-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GRiOLjsSCKCCn+8oDX3gSc4hJ7wtFqibpoIf5cazWRocu3bpQdkzOjreGRDpqCis tQHlCuWnNA8Kefl1Bg9TpQ== 0000806176-94-000004.txt : 19940701 0000806176-94-000004.hdr.sgml : 19940701 ACCESSION NUMBER: 0000806176-94-000004 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940430 FILED AS OF DATE: 19940628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREMIER STATE MUNICIPAL BOND FUND CENTRAL INDEX KEY: 0000806176 STANDARD INDUSTRIAL CLASSIFICATION: 0000 STATE OF INCORPORATION: MA FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04906 FILM NUMBER: 94536199 BUSINESS ADDRESS: STREET 1: 144 GENN CURTISS BLVD CITY: NUIONDALE STATE: NY ZIP: 11556 BUSINESS PHONE: 2129226805 FORMER COMPANY: FORMER CONFORMED NAME: PREMIER SERIES TAX EXEMPT BOND FUND DATE OF NAME CHANGE: 19870224 N-30D 1 ANNUAL REPORT PRESIDENT'S LETTER Dear Shareholder: As the annual reporting period for the Premier State Municipal Bond Fund, Massachusetts Series came to a close on April 30, 1994, the net asset value per share of Class A shares was $11.64, a decrease of approximately $.44 from the net asset value per share on April 30, 1993, adjusted for capital gain distributions. The net asset value per share for Class B shares was $11.63, a decrease of approximately $.45 from the net asset value per share on April 30, 1993, adjusted for capital gain distributions. During the reporting period, tax exempt dividends of approximately $.71 per share were paid by Class A shares, representing a distribution rate per share of 5.81%, based on the April 30, 1994 closing maximum offering price, adjusted for capital gain distributions. During the reporting period, tax exempt dividends of approximately $.64 per share were paid by Class B shares, representing a distribution rate per share of 5.51%, based on the April 30, 1994 closing net asset value per share, adjusted for capital gain distributions. We are pleased to inform you that all dividends paid from net investment income were exempt from Federal and State income taxes.* The Federal Reserve Board's actions to slow the rate of economic growth slightly, thereby forming a strategy to fight inflation in the future, caused the stock and bond markets to fall sharply in the first quarter of 1994. The Federal Reserve can stimulate or rein in the economy by lowering or increasing short-term interest rates, as it did with quarter point increases in its target for Federal Funds. The Federal Funds rate is the rate that banks charge each other for overnight loans and is currently adjusted to 4.0%. It is the main interest rate the Federal Reserve is using to influence economic activity, and it was increased four times. These increases were the first in five years, and at the time, the financial markets interpreted these moves as a sign that the Federal Reserve perceived incipient inflation that had eluded, or was contrary to, the views of many private economists and investors. Federal Reserve officials refuse to say precisely how much higher the Federal Funds target would have to be to bring down the nation's borrowing and spending so that the economy will grow at a rate that is considered neutral. A neutral growth rate is defined as the fastest rate possible without feeding inflation, and is believed to be the rate of growth equal to the economy's underlying capacity to produce goods and services. Currently, most economists think that rate is around 3%. Using unused factories and unemployed workers, it would be possible to temporarily grow faster the rate of total productive capacity. However, once the economy is operating at or near full capacity and full employment, inflation could pick up, demonstrated by rising prices for finished goods and by companies bidding up wages and prices for factory goods. The Federal Reserve is concerned with such an occurrence and is signaling that more increases in short-term rates could be on the way. If these increases materialize, they should slow economic growth, as companies and individuals pay more interest on their loans and mortgages and preempt an inflationary condition as a result. More immediately for investors, the Federal Reserve's stance means that those who have been weathering declining markets in the last few months may not be able to find comfort even if monthly inflation reports continue to show that current price increases are moderate, as was indicated by the latest round of figures. In the market, the prices of most Treasury, corporate and municipal securities have fallen and so have the net asset values of most fixed-income mutual funds. However, we believe the underlying fundamentals for municipals remain solid in spite of the potential negative tone of the overall bond market that could push yields higher. The overwhelming positive factor for tax exempts is limited new