-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AFh65Lx7uT9MnzPh3VOrW4z4RIf0JCAJeRsL2eTCu803qpiNJES7hMeISTQ0bbPN Gml3D5I5FA52p9FvnzZnFQ== 0000806176-98-000020.txt : 19980703 0000806176-98-000020.hdr.sgml : 19980703 ACCESSION NUMBER: 0000806176-98-000020 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980430 FILED AS OF DATE: 19980702 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DREYFUS PREMIER STATE MUNICIPAL BOND FUND CENTRAL INDEX KEY: 0000806176 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MD FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-04906 FILM NUMBER: 98659608 BUSINESS ADDRESS: STREET 1: 144 GENN CURTISS BLVD CITY: NUIONDALE STATE: NY ZIP: 11556 BUSINESS PHONE: 2129226805 MAIL ADDRESS: STREET 1: 144 GENN CURTISS BLVD CITY: NUIONDALE STATE: NY ZIP: 11556 FORMER COMPANY: FORMER CONFORMED NAME: PREMIER STATE MUNICIPAL BOND FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: PREMIER SERIES TAX EXEMPT BOND FUND DATE OF NAME CHANGE: 19870224 N-30D 1 ANNUAL REPORT Annual Report --------------------- Dreyfus Premier State Municipal Bond Fund Michigan Series --------------------- April 30, 1998 [Lion Logo] Dreyfus Premier State Municipal Bond Fund, Michigan Series - -------------------------------------------------------------------------------- Letter to Shareholders Dear Shareholder: We are pleased to report the performance for the Dreyfus Premier State Municipal Bond Fund -- Michigan Series for the 12-month period ended April 30, 1998, as shown in the following table: Total Return* Distribution Rate** ------------ ----------------- Class A shares 8.55% 4.88% Class B shares 8.08% 4.60% Class C shares 7.70% 4.32% Economic Review The United States is now in its eighth year of economic expansion. Inflation continues to rise at the slowest pace since 1964, and the unemployment rate has fallen to a level not seen in 25 years. Not surprisingly, consumer confidence has soared. Along with continued evidence of the robustness of the economy have come heightened expectations that the Federal Reserve Board (the "Fed") might raise interest rates in a preemptive move to avoid a reigniting of inflation. The last increase in short-term rates came in March 1997 when the Federal Open Market Committee (the policy-making arm of the Fed) hiked the target rates for Federal Funds by one quarter of a percent to 5.5%. (The Federal Funds rate is the rate of interest that banks charge one another for overnight loans.) Inflation has remained benign on all fronts, even in the tight labor market, an area closely watched by the Fed for signs of incipient inflation. The Labor Department's Employment Cost Index (ECI), a measure of wage, salary and benefit costs, suggests that wage inflation so far is not a problem. In fact, the first quarter increase in the ECI (0.7%) was its smallest quarterly rise in two years. Another inflation gauge, the broad-based Gross Domestic Product Price Deflator, rose at an annual rate of only 0.9% in the first quarter, its lowest rate since 1964. Inflation, as measured by the Consumer Price Index (a measure of a fixed basket of goods bought by a typical consumer including food, transportation, shelter, utilities, clothing, medical care, entertainment and other items), has been similarly tame. Prices at the consumer level have risen at an annual rate of about 1.5% over the reporting period. The lack of inflation has been even more dramatic at the production level of the economy where prices have fallen: in the 12 months ended April 30, the Producer Price Index declined 1.8%. Such a generally tepid price environment has been partly fostered by the economic problems in Asia which have suppressed worldwide demand for commodities, particularly oil. Reflecting a level of confidence not seen in three decades, consumers increased their spending over the reporting period, the first-quarter rate rising at the fastest pace in six years. Not surprisingly, the growth rate in new home construction over the reporting period was the strongest in four years. Plentiful and well-paying jobs (total wage and salary income is 7% higher than a year ago), low interest rates, the relative absence of inflation and investment market gains have resulted in a financially healthy consumer with a corresponding propensity to spend. Strong domestic demand for lower-priced imports has contributed further to the quiescent inflation environment while offsetting the drag on the economy resulting from the Asian financial crisis. It is still widely expected that the Asian economic slowdown will have a further dampening effect on the U.S. economy. Although the surge in domestic spending has masked the full impact of the fall in Asian demand, our trade deficit has reached a ten-year high, a dramatic sign of deterioration. Expectation of an economic slowdown may be a reason why the Fed has been reluctant to raise short-term interest rates. The production side of the economy has remained robust. Factory utilization has been high, production rates strong, and while exports to Asia have fallen sharply, they are growing in the rest of the world. Such resilience has been characteristic of one of the longest, most healthy economic advances in our history. Yet we remain mindful that the concept of an economic cycle is not dead, nor is inflation, and we are alert for indications of a resurgence in price pressures. Market Environment Long-term taxable interest rates continued to trend lower through mid-January due to a mix of economic turmoil in Asia and good domestic inflation news. The 30-year benchmark Treasury bond yield troughed on January 12, at 5.69%, boosted by non-traditional buyers in a flight to quality out of Asian markets and into U.S. Government securities. Since then, however, Asian markets have stabilized somewhat and shifted the focus of the bond market back to U.S. economic fundamentals. Of particular concern to bond market participants is the increasing tightness of the labor market and the potential for future wage inflation. This concern effectively capped the bond