camp Corp. Project) 6.10%, 5/1/2027 3,500,000 3,327,135 Prince William County Park Authority, Revenue 6.875%, 10/15/2016 (Prerefunded 10/15/2004) 3,000,000 (a) 3,258,660 Richmond Metropolitan Authority, Expressway Revenue 5.25%, 7/15/2017 (Insured; FGIC) 3,100,000 2,959,446 Staunton Industrial Development Authority, Educational Facilities Revenue (Mary Baldwin College) 6.75%, 11/1/2021 3,145,000 3,170,223 University of Virginia, University Revenue 5.75%, 5/1/2021 1,325,000 1,309,868 Upper Occoquan Sewer Authority, Regional Sewer Revenue 5.15%, 7/1/2020 (Insured; MBIA) 2,000,000 1,853,820 Virginia Beach Development Authority, Revenue: Industrial Development Mortgage (Ramada Oceanside Resort) 8%, 8/1/2010 310,000 321,706 Nursing Home (Sentara Life Care Corp.) 7.75%, 11/1/2021 1,000,000 1,055,710 Virginia Housing Development Authority, Commonwealth Mortgage: 6.60%, 7/1/2020 1,075,000 1,086,191 5.50%, 1/1/2022 4,245,000 3,945,388 U. S. RELATED--33.2% Commonwealth of Puerto Rico (Public Improvement): 5.25%, 7/1/2015 (Insured; MBIA) 3,000,000 2,955,090 6.80%, 7/1/2021 (Prerefunded 7/1/2002) 1,000,000 (a) 1,059,720 6%, 7/1/2026 (Prerefunded 7/1/2007) 1,500,000 (a) 1,613,160 Guam Airport Authority, Revenue 6.70%, 10/1/2023 2,000,000 2,024,900 Puerto Rico Electric Power Authority, Power Revenue: 5%, 7/1/2012 (Insured; MBIA) 50,000 48,772 5.003%, 7/1/2012 3,000,000 (b,c) 2,852,730 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) ------------------------------------------------------------------------------------------------------------------------------------ U. S. RELATED (CONTINUED) Puerto Rico Highway and Transportation Authority, Highway Revenue: 5.50%, 7/1/2015 (Insured; MBIA) 20,000 20,276 6.003%, 7/1/2015 3,990,000 (b) 4,100,244 6.625%, 7/1/2018 (Prerefunded 7/1/2002) 2,000,000 (a) 2,112,280 Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority, Higher Education Revenue (Ana G. Mendez University System Project) 5.375%, 2/1/2019 1,500,000 1,344,600 Puerto Rico Ports Authority, Special Facilities Revenue (American Airlines) 6.25%, 6/1/2026 3,000,000 2,950,530 Virgin Islands Public Finance Authority, Revenue: Gross Receipts Taxes Loan Note 6.50%, 10/1/2024 3,000,000 3,022,650 Matching Fund Loan Notes 7.25%, 10/1/2018 (Prerefunded 10/1/2002) 4,000,000 (a) 4,317,360 Virgin Islands Water and Power Authority, Electric System 7.40%, 7/1/2011 (Prerefunded 7/1/2001) 1,780,000 (a) 1,854,974 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $85,888,369) 84,210,816 ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM MUNICIPAL INVESTMENT--7.3% ------------------------------------------------------------------------------------------------------------------------------------ VIRGINIA: Dinwidde County Industrial Development Authority, Exempt Facility Revenue (Chaparral East Project) VRDN 6.25% (LOC; Bank of America, NA) 1,400,000 (d) 1,400,000 King George Industrial Development Authority, Exempt Facility Revenue (Birchwood Power Partners Project) VRDN 6.20% (LOC; Credit Suisse) 3,300,000 (d) 3,300,000 Roanoke Industrial Development Authority, HR (Carilion Health System) VRDN 5.80% 2,000,000 (d) 2,000,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $6,700,000) 6,700,000 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $92,588,369) 99.7% 90,910,816 CASH AND RECEIVABLES (NET) .3% 260,505 NET ASSETS 100.0% 91,171,321 Summary of Abbreviations FGIC Financial Guaranty Insurance Company FHA Federal Housing Administration 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 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 30.4 AA Aa AA 9.2 A A A 3.3 BBB Baa BBB 29.7 BB B BB 3.2 F1 MIG1/P1 SP1/A1 7.4 Not Rated(e) Not Rated(e) Not Rated(e) 16.8 100.0 (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) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF 1933. THIS SECURITY MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT APRIL 30, 2000, THIS SECURITY AMOUNTED TO $2,852,730 OR 3.1% OF NET ASSETS. (D) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE -- SUBJECT TO PERIODIC CHANGE. (E) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF ASSETS AND LIABILITIES April 30, 2000 Cost Value -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 92,588,369 90,910,816 Interest receivable 1,551,037 Receivable for shares of Beneficial Interest subscribed 22,094 Prepaid expenses 7,502 92,491,449 ------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 70,833 Cash overdraft due to Custodian 1,154,682 Payable for shares of Beneficial Interest redeemed 65,720 Accrued expenses 28,893 1,320,128 -------------------------------------------------------------------------------- NET