supply. Through April, gross issuance was 34% below the comparable period last year. Additionally, in June and July, a large amount of municipal bond investment will be returned to investors due to calls, refinancings and maturities. If much of these proceeds is reinvested into the market, it should provide the market with potential support. If this occurs, we think this can help provide a setting for municipals to be a strong relative performing sector within the fixed-income markets. The Commonwealth of Massachusetts, in spite of the negative effects of the recession and defense contract downsizing, has benefitted from the conservative fiscal policies of its well-received governor who has built up a rather large budget fund balance. Part of this surplus is expected to be used in this current fiscal year. The Commonwealth remains among the highest in personal income. During the first half of its fiscal year, the Series' total return benefited from the strong performance of the municipal market. Declining interest rates, an accommodative Federal Reserve Board policy, low price volatility, and a lackluster economy drove the municipal market to higher price valuations. However, as the economy began to pick up steam during the fourth quarter of 1993 and into the new year, a change in Federal Reserve policy and rising interest rates had a negative impact on the municipal market. Last year, when rates were reaching their cyclical lows, we altered our security selection strategy. Specifically, we elected not to chase the market, and began to conduct our business somewhat more defensively. While these actions limited performance during that period in 1993 when rates were still declining, they positioned the Fund more advantageously for the market decline which has occurred so far this year. As we stated in our previous report to shareholders, it was our intention to adopt a more defensive portfolio posture in order to reduce the volatility of the portfolio. In response, we reduced the Series' exposure to those bonds in the portfolio with the longest durations (price sensitivities) while maintaining the more defensive securities (i.e., pre-refunded bonds), and started building higher cash reserves. We still believe that a more defensive stance currently is warranted in view of the heightened degree of uncertainty about the near-term direction of the economy and inflation. Certainly, recent moves by the Federal Reserve to hike short-term interest rates provide enough of an impetus to maintain a cautious stance. The Federal Reserve generally acts in a series of moves rather than taking a one shot approach. While we increased our cash reserves, which are invested in tax exempt cash equivalent securities, in seeking to lessen the impact of rising rates on the Series, we are reluctant to keep too much cash on hand. Because of the restrictive investment choices in a State-specific portfolio, we are holding less cash reserves than we might maintain in a national fund. As mentioned previously, higher interest rates have severely curtailed the volume of new municipal securities so we have some concern about the potential periodic shortage of tax exempts if the financial markets stabilize and investors increase their level of purchases. Higher tax rates and the large number of bonds being retired currently lead us to believe that the potential demand for tax exempt securities is substantial, especially in those States with the highest tax structures. We have included a current statement of investments and recent financial statements for your review. We look forward to serving your investment needs in the future. Very truly yours, (Logo Signature) Richard J. Moynihan President May 24, 1994 New York, N.Y. *Some income may be subject to the Federal Alternative Minimum Tax for certain investors. PERFORMANCE COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN Premier STATE Municipal Bond Fund, MASSACHUSETTS SERIES Class A Shares AND THE lehman brothers municipal bond index Exhibit A $17,932 Lehman Brothers Municipal Bond Index* $15,731 Premier State Municipal Bond Fund Massachusetts Series (Class A Shares) In Dollars *Source: Lehman Brothers
AVERAGE ANNUAL TOTAL RETURN CLASS A CLASS B - --------------------------------------------------------- -------------------------------------------------------- % Return Reflecting % Return Applicable Contingent Reflecting % Return Deferred Sales % Return Without Maximum Initial Assuming No Charge Upon PERIODS ENDED 4/30/94 SALES CHARGE SALES CHARGE (4.5%) PERIODS ENDED 4/30/94 REDEMPTION REDEMPTION* - -------------------- ----------- ------------------ -------------------- --------- ---------------- 1 Year 2.08% (2.51)% 1 Year 1.44% (1.44)% 5 Year 8.37 7.39 From Inception (1/15/93) 4.64 2.36 From Inception (5/28/87) 7.47 6.76