rally and pushed long Treasury yields up to 5.95% on April 30, down from 6.96% at the start of the 12-month period. Long municipal bonds slightly under-performed their taxable counterparts during the reporting period as the tax-exempt arena saw a surge in volume as rates trended lower. The new issue volume included both advance refundings of already existing debt and municipalities and agencies taking on new debt at attractive rates. This increase in supply more than offset strong demand for municipals as the municipal/Treasury yield ratio (as measured by the Bond Buyer Revenue Bond Index/30-year Treasury yield) increased from 91% to nearly 93% by April 30. From an historic perspective, municipals are very attractive at these percentages relative to Treasuries. In addition, tax-exempt supply traditionally decreases as the summer months approach, thus offering the prospect for municipal out-performance in the months ahead. The Portfolio The supply of Michigan tax-exempt paper (which includes Puerto Rico issues) increased significantly during the reporting period. Deals of note include $333 million Michigan Building Authority, $261 million Michigan Hospital Revenue (Genesys Regional Medical Center), and several other issues ranging in size from $120 to $160 million. Also of major importance were four large Puerto Rico issues that were between $500 million and $1.2 billion. With the direction of long-term interest rates uncertain at best, we attempted to reposition the portfolio with securities that offer greater potential for price appreciation without increasing the risk profile of the Fund. This was done by selling less desirable structures and purchasing several of the new issues at attractive levels. We have maintained a nucleus of high coupon, income-generating securities which should perform well in times of uncertainty. At present, approximately 75% of the Fund is invested in securities which are rated "A" or better, which reflects of our view that credit spreads are too narrow to justify a higher percentage of lower rated bonds. Looking forward, issuance should decrease as the summer months approach. However, we will continue to look for opportunities to sell securities with inferior call features and/or liquidity and replace them with new issues that we believe offer greater potential for price appreciation. In conclusion, the tug of war between foreign economic crises and unusually tame U.S. inflation indicators that has left long-term interest rates range-bound since January cannot go on indefinitely. We will remain alert for signals of the next trend for long-term rates and stand ready to adjust the portfolio accordingly. Sincerely, Richard J. Moynihan Director, Municipal Portfolio Management The Dreyfus Corporation May 18, 1998 New York, N.Y. * 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 contingent deferred sales charge imposed on redemptions in the case of Class B shares and Class C shares. Income may be subject to state and local income taxes for non-Michigan residents. ** Distribution rate per share is based upon dividends per share paid from net investment income during the period, divided by the maximum offering price per share at the end of the period in the case of Class A shares, or the net asset value per share in the case of Class B shares and Class C shares, adjusted for capital gain distributions. Some income may be subject to the Federal Alternative Minimum Tax (AMT) for certain shareholders. Dreyfus Premier State Municipal Bond Fund, Michigan Series April 30, 1998 - -------------------------------------------------------------------------- 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 $22,016 Lehman Brothers Municipal Bond Index* [CHART] $21,779 Dreyfus Premier State Municipal Bond Fund, Michigan Series (Class A Shares) *Source: Lehman Brothers Average Annual Total Returns
- -------------------------------------------------------------------------------------------------------------------------- Class A Shares Class B Shares - ------------------------------------------------------ ------------------------------------------------------------ % Return Reflecting % Return Applicable Contingent Reflecting % Return Deferred Sales % Return Without Maximum Initial Assuming No Charge Upon Period Ended 4/30/98 Sales Charge Sales Charge (4.5%) Period Ended 4/30/98 Redemption Redemption* - ------------------- ---------------- -------------------- -------------------- ----------- ----------------- 1 Year 8.55% 3.69% 1 Year 8.08% 4.08% 5 Year 6.50 5.52 5 Year 5.95 5.63 10 Year 8.59 8.09 From Inception (1/15/93) 6.50 6.35 Class C Shares - ------------------------------------------------------------ % Return Reflecting Applicable Contingent % Return Deferred Sales Assuming Charge Upon Period Ended 4/30/98 No Redemption Redemption** - -------------------- ------------- ------------------ 1 Year 7.70% 6.70% From Inception (8/15/95) 6.65 6.65 - --------------- 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 on 4/30/88 to a $10,000 investment made in the Lehman Brothers Municipal Bond 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 Series 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. Unlike the Series, the Lehman Brothers Municipal Bond Index is an unmanaged total return performance benchmark for the long-term, investment-grade, geographically unrestricted tax exempt bond market, calculated by using municipal bonds selected to be representative of the municipal market overall. The Index does not take into account charges, fees and other expenses and is not limited to investments principally in Michigan municipal obligations. These factors can contribute to the Index potentially outperforming the Series. Further information relating to Series performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the Prospectus and elsewhere in this report. * The maximum contingent deferred sales charge for Class B shares is 4% and is reduced to 0% after six years. ** The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the date of purchase.