ASSETS ($) 91,171,321 -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 94,900,998 Accumulated net realized gain (loss) on investments (2,052,124) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (1,677,553) -------------------------------------------------------------------------------- NET ASSETS ($) 91,171,321 NET ASSET VALUE PER SHARE Class A Class B Class C ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 67,042,720 21,080,930 3,047,671 Shares Outstanding 4,233,148 1,331,354 192,545 ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 15.84 15.83 15.83 SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS Year Ended April 30, 2000 -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 5,976,871 EXPENSES: Management fee--Note 3(a) 540,481 Shareholder servicing costs--Note 3(c) 314,140 Distribution fees--Note 3(b) 151,739 Registration fees 30,648 Prospectus and shareholders' reports 23,443 Professional fees 20,302 Custodian fees 10,462 Trustees' fees and expenses--Note 3(d) 1,384 Loan commitment fees--Note 2 875 Miscellaneous 11,976 TOTAL EXPENSES 1,105,450 INVESTMENT INCOME--NET 4,871,421 -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4($): Net realized gain (loss) on investments (2,049,473) Net unrealized appreciation (depreciation) on investments (7,002,802) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (9,052,275) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,180,854) SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS Year Ended April 30, ------------------------------- 2000 1999 -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 4,871,421 5,023,622 Net realized gain (loss) on investments (2,049,473) 1,384,592 Net unrealized appreciation (depreciation) on investments (7,002,802) (350,457) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,180,854) 6,057,757 -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (3,555,627) (3,225,635) Class B shares (1,183,931) (1,688,611) Class C shares (131,863) (109,376) Net realized gain on investments: Class A shares (14,353) (884,913) Class B shares (4,898) (533,711) Class C shares (521) (37,805) TOTAL DIVIDENDS (4,891,193) (6,480,051) -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 13,520,146 12,134,539 Class B shares 2,450,891 4,716,025 Class C shares 1,029,974 1,520,409 Dividends reinvested: Class A shares 1,781,475 2,193,747 Class B shares 610,636 1,198,045 Class C shares 33,411 21,422 Cost of shares redeemed: Class A shares (13,581,470) (7,521,104) Class B shares (14,374,110) (10,983,245) Class C shares (939,870) (326,419) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (9,468,917) 2,953,419 TOTAL INCREASE (DECREASE) IN NET ASSETS (18,540,964) 2,531,125 -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 109,712,285 107,181,160 END OF PERIOD 91,171,321 109,712,285 SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, -------------------------------- 2000 1999 -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 819,840 694,996 Shares issued for dividends reinvested 110,040 125,125 Shares redeemed (834,478) (429,470) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 95,402 390,651 -------------------------------------------------------------------------------- CLASS B(A) Shares sold 149,838 269,387 Shares issued for dividends reinvested 37,644 68,334 Shares redeemed (873,486) (629,062) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (686,004) (291,341) -------------------------------------------------------------------------------- CLASS C Shares sold 64,286 86,730 Shares issued for dividends reinvested 2,071 1,224 Shares redeemed (58,119) (18,602) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 8,238 69,352 A DURING THE PERIOD ENDED APRIL 30, 2000, 471,244 CLASS B SHARES REPRESENTING $7,723,625 WERE AUTOMATICALLY CONVERTED TO 471,274 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Year Ended April 30, ----------------------------------------------------------- CLASS A SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 17.31 17.37 16.61 16.27 16.03 Investment Operations: Investment income--net .83 .85 .88 .94 .93 Net realized and unrealized gain (loss) on investments (1.47) .17 .76 .34 .24 Total from Investment Operations (.64) 1.02 1.64 1.28 1.17 Distributions: Dividends from investment income--net (.83) (.85) (.88) (.94) (.93) Dividends from net realized gain on investments (.00)(a) (.23) (.00)(a) -- -- Total Distributions (.83) (1.08) (.88) (.94) (.93) Net asset value, end of period 15.84 17.31 17.37 16.61 16.27 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (3.65) 5.98 10.05 8.02 7.32 