Past performance is not predictive of future performance. Share price and investment return fluctuate and share price may be more or less than original cost upon redemption. The above graph compares a $10,000 investment made in Class A shares of Premier State Municipal Bond Fund, Massachusetts Series on 5/28/87 (Inception Date) to a $10,000 investment made in the Lehman Brothers Municipal Bond Index on that date. For comparative purposes the value of the Index on 5/31/87 is used as the beginning value on 5/28/87. All dividends and capital gain distributions are reinvested. Performance for Class B shares will differ from the results shown above due to difference in charges and expenses charged to that class. The Series invests primarily in Massachusetts municipal securities and its performance shown in the graph takes into account the maximum initial sales charge on Class A shares and all other applicable fees and expenses. Unlike the Series, the Lehman Brothers Municipal Bond Index is an unmanaged total return performance benchmark for the long-term, investment grade tax exempt bond market, calculated by using municipal bonds selected to be representative of the market. The Index does not take into account charges, fees and other expenses. Further information relating to Series performance, including expense reimbursements, if applicable, is contained in the Condensed Financial Information section of the Prospectus and elsewhere in this report. *Maximum contingent deferred sales charge for Class B shares is 3% and is reduced to 0% after five years. PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES STATEMENT OF INVESTMENTS APRIL 30, 1994 PRINCIPAL MUNICIPAL BONDS--100.0% AMOUNT VALUE ------------ ------------ MASSACHUSETTS--90.5% Boston, Revenue, Refunding (Boston City Hospital) 5.75%, 2/15/2023 (Insured; FHA) $ 1,500,000 $ 1,354,185 Boston Industrial Development Financing Authority, Sewer Facility Revenue (Harbor Electric Energy Co. Project) 7.375%, 5/15/2015.................. 2,500,000 2,607,950 Boston Water and Sewer Commission, Revenue: 7.875%, 11/1/1996....................................................... 295,000 324,432 7.875%, 11/1/2013....................................................... 605,000 660,370 7.10%, 11/1/2019 (Insured; MBIA, Prerefunded 11/1/1999)(a).............. 1,000,000 1,112,660 Leominster 7.50%, 4/1/2009 (Insured; MBIA).................................. 1,275,000 1,403,800 Lynn Water and Sewer Commission, General Revenue 7.25%, 12/1/2010 (Insured; MBIA) 1,000,000 1,127,920 Massachusetts Bay Transportation Authority: 7.625%, 3/1/2009 (Insured; FSA)......................................... 1,000,000 1,114,540 7.75%, 3/1/2011 (Insured; FSA).......................................... 1,000,000 1,118,880 7%, 3/1/2021............................................................ 1,000,000 1,122,310 8.173%, 3/1/2021 (b,c).................................................. 2,300,000 1,840,000 Massachusetts College Building Authority, Project Revenue 7.80%, 5/1/2016 (Insured; MBIA)......................................... 1,000,000 1,109,970 Massachusetts Commonwealth: 7.25%, 3/1/2000 (Insured; FGIC)......................................... 650,000 726,980 7.25%, 3/1/2009 (Insured; FGIC, Prerefunded 3/1/2000)(a)................ 350,000 391,073 7%, 8/1/2012............................................................ 1,850,000 1,962,831 Massachusetts Education Loan Authority, Education Loan Revenue 7.75%, 1/1/2008 (Insured; MBIA)......................................... 1,375,000 1,435,211 Massachusetts Health and Educational Facilities Authority, Revenue: (Berkshire Health Systems): 7.50%, 10/1/2008 (Insured; MBIA)...................................... 1,000,000 1,100,280 6.75%, 10/1/2019 (Insured; MBIA)...................................... 1,750,000 1,779,855 (Brigham and Womens Hospital) 6.75%, 7/1/2024........................... 1,000,000 1,023,180 (Capital Asset Program) 7.30%, 10/1/2018 (Insured; MBIA)................ 3,750,000 4,129,387 (Harvard University) 6.50%, 12/1/2007................................... 750,000 787,807 (Lahey Clinic Medical Center) 7.625%, 7/1/2018 (Insured; MBIA, Prerefunded 7/1/1998)(a).............................. 1,000,000 1,117,940 (Medical Center of Central Massachusetts) 7.10%, 7/1/2021............... 1,000,000 1,045,050 (New England Deaconess Hospital) 6.875%, 4/1/2022....................... 6,000,000 6,144,600 (Refunding - Milton Hospital) 7%, 7/1/2016 (Insured; MBIA).............. 2,050,000 2,186,099 (Salem Hospital) 7.25%, 7/1/2009 (Insured; MBIA)........................ 370,000 393,658 (South Shore Hospital) 7.50%, 7/1/2020 (Insured; MBIA, Prerefunded 7/1/2000)(a) 2,000,000 2,270,280 (Tufts University) 8.25%, 8/15/2018 (Insured; FGIC) (b)................. 2,000,000 1,758,800 (University Hospital) 7.25%, 7/1/2019 (Insured; MBIA)................... 