Dreyfus Premier State Municipal Bond Fund, Michigan Series - ---------------------------------------------------------- Statement of Investments (continued) April 30, 1998
Principal Long-Term Municipal Investments--99.4% Amount Value - ------------------------------------------------------------------------------------ ------------- ------------- Michigan--98.0% Brighton Area School District, Refunding: Zero Coupon, 5/1/2014 (Insured: AMBAC)............................................. $ 8,000,000 $ 3,463,680 Zero Coupon, 5/1/2020 (Insured: AMBAC)............................................. 5,000,000 1,541,500 Capital Region Airport Authority, Airport Revenue 6.70%, 7/1/2021 (Insured; MBIA).................................................... 2,500,000 2,717,375 Chippewa County Hospital Finance Authority, Revenue, Refunding 5.625%, 11/1/2014.................................................................. 1,625,000 1,634,571 Chippewa Valley Schools, Refunding 7%, 5/1/2010 (Prerefunded 5/1/2001) (a)........... 1,275,000 1,391,866 Clarkston Community School 5.75%, 5/1/2016 (Insured; FGIC) (Prerefunded 5/1/2005) (a) 1,340,000 1,451,568 Detroit: (Unlimited Tax) 6.35%, 4/1/2014.................................................... 3,110,000 3,365,269 Water Supply Systems Revenue, Refunding 8.613%, 7/1/2022 (Insured; FGIC) (b)............................................. 1,500,000 1,753,125 Fowlerville Community Schools School District 5.60%, 5/1/2016 (Insured; MBIA)....... 2,995,000 3,090,690 Grand Rapids Housing Finance Authority, Multi-Family Revenue, Refunding 7.625%, 9/1/2023 (Collateralized; FNMA)............................................ 1,000,000 1,096,060 Grand Valley State University, College and University Revenue 5.50%, 2/1/2018 (Insured; FGIC).................................................... 2,570,000 2,641,780 Hancock Hospital Finance Authority, Health Hospital and Nursing Home Revenue (Portage Health) 5.45%, 8/1/2047 (Insured; MBIA)................................... 4,430,000 4,325,984 Highland Park School District 5.25%, 5/1/2009 (Insured; FSA)......................... 1,355,000 1,405,474 Huron Valley School District, Refunding Zero Coupon, 5/1/2018 (Insured; FGIC).............................................. 6,370,000 2,198,414 Kalamazoo Hospital Finance Authority, Hospital Facilities Revenue, Refunding: (Borgess Medical Center) 6.25%, 6/1/2014 (Insured; FGIC)........................... 2,000,000 2,264,440 (Bronson Methodist Hospital) 5.75%, 5/15/2016 (Insured; MBIA)...................... 2,500,000 2,604,450 Kenowa Hills Public Schools 5.875%, 5/1/2021 (Insured; MBIA)......................... 3,360,000 3,504,715 Kent County, Airport Facilities Revenue (Kent County International Airport): 5.90%, 1/1/2012.................................................................... 1,145,000 1,206,063 5.90%, 1/1/2013.................................................................... 1,095,000 1,148,863 6.10%, 1/1/2025 ................................................................... 3,000,000 3,212,190 Lake Orion Community School District, Refunding 5.80%, 5/1/2015 (Insured; AMBAC)..... 2,085,000 2,186,331 Lapeer Economic Development Corp., Ltd. Obligation Revenue (Lapeer Health Services Project) 8.625%, 2/1/2020 (Prerefunded 2/1/2000) (a)...... 2,000,000 2,188,280 Leslie Public School (Ingham and Jackson Counties School Building and Site) Refunding 6%, 5/1/2015 (Insured; AMBAC) (Prerefunded 5/1/2005) (a)................ 1,000,000 1,098,150 Michigan Building Authority, Lease Revenue 6.75%, 10/1/2007 (Insured; AMBAC)......... 1,600,000 1,746,192 Michigan Higher Education Student Loan Authority, Student Loan Revenue: 6.875%, 10/1/2007 (Insured; AMBAC)................................................ 2,250,000 2,369,520 7.55%, 10/1/2008 (Insured; MBIA).................................................. 1,150,000 1,226,383 6.125%, 9/1/2010.................................................................. 1,520,000 1,574,629
Dreyfus Premier State Municipal Bond Fund, Michigan Series - ---------------------------------------------------------- Statement of Investments (continued) April 30, 1998
Principal Long-Term Municipal Investments (continued) Amount Value - ------------------------------------------------------------------------------------ ------------- ------------- Michigan (continued) Michigan Hospital Finance Authority, HR: (Crittenton Hospital) 6.70%, 3/1/2007............................................. $ 2,250,000 $ 2,439,427 (Daughters of Charity National Health Systems - Providence Hospital) 7%, 11/1/2021 (Prerefunded 11/1/2001) (a)...................................... 2,700,000 2,979,855 Refunding: (Botsford Obligation Group): 5%, 2/15/2018 (Insured; MBIA)............................................... 3,000,000 2,872,530 5%, 2/15/2022 (Insured; MBIA)............................................... 600,000 564,954 (Detroit Medical Center) 8.125%, 8/15/2012..................................... 220,000 226,802 (Genesys Health Systems) 8.125%, 10/1/2021 (Prerefunded 10/1/2005) (a)......... 5,000,000 6,188,050 (Middle Michigan Obligation Group) 6.625%, 6/1/2010 (Prerefunded 6/1/2000) (a). 2,000,000 2,100,380 (Oakwood Obligation Group) 5%, 8/15/2031 (Insured; FSA)........................ 3,000,000 2,797,740 (Sinai Hospital of Greater Detroit) 6.70%, 1/1/2026............................ 