-----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, L1veBix1NMhiHJ+iNXevZAefsxPkTccttCoUpx8E6dPyX6ZimmTbJtVzEoHbRJmc o226Gmo7r950zbSN4mneBw== 0000806176-99-000026.txt : 19991223 0000806176-99-000026.hdr.sgml : 19991223 ACCESSION NUMBER: 0000806176-99-000026 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991031 FILED AS OF DATE: 19991222 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: 99778769 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 SEMI-ANNUAL Dreyfus Premier State Municipal Bond Fund, Connecticut Series SEMIANNUAL REPORT October 31, 1999 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Year 2000 Issues (Unaudited) The fund could be adversely affected if the computer systems used by The Dreyfus Corporation and the fund's other service providers do not properly process and calculate date-related information from and after January 1, 2000. The Dreyfus Corporation is working to avoid Year 2000-related problems in its systems and to obtain assurances from other service providers that they are taking similar steps. In addition, issuers of securities in which the fund invests may be adversely affected by Year 2000-related problems. This could have an impact on the value of the fund's investments and its share price. Contents THE FUND - -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Statement of Investments 11 Statement of Assets and Liabilities 12 Statement of Operations 13 Statement of Changes in Net Assets 15 Financial Highlights 18 Notes to Financial Statements FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Connecticut Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this semiannual report for Dreyfus Premier State Municipal Bond Fund, Connecticut Series, covering the six-month period from May 1, 1999 through October 31, 1999. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio manager, Samuel Weinstock. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates twice during the summer of 1999, effectively offsetting most of last fall' s interest-rate cuts. Higher interest rates led to some erosion of municipal bond prices, especially toward the end of the reporting period. In this environment, however, the yields of tax-exempt bonds have recently been quite attractive compared to the after-tax yields of taxable bonds of comparable maturity and credit quality. This is especially true for investors in the higher federal income tax brackets. We appreciate your confidence over the past six months, and we look forward to your continued participation in for Dreyfus Premier State Municipal Bond Fund, Connecticut Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation November 15, 1999 DISCUSSION OF FUND PERFORMANCE Samuel Weinstock, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Connecticut Series perform during the period? For the six-month period ended October 31, 1999, the fund's Class A shares provided a -4.98% total return; its Class B shares provided a -5.31% total return; and its Class C shares provided a -5.43% return.(1) In comparison, the Lipper Connecticut Municipal Debt Funds category average provided a -4.52% total return(2) for the same period. We attribute the fund's negative absolute performance to a declining bond market and rising interest rates. The fund's relative underperformance compared to its benchmark is primarily a result of our security selection strategy in a relatively small Connecticut market, where a scarcity of new issuance limited our investment choices. What is the fund's investment approach? Our goal is to seek as high a level of federal and Connecticut tax-exempt income as is practical from a diversified portfolio of municipal bonds without undue risk. To achieve this objective, we employ four primary strategies. First, we strive to identify the maturity range that we believe will provide the most favorable returns over the next two years. Second, we evaluate issuers' credit quality to find bonds that we believe provide high yields at an attractive price. Third, we look for bonds with attractively high interest payments, even if they sell at a premium to face value. Fourth, we assess individual bonds' early redemption features, focusing on those that cannot be redeemed soon by their issuers. Typically, the bonds we select for the fund will have several of these qualities. We also use computer models to evaluate the likely performance of bonds under various market scenarios, including a .25 % rise or .50% decline in interest rates. When we find securities that we believe will provide participation when the market rises and some protection against market declines, we tend to hold them for the long term. The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) What other factors influenced the fund's performance? The fund and the municipal bond marketplace were adversely affected by rising interest rates. When the reporting period began on May 1, 1999, investors were concerned that continued economic strength might rekindle long-dormant inflationary pressures. In fact, in an attempt to forestall a potential reacceleration of inflation, the Federal Reserve Board raised short-term interest rates twice during the summer of 1999. This change in monetary policy caused municipal bond prices to fall. In addition, strong economic conditions have contributed to the nation's first federal budget surplus in many years. While the government has had less need to issue U.S. Treasury securities, demand has remained high from domestic and overseas investors. This imbalance between supply and demand has recently constrained the rise of taxable bond yields relative to tax-exempt bonds. As a result, municipal bonds -- including those from Connecticut issuers -- are currently offering tax-exempt yields that compare very favorably with taxable yields after adjusting for taxes. What is the fund's current strategy? In a rising interest-rate environment, we have focused primarily on maintaining the fund's average duration within the neutral range. Because a fund's duration naturally extends as interest rates rise and some bonds' prices fall below levels at which issuers might redeem them early, bond funds tend to become more sensitive to the adverse short-term effects of higher interest rates. Accordingly, during the period we sold some of our longer maturity bonds, including those priced at discounts to face value. We also sold bonds that were in danger of falling below the prices at which corporations and other institutional investors remain eligible for municipal bonds' tax advantages. We attempted to reinvest the proceeds from those sales into tax-exempt bonds that we believed would remain highly liquid in a declining market. Accordingly, new purchases at the end of the period focused on insured and highly rated bonds in the 10-year maturity range. We also took steps to upgrade the fund by purchasing high quality bonds to replace pre-refunded bonds as well as bonds that were near their redemption dates. Typically, these new purchases were available at face value or modest premiums, and had maturities of seven years or less. Because of uncertainties in the pre-refunded bond market sector, these new purchases often gave us an opportunity to enhance the fund's income stream. November 15, 1999 (1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID, AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES FOR NON-CONNECTICUT RESIDENTS. SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE. (2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. The Fund STATEMENT OF INVESTMENTS October 31, 1999 (Unaudited) Principal LONG-TERM MUNICIPAL INVESTMENTS--96.8% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ CONNECTICUT--75.8% Connecticut: 5%, 3/15/2012 70,000 67,584 6.153%, 3/15/2012 5,000,000 (a,b) 4,646,000 5%, 8/1/2012 35,000 33,765 6.074%, 8/1/2012 5,900,000 (a,b) 5,473,194 5.125%, 3/15/2013 6,700,000 6,461,346 5.50%, 5/15/2014 2,000,000 1,989,060 5.50%, 5/15/2015 3,000,000 2,949,210 5.25%, 3/1/2016 5,000,000 4,729,400 (Clean Water Fund) Revenue: 5.25%, 7/15/2012 15,000 14,801 7.262%, 7/15/2012 4,850,000 (a) 4,712,260 Special Tax Obligation Revenue (Transportation Infrastructure): 5.50%, 11/1/2007 (Insured; FSA) 5,000,000 5,174,950 5.375%, 9/1/2008 2,500,000 2,549,125 7.125%, 6/1/2010 3,400,000 3,878,720 6.75%, 6/1/2011 (Prerefunded 6/1/2003) 8,500,000 (c) 9,139,965 Connecticut Development Authority, Revenue: First Mortgage Gross: (Elim Park Baptist Home Inc. Project) 9%, 12/1/2020 (Prerefunded 12/1/1999) 3,565,000 (c) 3,687,208 (Health Care Project, Church Homes Inc.): 5.70%, 4/1/2012 1,240,000 1,141,866 5.80%,4/1/2021 3,000,000 2,687,220 (Health Care Project, Elim Park Baptist Home) 5.375%, 12/1/2018 2,300,000 2,002,173 Life Care Facilities (Seabury Project) 8.75%, 9/1/2006 1,625,000 1,783,275 Pollution Control (Light and Power) 5.85%, 9/1/2028 10,150,000 9,312,828 Water Facilities (Bridgeport Hydraulic) 6.15%, 4/1/2035 2,750,000 2,724,370 Connecticut Health and Educational Facilities Authority, Revenue: (Connecticut College) 5.50%, 7/1/2027 (Insured; MBIA) 2,500,000 2,333,600 (Danbury Hospital) 5.75%, 7/1/2029 (Insured; AMBAC) 3,000,000 2,894,340 (Greenwich Academy) 5.75%, 3/1/2026 (Insured; FSA) 3,130,000 3,040,889 (Greenwich Hospital) 5.80%, 7/1/2026 (Insured; MBIA) 9,365,000 9,122,540 (Hartford University): 6.75%, 7/1/2012 3,500,000 3,556,140 6.80%, 7/1/2022 8,500,000 8,646,370 (Hospital for Special Care) 5.375%, 7/1/2017 4,430,000 3,814,540 (Johnson Evergreen Corp.) 8.50%, 7/1/2022 4,500,000 4,732,785 (Loomis Chaffee School Project) 6%, 7/1/2025 (Insured; MBIA) 1,000,000 1,002,640 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ CONNECTICUT (CONTINUED) Connecticut Health and Educational Facilities Authority, Revenue (continued): (Middlesex Hospital) 6.25%, 7/1/2022 (Insured; MBIA) (Prerefunded 7/1/2002 3,500,000 (c) 3,725,890 (New Britian General Hospital) 6.125%, 7/1/2014 (Insured; AMBAC) 1,000,000 1,035,830 (New Britain Memorial Hospital) 7.75%, 7/1/2022 (Prerefunded 7/1/2002) 11,000,000 (c) 12,115,840 (Norwalk Hospital) 6.25%, 7/1/2022 (Insured; MBIA) (Prerefunded 7/1/2002) 3,860,000 (c) 4,109,124 (Nursing Home Program - 3030 Park Fairfield Health Center Project) 6.25%, 11/1/2021 2,500,000 2,563,075 (Quinnipiac College) 6%, 7/1/2013 (Prerefunded 7/1/2003) 4,100,000 (c) 4,366,008 6%, 7/1/2013 2,445,000 2,393,508 (Sacred Heart University): 6.50%, 7/1/2016 (Prerefunded 7/1/2006) 1,465,000 (c) 1,614,152 6.125%, 7/1/2017 (Prerefunded 7/1/2007) 1,000,000 (c) 1,084,900 6.625%, 7/1/2026 (Prerefunded 7/1/2006) 2,720,000 (c) 3,016,045 (Trinity College) 5.875%, 7/1/2026 (Insured; MBIA) 2,500,000 2,469,900 (University of New Haven): 6.625%, 7/1/2016 4,050,000 4,021,691 6.70%, 7/1/2026 8,605,000 8,608,958 (William W. Backus Hospital) 5.75%, 7/1/2027 (Insured; AMBAC) 2,500,000 2,416,875 (Windham Community Memorial Hospital): 5.75%, 7/1/2011 1,000,000 928,010 6%, 7/1/2020 1,000,000 915,390 (Yale, New Haven Hospital) 5.70%, 7/1/2025 (Insured; MBIA) 7,970,000 7,659,090 Connecticut Housing Finance Authority (Housing Mortgage Finance Program): 6.20%, 5/15/2012 (Insured; MBIA) 1,000,000 1,049,070 6.125%, 5/15/2018 (Insured; MBIA) 1,655,000 1,697,583 6.45%, 5/15/2022 5,165,000 5,266,544 6.70%, 11/15/2022 15,985,000 16,563,497 6.75%, 11/15/2023 5,010,000 5,274,929 5.45%, 11/15/2029 5,805,000 5,229,260 6%, Series G, 11/15/2027 4,000,000 3,925,360 6%, Subseries F-2, 11/15/2027 4,945,000 4,852,726 5.85%, Subseries B-2, 11/15/2028 9,940,000 9,445,584 5.85%, Subseries C-2, 11/15/2028 6,455,000 6,219,457 The Fund STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Principal LONG-TERM INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ CONNECTICUT (CONTINUED) Connecticut Resource Recovery Authority, RRR 3.80%, 11/15/1999 6,750,000 6,749,055 Eastern Connecticut Resource Recovery Authority: Solid Waste Revenue: 6.694%, 1/1/2014 5,000,000 (a) 3,828,300 (Wheelabrator Lisbon Project): 5.50%, 1/1/2014 50,000 44,142 5.50%, 1/1/2020 9,380,000 7,987,351 Greenwich Housing Authority, MFHR (Greenwich Close) 6.25%, 9/1/2017 4,840,000 4,673,214 Sprague, Environmental Improvement Revenue (International Paper Company Project) 5.70%, 10/1/2021 1,350,000 1,215,203 Stamford 6.60%, 1/15/2010 2,750,000 3,054,315 U. S. RELATED--21.0% Commonwealth of Puerto Rico (Public Improvement): 5.50%, 7/1/2012 (Insured; MBIA) 1,000,000 1,013,140 5.25%, 7/1/2013 (Insured; MBIA) 6,000,000 5,848,260 5.25%, 7/1/2014 (Insured; MBIA) 1,000,000 963,760 6%, 7/1/2015 (Insured; MBIA) 3,000,000 3,125,430 Zero Coupon, 7/1/2017 (Insured; MBIA) 3,800,000 1,371,648 6.80%, 7/1/2021 (Prerefunded 7/1/2002) (c) 6,000,000 6,480,180 Puerto Rico Aqueduct and Sewer Authority, Revenue 6.25%, 7/1/2013 (Insured;MBIA) 9,000,000 9,673,380 Puerto Rico Electric Power Authority, Power Revenue: 5%, 7/1/2012 (Insured; MBIA) 50,000 48,468 6.23, 7/1/2012 2,000,000 (a,b) 1,873,840 Puerto Rico Highway and Transportation Authority, Highway Revenue: 6.559%, 7/1/2010 3,200,000 (a) 3,244,000 5.50%, 7/1/2015 (Insured; MBIA) 20,000 19,802 7.319%, 7/1/2015 3,990,000 (a) 3,910,918 6.625%, 7/1/2018 (Prerefunded 7/1/2002) 5,000,000 (c) 5,378,800 5.50%, 7/1/2026 (Insured; FSA) 2,850,000 2,717,703 5%, 7/1/2036 2,500,000 2,097,150 5.50%, 7/1/2036 5,000,000 4,599,500 Puerto Rico Industrial Development Company, General Purpose Revenue 5.375%, 7/1/2016 4,250,000 4,012,723 Puerto Rico Industrial Tourist, Educational, Medical and Environmental Control Facilities Financing Authority, Revenue: (Ana G Mendez University System Project) 5.375%, 2/1/2029 2,250,000 1,999,170 Principal LONG TERM INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ U. S. RELATED (CONTINUED) Puerto Rico Industrial Tourist, Educational, Medical and Environmental Control Facilities Financing Authority, Revenue (continued): (Teachers Retirement System): 5.50%, 7/1/2016 1,150,000 1,127,173 5.50%, 7/1/2021 1,800,000 1,709,244 Puerto Rico Ports Authority, Special Facilities Revenue (American Airlines): 6.30%, 6/1/2023 2,000,000 2,012,000 6.25%, 6/1/2026 3,250,000 3,265,633 University of Puerto Rico, University Revenue 5.50%, 6/1/2015 (Insured; MBIA) 5,000,000 4,945,599 Virgin Islands Water and Power Authority, Refunding (Electric Systems) 5.30%, 7/1/2021 2,000,000 1,781,339 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $341,793,074) 96.8% 337,640,900 CASH AND RECEIVABLES (NET) 3.2% 11,221,240 NET ASSETS 100.0% 348,862,140 The Fund STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Summary of Abbreviations AMBAC American Municipal Bond Assurance MFHR Multi-Family Housing Revenue Corporation RRR Resources Recovery Revenue FSA Financial Security Assurance MBIA Municipal Bond Investors Assurance Insurance Corporation Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) - ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 36.2 AA Aa AA 26.5 A A A 2.3 BBB Baa BBB 21.7 BB Ba BB 2.7 F1 MIG1/P1 SP1/A1 2.0 Not Rated(d) Not Rated(d) Not Rated(d) 8.6 100.0 (A) INVERSE FLOATER SECURITY -- THE INTEREST RATE IS SUBJECT TO CHANGE PERIODICALLY. (B) SECURITIES EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF 1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS. AT OCTOBER 31, 1999, THESE SECURITIES AMOUNTED TO $11,993,034 OR 3.4% OF NET ASSETS. (C) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. (D) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 (Unaudited) Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 341,793,074 337,640,900 Receivable for investment securities sold 5,628,369 Receivable for shares of Beneficial Interest subscribed 226,000 Interest receivable 7,153,725 Prepaid expenses 11,847 350,660,841 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 163,254 Due to Distributor 97,894 Cash overdraft due to Custodian 1,300,931 Payable for shares of Beneficial Interest redeemed 177,331 Accrued expenses 59,291 1,798,701 - -------------------------------------------------------------------------------- NET ASSETS ($) 348,862,140 - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 350,921,499 Accumulated net realized gain (loss) on investments 2,092,815 Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (4,152,174) - -------------------------------------------------------------------------------- NET ASSETS ($) 348,862,140 NET ASSET VALUE PER SHARE Class A Class B Class C - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets 295,489,093 49,164,752 4,208,295 Shares Outstanding 26,014,646 4,332,211 371,043 NET ASSET VALUE PER SHARE 11.36 11.35 11.34 SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF OPERATIONS Six Months Ended October 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 10,826,139 EXPENSES: Management fee--Note 3(a) 1,012,337 Shareholder servicing costs--Note 3(c) 567,830 Distribution fees--Note 3(b) 152,935 Custodian fees 19,362 Prospectus and shareholders' reports 15,752 Registration fees 14,717 Trustees' fees and expenses--Note 3(d) 2,303 Professional fees 2,041 Loan commitment fees--Note 2 809 Interest expense--Note 2 132 Miscellaneous 12,706 TOTAL EXPENSES 1,800,924 INVESTMENT INCOME--NET 9,025,215 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments 1,016,602 Net unrealized appreciation (depreciation) on investments (29,110,559) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (28,093,957) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (19,068,742) SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 9,025,215 18,451,596 Net realized gain (loss) on investments 1,016,602 4,383,270 Net unrealized appreciation (depreciation) on investments (29,110,559) 1,477,323 NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (19,068,742) 24,312,189 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (7,717,826) (15,578,898) Class B shares (1,209,986) (2,715,809) Class C shares (97,403) (156,889) Net realized gain on investments: Class A shares -- (4,072,493) Class B shares -- (834,380) Class C shares -- (50,867) TOTAL DIVIDENDS (9,025,215) (23,409,336) - -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 23,674,697 43,274,085 Class B shares 5,266,121 11,921,647 Class C shares 501,509 2,477,619 Dividends reinvested: Class A shares 4,344,173 11,453,214 Class B shares 751,890 2,410,797 Class C shares 46,710 118,461 Cost of shares redeemed: Class A shares (26,856,679) (47,956,181) Class B shares (11,126,725) (15,340,812) Class C shares (954,626) (194,500) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (4,352,930) 8,164,330 TOTAL INCREASE (DECREASE) IN NET ASSETS (32,446,887) 9,067,183 - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 381,309,027 372,241,844 END OF PERIOD 348,862,140 381,309,027 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 2,002,758 3,505,138 Shares issued for dividends reinvested 369,719 925,802 Shares redeemed (2,279,755) (3,878,849) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 92,722 552,091 - -------------------------------------------------------------------------------- CLASS B(A) Shares sold 441,788 963,796 Shares issued for dividends reinvested 63,984 194,981 Shares redeemed (938,997) (1,244,687) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (433,225) (85,910) - -------------------------------------------------------------------------------- CLASS C Shares sold 42,264 200,538 Shares issued for dividends reinvested 4,006 9,591 Shares redeemed (81,048) (15,793) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (34,778) 194,336 (A) DURING THE PERIOD ENDED OCTOBER 31, 1999, 619,660 CLASS B SHARES REPRESENTING $7,373,786 WERE AUTOMATICALLY CONVERTED TO 619,516 CLASS A SHARES.. SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Six Months Ended October 31, 1999 Year Ended April 30, --------------------------------------------------------------- CLASS A SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.26 12.23 11.81 11.90 11.76 11.81 Investment Operations: Investment income--net .30 .61 .62 .64 .66 .67 Net realized and unrealized gain (loss) on investments (.90) .19 .47 .16 .14 (.05) Total from Investment Operations (.60) .80 1.09 .80 .80 .62 Distributions: Dividends from investment income--net (.30) (.61) (.62) (.64) (.66) (.67) Dividends from net realized gain on investments -- (.16) (.05) (.25) -- -- Total Distributions (.30) (.77) (.67) (.89) (.66) (.67) Net asset value, end of period 11.36 12.26 12.23 11.81 11.90 11.76 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (9.88)(b) 6.70 9.44 6.84 6.85 5.47 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .89(b) .89 .90 .93 .92 .89 Ratio of net investment income to average net assets 4.99(b) 4.94 5.12 5.32 5.45 5.77 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- -- -- -- .01 Portfolio Turnover Rate 15.39(c) 21.95 33.31 30.66 28.83 10.48 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 295,489 317,923 310,343 313,881 321,559 335,964 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Six Months Ended October 31, 1999 Year Ended April 30, ------------------------------------------------------------------ CLASS B SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.26 12.23 11.80 11.89 11.76 11.80 Investment Operations: Investment income--net .26 .55 .56 .57 .60 .61 Net realized and unrealized gain (loss) on investments (.91) .19 .48 .16 .13 (.04) Total from Investment Operations (.65) .74 1.04 .73 .73 .57 Distributions: Dividends from investment income--net (.26) (.55) (.56) (.57) (.60) (.61) Dividends from net realized gain on investments -- (.16) (.05) (.25) -- -- Total Distributions (.26) (.71) (.61) (.82) (.60) (.61) Net asset value, end of period 11.35 12.26 12.23 11.80 11.89 11.76 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (10.53)(b) 6.15 8.97 6.28 6.20 4.99 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.41(b) 1.40 1.42 1.45 1.44 1.41 Ratio of net investment income to average net assets 4.46(b) 4.42 4.59 4.79 4.92 5.21 Decrease reflected in above expense ratios due to undertaking by the Manager -- -- -- -- -- .01 Portfolio Turnover Rate 15.39(c) 21.95 33.31 30.66 28.83 10.48 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 49,165 58,416 59,315 54,661 38,838 35,425 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. Six Months Ended October 31, 1999 Year Ended April 30, ---------------------------------------------- CLASS C SHARES (Unaudited) 1999 1998 1997 1996(a) - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.25 12.22 11.79 11.89 11.84 Investment Operations: Investment income--net .25 .52 .53 .54 .40 Net realized and unrealized gain (loss) on investments (.91) .19 .48 .15 .05 Total from Investment Operations (.66) .71 1.01 .69 .45 Distributions: Dividends from investment income--net (.25) (.52) (.53) (.54) (.40) Dividends from net realized gain on investments -- (.16) (.05) (.25) -- Total Distributions (.25) (.68) (.58) (.79) (.40) Net asset value, end of period 11.34 12.25 12.22 11.79 11.89 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (10.77)(c) 5.88 8.68 5.93 5.31(c) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.65(c) 1.65 1.68 1.70 1.64(c) Ratio of net investment income to average net assets 4.23(c) 4.15 4.29 4.56 4.31(c) Portfolio Turnover Rate 15.39(d) 21.95 33.31 30.66 28.83 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1000) 4,208 4,970 2,583 1,290 1,007 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. (D) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified, open-end management investment company, and operates as a series company currently offering thirteen series including the Connecticut Series (the "fund") . The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A. which is a wholly-owned subsidiary of Mellon Financial Corporation. 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 series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis. The fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (a) Portfolio valuation: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund receives net earnings credit based on available cash balances left on deposit. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) (c) Dividends to shareholders: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the " Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (d) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $500 million redemption credit facility (the "Facility" ) to be utilized for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the fund at rates based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 1999, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (a) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund's average daily net assets and is payable monthly. (b) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Class B and Class C shares pay the Distributor for distributing 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 October 31, 1999, Class B and Class C shares were charged $135,669 and $17,266, respectively, pursuant to the Plan. (c) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay the Distributor at an annual rate of .25 of 1% of the value of the average daily net assets 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 October 31, 1999, Class A, Class B and Class C shares were charged $386,563, $67,834 and $5,756, respectively, pursuant to the Shareholder Services Plan. The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended October 31, 1999, the fund was charged $74,898 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 October 31, 1999, amounted to $55,255,692 and $79,004,919, respectively. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) At October 31, 1999, accumulated net unrealized depreciation on investments was $4,152,174, consisting $7,845,490 gross unrealized appreciation and $11,997,664 gross unrealized depreciation. At October 31, 1999, 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). NOTES For More Information Dreyfus Premier State Municipal Bond Fund, Connecticut Series 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Distributor Premier Mutual Fund Services, Inc. 60 State Street Boston, MA 02109 To obtain information: BY TELEPHONE Call your financial representative or 1-800-554-4611 BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 (c) 1999 Dreyfus Service Corporation 064/623SA9910 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Florida Series SEMIANNUAL REPORT October 31, 1999 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Year 2000 Issues (Unaudited) The fund could be adversely affected if the computer systems used by The Dreyfus Corporation and the fund's other service providers do not properly process and calculate date-related information from and after January 1, 2000. The Dreyfus Corporation is working to avoid Year 2000-related problems in its systems and to obtain assurances from other service providers that they are taking similar steps. In addition, issuers of securities in which the fund invests may be adversely affected by Year 2000-related problems. This could have an impact on the value of the fund's investments and its share price. Contents THE FUND - -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Statement of Investments 10 Statement of Assets and Liabilities 11 Statement of Operations 12 Statement of Changes in Net Assets 14 Financial Highlights 17 Notes to Financial Statements FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Florida Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this semiannual report for Dreyfus Premier State Municipal Bond Fund, Florida Series, covering the six-month period from May 1, 1999 through October 31, 1999. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio manager, Douglas Gaylor. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates twice during the summer of 1999, effectively offsetting most of last fall' s interest-rate cuts. Higher interest rates led to some erosion of municipal bond prices, especially toward the end of the reporting period. In this environment, however, the yields of tax-exempt bonds have recently been quite attractive compared to the after-tax yields of taxable bonds of comparable maturity and credit quality. This is especially true for investors in the higher federal income tax brackets. We appreciate your confidence over the past six months, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Florida Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation November 15, 1999 DISCUSSION OF FUND PERFORMANCE Douglas Gaylor, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Florida Series perform during the period? For the six-month period ended October 31, 1999, the fund's Class A shares provided a -4.80% total return; its Class B shares provided a -5.05% total return; and its Class C shares provided a -5.19% total return.(1) In comparison, the Lipper Florida Municipal Debt Funds category average provided a -5.00% total return(2) for the same period. We attribute the fund's negative absolute returns over the past six months to a declining municipal bond market and a rising interest rate environment. The modest relative outperformance of the fund's Class A shares compared to its benchmark is primarily the result of our security selection strategy, which was designed to help position the fund to take advantage of attractive values created by the municipal bond market's decline. What is the fund's investment approach? Our goal is to seek as high a level of federally tax-exempt income as is practical from a diversified portfolio of long-term municipal bonds without undue risk. To achieve this objective, we employ two primary strategies. First, for between one-half and three quarters of the total fund, we look for bonds that potentially can provide consistently high current yields. We also try to ensure that we select bonds that are most likely to obtain attractive prices if and when we decide to sell them in the secondary market. Second, for the remainder of the fund, we try to look for bonds that we believe have the potential to offer attractive total returns. We typically look for bonds that are selling at a discount to face value because they may be temporarily out-of-favor among investors. Our belief is that these bonds' prices will rise as they return to favor over time. The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) What other factors influenced the fund's performance? The fund was adversely affected by rising interest rates over the past six months. When the reporting period began on May 1, 1999, investors were concerned that continued economic strength might rekindle long-dormant inflationary pressures. In fact, in an attempt to forestall a potential reacceleration of inflation, the Federal Reserve Board raised short-term interest rates twice during the summer of 1999. As interest rates rose, taxable fixed-income investments such as corporate bonds became more attractive to institutional investors such as hedge funds and insurance companies. Accordingly, many of these investors sold large numbers of municipal bonds into the secondary market, putting pressure on prices. In addition, strong economic conditions have contributed to the nation's first federal budget surplus in many years. While the government has had less need to issue U.S. Treasury securities, demand has remained high from domestic and overseas investors. This imbalance between supply and demand has recently constrained the rise of taxable bond yields relative to tax-exempt bonds. As a result, municipal bonds -- including those from Florida issuers -- are currently offering tax-exempt yields that compare very favorably with taxable yields after adjusting for taxes. What is the fund's current strategy? After the recent municipal bond market declines, we have focused primarily on positioning the fund to take advantage of what we anticipate to be an ensuing market recovery. This is consistent with our long-term perspective, in which we measure our success over a full interest-rate cycle. In preparation for the second "leg" of that cycle in a recovering market, which had not yet materialized as of October 31, we have focused on tax-exempt securities selling at deep discounts to their face values. Many of these bonds, in our opinion, have been punished more severely than circumstances warrant, and we believe that they should recover strongly when investors once again recognize their true values. As a result of this strategy, the fund' s average duration has lengthened naturally. While this has made the fund more vulnerable to the adverse effects of higher interest rates over the short term, we believe that it also positions us to participate more strongly in the market's recovery if interest rates moderate over the longer term. November 15, 1999 (1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID, AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES FOR NON-FLORIDA RESIDENTS. SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE. (2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. The Fund STATEMENT OF INVESTMENTS October 31, 1999 (Unaudited) Principal LONG-TERM MUNICIPAL INVESTMENTS--105.5% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA--98.8% Brevard County, IDR (Nui Corp. Project) 6.40%, 10/1/2024 (Insured; AMBAC) 1,000,000 1,025,450 Broward County Health Facilities Authority, Revenue (Broward County Nursing Home) 7.50%, 8/15/2020 (LOC; Allied Irish Bank) 1,000,000 1,050,420 Broward County Housing Finance Authority, MFHR (Bridgewater Place Apartments) 5.40%, 10/1/2029 2,000,000 1,780,880 Charlotte County: Healthcare Facilities Revenue (Charlotte Community Health Project) 9.25%, 7/1/2020 1,550,000 1,603,862 Utility Revenue 5%, 10/1/2023 (Insured; FGIC) 2,500,000 2,194,575 Clark County, IDR, (Nevada Power Co. Project) 5.90%, 10/1/2030 2,500,000 2,203,550 Dade County Housing Finance Authority, SFMR 6.70%, 4/1/2028 (Collateralized: FNMA, GNMA) 4,500,000 4,615,020 Duval County Housing Finance Authority, SFMR: 7.85%, 12/1/2022 (Collateralized; GNMA) 1,800,000 1,847,988 7.70%, 9/1/2024 (Collateralized; GNMA, Insured; FGIC) 805,000 835,212 Escambia County Housing Finance Authority, SFMR 7.80%, 4/1/2022 (Collateralized; GNMA) 555,000 573,776 Florida Board of Education: Capital Outlay (Public Education): 4.50%, 6/1/2019 (Insured; FSA) 7,000,000 5,774,720 4.50%, 6/1/2022 (Insured; FSA) 3,700,000 2,996,556 Lottery Revenue 4.50%, 7/1/2017 (Insured; FGIC) 2,110,000 1,760,837 Florida Department of Juvenile Justice (Juvenile Residential) 5.20%, 6/15/2019 (Insured; MBIA) 5,984,000 5,626,815 Florida, Housing Finance Agency: (Brittany Rosemont Apartments) 7%, 2/1/2035 (Insured; AMBAC) 6,000,000 6,385,020 Single Family Mortgage: 6.65%, 1/1/2024 (Collateralized: FNMA, GNMA) 2,365,000 2,449,099 6.65%, 7/1/2026 (Insured; MBIA) 1,425,000 1,468,064 Hillsborough County, Utility Revenue: 6.625%, 8/1/2011 4,000,000 4,154,480 7%, 8/1/2014 4,765,000 4,968,751 Hillsborough County Aviation Authority, Revenue (Delta Airlines) 6.80%, 1/1/2024 2,500,000 2,579,700 Hillsborough County Industrial Development Authority, PCR (Tampa Electric Co. Project) 6.25%, 12/1/2034 (Insured; MBIA) 1,000,000 1,018,410 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA (CONTINUED) Jacksonville Health Facilities Authority, HR (St. Luke's Hospital) 7.125%, 11/15/2020 13,000,000 13,756,080 Lee County Housing Finance Authority SFMR: 6.30%, 3/1/2029 (Collateralized: FNMA, GNMA) 970,000 1,010,216 (Multi-County Program) 7.45%, 9/1/2027 (Collateralized: FNMA, GNMA) 1,065,000 1,184,472 Marion County, Hospital District Revenue, Improvement (Munroe Regional Hospital) 5.625%, 10/1/2024 2,500,000 2,270,175 Miami-Dade County Housing Finance Authority, MFMR (Villa Esperanza Apartments Project) 5.35%, 10/1/2028 1,000,000 881,440 Miramar, Public Service Tax Revenue 6.15%, 10/1/2024 (Insured; FGIC) 1,000,000 1,009,310 Orange County, Tourist Development Tax Revenue 4.75%, 10/1/2024 (Insured; AMBAC) 9,160,000 7,642,096 Orange County Housing Finance Authority, MFHR (Seminole Pointe Project) 5.75%, 12/1/2023 2,840,000 2,674,286 Osceola County Industrial Development Authority, Revenue (Community Provider Pooled Loan Program) 7.75%, 7/1/2017 5,235,000 5,430,266 Palm Beach County, Solid Waste Industrial Development Revenue: (Okeelanta Power LP Project) 6.85%, 2/15/2021 7,500,000 (b) 4,593,750 (Osceola Power LP) 6.85%, 1/1/2014 5,800,000 (b) 3,494,500 Palm Beach County Housing Finance Authority Single Family Mortgage Purchase Revenue 6.55%, 4/1/2027 (Collateralized: FNMA, GNMA) 1,900,000 1,950,559 Pinellas County, PCR (Florida Power Corp.) 7.20%, 12/1/2014 2,000,000 2,112,420 Pinellas County Housing Finance Authority, SFMR: 7.70%, 8/1/2022 (Collateralized; GNMA) 1,650,000 1,709,812 (Multi-County Program) 6.70%, 2/1/2028 (Collateralized: FNMA, GNMA) 4,040,000 4,163,220 Polk County Industrial Development Authority, IDR (IMC Fertilizer) 7.525%, 1/1/2015 10,000,000 10,331,400 Port Everglades Authority, Port Improvement Revenue 5%, 9/1/2016 (Insured; MBIA) 1,000,000 908,160 St. Lucie, SWDR (Florida Power and Light Co. Project) 7.15%, 2/1/2023 2,000,000 2,089,200 Seminole, Water Control District 6.75%, 8/1/2022 2,000,000 1,950,980 Seminole County, Sales Tax Revenue 4.625%, 10/1/2022 (Insured; MBIA) 2,015,000 1,664,612 The Fund STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA (CONTINUED) Tampa: Alleghany Health System Revenue (St. Joseph) 6.50%, 12/1/2023 (Insured; MBIA, Prerefunded 12/1/2004) 1,000,000 (a) 1,096,610 Solid Waste System Revenue (McKay Bay Refuse) 5.25%, 10/1/2014 (Insured; AMBAC) 4,940,000 4,659,161 Utility Tax Zero Coupon, 4/1/2017 (Insured; AMBAC) 2,110,000 743,184 Tampa Bay Water, Utility System Revenue: 4.75%, Series A, 10/1/2027 (Insured; FGIC) 5,875,000 4,847,933 4.75%, Series B, 10/1/2027 (Insured; FGIC) 3,500,000 2,888,130 Tampa Sports Authority, Sales Tax Revenue (Tampa Bay Arena Project) 5.75%, 10/1/2025 (Insured; MBIA) 1,000,000 988,660 Tarpon Springs Health Facilities Authority, Hospital Revenue (Helen Ellis Memorial Hospital Project) 7.625%, 5/1/2021 3,990,000 4,021,162 Village Center Community Development District, Recreational Revenue 5%, 11/1/2023 (Insured; MBIA) 2,000,000 1,755,360 NEVADA--1.1% Clark County, IDR (Nevada Power Co. Project) 5.60%, 10/1/2030 2,000,000 1,685,960 U.S. RELATED--5.6% Guam Power Authority, Revenue 5%, 10/1/2024 (Insured; AMBAC) 1,000,000 870,900 Commonwealth of Puerto Rico, Public Improvement 4.50%, 7/1/2023 (Insured; FSA) 2,920,000 2,374,661 Puerto Rico Electric Power Authority, Power Revenue 5%, 7/1/2028 (Insured; FSA) 6,000,000 5,216,160 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $166,985,366) 105.5% 158,888,020 LIABILITIES, LESS CASH AND RECEIVABLES (5.5%) (8,338,181) NET ASSETS 100.0% 150,549,839 Summary of Abbreviations AMBAC American Municipal Bond Assurance LOC Letter of Credit Corporation MBIA Municipal Bond Investors Assurance FGIC Financial Guaranty Insurance Company Insurance Corporation FNMA Federal National Mortgage Association MFHR Multi-Family Housing Revenue FSA Financial Security Assurance MFMR Multi-Family Mortgage Revenue GNMA Government National Mortgage PCR Pollution Control Revenue Association SFMR Single Family Mortgage Revenue HR Hospital Revenue SWDR Solid Waste Disposal Revenue IDR Industrial Development Revenue Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) - ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 53.7 AA Aa AA 10.0 A A A 12.5 BBB Baa BBB 10.6 BB Ba BB 2.5 Not Rated(c) Not Rated(c) Not Rated(c) 10.7 100.0 (A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. (B) NON-INCOME ACCRUING SECURITY. (C) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 (Unaudited) Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 166,985,366 158,888,020 Interest receivable 2,765,800 Receivable for investment securities sold 1,080,570 Receivable for shares of Beneficial Interest subscribed 29,319 Prepaid expenses 13,548 162,777,257 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 76,930 Due to Distributor 40,382 Cash overdraft due to Custodian 90,344 Payable for investment securities purchased 11,659,546 Payable for shares of Beneficial Interest redeemed 322,007 Accrued expenses 38,209 12,227,418 - -------------------------------------------------------------------------------- NET ASSETS ($) 150,549,839 - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 158,494,925 Accumulated net realized gain (loss) on investments 152,260 Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (8,097,346) - -------------------------------------------------------------------------------- NET ASSETS ($) 150,549,839 NET ASSET VALUE PER SHARE Class A Class B Class C - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets 131,327,532 18,851,599 370,708 Shares Outstanding 10,079,696 1,447,544 28,455 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 13.03 13.02 13.03 SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS Six Months Ended October 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 4,763,580 EXPENSES: Management fee--Note 3(a) 449,901 Shareholder servicing costs--Note 3(c) 236,442 Distribution fees--Note 3(b) 57,517 Professional fees 19,391 Registration fees 17,010 Prospectus and shareholders' reports 16,052 Custodian fees 8,527 Trustees' fees and expenses--Note 3(d) 1,156 Loan commitment fees--Note 2 320 Miscellaneous 7,359 TOTAL EXPENSES 813,675 INVESTMENT INCOME--NET 3,949,905 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (246,932) Net unrealized appreciation (depreciation) on investments (11,805,764) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (12,052,696) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (8,102,791) SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 3,949,905 8,448,485 Net realized gain (loss) on investments (246,932) 2,468,854 Net unrealized appreciation (depreciation) on investments (11,805,764) (1,559,597) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (8,102,791) 9,357,742 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (3,449,266) (7,184,648) Class B shares (492,591) (1,247,785) Class C shares (8,048) (16,052) Net realized gain on investments: Class A shares -- (2,111,066) Class B shares -- (426,489) Class C shares -- (6,465) TOTAL DIVIDENDS (3,949,905) (10,992,505) - -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 6,845,254 6,795,289 Class B shares 722,256 1,932,433 Class C shares 55,574 289,864 Dividends reinvested: Class A shares 1,246,885 3,582,522 Class B shares 129,027 564,491 Class C shares 2,053 6,371 Cost of shares redeemed: Class A shares (15,578,043) (27,626,849) Class B shares (7,040,762) (8,078,977) Class C shares (52,268) (261,074) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (13,670,024) (22,795,930) TOTAL INCREASE (DECREASE) IN NET ASSETS (25,722,720) (24,430,693) - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 176,272,559 200,703,252 END OF PERIOD 150,549,839 176,272,559 SEE NOTES TO FINANCIAL STATEMENTS. Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 502,601 477,800 Shares issued for dividends reinvested 92,676 250,751 Shares redeemed (1,148,963) (1,932,468) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (533,686) (1,203,917) - -------------------------------------------------------------------------------- CLASS B(A) Shares sold 51,672 134,751 Shares issued for dividends reinvested 9,580 39,521 Shares redeemed (517,199) (567,781) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (455,947) (393,509) - -------------------------------------------------------------------------------- CLASS C Shares sold 4,117 20,218 Shares issued for dividends reinvested 153 446 Shares redeemed (3,934) (18,353) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 336 2,311 (A) DURING THE PERIOD ENDED OCTOBER 31, 1999, 324,025 CLASS B SHARES REPRESENTING $4,411,438 WERE AUTOMATICALLY CONVERTED TO 323,969 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Six Months Ended October 31, 1999 Year Ended April 30, ---------------------------------------------------------------- CLASS A SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 14.03 14.17 14.06 14.48 14.51 14.43 Investment Operations: Investment income--net .33 .65 .66 .76 .79 .81 Net realized and unrealized gain (loss) on investments (1.00) .05 .26 (.08) .17 .12 Total from Investment Operations (.67) .70 .92 .68 .96 .93 Distributions: Dividends from investment income--net (.33) (.65) (.66) (.76) (.79) (.81) Dividends from net realized gain on investments -- (.19) (.15) (.34) (.20) (.04) Total Distributions (.33) (.84) (.81) (1.10) (.99) (.85) Net asset value, end of period 13.03 14.03 14.17 14.06 14.48 14.51 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (9.52)(b) 5.00 6.73 4.74 6.63 6.71 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .92(b) .92 .91 .92 .91 .90 Ratio of net investment income to average net assets 4.90(b) 4.53 4.67 5.27 5.29 5.67 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- -- -- -- .01 Portfolio Turnover Rate 23.93(c) 88.48 91.18 71.68 54.37 50.62 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 131,328 149,185 167,793 202,503 227,478 252,406 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. Six Months Ended October 31, 1999 Year Ended April 30, ----------------------------------------------------------------- CLASS B SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 14.02 14.17 14.05 14.47 14.51 14.42 Investment Operations: Investment income--net .30 .57 .59 .69 .71 .73 Net realized and unrealized gain (loss) on investments (1.00) .04 .27 (.08) .16 .13 Total from Investment Operations (.70) .61 .86 .61 .87 .86 Distributions: Dividends from investment income--net (.30) (.57) (.59) (.69) (.71) (.73) Dividends from net realized gain on investments -- (.19) (.15) (.34) (.20) (.04) Total Distributions (.30) (.76) (.74) (1.03) (.91) (.77) Net asset value, end of period 13.02 14.02 14.17 14.05 14.47 14.51 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (10.02)(b) 4.40 6.26 4.21 6.01 6.21 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.42(b) 1.42 1.41 1.42 1.41 1.41 Ratio of net investment income to average net assets 4.39(b) 4.02 4.16 4.76 4.77 5.13 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- -- -- -- .01 Portfolio Turnover Rate 23.93(c) 88.48 91.18 71.68 54.37 50.62 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 18,852 26,693 32,545 35,802 27,023 25,282 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Six Months Ended October 31, 1999 Year Ended April 30, ---------------------------------------------- CLASS C SHARES (Unaudited) 1999 1998 1997 1996(a) - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 14.03 14.17 14.05 14.47 14.65 Investment Operations: Investment income--net .28 .53 .55 .65 .48 Net realized and unrealized gain (loss) on investments (1.00) .05 .27 (.08) .02 Total from Investment Operations (.72) .58 .82 .57 .50 Distributions: Dividends from investment income--net (.28) (.53) (.55) (.65) (.48) Dividends from net realized gain on investments -- (.19) (.15) (.34) (.20) Total Distributions (.28) (.72) (.70) (.99) (.68) Net asset value, end of period 13.03 14.03 14.17 14.05 14.47 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (10.30)(c) 4.13 5.94 3.95 4.69(c) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.67(c) 1.75 1.71 1.97 1.99(c) Ratio of net investment income to average net assets 4.10(c) 3.69 3.69 4.60 4.20(c) Portfolio Turnover Rate 23.93(d) 88.48 91.18 71.68 54.37 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 371 394 366 58 35 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. (D) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company, and operates as a series company currently offering thirteen series, including the Florida Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. 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 series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis. The fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service (" Service" ) The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities) . Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $2,453 during the period ended October 31, 1999, based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (D) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $500 million redemption credit facility (the "Facility") to be utilized for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the fund at rates based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 1999, 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 $1,325 during the period ended October 31, 1999 from commissions earned on sales of the fund's shares. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) (B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Class B and Class C shares pay the Distributor for distributing their shares at an annual rate of .50 of 1% of the value of the average daily net assets of Class B shares and .75 of 1% of the value of the average daily net assets of Class C shares. During the period ended October 31, 1999, Class B and Class C shares were charged $56,044 and $1,473, respectively, pursuant to the Plan. (C) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay the Distributor at an annual rate of .25 of 1% of the value of the average daily net assets 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 October 31, 1999, Class A, Class B and Class C shares were charged $175,987, $28,022 and $491, respectively, pursuant to the Shareholder Services Plan. The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended October 31, 1999, the fund was charged $13,595 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 October 31, 1999, amounted to $38,818,339 and $38,777,877, respectively. At October 31, 1999, accumulated net unrealized depreciation on investments was $8,097,346, consisting of $3,477,086 gross unrealized appreciation and $11,574,432 gross unrealized depreciation. At October 31, 1999, the cost of investments for Federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments). The Fund For More Information Dreyfus Premier State Municipal Bond Fund, Florida Series 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Distributor Premier Mutual Fund Services, Inc. 60 State Street Boston, MA 02109 To obtain information: BY TELEPHONE Call your financial representative or 1-800-554-4611 BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 (c) 1999 Dreyfus Service Corporation 051/615SA9910 ================================================================================ Dreyfus Premier State Municipal Bond Fund Georgia Series SEMIANNUAL REPORT October 31, 1999 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Year 2000 Issues (Unaudited) The fund could be adversely affected if the computer systems used by The Dreyfus Corporation and the fund's other service providers do not properly process and calculate date-related information from and after January 1, 2000. The Dreyfus Corporation is working to avoid Year 2000-related problems in its systems and to obtain assurances from other service providers that they are taking similar steps. In addition, issuers of securities in which the fund invests may be adversely affected by Year 2000-related problems. This could have an impact on the value of the fund's investments and its share price. Contents THE FUND - -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Statement of Investments 9 Statement of Assets and Liabilities 10 Statement of Operations 11 Statement of Changes in Net Assets 13 Financial Highlights 16 Notes to Financial Statements FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Georgia Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this semiannual report for Dreyfus Premier State Municipal Bond Fund, Georgia Series, covering the six-month period from May 1, 1999 through October 31, 1999. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio manager, Paul Disdier. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates twice during the summer of 1999, effectively offsetting most of last fall' s interest-rate cuts. Higher interest rates led to some erosion of municipal bond prices, especially toward the end of the reporting period. In this environment, however, the yields of tax-exempt bonds have recently been quite attractive compared to the after-tax yields of taxable bonds of comparable maturity and credit quality. This is especially true for investors in the higher federal income tax brackets. We appreciate your confidence over the past six months, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Georgia Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation November 15, 1999 DISCUSSION OF FUND PERFORMANCE Paul Disdier, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Georgia Series perform during the period? For the six-month period ended October 31, 1999, the fund's Class A shares provided a -5.54% total return; its Class B shares provided a -5.85% total return; and its Class C shares provided a -5.90% total return.(1 )In comparison, the Lipper Georgia Municipal Debt Funds category average provided a -5.14% total return(2) for the same period. We attribute the fund's negative absolute returns over the past six months to a declining municipal bond market and a rising interest-rate environment. Our modest relative underperformance compared to the fund's benchmark is primarily the result of a longer average maturity profile compared to the benchmark, as well as to a relatively small Georgia bond market, where the recent scarcity of new issuance limited our investment choices. What is the fund's investment approach? Our goal is to seek as high a level of federal and Georgia tax-exempt income as is practical from a diversified portfolio of municipal bonds without undue risk. To achieve this objective, we look for bonds that we expect to provide consistently high income streams. We strive to find such opportunities through rigorous analyses of individual bonds' structures. Within the context of our bond structure analysis, we pay particularly close attention to each bond's maturity and early redemption features. What other factors influenced the fund's performance? The fund was adversely affected by rising interest rates over the past six months. When the reporting period began on May 1, 1999, investors were concerned that continued economic strength might rekindle long-dormant inflationary pressures. In fact, in an attempt to forestall a The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) potential reacceleration of inflation, the Federal Reserve Board raised short-term interest rates twice during the summer of 1999. As interest rates rose, taxable fixed-income investments such as corporate bonds became more attractive to institutional investors such as hedge funds and insurance companies. Accordingly, many of these investors sold large numbers of municipal bonds into the secondary market, putting pressure on prices. Some, but not all, of this increased supply was absorbed by increased demand from individual investors seeking to manage their income tax liabilities. In addition, strong economic conditions have contributed to the nation's first federal budget surplus in many years. While the government has had less need to issue U.S. Treasury securities, demand has remained high from domestic and overseas investors. This imbalance between supply and demand has recently constrained the rise of taxable bond yields relative to tax-exempt bonds. As a result, municipal bonds -- including those from Georgia issuers -- are currently offering tax-exempt yields that compare very favorably with taxable yields after adjusting for taxes. What is the fund's current strategy? We have recently attempted to position the fund for opportunities to upgrade its holdings and maintain or enhance its income distributions. More specifically, we have raised cash in anticipation of potentially higher interest rates by selling long-term bonds that were priced at discounts to their face values. We redeployed some of those assets in higher yielding, investment grade bonds with shorter maturities. By replacing longer duration bonds with shorter duration bonds, we effectively reduced the fund's sensitivity to the adverse effects of rising interest rates. We have invested the remainder of the proceeds from longer term bond sales in very short-term, tax-exempt money market securities. We expect to put that cash to work when we feel the market stabilizes and opportunities to lock in high yields arise. We believe that such opportunities are likely to occur toward the end of the year, when a relative lack of new bond issuance may drive yields higher. In our view, issuers are likely to wait until after January 1, 2000 to raise capital in the municipal debt markets in order to avoid potential Y2K-related market disruptions. Yet demand for municipal bonds should remain high from individuals seeking to minimize their income tax liabilities. November 15, 1999 (1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID, AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES FOR NON-GEORGIA RESIDENTS. SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE. RETURN FIGURES PROVIDED REFLECT THE ABSORPTION OF FUND EXPENSES BY THE DREYFUS CORPORATION PURSUANT TO AN AGREEMENT IN EFFECT THROUGH 4/30/00, AT WHICH TIME IT MAY BE EXTENDED, TERMINATED OR MODIFIED. HAD THESE EXPENSES NOT BEEN ABSORBED, THE FUND'S RETURNS WOULD HAVE BEEN LOWER. (2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. The Fund STATEMENT OF INVESTMENTS October 31, 1999 (Unaudited) Principal LONG-TERM MUNICIPAL INVESTMENTS--88.0% Amount ($) Value ($) - --------------------------------------------------------------------------------------------------------------------------------- Atlanta Urban Residential Finance Authority, MFHR (New Community) 5.50%, 11/20/2027 (Collateralized; GNMA) 1,325,000 1,202,318 Barrow County School District 5.60%, 2/1/2015 (Insured; MBIA) 1,000,000 985,300 Brunswick & Glynn County Development Authority, Revenue (Pacific Corp. Project) 5.55%, 3/1/2026 1,000,000 855,780 Carroll County Water Authority, Water and Sewer Revenue 4.75%, 7/1/2022 (Insured; AMBAC) 1,000,000 832,600 Cherokee County, Water and Sewer Revenue, 4.75%, 8/1/2028 (Insured; FGIC) 1,000,000 811,580 Clayton County and Clayton County Water Authority, Water and Sewer Revenue 5.60%, 5/1/2013 (Insured; AMBAC) 900,000 905,139 Columbia County, Water and Sewer Revenue 5.40%, 6/1/2011 (Insured; AMBAC) 750,000 751,905 Fayette County School District 6.125%, 3/1/2015 500,000 536,525 Fulton County, Water and Sewer Revenue 6.375%, 1/1/2014 (Insured; FGIC, Escrowed to Maturity) 260,000 283,184 Gainesville, Water and Sewer Revenue 6%, 11/15/2012 (Insured; FGIC) 300,000 315,969 Georgia: 6.65%, 3/1/2009 1,000,000 1,118,270 5.65%, 3/1/2012 1,000,000 1,025,400 Georgia Housing and Finance Authority, SFMR 6.50%, 12/1/2017 (Insured; FHA) 1,000,000 1,026,810 Georgia Municipal Gas Authority, Gas Revenue (Warner Robins Project) 5.80%, 1/1/2015 (Insured; MBIA) 1,000,000 1,000,870 Marietta Development Authority, Revenue (First Mortgage-Life College) 5.75%, 9/1/2014 (Insured; FSA) 850,000 850,723 Marietta School 4.50%, 2/1/2019 1,000,000 821,570 Meriwether County School District 5.50%, 2/1/2016 (Insured; FSA) 750,000 723,772 Metropolitan Atlanta Rapid Transportation Authority, Sales Tax Revenue 6.25%, 7/1/2020 (Insured; AMBAC) 300,000 314,439 Private Colleges and Universities Authority, Revenue (Emory University Project) 5.50%, 11/1/2019 750,000 714,615 (Spellman College Project) 6.20%, 6/1/2014 (Insured; FGIC) 1,000,000 1,046,900 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ----------------------------------------------------------------------------------------------------------------------------------- Royston Hospital Authority, HR (Ty Cobb Healthcare System, Inc.) 6.50%, 7/1/2027 700,000 665,959 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $17,255,466) 16,789,628 - ----------------------------------------------------------------------------------------------------------------------------------- SHORT-TERM MUNICIPAL INVESTMENTS--10.0% - ----------------------------------------------------------------------------------------------------------------------------------- GEORGIA--4.7% Hapeville Development Authority, VRDN (Hapeville Hotel, Ltd.) 3.55% 900,000(a) 900,000 U. S. RELATED--5.3% Puerto Rico Commonwealth Highway and Transportation Authority, VRDN 3.10% 1,000,000(a) 1,000,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $1,900,000) 1,900,000 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $19,155,466) 98.0% 18,689,628 CASH AND RECEIVABLES (NET) 2.0% 382,141 NET ASSETS 100.0% 19,071,769 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Summary of Abbreviations AMBAC American Municipal Bond HR Hospital Revenue Assurance Corporation MBIA Municipal Bond Investors Assurance FGIC Financial Guaranty Insurance Company Insurance Corporation FHA Federal Housing Administration MFHR Multi-Family Housing Revenue FSA Financial Security Assurance SFMR Single Family Mortgage Revenue GNMA Government National Mortgage VRDN Variable Rate Demand Notes Association Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) - ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 70.6 AA Aa AA 11.1 BBB Baa BBB 8.1 F1+, F-1 MIG1, VMIG1 & P1 SP1, A1 10.2 100.0 (A) SECURITY PAYABLE ON DEMAND. VARIABLE INTEREST RATE SUBJECT TO PERIODIC CHANGE. (B) AT OCTOBER 31, 1999, THE FUND HAD $4,901,247 (25.7% OF NET ASSETS) INVESTED IN SECURITIES WHOSE PAYMENT OF PRINCIPAL AND INTEREST IS DEPENDENT UPON REVENUES GENERATED FROM UTILITY-WATER AND SEWER PROJECTS. SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 (Unaudited) Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 19,155,466 18,689,628 Cash 83,035 Interest receivable 293,641 Prepaid expenses 12,104 Due from The Dreyfus Corporation 4,255 19,082,663 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to Distributor 7,409 Payable for shares of Beneficial Interest redeemed 13 Accrued expenses 3,472 10,894 - -------------------------------------------------------------------------------- NET ASSETS ($) 19,071,769 - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 19,579,124 Accumulated net realized gain (loss) on investments (41,517) Accumulated net unrealized appreciation (depreciation) (465,838) on investments--Note 4 - -------------------------------------------------------------------------------- NET ASSETS 19,071,769 NET ASSET VALUE PER SHARE Class A Class B Class C - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 10,857,472 8,151,884 62,413 Shares Outstanding 850,981 638,719 4,895 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 12.76 12.76 12.75 SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF OPERATIONS Six Months Ended October 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 535,271 EXPENSES: Management fee--Note 3(a) 54,731 Shareholder servicing costs--Note 3(c) 31,970 Distribution fees--Note 3(b) 24,899 Registration fees 16,306 Professional fees 13,780 Prospectus and shareholders' reports 9,678 Custodian fees 651 Trustees' fees and expenses--Note 3(d) 156 Loan commitment fees--Note 2 70 Miscellaneous 3,311 TOTAL EXPENSES 155,552 Less-reduction in management fee due to undertaking--Note 3(a) (30,621) NET EXPENSES 124,931 INVESTMENT INCOME-NET 410,340 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4: Net realized gain (loss) on investments 25,758 Net unrealized appreciation (depreciation) on investments (1,600,993) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (1,575,235) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (1,164,895) SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 410,340 904,128 Net realized gain (loss) on investments 25,758 544,900 Net unrealized appreciation (depreciation) on investments (1,600,993) (214,880) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (1,164,895) 1,234,148 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (218,478) (290,432) Class B shares (191,259) (612,746) Class C shares (603) (950) TOTAL DIVIDENDS (410,340) (904,128) - -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 3,782,002 3,073,890 Class B shares 1,893,866 630,199 Class C shares 84,450 35,401 Dividends reinvested: Class A shares 136,555 186,394 Class B shares 106,514 298,894 Class C shares 265 409 Cost of shares redeemed: Class A shares (1,039,949) (784,843) Class B shares (5,658,983) (6,162,616) Class C shares (65,246) (32,325) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (760,526) (2,754,597) TOTAL INCREASE (DECREASE) IN NET ASSETS (2,335,761) (2,424,577) - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 21,407,530 23,832,107 END OF PERIOD 19,071,769 21,407,530 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A (A) Shares sold 280,705 220,547 Shares issued for dividends reinvested 10,360 13,383 Shares redeemed (75,025) (56,295) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 216,040 177,635 - -------------------------------------------------------------------------------- CLASS B (A) Shares sold 139,569 45,364 Shares issued for dividends reinvested 8,065 21,439 Shares redeemed (420,404) (443,237) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (272,770) (376,434) - -------------------------------------------------------------------------------- CLASS C Shares sold 6,444 2,553 Shares issued for dividends reinvested 20 29 Shares redeemed (4,939) (2,305) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 1,525 277 (A) DURING THE PERIOD ENDED OCTOBER 31, 1999, 183,711 CLASS B SHARES REPRESENTING $2,462,065 WERE AUTOMATICALLY CONVERTED TO 183,813 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Six Months Ended October 31, 1999 Year Ended April 30, ------------------------------------------------------------ CLASS A SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.81 13.63 13.22 13.05 12.80 12.69 Investment Operations: Investment income--net .29 .60 .61 .62 .66 .73 Net realized and unrealized gain (loss) on investments (1.05) .18 .41 .17 .25 .11 Total from Investment Operations (.76) .78 1.02 .79 .91 .84 Distributions: Dividends from investment income--net (.29) (.60) (.61) (.62) (.66) (.73) Net asset value, end of period 12.76 13.81 13.63 13.22 13.05 12.80 - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (%) (A) (10.99)(b) 5.74 7.76 6.16 7.14 6.87 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .99(b) .99 .95 .98 .74 .25 Ratio of net investment income to average net assets 4.38(b) 4.27 4.44 4.71 5.00 5.80 Decrease reflected in above expense ratios due to undertakings by the Manager .35(b) -- -- -- .21 .78 Portfolio Turnover Rate 16.95(c) 69.13 36.64 50.96 33.09 34.04 - ----------------------------------------------------------------------------------------------------------------------------------- Net Assets, end of period ($ x 1,000) 10,857 8,769 6,232 6,598 8,346 8,985 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Six Months Ended October 31, 1999 Year Ended April 30, ----------------------------------------------------------------- CLASS B SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.82 13.63 13.22 13.06 12.80 12.69 Investment Operations: Investment income--net .26 .53 .54 .56 .59 .66 Net realized and unrealized gain (loss) on investments (1.06) .19 .41 .16 .26 .11 Total from Investment Operations (.80) .72 .95 .72 .85 .77 Distributions: Dividends from investment income-net (.26) (.53) (.54) (.56) (.59) (.66) Net asset value, end of period 12.76 13.82 13.63 13.22 13.06 12.80 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%) (A) (11.60)(b) 5.29 7.24 5.55 6.69 6.33 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.51(b) 1.49 1.44 1.47 1.24 .75 Ratio of net investment income to average net assets 3.85(b) 3.79 3.94 4.20 4.46 5.27 Decrease reflected in above expense ratios due to undertakings by the Manager .27(b) -- -- -- .20 .80 Portfolio Turnover Rate 16.95(c) 69.13 36.64 50.96 33.09 34.04 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 8,152 12,592 17,558 18,211 20,106 19,429 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. Six Months Ended October 31, 1999 Year Ended April 30, ---------------------------------------------- CLASS C SHARES (Unaudited) 1999 1998 1997 1996(a) - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.80 13.62 13.22 13.05 12.85 Investment Operations: Investment income--net .24 .44 .47 .51 .38 Net realized and unrealized gain (loss) on investments (1.05) .18 .40 .17 .20 Total from Investment Operations (.81) .62 .87 .68 .58 Distributions: Dividends from investment income-net (.24) (.44) (.47) (.51) (.38) Net asset value, end of period 12.75 13.80 13.62 13.22 13.05 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%) (B) (11.70)(c) 4.59 6.61 5.30 6.28(c) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.71(c) 1.99 1.91 1.80 1.98(c) Ratio of net investment income to average net assets 3.61(c) 3.28 3.48 3.87 3.73(c) Decrease reflected in above expense ratios due to undertakings by the Manager .44(c) -- -- -- -- Portfolio Turnover Rate 16.95(d) 69.13 36.64 50.96 33.09 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 62 47 42 105 88 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. (D) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified, open-end management investment company, and operates as a series company currently offering thirteen series including the Georgia Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. 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 series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis. The fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities) . Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $1,287 during the period ended October 31, 1999 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the " Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gain. (D) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. The fund has an unused capital loss carryover of approximately $68,000 available for Federal income tax purposes to be applied against future net securities profits, if any, realized subsequent to April 30, 1999. If not applied, $51,000 of the carryover expires in fiscal 2004 and $17,000 expires in fiscal 2005. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $500 million redemption credit facility (the "Facility" ) to be utilized for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the fund at rates based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 1999, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (A) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund' s average daily net assets and is payable monthly. The Manager has undertaken from July 29, 1999 to April 30, 2000, to reduce the management fee paid by the fund, to the extent that the fund's aggregate expenses, excluding 12b-1 distribution fees, taxes, brokerage, commitment fees, interest on borrowings and extraordinary expenses, exceed an annual rate of .89 of 1% of the value of the fund's average daily net assets. The reduction in management fee, pursuant to the undertaking, amounted to $30,621 during the period ended October 31, 1999. (B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Class B and Class C shares pay the Distributor for distributing their shares at an annual rate of .50 of 1% of the value of the average daily net assets of Class B shares and .75 of 1% of the value of the average daily net assets of Class C shares. During the period ended October 31, 1999, Class B and Class C shares were charged $24,774 and $125, respectively, pursuant to the Plan. (C) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay the Distributor at an annual rate of .25 of 1% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (a securities dealer, financial institution or other industry professional) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 1999, Class A, Class B and Class C shares were charged $12,449, $12,387 and $41, respectively, pursuant to the Shareholder Services Plan. The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended October 31, 1999, the fund was charged $5,083 pursuant to the transfer agency agreement. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) (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 October 31, 1999, amounted to $3,131,509 and $4,871,448, respectively. At October 31, 1999, accumulated net unrealized depreciation on investments was $465,838, consisting of $293,246 gross unrealized appreciation and $759,084 gross unrealized depreciation. At October 31, 1999, 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). For More Information Dreyfus Premier State Municipal Bond Fund, Georgia Series 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Distributor Premier Mutual Fund Services, Inc. 60 State Street Boston, MA 02109 To obtain information: BY TELEPHONE Call your financial representative or 1-800-554-4611 BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 (c) 1999 Dreyfus Service Corporation 068SA9910 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Maryland Series SEMIANNUAL REPORT October 31, 1999 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Year 2000 Issues (Unaudited) The fund could be adversely affected if the computer systems used by The Dreyfus Corporation and the fund's other service providers do not properly process and calculate date-related information from and after January 1, 2000. The Dreyfus Corporation is working to avoid Year 2000-related problems in its systems and to obtain assurances from other service providers that they are taking similar steps. In addition, issuers of securities in which the fund invests may be adversely affected by Year 2000-related problems. This could have an impact on the value of the fund's investments and its share price. Contents THE FUND - -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Statement of Investments 11 Statement of Assets and Liabilities 12 Statement of Operations 13 Statement of Changes in Net Assets 15 Financial Highlights 18 Notes to Financial Statements FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Maryland Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this semiannual report for Dreyfus Premier State Municipal Bond Fund, Maryland Series, covering the six-month period from May 1, 1999 through October 31, 1999. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio manager, Douglas Gaylor. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates twice during the summer of 1999, effectively offsetting most of last fall' s interest-rate cuts. Higher interest rates led to some erosion of municipal bond prices, especially toward the end of the reporting period. In this environment, however, the yields of tax-exempt bonds have recently been quite attractive compared to the after-tax yields of taxable bonds of comparable maturity and credit quality. This is especially true for investors in the higher federal income tax brackets. We appreciate your confidence over the past six months, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Maryland Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation November 15, 1999 DISCUSSION OF FUND PERFORMANCE Douglas Gaylor, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Maryland Series perform during the period? For the six-month period ended October 31, 1999, the fund's Class A shares provided a -5.03% total return; its Class B shares provided a -5.20% total return; and its Class C shares provided a -5.38% total return.(1) In comparison, the Lipper Maryland Municipal Debt Funds category average provided a -4.50% total return(2) for the same period. We attribute the fund's negative absolute returns over the past six months to a declining municipal bond market and a rising interest rate environment. The underperformance of the fund' s Class A shares compared to its benchmark is primarily the result of our security selection strategy in the relatively small Maryland bond market. This strategy was designed to help position the fund to take advantage of attractive values created by the municipal bond market's decline. What is the fund's investment approach? Our goal is to seek as high a level of federal and Maryland state tax-exempt income as is practical from a diversified portfolio of long-term municipal bonds without undue risk. To achieve this objective, we employ two primary strategies. First, for between one-half and three quarters of the total fund, we look for bonds that potentially can provide consistently high current yields. We also try to ensure that we select bonds that are most likely to obtain attractive prices if and when we decide to sell them in the secondary market. Second, for the remainder of the fund, we try to look for bonds that we believe have the potential to offer attractive total returns. We typically look for bonds that are selling at a discount to face value because they may be temporarily out-of-favor among investors. Our belief is that these bonds' prices will rise as they return to favor over time. The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) What other factors influenced the fund's performance? The fund was adversely affected by rising interest rates. When the reporting period began on May 1, 1999, investors were concerned that continued economic strength might rekindle long-dormant inflationary pressures. In fact, in an attempt to forestall a potential reacceleration of inflation, the Federal Reserve Board raised short-term interest rates twice during the summer of 1999. As interest rates rose, taxable fixed-income investments such as corporate bonds became more attractive to institutional investors such as hedge funds and insurance companies. Accordingly, many of these investors sold large numbers of municipal bonds into the secondary market, putting pressure on prices. In addition, strong economic conditions have contributed to the nation's first federal budget surplus in many years. While the government has had less need to issue U.S. Treasury securities, demand has remained high from domestic and overseas investors. This imbalance between supply and demand has recently constrained the rise of taxable bond yields relative to tax-exempt bonds. As a result, municipal bonds -- including those from Maryland issuers -- are currently offering tax-exempt yields that compare very favorably with taxable yields after adjusting for taxes. What is the fund's current strategy? After the recent municipal bond market declines, we have focused primarily on positioning the fund to take advantage of what we anticipate to be an ensuing market recovery. This is consistent with our long-term perspective, in which we measure our success over a full interest-rate cycle. In preparation for the second "leg" of that cycle in a recovering market, which had not yet materialized as of October 31, we have focused on tax-exempt securities selling at deep discounts to their face values. Many of these bonds, in our opinion, have been punished more severely than circumstances warrant, and we believe that they should recover strongly when investors once again recognize their true values. As a result of this strategy, the fund' s average duration has lengthened naturally. While this has made the fund more vulnerable to the adverse effects of higher interest rates over the short term, we believe that it also positions us to participate more strongly in the market's recovery if interest rates moderate over the longer term. November 15, 1999 (1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID, AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES FOR NON-MARYLAND RESIDENTS. SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE. (2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. The Fund STATEMENT OF INVESTMENTS October 31, 1999 (Unaudited) Principal LONG TERM MUNICIPAL INVESTMENTS--98.0% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ MARYLAND--87.1% Anne Arundel County: General Improvement 4.50%, 8/1/2018 870,000 723,762 Water and Sewer: 4.50%, 8/1/2018 515,000 428,434 4.50%, 8/1/2019 1,495,000 1,235,109 4.50%, 8/1/2020 1,455,000 1,191,034 Baltimore: 7%, 10/15/2007 (Insured; MBIA) 500,000 565,875 (Tindeco Wharf Project) 6.60%, 12/20/2024 (Collateralized; GNMA) 4,250,000 4,400,790 Port Facilities Revenue (Consolidated Coal Sales) 6.50%, 12/1/2010 9,740,000 10,396,476 Baltimore City Housing Corp., MFHR 7.25%, 7/1/2023 (Collateralized; FNMA) 3,105,000 3,173,807 Baltimore County: Mortgage Revenue, Zero coupon, 9/1/2024 2,280,000 522,530 Nursing Facility Mortgage Revenue (Eastpoint Rehabilitation & Nursing Centers): 6.75%, 4/1/2015 1,000,000 930,840 6.75%, 4/1/2028 1,500,000 1,343,505 PCR (Bethlehem Steel Corp. Project): 7.50%, 6/1/2015 5,785,000 5,984,293 7.55%, 6/1/2017 2,690,000 2,791,870 Carroll County, County Commissioners-- Consolidated Public Improvement 4.70%, 10/1/2016 1,000,000 872,890 Gaithersburg, Hospital Facilities Improvement Revenue (Shady Grove) 6.50%, 9/1/2012 (Insured; FSA) 10,000,000 11,013,200 Howard County, COP 8.15%, 2/15/2020 605,000 771,091 Maryland, COP (Aviation Administration Facilities Project): 4.75%, 5/1/2015 565,000 493,578 4.75%, 5/1/2016 750,000 648,742 4.75%, 5/1/2017 1,650,000 1,414,759 4.75%, 5/1/2018 1,730,000 1,472,195 Maryland Community Development Administration, Department of Housing and Community Development: Housing Revenue 5.65%, 7/1/2039 4,750,000 4,365,535 Multi-Family Development (Auburn Manor Project) 5.30%, 10/1/2028 1,000,000 885,710 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ MARYLAND (CONTINUED) Maryland Community Development Administration, Department of Housing and Community Development (continued): MFHR: 6.50%, 5/15/2013 3,000,000 3,128,520 6.85%, 5/15/2033 5,000,000 5,214,850 6.70%, 5/15/2036 (Insured; FHA) 7,710,000 8,033,357 Residential 5.25%, 9/1/2029 3,700,000 3,215,448 Single Family Program: 6.95%, 4/1/2011 3,885,000 4,006,523 4.75%, 4/1/2012 2,865,000 2,630,442 4.80%, 4/1/2013 1,500,000 1,366,335 6.55%, 4/1/2026 7,200,000 7,403,616 6.75%, 4/1/2026 3,880,000 3,970,792 5.25%, 4/1/2029 8,330,000 7,244,768 7.45%, 4/1/2032 4,795,000 4,936,836 Maryland Economic Development Corp., Revenue (Health and Mental Hygiene Providers Facilities Acquisition Program): 8.375%, 3/1/2013 4,045,000 4,259,992 8.75%, 3/1/2017 4,810,000 4,835,397 Maryland Health and Higher Educational Facilities Authority, Revenue: (Calvert Memorial Hospital) 5%, 7/1/2028 1,900,000 1,588,210 (Doctors Community Hospital) 5.50%, 7/1/2024 9,890,000 8,397,797 (Helix Health Issue) 5%, 7/1/2027 (Insured; AMBAC) 5,500,000 4,825,040 (Johns Hopkins Hospital): 4.75%, 5/15/2033 7,100,000 5,674,391 4.50%, 5/15/2035 2,395,000 1,813,757 (Loyola College) 5%, 10/1/2039 3,500,000 2,935,030 (Medlantic Helix Issue) 4.75%, 8/15/2028 (Insured; FSA) 32,385,000 26,354,265 (Upper Chesapeake Hospitals) 5.375%, 1/1/2028 (Insured; FSA) 1,500,000 1,374,105 (Union Hospital of Cecil County): 6.70%, 7/1/2009 2,320,000 2,430,687 4.75%, 7/1/2013 1,840,000 1,587,846 5.10%, 7/1/2022 2,500,000 2,109,750 (University of Maryland Medical Systems) 7%, 7/1/2022 (Insured; FGIC) 4,500,000 5,117,040 Maryland Industrial Development Financing Authority, EDR (Medical Waste Association) 8.75%, 11/15/2010 700,000 683,095 The Fund STATEMENT OF INVESTMENTS (Unaudited)(CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ MARYLAND (CONTINUED) Maryland Local Government Insurance Trust, COP 7.125%, 8/1/2009 3,250,000 3,385,102 Maryland Stadium Authority, Sports Facility LR 7.60%, 12/15/2019 5,250,000 5,375,790 Montgomery County Housing Opportunities Commission, Revenue: Multi-Family Mortgage: 7.05%, 7/1/2032 2,485,000 2,556,096 7.375%, 7/1/2032 1,805,000 1,837,400 Single Family Mortgage: 7.375%, 7/1/2017 960,000 985,037 6.625%, 7/1/2026 1,015,000 1,045,897 Zero Coupon, 7/1/2027 12,165,000 2,287,507 Zero Coupon, 7/1/2028 41,975,000 7,557,599 Northeast Waste Disposal Authority, Solid Waste Revenue (Montgomery County Resource Recovery Project): 6%, 7/1/2008 2,690,000 2,752,677 6.20%, 7/1/2010 13,130,000 13,581,147 6.30%, 7/1/2016 14,205,000 14,532,425 Prince Georges County Consolidated Public Improvement 6.75%, 7/1/2010 1,170,000 1,234,549 Prince Georges County Housing Authority: Mortgage Revenue: (New Keystone Apartment Project) 6.80%, 7/1/2025 (Insured: FHA & MBIA) 4,300,000 4,458,498 (Riverview Terrace) 6.70%, 6/20/2020 (Collateralized; GNMA) 2,000,000 2,101,460 (Stevenson Apartments Project) 6.35%, 7/20/2020 (Collateralized; GNMA) 3,000,000 3,071,760 6%, 9/20/2029 (Collateralized; GNMA) 1,370,000 1,322,009 6.10%, 3/20/2041 (Collateralized; GNMA) 1,545,000 1,493,212 Revenue (Dimensions Health Corporation Project) 5.30%, 7/1/2024 8,350,000 6,738,366 SFMR 6.60%, 12/1/2025 (Collateralized: FNMA & GNMA) 4,270,000 4,391,097 U. S. RELATED--10.9% Guam Airport Authority, Revenue 6.70%, 10/1/2023 10,000,000 10,483,300 Guam Power Authority, Revenue 5.125%, 10/1/2029 (Insured; MBIA) 4,250,000 3,717,645 Puerto Rico Commonwealth, Public Improvement: 4.50%, 7/1/2023 (Insured; AMBAC) 5,000,000 4,066,200 5%, 7/1/2026 (Insured; FSA) 1,795,000 1,567,161 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ U. S. RELATED (CONTINUED) Puerto Rico Electric Power Authority, Power Revenue: 4.50%, 7/1/2019 (Insured; FSA) 2,970,000 2,481,970 4.75%, 7/1/2024 1,245,000 1,017,601 5%, 7/1/2028 (Insured; FSA) 8,885,000 7,724,264 Puerto Rico Public Buildings Authority, Revenue 