2,750,000 2,986,748 (Winchester Hospital) 8.125%, 7/1/2014 (Prerefunded 7/1/1995)(a)........ 1,040,000 1,122,878 Massachusetts Housing Finance Agency, Housing Revenue: Multi-Family Residential 7.80%, 8/1/2022 (Insured; FHA)................. 1,500,000 1,517,880 Residential: 6.25%, 11/15/2012 (Collateralized; FNMA).............................. 1,600,000 1,582,640 8.50%, 8/1/2020....................................................... 1,225,000 1,282,759 8.40%, 8/1/2021....................................................... 500,000 516,270 PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1994 PRINCIPAL MUNICIPAL BONDS (CONTINUED) AMOUNT VALUE ------------ ------------ MASSACHUSETTS (CONTINUED) Massachusetts Housing Finance Agency, Housing Revenue (continued): Single Family: 7.80%, 12/1/2005...................................................... $ 1,000,000 $ 1,036,820 7.90%, 6/1/2014....................................................... 1,000,000 1,054,140 8.10%, 12/1/2021...................................................... 2,400,000 2,585,832 7.95%, 6/1/2023....................................................... 2,000,000 2,089,300 Massachusetts Industrial Finance Agency, Revenue: (Brandeis University) 6.80%, 10/1/2019 (Insured; MBIA).................. 500,000 514,900 (Brooks School) 5.95%, 7/1/2023......................................... 1,000,000 932,060 (Leonard Morse Hospital) 8%, 10/15/2014 (Prerefunded 10/15/1999)(a)..... 1,000,000 1,154,470 (Provider Lease Program) 8.75%, 7/15/2009............................... 695,000 745,763 (Refunding - Harvard Community Health) 8.125%, 10/1/2017................ 750,000 820,650 Massachusetts Municipal Wheelhouse Electric Co., Power Supply Systems Revenue: 8.75%, 7/1/2018......................................................... 3,430,000 3,866,639 6.125%, 7/1/2019........................................................ 1,200,000 1,150,188 Massachusetts Port Authority, Special Project Revenue (Harborside Hyatt) 10%, 3/1/2026........................................ 3,000,000 3,279,990 Massachusetts Water Resources Authority 7.625%, 4/1/2014 (Prerefunded 4/1/2000)(a) 750,000 852,705 New England Education Loan Marketing Corp., Refunding (Student Loan) 5.70%, 7/1/2005.......................................... 1,000,000 959,240 Somerville Housing Development Corp., Multi-Family Revenue, Refunding 7.50%, 1/1/2024 (Collateralized; FNMA).................................. 1,000,000 1,045,080 University of Lowell Building Authority 7.60%, 11/1/2010 (Insured; FSA)..... 750,000 828,435 U. S. RELATED--9.5% Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 1,500,000 1,517,640 Puerto Rico Commonwealth: 6.80%, 7/1/2021 (Prerefunded 7/1/2002)(a)............................... 1,000,000 1,110,320 Refunding 6%, 7/1/2014.................................................. 2,000,000 1,921,200 Puerto Rico Commonwealth Highway and Transportation Authority, Highway Revenue: 7.561%, 7/1/2009 (b).................................................... 1,000,000 862,500 7.661%, 7/1/2010 (b).................................................... 1,000,000 847,500 Puerto Rico Electric Power Authority, Power Revenue 8%, 7/1/2008............ 500,000 569,020 Virgin Islands Public Finance Authority, Revenue, Refunding 7.25%, 10/1/2018 1,000,000 1,063,790 ------------- TOTAL INVESTMENTS (cost $79,295,988)........................................ $82,967,405 ===========
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES SUMMARY OF ABBREVIATIONS FGIC Financial Guaranty Insurance Corporation FSA Financial Security Assurance FHA Federal Housing Administration MBIA Municipal Bond Insurance Association FNMA Federal National Mortgage Association
SUMMARY OF COMBINED RATINGS (UNAUDITED) FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE - --------- --------- -------------------- ----------------------- AAA Aaa AAA 43.2% AA Aa AA 11.0 A A A 31.8 BBB Baa BBB 6.5 Not Rated Not Rated Not Rated 7.5 ------ 100.0% ======
NOTES TO STATEMENT OF INVESTMENTS: (a) Bonds which are prerefunded are collateralized by U.S. Government securities which are held in escrow and are used to pay principal and interest on the tax-exempt issue and to retire the bonds full at the earliest refunding date. (b) Residual Interest security - the interest rate is subject to change periodically. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At April 30, 1994, this security amounted to $1,840,000 or 2.3% of net assets. (d) Fitch currently provides creditworthiness information for a limited number of investments. (e) At April 30, 1994, the Fund had $27,584,209 (34.2%) of net assets invested in securities whose payment of principal and interest is dependent upon revenues generated from health care projects. (f) At April 30, 1994, 30.4% of the Fund's net assets are insured by MBIA. See notes to financial statements. PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1994 ASSETS: Investments in securities, at value (cost $79,295,988)-see statement...................................... $82,967,405 Interest receivable..................................................... 