-----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, IOx1UOy2jhyFSj5O109pLqH1x7GcN1pDEoMRF2JdOcjIBhRyo4wyV5RaU+DFy6ge I8o1p7sseUlu6udnT40O3A== 0000806176-95-000024.txt : 199507030000806176-95-000024.hdr.sgml : 19950703 ACCESSION NUMBER: 0000806176-95-000024 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950430 FILED AS OF DATE: 19950630 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREMIER STATE MUNICIPAL BOND FUND CENTRAL INDEX KEY: 0000806176 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [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: 95551630 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 LETTER TO SHAREHOLDERS Dear Shareholder: As your Series' annual reporting period ended on April 30, 1995, the net asset value per share for Class A shares was $12.72. Income dividends of approximately $.704 per share were paid during the period, representing a distribution rate per share of 5.29% based on the April 30 closing maximum offering price. The net asset value for Class B shares was $12.71. Income dividends of approximately $.636 per share were paid, equating to a 5.00% distribution rate per share based on the April 30 closing net asset value. We are pleased to inform you that all dividends paid from net investment income were fully exempt from Federal and North Carolina State personal income taxes.* The last six months have seen a dramatic change in the behavior of bond market prices. Last November marked the bottom of a severe downtrend. The bellwether 30-year Treasury bond reached a high yield of 8.16% on November 7, after reaching yields as low as 6.17% in January of 1994. These yield adjustments were caused by a series of rate hikes by the Federal Reserve Board. The Fed took these measures to subdue an economy that seemed to be growing at an inflationary pace. As 1994 drew to a close, the bond market continued to exhibit volatility. Economic indicators showed the overall capacity utilization rate at 85.4%, a 15-year high, and consumer confidence near its five-year high. Both represented strong signs of growth to which the bond market reacted adversely. However, during the first quarter of 1995 signs of a slowdown started to take hold as the effect of higher interest rates set in. Existing home sales, new construction and auto sales weakened. More important, jobless claims rose along with inventories, indicating slowing sales. Many forecasters started to revise their expectations for economic growth, and a solid market rally took hold as the threat of inflation began to subside. By the end of the first calendar quarter of 1995, both the bond market and your Series had regained much of the ground lost in 1994. Since then, the first quarter Gross Domestic Product (GDP) report of 2.8% showed a significant drop from the fourth quarter level of 5.1%, and April nonfarm employment declined by 9,000 workers, which clearly turned some bond market skeptics into believers. This follow-through has seen the 30-year U.S. Treasury Bond dip below the 7% yield level to 6.90% as of May 16. There is now speculation in some market sectors about a possible Federal Reserve lowering of interest rates to avoid recession. Countering this theory are those who claim that these new lower interest-rate levels could actually stimulate the economy during the second half of 1995. The unexpected municipal market turnaround was largely fueled by a shortage of securities. This technical phenomenon, which exists in the equity market also, is pronounced in the tax exempt market where new bond issuance is off nearly 50%, and yields on existing municipals have achieved a historically rich status relative to Treasuries. Recent municipal bond trading and spread relations have corrected, a correction that is attributable mostly to the prospect of a Federal flat tax proposal. Such a proposal, if passed, could diminish the tax advantage municipal bonds enjoy by providing more, or total, tax exemption to other investments. A proposal of this kind is at the embryonic stage, and could go through many changes due to the political climate. As a result, we expect the final resolution of any change in our present tax structure to be many months away. The more immediate concern of investors seems to be the scarce municipal supply that is expected to continue. Currently, the