5%, 7/1/2027 (Insured; AMBAC) 2,000,000 1,742,320 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $304,592,095) 98.0% 294,272,003 CASH AND RECEIVABLES (NET) 2.0% 5,885,228 NET ASSETS 100.0% 300,157,231 The Fund STATEMENT OF INVESTMENTS (Unaudited)(CONTINUED) Summary of Abbreviations AMBAC American Municipal Bond Assurance GNMA Government National Mortgage Corporation Association COP Certificate of Participation LR Lease Revenue EDR Economic Development Revenue MBIA Municipal Bond Investors Assurance FGIC Financial Guaranty Insurance Company Insurance Corporation FHA Federal Housing Administration MFHR Multi-Family Housing Revenue FNMA Federal National Mortgage Association PCR Pollution Control Revenue FSA Financial Security Assurance SFMR Single Family Mortgage Revenue Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) - ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 33.0 AA Aa AA 34.1 A A A 16.7 BBB Baa BBB 9.1 Not Rated(a) Not Rated(a) Not Rated(a) 7.1 100.0 (A) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. (B) AT OCTOBER 31, 1999, THE FUND HAD $90,394,189 (30.1% OF NET ASSETS) AND $91,748,683 (30.6% OF NET ASSETS) INVESTED IN SECURITIES WHOSE PAYMENT OF PRINCIPAL AND INTEREST IS DEPENDENT UPON REVENUES GENERATED FROM HEALTH CARE AND HOUSING PROJECTS, RESPECTIVELY. SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 (Unaudited) Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 304,592,095 294,272,003 Cash 1,146,550 Interest receivable 5,094,343 Receivable for shares of Beneficial Interest subscribed 10,002 Prepaid expenses 14,674 300,537,572 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 141,185 Due to Distributor 87,497 Payable for shares of Beneficial Interest redeemed 96,501 Accrued Expenses 55,158 380,341 - -------------------------------------------------------------------------------- NET ASSETS ($) 300,157,231 - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 308,080,721 Accumulated net realized gain (loss) on investments 2,396,602 Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (10,320,092) - -------------------------------------------------------------------------------- NET ASSETS ($) 300,157,231 NET ASSET VALUE PER SHARE Class A Class B Class C - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets 247,306,258 49,684,867 3,166,106 Shares Outstanding 20,636,259 4,145,345 264,000 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 11.98 11.99 11.99 SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF OPERATIONS Six Months Ended October 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 9,506,288 EXPENSES: Management fee--Note 3(a) 876,247 Shareholder servicing costs--Note 3(c) 504,651 Distribution fees--Note 3(b) 151,947 Custodian fees 19,850 Registration fees 18,991 Prospectus and shareholders' reports 11,317 Professional fees 8,538 Trustees' fees and expenses--Note 3(d) 2,159 Loan commitment fees--Note 2 1,001 Miscellaneous 11,741 TOTAL EXPENSES 1,606,442 INVESTMENT INCOME--NET 7,899,846 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (197,543) Net unrealized appreciation (depreciation) on investments (24,134,765) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (24,332,308) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (16,432,462) SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 7,899,846 15,723,604 Net realized gain (loss) on investments (197,543) 4,875,643 Net unrealized appreciation (depreciation) on investments (24,134,765) (2,906,514) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (16,432,462) 17,692,733 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (6,567,376) (13,142,319) Class B shares (1,261,787) (2,475,248) Class C shares (70,683) (106,037) Net realized gain on investments: Class A shares -- (3,920,985) Class B shares -- (858,010) Class C shares -- (41,411) TOTAL DIVIDENDS (7,899,846) (20,544,010) - -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 18,485,597 19,034,333 Class B shares 8,351,801 16,708,364 Class C shares 751,244 1,950,257 Dividends reinvested: Class A shares 3,986,467 10,945,576 Class B shares 756,046 2,138,858 Class C shares 43,395 93,797 Cost of shares redeemed: Class A shares (19,571,596) (26,068,594) Class B shares (14,995,816) (8,588,073) Class C shares (613,636) (385,542) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (2,806,498) 15,828,976 TOTAL INCREASE (DECREASE) IN NET ASSETS (27,138,806) 12,977,699 - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 327,296,037 314,318,338 END OF PERIOD 300,157,231 327,296,037 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 1,471,719 1,451,972 Shares issued for dividends reinvested 320,995 834,341 Shares redeemed (1,575,725) (1,987,044) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 216,989 299,269 - -------------------------------------------------------------------------------- CLASS B(A) Shares sold 660,815 1,273,167 Shares issued for dividends reinvested 60,819 163,084 Shares redeemed (1,197,030) (657,332) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (475,396) 778,919 - -------------------------------------------------------------------------------- CLASS C Shares sold 59,354 148,387 Shares issued for dividends reinvested 3,496 7,148 Shares redeemed (48,632) (29,616) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 14,218 125,919 (A) DURING THE PERIOD ENDED OCTOBER 31, 1999, 792,430 CLASS B SHARES REPRESENTING $9,966,459 WERE AUTOMATICALLY CONVERTED TO 792,673 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Six Months Ended October 31, 1999 Year Ended April 30, --------------------------------------------------------------- CLASS A SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.94 13.05 12.70 12.69 12.54 12.46 Investment Operations: Investment income--net .32 .65 .67 .68 .67 .70 Net realized and unrealized gain (loss) on investments (.96) .09 .50 .18 .23 .08 Total from Investment Operations (.64) .74 1.17 .86 .90 .78 Distributions: Dividends from investment income--net (.32) (.65) (.67) (.68) (.67) (.70) Dividends from net realized gain on investments -- (.20) (.15) (.17) (.08) -- Total Distributions (.32) (.85) (.82) (.85) (.75) (.70) Net asset value, end of period 11.98 12.94 13.05 12.70 12.69 12.54 - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (%)(A) (9.98)(b) 5.76 9.40 6.91 7.24 6.52 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .91(b) .90 .90 .90 .90 .90 Ratio of net investment income to average net assets 5.05(b) 4.97 5.12 5.29 5.23 5.69 Decrease reflected in above expense ratios due to undertaking by the Manager -- -- -- -- -- .01 Portfolio Turnover Rate 22.25(c) 29.30 18.12 43.63 41.65 35.39 - ----------------------------------------------------------------------------------------------------------------------------------- Net Assets, end of period ($ x 1,000) 247,306 264,255 262,560 266,658 283,878 301,834 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Six Months Ended October 31, 1999 Year Ended April 30, --------------------------------------------------------------- CLASS B SHARES (Unaudited) 1999 1998 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE DATA ($): Net asset value, beginning of period 12.94 13.05 12.70 12.69 12.54 12.46 Investment Operations: Investment income--net .28 .58 .60 .61 .61 .63 Net realized and unrealized gain (loss) on investments (.95) .09 .50 .18 .23 .08 Total from Investment Operations (.67) .67 1.10 .79 .84 .71 Distributions: Dividends from investment income--net (.28) (.58) (.60) (.61) (.61) (.63) Dividends from net realized gain on investments -- (.20) (.15) (.17) (.08) -- Total Distributions (.28) (.78) (.75) (.78) (.69) (.63) Net asset value, end of period 11.99 12.94 13.05 12.70 12.69 12.54 - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (%)(A) (10.32)(b) 5.20 8.83 6.34 6.66 5.94 - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.43(b) 1.42 1.42 1.43 1.43 1.44 Ratio of net investment income to average net assets 4.51(b) 4.44 4.59 4.75 4.68 5.13 Decrease reflected in above expense ratios due to undertaking by the Manager -- -- -- -- -- .01 Portfolio Turnover Rate 22.25(c) 29.30 18.12 43.63 41.65 35.39 - ----------------------------------------------------------------------------------------------------------------------------------- Net Assets, end of period ($ x 1,000) 49,685 59,806 50,141 45,329 41,179 35,090 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. Six Months Ended October 31, 1999 Year Ended April 30, -------------------------------------------------- CLASS C SHARES (Unaudited) 1999 1998 1997 1996(a) - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.95 13.06 12.71 12.69 12.67 Investment Operations: Investment income--net .27 .55 .57 .58 .41 Net realized and unrealized gain (loss) on investments (.96) .09 .50 .19 .10 Total from Investment Operations (.69) .64 1.07 .77 .51 Distributions: Dividends from investment income--net (.27) (.55) (.57) (.58) (.41) Dividends from net realized gain on investments -- (.20) (.15) (.17) (.08) Total Distributions (.27) (.75) (.72) (.75) (.49) Net asset value, end of period 11.99 12.95 13.06 12.71 12.69 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (10.67)(c) 4.93 8.55 6.16 5.57(d) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.64(c) 1.66 1.67 1.64 1.80(d) Ratio of net investment income to average net assets 4.29(c) 4.15 4.29 4.47 4.59(d) Portfolio Turnover Rate 22.25(d) 29.30 18.12 43.63 41.65 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 3,166 3,235 1,618 202 27 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. (D) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company and operates as a series company currently offering thirteen series including the Maryland Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. 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 series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis. The fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $8,896 during the period ended October 31, 1999 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the " Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (D) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $600 million redemption credit facility (the "Facility" ) to be utilized for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the fund at rates based on prevailing market rates in effect at the time of the borrowings. During the period ended October 31, 1999, 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 $355 during the period ended October 31, 1999, from commissions earned on sales of the fund's shares. (B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Class B and Class C shares pay the Distributor for distributing their shares at an annual rate of .50 of 1% of the value of the average daily net assets of Class B shares and .75 of 1% of the value of the average daily net assets of Class C shares. During the period ended October 31, 1999, Class B and Class C shares were charged $139,602 and $12,345, respectively, pursuant to the Plan. (C) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay the Distributor at an annual rate of .25 of 1% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (a securities dealer, financial institution or other industry professional) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 1999, Class A, Class B and Class C shares were charged $324,378, $69,801 and $4,115, respectively, pursuant to the Shareholder Services Plan. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited)(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 October 31, 1999, the fund was charged $47,376 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 October 31, 1999, amounted to $69,497,915 and $75,376,370, respectively. At October 31, 1999, accumulated net unrealized depreciation on investments was $10,320,092, consisting of $5,393,708 gross unrealized appreciation and $15,713,800 gross unrealized depreciation. At October 31, 1999, 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). NOTES For More Information Dreyfus Premier State Municipal Bond Fund Maryland Series 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Distributor Premier Mutual Fund Services, Inc. 60 State Street Boston, MA 02109 To obtain information: BY TELEPHONE Call your financial representative or 1-800-554-4611 BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 (c) 1999 Dreyfus Service Corporation 052/616SA9910 ================================================================================ Dreyfus Premier State Municipal Bond Fund Massachusetts Series SEMIANNUAL REPORT October 31, 1999 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Year 2000 Issues (Unaudited) The fund could be adversely affected if the computer systems used by The Dreyfus Corporation and the fund's other service providers do not properly process and calculate date-related information from and after January 1, 2000. The Dreyfus Corporation is working to avoid Year 2000-related problems in its systems and to obtain assurances from other service providers that they are taking similar steps. In addition, issuers of securities in which the fund invests may be adversely affected by Year 2000-related problems. This could have an impact on the value of the fund's investments Year 2000 Issues (Unaudited) and its share price. Contents THE FUND - -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Statement of Investments 9 Statement of Assets and Liabilities 10 Statement of Operations 11 Statement of Changes in Net Assets 13 Financial Highlights 16 Notes to Financial Statements FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Massachusetts Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this semiannual report for Dreyfus Premier State Municipal Bond Fund, Massachusetts Series, covering the six-month period from May 1, 1999 through October 31, 1999. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio manager, W. Michael Petty. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates twice during the summer of 1999, effectively offsetting most of last fall' s interest-rate cuts. Higher interest rates led to some erosion of municipal bond prices, especially toward the end of the reporting period. In this environment, however, the yields of tax-exempt bonds have recently been quite attractive compared to the after-tax yields of taxable bonds of comparable maturity and credit quality. This is especially true for investors in the higher federal income tax brackets. We appreciate your confidence over the past six months, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Massachusetts Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation November 15, 1999 DISCUSSION OF FUND PERFORMANCE W. Michael Petty, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Massachusetts Series perform during the period? For the six-month period ended October 31, 1999, the fund's Class A shares provided a -5.35% total return; its Class B shares provided a -5.61% total return; and its Class C shares provided a -5.80% total return.(1) In comparison, the Lipper Massachusetts Municipal Debt Funds category average provided a -5.17% total return(2) for the same period. We attribute the fund's negative absolute returns over the past six months to a declining municipal bond market and a rising interest-rate environment. The fund' s modest relative underperformance compared to its benchmark is primarily the result of our security selection strategy in a relatively small Massachusetts bond market, where a scarcity of new issuance limited our investment choices. What is the fund's investment approach? Our goal is to seek as high a level of federal and Massachusetts tax-exempt income as is practical from a diversified portfolio of long-term municipal bonds without undue risk. To achieve this objective, we employ two primary strategies. First, because Massachusetts issues relatively few municipal bonds, we begin by evaluating supply-and-demand factors. Based on that assessment, we select the individual Massachusetts tax-exempt bonds that we believe are most likely to provide the highest returns with the least risk. We look at such criteria as the bond' s yield, price, age, creditworthiness of its issuer, insurance, and any provisions for early redemption. Under most circumstances, we look for high yielding bonds that have 10-year call protection and are selling at a discount to face value. Second, while we do not attempt to predict changes in interest rates, we may tactically manage the fund' s average duration -- a measure of sensitivity to changes in interest rates -- in anticipation of temporary The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) supply-and-demand changes. If we expect the supply of newly issued bonds to increase, we may reduce the fund's average duration to make cash available for the purchase of higher yielding securities. Conversely, if we expect demand for municipal bonds to surge at a time when we anticipate little issuance, we may increase the fund's average duration to maintain current yields for as long as practical. At other times, we try to maintain a "neutral" average duration consistent with other Massachusetts municipal bond funds. What other factors influenced the fund's performance? The fund and the municipal bond marketplace were adversely affected by rising interest rates. When the reporting period began on May 1, 1999, investors were concerned that economic recovery in overseas markets and continued economic strength in the United States might rekindle long-dormant inflationary pressures. In fact, in an attempt to forestall a potential reacceleration of inflation, the Federal Reserve Board raised short-term interest rates twice during the summer of 1999. This change in monetary policy caused municipal bond prices to fall. In addition, strong economic conditions have contributed to the nation's first federal budget surplus in many years. While the government has had less need to issue U.S. Treasury securities, demand has remained high from domestic and overseas investors. This imbalance between supply and demand has recently constrained the rise of taxable bond yields relative to tax-exempt bonds. As a result, municipal bonds -- including those from Massachusetts issuers -- are currently offering tax-exempt yields that compare very favorably with taxable yields after adjusting for taxes. What is the fund's current strategy? In a rising interest-rate environment, we have focused primarily on maintaining the fund's average duration within the neutral range. Because a fund's duration naturally extends as interest rates rise and some bonds' prices fall below levels at which issuers might redeem them early, bond funds tend to become more sensitive to the adverse short-term effects of higher interest rates. Accordingly, during the period we sold some of our longer maturity bonds, including some that were priced at deep discounts to face value. In some cases, these sales also helped us lock in tax losses that may be used to offset any taxable capital gains the fund may produce. We attempted to reinvest the proceeds from those sales into tax-exempt bonds with defensive characteristics, which we believed had the potential to help us preserve capital and maintain an attractive income stream in a declining market. Although strong economic conditions reduced the issuance of new bonds during the period, we had few problems finding Massachusetts bonds in the secondary market. However, there was a relative scarcity of Massachusetts bonds with the defensive characteristics we sought, including high yields and strong credit quality. November 15, 1999 (1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID, AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES FOR NON-MASSACHUSETTS RESIDENTS. SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE. (2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. The Fund STATEMENT OF INVESTMENTS October 31, 1999 (Unaudited) Principal LONG-TERM MUNICIPAL INVESTMENTS--89.1% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ MASSACHUSETTS--71.6% Boston Industrial Development Financing Authority, Sewer Facility Revenue (Harbor Electric Energy Co. Project) 7.375%, 5/15/2015 2,500,000 2,604,750 Lynn Water and Sewer Commission, General Revenue 7.25%, 12/1/2010 (Insured; MBIA, Prerefunded 12/1/2000) 1,000,000 (a) 1,054,360 Massachusetts Bay Transportation Authority, General Transportation Systems: 5.50%, 3/1/2021 625,000 589,406 7%, 3/1/2021 1,000,000 1,125,200 Massachusetts Commonwealth 7%, 8/1/2012 (Prerefunded 8/1/2001) 1,850,000 (a) 1,970,861 Massachusetts Development Finance Agency, Revenue (Northern Berkshire Community) 6.25%, 8/15/2029 1,000,000 981,990 Massachusetts Education Loan Authority, Education Loan Revenue 7.75%, 1/1/2008 (Insured; MBIA) 855,000 874,998 Massachusetts Health and Educational Facilities Authority, Revenue: (Boston College) 4.75%, 6/1/2031 4,500,000 3,566,610 (Boston University) 6%, 5/15/2059 2,500,000 2,400,600 (Brandeis University) 4.75%, 10/1/2028 (Insured; MBIA) 2,450,000 1,995,941 (Medical Center of Central Massachusetts) 7.10%, 7/1/2021 1,000,000 1,064,110 (Milton Hospital) 7%, 7/1/2016 (Insured; MBIA) 2,050,000 2,121,689 (University Hospital) 7.25%, 7/1/2019 (Insured; MBIA, Prerefunded 7/1/2000) 2,750,000 (a) 2,864,565 (Vinfen Corporation) 5.30%, 11/15/2028 2,670,000 2,282,770 Massachusetts Industrial Finance Agency, Revenue: (College of the Holy Cross) 5%, 9/1/2023 (Insured; MBIA) 3,350,000 2,899,258 (Provider Lease Program) 8.75%, 7/15/2009 120,000 120,173 (Suffolk University) 5.25%, 7/1/2027 1,000,000 892,480 (Water Treatment-American Hingham) 6.95%, 12/1/2035 3,000,000 3,157,170 Health Care Facility (Health Foundation, Inc. Project) 6.75%, 12/1/2027 1,000,000 966,400 Resource Recovery (Ogden Haverhill Project) 5.60%, 12/1/2019 1,000,000 876,940 Massachusetts Port Authority, Revenue Special Project (Harborside Hyatt) 10%, 3/1/2026 3,000,000 3,191,640 Massachusetts Water Pollution Abatement Trust, Water Pollution Abatement Revenue (New Bedford Program) 4.75%, 2/1/2026 (Insured; FGIC) 3,000,000 2,464,410 Massachusetts Water Resource Authority: 4%, 12/1/2018 1,900,000 1,429,788 4.75%, 8/1/2037 (Insured; FSA) 2,000,000 1,584,980 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ U.S. RELATED--17.5% Guam Airport Authority, Revenue 6.70%, 10/1/2023 1,500,000 1,572,495 Puerto Rico Commonwealth 6%, 7/1/2014 1,000,000 1,018,820 Puerto Rico Commonwealth Highway and Transportation Authority, Highway Revenue: 6.459%, 7/1/2009 1,000,000 (b) 1,013,750 6.559%, 7/1/2010 1,000,000 (b) 1,013,750 5%, 7/1/2036 2,000,000 1,677,720 Puerto Rico Public Buildings Authority, Guaranteed Government Facilities Revenue 6.25%, 7/1/2015 (Insured; AMBAC) 1,100,000 1,174,437 Virgin Islands Public Finance Authority, Revenue 7.25%, 10/1/2018 (Prerefunded 10/1/2002) 2,750,000 3,030,582 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $54,933,840) 53,582,643 - ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM MUNICIPAL INVESTMENTS--11.0% - ------------------------------------------------------------------------------------------------------------------------------------ MASSACHUSETTS--8.5% Massachusetts Health and Educational Facilities Authority, Revenue, VRDN (Capital Assets Program): 3.45% 2,400,000 (c) 2,400,000 3.45% 500,000 (c) 500,000 3.50% 2,200,000 (c) 2,200,000 U. S. RELATED--2.5% Puerto Rico Commonwealth Highway and Transportation Authority, VRDN 3.10% 1,500,000 (c) 1,500,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $6,600,000) 6,600,000 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $61,533,840) 100.1% 60,182,643 LIABILITIES, LESS CASH AND RECEIVABLES (.1%) (80,127) NET ASSETS 100.0% 60,102,516 The Fund STATEMENT OF INVESTMENTS (CONTINUED) Summary of Abbreviations AMBAC American Municipal Bond MBIA Municipal Bond Investors Assurance Assurance Corporation Insurance Corporation FSA Financial Security Assurance VRDN Variable Rate Demand Notes FGIC Financial Guaranty Insurance Company Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) - ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 39.9 AA Aa AA 11.1 A A A 13.9 BBB Baa BBB 17.0 F-1+, F-1 MIG1, VMIG1 & P1 SP1 & A1 11.0 Not Rated (d) Not Rated (d) Not Rated (d) 7.1 100.0 (A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. (B) INVERSE FLOATER SECURITY--THE INTEREST RATE IS SUBJECT TO CHANGE PERIODICALLY. (C) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE SUBJECT TO PERIODIC CHANGE. (D) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 (Unaudited) Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 61,533,840 60,182,643 Cash 790,598 Interest receivable 1,058,273 Prepaid expenses 13,542 62,045,056 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 30,496 Due to Distributor 15,110 Payable for investment securities purchased 1,886,876 Payable for shares of Beneficial Interest redeemed 7,190 Accrued expenses 2,868 1,942,540 - -------------------------------------------------------------------------------- NET ASSETS ($) 60,102,516 - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 61,657,187 Accumulated net realized gain (loss) on investments (203,474) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (1,351,197) - -------------------------------------------------------------------------------- NET ASSETS ($) 60,102,516 NET ASSET VALUE PER SHARE Class A Class B Class C - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSETS ($) 54,658,408 5,281,660 162,448 Shares Outstanding 5,076,003 490,829 15,079 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 10.77 10.76 10.77 SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF OPERATIONS Six Months Ended October 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 1,998,118 EXPENSES: Management fee--Note 3(a) 178,600 Shareholder servicing costs--Note 3(c) 101,709 Distribution fees--Note 3(b) 16,269 Registration fees 12,089 Professional fees 10,388 Prospectus and shareholders' reports 5,193 Custodian fees 3,988 Trustees' fees and expenses--Note 3(d) 460 Loan commitment fees--Note 2 215 Miscellaneous 4,276 TOTAL EXPENSES 333,187 INVESTMENT INCOME--NET 1,664,931 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (281,896) Net unrealized appreciation (depreciation) on investments (4,976,462) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (5,258,358) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (3,593,427) SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 1,664,931 3,402,500 Net realized gain (loss) on investments (281,896) 569,381 Net unrealized appreciation (depreciation) on investments (4,976,462) (43,907) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (3,593,427) 3,927,974 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (1,516,758) (3,085,284) Class B shares (142,347) (312,675) Class C shares (5,826) (4,541) Net realized gain on investments: Class A shares -- (981,213) Class B shares -- (112,114) Class C shares -- (3,099) TOTAL DIVIDENDS (1,664,931) (4,498,926) - -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 2,204,562 7,581,389 Class B shares 558,947 1,829,019 Class C shares 30,931 341,132 Dividends reinvested: Class A shares 894,284 2,550,054 Class B shares 90,420 263,046 Class C shares 3,596 7,326 Cost of shares redeemed: Class A shares (6,659,854) (7,190,547) Class B shares (1,601,650) (1,888,781) Class C shares (196,520) -- INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (4,675,284) 3,492,638 TOTAL INCREASE (DECREASE) IN NET ASSETS (9,933,642) 2,921,686 - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 70,036,158 67,114,472 END OF PERIOD 60,102,516 70,036,158 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS (continued) Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A (A) Shares sold 197,837 632,649 Shares issued for dividends reinvested 80,343 215,156 Shares redeemed (593,385) (607,023) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (315,205) 240,782 - -------------------------------------------------------------------------------- CLASS B (A) Shares sold 49,758 154,844 Shares issued for dividends reinvested 8,126 22,203 Shares redeemed (143,986) (160,697) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (86,102) 16,350 - -------------------------------------------------------------------------------- CLASS C Shares sold 2,692 28,770 Shares issued for dividends reinvested 320 621 Shares redeemed (17,422) -- NET INCREASE (DECREASE) IN SHARES OUTSTANDING (14,410) 29,391 (A) DURING THE PERIOD ENDED OCTOBER 31, 1999, 95,129 CLASS B SHARES REPRESENTING $1,056,324 WERE AUTOMATICALLY CONVERTED TO 95,110 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period , assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements Six Months Ended October 31, 1999 Year Ended April 30, ---------------------------------------------------------------- CLASS A SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 11.68 11.75 11.40 11.50 11.53 11.64 Investment Operations: Investment income--net .29 .59 .61 .63 .66 .69 Net realized and unrealized gain (loss) on investments (.91) .11 .40 .17 -- (.06) Total from Investment Operations (.62) .70 1.01 .80 .66 .63 Distributions: Dividends from investment income--net (.29) (.59) (.61) (.63) (.66) (.69) Dividends from net realized gain on investments -- (.18) (.05) (.27) (.03) -- Dividends in excess of net realized gain on investments -- -- -- -- -- (.05) Total Distributions (.29) (.77) (.66) (.90) (.69) (.74) Net asset value, end of period 10.77 11.68 11.75 11.40 11.50 11.53 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%) (A) (10.61)(b) 6.08 9.04 7.08 5.69 5.72 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .97(b) .93 .91 .92 .92 .94 Ratio of net investment income to average net assets 5.17(b) 4.97 5.23 5.46 5.57 6.04 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- -- -- -- .01 Portfolio Turnover Rate 40.36(c) 47.11 48.69 24.45 34.86 13.62 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ X 1,000) 54,658 62,958 60,529 65,809 68,812 72,731 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (continued) Six Months Ended October 31, 1999 Year Ended April 30, ---------------------------------------------------------------- CLASS B SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 11.67 11.75 11.40 11.49 11.52 11.63 Investment Operations: Investment income--net .26 .53 .55 .57 .60 .63 Net realized and unrealized gain (loss) on investments (.91) .10 .40 .18 -- (.06) Total from Investment Operations (.65) .63 .95 .75 .60 .57 Distributions: Dividends from investment income--net (.26) (.53) (.55) (.57) (.60) (.63) Dividends from net realized gain on investments -- (.18) (.05) (.27) (.03) -- Dividends in excess of net realized gain on investments -- -- -- -- -- (.05) Total Distributions (.26) (.71) (.60) (.84) (.63) (.68) Net asset value, end of period 10.76 11.67 11.75 11.40 11.49 11.52 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%) (A) (11.13)(b) 5.46 8.49 6.63 5.15 5.15 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.49(b) 1.43 1.42 1.43 1.43 1.45 Ratio of net investment income to average net assets 4.64(b) 4.46 4.71 4.94 5.03 5.47 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- -- -- -- .01 Portfolio Turnover Rate 40.36(c) 47.11 48.69 24.45 34.86 13.62 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ X 1,000) 5,282 6,733 6,584 6,064 5,255 4,220 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. Six Months Ended October 31, 1999 Year Ended April 30, ------------------------------------------ CLASS C SHARES (Unaudited) 1999 1998 1997 1996(a) - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 11.69 11.76 11.41 11.48 11.59 Investment Operations: Investment income--net .25 .50 .52 .54 .40 Net realized and unrealized gain (loss) on investments (.92) .11 .40 .20 (.08) Total from Investment Operations (.67) .61 .92 .74 .32 Distributions: Dividends from investment income--net (.25) (.50) (.52) (.54) (.40) Dividends from net realized gain on investments -- (.18) (.05) (.27) (.03) Total Distributions (.25) (.68) (.57) (.81) (.43) Net asset value, end of period 10.77 11.69 11.76 11.41 11.48 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%) (B) (11.51)(c) 5.28 8.22 6.55 3.76(c) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.68(c) 1.70 1.64 1.65 1.69(c) Ratio of net investment income to average net assets 4.47(c) 4.06 4.51 4.64 4.72(c) Decrease reflected in above expense ratios due to undertakings by the Manager Portfolio Turnover Rate 40.36(d) 47.11 48.69 24.45 34.86 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ X 1000) 162 345 1 1 1 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. (D) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company, and operates as a series company currently offering thirteen series including the Massachusetts Series (the " fund" ). The fund's investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A. which is a wholly owned subsidiary of Mellon Financial Corporation. 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 series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis. The fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (a) Portfolio valuation: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $4,190 during the period ended October 31, 1999 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (c) Dividends to shareholders: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the " Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (d) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $500 million redemption credit facility (the "Facility" ) to be utilized for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the fund at rates based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 1999, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (a) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund's average daily net assets and is payable monthly. (b) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Class B and Class C shares pay the Distributor for distributing their shares at an annual rate of .50 of 1% of the value of the average daily net assets of Class B shares and .75 of 1% of the value of the average daily net assets of Class C shares. During the period ended October 31, 1999, Class B and Class C shares were charged $15,294 and $975, respectively, pursuant to the Plan. (c) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay the Distributor at an annual rate of .25 of 1% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (a securities dealer, financial institution or other industry professional) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 1999, Class A, Class B and Class C shares were charged $73,210, $7,647 and $325, respectively, pursuant to the Shareholder Services Plan. The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended October 31, 1999, the fund was charged $9,611 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 October 31, 1999, amounted to $24,664,946 and $36,066,995, respectively. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) At October 31, 1999, accumulated net unrealized depreciation on investment was $1,351,197, consisting of $1,483,739 gross unrealized appreciation and $2,834,936 gross unrealized depreciation. At October 31, 1999, 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). For More Information Dreyfus Premier State Municipal Bond Fund Massachusetts Series 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Distributor Premier Mutual Fund Services, Inc. 60 State Street Boston, MA 02109 To obtain information: BY TELEPHONE Call your financial representative or 1-800-554-4611 BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 (c) 1999 Dreyfus Service Corporation 063/622SA9910 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Michigan Series SEMIANNUAL REPORT October 31, 1999 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Year 2000 Issues (Unaudited) The fund could be adversely affected if the computer systems used by The Dreyfus Corporation and the fund's other service providers do not properly process and calculate date-related information from and after January 1, 2000. The Dreyfus Corporation is working to avoid Year 2000-related problems in its systems and to obtain assurances from other service providers that they are taking similar steps. In addition, issuers of securities in which the fund invests may be adversely affected by Year 2000-related problems. This could have an impact on the value of the fund's investments and its share price. Contents THE FUND - -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Statement of Investments 11 Statement of Assets and Liabilities 12 Statement of Operations 13 Statement of Changes in Net Assets 15 Financial Highlights 18 Notes to Financial Statements FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Michigan Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this semiannual report for Dreyfus Premier State Municipal Bond Fund, Michigan Series, covering the six-month period from May 1, 1999 through October 31, 1999. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio manager, W. Michael Petty. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates twice during the summer of 1999, effectively offsetting most of last fall' s interest-rate cuts. Higher interest rates led to some erosion of municipal bond prices, especially toward the end of the reporting period. In this environment, however, the yields of tax-exempt bonds have recently been quite attractive compared to the after-tax yields of taxable bonds of comparable maturity and credit quality. This is especially true for investors in the higher federal income tax brackets. We appreciate your confidence over the past six months, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Michigan Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation November 15, 1999 DISCUSSION OF FUND PERFORMANCE W. Michael Petty, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Michigan Series perform during the period? For the six-month period ended October 31, 1999, the fund's Class A shares provided a -4.19% total return; its Class B shares provided a -4.44% total return; and its Class C shares provided a -4.55% total return.