2,500,000 2,756,475 (Sisters of Mercy Health Corp.): 6.25%, 2/15/2009 (Insured; FSA)............................................. 1,065,000 1,141,989 5.375%, 8/15/2014 (Insured; MBIA)........................................... 1,340,000 1,389,379 Michigan Housing Development Authority: (Home Improvement Program) 7.65%, 12/1/2012....................................... 1,755,000 1,830,009 Rental Housing Revenue: 6.50%, 4/1/2006................................................................ 2,000,000 2,161,300 7.70%, 4/1/2023 (Insured; FSA)................................................. 4,185,000 4,488,454 SFMR: 7.50%, 6/1/2015................................................................ 2,355,000 2,460,504 5.95%, 12/1/2016............................................................... 2,365,000 2,472,584 6.95%, 12/1/2020............................................................... 1,550,000 1,636,769 Michigan Municipal Bond Authority, Revenue (State Revolving Fund): 6.50%, 10/1/2014 (Prerefunded 10/1/2004) (a)...................................... 2,500,000 2,817,300 6.50%, 10/1/2017 (Prerefunded 10/1/2004) (a)...................................... 3,500,000 3,944,220 Michigan State University, College and University Revenue 5%, 2/15/2026 (Insured; AMBAC).................................................... 8,350,000 7,963,813 Michigan Strategic Fund, Limited Obligation Revenue: (Northeastern Community Mental Health Foundation) 8.25%, 1/1/2009................. 1,350,000 1,407,564 (NSF International Project) 5.75%, 8/1/2019 (LOC; First of America Bank) (c)...... 3,000,000 3,098,160 Refunding (Ledyard Association Ltd. Partnership Project) 6.25%, 10/1/2011 (Insured; ITT Lyndon Property Insurance Co.).................. 3,075,000 3,386,467 SWDR, Refunding (Genesee Power Station Project) 7.50%, 1/1/2021................... 3,000,000 3,251,910 Monroe County: PCR (Detroit Edison Project): 7.50%, 12/1/2019 (Insured; AMBAC).............................................. 4,650,000 4,996,053 7.875%, 12/1/2019.............................................................. 2,720,000 2,921,062 7.65%, 9/1/2020 (Insured; FGIC)................................................ 2,250,000 2,438,010 6.55%, 6/1/2024 (Insured; MBIA)................................................ 1,700,000 1,843,412 Water Supply Systems (Frenchtown Charter Township Water Treatment and Distribution Systems) 6.50%, 5/1/2013 (Prerefunded 5/1/2000) (a)........... 2,500,000 2,661,225
Dreyfus Premier State Municipal Bond Fund, Michigan Series - ---------------------------------------------------------- Statement of Investments (continued) April 30, 1998
Principal Long-Term Municipal Investments (continued) Amount Value - ------------------------------------------------------------------------------------ ------------- ------------- Michigan (continued) Monroe County Economic Development Corp., Ltd. Obligation Refunding, Revenue (Detroit Edison Co. Project) 6.95%, 9/1/2022 (Insured; FGIC)...................... $ 2,000,000 $ 2,470,620 Northville, Special Assessment (Wayne County) 7.875%, 1/1/2006....................... 1,685,000 1,760,033 Northwestern Michigan College, Community College Improvement Revenue, Refunding 7%, 7/1/2011...................................................................... 1,800,000 1,953,738 Oakland County Economic Development Corp., Ltd. Obligation Revenue (Pontiac Osteopathic Hospital Project) 9.625%, 1/1/2020 (Prerefunded 1/1/2000) (a)....................................... 1,575,000 1,742,108 Redford Unified School District, Refunding: 5.25%, 5/1/2011 (Insured; AMBAC).................................................. 1,990,000 2,061,242 5.5%, 5/1/2015 (Insured; AMBAC)................................................... 1,260,000 1,325,659 Rockford Public Schools, Refunding (Kent County School Building and Site) 7.375%, 5/1/2019 (Prerefunded 5/1/2000) (a)....................................... 2,000,000 2,140,680 Romulus Community Schools, Refunding Zero Coupon 5/1/2020 (Insured; FGIC).............................................. 1,385,000 426,996 Romulus Economic Development Corp., Ltd. Obligation EDR Refunding (Romulus Hir Ltd. Partnership Project) 7%, 11/1/2015 (Insured; ITT Lyndon Property Insurance Co.)........................ 3,700,000 3,954,338 South Lyon Community Schools (School Building) 6.375%, 5/1/2018 (Prerefunded 5/1/2002) (a)....................................... 1,500,000 1,636,200 Wayne Charter County, Special Airport Facilities Revenue, Refunding (Northwest Airlines Inc.) 6.75%, 12/1/2015........................................ 5,735,000 6,294,679 U.S. Related--1.4% Puerto Rico Housing Finance Corp., MFMR 7.50%, 4/1/2022 (LOC; Government Development Bank) (c)............................ 2,160,000 2,287,850 -------------- TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $155,912,000)............................................................... $167,698,102 -------------- -------------- Short-Term Municipal Investments--.6% - ------------------------------------------------------------------------------------ U.S. Related; Puerto Rico Electric Power Authority, Revenue, Refunding, VRDN 3.37% (Insured; FSA) (Prerefunded 7/1/2002) (a,d) (cost $1,000,000)................................................................. $ 1,000,000 $ 1,000,000 -------------- -------------- TOTAL INVESTMENTS--100.0% (cost $156,912,000)................................................................ $168,698,102 -------------- --------------