estimated net supply of municipal debt in 1995 (estimated new issuance minus bond redemptions and coupon payments) is a negative $50 billion. The response of investors to unexpected domestic economic weakness ultimately supported the bond market and your Series; initial mixed signals, however, and continuous doubts about the dollar caused us to adopt and maintain a cautious market approach with the Series this year. This means that the Series' income orientation was emphasized, which was accomplished by holding, when possible, bonds that have coupons higher than what the current market offers. Additionally, any recent portfolio changes reflected what we believe were the best income opportunities and credit risk improvements available to us. As a balance to our defensive strategy, some non-callable bonds were added which have greater sensitivity to market moves. Our efforts to provide more tax-free income and lower volatility diminished, to some extent, the capital appreciation your Series might otherwise have been able to achieve during the market spike in the first quarter of 1995. We have included a current Statement of Investments and recent financial statements for your review, and look forward to serving your investment needs in the future. Sincerely, (Richard J. Moynihan Signature Logo) Richard J. Moynihan Director, Municipal Portfolio Management The Dreyfus Corporation May 17, 1995 New York, N.Y. * Some income may be subject to the Federal Alternative Minimum Tax (AMT) for certain shareholders. PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES APRIL 30, 1995 COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES CLASS A SHARES AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX (Exhibit A) In Dollars $13,175 Lehman Brothers Municipal Bond Index* $12,626 Premier State Municipal Bond Fund, North Carolina Series (Class A Shares) *Source: Lehman Brothers
AVERAGE ANNUAL TOTAL RETURNS CLASS A CLASS B - ------------------------------------------------------------ ---------------------------------------------------------- % Return Reflecting % Return Applicable Contingent Reflecting % Return Deferred Sales % Return Without Maximum Initial Assuming No Charge Upon Periods ended 4/30/95 Sales Charge Sales Charge (4.5%) Periods ended 4/30/95 Redemption Redemption* - --------------------- ---------------- ------------------- --------------------- ----------- ---------------------- 1 Year 5.70% .94% 1 Year 5.12% 2.12% From Inception (8/1/91) 7.74 6.42 From Inception (1/15/93) 4.45 3.63
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, North Carolina Series on 8/1/91 (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 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 shares will differ from the results shown above due to difference in charges and expenses charged to that class. The Series 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. Unlike the Series, the Lehman Brothers Municipal Bond Index is an unmanaged total return performance benchmark for the long-term, investment grade, geographically unrestricted tax exempt bond market, calculated by using municipal bonds selected to be representative of the market. The Index does not take into account charges, fees and other expenses. Also, unlike the Fund which principally limits investments to North Carolina municipal obligations, the Index is not state-specific. 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, NORTH CAROLINA SERIES STATEMENT OF INVESTMENTS APRIL 30, 1995 PRINCIPAL LONG-TERM MUNICIPAL INVESTMENTS-99.4% AMOUNT VALUE ------------ ------------ NORTH CAROLINA-73.2% Asheville, COP, Refunding 6.50%, 2/1/2008................................... $ 500,000 $ 527,575 Board of Governors of the University of North Carolina, Revenue (University of North Carolina Hospital - Chapel Hill) 6%, 2/15/2024..... 3,000,000 2,823,990 Buncombe County Metropolitan Sewage District, Sewage System Revenue: 6.75%, 7/1/2022 (Prerefunded; 7/1/2002) (a)............................. 500,000 556,610 Refunding 5.50%, 7/1/2022 (Insured; FGIC)............................... 1,125,000 1,047,105 Charlotte, COP (Convention Facility Project): 6.75%, 12/1/2021 (Prerefunded; 12/1/2001) (Insured; AMBAC) (a)......... 1,000,000 1,111,620 Refunding 5.25%, 12/1/2020 (Insured; AMBAC)............................. 