(1) In comparison, the Lipper Michigan Municipal Debt Funds category average provided a -4.64% total return(2) for the same period. We attribute the fund's negative absolute returns over the past six months to a declining municipal bond market and a rising interest-rate environment. The fund's relative outperformance compared to its benchmark is primarily the result of our security selection strategy in a relatively small Michigan bond market. What is the fund's investment approach? Our goal is to seek as high a level of federal and Michigan tax-exempt income as is practical from a diversified portfolio of long-term municipal bonds without undue risk. To achieve this objective, we employ two primary strategies. First, we evaluate supply-and-demand factors in the bond market that are affected by the relatively few municipal bonds issued by Michigan. Based on that assessment, we select the individual Michigan tax-exempt bonds that we believe are most likely to provide the highest returns with the least risk. We look at such criteria as the bond' s yield, price, age, creditworthiness of its issuer, insurance, and any provisions for early redemption. Under most circumstances, we look for high yielding bonds that have 10-year call protection and that are selling at a discount to face value. Second, while we do not attempt to predict changes in interest rates, we may tactically manage the fund' s average duration -- a measure of sensitivity to changes in interest rates -- in anticipation of temporary supply-and-demand changes. If we expect the supply of newly issued The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) bonds to increase, we may reduce the fund's average duration to make cash available for the purchase of higher yielding securities. Conversely, if we expect demand for municipal bonds to surge at a time when we anticipate little issuance, we may increase the fund's average duration to maintain current yields for as long as practical. At other times, we try to maintain a "neutral" average duration consistent with other Michigan municipal bond funds. What other factors influenced the fund's performance? The fund and the municipal bond marketplace were adversely affected by rising interest rates. When the reporting period began on May 1, 1999, investors were concerned that economic recovery in overseas markets and continued economic strength in the United States might rekindle long-dormant inflationary pressures. In fact, in an attempt to forestall a potential reacceleration of inflation, the Federal Reserve Board raised short-term interest rates twice during the summer of 1999. This change in monetary policy caused municipal bond prices to fall. In addition, strong economic conditions have contributed to the nation's first federal budget surplus in many years. While the government has had less need to issue U.S. Treasury securities, demand has remained high from domestic and overseas investors. This imbalance between supply and demand has recently constrained the rise of taxable bond yields relative to tax-exempt bonds. As a result, municipal bonds -- including those from Michigan issuers -- are currently offering tax-exempt yields that compare very favorably with taxable yields after adjusting for taxes. What is the fund's current strategy? In a rising interest-rate environment, we have focused primarily on maintaining the fund's average duration toward the short end of the neutral range. Because a fund' s duration naturally extends as interest rates rise and some bonds' prices fall below levels at which issuers might redeem them early, bond funds tend to become more sensitive to the adverse short-term effects of higher interest rates. Accordingly, during the period we sold some of our longer maturity bonds, including some that were priced at deep discounts to face value. In some cases, these sales also helped us lock in tax losses that may be used to offset any taxable capital gains the fund may produce. We attempted to reinvest the proceeds from those sales into tax-exempt bonds with defensive characteristics, which we believed had the potential to help us preserve capital and maintain an attractive income stream in a declining market. Although strong economic conditions reduced the issuance of new bonds during the period, we had few problems finding Michigan bonds in the secondary market. However, there was a relative scarcity of Michigan bonds with the defensive characteristics we sought, including high yields and strong credit quality. November 15, 1999 (1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID, AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES FOR NON-MICHIGAN RESIDENTS. SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE. (2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. The Fund STATEMENT OF INVESTMENTS October 31, 1999 (Unaudited) Principal LONG-TERM MUNICIPAL INVESTMENTS--99.3% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ Allegan Hospital Finance Authority, HR (Allegan General Hospital): 6.875%, 11/15/2017 4,460,000 4,385,250 7%, 11/15/2021 800,000 786,312 Anchor Bay School District 4.75%, 5/1/2026 (Insured; FGIC) 2,250,000 1,834,335 Big Rapids Public School District 4.75%, 5/1/2025 (Insured; FSA) 1,500,000 1,237,215 Brighton Area School District: Zero Coupon, 5/1/2014 (Insured: AMBAC) 8,000,000 3,432,080 Zero Coupon, 5/1/2020 (Insured: AMBAC) 5,000,000 1,438,150 Capital Region Airport Authority, Airport Revenue 6.70%, 7/1/2021 (Insured; MBIA) 2,500,000 2,634,825 Chippewa County Hospital Finance Authority, Revenue 5.625%, 11/1/2014 1,625,000 1,463,377 Chippewa Valley Schools 7%, 5/1/2010 (Prerefunded 5/1/2001) 1,275,000 (a) 1,348,873 Clarkston Community School 5.75%, 5/1/2016 (Insured; FGIC) (Prerefunded 5/1/2005) 1,340,000 (a) 1,414,933 Detroit: (Unlimited Tax) 6.35%, 4/1/2014 2,995,000 3,117,765 Water Supply Systems Revenue 8.968%, 7/1/2022 (Insured; FGIC) 1,500,000 (b) 1,657,500 Detroit City School District, School Building and Site Improvement 4.75%, 5/1/2028 (Insured; FGIC) 10,950,000 8,932,024 Dickinson County Healthcare Systems, HR 5.70%, 11/1/2018 3,000,000 2,664,000 Fowlerville Community Schools School District 5.60%, 5/1/2016 (Insured; MBIA) 2,995,000 3,126,301 Grand Rapids Charter Township, Revenue (Porter Hills Obligation Group) 5.45%, 7/1/2029 500,000 425,800 Grand Rapids Housing Finance Authority, Multi-Family Revenue 7.625%, 9/1/2023 (Collateralized; FNMA) 1,000,000 1,093,090 Grand Valley State University, College and University Revenue 5.50%, 2/1/2018 (Insured; FGIC) 2,570,000 2,479,433 Huron Valley School District Zero Coupon, 5/1/2018 (Insured; FGIC) 6,370,000 2,083,882 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ Kalamazoo Hospital Finance Authority, Hospital Facilities Revenue: (Borgess Medical Center) 6.25%, 6/1/2014 (Insured; FGIC) 2,000,000 2,121,120 (Bronson Methodist Hospital) 5.75%, 5/15/2016 (Insured; MBIA) 755,000 736,503 Kenowa Hills Public Schools 5.875%, 5/1/2021 (Insured; MBIA) 3,360,000 3,323,611 Kent County, Airport Facilities Revenue (Kent County International Airport): 5.90%, 1/1/2012 1,145,000 1,218,555 5.90%, 1/1/2013 1,095,000 1,165,343 6.10%, 1/1/2025 3,000,000 3,231,360 Lake Orion Community School District 5.80%, 5/1/2015 (Insured; AMBAC) 2,085,000 2,093,382 Leslie Public School (Ingham and Jackson Counties School Building and Site) 6%, 5/1/2015 (Insured; AMBAC) (Prerefunded 5/1/2005) 1,000,000 (a) 1,067,910 Lincoln Consolidated School District 5%, 5/1/2028 (Insured; FSA) 1,000,000 853,980 Michigan Building Authority, Lease Revenue 6.75%, 10/1/2007 (Insured; AMBAC) 1,600,000 1,704,832 Michigan Higher Education Student Loan Authority, Student Loan Revenue: 6.875%, 10/1/2007 (Insured; AMBAC) 2,250,000 2,333,543 7.55%, 10/1/2008 (Insured; MBIA) 500,000 521,235 6.125%, 9/1/2010 1,520,000 1,553,273 Michigan Hospital Finance Authority, HR: (Crittenton Hospital) 6.70%, 3/1/2007 2,250,000 2,372,940 (Daughters of Charity National Health Systems--Providence Hospital) 7%, 11/1/2021 (Prerefunded 11/1/2001) 2,700,000 (a) 2,891,214 (Detroit Medical Center) 8.125%, 8/15/2012 75,000 75,669 (Genesys Health Systems) 8.125%, 10/1/2021 (Prerefunded 10/1/2005) 5,000,000 (a) 5,918,000 (Middle Michigan Obligated Group) 6.625%, 6/1/2010 (Prerefunded 6/1/2000) 2,000,000 (a) 2,032,100 (Sisters of Mercy Health Corp.) 6.25%, 2/15/2009 (Insured; FSA) 1,065,000 1,118,250 The Fund STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ Michigan Housing Development Authority: (Home Improvement Program) 7.65%, 12/1/2012 1,435,000 1,464,891 Rental Housing Revenue: 6.50%, 4/1/2006 2,000,000 2,111,220 7.70%, 4/1/2023 (Insured; FSA) 4,185,000 4,379,477 Michigan Housing Representatives, COP: Zero Coupon, 8/15/2022 (Insured; AMBAC) 7,325,000 1,817,186 Zero Coupon, 8/15/2023 (Insured; AMBAC) 2,615,000 608,850 Michigan Municipal Bond Authority, Revenue (State Revolving Fund): 6.50%, 10/1/2014 (Prerefunded 10/1/2004) 2,500,000 (a) 2,738,250 6.50%, 10/1/2017 (Prerefunded 10/1/2004) 3,500,000 (a) 3,833,550 Michigan Strategic Fund, Limited Obligation Revenue: (Northeastern Community Mental Health Foundation) 8.25%, 1/1/2009 1,270,000 1,296,657 (NSF International Project) 5.75%, 8/1/2019 (LOC; First of America Bank) 2,075,000 1,981,750 (Ledyard Association Ltd. Partnership Project) 6.25%, 10/1/2011 (Insured; ITT Lyndon Property Insurance Co.) 3,075,000 3,134,102 SWDR (Genesee Power Station Project) 7.50%, 1/1/2021 3,000,000 3,127,590 Monroe County, PCR (Detroit Edison Project): 7.50%, 12/1/2019 (Insured; AMBAC) 4,650,000 4,803,961 7.875%, 12/1/2019 2,720,000 2,810,522 7.65%, 9/1/2020 (Insured; FGIC) 2,250,000 2,348,865 6.55%, 6/1/2024 (Insured; MBIA) 1,700,000 1,764,515 Monroe County Economic Development Corp., Ltd. Obligation Revenue (Detroit Edison Co. Project) 6.95%, 9/1/2022 (Insured; FGIC) 2,000,000 2,260,020 Northville, Special Assessment (Wayne County) 7.875%, 1/1/2006 1,685,000 1,723,721 Northwestern Michigan College, Community College Improvement Revenue 7%, 7/1/2011 1,800,000 1,898,388 Oakland County Economic Development Corp., Limited Obligation Revenue (Pontiac Osteopathic Hospital Project) 9.625%, 1/1/2020 (Prerefunded 1/1/2000) 1,575,000 (a) 1,621,037 Plymouth-Canton Community School District 4.75%, 5/1/2023 (Insured; FSA) 3,000,000 2,496,120 Redford Unified School District 5.50%, 5/1/2015 (Insured; AMBAC) 1,260,000 1,231,108 Romulus Community Schools Zero Coupon 5/1/2020 (Insured; FGIC) 1,385,000 400,750 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ Romulus Economic Development Corp., Ltd. Obligation EDR (Romulus Hir Ltd. Partnership Project) 7%, 11/1/2015 (Insured; ITT Lyndon Property Insurance Co.) 3,700,000 4,034,961 South Lyon Community Schools: 4.75%, 5/1/2023 (Insured; FGIC) 2,000,000 1,664,080 (School Building) 6.375%, 5/1/2018 (Prerefunded 5/1/2002) 1,500,000 (a) 1,596,270 Saint John's Public Schools 5.10%, 5/1/2025 (Insured; FGIC) 1,790,000 1,577,760 Wayne Charter County, Airport Revenue: (Detroit Metropolitan Wayne County Airport) 5%, 12/1/2022 1,485,000 1,260,438 Special Facilities (Northwest Airlines Inc.) 6.75%, 12/1/2015 5,730,000 5,776,700 Wayne State University, University Revenues 5.125%, 11/15/2029 (Insured; FGIC) 1,500,000 1,306,275 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $147,304,816) 148,956,979 SHORT-TERM MUNICIPAL INVESTMENTS--1.8% - ------------------------------------------------------------------------------------------------------------------------------------ Michigan Strategic Fund, VRDN: Limited Obligation Revenue (Detroit Edison Co. Project) 3.20% (LOC; Barclays Bank PLC) 500,000 (c) 500,000 PCR (Consumers Power Project) 3.20% (Insured; AMBAC) 700,000 (c) 700,000 Midland County Economic Development Corp., Economic Development Limited Obligation Revenue, VRDN (Dow Chemical Co. Project) 3.65% 1,500,000 (c) 1,500,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $2,700,000) 2,700,000 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $150,004,816) 101.1% 151,656,979 LIABILITIES, LESS CASH AND RECEIVABLES (1.1%) (1,628,264) NET ASSETS 100.0% 150,028,715 The Fund STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Summary of Abbreviations AMBAC American Municipal Bond HR Hospital Revenue Assurance Corporation LOC Letter of Credit COP Certificate of Participation MBIA Municipal Bond Investors Assurance EDR Economic Development Revenue Insurance Corporation FGIC Financial Guaranty Insurance Company PCR Pollution Control Revenue FNMA Federal National Mortgage Association SWDR Solid Waste Disposal Revenue FSA Financial Security Assurance VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) - ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 55.6 AA Aa AA 12.6 A A A 8.6 BBB Baa BBB 4.6 F1 Mig1 SP1 1.8 Not Rated (d) Not Rated (d) Not Rated (d) 16.8 100.0 (A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. (B) INVERSE FLOATER SECURITY-THE INTEREST RATE IS SUBJECT TO CHANGE PERIODICALLY. (C) SECURITIES PAYABLE ON DEMAND. VARIABLE RATE INTEREST-SUBJECT TO PERIODIC CHANGE. (D) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 (Unaudited) Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 150,004,816 151,656,979 Cash 445,637 Interest receivable 2,855,756 Receivable for investment securities sold 451,510 Receivable for Beneficial Interest subscribed 44,338 Prepaid expenses 12,804 155,467,024 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 70,195 Due to Distributor 40,125 Payable for investment securities purchased 5,216,440 Payable for shares of Beneficial Interest redeemed 81,952 Accrued expenses 29,597 5,438,309 - -------------------------------------------------------------------------------- NET ASSETS ($) 150,028,715 - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 148,719,400 Accumulated net realized gain (loss) on investments (342,848) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 1,652,163 NET ASSETS ($) 150,028,715 NET ASSET VALUE PER SHARE Class A Class B Class C - --------------------------------------------------------------------------------------------------------------------- Net Assets ($) 131,474,052 17,189,803 1,364,860 Shares Outstanding 9,043,171 1,182,714 93,870 - --------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE ($) 14.54 14.53 14.54 SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF OPERATIONS Six Months Ended October 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 4,853,916 EXPENSES: Management fee--Note 3(a) 442,443 Shareholder servicing costs--Note 3(c) 258,826 Distribution fees--Note 3(b) 55,318 Registration fees 18,116 Professional fees 14,256 Custodian fees 9,087 Prospectus and shareholders' reports 4,966 Trustees' fees and expenses--Note 3(d) 984 Loan commitment fees--Note 2 317 Miscellaneous 3,355 TOTAL EXPENSES 807,668 INVESTMENT INCOME (NET) 4,046,248 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4 ($): Net realized gain (loss) on investments (1,231,027) Net unrealized appreciation (depreciation) on investments (9,776,147) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (11,007,174) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (6,960,926) SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 4,046,248 8,377,835 Net realized gain (loss) on investments (1,231,027) 1,678,968 Net unrealized appreciation (depreciation) on investments (9,776,147) (357,792) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (6,960,926) 9,699,011 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (3,559,897) (7,320,520) Class B shares (450,330) (996,364) Class C shares (36,021) (60,951) Net realized gain on investments: Class A shares -- (1,532,800) Class B shares -- (242,336) Class C shares -- (19,667) TOTAL DIVIDENDS (4,046,248) (10,172,638) - -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 5,001,598 10,496,366 Class B shares 1,273,958 6,039,658 Class C shares 47,823 1,596,045 Dividends reinvested: Class A shares 1,962,302 5,128,473 Class B shares 249,928 750,794 Class C shares 12,173 33,463 Cost of shares redeemed: Class A shares (11,714,064) (18,726,345) Class B shares (5,320,289) (5,296,289) Class C shares (456,632) (368,225) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (8,943,203) (346,060) TOTAL INCREASE (DECREASE) IN NET ASSETS (19,950,377) (819,687) - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 169,979,092 170,798,779 END OF PERIOD 150,028,715 169,979,092 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 330,547 668,141 Shares issued for dividends reinvested 131,263 324,921 Shares redeemed (782,456) (1,188,891) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (320,646) (195,829) - -------------------------------------------------------------------------------- CLASS B (A) Shares sold 83,128 382,748 Shares issued for dividends reinvested 16,702 47,574 Shares redeemed (352,393) (336,686) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (252,563) 93,636 - -------------------------------------------------------------------------------- CLASS C Shares sold 3,223 100,814 Shares issued for dividends reinvested 812 2,120 Shares redeemed (30,734) (23,362) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (26,699) 79,572 (A) DURING THE PERIOD ENDED OCTOBER 31, 1999, 182,754 CLASS B SHARES REPRESENTING $2,767,935 WERE AUTOMATICALLY CONVERTED TO 182,770 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Six Months Ended October 31, 1999 Year Ended April 30, ------------------------------------------------------------------ CLASS A SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 15.57 15.61 15.14 15.15 15.14 15.27 Investment Operations: Investment income--net .38 .78 .80 .81 .83 .85 Net realized and unrealized gain (loss) on investments (1.03) .12 .48 .21 .20 .11 Total from Investment Operations (.65) .90 1.28 1.02 1.03 .96 Distributions: Dividends from investment income--net (.38) (.78) (.80) (.81) (.83) (.85) Dividends from net realized gain on investments -- (.16) (.01) (.22) (.19) (.24) Total Distributions (.38) (.94) (.81) (1.03) (1.02) (1.09) Net asset value, end of period 14.54 15.57 15.61 15.14 15.15 15.14 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%) (A) (8.31)(b) 5.89 8.55 6.89 6.81 6.65 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .93(b) .92 .92 .91 .93 .92 Ratio of net investment income to average net assets 5.10(b) 4.96 5.12 5.34 5.35 5.66 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- -- -- -- .01 Portfolio Turnover Rate 14.21(c) 36.17 41.46 22.32 56.88 48.30 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 131,474 145,764 149,221 155,568 166,538 176,604 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Six Months Ended October 31, 1999 Year Ended April 30, --------------------------------------------------------------- CLASS B SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 15.56 15.61 15.13 15.15 15.13 15.27 Investment Operations: Investment income--net .35 .70 .72 .74 .75 .77 Net realized and unrealized gain (loss) on investments (1.03) .11 .49 .20 .21 .10 Total from Investment Operations (.68) .81 1.21 .94 .96 .87 Distributions: Dividends from investment income--net (.35) (.70) (.72) (.74) (.75) (0.77) Dividends from net realized gain on investments -- (.16) (.01) (.22) (.19) (0.24) Total Distributions (.35) (.86) (.73) (.96) (.94) (1.01) Net asset value, end of period 14.53 15.56 15.61 15.13 15.15 15.13 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%) (A) (8.81)(b) 5.29 8.08 6.27 6.33 6.01 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.44(b) 1.42 1.42 1.42 1.44 1.44 Ratio of net investment income to average net assets 4.58(b) 4.44 4.61 4.82 4.82 5.10 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- -- -- -- 0.01 Portfolio Turnover Rate 14.21(c) 36.17 41.46 22.32 56.88 48.30 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 17,190 22,338 20,938 19,338 19,031 16,471 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. Six Months Ended October 31, 1999 Year Ended April 30, -------------------------------------------- CLASS C SHARES (Unaudited) 1999 1998 1997 1996a - ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE DATA ($) Net asset value, beginning of period 15.57 15.61 15.14 15.16 15.18 Investment Operations: Investment income--net .33 .66 .67 .69 .50 Net realized and unrealized gain (loss) on investments (1.03) .12 .48 .20 .17 Total from Investment Operations (.70) .78 1.15 .89 .67 Distributions: Dividends from investment income--net (.33) (.66) (.67) (.69) (.50) Dividends from net realized gain on investments -- (.16) (.01) (.22) (.19) Total Distributions (.33) (.82) (.68) (.91) (.69) Net asset value, end of period 14.54 15.57 15.61 15.14 15.16 - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (%) (B) (9.03)(c) 5.08 7.70 5.94 6.12(c) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.69(c) 1.67 1.69 1.72 1.70(c) Ratio of net investment income to average net assets 4.36(c) 4.16 4.26 4.47 4.47(c) Portfolio Turnover Rate 14.21(d) 36.17 41.46 22.32 56.88 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 1,365 1,877 640 241 133 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. (D) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company, and operates as a series company currently offering thirteen series including, the Michigan Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. 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 series. Expenses directly attributable to each fund are charged to that series' 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. Under the terms of the custody agreement, the fund received net earnings credits of $4,720 during the period ended October 31, 1999 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are nor The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) mally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the "Code"). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (D) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $500 million redemption credit facility (the "Facility" ) to be utilized for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the fund at rates based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 1999, 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 $3,269 during the period ended October 31, 1999, from commisssions earned on sales of the fund's shares. (B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Class B and Class C shares pay the Distributor for distributing their shares at an annual rate of .50 of 1% of the value of the average daily net assets of Class B shares and .75 of 1% of the value of the average daily net assets of Class C shares. During the period ended October 31, 1999, Class B and Class C shares were charged $49,120 and $6,198, respectively, pursuant to the Plan. (C) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay the Distributor at an annual rate of .25 of 1% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (a securities dealer, financial institution or other industry professional) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 1999, Class A, Class B and Class C shares were charged $174,484, $24,560 and $2,066, respectively, pursuant to the Shareholder Services Plan. The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended October 31, 1999, the fund was charged $41,963 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 October 31, 1999 amounted to $22,237,902 and $26,176,340 respectively. At October 31, 1999, accumulated net unrealized appreciation on investments was $1,652,163, consisting of $6,100,809 gross unrealized appreciation and $4,448,646 gross unrealized depreciation. At October 31, 1999, the cost of investments for Federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments). The Fund For More Information Dreyfus Premier State Municipal Bond Fund, Michigan Series 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 100 Church Street New York, New York 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Distributor Premier Mutual Fund Services, Inc. 60 State Street Boston, MA 02109 To obtain information: BY TELEPHONE Call your financial representative or 1-800-554-4611 BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 (c) 1999 Dreyfus Service Corporation 053/617SA9910 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Minnesota Series SEMIANNUAL REPORT October 31, 1999 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Year 2000 Issues (Unaudited) The fund could be adversely affected if the computer systems used by The Dreyfus Corporation and the fund's other service providers do not properly process and calculate date-related information from and after January 1, 2000. The Dreyfus Corporation is working to avoid Year 2000-related problems in its systems and to obtain assurances from other service providers that they are taking similar steps. In addition, issuers of securities in which the fund invests may be adversely affected by Year 2000-related problems. This could have an impact on the value of the fund's investments and its share price. Contents THE FUND - -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Statement of Investments 11 Statement of Assets and Liabilities 12 Statement of Operations 13 Statement of Changes in Net Assets 15 Financial Highlights 18 Notes to Financial Statements FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Minnesota Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this semiannual report for Dreyfus Premier State Municipal Bond Fund, Minnesota Series, covering the six-month period from May 1, 1999 through October 31, 1999. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio manager, W. Michael Petty. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates twice during the summer of 1999, effectively offsetting most of last fall' s interest-rate cuts. Higher interest rates led to some erosion of municipal bond prices, especially toward the end of the reporting period. In this environment, however, the yields of tax-exempt bonds have recently been quite attractive compared to the after-tax yields of taxable bonds of comparable maturity and credit quality. This is especially true for investors in the higher federal income tax brackets. We appreciate your confidence over the past six months, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Minnesota Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation November 15, 1999 DISCUSSION OF FUND PERFORMANCE W. Michael Petty, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Minnesota Series perform during the period? For the six-month period ended October 31, 1999, the fund's Class A shares provided a -4.69% total return; its Class B shares provided a -5.00% total return; and its Class C shares provided a -5.12% total return.(1) In comparison, the Lipper Minnesota Municipal Debt Funds category average provided a -4.67% total return(2) for the same period. We attribute the fund's negative absolute returns over the past six months to a declining municipal bond market and a rising interest-rate environment. The fund' s modest relative underperformance compared to its benchmark is primarily the result of our security selection strategy in a relatively small Minnesota bond market, where a scarcity of new issuance limited our investment choices. What is the fund's investment approach? Our goal is to seek as high a level of federal and Minnesota tax-exempt income as is practical from a diversified portfolio of long-term municipal bonds without undue risk. To achieve this objective, we employ two primary strategies. First, because Minnesota issues relatively few municipal bonds, we begin by evaluating supply-and-demand factors. Based on that assessment, we select the individual Minnesota tax-exempt bonds that we believe are most likely to provide the highest returns with the least risk. We look at such criteria as the bond's yield, price, age, creditworthiness of its issuer, insurance, and any provisions for early redemption. Under most circumstances, we look for high yielding bonds that have 10-year call protection and that are selling at a discount to face value. Second, while we do not attempt to predict changes in interest rates, we may tactically manage the fund' s average duration -- a measure of sensitivity to changes in interest rates -- in anticipation of temporary The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) supply-and-demand changes. If we expect the supply of newly issued bonds to increase, we may reduce the fund's average duration to make cash available for the purchase of higher yielding securities. Conversely, if we expect demand for municipal bonds to surge at a time when we anticipate little issuance, we may increase the fund's average duration to maintain current yields for as long as practical. At other times, we try to maintain a "neutral" average duration consistent with other Minnesota municipal bond funds. What other factors influenced the fund's performance? The fund and the municipal bond marketplace were adversely affected by rising interest rates. When the reporting period began on May 1, 1999, investors were concerned that economic recovery in overseas markets and continued economic strength in the United States might rekindle long-dormant inflationary pressures. In fact, in an attempt to forestall a potential reacceleration of inflation, the Federal Reserve Board raised short-term interest rates twice during the summer of 1999. This change in monetary policy caused municipal bond prices to fall. In addition, strong economic conditions have contributed to the nation's first federal budget surplus in many years. While the government has had less need to issue U.S. Treasury securities, demand has remained high from domestic and overseas investors. This imbalance between supply and demand has recently constrained the rise of taxable bond yields relative to tax-exempt bonds. As a result, municipal bonds -- including those from Minnesota issuers -- are currently offering tax-exempt yields that compare very favorably with taxable yields after adjusting for taxes. What is the fund's current strategy? In a rising interest-rate environment, we have focused primarily on maintaining the fund's average duration within the neutral range. Because a fund's duration naturally extends as interest rates rise and some bonds' prices fall below levels at which issuers might redeem them early, bond funds tend to become more sensitive to the adverse short-term effects of higher interest rates. Accordingly, during the period we sold some of our longer maturity bonds, including some that were priced at deep discounts to face value. In some cases, these sales also helped us lock in tax losses that may be used to offset any taxable capital gains the fund may produce. We attempted to reinvest the proceeds from those sales into tax-exempt bonds with defensive characteristics, which we believed had the potential to help us preserve capital and maintain an attractive income stream in a declining market. Although strong economic conditions reduced the issuance of new bonds during the period, we had few problems finding Minnesota bonds in the secondary market. However, there was a relative scarcity of Minnesota bonds with the defensive characteristics we sought, including high yields and strong credit quality. November 15, 1999 (1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID, AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES FOR NON-MINNESOTA RESIDENTS. SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE. (2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. The Fund STATEMENT OF INVESTMENTS October 31, 1999 (Unaudited) Principal LONG-TERM MUNICIPAL INVESTMENTS--96.1% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ MINNESOTA Anoka County: RRR (Northern States Power Co.): 4.50%, 12/1/2007 1,300,000 (a) 1,237,587 7.15%, 12/1/2008 1,150,000 1,176,266 SWDR (United Power Association Project) 6.95%, 12/1/2008 (Guaranteed; National Rural Utilities Cooperative Finance Corp.) 3,825,000 3,956,809 Brooklyn Park 5.85%, 2/1/2016 (Insured; FSA) 1,425,000 1,431,883 Dakota County Housing and Redevelopment Authority, South Saint Paul Revenue (Single Family-GNMA Program) 8.10%, 9/1/2012 65,000 66,377 Eden Prairie, MFHR: (Eden Investments Project) 7.40%, 8/1/2025 (Insured; FHA) 500,000 514,705 (Welsh Parkway Apartments) 8%, 7/1/2026 (Insured; FHA) 2,760,000 2,873,684 Edina, Housing Development Revenue (Edina Park Project) 7.70%, 12/1/2028 (Insured; FHA) 2,500,000 2,551,700 Golden Valley, Revenue (Covenant Retirement Communities) 5.50%, 12/1/2029 2,000,000 1,747,720 Grand Rapids Housing and Redevelopment Authority, Revenue (Governmental Housing-Lakeshore Project) 5.30%, 10/1/2029 1,000,000 893,030 Harmony, MFHR (Zedakah Foundation Project) 5.95 %, 9/1/2020 1,235,000 1,214,623 Hastings, Health Care Facility Revenue (Regina Medical Center) 5.30%, 9/15/2028 (Insured; ACA) 2,000,000 1,717,420 Hibbing Economic Development Authority, Housing Development Revenue 4.70%, 10/1/2028 (Insured; MBIA) 715,000 588,581 Hubbard County, SWDR (Potlatch Corp. Project) 7.375%, 8/1/2013 1,000,000 1,024,040 Inver Grove Heights Independent School District Number 199 5.75%, 2/1/2017 2,225,000 2,213,942 Mahtomedi Independent School District Number 832 Zero Coupon, 2/1/2017 (Insured; MBIA) 1,275,000 457,406 Minneapolis: Zero Coupon, 12/1/2014 1,825,000 770,187 Health Care Facilities Revenue (Shelter Care Foundation): 6%, 4/1/2010 965,000 907,611 6.50%, 4/1/2029 1,000,000 904,180 Home Ownership Program 7.10%, 6/1/2021 420,000 434,843 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ MINNESOTA (CONTINUED) Minneapolis (continued): HR (Lifespan Inc.-Minneapolis Children's Medical Center Project) 7%, 12/1/2020 (Prerefunded 6/1/2001) 5,650,000 (a) 5,996,628 MFHR (Churchill Apartments Project) 7.05%, 10/1/2022 (Insured; FSA) 4,000,000 4,196,800 MFMR (Seward Towers Project) 7.375%, 12/20/2030 (Collateralized; GNMA) 2,350,000 2,424,072 Minneapolis and Saint Paul Metropolitan Airports Commission, Airport Revenue: 5.125%, 1/1/2025 (Insured; FGIC) 2,500,000 2,201,650 5.125%, 1/1/2031 (Insured; FGIC) 2,150,000 1,865,921 Minneapolis Community Development Agency, Ltd. Tax Support Development Revenue: 8%, 12/1/2009 300,000 306,438 7.75%, 12/1/2019 2,705,000 2,824,480 7.40%, 12/1/2021 2,000,000 2,132,380 Minneapolis-Saint Paul Housing and Redevelopment Authority, Health Care Systems Revenue (Group Health Plan Inc., Project) 6.75%, 12/1/2013 2,750,000 2,782,835 Minneapolis-Saint Paul Housing Finance Board, SFMR: 8.875%, 11/1/2018 (Collateralized; GNMA) 55,000 55,652 8.30%, 8/1/2021 (Collateralized; GNMA) 175,000 177,060 7.30%, 8/1/2031 (Collateralized; GNMA) 4,510,000 4,647,510 Minneapolis Special School District Number 001, COP: 5.90%, 2/1/2017 (Insured; MBIA) 4,400,000 4,423,496 5.65%, 2/1/2018 (Insured; MBIA) 1,075,000 1,051,554 State of Minnesota (Duluth Airport) 6.25%, 8/1/2014 2,500,000 2,579,375 Minnesota Agricultural and Economic Development Board, Minnesota Small Business Development Loan Revenue 8.125%, 8/1/2009 500,000 502,040 Minnesota Higher Education Facilities Authority: Adjustable Demand Revenue (Bethel College and Seminary) 5.10%, 4/1/2019 (LOC; Allied Irish Bank PLC) 4,100,000 3,633,461 College and University Revenue: (College at Saint Benedict) 5.35%, 3/1/2020 1,000,000 898,050 (University of Saint Thomas): 5.35%, 4/1/2017 1,000,000 932,850 5.40%, 4/1/2022 2,200,000 2,031,964 Mortgage Revenue (Augsburg College) 5.30%, 10/1/2027 2,395,000 2,074,405 The Fund STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ MINNESOTA (CONTINUED) Minnesota Housing Finance Agency, Revenue: Rental Housing 6.10%, 8/1/2009 1,975,000 1,984,263 Single Family Mortgage: 5.80% 7/1/2021 1,810,000 1,745,003 7.45%, 7/1/2022 (Insured; FHA) 1,600,000 1,647,376 6.95%, 7/1/2026 2,275,000 2,355,262 Minnesota Public Facilities Authority, Water Pollution Control Revenue: 6.95%, 3/1/2013 (Prerefunded 3/1/2001) 3,000,000 (a) 3,164,340 6.50%, 3/1/2014 (Prerefunded 3/1/2001) 5,200,000 (a) 5,539,144 New Hope, Housing and Health Care Facilities Revenue (Masonic Home - North Ridge): 5.90, 3/1/2019 1,000,000 890,580 5.875%, 3/1/2029 3,000,000 2,573,340 Northern Municipal Power Agency, Electric System Revenue Residual Certificates 6.995%, 1/1/2016 (Insured; FSA) 6,765,000 (b) 6,166,703 City of Red Wing, Health Care Facilities Revenue (River Region Obligation Group) 6.50%, 9/1/2022 3,445,000 3,469,494 Rosemount Independent School District Number 196 Zero Coupon, 4/1/2014 (Insured; MBIA) 3,000,000 1,313,400 Saint Cloud, Hospital Facilities Revenue (The Saint Cloud Hospital) 7%, 7/1/2020 (Insured; AMBAC) (Prerefunded 7/1/2001) 1,000,000 (a) 1,063,420 Saint Paul Housing and Redevelopment Authority, Revenue: Hospital (HealthEast Project): 5.70%, 11/1/2015 (Insured; ACA) 2,000,000 1,902,320 5.85%, 11/1/2017 (Insured; ACA) 1,000,000 959,730 Single Family Mortgage 6.90%, 12/1/2021 (Insured; FNMA) 2,045,000 2,108,477 Sartell, PCR (Champion International Corp. Project) 6.95%, 10/1/2012 5,000,000 5,217,100 Seaway Port Authority of Duluth, Industrial Development Dock and Wharf Revenues (Cargill Inc. Project) 6.80%, 5/1/2012 3,000,000 3,164,520 Southern Municipal Power Agency, Power Supply System Revenue: 5% 1/1/2016 (Insured; MBIA) 1,470,000 1,329,644 Zero Coupon, 1/1/2021 (Insured; MBIA) 8,000,000 2,205,200 Zero Coupon, 1/1/2025 (Insured; MBIA) 5,255,000 1,127,250 Zero Coupon, 1/1/2026 (Insured; MBIA) 15,530,000 3,125,723 Zero Coupon, 1/1/2027 (Insured; MBIA) 4,800,000 908,688 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ MINNESOTA (CONTINUED) University of Minnesota, College and University Revenue 5.50%, 7/1/2021 5,925,000 5,703,227 Washington County Housing and Redevelopment Authority, Hospital Facility Revenue (Healtheast Project): 5.375%, 11/15/2018 (Insured; ACA) 5,000,000 4,488,450 5.50%, 11/15/2027 (Insured; ACA) 2,455,000 2,192,315 Western Minnesota Municipal Power Agency, Electric Power and Light Revenue 5.50%, 1/1/2012 (Insured; AMBAC) 1,000,000 1,003,510 White Bear Lake Independent School District Number 624 5.75%, 2/1/2017 1,265,000 1,258,713 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $146,420,582) 143,028,407 - ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM MUNICIPAL INVESTMENTS--3.0% - ------------------------------------------------------------------------------------------------------------------------------------ MINNESOTA Beltrami County, Environmental Control Revenue, VRDN (Northwood Panelboard Co. Project) 3.30% (LOC; Union Bank of Switzerland) 3,400,000 (c) 3,400,000 Cohasset, Revenue, VRDN (Minnesota Power and Light Co. Project) 3.20% (LOC; ABN Amro Bank N.V.) 1,000,000 (c) 1,000,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $4,400,000) 4,400,000 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS--100.0% (cost $150,820,582) 99.1% 147,428,407 CASH AND RECEIVABLES (NET) .9% 1,405,830 NET ASSETS 100.0% 148,834,237 The Fund STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Summary of Abbreviations ACA American Capital Access LOC Letter of Credit AMBAC American Municipal Bond Assurance MBIA Municipal Bond Investors Assurance Corporation Insurance Corporation COP Certificate of Participation MFHR Multi-Family Housing Revenue FGIC Financial Guaranty Insurance Company MFMR Multi-Family Mortgage Revenue FHA Federal Housing Administration PCR Pollution Control Revenue FNMA Federal National Mortgage Association RRR Resources Recovery Revenue FSA Financial Security Assurance SFMR Single Family Mortgage Revenue GNMA Government National Mortgage SWDR Solid Waste Disposal Revenue Association VRDN Variable Rate Demand Notes HR Hospital Revenue Summary of Combined Ratings Fitch or Moody's or Standard & Poor's Value (%) - ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 40.1 AA Aa AA 19.5 A A A 18.8 BBB Baa BBB 10.5 F1 MIG1 SP1 3.0 Not Rated(d) Not Rated(d) Not Rated(d) 8.1 100.0 A BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. B INVERSE FLOATER SECURITY--THE INTEREST RATE IS SUBJECT TO CHANGE PERIODICALLY C SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE. D SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 (Unaudited) Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 150,820,582 147,428,407 Cash 208,166 Interest receivable 2,469,327 Receivable for investment securities sold 877,156 Receivable for shares of Beneficial Interest subscribed 2,850 Prepaid expenses 14,195 151,000,101 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 69,992 Due to Distributor 41,221 Payable for investment securities purchased 1,746,165 Payable for shares of Beneficial Interest redeemed 293,916 Accrued expenses 14,570 2,165,864 - -------------------------------------------------------------------------------- NET ASSETS ($) 148,834,237 - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 151,795,969 Accumulated net realized gain (loss) on investments 430,443 Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (3,392,175) - -------------------------------------------------------------------------------- NET ASSETS ($) 148,834,237 NET ASSET VALUE PER SHARE Class A Class B Class C - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 127,495,595 20,522,275 816,367 Shares Outstanding 8,972,421 1,441,882 57,372 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 14.21 14.23 14.23 SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF OPERATIONS Six Months Ended October 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 4,777,820 EXPENSES: Management fee--Note 3(a) 434,830 Shareholder servicing costs--Note 3(c) 243,640 Distribution fees--Note 3(b) 67,076 Registration fees 16,128 Prospectus and shareholders' reports 11,573 Custodian fees 9,472 Professional fees 8,393 Loan commitment fees--Note 2 306 Miscellaneous 2,149 TOTAL EXPENSES 793,567 INVESTMENT INCOME--NET 3,984,253 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (158,312) Net unrealized appreciation (depreciation) on investments (11,516,757) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (11,675,069) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (7,690,816) SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 3,984,253 8,002,206 Net realized gain (loss) on investments (158,312) 1,265,513 Net unrealized appreciation (depreciation) on investments (11,516,757) (1,000,899) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (7,690,816) 8,266,820 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (3,382,753) (6,587,991) Class B shares (576,460) (1,370,327) Class C shares (25,040) (43,888) Net realized gain on investments: Class A shares -- (303,409) Class B shares -- (72,456) Class C shares -- (2,946) TOTAL DIVIDENDS (3,984,253) (8,381,017) - -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 11,092,758 15,840,640 Class B shares 1,311,724 6,424,682 Class C shares 29,684 759,136 Dividends reinvested: Class A shares 2,034,904 4,269,607 Class B shares 356,695 925,393 Class C shares 18,290 38,489 Cost of shares redeemed: Class A shares (10,203,031) (11,847,645) Class B shares (8,862,393) (6,315,442) Class C shares (567,891) (31,617) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (4,789,260) 10,063,243 TOTAL INCREASE (DECREASE) IN NET ASSETS (16,464,329) 9,949,046 - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 165,298,566 155,349,520 END OF PERIOD 148,834,237 165,298,566 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 749,009 1,027,749 Shares issued for dividends reinvested 138,655 276,384 Shares redeemed (691,909) (767,790) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 195,755 536,343 - -------------------------------------------------------------------------------- CLASS B(A) Shares sold 87,439 414,987 Shares issued for dividends reinvested 24,200 59,803 Shares redeemed (598,258) (409,838) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (486,619) 64,952 - -------------------------------------------------------------------------------- CLASS C Shares sold 1,990 48,848 Shares issued for dividends reinvested 1,241 2,489 Shares redeemed (38,660) (2,051) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (35,429) 49,286 A DURING THE PERIOD ENDED OCTOBER 31, 1999, 440,598 CLASS B SHARES REPRESENTING $6,538,272 WERE AUTOMATICALLY CONVERTED TO 441,435 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Six Months Ended October 31, 1999 Year Ended April 30, ----------------------------------------------------------------- CLASS A SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 15.30 15.30 15.03 14.98 14.90 14.72 Investment Operations: Investment income--net .38 .78 .82 .82 .82 .83 Net realized and unrealized gain (loss) on investments (1.09) .04 .27 .09 .08 .18 Total from Investment Operations (.71) .82 1.09 .91 .90 1.01 Distributions: Dividends from investment income--net (.38) (.78) (.82) (.82) (.82) (.83) Dividends from net realized gain on investments -- (.04) -- (.04) -- -- Total Distributions (.38) (.82) (.82) (.86) (.82) (.83) Net asset value, end of period 14.21 15.30 15.30 15.03 14.98 14.90 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (9.30)(b) 5.41 7.36 6.16 6.11 7.14 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .91(b) .91 .90 .91 .90 .90 Ratio of net investment income to average net assets 5.13(b) 5.05 5.32 5.42 5.41 5.68 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- -- -- -- .01 Portfolio Turnover Rate 7.11(c) 41.27 13.37 25.82 35.47 51.95 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 127,496 134,314 126,115 129,031 138,058 145,444 A EXCLUSIVE OF SALES CHARGE. B ANNUALIZED. C NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Six Months Ended October 31, 1999 Year Ended April 30, ----------------------------------------------------------------- CLASS B SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 15.33 15.33 15.06 15.01 14.92 14.74 Investment Operations: Investment income--net .34 .70 .74 .74 .74 .75 Net realized and unrealized gain (loss) on investments (1.10) .04 .27 .09 .09 .18 Total from Investment Operations (.76) .74 1.01 .83 .83 .93 Distributions: Dividends from investment income--net (.34) (.70) (.74) (.74) (.74) (.75) Dividends from net realized gain on investments -- (.04) -- (.04) -- -- Total Distributions (.34) (.74) (.74) (.78) (.74) (.75) Net asset value, end of period 14.23 15.33 15.33 15.06 15.01 14.92 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (9.92)(b) 4.86 6.79 5.60 5.62 6.57 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.44(b) 1.43 1.42 1.44 1.43 1.44 Ratio of net investment income to average net assets 4.59(b) 4.52 4.79 4.90 4.87 5.13 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- -- -- -- .01 Portfolio Turnover Rate 7.11(c) 41.27 13.37 25.82 35.47 51.95 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 20,522 29,562 28,568 26,004 25,617 23,217 A EXCLUSIVE OF SALES CHARGE. B ANNUALIZED. C NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. Six Months Ended October 31, 1999 Year Ended April 30, ------------------------------------------- CLASS C SHARES (Unaudited) 1999 1998 1997 1996(a) - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 15.33 15.33 15.06 15.01 14.96 Investment Operations: Investment income--net .32 .65 .69 .70 .50 Net realized and unrealized gain (loss) on investments (1.10) .04 .27 .09 .05 Total from Investment Operations (.78) .69 .96 .79 .55 Distributions: Dividends from investment income--net (.32) (.65) (.69) (.70) (.50) Dividends from net realized gain on investments -- (.04) -- (.04) -- Total Distributions (.32) (.69) (.69) (.74) (.50) Net asset value, end of period 14.23 15.33 15.33 15.06 15.01 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (10.16)(c) 4.53 6.46 5.34 5.15(c) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.73(c) 1.74 1.73 1.67 1.42(c) Ratio of net investment income to average net assets 4.33(c) 4.16 4.40 4.62 4.00(c) Portfolio Turnover Rate 7.11(d) 41.27 13.37 25.82 35.47 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 816 1,422 667 307 373 A FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. B EXCLUSIVE OF SALES CHARGE. C ANNUALIZED. D NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company and operates as a series company currently offering thirteen series, including the Minnesota Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. 