Dreyfus Premier State Municipal Bond Fund, Michigan Series - ----------------------------------------------------------
Summary of Abbreviations - ---------------------------------------------------------------------------------------------------------------------------- AMBAC American Municipal Bond Assurance Corporation MBIA Municipal Bond Investors Assurance EDR Economic Development Revenue Insurance Corporation FGIC Financial Guaranty Insurance Company MFMR Multi-Family Mortgage Revenue FNMA Federal National Mortgage Association PCR Pollution Control Revenue FSA Financial Security Assurance SFMR Single Family Mortgage Revenue HR Hospital Revenue SWDR Solid Waste Disposal Revenue LOC Letter of Credit VRDN Variable Rate Demand Notes
Summary of Combined Ratings (Unaudited) - --------------------------------------------------------------------------------------------------------------------------- Fitch (e) or Moody's or Standard & Poor's Percentage of Value - ------ ------- ---------------- ----------------- AAA Aaa AAA 48.3% AA Aa AA 12.0 A A A 16.0 BBB Baa BBB 9.7 Not Rated (f) Not Rated (f) Not Rated (f) 14.0 ------ 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) Inverse floater security--the interest rate is subject to change periodically. (c) Secured by letters of credit. (d) Security payable upon demand. The interest rate, which is subject to change, is based upon bank prime rate or an index of market interest rates. (e) Fitch currently provides creditworthiness information for a limited number of investments. (f) Securities which, while not rated by Fitch, Moody's or 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. Dreyfus Premier State Municipal Bond Fund, Michigan Series - ---------------------------------------------------------- Statement of Assets and Liabilities April 30, 1998
Cost Value ------------ ------------ ASSETS: Investments in securities--See Statement of Investments........... $156,912,000 $168,698,102 Interest receivable............................................... 2,885,778 Receivable for investment securities sold......................... 389,222 Receivable for shares of Beneficial Interest subscribed........... 255,252 Prepaid expenses and other assets................................. 5,245 -------------- 172,233,599 -------------- LIABILITIES: Due to The Dreyfus Corporation and affiliates..................... 78,581 Due to Distributor................................................ 44,719 Cash overdraft due to Custodian................................... 98,301 Payable for shares of Beneficial Interest redeemed................ 1,179,092 Accrued expenses and other liabilities............................ 34,127 -------------- 1,434,820 -------------- NET ASSETS .......................................................................... $170,798,779 -------------- -------------- REPRESENTED BY: Paid-in capital................................................... $158,008,663 Accumulated net realized gain (loss) on investments............... 1,004,014 Accumulated net unrealized appreciation (depreciation) on investments--Note 4.......................................... 11,786,102 -------------- NET ASSETS .......................................................................... $170,798,779 -------------- --------------
NET ASSET VALUE PER SHARE ------------------------- Class A Class B Class C -------------- -------------- -------------- Net Assets............................................................... $149,220,927 $ 20,937,694 $ 640,158 Shares Outstanding....................................................... 9,559,646 1,341,641 40,997 NET ASSET VALUE PER SHARE................................................ $15.61 $15.61 $15.61 ------- ------- ------- ------- ------- -------
See notes to financial statements. Dreyfus Premier State Municipal Bond Fund, Michigan Series - ---------------------------------------------------------- Statement of Operations Year Ended April 30, 1998
INVESTMENT INCOME INCOME Interest Income................................................... $10,630,806 EXPENSES: Management fee--Note 3(a)......................................... $ 969,239 Shareholding servicing costs--Note 3(c)........................... 560,248 Distribution fees--Note 3(b)...................................... 104,917 Professional fees................................................. 29,971 Custodian fees.................................................... 18,942 Prospectus and shareholders' reports.............................. 16,447 Registration fees................................................. 10,170 Trustees' fees and expenses--Note 3(d)............................ 2,455 Loan commitment fees--Note 2...................................... 1,907 Miscellaneous..................................................... 5,005 ------------ Total Expenses................................................ 1,719,301 ------------ INVESTMENT INCOME--NET................................................................ 8,911,505 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4: Net realized gain (loss) on investments........................... $ 1,713,224 Net unrealized appreciation (depreciation) on investments................................................ 3,824,470 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS............................... 5,537,694 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................. $14,449,199 ------------ ------------