4,000,000 3,581,120 Charlotte-Mecklenberg Hospital Authority, Health Care System Revenue: 5.75%, 1/1/2012......................................................... 1,285,000 1,256,602 6.25%, 1/1/2020......................................................... 500,000 503,935 Cleveland County, Sanitary District, Water 6.75%, 3/1/2015 (Insured; FGIC).. 290,000 308,351 Coastal Regional Solid Waste Management Authority, Solid Waste Disposal System Revenue 6.50%, 6/1/2008.......................................... 1,000,000 1,046,690 Craven County Industrial Facilities and Pollution Control Financing Authority, PCR Refunding (Weyerhaeuser Co. Project) 6.35%, 1/1/2010.................... 2,000,000 2,022,800 Dare County, COP 6.60%, 5/1/2006 (Insured; MBIA)............................ 400,000 431,256 Durham County, COP (Jail Facilities and Computer Equipment Project) 6.625%, 5/1/2014........................................................ 850,000 876,580 Fayetteville Public Works Commission, Revenue, Refunding 6.50%, 3/1/2014 (Prerefunded; 3/1/2000) (Insured; FGIC) (a)............ 350,000 378,595 Forsyth County, COP (1991 Allied Health Technologies Building Project) 6.50%, 6/1/2012......................................................... 300,000 312,798 Greensboro, COP (1991 Greensboro Coliseum Arena Expansion Project) 6.25%, 12/1/2011........................................................ 500,000 515,705 Haywood County, Industrial Facilities and PCR, Refunding (Champion International Corp. Project) 6.85%, 5/1/2014.................. 500,000 512,025 Martin County Industrial Facilities and Pollution Control Financing Authority, Revenue (Solid Waste Disposal - Weyerhaeuser Project): 7.25%, 9/1/2014....................................................... 400,000 420,424 6.80%, 5/1/2024....................................................... 2,000,000 2,059,300 New Hanover County Industrial Facilities and Pollution Control Financing Authority, Solid Waste Disposal Revenue (Occidental Petroleum) 6.50%, 8/1/2014..... 1,000,000 984,770 North Carolina Eastern Municipal Power Agency, Power System Revenue 5.75%, 12/1/2016........................................................ 1,865,000 1,666,098 PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995 PRINCIPAL LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE ------------- ------------- NORTH CAROLINA (CONTINUED) North Carolina Eastern Municipal Power Agency, Power System Revenue (continued): Refunding: 5.875%, 1/1/2013...................................................... $ 5,000,000 $ 4,604,950 6%, 1/1/2013.......................................................... 2,500,000 2,349,525 6.50%, 1/1/2017....................................................... 1,000,000 985,040 North Carolina Educational Facilities Finance Agency, Revenue (Duke University Project) 6.75%, 10/1/2021.............................. 500,000 521,800 North Carolina Housing Finance Agency: Multi-Family Revenue, Refunding 6.90%, 7/1/2024 (Insured: FHA).......... 485,000 496,839 Single Family Revenue: 7.05%, 9/1/2020....................................................... 1,465,000 1,513,389 6.10%, 9/1/2025 (Insured; FHA)........................................ 4,000,000 4,081,640 6.70%, 9/1/2026....................................................... 2,250,000 2,272,162 North Carolina Medical Care Commission, HR: (Annie Penn Memorial Hospital Project) 7.50%, 8/15/2021................. 4,500,000 4,565,655 (Duke University Hospital Project) 7%, 6/1/2021 (Prerefunded; 6/1/2001) (a) 3,000,000 3,349,260 (Presbyterian Hospital Project) 7.375%, 10/1/2020 (Prerefunded; 10/1/2000) (a) 250,000 282,100 Refunding: (Carolina Medicorp Project) 5.50%, 5/1/2015........................... 500,000 465,595 (Mercy Hospital Project) 6.50%, 8/1/2015.............................. 1,000,000 996,520 (North Carolina Baptist Hospital Project) 6%, 6/1/2022................ 1,000,000 981,560 (Southeastern General Hospital Project) Zero Coupon, 6/1/2006 (Insured; FSA) 1,000,000 541,940 North Carolina Municipal Power Agency, Number 1 Catawba Electric Revenue: 7%, 1/1/1996............................................................ 200,000 205,372 5%, 1/1/2015............................................................ 1,000,000 834,690 5.75%, 1/1/2015......................................................... 