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .97 .92 .75 .39 .50 Ratio of net investment income to average net assets 5.12 4.83 5.10 5.67 5.58 Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation -- -- .14 .55 .55 Portfolio Turnover Rate 31.63 30.19 21.25 45.29 50.06 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 67,043 71,612 65,086 61,099 61,149 (A) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE. (B) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. Year Ended April 30, ----------------------------------------------------------- CLASS B SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 17.31 17.37 16.60 16.27 16.03 Investment Operations: Investment income--net .75 .76 .79 .86 .84 Net realized and unrealized gain (loss) on investments (1.48) .17 .77 .33 .24 Total from Investment Operations (.73) .93 1.56 1.19 1.08 Distributions: Dividends from investment income--net (.75) (.76) (.79) (.86) (.84) Dividends from net realized gain on investments (.00)(a) (.23) (.00)(a) -- -- Total Distributions (.75) (.99) (.79) (.86) (.84) Net asset value, end of period 15.83 17.31 17.37 16.60 16.27 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (4.21) 5.44 9.56 7.41 6.77 ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.48 1.43 1.26 .90 1.01 Ratio of net investment income to average net assets 4.59 4.32 4.58 5.15 5.06 Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation -- -- .14 .55 .55 Portfolio Turnover Rate 31.63 30.19 21.25 45.29 50.06 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 21,081 34,912 40,100 35,787 33,120 (A) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE. (B) EXCLUSIVE OF SALES CHARGE. SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS (CONTINUED) The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Year Ended April 30, ----------------------------------------------------------- CLASS C SHARES 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 17.30 17.36 16.60 16.26 16.17 Investment Operations: Investment income--net .71 .72 .75 .81 .57 Net realized and unrealized gain (loss) on investments (1.47) .17 .76 .34 .09 Total from Investment Operations (.76) .89 1.51 1.15 .66 Distributions: Dividends from investment income--net (.71) (.72) (.75) (.81) (.57) Dividends from net realized gain on investments (.00)(b) (.23) (.00)(b) -- -- Total Distributions (.71) (.95) (.75) (.81) (.57) Net asset value, end of period 15.83 17.30 17.36 16.60 16.26 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(C) (4.37) 5.19 9.22 7.18 5.64(d) ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.70 1.66 1.54 1.17 1.21(d) Ratio of net investment income to average net assets 4.37 4.06 4.24 4.83 4.55(d) Decrease reflected in above expense ratios due to undertakings by The Dreyfus Corporation -- -- .11 .54 .52(d) Portfolio Turnover Rate 31.63 30.19 21.25 45.29 50.06 ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 3,048 3,188 1,996 674 166 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) AMOUNT REPRESENTS LESS THAN $.01 PER SHARE. (C) EXCLUSIVE OF SALES CHARGE. (D) ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company, and operates as a series company currently offering thirteen series including the Virginia Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A, which is a wholly-owned subsidiary of Mellon Financial Corporation. Effective March 22, 2000, Dreyfus Service Corporation ("DSC"), a wholly-owned subsidiary of the Manager, became the distributor of the fund's shares. Prior to March 22, 2000, Premier Mutual Fund Services, Inc. was the distributor. The fund is authorized to issue an unlimited number of $.001 par value shares in the following classes of shares: Class A, Class B and Class C shares. Class A shares are subject to a sales charge imposed at the time of purchase, Class B shares are subject to a contingent deferred sales charge ("CDSC") imposed on Class B share redemptions made within six years of purchase (five years for shareholders beneficially owning Class B shares on November 30, 1996) and Class C shares are subject to a CDSC imposed on Class C shares redeemed within one year of purchase. 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 Trust accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each fund are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis. The fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumption. Actual results could differ from those estimates. The Fund NOTES TO FINANCIAL STATEMENTS (CONTINUED) (a) Portfolio valuation: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund receives net earnings credits based on available cash balances left on deposit. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (c) Dividends to shareholders: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the " Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (d) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the 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 $423,000 available for Federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to April 30, 2000. This amount is calculated based on federal income tax regulations which may differ from financial reporting in accordance with generally accepted accounting principles. If not applied, the carryover expires in fiscal 2008. 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 at rates based on prevailing market rates in effect at the time of borrowings. During period ended April 30, 2000, 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 Manager had undertaken from May 1, 1999 to April 30, 2000 to reduce the management fee paid by the fund, to the extent that the fund' s aggregate expenses, exclusive of taxes, brokerage commission, interest on borrowings, Distribution Plan fees, commitment fees and extraordinary expenses, exceed an annual rate of 1% of the value of the fund's average daily net assets. DSC retained $3,983 during the period ended April 30, 2000, 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, 2000, Class B and Class C shares were charged $129,096 and $22,643, respectively, pursuant to the Plan, of which $11,684 and $2,501, for Class B and Class C shares, respectively, were paid to DSC. (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 their average daily net assets 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, 2000, Class A, Class B and Class C shares were charged $173,577, $64,548 and $7,548, respectively, pursuant to the Shareholder Services Plan, of which $18,411, $5,842 and $834, for Class A, Class B and Class C shares, respectively, were paid to DSC. 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, 2000, the fund was charged $47,416 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"). Effective April 13, 2000, each Board member receives an annual fee of $50,000 and a fee of $6,500 for each meeting held in person 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. Prior to April 13, 2000, each Board member who was not an "affiliated person" as defined in the Act received from the Trust an annual fee of $2,500 and an attendance fee of $250 per meeting. The Chairman of the Board received an additional 25% of such compensation. Subject to the fund' s Director Emeritus Program Guidelines, Emeritus Board members, if any, receive 50% of the Trust's annual retainer fee and per meeting fee paid at the time the Board member achieved 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, 2000, amounted to $30,163,494 and $45,944,296, respectively. At April 30, 2000, accumulated net unrealized depreciation on investments was $1,677,553, consisting of $1,601,749 gross unrealized appreciation and $3,279,302 gross unrealized depreciation. At April 30, 2000, 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). The Fund REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Trustees Dreyfus Premier State Municipal Bond Fund, Virginia Series We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Premier State Municipal Bond Fund, Virginia Series (one of the Funds constituting the Dreyfus Premier State Municipal Bond Fund) as of April 30, 2000 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 and the financial highlights. Our procedures included confirmation of securities owned as of April 30, 2000 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier State Municipal Bond Fund, Virginia Series at April 30, 2000, 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 9, 2000 IMPORTANT TAX INFORMATION (Unaudited) In accordance with Federal tax law, the fund hereby makes the following designations regarding its fiscal year ended April 30, 2000: -- all the dividends paid from investment income-net are "exempt -interest dividends" (not subject to regular Federal and, for individuals who are Virginia residents, Virginia personal income taxes), and 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 2000 calendar year on Form 1099-DIV which will be mailed by January 31, 2001. The Fund For More Information Dreyfus Premier State Municipal Bond Fund, Virginia Series 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 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) 2000 Dreyfus Service Corporation 066AR004 ================================================================================