1,559,770 Receivable for shares of Beneficial Interest subscribed................. 69,192 Prepaid expenses........................................................ 7,164 ----------- 84,603,531 LIABILITIES: Due to The Dreyfus Corporation.......................................... $ 51,555 Due to Custodian........................................................ 3,934,625 Payable for shares of Beneficial Interest redeemed...................... 27,087 Accrued expenses........................................................ 23,654 4,036,921 --------- --------- NET ASSETS ................................................................ $80,566,610 =========== REPRESENTED BY: Paid-in capital......................................................... $76,908,157 Accumulated distributions in excess of net realized gain on investments-Note 1(c) (12,964) Accumulated net unrealized appreciation on investments-Note 3........... 3,671,417 ----------- NET ASSETS at value......................................................... $80,566,610 =========== Shares of Beneficial Interest outstanding: Class A Shares (unlimited number of $.001 par value shares authorized)............... 6,605,322 =========== Class B Shares (unlimited number of $.001 par value shares authorized)............... 318,297 =========== NET ASSET VALUE per share: Class A Shares ($76,864,652 / 6,605,322 shares)...................................... $11.64 ====== Class B Shares ($3,701,958 / 318,297 shares)......................................... $11.63 ====== See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1994 INVESTMENT INCOME: INTEREST INCOME......................................................... $5,612,047 EXPENSES: Management fee--Note 2(a)............................................. $ 466,331 Shareholder servicing costs-Note 2(c)................................. 265,697 Prospectus and shareholders' reports.................................. 21,198 Distribution fees (Class B shares)-Note 2(b).......................... 13,123 Professional fees..................................................... 11,089 Custodian fees........................................................ 9,068 Registration fees..................................................... 4,727 Trustees' fees and expenses-Note 2(d)................................. 703 Miscellaneous......................................................... 11,393 ------------ 803,329 Less-reduction in management fee due to undertakings-Note 2(a)............................................ 95,389 ------------ TOTAL EXPENSES.................................................. 707,940 ---------- INVESTMENT INCOME--NET.......................................... 4,904,107 REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS: Net realized gain on investments--Note 3................................ $ 38,609 Net unrealized (depreciation) on investments............................ (3,301,993) ------------ NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (3,263,384) ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $1,640,723 ========== See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED APRIL 30, --------------------------------- 1993 1994 --------------- --------------- OPERATIONS: Investment income--net.................................................. $ 4,556,661 $ 4,904,107 Net realized gain on investments........................................ 537,446 38,609 Net unrealized appreciation (depreciation) on investments for the year.. 4,033,314 (3,301,993) ------------ ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. 9,127,421 1,640,723 ------------ ------------ DIVIDENDS TO SHAREHOLDERS FROM: Investment income--net: Class A shares........................................................ (4,549,010) (4,768,195) Class B shares........................................................ (7,651) (135,912) Net realized gain on investments: Class A shares........................................................ (56,938) (303,176) Class B shares........................................................ - (11,985) Excess net realized gain on investments: Class A shares........................................................ - (12,471) Class B shares........................................................ - (493) ------------ ------------ TOTAL DIVIDENDS................................................... (4,613,599) (5,232,232) ------------ ------------ BENEFICIAL INTEREST TRANSACTIONS: Net proceeds from shares sold: Class A shares........................................................ 