6,250,000 5,733,000 5.75%, 1/1/2020 (Insured; MBIA)......................................... 2,000,000 1,903,760 Pitt County, Revenue (Pitt County Memorial Hospital) 6.90%, 12/1/2021....... 540,000 566,676 Surry County Northern Hospital District, Health Care Facilities Revenue, Refunding 7.875%, 10/1/2021....................................................... 1,000,000 1,032,450 Wake County, Hospital System Revenue, Refunding: Zero Coupon, 10/1/2010 (Insured; MBIA).................................. 2,200,000 885,192 5.125%, 10/1/2026 (Insured; MBIA)....................................... 3,250,000 2,821,130 Wake County Industrial Facilities and Pollution Control Financing Authority, Revenue (Carolina Power and Light) 6.90%, 4/1/2009.............................. 2,000,000 2,088,980 U.S. RELATED-26.2% Guam Airport Authority, Revenue 6.70%, 10/1/2023............................ 2,000,000 2,025,280 Guam Government 5.40%, 11/15/2018........................................... 2,000,000 1,698,240 PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES STATEMENT OF INVESTMENTS (CONTINUED) APRIL 30, 1995 PRINCIPAL LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) AMOUNT VALUE ------------- ------------- U.S. RELATED (CONTINUED) Commonwealth of Puerto Rico: Public Improvement: 7.70%, 7/1/2020 (Prerefunded; 7/1/2000) (a)........................... $ 1,000,000 $ 1,143,080 6.80%, 7/1/2021 (Prerefunded; 7/1/2002) (a)........................... 600,000 667,626 Refunding 5.50%, 7/1/2013............................................... 2,000,000 1,852,540 Puerto Rico Highway Authority, Revenue, Refunding 8%, 7/1/2003 (Prerefunded; 7/1/1998) (a)................................ 2,000,000 2,229,380 Puerto Rico Highway and Transportation Authority, Highway Revenue 6.625%, 7/1/2018 (Prerefunded 7/1/2002) (a)............................. 3,600,000 3,968,280 Puerto Rico Port Authority, Special Facilities Revenue (American Airlines, Inc. Project) 6.30%, 6/1/2023....................... 1,500,000 1,418,970 Puerto Rico Public Buildings Authority, Guaranteed Public Education and Health Facilities, Refunding: 6%, 7/1/2012.......................................................... 850,000 832,974 5.75%, 7/1/2015....................................................... 7,000,000 6,616,330 Virgin Islands Public Finance Authority, Revenue, Refunding, Matching Fund Loan Notes 7.25%, 10/1/2018............................... 1,500,000 1,550,505 ------------- TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $92,201,710)...................................................... $91,026,379 ============= SHORT-TERM MUNICIPAL INVESTMENT-.6% NORTH CAROLINA; North Carolina Educational Facilities Finance Agency , Revenue, VRDN (Bowman Grey School Medical Project) 4.60% (LOC; Wachovia Bank) (b,c) (cost $500,000)......................................................... $ 500,000 $ 500,000 ============= TOTAL INVESTMENTS-100.0% (cost $92,701,710)...................................................... $91,526,379 =============
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES SUMMARY OF ABBREVIATIONS AMBAC American Municipal Bond Assurance Corporation LOC Letter of Credit COP Certificate of Participation MBIA Municipal Bond Investors Assurance FGIC Financial Guaranty Insurance Company Insurance Corporation FHA Federal Housing Administration PCR Pollution Control Revenue FSA Financial Security Assurance VRDN Variable Rate Demand Notes HR Hospital Revenue
SUMMARY OF COMBINED RATINGS (UNAUDITED) FITCH (D) OR MOODY'S OR STANDARD & POOR'S PERCENTAGE OF VALUE - -------- -------- ------------------ ------------------- AAA Aaa AAA 27.8% AA Aa AA 18.8 A A A 37.8 BBB Baa BBB 13.4 F1 MIG1 SP1 .5 Not Rated (e) Not Rated (e) Not Rated (e) 1.7 ------- 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 municipal issue and to retire the bonds in full at the earliest refunding date. (b) Secured by letters of credit. (c) Securities payable on demand. The interest rate, which is subject to change, is based upon bank prime rates or an index of market interest rates. (d) Fitch currently provides creditworthiness information for a limited number of investments. (e) Securities which, while not rated by Fitch, Moody's or Standard and 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.