See notes to financial statements. Dreyfus Premier State Municipal Bond Fund, Michigan Series - ---------------------------------------------------------- Statement of Changes in Net Assets
Year Ended Year Ended April 30, 1998 April 30, 1997 -------------- ------------- OPERATIONS: Investment income--net............................................................ $ 8,911,505 $ 9,636,187 Net realized gain (loss) on investments........................................... 1,713,224 (627,210) Net unrealized appreciation (depreciation) on investments......................... 3,824,470 3,129,851 ------------ ------------- Net Increase (Decrease) in Net Assets Resulting from Operations............. 14,449,199 12,138,828 ------------ ------------- DIVIDENDS TO SHAREHOLDERS FROM: Investment income--net: Class A shares................................................................. (7,955,561) (8,691,679) Class B shares................................................................. (937,724) (934,756) Class C shares................................................................. (18,220) (9,752) Net realized gain on investments: Class A shares................................................................. (75,069) (2,310,672) Class B shares................................................................. (9,870) (280,992) Class C shares................................................................. (252) (3,342) ------------ ------------- Total Dividends............................................................. (8,996,696) (12,231,193) ------------ ------------- BENEFICIAL INTEREST TRANSACTIONS: Net proceeds from shares sold: Class A shares................................................................. 4,897,519 5,737,268 Class B shares................................................................. 3,020,561 2,530,630 Class C shares................................................................. 385,397 202,082 Dividends reinvested: Class A shares................................................................. 4,509,960 6,502,642 Class B shares................................................................. 559,930 755,630 Class C shares................................................................. 10,205 6,387 Cost of shares redeemed: Class A shares................................................................. (20,589,778) (23,142,080) Class B shares................................................................. (2,589,595) (2,955,952) Class C shares................................................................. (4,831) (99,257) ------------ ------------- Increase (Decrease) in Net Assets from Beneficial Interest Transactions..... (9,800,632) (10,462,650) ------------- ------------- Total Increase (Decrease) in Net Assets.................................. (4,348,129) (10,555,015) NET ASSETS: Beginning of Period............................................................... 175,146,908 185,701,923 ------------ ------------- End of Period..................................................................... $170,798,779 $175,146,908 ------------ ------------- ------------ -------------
See notes to financial statements. Dreyfus Premier State Municipal Bond Fund, Michigan Series - ---------------------------------------------------------- Statement of Changes in Net Assets (continued) Shares
------------------------------ Year Ended Year Ended April 30, 1998 April 30, 1997 -------------- ------------- CAPITAL SHARE TRANSACTIONS: Class A -------- Shares sold....................................................................... 313,349 376,125 Shares issued for dividends reinvested............................................ 288,987 424,804 Shares redeemed................................................................... (1,320,623) (1,515,387) ----------- ----------- Net Increase (Decrease) in Shares Outstanding............... (718,287) (714,458) ----------- ----------- ----------- ----------- Class B -------- Shares sold....................................................................... 193,841 165,789 Shares issued for dividends reinvested............................................ 35,883 49,375 Shares redeemed................................................................... (165,925) (193,563) ----------- ----------- Net Increase (Decrease) in Shares Outstanding............... 63,799 21,601 ----------- ----------- ----------- ----------- Class C -------- Shares sold....................................................................... 24,716 13,302 Shares issued for dividends reinvested............................................ 651 418 Shares redeemed................................................................... (306) (6,548) ----------- ----------- Net Increase (Decrease) in Shares Outstanding............... 25,061 7,172 ----------- ----------- ----------- -----------
See notes to financial statements. Dreyfus Premier State Municipal Bond Fund, Michigan 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 period indicated. This information has been derived from the Fund's financial statements.