12,873,702 6,515,438 Class B shares........................................................ 1,057,732 2,835,004 Dividends reinvested: Class A shares........................................................ 2,354,860 2,622,716 Class B shares........................................................ 2,601 68,991 Cost of shares redeemed: Class A shares........................................................ (6,908,497) (8,594,165) Class B shares........................................................ (150) (56,768) ------------ ------------ INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS...... 9,380,248 3,391,216 ------------ ------------ TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 13,894,070 (200,293) NET ASSETS: Beginning of year....................................................... 66,872,833 80,766,903 ------------ ------------ End of year............................................................. $80,766,903 $80,566,610 ============ ===========
SHARES ------------------------------------------------------------------- CLASS A CLASS B --------------------------------- ----------------------------- YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, --------------------------------- ----------------------------- 1993 1994 1993(1) 1994 -------- -------- -------- --------- CAPITAL SHARE TRANSACTIONS: Shares sold............................ 1,094,206 531,050 87,675 229,412 Shares issued for dividends reinvested. 199,322 214,378 215 5,666 Shares redeemed........................ (586,172) (710,422) (12) (4,659) -------- -------- -------- --------- NET INCREASE IN SHARES OUTSTANDING 707,356 35,006 87,878 230,419 ========= ========== ========= =========
* From January 15, 1993 (commencement of initial offering) to April 30, 1993. See notes to financial statements. PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES FINANCIAL HIGHLIGHTS Contained below is per share operating performance data for a share of Beneficial Interest outstanding, total investment return, ratios to average net assets and other supplemental data for each year indicated. This information has been derived from information provided in the Series' financial statements. CLASS A SHARES CLASS B SHARES ------------------------------------------ -------------------------- YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, ------------------------------------------ -------------------------- PER SHARE DATA: 1990 1991 1992 1993 1994 1993(1) 1994 ----- ------ ------ ----- ------ ------- ------- Net asset value, beginning of year.... $10.92 $10.69 $11.05 $11.41 $12.13 $11.79 $12.13 ----- ----- ------ ------ ------ ------ ------ INVESTMENT OPERATIONS: Investment income--net................ .82 .79 .75 .73 .71 .19 .64 Net realized and unrealized gain (loss) on investments...................... (.23) .37 .36 .73 (.44) .34 (.45) ----- ----- ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS .59 1.16 1.11 1.46 .27 .53 .19 ----- ----- ------ ------ ------ ------ ------ DISTRIBUTIONS: Dividends from investment income--net. (.82) (.79) (.75) (.73) (.71) (.19) (.64) Dividends from net realized gain on investments...................... - (.01) -- (.01) (.05) - (.05) Dividends from excess net realized gain on investments...................... - - - -- -- -- -- ----- ----- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS............. (.82) (.80) (.75) (.74) (.76) (.19) (.69) ----- ----- ------ ------ ------ ------ ------ Net asset value, end of year.......... $10.69 $11.05 $11.41 $12.13 $11.64 $12.13 $11.63 ====== ====== ====== ====== ======= ======= ====== TOTAL INVESTMENT RETURN (2)............... 5.49% 11.23% 10.32% 13.14% 2.08% 15.56%(3) 1.44% RATIOS/SUPPLEMENTAL DATA: Ratio of expenses to average net assets -- .19% .55% .69% .82% 1.15%(3) 1.36% Ratio of net investment income to average net assets.................. 7.40% 7.21% 6.65% 6.16% 5.80% 4.92%(3) 5.18% Decrease reflected in above expense ratios due to undertakings by the Manager...... 1.11% .78% .41% .24% .11% .13%(3) .10% Portfolio Turnover Rate............... 28.44% 47.07% 24.75% 11.36% 12.04% 11.36% 12.04% Net Assets, end of year (000's Omitted) $43,375 $57,328 $66,873 $79,701 $76,865 $1,066 $3,702