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 series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis. The fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (a) Portfolio valuation: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (c) Dividends to shareholders: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the " Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (d) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $500 million redemption credit facility (the "Facility" ) to be utilized for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the fund at rates based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 1999, 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 $238 during the period ended October 31, 1999, from commissions earned on sales of the fund's shares. (b) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Class B and Class C shares pay the Distributor for distributing their shares at an annual rate of .50 of 1% of the value of the average daily net assets of Class B shares and .75 of 1% of the value of the average daily net assets of Class C shares. During the period ended October 31, 1999, Class B and Class C shares were charged $62,743 and $4,333, respectively, pursuant to the Plan. (c) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay the Distributor at an annual rate of .25 of 1% of the value of the average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (a securities dealer, financial institution or other industry professional) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 1999, Class A, Class B and Class C shares were charged $164,834, $31,372 and $1,444, respectively, pursuant to the Shareholder Services Plan. The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended October 31, 1999, the fund was charged $33,608 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. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) NOTE 4--Securities Transactions: The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period October 31, 1999, amounted to $11,036,639 and $24,310,310, respectively. At October 31, 1999, accumulated net unrealized depreciation on investments was $3,392,175, consisting of $2,981,053 gross unrealized appreciation and $6,373,228 gross unrealized depreciation. At October 31, 1999, 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). NOTES For More Information Dreyfus Premier State Municipal Bond Fund, Minnesota Series 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Distributor Premier Mutual Fund Services, Inc. 60 State Street Boston, MA 02109 To obtain information: BY TELEPHONE Call your financial representative or 1-800-554-4611 BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 (c) 1999 Dreyfus Service Corporation 055/618SA9910 ================================================================================ Dreyfus Premier State Municipal Bond Fund, New Jersey Series SEMIANNUAL REPORT October 31, 1999 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Year 2000 Issues (Unaudited) The fund could be adversely affected if the computer systems used by The Dreyfus Corporation and the fund's other service providers do not properly process and calculate date-related information from and after January 1, 2000. The Dreyfus Corporation is working to avoid Year 2000-related problems in its systems and to obtain assurances from other service providers that they are taking similar steps. In addition, issuers of securities in which the fund invests may be adversely affected by Year 2000-related problems. This could have an impact on the value of the fund's investments and its share price. Contents THE FUND - -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Statement of Investments 9 Statement of Assets and Liabilities 10 Statement of Operations 11 Statement of Changes in Net Assets 13 Financial Highlights 16 Notes to Financial Statements FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, New Jersey Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this semiannual report for Dreyfus Premier State Municipal Bond Fund, New Jersey Series, covering the six-month period from May 1, 1999 through October 31, 1999. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio manager, W. Michael Petty. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates twice during the summer of 1999, effectively offsetting most of last fall' s interest-rate cuts. Higher interest rates led to some erosion of municipal bond prices, especially toward the end of the reporting period. In this environment, however, the yields of tax-exempt bonds have recently been quite attractive compared to the after-tax yields of taxable bonds of comparable maturity and credit quality. This is especially true for investors in the higher federal income tax brackets. We appreciate your confidence over the past six months, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, New Jersey Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation November 15, 1999 DISCUSSION OF FUND PERFORMANCE W. Michael Petty, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, New Jersey Series perform during the period? For the six-month period ended October 31, 1999, the fund's Class A shares provided a -7.16% total return; its Class B shares provided a -7.41% total return; and its Class C shares provided a -7.50% total return.(1) In comparison, the Lipper New Jersey Municipal Debt Funds category average provided a -5.29% total return(2) for the same period. We attribute the fund's negative absolute returns over the past six months to a declining municipal bond market and a rising interest-rate environment. The fund' s relative underperformance compared to its benchmark is primarily the result of our longer-than-average duration, which has been difficult to shorten due to a lack of new bond issuance. We have attempted to offset our longer duration with a security selection strategy designed to take advantage of attractive values created by the market's decline. What is the fund's investment approach? Our goal is to seek as high a level of federal and New Jersey tax-exempt income as is practical from a diversified portfolio of long-term municipal bonds without undue risk. To achieve this objective, we employ two primary strategies. First, because New Jersey issues relatively few municipal bonds, we begin by evaluating supply-and-demand factors in the bond market. Based on that assessment, we select the individual New Jersey tax-exempt bonds that we believe are most likely to provide the highest returns with the least risk. We look at such criteria as the bond's yield, price, age, creditworthiness of its issuer, insurance, and any provisions for early redemption. Under most circumstances, we look for high yielding bonds that have 10-year call protection and that are selling at a discount to face value. The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) Second, while we do not attempt to predict changes in interest rates, we may tactically manage the fund' s average duration -- a measure of sensitivity to changes in interest rates -- in anticipation of temporary supply-and-demand changes. If we expect the supply of newly issued bonds to increase, we may reduce the fund' s average duration to make cash available for the purchase of higher yielding securities. Conversely, if we expect demand for municipal bonds to surge at a time when we anticipate little issuance, we may increase the fund' s average duration to maintain current yields for as long as practical. At other times, we try to maintain a "neutral" average duration consistent with other New Jersey municipal bond funds. What other factors influenced the fund's performance? The fund and the municipal bond marketplace were adversely affected by rising interest rates. When the reporting period began on May 1, 1999, investors were concerned that economic recovery in overseas markets and continued economic strength in the United States might rekindle long-dormant inflationary pressures. In fact, in an attempt to forestall a potential reacceleration of inflation, the Federal Reserve Board raised short-term interest rates twice during the summer of 1999. This change in monetary policy caused municipal bond prices to fall. In addition, strong economic conditions have contributed to the nation's first federal budget surplus in many years. While the government has had less need to issue U.S. Treasury securities, demand has remained high from domestic and overseas investors. This imbalance between supply and demand has recently constrained the rise of taxable bond yields relative to tax-exempt bonds. As a result, municipal bonds -- including those from New Jersey issuers -- are currently offering tax-exempt yields that compare very favorably with taxable yields after adjusting for taxes. What is the fund's current strategy? In a rising interest-rate environment, we have focused primarily on maintaining the fund's average duration. Because a fund's duration naturally extends as interest rates rise and some bonds' prices fall below levels at which issuers might redeem them early, bond funds tend to become more sensitive to the adverse short-term effects of higher interest rates. Accordingly, during the period we attempted to sell some of our longer maturity bonds, including some that were priced at deep discounts to face value. In some cases, these sales also helped us lock in tax losses that may be used to offset any taxable capital gains the fund may produce. We attempted to reinvest the proceeds from those sales into tax-exempt bonds with defensive characteristics, which we believed had the potential to help us preserve capital and maintain an attractive income stream in a declining market. Although strong economic conditions reduced the issuance of new bonds during the period, we had few problems finding New Jersey bonds in the secondary market. However, there was a relative scarcity of New Jersey bonds with the defensive characteristics we sought, including high yields and strong credit quality. November 15, 1999 (1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID, AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES FOR NON-NEW JERSEY RESIDENTS. SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE. RETURN FIGURES PROVIDED REFLECT THE ABSORPTION OF FUND EXPENSES BY THE DREYFUS CORPORATION PURSUANT TO AN AGREEMENT IN EFFECT THROUGH 4/30/00, AT WHICH TIME IT MAY BE EXTENDED, TERMINATED OR MODIFIED. HAD THESE EXPENSES NOT BEEN ABSORBED, THE FUND'S RETURNS WOULD HAVE BEEN LOWER. (2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. The Fund STATEMENT OF INVESTMENTS October 31, 1999 (Unaudited) Principal LONG-TERM MUNICIPAL INVESTMENTS--87.4% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY--85.5% Camden County Improvement Authority, Revenue (Health Care Redevelopment Project - Cooper Health System Obligation Group) 5.875%, 2/15/2015 100,000 76,970 East Orange Board of Education COP (AGH Leasing Inc) Zero Coupon, 8/1/2017 (Insured; FSA) 1,420,000 496,219 Essex County Improvement Authority Utility System Revenue (Orange Franchise Acquisition Project) 5.75%, 7/1/2027 (Insured; MBIA) 500,000 492,130 Mercer County Improvement Authority, Revenue (County Courthouse Project) 5.75%, 11/1/2017 500,000 500,565 New Jersey GO, 5%, 2/1/2014 1,340,000 1,257,268 New Jersey Economic Development Authority, Revenue First Mortgage (The Evergreens): 6%, 10/1/2017 650,000 595,296 6%, 10/1/2022 700,000 625,723 (Fellowship Village) 5.50%, 1/1/2018 450,000 399,524 (Educational Testing Service) 4.75%, 5/15/2025 (Insured; MBIA) 900,000 757,503 Special Facility (Continental Airlines Inc. Project) 6.25%, 9/15/2019 1,320,000 1,253,749 (Transportation Project) 6%, 5/1/2016 (Insured; FSA) 1,000,000 1,020,680 Water Facilities (New Jersey American Water Co. Inc. Project) 6.50%, 4/1/2022 (Insured; FGIC) 500,000 514,530 New Jersey Educational Facilities Authority, Revenue: (Monmouth University) 5.80%, 7/1/2022 395,000 374,709 (Trenton State College) 6%, 7/1/2019 (Insured; AMBAC) 500,000 504,500 New Jersey Health Care Facilities Financing Authority, Revenue: (Burdette Tomlin Memorial Hospital) 5.50%, 7/1/2019 500,000 457,040 (General Hospital Center at Passaic) 6.75%, 7/1/2019 (Insured; FSA) 550,000 603,999 (Palisades Medical Center Obligation Group) 5.25%, 7/1/2028 250,000 216,680 (Saint Barnabas) Zero Coupon, 7/1/2023 (Insured; MBIA) 1,000,000 236,740 (Saint Elizabeth Hospital Obligation Group) 6%, 7/1/2020 225,000 206,195 (Virtua Health Issue) 4.50%, 7/1/2028 (Insured; FSA) 250,000 195,975 New Jersey Highway Authority, Garden State Parkway General Revenue 6%, 1/1/2019 640,000 657,254 New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue 6.05%, 10/1/2028 (Insured; MBIA) 500,000 504,615 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY (CONTINUED) New Jersey Turnpike Authority, Turnpike Revenue 6.50%, 1/1/2016 220,000 235,492 Port Authority of New York and New Jersey: Special Obligation Revenue (Special Project) (JFK International Air Terminal) 5.75%, 12/1/2022 (Insured; MBIA) 335,000 326,012 South Jersey Transportation Authority, LR (Raytheon Aircraft Service Inc. Project) 6.15%, 1/1/2022 500,000 469,515 U.S. RELATED--1.9% Puerto Rico Housing Bank and Finance Agency, SFMR 6.25%, 4/1/2029 (Insured GNMA) 290,000 293,048 TOTAL LONG-TERM INVESTMENTS (cost $13,982,889) 13,271,931 - ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM MUNICIPAL INVESTMENTS--5.9% - ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY; New Jersey Economic Development Authority, VRDN Dock Facility Revenue (Bayonne/Imtt Project) (LOC; Bank One Corp.) 3.50% 300,000 (a) 300,000 New Jersey Economic Development Authority, EDR, VRDN: (Dow Chemical - El Dorado Terminal) 3.45% 200,000 (a) 200,000 (Foreign Trade Zone Project) (LOC; Bank of New York) 3.50% 200,000 (a) 200,000 Port Authority of New York and New Jersey, Special Obligation Revenue, VRDN (Versatile Structure Obligation) 3.60% 200,000 (a) 200,000 TOTAL SHORT-TERM INVESTMENTS (cost $900,000) 900,000 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $14,882,889) 93.3% 14,171,931 CASH AND RECEIVABLES (NET) 6.7% 1,017,358 NET ASSETS 100.0% 15,189,289 The Fund STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Summary of Abbreviations AMBAC American Municipal Bond Assurance GO General Obligation Corporation LOC Letter of Credit COP Certificate of Participation LR Lease Revenue EDR Economic Development Revenue MBIA Municipal Bond Investors Assurance FGIC Financial Guaranty Insurance Company Insurance Corporation FSA Financial Security Assurance SFMR Single Family Mortgage Revenue GNMA Government National Mortgage VRDN Variable Rate Demand Notes Association Summary of Combined Ratings Fitch or Moody's or Standard & Poor's Value (%) - ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 46.7 AA Aa AA 12.4 A A A 6.4 BBB Baa BBB 10.2 BB Ba BB 8.8 B B B .5 F1 MIG1/P1 SP1/A1 6.4 Not Rated(b) Not Rated(b) Not Rated(b) 8.6 100.0 (A) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE. (B) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. (C) AT OCTOBER 31, 1999, THE FUND HAD $3,962,702 (26.1%) OF NET ASSETS INVESTED IN SECURITIES WHOSE PAYMENT OF PRINCIPAL AND INTEREST IS DEPENDENT UPON REVENUES GENERATED FROM TRANSPORTATION PROJECTS. SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 (Unaudited) Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 14,882,889 14,171,931 Cash 77,930 Receivable for investment securities sold 732,349 Interest receivable 198,624 Prepaid expenses 14,186 Due from The Dreyfus Corporation 6,596 15,201,616 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to Distributor 7,775 Accrued expenses 4,552 12,327 - -------------------------------------------------------------------------------- NET ASSETS ($) 15,189,289 - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 16,064,561 Accumulated net realized gain (loss) on investments (164,314) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (710,958) - -------------------------------------------------------------------------------- NET ASSETS ($) 15,189,289 NET ASSET VALUE PER SHARE Class A Class B Class C - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets 4,812,511 10,101,895 274,883 Shares Outstanding 403,694 847,696 23,038 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 11.92 11.92 11.93 SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF OPERATIONS Six Months Ended October 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 454,883 EXPENSES: Management fee--Note 3(a) 44,999 Distribution fees--Note 3(b) 28,584 Shareholder servicing costs--Note 3(c) 31,427 Professional fees 11,717 Registration fees 9,846 Prospectus and shareholders' reports 7,840 Custodian fees 1,920 Trustees' fees and expenses--Note 3(d) 138 Loan commitment fees--Note 2 35 Miscellaneous 5,327 TOTAL EXPENSES 141,833 Less--reduction in management fee due to undertaking--Note 3(a) (30,996) NET EXPENSES 110,837 INVESTMENT INCOME--NET 344,046 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (366,888) Net unrealized appreciation (depreciation) on investments (1,212,421) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (1,579,309) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (1,235,263) SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 344,046 642,885 Net realized gain (loss) on investments (366,888) 231,591 Net unrealized appreciation (depreciation) on investments (1,212,421) (73,816) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (1,235,263) 800,660 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (116,347) (212,301) Class B shares (221,502) (424,424) Class C shares (6,197) (6,160) Net realized gain on investments: Class A shares -- (32,649) Class B shares -- (72,679) Class C shares -- (1,052) TOTAL DIVIDENDS (344,046) (749,265) - -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 466,653 1,206,947 Class B shares 457,201 2,694,789 Class C shares -- 254,987 Dividends reinvested: Class A shares 69,898 155,326 Class B shares 141,848 318,957 Class C shares 6,060 5,677 Cost of shares redeemed: Class A shares (412,477) (648,145) Class B shares (1,067,076) (1,962,099) Class C shares (48,716) (28,097) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (386,609) 1,998,342 TOTAL INCREASE (DECREASE) IN NET ASSETS (1,965,918) 2,049,737 - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 17,155,207 15,105,470 END OF PERIOD 15,189,289 17,155,207 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1998 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 36,589 90,729 Shares issued for dividends reinvested 5,605 11,685 Shares redeemed (32,512) (49,056) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 9,682 53,358 - -------------------------------------------------------------------------------- CLASS B(A) Shares sold 36,374 203,083 Shares issued for dividends reinvested 11,369 24,002 Shares redeemed (85,085) (147,804) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (37,342) (79,281) - -------------------------------------------------------------------------------- CLASS C Shares sold -- 19,197 Shares issued for dividends reinvested 484 428 Shares redeemed (3,948) (2,111) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (3,464) 17,514 (A) DURING THE PERIOD ENDED OCTOBER 31, 1999, 539 CLASS B SHARES REPRESENTING $6,854 WERE AUTOMATICALLY CONVERTED TO 539 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Six Months Year Nine Months Year Ended Ended Ended Ended October 31, 1999 April 30, April 30, July 31, ______________ _________________________ CLASS A SHARES (Unaudited) 1999 1998 1997(a) 1996 1995 1994(b) - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.14 13.08 12.63 12.79 12.71 12.58 12.50 Investment Operations: Investment income--net .29 .57 .61 .42 .59 .71 .18 Net realized and unrealized gain (loss) on investments (1.22) .15 .56 (.02) .08 .13 .08 Total from Investment Operations (.93) .72 1.17 .40 .67 .84 .26 Distributions: Dividends from investment income--net (.29) (.57) (.61) (.42) (.59) (.71) (.18) Dividends from net realized gain on investments -- (.09) (.11) (.14) -- -- -- Total Distributions (.29) (.66) (.72) (.56) (.59) (.71) (.18) Net asset value, end of period 11.92 13.14 13.08 12.63 12.79 12.71 12.58 - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (%)(C) (14.20)(d) 5.52 9.48 4.25(d) 5.31 7.01 2.07(e) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .98(d) 1.08 1.02 1.20(d) 1.14 .10 -- Ratio of net investment income to average net assets 4.57(d) 4.28 4.73 4.39(d) 4.55 5.60 5.25(d) Decrease reflected in above expense ratios due to undertakings by the Manager (limited to the expense limitation provision of the management agreement) .38(d) -- .03 .10(d) .08 1.35 2.50(d) Portfolio Turnover Rate 71.90(e) 64.4 50.78 110.12(e) 28.14 43.48 -- - ----------------------------------------------------------------------------------------------------------------------------------- Net Assets, end of period ($ x 1,000) 4,813 5,179 4,454 4,837 5,212 4,981 2,318 (A) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO APRIL 30. (B) FROM MAY 4, 1994 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1994. (C) EXCLUSIVE OF SALES CHARGE. (D) ANNUALIZED. (E) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Six Months Nine Ended Months October 31, Year Ended Ended Year Ended 1999 April 30, April 30, July 31, ______________ _________________________ CLASS B SHARES (Unaudited) 1999 1998 1997(a) 1996 1995 1994(b) - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.14 13.07 12.63 12.79 12.71 12.58 12.50 Investment Operations: Investment income--net .26 .50 .55 .37 .52 .65 .16 Net realized and unrealized gain (loss) on investments (1.22) .16 .55 (.02) .08 .13 .08 Total from Investment Operations (.96) .66 1.10 .35 .60 .78 .24 Distributions: Dividends from investment income--net (.26) (.50) (.55) (.37) (.52) (.65) (.16) Dividends from net realized gain on investments -- (.09) (.11)(a) (.14) -- -- -- Total Distributions (.26) (.59) (.66) (.51) (.52) (.65) (.16) Net asset value, end of period 11.92 13.14 13.07 12.63 12.79 12.71 12.58 - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (%) (C) (14.70)(d) 5.08 8.85 3.74(d) 4.79 6.48 1.94(e) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.52(d) 1.58 1.53 1.69(d) 1.63 .61 .50(d) Ratio of net investment income to average net assets 4.04(d) 3.78 4.20 3.88(d) 4.04 5.00 4.69(d) Decrease reflected in above expense ratios due to undertakings by the Manager (limited to the expense limitation provision of the management agreement) .38(d) -- .03 .09(d) .08 1.29 2.50(d) Portfolio Turnover Rate 71.90(e) 64.40 50.78 110.12(e) 28.14 43.48 -- - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 10,102 11,628 10,533 8,680 8,910 6,852 2,373 (A) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO APRIL 30. (B) FROM MAY 4, 1994 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1994. (C) EXCLUSIVE OF SALES CHARGE. (D) ANNUALIZED. (E) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. Six Months Nine Ended Months Year October 31, Ended Ended 1999 Year Ended April 30, April 30, July 31, ___________________ CLASS C SHARES (Unaudited) 1999 1998 1997(a) 1996(b) - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.15 13.09 12.64 12.78 13.21 Investment Operations: Investment income--net .24 .46 .50 .35 .32 Net realized and unrealized gain (loss) on investments (1.22) .15 .56 -- (.43) Total from Investment Operations (.98) .61 1.06 .35 (.11) Distributions: Dividends from investment income--net (.24) (.46) (.50) (.35) (.32) Dividends from net realized gain on investments -- (.09) (.11) (.14) -- Total Distributions (.24) (.55) (.61) (.49) (.32) Net asset value, end of period 11.93 13.15 13.09 12.64 12.78 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(C) (14.88)(d) 4.67 8.55 3.72(d) (1.21)(d) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.73(d) 1.88 1.91 1.97(d) 1.95(d) Ratio of net investment income to average net assets 3.83(d) 3.42 3.65 3.62(d) 3.68(d) Decrease reflected in above expense ratios due to undertakings by the Manager (limited to the expense limitation provision of the management agreement) .34(d) -- .06 .76(d) .02(d) Portfolio Turnover Rate 71.90(e) 64.40 50.78 110.12(e) 28.14 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 275 349 118 1 6 (A) THE FUND CHANGED ITS FISCAL YEAR END FROM JULY 31 TO APRIL 30. (B) FROM DECEMBER 4, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO JULY 31, 1996. (C) EXCLUSIVE OF SALES CHARGE. (D) ANNUALIZED. (E) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified, open-end management investment company, and operates as a series company currently offering thirteen series, including the New Jersey Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. 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 series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis. The fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (a) Portfolio valuation: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $362 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (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 Series may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the " Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (d) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $500 million redemption credit facility (the "Facility" ) to be utilized for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the fund at rates based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 1999, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (a) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund's average daily net assets and is payable monthly. The Manager has undertaken from July 29, 1999 to April 30, 2000, to reduce the management fee paid by the fund, to the extent that the fund's aggregate expenses, excluding 12b-1 distribution fees, taxes, brokerage, commitment fees, interest on borrowings and extraordinary expenses, exceed an annual rate of .77 of 1% of the value of the fund's average daily net assets. The reduction in management fee, pursuant to the undertaking, amounted to $30,996 during the period ended October 31, 1999. (b) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Class B and Class C shares pay the Distributor for distributing their shares at an annual rate of .50 of 1% of the value of the average daily net assets of Class B shares and .75 of 1% of the value of the average daily net assets of Class C shares. During the period ended October 31, 1999, Class B and Class C shares were charged $27,370 and $1,214, respectively, pursuant to the Plan. (c) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay the Distributor at an annual rate of .25 of 1% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (a securities dealer, financial institution or other industry professional) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 1999, Class A, Class B and Class C shares were charged $6,365, $13,685 and $405, respectively, pursuant to the Shareholder Services Plan. The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended October 31, 1999, the fund was charged $3,658 pursuant to the transfer agency agreement. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) (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 October 31, 1999, amounted to $11,412,738 and $13,290,857, respectively. At October 31, 1999, accumulated net unrealized depreciation on investments was $710,958, consisting of $42,106 gross unrealized appreciation and $753,064 gross unrealized depreciation. At October 31, 1999, 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). For More Information Dreyfus Premier State Municipal Bond Fund, New Jersey Series 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Distributor Premier Mutual Fund Services, Inc. 60 State Street Boston, MA 02109 To obtain information: BY TELEPHONE Call your financial representative or 1-800-554-4611 BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 (c) 1999 Dreyfus Service Corporation 380/381SA9910 ================================================================================ Dreyfus Premier State Municipal Bond Fund, North Carolina Series SEMIANNUAL REPORT October 31, 1999 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Year 2000 Issues (Unaudited) The fund could be adversely affected if the computer systems used by The Dreyfus Corporation and the fund's other service providers do not properly process and calculate date-related information from and after January 1, 2000. The Dreyfus Corporation is working to avoid Year 2000-related problems in its systems and to obtain assurances from other service providers that they are taking similar steps. In addition, issuers of securities in which the fund invests may be adversely affected by Year 2000-related problems. This could have an impact on the value of the fund's investments and its share price. Contents THE FUND - -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Statement of Investments 10 Statement of Assets and Liabilities 11 Statement of Operations 12 Statement of Changes in Net Assets 14 Financial Highlights 17 Notes to Financial Statements FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, North Carolina Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this semiannual report for Dreyfus Premier State Municipal Bond Fund, North Carolina Series, covering the six-month period from May 1, 1999 through October 31, 1999. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio manager, W. Michael Petty. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates twice during the summer of 1999, effectively offsetting most of last fall' s interest-rate cuts. Higher interest rates led to some erosion of municipal bond prices, especially toward the end of the reporting period. In this environment, however, the yields of tax-exempt bonds have recently been quite attractive compared to the after-tax yields of taxable bonds of comparable maturity and credit quality. This is especially true for investors in the higher federal income tax brackets. We appreciate your confidence over the past six months, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, North Carolina Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation November 15, 1999 DISCUSSION OF FUND PERFORMANCE W. Michael Petty, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, North Carolina Series perform during the period? For the six-month period ended October 31, 1999, the fund produced the following total returns: Class A shares provided a -5.54% total return; Class B shares provided a -5.87% total return; and Class C shares provided a -5.97% total return.(1) In comparison, the Lipper North Carolina Municipal Debt Funds category average provided a -5.14% total return(2) for the same period. We attribute the modest underperformance of the fund relative to its benchmark to our security selection strategy in a relatively small North Carolina bond market. Although this strategy was designed to help the fund maintain its average duration and preserve capital in a rising interest-rate environment, a scarcity of new bonds limited our investment opportunities. What is the fund's investment approach? Our goal is to maximize current income exempt from federal and North Carolina state income tax from a diversified portfolio of municipal bonds without undue risk. To achieve this objective, we employ two primary strategies. First, we evaluate supply-and-demand factors in the bond market that are affected by the relatively few municipal bonds issued by North Carolina. Based on that assessment, we select the individual North Carolina tax-exempt bonds that we believe are most likely to provide the highest returns with the least risk. We look at such criteria as the bond's yield, price, age, creditworthiness of its issuer, insurance, and any provisions for early redemption. Under most circumstances, we look for high yielding bonds that have 10-year call protection and that are selling at a discount to face value. While we do not attempt to predict changes in interest rates, we may tactically manage the fund's average duration -- a measure of sensitiv The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) ity to changes in interest rates -- in anticipation of temporary supply-and-demand changes. If we expect the supply of newly issued bonds to increase, we may reduce the fund's average duration to make cash available for the purchase of higher yielding securities. Conversely, if we expect demand for municipal bonds to surge at a time when we anticipate little issuance, we may increase the fund's average duration to maintain current yields for as long as practical. At other times, we try to maintain a "neutral" average duration consistent with other North Carolina municipal bond funds. What other factors influenced the fund's performance? The fund and the municipal bond marketplace were adversely affected by rising interest rates over the past six months. When the reporting period began on May 1, 1999, investors were concerned that economic recovery in overseas markets and continued economic strength in the United States might rekindle long-dormant inflationary pressures. In fact, in an attempt to forestall a potential reacceleration of inflation, the Federal Reserve Board raised short-term interest rates twice during the summer of 1999. This change in monetary policy caused municipal bond prices to fall. In addition, strong economic conditions contributed to the nation's first federal budget surplus in many years. While the government has had less need to issue U.S. Treasury securities, demand has remained high from domestic and overseas investors. This imbalance between supply and demand has recently constrained the rise of taxable bond yields relative to tax-exempt bonds. As a result, municipal bonds -- including those from North Carolina issuers -- are currently offering tax-exempt yields that compare very favorably with taxable yields after adjusting for taxes. What is the fund's current strategy? In a rising interest-rate environment, we have focused primarily on maintaining the fund's average duration within the neutral range. Because a fund's duration naturally extends as interest rates rise, and additionally some bonds' prices fall below levels at which issuers might redeem them early, bond funds tend to become more sensitive to the adverse short-term effects of higher interest rates. Accordingly, during the period we sold some of our longer maturity bonds, including some that were priced at deep discounts to face value. In some cases, these sales also helped us lock in tax losses that may be used to offset any taxable capital gains that the fund may produce. We attempted to reinvest the proceeds from these sales into tax-exempt bonds with defensive characteristics, which we believed had the potential to help us preserve capital and maintain an attractive income stream in a declining market. Although strong economic conditions reduced the issuance of new bonds during the period, we had few problems finding North Carolina bonds in the secondary market. However, there was a relative scarcity of North Carolina bonds with the defensive characteristics we sought, including high yields and strong credit quality. November 15, 1999 (1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID, AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES FOR NON-NORTH CAROLINA RESIDENTS. SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE. (2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. The Fund STATEMENT OF INVESTMENTS October 31, 1999 (Unaudited) Principal LONG-TERM MUNICIPAL INVESTMENTS--87.2% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ NORTH CAROLINA--65.0% Buncombe County Metropolitan Sewage District, Sewage System Revenue 6.75%, 7/1/2022 (Prerefunded 7/1/2002) 500,000 (a) 538,775 Charlotte, Special Facilities Revenue (Charlotte-Douglas International Airport) 5.60%, 7/1/2027 4,000,000 3,256,520 Dare County, Utility System Revenue 4.75%, 6/1/2024 (Insured; MBIA) 750,000 623,932 Monroe, Combined Enterprise System Revenue 4.50%, 3/1/2023 2,630,000 2,094,453 New Hanover County, HR (New Hanover Regional Medical Center Project) 5.75%, 10/1/2026 (Insured; AMBAC) 3,280,000 3,203,051 New Hanover County Industrial Facilities and Pollution Control Financing Authority (Occidental Petroleum) 6.50%, 8/1/2014 1,000,000 1,009,370 North Carolina Eastern Municipal Power Agency, Power System Revenue: 5.875%, 1/1/2013 1,610,000 1,523,044 6%, 1/1/2013 2,500,000 2,511,300 6%, 1/1/2022 1,000,000 918,570 North Carolina Educational Assistance Authority, Guaranteed Student Loan Revenue 6.35%, 7/1/2016 3,875,000 3,904,062 North Carolina Housing Finance Agency: Multi-Family Revenue 5.95%, 7/1/2021 (Insured; FHA) 1,905,000 1,875,415 Single Family Revenue: 5.75%, 3/1/2017 (Insured; FHA) 3,000,000 2,951,280 6.10%, 9/1/2025 (Insured; FHA) 220,000 222,328 6.50%, 9/1/2026 4,125,000 4,223,464 North Carolina Medical Care Commission, Health, Hospital and Nursing Home Revenue: (Annie Penn Memorial Hospital Project) 7.50%, 8/15/2021 3,750,000 4,058,287 (Deerfield Episcopal Hospital): 6%, 11/1/2019 1,670,000 1,503,234 6%, 11/1/2027 1,330,000 1,164,003 (Firsthealth of the Carolinas) 4.75%, 10/1/2026 400,000 319,440 (Halifax Regional Medical Center) 5%, 8/15/2024 800,000 632,104 (Pitt County Memorial Hospital) 4.75%, 12/1/2028 (Insured; MBIA) 2,990,000 2,407,249 Principal LONG TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ NORTH CAROLINA (CONTINUED) North Carolina Medical Care Commission, Health, Hospital and Nursing Home Revenue (continued): (Wilson Memorial Hospital Project) Zero Coupon, 11/1/2016 (Insured; AMBAC) 3,055,000 1,106,888 North Carolina Municipal Power Agency Number 1, Catawba Electric Revenue: 5.50%, 1/1/2015 (Insured; MBIA) 4,000,000 3,865,960 5.75%, 1/1/2015 (Insured; MBIA) 1,590,000 1,556,038 Sampson Area Development Corp., Installment Payment Revenue 4.75%, 6/1/2024 (Insured; MBIA) 1,000,000 826,380 Shelby, Combined Enterprise System Revenue 5.625%, 5/1/2014 1,000,000 974,860 University of North Carolina, Multiple Utility Revenues: Zero Coupon, 8/1/2018 2,500,000 815,950 4.50%, 10/1/2018 1,500,000 1,231,965 4.50%, 10/1/2023 1,580,000 1,254,725 University of North Carolina Hospitals at Chapel Hill, Revenue 5%, 2/15/2024 (Insured; AMBAC) 1,000,000 864,300 Wake County, Hospital System Revenue Zero Coupon, 10/1/2010 (Insured; MBIA) 2,200,000 1,211,188 U.S. RELATED--22.2% Guam Airport Authority, Airport and Marina Revenue 6.70%, 10/1/2023 2,000,000 2,096,660 Guam Power Authority, Electric Power and Light Revenues 6.30%, 10/1/2022 2,000,000 2,153,440 Commonwealth of Puerto Rico 6.80%, 7/1/2021 (Prerefunded 7/1/2002) 600,000 (a) 648,018 Commonwealth of Puerto Rico Infrastructure Financing Authority 6.495%, 7/1/2015 (Insured; AMBAC) 1,940,000 (b) 1,651,212 Puerto Rico Ports Authority, Special Facilities Revenue (American Airlines): 6.30%, 6/1/2023 (Guaranteed; AMR Corp.) 1,000,000 1,006,000 6.25%, 6/1/2026 (Guaranteed; AMR Corp.) 2,950,000 2,964,190 Virgin Islands Territory, Hugo Insurance Claims Fund Program 7.75%, 7/1/2011 1,160,000 1,234,170 Virgin Islands Public Finance Authority, Revenues Matching Fund Loan Notes 7.25%, 10/1/2018 4,000,000 4,408,120 Virgin Islands Water and Power Authority, Electric System Revenue 7.40%, 7/1/2011 1,690,000 1,791,823 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $72,979,663) 70,601,768 The Fund STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Principal SHORT-TERM MUNICIPAL INVESTMENTS--12.7% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ NORTH CAROLINA--9.0% North Carolina Medical Care Commission, HR, VRDN: (Carol Woods Project) 3.25% (LOC; Bank of America) 3,000,000 (c) 3,000,000 (Pooled Financing Project) 3.25% (LOC; First Union National Bank) 1,100,000 (c) 1,100,000 Wake County Industrial Facilities and Pollution Control Financing Authority, Revenue, VRDN (Carolina Power and Light Co. Project) 3.10% (LOC; First Union National Bank) 3,200,000 (c) 3,200,000 U.S. RELATED--3.7% Puerto Rico Highway and Transportation Authority, Transportation Revenue, VRDN 3.10% (Insured; AMBAC, SBPA; Bank of Nova Scotia ) 3,000,000 (c) 3,000,000 TOTAL SHORT-TERM INVESTMENTS (cost $10,300,000) 10,300,000 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $83,279,663) 99.9% 80,901,768 CASH AND RECEIVABLES (NET) .1% 94,890 NET ASSETS 100.0% 80,996,658 Summary of Abbreviations AMBAC American Municipal Bond Assurance MBIA Municipal Bond Investors Assurance Corporation Insurance Corporation FHA Federal Housing Administration SBPA Standby Bond Purchase Agreement HR Hospital Revenue VRDN Variable Rate Demand Notes LOC Letter of Credit Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) - ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 34.6 AA Aa AA 12.9 A A A 6.8 BBB Baa BBB 22.1 F1 MIG1 SP1 12.7 Not Rated(d) Not Rated(d) Not Rated(d) 10.9 100.0 (A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. (B) INVERSE FLOATER SECURITY -- THE INTEREST RATE IS SUBJECT TO CHANGE PERIODICALLY. (C) SECURITIES PAYABLE ON DEMAND. VARIABLE INTEREST RATE--SUBJECT TO PERIODIC CHANGE. (D) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 (Unaudited) Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 83,279,663 80,901,768 Cash 1,410,854 Receivable for investment securities sold 1,346,020 Interest receivable 1,141,340 Receivable for shares of Beneficial Interest subscribed 248,521 Prepaid expenses 13,613 85,062,116 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 37,951 Due to Distributor 28,354 Payable for investment securities purchased 3,895,736 Payable for shares of Beneficial Interest redeemed 93,700 Accrued expenses 9,717 4,065,458 - -------------------------------------------------------------------------------- NET ASSETS ($) 80,996,658 - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 83,472,026 Accumulated net realized gain (loss) on investments (97,473) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (2,377,895) - -------------------------------------------------------------------------------- NET ASSETS ($) 80,996,658 NET ASSET VALUE PER SHARE Class A Class B Class C - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 55,215,840 25,292,225 488,593 Shares Outstanding 4,295,192 1,969,123 38,000 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 12.86 12.84 12.86 SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS Six Months Ended October 31, 1999 (Unaudited) INVESTMENT INCOME ($): INTEREST INCOME 2,463,071 EXPENSES: Management fee--Note 3(a) 233,886 Shareholder servicing costs--Note 3(c) 139,206 Distribution fees--Note 3(b) 78,505 Registration fees 14,910 Professional fees 12,428 Custodian fees 4,258 Prospectus and shareholders' reports 2,808 Trustees' fees and expenses--Note 3(d) 528 Loan commitment fees--Note 2 163 Miscellaneous 5,245 TOTAL EXPENSES 491,937 INVESTMENT INCOME--NET 1,971,134 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (268,854) Net unrealized appreciation (depreciation) on investments (6,680,487) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (6,949,341) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,978,207) SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 1,971,134 3,869,834 Net realized gain (loss) on investments (268,854) 908,096 Net unrealized appreciation (depreciation) on investments (6,680,487) (152,616) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,978,207) 4,625,314 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (1,302,984) (1,969,580) Class B shares (658,478) (1,894,185) Class C shares (9,672) (6,069) Net realized gain on investments: Class A shares -- (212,660) Class B shares -- (248,449) Class C shares -- (540) TOTAL DIVIDENDS (1,971,134) (4,331,483) - -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 14,536,538 9,826,910 Class B shares 2,581,627 6,026,320 Class C shares 255,368 415,737 Dividends reinvested: Class A shares 691,362 1,147,257 Class B shares 381,171 1,337,827 Class C shares 3,700 2,035 Cost of shares redeemed: Class A shares (3,407,601) (4,905,844) Class B shares (14,693,923) (13,287,728) Class C shares (164,859) (25,569) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS 183,383 536,945 TOTAL INCREASE (DECREASE) IN NET ASSETS (6,765,958) 830,776 - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 87,762,616 86,931,840 END OF PERIOD 80,996,658 87,762,616 SEE NOTES TO FINANCIAL STATEMENTS. Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 1,071,445 701,323 Shares issued for dividends reinvested 51,996 81,450 Shares redeemed (253,319) (348,339) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 870,122 434,434 - -------------------------------------------------------------------------------- CLASS B(A) Shares sold 189,249 428,998 Shares issued for dividends reinvested 28,594 95,019 Shares redeemed (1,084,315) (947,962) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (866,472) (423,945) - -------------------------------------------------------------------------------- CLASS C Shares sold 19,071 29,569 Shares issued for dividends reinvested 278 145 Shares redeemed (12,429) (1,805) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 6,920 27,909 (A) DURING THE PERIOD ENDED OCTOBER 31, 1999, 933,181 CLASS B SHARES REPRESENTING $12,665,399 WERE AUTOMATICALLY CONVERTED TO 932,724 CLASS A SHARES SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Six Months Ended October 31, 1999 Year Ended April 30, --------------------------------------------------------------- CLASS A SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.95 13.91 13.23 12.91 12.72 12.73 Investment Operations: Investment income--net .32 .66 .67 .67 .67 .70 Net realized and unrealized gain (loss) on investments (1.09) .11 .68 .32 .19 (.01) Total from Investment Operations (.77) .77 1.35 .99 .86 .69 Distributions: Dividends from investment income--net (.32) (.66) (.67) (.67) (.67) (.70) Dividends from net realized gain on investments -- (.07) -- -- -- -- Total Distributions (.32) (.73) (.67) (.67) (.67) (.70) Net asset value, end of period 12.86 13.95 13.91 13.23 12.91 12.72 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (10.99)(b) 5.63 10.39 7.81 6.79 5.70 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .96(b) .94 .87 1.04 .98 .65 Ratio of net investment income to average net assets 4.84(b) 4.68 4.89 5.10 5.11 5.63 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- -- -- .02 .31 Portfolio Turnover Rate 10.38(c) 41.15 32.28 44.91 47.15 12.02 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 55,216 47,794 41,592 42,130 47,042 50,205 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. Six Months Ended October 31, 1999 Year Ended April 30, --------------------------------------------------------------- CLASS B SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 13.94 13.90 13.22 12.90 12.71 12.72 Investment Operations: Investment income--net .29 .59 .60 .60 .60 .64 Net realized and unrealized gain (loss) on investments (1.10) .11 .68 .32 .19 (.01) Total from Investment Operations (.81) .70 1.28 .92 .79 .63 Distributions: Dividends from investment income--net (.29) (.59) (.60) (.60) (.60) (.64) Dividends from net realized gain on investments -- (.07) -- -- -- -- Total Distributions (.29) (.66) (.60) (.60) (.60) (.64) Net asset value, end of period 12.84 13.94 13.90 13.22 12.90 12.71 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (11.64)(b) 5.10 9.84 7.27 6.25 5.12 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.49(b) 1.44 1.38 1.54 1.49 1.18 Ratio of net investment income to average net assets 4.29(b) 4.16 4.39 4.59 4.59 5.08 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- -- -- .02 .30 Portfolio Turnover Rate 10.38(c) 41.15 32.28 44.91 47.15 12.02 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 25,292 39,535 45,296 43,979 42,668 42,310 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Six Months Ended October 31, 1999 Year Ended April 30, ------------------------------------------- CLASS C SHARES (Unaudited) 1999 1998 1997 1996(a) - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($) Net asset value, beginning of period 13.96 13.90 13.22 12.90 12.76 Investment Operations: Investment income--net .27 .56 .57 .57 .40 Net realized and unrealized gain (loss) on investments (1.10) .13 .68 .32 .14 Total from Investment Operations (.83) .69 1.25 .89 .54 Distributions: Dividends from investment income--net (.27) (.56) (.57) (.57) (.40) Dividends from net realized gain on investments -- (.07) -- -- -- Total Distributions (.27) (.63) (.57) (.57) (.40) Net asset value, end of period 12.86 13.96 13.90 13.22 12.90 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (11.84)(c) 5.02 9.58 7.00 5.92(c) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.68(c) 1.63 1.62 1.77 1.73(c) Ratio of net investment income to average net assets 4.06(c) 3.83 4.08 4.31 4.31(c) Portfolio Turnover Rate 10.38(d) 41.15 32.28 44.91 47.15 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1000) 489 434 44 11 1 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. (D) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company, and operates as a series company currently offering thirteen series including the North Carolina Series (the " fund" ). The fund's investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. 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 series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis. The fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are val The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) ued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $4,585 during the period ended October 31, 1999 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the " Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (D) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $500 million redemption credit facility (the "Facility" ) to be utilized for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the fund at rates based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 1999, 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 $26 during the period ended October 31, 1999, from commissions earned on sales of the fund's shares. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) (B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Class B and Class C shares pay the Distributor for distributing the fund' s Class B and Class C shares at an annual rate of .50 of 1% of the value of the average daily net assets of Class B shares and .75 of 1% of the value of the average daily net assets of Class C shares. During the period ended October 31, 1999, Class B and Class C shares were charged $76,718 and $1,787, respectively, pursuant to the Plan. (C) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay the Distributor at an annual rate of .25 of 1% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (a securities dealer, financial institution or other industry professional) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 1999, Class A, Class B and Class C shares were charged $67,357, $38,359 and $596, respectively, pursuant to the Shareholder Services Plan. The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended October 31, 1999, the fund was charged $22,692 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 October 31, 1999, amounted to $8,353,219 and $16,658,296, respectively. At October 31, 1999, accumulated net unrealized depreciation on investments was $2,377,895, consisting of $1,430,683 gross unrealized appreciation and $3,808,578 gross unrealized depreciation. At October 31, 1999, the cost of investments for Federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments). The Fund For More Information Dreyfus Premier State Municipal Bond Fund, North Carolina Series 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Distributor Premier Mutual Fund Services, Inc. 60 State Street Boston, MA 02109 To obtain information: BY TELEPHONE Call your financial representative or 1-800-554-4611 BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 (c) 1999 Dreyfus Service Corporation 065/624SA9910 ================================================================================ Dreyfus Premier State Municipal Bond Fund Ohio Series SEMIANNUAL REPORT October 31, 1999 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Year 2000 Issues (Unaudited) The fund could be adversely affected if the computer systems used by The Dreyfus Corporation and the fund's other service providers do not properly process and calculate date-related information from and after January 1, 2000. The Dreyfus Corporation is working to avoid Year 2000-related problems in its systems and to obtain assurances from other service providers that they are taking similar steps. In addition, issuers of securities in which the fund invests may be adversely affected by Year 2000-related problems. This could have an impact on the value of the fund's investments and its share price. Contents THE FUND - -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Statement of Investments 13 Statement of Assets and Liabilities 14 Statement of Operations 15 Statement of Changes in Net Assets 17 Financial Highlights 20 Notes to Financial Statements 26 Report of Independent Auditors 27 Important Tax Information FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Ohio Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this semiannual report for Dreyfus Premier State Municipal Bond Fund, Ohio Series, covering the six-month period from May 1, 1999 through October 31, 1999. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio manager, W. Michael Petty. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates twice during the summer of 1999, effectively offsetting most of last fall' s interest-rate cuts. Higher interest rates led to some erosion of municipal bond prices, especially toward the end of the reporting period. In this environment, however, the yields of tax-exempt bonds have recently been quite attractive compared to the after-tax yields of taxable bonds of comparable maturity and credit quality. This is especially true for investors in the higher federal income tax brackets. We appreciate your confidence over the past six months, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Ohio Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation November 15, 1999 DISCUSSION OF FUND PERFORMANCE W. Michael Petty, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Ohio Series perform during the period? For the six-month period ended October 31, 1999, the fund's Class A shares produced a -4.52% total return; its Class B shares produced a -4.76% total return; and its Class C shares produced a -4.88% total return.(1) In comparison, the Lipper Ohio Municipal Debt Funds category average produced a -4.73% total return(2) for the same period. We attribute the fund's negative absolute returns over the past six months to a declining municipal bond market and a rising interest-rate environment. The modest relative outperformance of the fund's Class A shares compared to its benchmark is primarily the result of our security selection strategy in a relatively small Ohio bond market. What is the fund's investment approach? Our goal is to seek as high a level of federal and Ohio tax-exempt income as is practical from a diversified portfolio of longer term municipal bonds without undue risk. To achieve this objective, we employ two primary strategies. First, we evaluate supply-and-demand factors in the bond market that are affected by the relatively few municipal bonds issued in Ohio. Based on that assessment, we select the individual Ohio tax-exempt bonds that we believe are most likely to provide the highest returns with the least amount of risk. We look at such criteria as the bond' s yield, price, age, creditworthiness of its issuer, insurance, and any provisions for early redemption. Under most circumstances, we look for high yielding bonds that have 10-year call protection and are selling at a discount to face value. Second, while we do not attempt to predict changes in interest rates, we may tactically manage the fund' s average duration -- a measure of sensitivity to changes in interest rates -- in anticipation of temporary supply-and-demand changes. If we expect the supply of newly issued The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) bonds to increase, we may reduce the fund's average duration to make cash available for the purchase of higher yielding securities. Conversely, if we expect demand for municipal bonds to surge at a time when we anticipate little issuance, we may increase the fund's average duration to maintain current yields for as long as practical. At other times, we try to maintain a "neutral" average duration consistent with other Ohio municipal bond funds. What other factors influenced the fund's performance? The fund and the municipal bond marketplace were adversely affected by rising interest rates. When the reporting period began on May 1, 1999, investors were concerned that economic recovery in overseas markets and continued economic strength in the United States might rekindle long-dormant inflationary pressures. In fact, in an attempt to forestall a potential reacceleration of inflation, the Federal Reserve Board raised short-term interest rates twice during the summer of 1999. This change in monetary policy caused municipal bond prices to fall. In addition, strong economic conditions have contributed to the nation's first federal budget surplus in many years. While the government has had less need to issue U.S. Treasury securities, demand has remained high from domestic and overseas investors. This imbalance between supply and demand has recently constrained the rise of taxable bond yields relative to tax-exempt bonds. As a result, municipal bonds -- including those from Ohio issuers -- are currently offering tax-exempt yields that compare very favorably with taxable yields after adjusting for taxes. What is the fund's current strategy? In a rising interest-rate environment, we have focused primarily on maintaining the fund's average duration toward the short end of the neutral range. Because a fund' s duration naturally extends as interest rates rise and some bonds' prices fall below levels at which issuers might redeem them early, bond funds tend to become more sensitive to the adverse short-term effects of higher interest rates. Accordingly, during the period, we sold some of our longer maturity bonds, including some that were priced at deep discounts to face value. In some cases, these sales also helped us lock in tax losses that may be used to offset any taxable capital gains the portfolio may produce. We attempted to reinvest the proceeds from those sales into tax-exempt bonds with defensive characteristics, which we believed had the potential to help us preserve capital and maintain an attractive income stream in a declining market. Although strong economic conditions reduced the issuance of new bonds during the period, we had few problems finding Ohio bonds in the secondary market. However, there was a relative scarcity of Ohio bonds with the defensive characteristics we sought, including high yields and strong credit quality. November 15, 1999 (1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID, AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES FOR NON-OHIO RESIDENTS. SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE. (2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. The Fund STATEMENT OF INVESTMENTS October 31, 1999 (Unaudited) Principal LONG-TERM MUNICIPAL INVESTMENTS--94.1% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ Akron: 6%, 12/1/2012 1,380,000 1,448,310 Pension Revenue 4.75%, 12/1/2023 (Insured; AMBAC) 1,330,000 1,111,401 Sewer Systems Revenue 5.875%, 12/1/2016 (Insured; MBIA) 1,200,000 1,206,060 Akron-Wilbeth Housing Development Corp., First Mortgage Revenue 7.90%, 8/1/2003 (Insured; FHA) 1,295,000 1,414,775 Allen County, Industrial First Mortgage Revenue 6.75%, 11/15/2008 (Guaranteed; K-Mart Corp.) 1,280,000 1,304,998 City of Barberton, Hospital Facilities Revenue (The Barberton Citizens Hospital Co. Project) 7.25%, 1/1/2012 (Prerefunded 1/1/2002) 2,400,000 (a) 2,577,720 Board of Education of the Cleveland City School District 8%, 12/1/2001 1,080,000 1,126,267 Butler County, Hospital Facilities Improvement Revenue (Fort Hamilton Hughes Group) 7.25%, 1/1/2001 1,775,000 1,782,064 City of Cambridge, HR (Guernsey Memorial Hospital Project) 8%, 12/1/2006 2,000,000 2,112,820 Clermont County, Hospital Facilities Revenue (Mercy Health Systems): 5.625%, 9/1/2016 (Insured; AMBAC) 4,250,000 4,079,958 7.50%, 9/1/2019 (Prerefunded 9/1/2001) (Insured; AMBAC) 180,000 (a) 190,244 City of Cleveland: Airport Special Revenue (Continental Airlines Inc. Project) 5.375%, 9/15/2027 5,000,000 4,162,800 COP: (Motor Vehicle, Motorized and Communication Equipment) 7.10%, 7/1/2002 1,185,000 1,211,165 (Stadium Project) 5.25%, 11/15/2022 (Insured; AMBAC) 9,100,000 8,227,219 Parking Facility Improvement Revenue 8%, 9/15/2012 (Prerefunded 9/15/2002) 5,000,000 (a) 5,555,750 Waterworks Revenue 5.50%, 1/1/2021 (Insured; MBIA) 8,000,000 7,685,280 Cleveland-Cuyahoga County Port Authority, Revenue: (Capital Improvements Project) 5.375%, 5/15/2019 1,000,000 869,000 (Port of Cleveland) 5.375%, 5/15/2018 2,860,000 2,481,393 (Rock & Roll Hall of Fame) 5.40%, 12/1/2015 (Insured; AMBAC) 2,540,000 2,428,113 Cleveland Public Power System, Revenue 5.833%, 11/15/2018 5,000,000 (b) 4,011,300 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ Cuyahoga County: HR: Improvement: (MetroHealth Systems Project) 6.125%, 2/15/2024 4,845,000 4,724,989 (University Hospitals Health) 5.625%, 1/15/2015 (Insured; MBIA) 3,695,000 3,573,730 (Meridia Health Systems) 7%, 8/15/2023 (Prerefunded 8/15/2001) 1,750,000 (a) 1,866,970 Jail Facilities 7%, 10/1/2013 (Prerefunded 10/1/2001) 6,125,000 (a) 6,547,257 Delaware County, Sewer Disposal Improvement 4.75%, 12/1/2024 (Insured; MBIA) 1,000,000 833,800 Eaton, IDR (Baxter International Inc. Project) 6.50%, 12/1/2012 1,500,000 1,554,615 Euclid City School District, Improvement 7.10%, 12/1/2011 (Prerefunded 12/1/2001) 1,000,000 (a) 1,075,730 Village of Evendale, IDR (Ashland Oil Inc. Project) 6.90%, 11/1/2010 2,000,000 2,073,720 Fairfield City School District, School Improvement Unlimited Tax: 7.20%, 12/1/2011 (Insured; FGIC) 1,000,000 1,130,750 7.20%, 12/1/2012 (Insured; FGIC) 1,250,000 1,410,412 6.10%, 12/1/2015 (Insured; FGIC) 2,000,000 2,040,440 6%, 12/1/2020 (Insured; FGIC) 2,000,000 2,013,540 Findlay 5.875%, 7/1/2017 2,000,000 2,021,460 Franklin County: Health Care Facilities Revenue, Improvement (Friendship Village of Columbus) 5.375%, 8/15/2028 (Insured; ACA) 5,000,000 4,458,050 HR: (Children's Hospital Project): 6.60%, 5/1/2013 4,000,000 4,275,040 5%, 5/1/2018 2,610,000 2,282,341 5.20%, 5/1/2029 (Insured; MBIA) 2,700,000 2,360,340 Holy Cross Health Systems Corp.: (Mount Carmel Health) 6.75%, 6/1/2019 (Insured; MBIA) (Prerefunded 6/1/2002) 2,500,000 (a) 2,687,150 Improvement 5.80%, 6/1/2016 2,000,000 1,961,300 Improvement (Worthington Christian Village Congregate Care Project): 10.25%, 8/1/2015 660,000 703,481 7.80%, 2/1/2017 (Insured; FHA) 5,690,000 5,966,306 The Fund STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ Gahanna-Jefferson Public Schools 4.75%, 12/1/2021 1,325,000 1,110,310 Gallia County Local School District 7.375%, 12/1/2004 570,000 634,564 Greater Cleveland Gateway Economic Development Corp.: Senior Lien Excise Tax Revenue 6.875%, 9/1/2005 (Insured; FSA) 1,500,000 1,577,040 Stadium Revenue 7.50%, 9/1/2005 5,675,000 5,989,906 Greater Cleveland Regional Transit Authority 5.65%, 12/1/2016 (Insured; FGIC) 5,445,000 5,747,197 Hamilton County: Hospital Facilities Improvement Revenue Improvement (Deaconess Hospital) 7%, 1/1/2012 2,570,000 2,709,114 Mortgage Revenue (Judson Care Center) 7.80%, 8/1/2019 (Prerefunded 8/1/2000) (Insured; FHA, LOC; Citibank) 3,970,000 (a) 4,132,055 Hilliard School District, School Improvement: Zero Coupon, 12/1/2013 (Insured; FGIC) 1,655,000 741,572 Zero Coupon, 12/1/2014 (Insured; FGIC) 1,655,000 690,300 Jefferson County (County Jail Construction) 5.75%, 12/1/2019 (Insured; FSA) 6,655,000 6,611,543 Kent State University, University Revenue 5.50%, 5/1/2017 (Insured; MBIA) 1,000,000 962,500 Kirtland Local School District 7.50%, 12/1/2009 760,000 777,229 Knox County, IDR (Weyerhaeuser Co. Project) 9%, 10/1/2007 1,000,000 1,208,660 Lakota Local School District 6.125%, 12/1/2017 (Insured; AMBAC) (Prerefunded 12/1/2005) 1,075,000 (a) 1,153,185 Lorain County, HR (Catholic Healthcare Partners): 5.625%, 9/1/2016 (Insured; MBIA) 2,625,000 2,522,678 5.625%, 9/1/2017 (Insured; MBIA) 3,350,000 3,207,960 Lowellville, Sanitary Sewer Systems Revenue (Browning-Ferris Industries Inc.) 7.25%, 6/1/2006 1,000,000 1,006,470 Lucas County, HR (Promedia Healthcare Obligation Group) 5.375%, 11/15/2023 (Insured; AMBAC) 1,510,000 1,379,007 Mahoning County, Health Care Facilities Revenue (Youngstown Osteopathic Hospital Project) 7.60%, 8/1/2010 (LOC; Marine Midland Bank) 3,775,000 3,897,536 Marion County, Health Care Facilities Revenue, Improvement (United Church Homes Inc.) 6.375%, 11/15/2010 3,000,000 2,947,530 Montgomery County, Limited General Obligation and Sewer Revenue 5.60%, 12/1/2016 1,380,000 1,355,381 Moraine, SWDR (General Motors Corp. Project): 6.75%, 7/1/2014 5,000,000 5,339,200 5.65%, 7/1/2024 3,800,000 3,608,480 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ Middleburg Heights 4.375%, 12/1/2018 5,725,000 4,625,457 North Royalton City School District 6.10%, 12/1/2019 (Insured; MBIA) 2,500,000 2,551,075 State of Ohio: Economic Development Revenue: Ohio Enterprise Bond Fund (VSM Corp. Project) 7.375%, 12/1/2011 885,000 927,604 (Sponge Inc. Project) 8.375%, 6/1/2014 1,465,000 1,519,337 Environmental Improvement Revenue (USX Corp. Project) 5.625%, 5/1/2029 1,000,000 878,570 PCR (Standard Oil Co. Project) 6.75%, 12/1/2015 (Guaranteed; British Petroleum Co. P.L.C.) 2,700,000 2,958,336 Ohio Air Quality Development Authority, PCR: (Cleveland Electric Illuminating Co. Project) 6.85%, 7/1/2023 5,250,000 5,298,090 (Ohio Edison) 7.45%, 3/1/2016 (Insured; FGIC) 3,500,000 3,604,230 Ohio Building Authority, State Facilities (Juvenile Correctional Projects) 6.60%, 10/1/2014 (Insured; AMBAC) 1,660,000 1,829,287 Ohio Higher Educational Facility Commission, Revenue (Higher Educational Facility-Oberlin College) 5%, 10/1/2029 2,800,000 2,397,304 Ohio Housing Finance Agency, SFMR (GNMA Mortgage Backed Securities Program) Zero Coupon, 9/1/2021 7,745,000 1,428,565 Ohio Turnpike Commission, Turnpike Revenue, Highway Improvements: 4.50%, 2/15/2024 (Insured; FGIC) 4,650,000 3,671,221 5.75%, 2/15/2024 (Prerefunded 2/15/2004) 6,100,000 (a) 6,464,292 4.75%, 2/15/2028 (Insured; FGIC) 2,600,000 2,121,990 Ohio Water Development Authority, Revenue: (Fresh Water) 5.90%, 12/1/2015 (Insured; AMBAC) 4,650,000 4,693,571 Pollution Control Facilities (Ohio Edison) 8.10%, 10/1/2023 3,700,000 3,786,913 (Toledo Edison Project) 7.55%, 6/1/2023 2,000,000 2,046,300 Ottawa County, Sanitary Sewer Systems Special Assessment (Portage-Catawba Island Sewer Project) 7%, 9/1/2011 (Insured; AMBAC) (Prerefunded 9/1/2001) 1,000,000 (a) 1,068,520 Parma, Hospital Improvement Revenue (Parma Community General Hospital Association) 5.375%, 11/1/2029 4,000,000 3,427,880 Portage County, HR (Robinson Memorial Hospital) 5.75%, 11/15/2019 (Insured; AMBAC) 2,000,000 1,927,420 The Fund STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ Shelby County, Hospital Facilities Revenue, Improvement (The Shelby County Memorial Hospital Association) 7.70%, 9/1/2018 2,500,000 2,746,725 South Euclid, Recreation Facilities 7%, 12/1/2011 (Prerefunded 12/1/2001) 2,285,000 (a) 2,456,078 South-Western City School District (Franklin and Pickway Counties) School Building Construction 4.75%, 12/1/2026 (Insured; AMBAC) 3,730,000 3,055,803 Southwest Regional Water District, Water Revenue: 6%, 12/1/2015 (Insured; MBIA) 1,600,000 1,620,608 6%, 12/1/2020 (Insured; MBIA) 1,250,000 1,257,438 Springboro, Water System Revenue 4.75%, 12/1/2023 (Insured; AMBAC) 2,600,000 2,158,338 Student Loan Funding Corp., Student Loan Revenue 7.20%, 8/1/2003 405,000 410,010 Toledo 5.625%, 12/1/2011 (Insured; AMBAC) 1,000,000 1,022,060 University of Cincinnati, University and College Revenue, COP 6.75%, 12/1/2009 (Prerefunded 12/1/2001) (Insured; MBIA) 750,000 (a) 802,133 Warren: 7.75%, 11/1/2010 (Prerefunded 11/1/2000) 2,785,000 (a) 2,944,943 Waterworks Revenue 5.50%, 11/1/2015 (Insured; FGIC) 1,450,000 1,417,578 Wauseon Exempted Village School District, School Improvement 5.50%, 12/1/2022 (Insured; MBIA) 1,900,000 1,803,575 Westerville, Improvement 4.50%, 12/1/2018 4,650,000 3,842,621 West Holmes Local School District 5.375%, 12/1/2023 (Insured; MBIA) 1,860,000 1,729,540 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $257,682,602) 254,350,887 Principal SHORT-TERM MUNICIPAL INVESTMENTS--3.9% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ Cuyahoga County, HR, VRDN (The Cleveland Clinic) 3.20% (SBPA; Bank of America) 1,200,000 (c) 1,200,000 Montgomery County, Revenue, VRDN (Miami Valley Hospital) 3.15% (SBPA; National City Bank) 1,000,000 (c) 1,000,000 Ohio Air Quality Development Authority, Revenue, VRDN (Cincinnati Gas and Electric) 3.20% (LOC; ABN Amro Bank) 2,100,000 (c) 2,100,000 State of Ohio, PCR, VRDN (Sohio Air Project) 3.20% 400,000 (c) 400,000 Twinsburg, IDR, VRDN (United Stationers Supply Co.) 3.30% (LOC; PNC Bank) 5,900,000 (c) 5,900,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $10,600,000) 10,600,000 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $268,282,602) 98.0% 264,950,887 CASH AND RECEIVABLES (NET) 2.0% 5,386,770 NET ASSETS 100.0% 270,337,657 The Fund STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Summary of Abbreviations ACA American Capital Access LOC Letter of Credit AMBAC American Municipal Bond MBIA Municipal Bond Investors Assurance Assurance Corporation Insurance Corporation COP Certificate of Participation PCR Pollution Control Revenue FGIC Financial Guaranty Insurance Company SBPA Standby Bond Purchase Agreement FHA Federal Housing Administration SFMR Single Family Mortgage Revenue FSA Financial Security Assurance SWDR Solid Waste Disposal Revenue GNMA Government National Mortgage VRDN Variable Rate Demand Notes Association HR Hospital Revenue IDR Industrial Development Revenue Summary of Combined Ratings Fitch or Moody's or Standard & Poor's Value (%) - ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 44.8 AA Aa AA 13.2 A A A 16.4 BBB Baa BBB 9.8 BB Ba BB 5.2 F1 Mig1 SP1 4.0 Not Rated (d) Not Rated (d) Not Rated (d) 6.6 100.0 (A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. (B) INVERSE FLOATER SECURITY--THE INTEREST RATE IS SUBJECT TO CHANGE PERIODICALLY. (C) SECURITIES PAYABLE ON DEMAND. VARIABLE RATE INTEREST--SUBJECT TO PERIODIC CHANGE. (D) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 (Unaudited) Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 268,282,602 264,950,887 Cash 465,526 Interest receivable 5,176,544 Receivable for shares of Beneficial Interest subscribed 407,207 Receivable for investment securities sold 97,313 Prepaid expenses 11,933 271,109,410 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 127,063 Due to Distributor 79,550 Payable for shares of Beneficial Interest redeemed 521,183 Accrued expenses 43,957 771,753 - -------------------------------------------------------------------------------- NET ASSETS ($) 270,337,657 - -------------------------------------------------------------------------------- COMPOSTION OF NET ASSETS ($): Paid-in capital 274,551,257 Accumulated net realized gain (loss) on investments (881,885) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (3,331,715) - -------------------------------------------------------------------------------- NET ASSETS ($) 270,337,657 NET ASSET VALUE PER SHARE Class A Class B Class C - ----------------------------------------------------------------------------------------------------------------------------- NET ASSETS ($) 221,055,825 46,727,300 2,554,532 Shares Outstanding 18,553,720 3,920,915 214,150 - ----------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE ($) 11.91 11.92 11.93 SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF OPERATIONS Six Months Ended October 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 8,592,883 EXPENSES: Management fee--Note 3(a) 783,521 Shareholder servicing costs--Note 3(c) 438,000 Distribution fees--Note 3(b) 135,366 Registration fees 15,886 Custodian fees 14,314 Prospectus and shareholders' reports 10,353 Professional fees 9,723 Trustees' fees and expenses--Note 3(d) 1,725 Loan commitment fees--Note 2 556 Miscellaneous 11,916 TOTAL EXPENSES 1,421,360 INVESTMENT INCOME--NET 7,171,523 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (1,282,606) Net unrealized appreciation (depreciation) on investments (19,061,263) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (20,343,869) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (13,172,346) SEE NOTES TO FINANCIAL STATEMENTS. STATEMENT OF CHANGES IN NET ASSETS Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 7,171,523 14,414,062 Net realized gain (loss) on investments (1,282,606) 2,281,303 Net unrealized appreciation (depreciation) on investments (19,061,263) (767,158) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (13,172,346) 15,928,207 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (5,951,054) (11,917,210) Class B shares (1,172,298) (2,449,931) Class C shares (48,171) (46,921) Net realized gain on investments: Class A shares -- (2,494,992) Class B shares -- (594,108) Class C shares -- (11,846) TOTAL DIVIDENDS (7,171,523) (17,515,008) - -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 14,903,348 17,942,916 Class B shares 5,525,722 12,817,223 Class C shares 953,388 1,297,795 Dividends reinvested: Class A shares 3,735,904 9,379,044 Class B shares 795,502 2,144,631 Class C shares 34,998 49,513 Cost of shares redeemed: Class A shares (18,054,261) (26,701,239) Class B shares (10,894,473) (10,126,784) Class C shares (68,238) (115,318) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (3,068,110) 6,687,781 TOTAL INCREASE (DECREASE) IN NET ASSETS (23,411,979) 5,100,980 - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 293,749,636 288,648,656 END OF PERIOD 270,337,657 293,749,636 SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A (A) Shares sold 1,201,409 1,387,167 Shares issued for dividends reinvested 304,005 723,830 Shares redeemed (1,468,228) (2,065,623) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 37,186 45,374 - -------------------------------------------------------------------------------- CLASS B (A) Shares sold 446,124 988,648 Shares issued for dividends reinvested 64,659 165,437 Shares redeemed (879,377) (785,050) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (368,594) 369,035 - -------------------------------------------------------------------------------- CLASS C Shares sold 77,060 100,043 Shares issued for dividends reinvested 2,851 3,821 Shares redeemed (5,671) (8,879) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 74,240 94,985 A DURING THE PERIOD ENDED OCTOBER 31, 1999, 582,867 CLASS B SHARES REPRESENTING $7,248,948 WERE AUTOMATICALLY CONVERTED TO 583,323 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rates) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Six Months Ended October 31, 1999 Year Ended April 30, ---------------------------------------------------------------- CLASS A SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.80 12.86 12.65 12.58 12.62 12.70 Investment Operations: Investment income--net .32 .65 .67 .69 .71 .73 Net realized and unrealized gain (loss) on investments (.89) .08 .34 .17 .14 (.05) Total from Investment Operations (.57) .73 1.01 .86 .85 .68 Distributions: Dividends from investment income--net (.32) (.65) (.67) (.69) (.71) (.73) Dividends from net realized gain on investments -- (.14) (.13) (.10) (.18) (.03) Total Distributions (.32) (.79) (.80) (.79) (.89) (.76) Net asset value, end of period 11.91 12.80 12.86 12.65 12.58 12.62 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%) (A) (8.97)(b) 5.72 8.09 6.91 6.77 5.63 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .90(b) .91 .90 .91 .89 .92 Ratio of net investment income to average net assets 5.13(b) 5.00 5.17 5.40 5.49 5.84 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- -- -- -- .01 Portfolio Turnover Rate 17.92(c) 40.36 24.73 29.65 43.90 39.53 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ X 1,000) 221,056 237,027 237,618 242,572 257,639 273,225 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Six Months Ended October 31, 1999 Year Ended April 30, ---------------------------------------------------------------- CLASS B SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.81 12.87 12.65 12.59 12.63 12.71 Investment Operations: Investment income--net .29 .58 .60 .62 .64 .66 Net realized and unrealized gain (loss) on investments (.89) .08 .35 .16 .14 (.05) Total from Investment Operations (.60) .66 .95 .78 .78 .61 Distributions: Dividends from investment income--net (.29) (.58) (.60) (.62) (.64) (.66) Dividends from net realized gain on investments -- (.14) (.13) (.10) (.18) (.03) Total Distributions (.29) (.72) (.73) (.72) (.82) (.69) Net asset value, end of period 11.92 12.81 12.87 12.65 12.59 12.63 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%) A (9.44)(b) 5.17 7.62 6.27 6.19 5.06 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.41(b) 1.42 1.41 1.42 1.42 1.44 Ratio of net investment income to average net assets 4.61(b) 4.47 4.65 4.87 4.94 5.29 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- -- -- -- .01 Portfolio Turnover Rate 17.92(c) 40.36 24.73 29.65 43.90 39.53 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ X 1,000) 46,727 54,929 50,453 44,746 40,476 32,797 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. Six Months Ended October 31, 1999 Year Ended April 30, ------------------------------------------ CLASS C SHARES (Unaudited) 1999 1998 1997 1996(a) - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 12.82 12.88 12.66 12.59 12.68 Investment Operations: Investment income--net .27 .55 .57 .59 .43 Net realized and unrealized gain (loss) on investments (.89) .08 .35 .17 .09 Total from Investment Operations (.62) .63 .92 .76 .52 Distributions: Dividends from investment income--net (.27) (.55) (.57) (.59) (.43) Dividends from net realized gain on investments -- (.14) (.13) (.10) (.18) Total Distributions (.27) (.69) (.70) (.69) (.61) Net asset value, end of period 11.93 12.82 12.88 12.66 12.59 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%) B (9.68)(c) 4.92 7.35 6.07 5.66(c) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.66(c) 1.66 1.66 1.64 1.63(c) Ratio of net investment income to average net assets 4.32(c) 4.20 4.38 4.44 4.66(c) Portfolio Turnover Rate 17.92(d) 40.36 24.73 29.65 43.90 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ X 1,000) 2,555 1,793 579 694 1 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. (D) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company, and operates as a series company currently offering thirteen series including the Ohio Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. 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 series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis. The fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (a) Portfolio valuation: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $7,628 during the period ended October 31, 1999 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (c) Dividends to shareholders: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the ("Code"). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (d) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $500 million redemption credit facility (the "Facility") to be utilized for temporary and emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the fund at rates based on prevailing market rats in effect at the time of borrowings. During the period ended October 31, 1999, 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 $2,132 during the period ended October 31, 1999, from commissions earned on sales of the fund's shares. (b) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Class B and Class C shares pay the Distributor for distributing their shares at an annual rate of .50 of 1% of the value of the average daily net assets of Class B shares and .75 of 1% of the value of the average daily net assets of Class C shares. During the period ended October 31, 1999, Class B and Class C shares were charged $127,011 and $8,355, respectively, pursuant to the Plan. (c) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay the Distributor at an annual rate of .25 of 1% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (a securities dealer, financial institution or other industry professional) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 1999, Class A, Class B and Class C shares were charged $289,855, $63,506 and $2,785, respectively, pursuant to the Shareholder Services Plan. The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended October 31, 1999, the fund was charged $60,757 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. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) NOTE 4--Securities Transactions: The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended October 31, 1999, amounted to $49,649,373 and $68,410,186, respectively. At October 31, 1999, accumulated net unrealized depreciation on investments was $3,331,715, consisting of $6,298,337 gross unrealized appreciation and $9,630,052 gross unrealized depreciation. At October 31, 1999, 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). For More Information Dreyfus Premier State Municipal Bond Fund Ohio Series 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 100 Church Street New York, New York 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Distributor Premier Mutual Fund Services, Inc. 60 State Street Boston, MA 02109 To obtain information: BY TELEPHONE Call your financial representative or 1-800-554-4611 BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 (c) 1999 Dreyfus Service Corporation 057/619SA9910 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series SEMIANNUAL REPORT October 31, 1999 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Year 2000 Issues (Unaudited) The fund could be adversely affected if the computer systems used by The Dreyfus Corporation and the fund's other service providers do not properly process and calculate date-related information from and after January 1, 2000. The Dreyfus Corporation is working to avoid Year 2000-related problems in its systems and to obtain assurances from other service providers that they are taking similar steps. In addition, issuers of securities in which the fund invests may be adversely affected by Year 2000-related problems. This could have an impact on the value of the fund's investments and its share price. Contents THE FUND - -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Statement of Investments 12 Statement of Assets and Liabilities 13 Statement of Operations 14 Statement of Changes in Net Assets 16 Financial Highlights 19 Notes to Financial Statements FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this semiannual report for Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series, covering the six-month period from May 1, 1999 through October 31, 1999. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio manager, Douglas Gaylor. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates twice during the summer of 1999, effectively offsetting most of last fall' s interest-rate cuts. Higher interest rates led to some erosion of municipal bond prices, especially toward the end of the reporting period. In this environment, however, the yields of tax-exempt bonds have recently been quite attractive compared to the after-tax yields of taxable bonds of comparable maturity and credit quality. This is especially true for investors in the higher federal income tax brackets. We appreciate your confidence over the past six months, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation November 15, 1999 DISCUSSION OF FUND PERFORMANCE Douglas Gaylor, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series perform during the period? For the six-month period ended October 31, 1999, the fund's Class A shares provided a -5.09% total return; its Class B shares provided a -5.34% total return; and its Class C shares provided a -5.45% total return.(1) In comparison, the Lipper Pennsylvania Municipal Debt Funds category average provided a -5.33% total return(2) for the same period. We attribute the fund's negative absolute returns over the past six months to a declining municipal bond market and a rising interest rate environment. The modest relative outperformance of the fund's Class A shares compared to its benchmark is primarily the result of our security selection strategy in the Pennsylvania bond market. This strategy was designed to help position the fund to take advantage of attractive values created by the municipal bond market's decline. What is the fund's investment approach? Our goal is to seek as high a level of federal and Pennsylvania state tax-exempt income as is practical from a diversified portfolio of long-term municipal bonds without undue risk. To achieve this objective, we employ two primary strategies. First, for between one-half and three quarters of the total fund, we look for bonds that potentially can provide consistently high current yields. We also try to ensure that we select bonds that are most likely to obtain attractive prices if and when we decide to sell them in the secondary market. Second, for the remainder of the fund, we try to look for bonds that we believe have the potential to offer attractive total returns. We typically look for bonds that are selling at a discount to face value because they may be temporarily out-of-favor among investors. Our belief is that these bonds' prices will rise as they return to favor over time. The Fund DISCUSSION OF FUND PERFORMANCE (continued) What other factors influenced the fund's performance? The fund was adversely affected by rising interest rates over the past six months. When the reporting period began on May 1, 1999, investors were concerned that continued economic strength might rekindle long, dormant inflationary pressures. In fact, in an attempt to forestall a potential reacceleration of inflation, the Federal Reserve Board raised short-term interest rates twice during the summer of 1999. As interest rates rose, taxable fixed-income investments such as corporate bonds became more attractive to institutional investors such as hedge funds and insurance companies. Accordingly, many of these investors sold large numbers of municipal bonds into the secondary market, putting pressure on prices. In addition, strong economic conditions have contributed to the nation's first federal budget surplus in many years. While the government has had less need to issue U.S. Treasury securities, demand has remained high from domestic and overseas investors. This imbalance between supply and demand has recently constrained the rise of taxable bond yields relative to tax-exempt bonds. As a result, municipal bonds -- including those from Pennsylvania issuers -- are currently offering tax-exempt yields that compare very favorably with taxable yields after adjusting for taxes. What is the fund's current strategy? After the recent municipal bond market declines, we have focused primarily on positioning the fund to take advantage of what we anticipate to be an ensuing market recovery. This is consistent with our long-term perspective, in which we measure our success over a full interest-rate cycle. In preparation for the second "leg" of that cycle in a recovering market, which had not yet materialized as of October 31, we have focused on tax-exempt securities selling at deep discounts to their face values. Many of these bonds, in our opinion, have been punished more severely than circumstances warrant, and we believe that they should recover strongly when investors once again recognize their true values. As a result of this strategy, the fund' s average duration has lengthened naturally. While this has made the fund more vulnerable to the adverse effects of higher interest rates over the short term, we believe that it also positions us to participate more strongly in the market's recovery if interest rates moderate over the longer term. November 15, 1999 (1) Total return includes reinvestment of dividends and any capital gains paid, and does not take into consideration the maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charge imposed on redemptions in the case of Class B and Class C shares. Had these charges been reflected, returns would have been lower. Past performance is no guarantee of future results. Share price, yield and investment return fluctuate such that upon redemption fund shares may be worth more or less than their original cost. Income may be subject to state and local taxes for non-Pennsylvania residents. Some income may be subject to the Federal Alternative Minimum Tax (AMT) for certain investors. Capital gains, if any, are fully taxable. (2) Source: Lipper Analytical Services, Inc. The Fund STATEMENT OF INVESTMENTS October 31, 1999 (Unaudited) Principal LONG-TERM MUNICIPAL INVESTMENTS--98.6% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA--94.1% Allegheny County Hospital Development Authority, Revenue (Health Center - UPMC Health System): 4.50%, 8/1/2015 (Insured; MBIA) 2,000,000 1,653,060 4.625%, 12/15/2015 (Insured; AMBAC) 3,415,000 2,863,614 4.75%, 12/15/2016 (Insured; AMBAC) 2,245,000 1,894,870 5%, 11/1/2018 1,000,000 865,590 (Hospital - South Hills Health) 5.125%, 5/1/2029 3,000,000 2,420,010 Allegheny County Industrial Development Authority, Medical Center Revenue (Presbyterian Medical Center of Oakmont Pennsylvania, Inc.) 6.75%, 2/1/2026 (Insured; FHA) 1,785,000 1,877,445 Allegheny County Residential Finance Authority, SFMR: 7.40%, 12/1/2022 1,420,000 1,468,450 7.95%, 6/1/2023 845,000 869,463 Bangor Area School District: 4.50%, 3/15/2016 (Insured; FSA) 2,040,000 1,707,582 4.50%, Series A 3/15/2017 (Insured; FSA) 1,205,000 999,535 4.50%, Series B 3/15/2017 (Insured; FSA) 2,130,000 1,766,814 Beaver County Industrial Development Authority, PCR (Pennsylvania Power Company Mansfield Project) 7.15%, 9/1/2021 3,000,000 3,109,770 Berks County Municipal Authority, Revenue (Phoebe - Devitt Homes Project): 5.50%, 5/15/2015 780,000 676,510 5.75%, 5/15/2022 1,500,000 1,282,095 Blair County Hospital Authority, Revenue (Altoona Hospital Project) 6.375%, 7/1/2013 (Insured; AMBAC) (Prerefunded 7/1/2002) 5,000,000 (a) 5,334,400 Bradford County Industrial Development Authority, SWDR (International Paper Company Projects) 6.60%, 3/1/2019 4,250,000 4,293,732 Butler Area School District, 4.75%, 10/1/2022 (Insured; FGIC) 2,190,000 1,828,672 Charleroi Area School Authority, School Revenue Zero Coupon, 10/1/2020 (Insured; FGIC) 2,000,000 (b) 548,100 Coatesville Area School District 4.50%, 10/1/2016 (Insured; FSA) 7,355,000 6,099,501 Dauphin County General Authority, Revenue (Office and Parking, Riverfront Office) 6%, 1/1/2025 3,000,000 2,751,000 East Whiteland Township 5%, 9/1/2019 (Insured; FSA) 2,820,000 2,455,374 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA (CONTINUED) Erie: Zero Coupon, 11/15/2019 (Insured; FSA) 1,685,000 492,660 Zero Coupon, 11/15/2020 (Insured; FSA) 2,110,000 579,026 Erie County Higher Education Building Authority, College Revenue (Mercyhurst College Project) 5.75%, 3/15/2020 2,000,000 1,882,200 Erie School District Zero Coupon, 9/1/2015 (Insured; FSA) 1,135,000 440,891 Franklin County Industrial Development Authority, HR (The Chambersburg Hospital) 5%, 7/1/2018 (Insured; AMBAC) 1,200,000 1,040,124 Gettysburg Municipal Authority, College Revenue (Gettysburg College) 4.75%, 8/15/2023 (Insured; AMBAC) 2,000,000 1,662,060 Girtys Run Joint Sewer Authority, Sewer Revenue 4.50%, 11/1/2020 (Insured; FSA) 4,580,000 3,716,349 Harrisburg Authority, Office and Parking Revenue 6%, 5/1/2019 2,000,000 1,872,520 Harrisburg Redevelopment Authority, Revenue: Zero Coupon, 5/1/2018 (Insured; FSA) 2,750,000 882,062 Zero Coupon, 11/1/2018 (Insured; FSA) 2,750,000 855,360 Zero Coupon, 11/1/2019 (Insured; FSA) 2,750,000 799,727 Zero Coupon, 5/1/2020 (Insured; FSA) 2,750,000 773,877 Zero Coupon, 11/1/2020 (Insured; FSA) 2,750,000 750,310 Lancaster Area Sewer Authority, Revenue 4.50%, 4/1/2018 (Insured; MBIA) 2,730,000 2,233,495 Lower Merion Township School District 5%, 5/15/2023 1,000,000 870,770 Luzerne County Industrial Development Authority, Exempt Facilities Revenue (Pennsylvania Gas and Water Company Project) 7.125%, 12/1/2022 4,000,000 4,266,440 Montgomery County Higher Educational and Health Authority, RRR First Mortgage (Montgomery Income Project) 10.50%, 9/1/2020 2,875,000 3,011,246 Montgomery County Industrial Development Authority, RRR 7.50%, 1/1/2012 (LOC; Banque Paribas) 14,715,000 15,315,078 Montour School District, Notes: Zero Coupon, 1/1/2024 (Insured; FGIC) 1,155,000 254,874 Zero Coupon, 1/1/2025 (Insured; FGIC) 2,015,000 416,702 Norristown (Asset Guarantee) Zero Coupon, 12/15/2014 1,465,000 580,829 Northampton County Industrial Development Authority, PCR (Bethlehem Steel) 7.55%, 6/1/2017 5,700,000 5,872,653 The Fund STATEMENT OF INVESTMENTS (Unaudited) (continued) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA (CONTINUED) Pennsylvania, COP 5%, 7/1/2015 (Insured; AMBAC) 125,000 110,259 Pennsylvania Economic Development Financing Authority: RRR (Northampton Generating Project): 6.50%, 1/1/2013 6,500,000 6,548,425 Wastewater Treatment Revenue (Sun Co. Inc. - R and M Project) 7.60% 4,240,000 4,547,909 Pennsylvania Higher Education Assistance Agency, Student Loan Revenue 7.05%, 10/1/2016 (Insured; AMBAC) 2,500,000 2,653,525 Pennsylvania Housing Finance Agency: 6.50%, 7/1/2023 2,750,000 2,892,863 Single Family Mortgage: 6.75%, 4/1/2016 3,000,000 3,067,020 6.85%, 4/1/2016 (Insured; FHA) 3,700,000 3,774,370 6.90%, 4/1/2025 6,250,000 6,512,000 Pennsylvania State Higher Educational Facilities Authority, Revenue (State System Higher Education): 5%, 6/15/2019 (Insured; AMBAC) 2,000,000 1,753,200 5%, 6/15/2024 (Insured; FSA) 1,770,000 1,526,377 (UPMC Health System) 4.875%, 8/1/2019 (Insured; FSA) 1,250,000 1,045,825 Pennsylvania State University: 5%, 8/15/2017 2,000,000 1,771,900 5%, 5/15/2022 2,000,000 1,738,580 Philadelphia: 4.75%, 5/15/2020 (Insured; FGIC) 8,900,000 7,452,860 Gas Works Revenue: 5%, 7/1/2017 (Insured; FSA) 2,500,000 2,201,175 5%, 7/1/2018 (Insured; FSA) 3,500,000 3,054,660 5%, 7/1/2023 (Insured; FSA) 6,000,000 5,148,300 6.375%, 7/1/2026 (Insured; CMAC) 2,000,000 2,043,100 Water and Wastewater Revenue 5.75%, 6/15/2013 (Insured; MBIA) 8,000,000 8,039,440 Philadelphia Authority for Industrial Development, Industrial and Commercial (Girard Estate Coal Mining Project) 5.50%, 11/15/2016 900,000 890,559 Philadelphia Hospital and Higher Education Facilities, HR (Temple University Hospital) 6.625%, 11/15/2023 16,240,000 16,311,294 Philadelphia School District 4.50%, 4/1/2023 (Insured; MBIA) 16,625,000 13,269,576 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA (CONTINUED) Pittsburgh and Allegheny County Public Auditorium Authority, Excise Tax (Hotel Room) 5%, 2/1/2024 (Insured, AMBAC) 2,250,000 1,942,335 Pittsburgh Urban Redevelopment Authority Mortgage Revenue: 7.05%, 4/1/2023 1,785,000 1,829,518 (Sidney Square Project) 6.65%, 9/1/2028 3,350,000 3,412,277 Pittsburgh Water and Sewer Authority, Water and Sewer Systems Revenue 5%, 9/1/2017 3,000,000 2,666,400 Pottstown School District: 5%, 6/1/2018 (Insured; MBIA) 1,170,000 1,032,151 4.75%, 6/1/2022 (Insured; MBIA) 3,760,000 3,143,849 Schuylkill County Industrial Development Authority First Mortgage Revenue (Valley Health Concerns) 8.75%, 3/1/2012 2,500,000 2,503,600 Southeast Delco School District: Zero Coupon, 2/1/2020 (Insured; MBIA) 2,055,000 591,943 Zero Coupon, 2/1/2023 (Insured; MBIA) 2,055,000 490,076 Southeastern Transportation Authority, Special Revenue 4.75%, 3/1/2024 (Insured; FGIC) 2,775,000 2,298,338 Spring-Ford Area School District 4.75%, 3/1/2022 (Insured; FGIC) 8,935,000 7,478,238 State Public School Building Authority, School Revenue (School District of York Project) 4.75%, 2/15/2014 (Insured; FGIC) 1,655,000 1,472,040 Washington County Industrial Development Authority, PCR (West Pennsylvania Power Company Mitchell) 6.05%, 4/1/2014 (Insured; FGIC) 3,000,000 3,064,290 Washington County Industrial Development Authority, Revenue (Presbyterian Medical Center) 6.75%, 1/15/2023 (Insured; FHA) 3,000,000 3,184,140 U.S. RELATED--4.5% Commonwealth of Puerto Rico (Public Improvement) 4.50%, 7/1/2023 5,000,000 4,066,200 Guam Airport Authority, Revenue 6.50%, 10/1/2023 2,000,000 2,039,640 Puerto Rico Electric Power Authority, Power Revenue 5%, 7/1/2023 5,500,000 4,781,480 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $248,035,394) 237,684,572 The Fund STATEMENT OF INVESTMENTS (Unaudited) (continued) Principal SHORT-TERM MUNICIPAL INVESTMENTS--.7% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA; Geisinger Authority Health System, Revenue VRDN (Geisinger Health) 3.60% 1,000,000 (c) 1,000,000 Pennsylvania State Higher Educational Facilities Authority, VRDN (Carnegie Mellon University) 3.60% 600,000 (c) 600,000 TOTAL SHORT-TERM MUNICIPAL INVESTMENTS (cost $1,600,000) 1,600,000 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $249,635,394) 99.3% 239,284,572 CASH AND RECEIVABLES (NET) .7% 1,666,646 NET ASSETS 100.0% 240,951,218 Summary of Abbreviations AMBAC American Municipal Bond Assurance LOC Letter of Credit Corporation MBIA Municipal Bond Investors Assurance CMAC Capital Market Assurance Corporation Insurance Corporation COP Certificate of Participation PCR Pollution Control Revenue FGIC Financial Guaranty Insurance Company RRR Resources Recovery Revenue FHA Federal Housing Administration SFMR Single Family Mortgage Revenue FSA Financial Security Assurance SWDR Solid Waste Disposal Revenue HR Hospital Revenue VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) - ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 58.8 AA Aa AA 7.6 A A A 11.0 BBB Baa BBB 14.4 F1 MIG1 SP1 .7 Not Rated(d) Not Rated(d) Not Rated(d) 7.5 100.0 (a) Bonds which are prerefunded are collateralized by U.S. Government securities which are held in escrow and are used to pay principal and interest on the municipal issue and to retire the bonds in full at the earliest refunding date. (b) Purchased on a delayed delivery basis. (c) Securities payable on demand. Variable interest rate--subject to periodic change. (d) Securities which, while not rated by Fitch, Moody's and Standard & Poor's have been determined by the Manager to be of comparable quality to those rated securities in which the fund may invest. See notes to financial statements.
The Fund STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 (Unaudited) Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 249,635,394 239,284,572 Interest receivable 4,139,674 Receivable for shares of Beneficial Interest subscribed 84,013 Prepaid expenses 11,676 243,519,935 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 112,753 Due to Distributor 73,638 Cash overdraft due to Custodian 135,640 Payable for investment securities purchased 2,004,649 Payable for shares of Beneficial Interest redeemed 188,828 Accrued expenses 53,209 2,568,717 - -------------------------------------------------------------------------------- NET ASSETS ($) 240,951,218 - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 246,864,063 Accumulated net realized gain (loss) on investments 4,437,977 Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (10,350,822) - -------------------------------------------------------------------------------- NET ASSETS ($) 240,951,218 NET ASSET VALUE PER SHARE Class A Class B Class C - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 188,907,252 50,974,228 1,069,738 Shares Outstanding 12,323,476 3,328,368 69,749 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 15.33 15.32 15.34 See notes to financial statements.
STATEMENT OF OPERATIONS Six Months Ended October 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 7,509,956 EXPENSES: Management fee--Note 3(a) 701,368 Shareholder servicing costs--Note 3(c) 430,718 Distribution fees--Note 3(b) 152,361 Custodian fees 13,222 Prospectus and shareholders' reports 12,984 Registration fees 12,903 Professional fees 8,161 Trustees' fees and expenses--Note 3(d) 1,548 Loan commitment fees--Note 2 816 Miscellaneous 8,583 TOTAL EXPENSES 1,342,664 INVESTMENT INCOME--NET 6,167,292 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments 994,878 Net unrealized appreciation (depreciation) on investments (20,615,846) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (19,620,968) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (13,453,676) See notes to financial statements. The Fund STATEMENT OF CHANGES IN NET ASSETS Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 6,167,292 12,843,754 Net realized gain (loss) on investments 994,878 5,906,216 Net unrealized appreciation (depreciation) on investments (20,615,846) (3,365,196) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (13,453,676) 15,384,774 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (4,829,789) (9,548,326) Class B shares (1,317,756) (3,269,922) Class C shares (19,747) (25,507) Net realized gain on investments: Class A shares -- (3,137,642) Class B shares -- (1,225,935) Class C shares -- (9,155) TOTAL DIVIDENDS (6,167,292) (17,216,487) - -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 19,537,303 15,324,595 Class B shares 5,436,062 9,317,671 Class C shares 400,039 888,826 Dividends reinvested: Class A shares 2,423,080 6,692,004 Class B shares 853,332 2,958,657 Class C shares 11,304 12,609 Cost of shares redeemed: Class A shares (13,805,527) (21,037,691) Class B shares (19,613,353) (17,742,150) Class C shares (165,255) (460,642) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (4,923,015) (4,046,121) TOTAL INCREASE (DECREASE) IN NET ASSETS (24,543,983) (5,877,834) - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 265,495,201 271,373,035 END OF PERIOD 240,951,218 265,495,201 See notes to financial statements. Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 1,217,395 918,902 Shares issued for dividends reinvested 152,839 398,920 Shares redeemed (867,560) (1,253,979) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 502,674 63,843 - -------------------------------------------------------------------------------- CLASS B(A) Shares sold 336,709 556,572 Shares issued for dividends reinvested 53,782 176,403 Shares redeemed (1,222,920) (1,062,694) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (832,429) (329,719) - -------------------------------------------------------------------------------- CLASS C Shares sold 25,290 53,260 Shares issued for dividends reinvested 715 752 Shares redeemed (10,443) (27,571) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 15,562 26,441 (a) During the period ended October 31, 1999, 891,489 Class B shares representing $14,294,384 were automatically converted to 891,446 Class A shares See notes to financial statements. The Fund FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Six Months Ended October 31, 1999 Year Ended April 30, ---------------------------------------------------------------- CLASS A SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 16.56 16.68 16.23 16.17 16.12 16.01 Investment Operations: Investment income--net .40 .82 .85 .85 .87 .91 Net realized and unrealized gain (loss) on investments (1.23) .16 .71 .24 .32 .11 Total from Investment Operations (.83) .98 1.56 1.09 1.19 1.02 Distributions: Dividends from investment income--net (.40) (.82) (.85) (.85) (.87) (.91) Dividends from net realized gain on investments -- (.28) (.26) (.18) (.27) -- Total Distributions (.40) (1.10) (1.11) (1.03) (1.14) (.91) Net asset value, end of period 15.33 16.56 16.68 16.23 16.17 16.12 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (5.09)(b) 5.97 9.83 6.89 7.46 6.65 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .93(b) .92 .92 .92 .92 .92 Ratio of net investment income to average net assets 4.96(b) 4.90 5.09 5.22 5.28 5.77 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- -- -- -- .01 Portfolio Turnover Rate 26.56(c) 48.14 34.82 60.57 52.69 55.19 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 188,907 195,728 196,055 201,229 216,802 219,949 (a) Exclusive of sales charge. (b) Annualized (c) Not annualized See notes to financial statements. Six Months Ended October 31, 1999 Year Ended April 30, ----------------------------------------------------------------- CLASS B SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 16.55 16.67 16.23 16.16 16.11 16.01 Investment Operations: Investment income--net .36 .74 .77 .77 .79 .83 Net realized and unrealized gain (loss) on investments (1.23) .16 .70 .25 .32 .10 Total from Investment Operations (.87) .90 1.47 1.02 1.11 .93 Distributions: Dividends from investment income--net (.36) (.74) (.77) (.77) (.79) (.83) Dividends from net realized gain on investments -- (.28) (.26) (.18) (.27) -- Total Distributions (.36) (1.02) (1.03) (.95) (1.06) (.83) Net asset value, end of period 15.32 16.55 16.67 16.23 16.16 16.11 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (5.34)(b) 5.43 9.20 6.41 6.92 6.02 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.45(b) 1.43 1.43 1.43 1.43 1.44 Ratio of net investment income to average net assets 4.43(b) 4.39 4.57 4.71 4.76 5.22 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- -- -- -- .01 Portfolio Turnover Rate 26.56(c) 48.14 34.82 60.57 52.69 55.19 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 50,974 68,869 74,855 71,671 72,610 70,062 (a) Exclusive of sales charge. (b) Annualized (c) Not annualized See notes to financial statements. The Fund FINANCIAL HIGHLIGHTS (continued) Six Months Ended October 31, 1999 Year Ended April 30, ------------------------------------------- CLASS C SHARES (Unaudited) 1999 1998 1997 1996(a) - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 16.57 16.69 16.23 16.16 16.18 Investment income--net .34 .69 .70 .69 .53 Net realized and unrealized gain (loss) on investments (1.23) .16 .72 .25 .25 Total from Investment Operations (.89) .85 1.42 .94 .78 Distributions: Dividends from investment income--net (.34) (.69) (.70) (.69) (.53) Dividends from net realized gain on investments -- (.28) (.26) (.18) (.27) Total Distributions (.34) (.97) (.96) (.87) (.80) Net asset value, end of period 15.34 16.57 16.69 16.23 16.16 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (5.80)(c) 5.16 8.91 5.92 6.71(c) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.70(c) 1.69 1.69 1.83 1.70(c) Ratio of net investment income to average net assets 4.18(c) 4.07 3.98 4.28 4.46(c) Portfolio Turnover Rate 26.56(d) 48.14 34.82 60.57 52.69 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 1,070 898 463 32 21 (a) From August 15, 1995 (commencement of initial offering) to April 30, 1996. (b) Exclusive of sales charge. (c) Annualized. (c) Not annualized. See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company and operates as a series company currently offering thirteen series including the Pennsylvania Series (the " fund" ). The fund's investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. 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 series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis. The fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) (A) PORTFOLIO VALUATION: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $8,001 during the period ended October 31, 1999 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the " Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (D) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $500 million redemption credit facility (the "Facility") to be utilized for temporary and emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the fund at rates based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 1999, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (A) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund's average daily net assets and is payable monthly. The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, retained $2,206 during the period ended October 31, 1999, from commissions earned on sales of the fund's shares. (B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Class B and Class C shares pay the Distributor for distributing 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 October 31, 1999, Class B and Class C shares were charged $148,814 and $3,547, respectively, pursuant to the Plan. (C) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay the Distributor at an annual rate of .25 of 1% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (a securities dealer, financial institution or other industry professional) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 1999 Class A, Class B and Class C shares were charged $243,214, $74,407, and $1,183, respectively, pursuant to the Shareholder Services Plan. The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended October 31, 1999, the fund was charged $69,457 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 October 31, 1999, amounted to $66,697,733 and $71,126,208 respectively. At October 31, 1999, accumulated net unrealized depreciation on investments was $10,350,822, consisting of $3,056,983 gross unrealized appreciation and $13,407,805 gross unrealized depreciation. At October 31, 1999, the cost of investments for Federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments). The Fund NOTES For More Information Dreyfus Premier State Municipal Bond Fund, Pennsylvania Series 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Distributor Premier Mutual Fund Services, Inc. 60 State Street Boston, MA 02109 To obtain information: BY TELEPHONE Call your financial representative or 1-800-554-4611 BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 (c) 1999 Dreyfus Service Corporation 058/620SA9910 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Texas Series SEMIANNUAL REPORT October 31, 1999 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Year 2000 Issues (Unaudited) The fund could be adversely affected if the computer systems used by The Dreyfus Corporation and the fund's other service providers do not properly process and calculate date-related information from and after January 1, 2000. The Dreyfus Corporation is working to avoid Year 2000-related problems in its systems and to obtain assurances from other service providers that they are taking similar steps. In addition, issuers of securities in which the fund invests may be adversely affected by Year 2000-related problems. This could have an impact on the value of the fund's investments and its share price. Contents THE FUND - -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Statement of Investments 10 Statement of Assets and Liabilities 11 Statement of Operations 12 Statement of Changes in Net Assets 14 Financial Highlights 17 Notes to Financial Statements FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Texas Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this semiannual report for Dreyfus Premier State Municipal Bond Fund, Texas Series, covering the six-month period from May 1, 1999 through October 31, 1999. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio manager, Douglas Gaylor. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates twice during the summer of 1999, effectively offsetting most of last fall' s interest-rate cuts. Higher interest rates led to some erosion of municipal bond prices, especially toward the end of the reporting period. In this environment, however, the yields of tax-exempt bonds have recently been quite attractive compared to the after-tax yields of taxable bonds of comparable maturity and credit quality. This is especially true for investors in the higher federal income tax brackets. We appreciate your confidence over the past six months, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Texas Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation November 15, 1999 DISCUSSION OF FUND PERFORMANCE Douglas Gaylor, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Texas Series perform during the period? For the six-month period ended October 31, 1999, the fund's Class A shares provided a -5.94% total return; its Class B shares provided a -6.22% total return; and its Class C shares provided a -6.30% total return.(1) In comparison, the Lipper Texas Municipal Debt Funds category average provided a -6.03% total return(2) for the same period. We attribute the fund's negative absolute returns over the past six months to a declining municipal bond market and a rising interest rate environment. The modest relative outperformance of the fund's Class A shares compared to its benchmark is primarily the result of our security selection strategy, which was designed to help position the fund to take advantage of attractive values created by the municipal bond market's decline. What is the fund's investment approach? Our goal is to seek as high a level of federal and Texas tax-exempt income as is practical from a diversified portfolio of long-term municipal bonds without undue risk. To achieve this objective, we employ two primary strategies. First, for between one-half and three quarters of the total fund, we look for bonds that potentially can provide consistently high current yields. We also try to ensure that we select bonds that are most likely to obtain attractive prices if and when we decide to sell them in the secondary market. Second, for the remainder of the fund, we try to look for bonds that we believe have the potential to offer attractive total returns. We typically look for bonds that are selling at a discount to face value because they may be temporarily out-of-favor among investors. Our belief is that these bonds' prices will rise as they return to favor over time. The Fund DISCUSSION OF FUND PERFORMANCE (CONTINUED) What other factors influenced the fund's performance? The fund was adversely affected by rising interest rates. When the reporting period began on May 1, 1999, investors were concerned that continued economic strength might rekindle long-dormant inflationary pressures. In fact, in an attempt to forestall a potential reacceleration of inflation, the Federal Reserve Board raised short-term interest rates twice during the summer of 1999. As interest rates rose, taxable fixed-income investments such as corporate bonds became more attractive to institutional investors such as hedge funds and insurance companies. Accordingly, many of these investors sold large numbers of municipal bonds into the secondary market, putting pressure on prices. In addition, strong economic conditions have contributed to the nation's first federal budget surplus in many years. While the government has had less need to issue U.S. Treasury securities, demand has remained high from domestic and overseas investors. This imbalance between supply and demand has recently constrained the rise of taxable bond yields relative to tax-exempt bonds. As a result, municipal bonds -- including those from Texas issuers -- are currently offering tax-exempt yields that compare very favorably with taxable yields after adjusting for taxes. What is the fund's current strategy? After the recent municipal bond market declines, we have focused primarily on positioning the fund to take advantage of what we anticipate to be an ensuing market recovery. This is consistent with our long-term perspective, in which we measure our success over a full interest rate cycle. In preparation for the second "leg" of that cycle in a recovering market, which had not yet materialized as of October 31, we have focused on tax-exempt securities selling at deep discounts to their face values. Many of these bonds, in our opinion, have been punished more severely than circumstances warrant, and we believe that they should recover strongly when investors once again recognize their true values. As a result of this strategy, the fund' s average duration has lengthened naturally. While this has made the fund more vulnerable to the adverse effects of higher interest rates over the short term, we believe that it also positions us to participate more strongly in the market's recovery if interest rates moderate over the longer term. November 15, 1999 (1) TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS AND ANY CAPITAL GAINS PAID, AND DOES NOT TAKE INTO CONSIDERATION THE MAXIMUM INITIAL SALES CHARGE IN THE CASE OF CLASS A SHARES, OR THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE IMPOSED ON REDEMPTIONS IN THE CASE OF CLASS B AND CLASS C SHARES. HAD THESE CHARGES BEEN REFLECTED, RETURNS WOULD HAVE BEEN LOWER. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE, YIELD AND INVESTMENT RETURN FLUCTUATE SUCH THAT UPON REDEMPTION FUND SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES FOR NON-TEXAS RESIDENTS. SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT) FOR CERTAIN INVESTORS. CAPITAL GAINS, IF ANY, ARE FULLY TAXABLE. RETURN FIGURES PROVIDED REFLECT THE ABSORPTION OF FUND EXPENSES BY THE DREYFUS CORPORATION PURSUANT TO AN UNDERTAKING IN EFFECT THAT MAY BE EXTENDED, TERMINATED OR MODIFIED AT ANY TIME. HAD THESE EXPENSES NOT BEEN ABSORBED, THE FUND'S RETURNS WOULD HAVE BEEN LOWER. (2) SOURCE: LIPPER ANALYTICAL SERVICES, INC. The Fund STATEMENT OF INVESTMENTS October 31, 1999 (Unaudited) Principal LONG-TERM MUNICIPAL INVESTMENTS--97.2% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ TEXAS--96.0% Aledo Independent School District, Unlimited Tax School Building (Permanent School Fund Guaranteed) Zero Coupon, 2/15/2014 1,225,000 529,114 Brazos Higher Education Authority Inc., Student Loan Revenue 6.80%, 12/1/2004 700,000 745,227 Clear Creek Independent School District (Permanent School Fund Guaranteed) 4.25%, 2/1/2013 1,475,000 1,270,978 Coastal Water Authority, Water Conveyance System 6.25%, 12/15/2017 (Insured; AMBAC) 5,885,000 5,945,557 Dallas-Fort Worth Regional Airport, Joint Revenue 6.625%, 11/1/2021 (Insured; FGIC) 1,250,000 1,294,087 Denison Hospital Authority, HR (Texoma Medical Center Project) 6.125%, 8/15/2017 750,000 672,150 Eanes Independent School District (Permanent School Fund Guaranteed) 4.50%, 8/1/2017 1,400,000 1,151,738 El Paso Housing Authority, Multi-Family Revenue (Section 8 Projects) 6.25%, 12/1/2009 2,510,000 2,567,429 Grape Creek-Pulliam Independent School District Public Facility Corp., School Facility LR 7.25%, 5/15/2021 2,200,000 2,352,108 Grapevine-Colleyville Independent School District, Unlimited Tax School Building (Permanent School Fund Guaranteed): Zero Coupon, 8/15/2017 2,590,000 879,901 Zero Coupon, 8/15/2018 2,390,000 759,996 Gulf Coast Waste Disposal Authority, SWDR (Champion International Corp. Project): 7.25%, 4/1/2017 (Prerefunded 4/1/2002) 440,000 (a) 474,773 7.25%, 4/1/2017 560,000 584,651 Houston: Airport System Special Facilities Revenue (Automated People Mover Project) 5.375%, 7/15/2009 (Insured; FSA) 2,000,000 2,001,080 Public Improvement 4.75%, 3/1/2016 1,160,000 999,908 Houston Independent School District (Permanent School Fund Guaranteed): Zero Coupon, 8/15/2015 3,000,000 1,155,990 4.75%, 2/15/2022 2,500,000 2,084,775 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ TEXAS (CONTINUED): Irving Independent School District (Permanent School Fund Guaranteed): Zero Coupon, 2/15/2010 1,985,000 1,128,691 Zero Coupon, 2/15/2016 1,000,000 375,050 Katy Independent School District, Limited Tax Refunding and School Building (Permanent School Fund Guaranteed) 4.75%, 2/15/2021 1,295,000 1,081,921 La Porte Independent School District (Permanent School Fund Guaranteed) 4.50%, 2/15/2017 1,000,000 825,270 Lakeway Municipal Utility District Zero Coupon, 9/1/2013 (Insured; FGIC) 1,850,000 831,834 Leon County, PCR (Nucor Corp. Project) 7.375%, 8/1/2009 750,000 795,607 Lower Colorado River Authority, Revenue, Junior Lein 4.50%, 1/1/2017 (Insured; FSA) 2,560,000 2,192,256 North Texas Higher Education Authority, Inc., Student Loan Revenue 7.25%, 4/1/2003 (Insured; AMBAC) 1,000,000 1,031,720 Port of Bay City Authority, Matagorda County Revenue (Hoechst Celanese Corp. Project) 6.50%, 5/1/2026 3,500,000 3,516,975 Round Rock Independent School District (Permanent School Fund Guaranteed) 4.50%, 8/1/2016 1,950,000 1,627,957 Texas: (Veterans Housing Assistance) 6.80%, 12/1/2023 2,145,000 2,235,734 (Water Development) 5%, 8/1/2020 750,000 654,743 Texas Department Housing and Community Affairs, MFHR (Harbors and Plumtree) 6.35%, 7/1/2016 1,300,000 1,322,373 Texas Higher Education Coordinating Board, College Student Loan Revenue 7.30%, 10/1/2003 395,000 419,328 Texas National Research Laboratory Commission Financing Corp., LR (Superconducting Super Collider) 6.95%, 12/1/2012 700,000 783,944 Texas Public Finance Authority, Building Revenue (State Preservation Board Project): 4.50%, 2/1/2018 (Insured; AMBAC) 2,805,000 2,307,954 4.50%, 2/1/2019 (Insured; AMBAC) 2,165,000 1,768,069 The Fund STATEMENT OF INVESTMENTS (Unaudited) (CONTINUED) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ TEXAS (CONTINUED): Texas Public Property Finance Corp., Revenue (Mental Health and Retardation) 8.875%, 9/1/2011 (Prerefunded 9/1/2001) 455,000 (a) 498,571 Texas Water Development Board, Revenue, State Revolving Fund 4.75%, 7/15/2020 1,695,000 1,425,156 Tomball Hospital Authority, Revenue 6%, 7/1/2013 5,000,000 4,695,600 Tomball Independent School District (Permanent School Fund Guaranteed) 4.75%, 2/15/2020 2,515,000 2,118,711 Tyler Health Facility Development Corp., HR (East Texas Medical Center Regional Health) 6.625%, 11/1/2011 1,605,000 1,445,848 University of Texas (Financing System) University Revenues 3.75%, 8/15/2018 5,000,000 3,591,250 Victoria, Utility System Revenue 4.75%, 12/1/2022 1,105,000 918,487 Waxahachie Community Development Corp., Sales Tax Revenue: Zero Coupon, 8/1/2020 (Insured; MBIA) 1,430,000 392,278 Zero Coupon, 8/1/2023 (Insured; MBIA) 1,000,000 226,500 West Side Calhoun County Navigation District, SWDR (Union Carbide Chemical and Plastics) 8.20%, 3/15/2021 500,000 525,170 U.S. RELATED--1.2% Puerto Rico (Public Improvement) 4.50%, 7/1/2023 (Insured; FSA) 1,000,000 813,240 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $68,212,475) 97.2% 65,019,699 CASH AND RECEIVABLES (NET) 2.8% 1,863,953 NET ASSETS 100.0% 66,883,652 Summary of Abbreviations AMBAC American Municipal Bond Assurance MBIA Municipal Bond Investors Assurance Corporation Insurance Corporation FGIC Financial Guaranty Insurance Company MFHR Multi-Family Housing Revenue FSA Financial Security Assurance PCR Pollution Control Revenue HR Hospital Rvenue SWDR Solid Waste Disposal Revenue LR Lease Revenue Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) - ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 62.3 AA Aa AA 7.2 A A A 13.2 BBB Baa BBB 14.3 B B B 2.2 Not Rated(b) Not Rated(b) Not Rated(b) .8 100.0 (A) BONDS WHICH ARE PREREFUNDED ARE COLLATERALIZED BY U.S. GOVERNMENT SECURITIES WHICH ARE HELD IN ESCROW AND ARE USED TO PAY PRINCIPAL AND INTEREST ON THE MUNICIPAL ISSUE AND TO RETIRE THE BONDS IN FULL AT THE EARLIEST REFUNDING DATE. (B) SECURITIES WHICH, WHILE NOT RATED BY FITCH, MOODY'S AND STANDARD & POOR'S HAVE BEEN DETERMINED BY THE MANAGER TO BE OF COMPARABLE QUALITY TO THOSE RATED SECURITIES IN WHICH THE FUND MAY INVEST. SEE NOTES TO FINANCIAL STATEMENTS.