Class A Shares ------------------------------------------------------- Year Ended April 30, ------------------------------------------------------- PER SHARE DATA: 1998 1997 1996 1995 1994 ------- ------- ------- ------- ------- Net asset value, beginning of period............................... $15.14 $15.15 $15.14 $15.27 $15.65 ------- ------- ------- ------- ------- Investment Operations: Investment income--net.............................................. .80 .81 .83 .85 .89 Net realized and unrealized gain (loss) on investments............. .48 .21 .20 .11 (.30) ------- ------- ------- ------- ------- Total from Investment Operations................................... 1.28 1.02 1.03 .96 .59 ------- ------- ------- ------- ------- Distributions: Dividends from investment income--net............................... (.80) (.81) (.83) (.85) (.89) Dividends from net realized gain on investments.................... (.01) (.22) (.19) (.24) (.08) ------- ------- ------- ------- ------- Total Distributions................................................ (.81) (1.03) (1.02) (1.09) (.97) ------- ------- ------- ------- ------- Net asset value, end of period........................................ $15.61 $15.14 $15.15 $15.14 $15.27 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- TOTAL INVESTMENT RETURN*.............................................. 8.55% 6.89% 6.81% 6.65% 3.65% RATIOS/SUPPLEMENTAL DATA: Ratio of expenses to average net assets............................ .92% .91% .93% .92% .81% Ratio of net investment income to average net assets............... 5.12% 5.34% 5.35% 5.66% 5.56% Decrease reflected in above expense ratios due to undertakings by the Manager..................................... -- -- -- .01% .11% Portfolio Turnover Rate............................................ 41.46% 22.32% 56.88% 48.30% 19.96% Net Assets, end of period (000's Omitted).......................... $149,221 $155,568 $166,538 $176,604 $187,405 - -------------------------- * Exclusive of sales load.
See notes to financial statements. Dreyfus Premier State Municipal Bond Fund, Michigan Series - ---------------------------------------------------------- Financial Highlights (continued) Contained below is per share operating performance data for a share of Beneficial Interest outstanding, total investment return, ratios to average net assets and other supplemental data for each period indicated. This information has been derived from the Fund's financial statements.
Class B Shares ------------------------------------------------------- Year Ended April 30, ------------------------------------------------------- PER SHARE DATA: 1998 1997 1996 1995 1994 ------- ------- ------- ------- ------- Net asset value, beginning of period.............................. $15.13 $15.15 $15.13 $15.27 $15.64 ------- ------- ------- ------- ------- Investment Operations: Investment income--net............................................ .72 .74 .75 .77 .80 Net realized and unrealized gain (loss) on investments............ .49 .20 .21 .10 (.29) ------- ------- ------- ------- ------- Total from Investment Operations.................................. 1.21 .94 .96 .87 .51 ------- ------- ------- ------- ------- Distributions: Dividends from investment income--net............................. (.72) (.74) (.75) (.77) (.80) Dividends from net realized gain on investments................... (.01) (.22) (.19) (.24) (.08) ------- ------- ------- ------- ------- Total Dividends................................................... (.73) (.96) (.94) (1.01) (.88) ------- ------- ------- ------- ------- Net asset value, end of period.................................... $15.61 $15.13 $15.15 $15.13 $15.27 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- TOTAL INVESTMENT RETURN*............................................. 8.08% 6.27% 6.33% 6.01% 3.11% RATIOS/SUPPLEMENTAL DATA: Ratio of expenses to average net assets........................... 1.42% 1.42% 1.44% 1.44% 1.38% Ratio of net investment income to average net assets.............. 4.61% 4.82% 4.82% 5.10% 4.88% Decrease reflected in above expense ratios due to undertakings by the Manager.................................... -- -- -- .01% .09% Portfolio Turnover Rate........................................... 41.46% 22.32% 56.88% 48.30% 19.96% Net Assets, end of period (000's Omitted)......................... $20,938 $19,338 $19,031 $16,471 $13,861 - ----------------------- * Exclusive of sales load.
See notes to financial statements. Dreyfus Premier State Municipal Bond Fund, Michigan Series - ---------------------------------------------------------- Financial Highlights (continued) Contained below is per share operating performance data for a share of Beneficial Interest outstanding, total investment return, ratios to average net assets and other supplemental data for each period indicated. This information has been derived from the Fund's financial statements.