(1)From January 15, 1993 (commencement of initial offering) to April 30, 1993. (2)Exclusive of sales load. (3)Annualized. See notes to financial statements. PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES NOTES TO FINANCIAL STATEMENTS NOTE 1--SIGNIFICANT ACCOUNTING POLICIES: Premier State Municipal Bond Fund (the "Fund") is registered under the Investment Company Act of 1940 ("Act") as a non-diversified open-end management investment company and operates as a series company currently offering fifteen series including the Massachusetts Series (the "Series"). Dreyfus Service Corporation ("Distributor") acts as the distributor of the Fund's shares. The Distributor is a wholly-owned subsidiary of The Dreyfus Corporation ("Manager"). The Fund accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them. The Series offers both Class A and Class B shares. Class A shares are subject to a sales charge imposed at the time of purchase and Class B shares are subject to a contingent deferred sales charge imposed at the time of redemption on redemptions made within five years of purchase. Other differences between the two Classes include the services offered to and the expenses borne by each Class and certain voting rights. (A) PORTFOLIO VALUATION: The Series' investments (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices in the judgment of the Service are readily available and are representative of the bid side of the market 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, when appropriate, discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. The Series follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the Series. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the Series may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code. To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the Series not to distribute such gain. PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) Dividends in excess of net realized gains on investment for financial statement purposes result from current period wash sale loss deferrals and other losses from security transactions during the year ended April 30, 1994 which are treated for Federal income tax purposes as arising in fiscal 1995. (D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of income and net realized capital gain sufficient to relieve it from all, or substantially all, Federal income taxes. NOTE 2--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES: (A) Pursuant to a management agreement ("Agreement") with the Manager, the management fee is computed at the annual rate of .55 of 1% of the average daily value of the Series' net assets and is payable monthly. The Agreement provides for an expense reimbursement from the Manager should the Series' aggregate expenses, exclusive of taxes, brokerage, interest on borrowings and extraordinary expenses, exceed the expense limitation of any state having jurisdiction over the Series for any full fiscal year. However, the Manager had undertaken from May 1, 1993 through January 18, 1994 to reduce the management fee paid by the Series, to the extent that the Series' aggregate expenses (excluding certain expenses as described above) exceeded specified annual percentages of the Series' average daily net assets. The Manager has currently undertaken from January 19, 1994 through July 1, 1994, to waive receipt of the management fee payable to it by the Series in excess of an annual rate of .50 of 1% of the Series' average daily net assets. The reduction in management fee, pursuant to the undertakings, amounted to $95,389 for the year ended April 30, 1994. The undertaking may be modified by the Manager from time to time, provided that the resulting expense reimbursement would not be less than the amount required pursuant to the Agreement. The Distributor retained $14,298 during the year ended April 30, 1994 from commissions earned on sales of the Series' Class A shares. The Distributor retained $1,595 during the year ended April 30, 1994 from contingent deferred sales charges imposed upon redemptions of the Series' Class B shares. (B) Under the Distribution Plan ("Class B Distribution Plan") adopted pursuant to Rule 12b-1 under the Act, the Series pays the Distributor at an annual rate of .50 of 1% of the value of the Series' Class B shares average daily net assets, for the costs and expenses in connection with advertising, marketing and distributing the Series' Class B shares. The Distributor may make payments to one or more Service Agents (a securities dealer, financial institution, or other industry professional) based on the value of the Series' Class B shares owned by clients of the Service Agent. During the year ended April 30, 1994, $13,123 was charged to the Series pursuant to the Class B Distribution Plan. (C) Under the Shareholder Services Plan, the Series pays the Distributor, at an annual rate of .25 of 1% of the value of the average daily net assets of Class A and Class B shares for servicing shareholder accounts. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the Series and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Serv ice Agents in respect of these services. The Distributor determines the amounts to be paid to Service Agents. For the year ended April 30, 1994, $205,407 and $6,562 were charged to the Class A and Class B shares, respectively, pursuant to the Shareholder Services Plan. PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) (D) Certain officers and trustees of the Fund are "affiliated persons," as defined in the Act, of the Manager and/or the Distributor. Each trustee who is not an "affiliated person" receives from the Fund an annual fee of $2,500 and an attendance fee of $250 per meeting. (E) On December 5, 1993, the Manager entered into an Agreement and Plan of Merger (the "Merger Agreement") providing for the merger of the Manager with a subsidiary of Mellon Bank Corporation ("Mellon"). Following the merger, it is planned that the Manager will be a direct subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a number of contingencies, including receipt of certain regulatory approvals and approvals of the stockholders of the Manager and of Mellon. The merger is expected to occur in mid-1994, but could occur later. As a result of regulatory requirements and the terms of the Merger Agreement, the Manager will seek various approvals from the Fund's board and shareholders before completion of the merger. Shareholder approval will be solicited by a proxy statement. NOTE 3--SECURITIES TRANSACTIONS: Purchases and sales of securities amounted to $16,459,050 and $10,140,340, respectively, for the year ended April 30, 1994, and consisted entirely of municipal bonds. At April 30, 1994, accumulated net unrealized appreciation on investments was $3,671,417, consisting of $4,929,329 gross unrealized appreciation and $1,257,912 gross unrealized depreciation. At April 30, 1994, the cost of investments for Federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments). PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS SHAREHOLDERS AND BOARD OF TRUSTEES PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES We have audited the accompanying statement of assets and liabilities of Premier State Municipal Bond Fund, Massachusetts series (one of the Series constituting the Premier State Municipal Bond Fund), including the statement of investments, as of April 30, 1994, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and financial highlights for each of the years indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 1994 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Premier State Municipal Bond Fund, Massachusetts Series at April 30, 1994, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the indicated years, in conformity with generally accepted accounting principles. (Ernest and Young Signature Logo) New York, New York June 7, 1994 PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES IMPORTANT TAX INFORMATION (UNAUDITED) In accordance with Federal tax law, the Series hereby makes the following designations regarding its fiscal year ended April 30, 1994: - all the dividends paid from investment income-net are "exempt-interest dividends" (not subject to regular Federal, and for individuals who are Massachusetts residents, Massachusetts personal income taxes). - The portion of the $.0467 per share paid by the Series on December 8, 1993 representing a long-term capital gain distribution is $.0267 per share (96.53% of which is not subject to Massachusetts personal income tax.) As required by Federal tax law rules, shareholders will receive notification of their portion of the Series' taxable ordinary dividends (if any) and capital gain distributions (if any) paid for the 1994 calendar year on Form 1099-DIV which will be mailed by January 31, 1995. PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES 144 Glenn Curtiss Boulevard Uniondale, NY 11556 MANAGER The Dreyfus Corporation 200 Park Avenue New York, NY 10166 DISTRIBUTOR Dreyfus Service Corporation 200 Park Avenue New York, NY 10166 CUSTODIAN The Bank of New York 110 Washington Street New York, NY 10286 TRANSFER AGENT & DIVIDEND DISBURSING AGENT The Shareholder Services Group, Inc. P.O. Box 9671 Providence, RI 02940 Further information is contained in the Prospectus, which must precede or accompany this report. Printed in U.S.A. 063/AR944 Annual Report Premier State Municipal Bond Fund Massachusetts Series April 30, 1994 (Dreyfus Lion Logo) EX-99.A 2 GRAPH IN THE PRESIDENT'S LETTER COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PREMIER STATE MUNICIPAL BOND FUND, MASSACHUSETTS SERIES CLASS A SHARES AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX EXHIBIT A: ___________________________________________________ | | | | | | | PREMIER STATE | | PERIOD | LEHMAN BROTHERS |MUNICIPAL BOND FUND,| | | MUNICIPAL |MASSACHUSETTS SERIES| | | BOND INDEX * | CLASS A | |-----------|-----------------|--------------------| | 5/28/87 | 10,000 | 9,551 | | 4/30/88 | 10,929 | 9,403 | | 4/30/89 | 11,905 | 10,523 | | 4/30/90 | 12,763 | 11,100 | | 4/30/91 | 14,229 | 12,347 | | 4/30/92 | 15,582 | 13,621 | | 4/30/93 | 17,553 | 15,411 | | 4/30/94 | 17,932 | 15,731 | |--------------------------------------------------| -----END PRIVACY-ENHANCED MESSAGE-----