The Fund STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 (Unaudited) Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 68,212,475 65,019,699 Receivable for investment securities sold 1,460,484 Interest receivable 1,195,789 Prepaid expenses 17,613 67,693,585 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 16,675 Due to Distributor 19,495 Cash overdraft due to Custodian 702,641 Payable for shares of Beneficial Interest redeemed 57,588 Accrued expenses 13,534 809,933 - -------------------------------------------------------------------------------- NET ASSETS ($) 66,883,652 - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 69,154,851 Accumulated net realized gain (loss) on investments 921,577 Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (3,192,776) - -------------------------------------------------------------------------------- NET ASSETS ($) 66,883,652 NET ASSET VALUE PER SHARE Class A Class B Class C - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets 55,418,894 10,768,127 696,631 Shares Outstanding 2,824,912 549,034 35,529 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 19.62 19.61 19.61 SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS Six Months Ended October 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 2,071,819 EXPENSES: Management fee--Note 3(a) 201,517 Shareholder servicing costs--Note 3(c) 109,104 Distribution fees--Note 3(b) 37,272 Registration fees 21,182 Professional fees 14,376 Prospectus and shareholders' reports 6,614 Custodian fees 4,145 Trustees' fees and expenses--Note 3(d) 515 Loan commitment fees--Note 2 144 Miscellaneous 6,061 TOTAL EXPENSES 400,930 Less--reduction in management fee due to undertaking--Note 3(a) (52,223) NET EXPENSES 348,707 INVESTMENT INCOME--NET 1,723,112 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments 325,781 Net unrealized appreciation (depreciation) on investments (6,569,090) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (6,243,309) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,520,197) SEE NOTES TO FINANCIAL STATEMENTS. The Fund STATEMENT OF CHANGES IN NET ASSETS Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 1,723,112 3,580,223 Net realized gain (loss) on investments 325,781 1,655,520 Net unrealized appreciation (depreciation) on investments (6,569,090) (902,285) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (4,520,197) 4,333,458 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (1,411,961) (2,750,126) Class B shares (296,813) (815,258) Class C shares (14,338) (14,839) Net realized gain on investments: Class A shares -- (1,392,005) Class B shares -- (491,551) Class C shares -- (9,650) TOTAL DIVIDENDS (1,723,112) (5,473,429) - -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 4,437,375 6,902,174 Class B shares 694,451 3,131,814 Class C shares 207,158 472,618 Dividends reinvested: Class A shares 633,972 2,017,842 Class B shares 184,005 874,269 Class C shares 10,700 10,434 Cost of shares redeemed: Class A shares (5,159,443) (7,312,717) Class B shares (5,966,368) (7,146,330) Class C shares (82,401) (115,404) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (5,040,551) (1,165,300) TOTAL INCREASE (DECREASE) IN NET ASSETS (11,283,860) (2,305,271) - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 78,167,512 80,472,783 END OF PERIOD 66,883,652 78,167,512 SEE NOTES TO FINANCIAL STATEMENTS. Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 215,245 318,580 Shares issued for dividends reinvested 31,100 92,816 Shares redeemed (252,728) (335,978) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (6,383) 75,418 - -------------------------------------------------------------------------------- CLASS B(A) Shares sold 32,869 143,855 Shares issued for dividends reinvested 8,995 40,204 Shares redeemed (289,846) (330,498) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (247,982) (146,439) - -------------------------------------------------------------------------------- CLASS C Shares sold 9,927 21,872 Shares issued for dividends reinvested 526 482 Shares redeemed (3,961) (5,370) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 6,492 16,984 (A) DURING THE PERIOD ENDED OCTOBER 31, 1999, 177,905 CLASS B SHARES REPRESENTING $3,662,692 WERE AUTOMATICALLY CONVERTED TO 177,929 CLASS A SHARES. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Six Months Ended October 31, 1999 Year Ended April 30, ----------------------------------------------------------------- CLASS A SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 21.37 21.68 20.99 20.84 20.69 20.41 Investment Operations: Investment income--net .50 1.00 1.08 1.17 1.20 1.22 Net realized and unrealized gain (loss) on investments (1.75) .21 .99 .41 .45 .28 Total from Investment Operations (1.25) 1.21 2.07 1.58 1.65 1.50 Distributions: Dividends from investment income--net (.50) (1.00) (1.08) (1.17) (1.20) (1.22) Dividends from net realized gain on investments -- (.52) (.30) (.26) (.30) -- Total Distributions (.50) (1.52) (1.38) (1.43) (1.50) (1.22) Net asset value, end of period 19.62 21.37 21.68 20.99 20.84 20.69 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (11.78)(b) 5.66 10.03 7.74 8.06 7.63 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .85(b) .85 .72 .37 .37 .37 Ratio of net investment income to average net assets 4.81(b) 4.59 4.96 5.54 5.64 6.01 Decrease reflected in above expense ratios due to undertakings by the Manager .14(b) .07 .18 .55 .55 .55 Portfolio Turnover Rate 21.17(c) 49.67 27.18 61.22 49.24 38.68 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 55,419 60,516 59,758 60,849 62,864 68,103 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. Six Months Ended October 31, 1999 Year Ended April 30, ---------------------------------------------------------------- CLASS B SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 21.37 21.68 20.98 20.84 20.69 20.41 Investment Operations: Investment income--net .44 .89 .97 1.06 1.09 1.10 Net realized and unrealized gain (loss) on investments (1.76) .21 1.00 .40 .45 .28 Total from Investment Operations (1.32) 1.10 1.97 1.46 1.54 1.38 Distributions: Dividends from investment income--net (.44) (.89) (.97) (1.06) (1.09) (1.10) Dividends from net realized gain on investments -- (.52) (.30) (.26) (.30) -- Total Distributions (.44) (1.41) (1.27) (1.32) (1.39) (1.10) Net asset value, end of period 19.61 21.37 21.68 20.98 20.84 20.69 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(A) (12.34)(b) 5.13 9.53 7.15 7.51 7.05 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.35(b) 1.35 1.23 .88 .88 .89 Ratio of net investment income to average net assets 4.29(b) 4.09 4.44 5.03 5.13 5.46 Decrease reflected in above expense ratios due to undertakings by the Manager .15(b) .08 .18 .55 .55 .55 Portfolio Turnover Rate 21.17(c) 49.67 27.18 61.22 49.24 38.68 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 10,768 17,031 20,454 17,396 17,461 16,818 (A) EXCLUSIVE OF SALES CHARGE. (B) ANNUALIZED. (C) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS. The Fund FINANCIAL HIGHLIGHTS (CONTINUED) Six Months Ended October 31, 1999 Year Ended April 30, ---------------------------------------------- CLASS C SHARES (Unaudited) 1999 1998 1997 1996(a) - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 21.36 21.67 20.97 20.83 20.78 Investment Operations: Investment income--net .42 .83 .91 .99 .73 Net realized and unrealized gain (loss) on investments (1.75) .21 1.00 .40 .35 Total from Investment Operations (1.33) 1.04 1.91 1.39 1.08 Distributions: Dividends from investment income--net (.42) (.83) (.91) (.99) (.73) Dividends from net realized gain on investments -- (.52) (.30) (.26) (.30) Total Distributions (.42) (1.35) (1.21) (1.25) (1.03) Net asset value, end of period 19.61 21.36 21.67 20.97 20.83 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (12.50)(c) 4.86 9.24 6.79 7.29(c) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.60(c) 1.60 1.52 1.19 1.18(c) Ratio of net investment income to average net assets 4.02(c) 3.79 4.10 4.57 4.77(c) Decrease reflected in above expense ratios due to undertakings by the Manager .15(c) .11 .15 .54 .58(c) Portfolio Turnover Rate 21.17(d) 49.67 27.18 61.22 49.24 - ----------------------------------------------------------------------------------------------------------------------------------- Net Assets, end of period ($ x 1,000) 697 620 261 129 1 (A) FROM AUGUST 15, 1995 (COMMENCEMENT OF INITIAL OFFERING) TO APRIL 30, 1996. (B) EXCLUSIVE OF SALES CHARGE. (C) ANNUALIZED. (D) NOT ANNUALIZED. SEE NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company, and operates as a series company currently offering thirteen series including the Texas Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. 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 series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis. The fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. (a) Portfolio valuation: Investments in securities (excluding options and financial futures on municipal and U.S. treasury securities) are val The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) ued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund received net earnings credits of $1,202 during the period ended October 31, 1999 based on available cash balances left on deposit. Income earned under this arrangement is included in interest income. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (c) Dividends to shareholders: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the " Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (d) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $500 million redemption credit facility (the "Facility" ) to be utilized for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay commitment fees on its pro rata portion of the Facility. Interest is charged to the fund at rates based on prevailing market rates in effect at the time of borrowings. During the period ended October 31, 1999, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (a) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund's average daily net assets and is payable monthly. The Manager has undertaken from May 1, 1999 to October 31, 1999 to reduce the management fee paid by the fund, to the extent that the fund's aggregate expenses, excluding 12b-1 distribution fees, taxes, brokerage, commitment fees, interest on borrowings and extraordinary The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) expenses, exceed an annual rate of .85 of 1% of the value of the fund's average daily net assets. The reduction in management fee, pursuant to the undertaking, amounted to $52,223 during the period ended October 31, 1999. (b) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Class B and Class C shares pay the Distributor for distributing their shares at an annual rate of .50 of 1% of the value of the average daily net assets of Class B shares and .75 of 1% of the value of the average daily net assets of Class C shares. During the period ended October 31, 1999, Class B and Class C shares were charged $34,597 and $2,675, respectively, pursuant to the Plan. (c) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay the Distributor at an annual rate of .25 of 1% of the value of the average daily net assets 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 October 31, 1999, Class A, Class B and Class C shares were charged $73,408, $17,298 and $892, respectively, pursuant to the Shareholder Services Plan. The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended October 31, 1999, the fund was charged $12,655 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 October 31, 1999 amounted to $14,978,580 and $19,659,141, respectively. At October 31, 1999, accumulated net unrealized depreciation on investments was $3,192,776, consisting of $805,602 gross unrealized appreciation and $3,998,378 gross unrealized depreciation. At October 31, 1999, the cost of investments for Federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments). The Fund For More Information Dreyfus Premier State Municipal Bond Fund, Texas Series 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Distributor Premier Mutual Fund Services, Inc. 60 State Street Boston, MA 02109 To obtain information: BY TELEPHONE Call your financial representative or 1-800-554-4611 BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 (c) 1999 Dreyfus Service Corporation 061/621SA9910 ================================================================================ Dreyfus Premier State Municipal Bond Fund, Virginia Series SEMIANNUAL REPORT October 31, 1999 (reg.tm) The views expressed herein are current to the date of this report. These views and the composition of the fund's portfolio are subject to change at any time based on market and other conditions. * Not FDIC-Insured * Not Bank-Guaranteed * May Lose Value Year 2000 Issues (Unaudited) The fund could be adversely affected if the computer systems used by The Dreyfus Corporation and the fund's other service providers do not properly process and calculate date-related information from and after January 1, 2000. The Dreyfus Corporation is working to avoid Year 2000-related problems in its systems and to obtain assurances from other service providers that they are taking similar steps. In addition, issuers of securities in which the fund invests may be adversely affected by Year 2000-related problems. This could have an impact on the value of the fund's investments and its share price. Contents THE FUND - -------------------------------------------------- 2 Letter from the President 3 Discussion of Fund Performance 6 Statement of Investments 10 Statement of Assets and Liabilities 11 Statement of Operations 12 Statement of Changes in Net Assets 14 Financial Highlights 17 Notes to Financial Statements FOR MORE INFORMATION - --------------------------------------------------------------------------- Back Cover The Fund Dreyfus Premier State Municipal Bond Fund, Virginia Series LETTER FROM THE PRESIDENT Dear Shareholder: We are pleased to present this semiannual report for Dreyfus Premier State Municipal Bond Fund, Virginia Series, covering the six-month period from May 1, 1999 through October 31, 1999. Inside, you'll find valuable information about how the fund was managed during the reporting period, including a discussion with the fund's portfolio manager, Samuel Weinstock. When the reporting period began, evidence had emerged that the U.S. economy was growing strongly in an environment characterized by high levels of consumer spending and low levels of unemployment. Concerns that inflationary pressures might re-emerge caused the Federal Reserve Board to raise short-term interest rates twice during the summer of 1999, effectively offsetting most of last fall' s interest-rate cuts. Higher interest rates led to some erosion of municipal bond prices, especially toward the end of the reporting period. In this environment, however, the yields of tax-exempt bonds have recently been quite attractive compared to the after-tax yields of taxable bonds of comparable maturity and credit quality. This is especially true for investors in the higher federal income tax brackets. We appreciate your confidence over the past six months, and we look forward to your continued participation in Dreyfus Premier State Municipal Bond Fund, Virginia Series. Sincerely, Stephen E. Canter President and Chief Investment Officer The Dreyfus Corporation November 15, 1999 DISCUSSION OF FUND PERFORMANCE Samuel Weinstock, Portfolio Manager How did Dreyfus Premier State Municipal Bond Fund, Virginia Series perform during the period? For the six-month period ended October 31, 1999, the fund's Class A shares provided a -5.28% total return; its Class B shares provided a -5.58% total return; and its Class C shares provided a -5.64% return.(1 )In comparison, the Lipper Virginia Municipal Debt Funds category average provided a -4.66% total return(2) for the same period. We attribute the fund's negative absolute performance to a declining bond market and rising interest rates. The fund's relative underperformance compared to its benchmark is primarily a result of a relatively small Virginia bond market, where the recent scarcity of new issuance limited our investment choices. What is the fund's investment approach? Our goal is to seek as high a level of federal and Virginia tax-exempt income as is practical from a diversified portfolio of municipal bonds without undue risk. To achieve this objective, we employ four primary strategies. First, we strive to identify the maturity range that we believe will provide the most favorable returns over the next two years. Second, we evaluate issuers' credit quality to find bonds that we believe provide high yields at an attractive price. Third, we look for bonds with attractively high interest payments, even if they sell at a premium to face value. Fourth, we assess individual bonds' early redemption features, focusing on those that cannot be redeemed soon by their issuers. Typically, the bonds we select for the fund will have several of these qualities. We also use computer models to evaluate the likely performance of bonds under various market scenarios, including a .25% rise or .50% decline in interest rates. When we find securities that we believe will provide participation when the market rises and some protection against market declines, we tend to hold them for the long term. The Fund DISCUSSION OF FUND PERFORMANCE (continued) What other factors influenced the fund's performance? The fund and the municipal bond marketplace were adversely affected by rising interest rates. When the reporting period began on May 1, 1999, investors were concerned that continued economic strength might rekindle long-dormant inflationary pressures. In fact, in an attempt to forestall a potential reacceleration of inflation, the Federal Reserve Board raised short-term interest rates twice during the summer of 1999. This change in monetary policy caused municipal bond prices to fall. In addition, strong economic conditions have contributed to the nation's first federal budget surplus in many years. While the government has had less need to issue U.S. Treasury securities, demand has remained high from domestic and overseas investors. This imbalance between supply and demand has recently constrained the rise of taxable bond yields relative to tax-exempt bonds. As a result, municipal bonds -- including those from Virginia issuers -- are currently offering tax-exempt yields that compare very favorably with taxable yields after adjusting for taxes. What is the fund's current strategy? In a rising interest-rate environment, we have focused primarily on maintaining the fund's average duration within the neutral range. Because a fund's duration naturally extends as interest rates rise and some bonds' prices fall below levels at which issuers might redeem them early, bond funds tend to become more sensitive to the adverse short-term effects of higher interest rates. Accordingly, during the period we sold some of our longer maturity bonds, including those priced at discounts to face value. We also sold bonds that were in danger of falling below the prices at which corporations and other institutional investors remain eligible for municipal bonds' tax advantages. Although the supply of new Virginia bonds has been very limited, we have attempted to reinvest the proceeds from the above-mentioned sales into tax-exempt bonds that we believed would remain highly liquid in a declining market. Accordingly, whenever possible we reduced our holdings of bonds from Puerto Rico issuers in favor of Virginia obligations. We also took steps to upgrade the fund by using high quality bonds to replace pre-refunded bonds as well as bonds that were near their redemption dates. Typically, these new purchases were available at face value or modest premiums, and had maturities of seven years or less. Because of uncertainties in the pre-refunded bond market sector, these new purchases often gave us an opportunity to enhance the fund's income stream. November 15, 1999 (1) Total return includes reinvestment of dividends and any capital gains paid, and does not take into consideration the maximum initial sales charge in the case of Class A shares, or the applicable contingent deferred sales charge imposed on redemptions in the case of Class B and Class C shares. Had these charges been reflected, returns would have been lower. Past performance is no guarantee of future results. Share price, yield and investment return fluctuate such that upon redemption fund shares may be worth more or less than their original cost. Income may be subject to state and local taxes for non-Virginia residents. Some income may be subject to the Federal Alternative Minimum Tax (AMT) for certain investors. Capital gains, if any, are fully taxable. (2) Source: Lipper Analytical Services, Inc. The Fund STATEMENT OF INVESTMENTS October 31, 1999 (Unaudited) Principal LONG-TERM MUNICIPAL INVESTMENTS--95.1% Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ VIRGINIA--67.2% Alexandria Redevelopment and Housing Authority, Multi-Family Housing Mortgage Revenue (Buckingham Village Apartments) 6.125%, 7/1/2021 3,000,000 2,964,240 Beford County Industrial Development Authority, IDR, (Nekossa Packaging Corp. Project) 5.60%, 12/1/2025 4,500,000 3,898,215 Chesapeake Bay Bridge and Tunnel Commission District, Revenue, General Resolution 5.50%, 7/1/2025 (Insured; MBIA) 2,500,000 2,379,475 Chesapeake Toll Road, Expressway Revenue 5.625%, 7/15/2019 1,250,000 1,176,175 Dinwiddie County Industrial Development Authority, LR (Dinwiddie County School Facilities Project) 6%, 2/1/2018 500,000 481,445 Dulles Town Center Community Development Authority, Special Assessment Tax (Dulles Town Center Project) 6.25%, 3/1/2026 3,000,000 2,842,530 Fairfax County Park Authority, Park Facilities Revenue 6.625%, 7/15/2020 2,665,000 2,738,394 Fairfax County Redevelopment and Housing Authority, MFHR (Paul Spring Retirement Center): 5.90%, 6/15/2017 (Insured; FHA) 200,000 199,984 6%, 12/15/2028 (Insured; FHA) 600,000 599,952 Fairfax County Water Authority, Water Revenue 7.769%, 4/1/2029 2,000,000 (a,b) 1,965,580 Hampton Redevelopment and Housing Authority, First Mortgage Revenue (Olde Hampton Hotel Associates Project) 6.50%, 7/1/2016 2,640,000 2,495,882 Harrisonburg Redevelopment and Housing Authority, Lease Purchase Revenue 4.20%, 3/1/2004 1,900,000 1,842,202 Industrial Development Authority of the City of Hopewell, Health Care Facility Revenue: (Colonial Heights Convalescent Center Project) 5.60%, 10/1/2003 205,000 203,329 (Forest Hill Convalescent Center Project): 6%, 10/1/2006 (Prerefunded 10/1/2002) 260,000 (c) 279,053 6.15%, 10/1/2007 (Prerefunded 10/1/2002) 280,000 (c) 301,655 6.25%, 10/1/2008 (Prerefunded 10/1/2002) 115,000 (c) 124,206 (Westport Convalescent Center Project): 5.90%, 10/1/2005 315,000 313,016 6.15%, 10/1/2007 175,000 174,372 6.25%, 10/1/2008 410,000 408,950 Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ VIRGINIA (CONTINUED) Industrial Development Authority of Giles County, Exempt Facility Revenue (Hoechst Celanese Corp. Project) 5.95%, 12/1/2025 3,000,000 2,765,610 Industrial Development Authority of the County of Henrico, SWDR (Browning-Ferris Industries of South Atlantic, Inc. Project) 5.45%, 1/1/2014 3,500,000 3,026,835 Industrial Development Authority of the County of Prince William, Revenue: Hospital Facility (Potomac Hospital Corp. of Prince William) 6.85%, 10/1/2025 (Prerefunded 10/1/2005) 1,000,000 (c) 1,123,340 (Potomac Place) 6.25%, 12/20/2027 700,000 727,510 Residential Care Facility (First Mortgage-Westminster Lake Ridge) 6.625%, 1/1/2026 3,500,000 3,425,135 Industrial Development Authority of the City of Winchester, Residential Care Facility First Mortgage Revenue (Westminster - Canterbury) 5.75%, 1/1/2027 2,750,000 2,407,845 Industrial Development Authority of the Town of West Point, SWDR (Chesapeake Corp. Project) 6.375%, 3/1/2019 2,500,000 2,418,925 Isle Wight County Industrial Development Authority, Solid Waste Disposal Facilities Revenue (Union Camp Corp. Project) 6.10%, 5/1/2027 3,500,000 3,415,755 Prince William County Park Authority, Revenue 6.875%, 10/15/2016 (Prerefunded 10/15/2004) 3,000,000 (c) 3,328,410 Richmond Metropolitan Authority, Expressway Revenue 5.25%, 7/15/2017 (Insured; FGIC) 3,100,000 2,894,656 Staunton Industrial Development Authority, Educational Facilities Revenue (Mary Baldwin College) 6.75%, 11/1/2021 3,145,000 3,253,408 University of Virginia, University Revenue 5.75%, 5/1/2021 2,325,000 2,237,650 Upper Occoquan Sewer Authority, Regional Sewer Revenue 5.15%, 7/1/2020 (Insured; MBIA) 2,000,000 1,805,440 Virginia Beach Development Authority, Revenue: Industrial Development Mortgage (Ramada Oceanside Resort) 8%, 8/1/2010 310,000 327,180 Nursing Home (Sentara Life Care Corp.) 7.75%, 11/1/2021 1,000,000 1,065,720 Virginia Housing Development Authority, Commonwealth Mortgage: 6.60%, 7/1/2020 1,075,000 1,092,426 5.50%, 1/1/2022 4,375,000 4,077,894 The Fund STATEMENT OF INVESTMENTS (Unaudited) (continued) Principal LONG-TERM MUNICIPAL INVESTMENTS (CONTINUED) Amount ($) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ U. S. RELATED--27.9% Commonwealth of Puerto Rico (Public Improvement): 6%, 7/1/2015 2,000,000 2,083,620 6.80%, 7/1/2021 (Prerefunded 7/1/2002) 1,000,000 (c) 1,080,030 6%, 7/1/2026 (Prerefunded 7/1/2007) 1,500,000 (c) 1,638,510 Guam Airport Authority, Revenue 6.70%, 10/1/2023 2,000,000 2,096,660 Puerto Rico Electric Power Authority, Power Revenue: 5%, 7/1/2012 (Insured; MBIA) 50,000 48,467 6.23%, 7/1/2012 3,000,000 (a,b) 2,810,760 Puerto Rico Highway and Transportation Authority, Highway Revenue: 5.50%, 7/1/2013 (Insured; MBIA) 10,000 10,033 7.319%, 7/1/2013 2,290,000 (a) 2,304,931 6.625%, 7/1/2018 (Prerefunded 7/1/2002) 2,000,000 (c) 2,151,520 5.50%, 7/1/2026 875,000 834,383 Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority, Higher Education Revenue (Ana G. Mendez University System Project) 5.375%, 2/1/2019 1,500,000 1,364,190 Puerto Rico Ports Authority, Special Facilities Revenue (American Airlines) 6.25%, 6/1/2026 3,000,000 3,014,430 Virgin Islands Public Finance Authority, Revenue, Matching Fund Loan Notes 7.25%, 10/1/2018 (Prerefunded 10/1/2002) 4,000,000 (c) 4,408,120 Virgin Islands Territory (Hugo Insurance Claims Fund Program) 7.75%, 10/1/2006 (Prerefunded 10/1/2001) 1,160,000 (c) 1,234,170 Virgin Islands Water and Power Authority, Electric System 7.40%, 7/1/2011 (Prerefunded 7/1/2001) 1,780,000 (c) 1,887,245 TOTAL LONG-TERM MUNICIPAL INVESTMENTS (cost $94,162,501) 91,749,463 - ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM MUNICIPAL INVESTMENTS--2.3% - ------------------------------------------------------------------------------------------------------------------------------------ VIRGINIA Roanoke Industrial Development Authority, HR (Roanoke Memorial Hospitals) VRDN 3.60% (cost $2,200,000) 2,200,000 (d) 2,200,000 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (cost $96,362,501) 97.4% 93,949,463 CASH AND RECEIVABLES (NET) 2.6% 2,469,002 NET ASSETS 100.0% 96,418,465 Summary of Abbreviations FGIC Financial Guaranty Insurance Company MBIA Municipal Bond Investors Assurance FHA Federal Housing Administration Insurance Corporation HR Hospital Revenue MFHR Multi-Family Housing Revenue IDR Industrial Development Revenue SWDR Solid Waste Disposal Revenue LR Lease Revenue VRDN Variable Rate Demand Notes Summary of Combined Ratings (Unaudited) Fitch or Moody's or Standard & Poor's Value (%) - ------------------------------------------------------------------------------------------------------------------------------------ AAA Aaa AAA 25.9 AA Aa AA 13.1 A A A 6.1 BBB Baa BBB 27.0 BB Ba BB 3.2 F1 MIG1/P1 SP1/A1 2.3 Not Rated(e) Not Rated(e) Not Rated(e) 22.4 100.0 (a) Inverse floater security -- the interest rate is subject to change periodically. (b) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At October 31, 1999, these securities amounted to $4,776,340 or 5.0% of net assets. (c) Bonds which are prerefunded are collateralized by U.S. Government securities which are held in escrow and are used to pay principal and interest on the municipal issue and to retire the bonds in full at the earliest refunding date. (d) Securities payable on demand. Variable interest rate--subject to periodic change. (e) Securities which, while not rated by Fitch, Moody's and Standard & Poor's have been determined by the Manager to be of comparable quality to those rated securities in which the fund may invest. See notes to financial statements.
The Fund STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 (Unaudited) Cost Value - -------------------------------------------------------------------------------- ASSETS ($): Investments in securities--See Statement of Investments 96,362,501 93,949,463 Cash 251,866 Interest receivable 1,740,541 Receivable for investment securities sold 678,758 Receivable for shares of Beneficial Interest subscribed 4,955 Prepaid expenses 13,493 96,639,076 - -------------------------------------------------------------------------------- LIABILITIES ($): Due to The Dreyfus Corporation and affiliates 45,548 Due to Distributor 33,172 Payable for shares of Beneficial Interest redeemed 116,900 Accrued expenses 24,991 220,611 - -------------------------------------------------------------------------------- NET ASSETS ($) 96,418,465 - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS ($): Paid-in capital 99,231,938 Accumulated net realized gain (loss) on investments (400,435) Accumulated net unrealized appreciation (depreciation) on investments--Note 4 (2,413,038) - -------------------------------------------------------------------------------- NET ASSETS ($) 96,418,465 NET ASSET VALUE PER SHARE Class A Class B Class C - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets ($) 68,896,102 24,680,030 2,842,333 Shares Outstanding 4,309,181 1,543,949 177,878 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE PER SHARE ($) 15.99 15.99 15.98 See notes to financial statements.
STATEMENT OF OPERATIONS Six Months Ended October 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME ($): INTEREST INCOME 3,079,767 EXPENSES: Management fee--Note 3(a) 285,390 Shareholder servicing costs--Note 3(c) 162,715 Distribution fees--Note 3(b) 85,084 Registration fees 18,243 Professional fees 11,467 Prospectus and shareholders' reports 10,759 Custodian fees 5,464 Trustees' fees and expenses--Note 3(d) 720 Loan commitment fees--Note 2 201 Miscellaneous 7,356 TOTAL EXPENSES 587,399 INVESTMENT INCOME--NET 2,492,368 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NOTE 4 ($): Net realized gain (loss) on investments (417,556) Net unrealized appreciation (depreciation) on investments (7,738,287) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (8,155,843) NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (5,663,475) See notes to financial statements. The Fund STATEMENT OF CHANGES IN NET ASSETS Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- OPERATIONS ($): Investment income--net 2,492,368 5,023,622 Net realized gain (loss) on investments (417,556) 1,384,592 Net unrealized appreciation (depreciation) on investments (7,738,287) (350,457) NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (5,663,475) 6,057,757 - -------------------------------------------------------------------------------- DIVIDENDS TO SHAREHOLDERS FROM ($): Investment income--net: Class A shares (1,774,428) (3,225,645) Class B shares (650,086) (1,688,611) Class C shares (67,854) (109,376) Net realized gain on investments: Class A shares -- (884,913) Class B shares -- (533,711) Class C shares -- (37,805) TOTAL DIVIDENDS (2,492,368) (6,480,051) - -------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS ($): Net proceeds from shares sold: Class A shares 9,233,337 12,134,539 Class B shares 1,257,295 4,716,025 Class C shares 316,351 1,520,409 Dividends reinvested: Class A shares 896,702 2,193,747 Class B shares 326,705 1,198,045 Class C shares 14,599 21,422 Cost of shares redeemed: Class A shares (7,221,178) (7,521,104) Class B shares (9,534,319) (10,983,245) Class C shares (427,469) (326,419) INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (5,137,977) 2,953,419 TOTAL INCREASE (DECREASE) IN NET ASSETS (13,293,820) 2,531,125 - -------------------------------------------------------------------------------- NET ASSETS ($): Beginning of Period 109,712,285 107,181,160 END OF PERIOD 96,418,465 109,712,285 See notes to financial statements. Six Months Ended October 31, 1999 Year Ended (Unaudited) April 30, 1999 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: CLASS A(A) Shares sold 549,809 694,996 Shares issued for dividends reinvested 54,093 125,125 Shares redeemed (432,467) (429,470) NET INCREASE (DECREASE) IN SHARES OUTSTANDING 171,435 390,651 - -------------------------------------------------------------------------------- CLASS B(A) Shares sold 74,783 269,387 Shares issued for dividends reinvested 19,685 68,334 Shares redeemed (567,877) (629,062) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (473,409) (291,341) - -------------------------------------------------------------------------------- CLASS C Shares sold 18,791 86,730 Shares issued for dividends reinvested 881 1,224 Shares redeemed (26,101) (18,602) NET INCREASE (DECREASE) IN SHARES OUTSTANDING (6,429) 69,352 (a) During the period ended October 31, 1999, 372,373 Class B shares representing $6,256,860 were automatically converted to 372,423 Class A shares. See notes to financial statements. The Fund FINANCIAL HIGHLIGHTS The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These figures have been derived from the fund's financial statements. Six Months Ended October 31, 1999 Year Ended April 30, ---------------------------------------------------------------- CLASS A SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 17.31 17.37 16.61 16.27 16.03 16.02 Investment Operations: Investment income--net .42 .85 .88 .94 .93 .94 Net realized and unrealized gain (loss) on investments (1.32) .17 .76 .34 .24 .04 Total from Investment Operations (.90) 1.02 1.64 1.28 1.17 .98 Distributions: Dividends from investment income--net (.42) (.85) (.88) (.94) (.93) (.94) Dividends from net realized gain on investments -- (.23) (.00)(a) -- -- -- Dividends in excess of net realized gain on investments -- -- -- -- -- (.03) Total Distributions (.42) (1.08) (.88) (.94) (.93 (.97) Net asset value, end of period 15.99 17.31 17.37 16.61 16.27 16.03 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (10.47)(c) 5.98 10.05 8.02 7.32 6.39 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets .97(c) .92 .75 .39 .50 .39 Ratio of net investment income to average net assets 4.97(c) 4.83 5.10 5.67 5.58 5.93 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- .14 .55 .55 .55 Portfolio Turnover Rate 11.95(d) 30.19 21.25 45.29 50.06 21.60 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 68,896 71,612 65,086 61,099 61,149 62,428 (a) Amount represents less than $.01 per share. (b) Exclusive of sales charge. (c) Annualized. (d) Not annualized. See notes to financial statements. Six Months Ended October 31, 1999 Year Ended April 30, ------------------------------------------------------------------ CLASS B SHARES (Unaudited) 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 17.31 17.37 16.60 16.27 16.03 16.02 Investment Operations: Investment income--net .37 .76 .79 .86 .84 .85 Net realized and unrealized gain (loss) on investments (1.32) .17 .77 .33 .24 .04 Total from Investment Operations (.95) .93 1.56 1.19 1.08 .89 Distributions: Dividends from investment income--net (.37) (.76) (.79) (.86) (.84) (.85) Dividends from net realized gain on investments -- (.23) (.00)(a) -- -- -- Dividends in excess of net realized gain on investments -- -- -- -- -- (.03) Total Distributions (.37) (.99) (.79) (.86) (.84 (.88) Net asset value, end of period 15.99 17.31 17.37 16.60 16.27 16.03 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(B) (11.07)(c) 5.44 9.56 7.41 6.77 5.83 - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.48(c) 1.43 1.26 .90 1.01 .90 Ratio of net investment income to average net assets 4.45(c) 4.32 4.58 5.15 5.06 5.40 Decrease reflected in above expense ratios due to undertakings by the Manager -- -- .14 .55 .55 .55 Portfolio Turnover Rate 11.95(d) 30.19 21.25 45.29 50.06 21.60 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 24,680 34,912 40,100 35,787 33,120 28,813 (a) Amount represents less than $.01 per share. (b) Exclusive of sales charge. (c) Annualized. (d) Not annualized. The Fund FINANCIAL HIGHLIGHTS (continued) Six Months Ended October 31, 1999 Year Ended April 30, -------------------------------------------- CLASS C SHARES (Unaudited) 1999 1998 1997 1996(a) - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA ($): Net asset value, beginning of period 17.30 17.36 16.60 16.26 16.17 Investment Operations: Investment income--net .35 .72 .75 .81 .57 Net realized and unrealized gain (loss) on investments (1.32) .17 .76 .34 .09 Total from Investment Operations (.97) .89 1.51 1.15 .66 Distributions: Dividends from investment income--net (.35) (.72) (.75) (.81) (.57) Dividends from net realized gain on investments -- (.23) (.00)(b) -- -- Total Distributions (.35) (.95) (.75) (.81) (.57) Net asset value, end of period 15.98 17.30 17.36 16.60 16.26 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN (%)(C) (11.19)(d) 5.19 9.22 7.18 5.64(d) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA (%): Ratio of expenses to average net assets 1.70(d) 1.66 1.54 1.17 1.21(d) Ratio of net investment income to average net assets 4.24(d) 4.06 4.24 4.83 4.55(d) Decrease reflected in above expense ratios due to undertakings by the Manager -- -- .11 .54 .52(d) Portfolio Turnover Rate 11.95(e) 30.19 21.25 45.29 50.06 - ------------------------------------------------------------------------------------------------------------------------------------ Net Assets, end of period ($ x 1,000) 2,842 3,188 1,996 674 166 (a) From August 15, 1995 (commencement of initial offering) to April 30, 1996. (b) Amount represents less than $.01 per share. (c) Exclusive of sales charge. (d) Annualized. (e) Not annualized. See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1--Significant Accounting Policies: Dreyfus Premier State Municipal Bond Fund (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified open-end management investment company, and operates as a series company currently offering thirteen series including the Virginia Series (the "fund"). The fund' s investment objective is to maximize current income exempt from Federal and, where applicable, from State income taxes, without undue risk. The Dreyfus Corporation (the "Manager") serves as the fund's investment adviser. The Manager is a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Financial Corporation. 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 series. Expenses directly attributable to each series are charged to that series' operations; expenses which are applicable to all series are allocated among them on a pro rata basis. The fund' s financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumption. 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 The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) valued each business day by an independent pricing service ("Service") approved by the Board of Trustees. Investments for which quoted bid prices are readily available and are representative of the bid side of the market in the judgment of the Service are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). Other investments (which constitute a majority of the portfolio securities) are carried at fair value as determined by the Service, based on methods which include consideration of: yields or prices of municipal securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. Options and financial futures on municipal and U.S. treasury securities are valued at the last sales price on the securities exchange on which such securities are primarily traded or at the last sales price on the national securities market on each business day. Investments not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. Bid price is used when no asked price is available. (B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gain and loss from securities transactions are recorded on the identified cost basis. Interest income, adjusted for amortization of premiums and original issue discounts on investments, is earned from settlement date and recognized on the accrual basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after the trade date. Under the terms of the custody agreement, the fund receives net earnings credits based on available cash balances left on deposit. The fund follows an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting the state and certain of its public bodies and municipalities may affect the ability of issuers within the state to pay interest on, or repay principal of, municipal obligations held by the fund. (C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the fund to declare dividends daily from investment income-net. Such dividends are paid monthly. Dividends from net realized capital gain are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the " Code" ). To the extent that net realized capital gain can be offset by capital loss carryovers, if any, it is the policy of the fund not to distribute such gain. (D) FEDERAL INCOME TAXES: It is the policy of the fund to continue to qualify as a regulated investment company, which can distribute tax exempt dividends, by complying with the applicable provisions of the Code, and to make distributions of income and net realized capital gain sufficient to relieve it from substantially all Federal income and excise taxes. NOTE 2--Bank Line of Credit: The fund participates with other Dreyfus-managed funds in a $500 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 period ended October 31, 1999, the fund did not borrow under the Facility. NOTE 3--Management Fee and Other Transactions With Affiliates: (A) Pursuant to a management agreement with the Manager, the management fee is computed at the annual rate of .55 of 1% of the value of the fund's average daily net assets and is payable monthly. The Manager had undertaken from May 1, 1999 to October 31, 1999 to reduce the management fee paid by the fund, to the extent that the fund' s aggregate expenses, exclusive of taxes, brokerage commission, interest on borrowings, Distribution Plan fees, commitment fees and The Fund NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) extraordinary expenses, exceed an annual rate of 1% of the value of the fund's average daily net assets. Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, retained $3,977 during the period ended October 31, 1999, from commissions earned on sales of the fund's shares. (B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under the Act, Class B and Class C shares pay the Distributor for distributing their shares at an annual rate of .50 of 1% of the value of the average daily net assets of Class B shares and .75 of 1% of the value of the average daily net assets of Class C shares. During the period ended October 31, 1999, Class B and Class C shares were charged $73,080 and $12,004, respectively, pursuant to the Plan. (C) Under the Shareholder Services Plan, Class A, Class B and Class C shares pay the Distributor at an annual rate of .25 of 1% of the value of their average daily net assets for the provision of certain services. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (a securities dealer, financial institution or other industry professional) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended October 31, 1999, Class A, Class B and Class C shares were charged $89,181, $36,540 and $4,001, respectively, pursuant to the Shareholder Services Plan. The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the Manager, under a transfer agency agreement for providing personnel and facilities to perform transfer agency services for the fund. During the period ended October 31, 1999, the fund was charged $23,078 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 October 31, 1999, amounted to $12,101,976 and $21,251,714, respectively. At October 31, 1999, accumulated net unrealized depreciation on investments was $2,413,038, consisting of $1,920,604 gross unrealized appreciation and $4,333,642 gross unrealized depreciation. At October 31, 1999, the cost of investments for Federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments). The Fund For More Information Dreyfus Premier State Municipal Bond Fund, Virginia Series 200 Park Avenue New York, NY 10166 Manager The Dreyfus Corporation 200 Park Avenue New York, NY 10166 Custodian The Bank of New York 100 Church Street New York, NY 10286 Transfer Agent & Dividend Disbursing Agent Dreyfus Transfer, Inc. P.O. Box 9671 Providence, RI 02940 Distributor Premier Mutual Fund Services, Inc. 60 State Street Boston, MA 02109 To obtain information: BY TELEPHONE Call your financial representative or 1-800-554-4611 BY MAIL Write to: The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 (c) 1999 Dreyfus Service Corporation 066/625SA9910 -----END PRIVACY-ENHANCED MESSAGE-----