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1995 ASSETS: Investments in securities, at value (cost $92,701,710)-see statement...................................... $91,526,379 Interest receivable..................................................... 1,687,856 Receivable for shares of Beneficial Interest subscribed................. 54,021 Prepaid expenses........................................................ 7,108 ----------- 93,275,364 LIABILITIES: Due to The Dreyfus Corporation.......................................... $ 22,973 Due to Distributor...................................................... 36,898 Due to Custodian........................................................ 589,674 Payable for shares of Beneficial Interest redeemed...................... 63,957 Accrued expenses........................................................ 47,104 760,606 ---------- ----------- NET ASSETS ................................................................ $92,514,758 =========== REPRESENTED BY: Paid-in capital......................................................... $96,294,013 Accumulated net realized (loss) on investments.......................... (2,603,924) Accumulated net unrealized (depreciation) on investments-Note 3(b)...... (1,175,331) ----------- NET ASSETS at value......................................................... $92,514,758 =========== Shares of Beneficial Interest outstanding: Class A Shares (unlimited number of $.001 par value shares authorized)............... 3,945,385 =========== Class B Shares (unlimited number of $.001 par value shares authorized)............... 3,327,642 =========== NET ASSET VALUE per share: Class A Shares ($50,204,678 / 3,945,385 shares)...................................... $12.72 ====== Class B Shares ($42,310,080 / 3,327,642 shares)...................................... $12.71 ====== See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES STATEMENT OF OPERATIONS YEAR ENDED APRIL 30, 1995 INVESTMENT INCOME: INTEREST INCOME......................................................... $ 6,103,845 EXPENSES: Management fee-Note 2(a).............................................. $ 535,236 Shareholder servicing costs-Note 2(c)................................. 319,198 Distribution fees (Class B shares)-Note 2(b).......................... 199,899 Custodian fees........................................................ 14,145 Professional fees..................................................... 13,948 Prospectus and shareholders' reports.................................. 12,560 Registration fees..................................................... 961 Trustees' fees and expenses-Note 2(d)................................. 826 Miscellaneous......................................................... 45,664 ----------- 1,142,437 Less-reduction in management fee due to undertakings-Note 2(a)............................................ 297,996 ----------- TOTAL EXPENSES.................................................. 844,441 ----------- INVESTMENT INCOME-NET........................................... 5,259,404 ----------- REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS: Net realized (loss) on investments (including options transactions)-Note 3(a) $(2,391,318) Net realized gain on financial futures-Note 3(a)........................ 48,742 ----------- NET REALIZED (LOSS)................................................... (2,342,576) Net unrealized appreciation on investments.............................. 2,019,925 ----------- NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (322,651) ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 4,936,753 =========== See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED APRIL 30, -------------------------------- 1994 1995 -------------- -------------- OPERATIONS: Investment income-net................................................... $ 5,023,340 $ 5,259,404 Net realized (loss) on investments...................................... (259,519) (2,342,576) Net unrealized appreciation (depreciation) on investments for the year.. (6,321,383) 2,019,925 -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS... (1,557,562) 4,936,753 -------------- -------------- DIVIDENDS TO SHAREHOLDERS FROM; Investment income-net: Class A shares........................................................ (3,507,400) (3,229,769) Class B shares........................................................ (1,515,940) (2,029,635) -------------- -------------- TOTAL DIVIDENDS................................................... (5,023,340) (5,259,404) -------------- -------------- BENEFICIAL INTEREST TRANSACTIONS: Net proceeds from shares sold: Class A shares........................................................ 23,248,700 3,792,421 Class B shares........................................................ 28,953,805 5,258,725 Dividends reinvested: Class A shares........................................................ 1,920,032 1,700,541 Class B shares........................................................ 941,663 1,251,870 Cost of shares redeemed: Class A shares........................................................ (9,403,883) (23,036,441) Class B shares........................................................ (1,465,324) (3,172,359) -------------- -------------- INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS................................ 44,194,993 (14,205,243) -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS......................... 37,614,091 (14,527,894) NET ASSETS: Beginning of year....................................................... 69,428,561 107,042,652 -------------- -------------- End of year............................................................. $107,042,652 $ 92,514,758 ============== ==============
SHARES --------------------------------------------------------------------- CLASS A CLASS B --------------------------------- -------------------------------- YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, --------------------------------- -------------------------------- 1994 1995 1994 1995 --------------- -------------- -------------- -------------- CAPITAL SHARE TRANSACTIONS: Shares sold............................ 1,697,042 302,337 2,120,383 420,696 Shares issued for dividends reinvested. 141,385 135,607 69,404 100,207 Shares redeemed........................ (691,793) (1,840,173) (108,062) (256,909) --------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN SHARES OUTSTANDING.......... 1,146,634 (1,402,229) 2,081,725 263,994 =============== ============== ============== ============== See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES FINANCIAL HIGHLIGHTS Contained below is per share operating performance data for a share of Beneficial Interest outstanding, total investment return, ratios to average net assets and other supplemental data for each year indicated. This information has been derived from the Series' financial statements. CLASS A SHARES CLASS B SHARES ------------------------------------ -------------------------- YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, ------------------------------------ -------------------------- PER SHARE DATA: 1992(1) 1993 1994 1995 1993(2) 1994 1995 ------ ------ ------ ------ ------ ------ ------ Net asset value, beginning of year........ $12.00 $12.39 $13.40 $12.73 $12.90 $13.39 $12.72 ------ ------ ------ ------ ------ ------ ------ INVESTMENT OPERATIONS: Investment income-net..................... .62 .78 .74 .70 .20 .66 .64 Net realized and unrealized gain (loss) on investments.......................... .39 1.02 (.67) (.01) .49 (.67) (.01) ------ ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS........ 1.01 1.80 .07 .69 .69 (.01) .63 ------ ------ ------ ------ ------ ------ ------ DISTRIBUTIONS: Dividends from investment income-net...... (.62) (.78) (.74) (.70) (.20) (.66) (.64) Dividends from net realized gain on investments - (.01) - - - - - ------ ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS..................... (.62) (.79) (.74) (.70) (.20) (.66) (.64) ------ ------ ------ ------ ------ ------ ------ Net asset value, end of year.............. $12.39 $13.40 $12.73 $12.72 $13.39 $12.72 $12.71 ====== ====== ====== ====== ====== ====== ====== TOTAL INVESTMENT RETURN (3)................... 11.36%(4) 14.97% .29% 5.70% 18.53%(4) (.27%) 5.12% RATIOS/SUPPLEMENTAL DATA: Ratio of expenses to average net assets... - .29% .44% .65% .79%(4) 1.00% 1.18% Ratio of net investment income to average net assets...................... 6.35%(4) 5.94% 5.38% 5.63% 4.47%(4) 4.78% 5.08% Decrease reflected in above expense ratios due to undertakings by the Manager...... 1.14%(4) .76% .50% .31% .56%(4) .48% .30% Portfolio Turnover Rate................... 15.01%(5) 5.76% 11.62% 12.02% 5.76% 11.62% 12.02% Net Assets, end of year (000's Omitted)... $26,387 $56,284 $68,074 $50,205 $13,145 $38,968 $42,310 (1) From August 1, 1991 (commencement of operations) to April 30, 1992. (2) From January 15, 1993 (commencement of initial offering) to April 30, 1993. (3) Exclusive of sales load. (4) Annualized. (5) Not annualized. See notes to financial statements.
PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA 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 North Carolina Series (the "Series"). Dreyfus Service Corporation, until August 24, 1994, acted as the distributor of the Fund's shares. Dreyfus Service Corporation is a wholly-owned subsidiary of The Dreyfus Corporation ("Manager"). Effective August 24, 1994, the Manager became a direct subsidiary of Mellon Bank, N.A. On August 24, 1994, Premier Mutual Fund Services, Inc. (the "Distributor") was engaged as the Fund's distributor. The Distributor, located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned subsidiary of FDI Distribution Services, Inc., a provider of mutual fund administration services, which in turn is a wholly-owned subsidiary of FDI Holdings, Inc., the parent company of which is Boston Institutional Group, Inc. The Fund accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis. The Series 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 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 issued 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. PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Series to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain, if any, are normally declared and paid annually, but the Series may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code. To the extent that net realized capital gain can be offset by capital loss carryovers, it is the policy of the Series not to distribute such gain. (D) FEDERAL INCOME TAXES: It is the policy of the Series to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Internal Revenue Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. The Fund has an unused capital loss carryover of approximately $1,533,000 available for Federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to April 30, 1995. The carryover does not include net realized securities losses from November 1, 1994 through April 30, 1995 which are treated, for Federal income tax purposes, as arising in fiscal 1996. If not applied, $225,000 of the carryover expires in fiscal 2002 and $1,308,000 of the carryover expires in fiscal 2003. 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, 1994 through June 30, 1994 to waive receipt of the management fee payable to it by the Series in excess of an annual rate of .20 of 1% (excluding certain expenses as described above) of the Series' average daily net assets and thereafter, had undertaken through April 30, 1995 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 reduction in management fee, pursuant to the undertakings, amounted to $297,996 for the year ended April 30, 1995. Dreyfus Service Corporation retained $5,095 during the year ended April 30, 1995 from commissions earned on sales of the Series' Class A shares. Prior to August 24, 1994, Dreyfus Service Corporation retained $13,979 during the year ended April 30, 1995 from contingent deferred sales charges imposed upon redemptions of the Series' Class B shares. (B) On August 3, 1994, Series shareholders approved a revised Distribution Plan with respect to Class B shares only (the "Class B Distribution Plan") pursuant to Rule 12b-1 under the Act. Pursuant to the Class B Distribution Plan, effective August 24, 1994, the Fund pays the Distributor for distributing the Series' Class B shares at an annual rate of .50 of 1% of the value of the average daily net assets of Class B shares. Prior to August 24, 1994, the Distribution Plan ("prior Class B Distribution Plan") provided that the Series pays Dreyfus Service Corporation 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. Dreyfus Service Corporation made payments to one or more Service Agents based on the value of the Series' Class B shares owned by clients of the Service Agents. PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) During the year ended April 30, 1995, $136,431 was charged to the Series pursuant to the Class B Distribution Plan and $63,468 was charged to the Series pursuant to the prior Class B Distribution Plan. (C) Under the Shareholder Service 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 service provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the Series and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents in respect of these services. The Distributor determines the amounts to be paid to Service Agents. From May 1, 1994 through August 23, 1994, $52,956 and $31,456 were charged to Class A and Class B shares, respectively, by Dreyfus Service Corpor ation. From August 24, 1994 through April 30, 1995, $90,383 and $68,494 were charged to Class A and Class B shares, respectively, by the Distributor pursuant to the Shareholder Services Plan. (D) Prior to August 24, 1994, certain officers and trustees of the Fund were "affiliated persons," as defined in the Act, of the Manager and/or Dreyfus Service Corporation. 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. The Chairman of the Board receives an additional 25% of such compensation. NOTE 3-SECURITIES TRANSACTIONS: (A) The aggregate amount of purchases and sales of investment securities, excluding options transactions, amounted to $20,683,385 and $31,587,918, respectively, for the year ended April 30, 1995, and consisted entirely of long-term and short-term municipal investments. In addition, the following table summarizes the Series' call/put options written transactions for the year ended April 30, 1995:
OPTIONS TERMINATED -------------------------- NET NUMBER OF PREMIUMS REALIZED CONTRACTS RECEIVED COST GAIN ----------- ----------- ----------- ----------- OPTIONS WRITTEN: Contracts outstanding April 30, 1994........ - - Contracts written........................... 250 $ 172,627 ----------- ----------- 250 172,627 Contracts Terminated; Expired................................... 250 172,627 - $172,627 ----------- ----------- ----------- ----------- Total contracts terminated................ 250 $ 172,627 $172,627 ----------- ----------- ----------- ----------- Contracts outstanding April 30, 1995........ - - =========== ===========
As a writer of call options, the Series receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the Series would incur a gain, to the extent of the premium, if the price of the underlying financial instrument decreases between the date the option is written and the date on which the option is terminated. PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) Generally, the Series would realize a loss, if the price of the financial instrument increases between those dates. At April 30, 1995, there were no call options written outstanding. As a writer of put options, the Series receives a premium at the outset and then bears the market risk of unfavorable changes in the price of the financial instrument underlying the option. Generally, the Series would incur a gain, to the extent of the premium, if the price of the underlying financial instrument increases between the date the option is written and the date on which the option is terminated. Generally, the Series would realize a loss, if the price of the financial instrument declines between those dates. At April 30, 1995, there were no put options written outstanding. The Series engages in trading financial futures contracts. The Series is exposed to market risk as a result of changes in the value of the underlying financial instruments. Investments in financial futures require the Series to "mark to market" on a daily basis, which reflects the change in the market value of the contract at the close of each day's trading. Accordingly, variation margin payments are received to reflect daily unrealized gains or losses. When the contracts are closed, the Series recognizes a realized gain or loss. These investments require initial margin deposits with a custodian, which consist of cash or cash equivalents, up to approximately 10% of the contract amount. The amount of these deposits is determined by the exchange or Board of Trade on which the contract is traded and is subject to change. At April 30, 1995, there were no financial futures contracts outstanding. (B) At April 30, 1995, accumulated net unrealized depreciation on investments was $1,175,331, consisting of $1,842,605 gross unrealized appreciation and $3,017,936 gross unrealized depreciation. At April 30, 1995, 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, NORTH CAROLINA SERIES REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS SHAREHOLDERS AND BOARD OF TRUSTEES PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Premier State Municipal Bond Fund, North Carolina Series (one of the Series constituting the Premier State Municipal Bond Fund) as of April 30, 1995, 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, 1995 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, North Carolina Series at April 30, 1995, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the indicated years, in conformity with generally accepted accounting principles. (Ernst & Young Signature Logo) New York, New York June 6, 1995 IMPORTANT TAX INFORMATION (UNAUDITED) In accordance with Federal tax law, the Series hereby designates all the dividends paid from investment income-net during the fiscal year ended April 30, 1995 as "exempt-interest dividends" (not subject to regular Federal and, for individuals who are North Carolina residents, North Carolina personal income taxes). As required by Federal tax law rules, shareholders will receive notification of their portion of the Series' taxable ordinary dividends (if any) and capital gain distributions (if any) paid for the 1995 calendar year on Form 1099-DIV which will be mailed by January 31, 1996. 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 90 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. 065/624AR954 Annual Report PREMIER STATE MUNICIPAL BOND FUND NORTH CAROLINA SERIES April 30, 1995 (Dreyfus Logo) EX-99 2 TABLE FOR GRAPH IN PRESIDENT'S LETTER COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PREMIER STATE MUNICIPAL BOND FUND, NORTH CAROLINA SERIES CLASS A SHARES AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX EXHIBIT A: ____________________________________________________ | | | PREMIER STATE | | | LEHMAN BROTHERS |MUNICIPAL BOND FUND, | | PERIOD | MUNICIPAL |NORTH CAROLINA SERIES| | | BOND INDEX * | (CLASS A SHARES) | |-----------|-----------------|---------------------| | 8/1/91 | 10,000 | 9,547 | | 4/30/92 | 10,734 | 10,360 | | 4/30/93 | 12,092 | 11,911 | | 4/30/94 | 12,353 | 11,945 | | 4/30/95 | 13,175 | 12,626 | |---------------------------------------------------| *Source: Lehman Brothers -----END PRIVACY-ENHANCED MESSAGE-----