Class C Shares ---------------------------------- Year Ended April 30, ---------------------------------- PER SHARE DATA: 1998 1997 1996(1) ------- ------- ------- Net asset value, beginning of period........................................... $15.14 $15.16 $15.18 ------- ------- ------- Investment Operations: Investment income--net......................................................... .67 .69 .50 Net realized and unrealized gain (loss) on investments......................... .48 .20 .17 ------- ------- ------- Total from Investment Operations............................................... 1.15 .89 .67 ------- ------- ------- Distributions: Dividends from investment income--net.......................................... (.67) (.69) (.50) Dividends from net realized gain on investments................................ (.01) (.22) (.19) ------- ------- ------- Total Distributions............................................................ (.68) (.91) (.69) ------- ------- ------- Net asset value, end of period................................................. $15.61 $15.14 $15.16 ======= ======= ======= TOTAL INVESTMENT RETURN(2)........................................................ 7.70% 5.94% 6.12%(3) RATIOS/SUPPLEMENTAL DATA: Ratio of expenses to average net assets........................................ 1.69% 1.72% 1.70%(3) Ratio of net investment income to average net assets........................... 4.26% 4.47% 4.47%(3) Portfolio Turnover Rate........................................................ 41.46% 22.32% 56.88% Net Assets, end of period (000's Omitted)...................................... $640 $241 $133 - ----------------------------- (1) From August 15, 1995 (commencement of intital offering) to April 30, 1996. (2) Exclusive of sales load. (3) Annualized.
See notes to financial statements. Dreyfus Premier State Municipal Bond Fund, Michigan Series - ---------------------------------------------------------- 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 ("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. Premier Mutual Fund Services, Inc. (the "Distributor") is the distributor of the Fund's shares. 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. 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 fund. Expenses directly attributable to each fund are charged to that fund's operations; expenses which are applicable to all funds 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. Dreyfus Premier State Municipal Bond Fund, Michigan Series - ---------------------------------------------------------- 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. 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 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. NOTE 2--Bank Line of Credit: The Fund participates with other Dreyfus-managed funds in a $600 million redemption credit facility ("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, 1998, 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. Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, retained $268 during the period ended April 30, 1998, from commissions earned on sales of the Fund's shares. (b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, the Fund pays 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, 1998, Class B and Class C shares were charged $101,708 and $3,209, respectively, pursuant to the Distribution Plan. (c) Under the Shareholder Services Plan, the Fund pays the Distributor at an annual rate of .25 of 1% of the value of the average daily net assets of Class A, Class B and Class C shares for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the 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, 1998, Class A, Class B and Class C shares were charged $388,639, $50,854 and $1,070, respectively, pursuant to the Shareholder Services Plan. Dreyfus Premier State Municipal Bond Fund, Michigan Series - ---------------------------------------------------------- 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, 1998, the Fund was charged $90,087 pursuant to the transfer agency agreement. (d) Each trustee who is not an "affiliated person" as defined in the Act receives from the Trust 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 4--Securities Transactions: The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended April 30, 1998 amounted to $70,718,414 and $71,789,879, respectively. At April 30, 1998, accumulated net unrealized appreciation on investments was $11,786,102, consisting of $12,082,656 gross unrealized appreciation and $296,554 gross unrealized depreciation. At April 30, 1998, 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). Dreyfus Premier State Municipal Bond Fund, Michigan Series - ---------------------------------------------------------- Report of Ernst & Young LLP, 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 (one of the Funds constituting the Dreyfus Premier State Municipal Bond Fund) as of April 30, 1998, 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 and financial highlights. Our procedures included confirmation of securities owned as of April 30, 1998 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, 1998, 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 LLP New York, New York June 3, 1998 Important Tax Information (Unaudited) In accordance with Federal tax law, the Fund hereby makes the following designations regarding its fiscal year ended April 30, 1998: - -- 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 $.0076 per share as a long-term capital gain distribution (of which 100% is subject to the 20% maximum Federal tax rate) paid on December 4, 1997. 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 1998 calendar year on Form 1099-DIV which will be mailed by January 31, 1999. 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 90 Washington Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Printed in U.S.A. 053/617AR984 EX-99 2 TABLE FOR GRAPH IN THE PRESIDENT'S LETTER 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 EXHIBIT A: DREYFUS PREMIER STATE MUNICIPAL LEHMAN BROTHERS BOND FUND, PERIOD MUNICIPAL MICHIGAN SERIES BOND INDEX * (CLASS A SHARES) 4/30/88 10,000 9,553 4/30/89 10,893 10,819 4/30/90 11,678 11,424 4/30/91 13,019 12,750 4/30/92 14,257 14,039 4/30/93 16,061 15,899 4/30/94 16,407 16,479 4/30/95 17,499 17,574 4/30/96 18,889 18,771 4/30/97 20,142 20,064 4/30/98 22,016 21,779 *Source: Lehman Brothers -----END PRIVACY-ENHANCED MESSAGE-----