| UNITED STATES | ||
| SECURITIES AND EXCHANGE COMMISSION | ||
| Washington, D.C. 20549 | ||
| FORM N-CSR | ||
| CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT | ||
| INVESTMENT COMPANIES | ||
| Investment Company Act file number 811-4764 | ||
| Dreyfus Premier Municipal Bond Fund | ||
| (Exact name of Registrant as specified in charter) | ||
| c/o The Dreyfus Corporation | ||
| 200 Park Avenue | ||
| New York, New York 10166 | ||
| (Address of principal executive offices) (Zip code) | ||
| Mark N. Jacobs, Esq. | ||
| 200 Park Avenue | ||
| New York, New York 10166 | ||
| (Name and address of agent for service) | ||
| Registrant's telephone number, including area code: (212) 922-6000 | ||
| Date of fiscal year end: | 4/30 | |
| Date of reporting period: | 4/30/06 | |
FORM N-CSR
Item 1. Reports to Stockholders.
| Dreyfus Premier Municipal Bond Fund |
ANNUAL REPORT April 30, 2006
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The views expressed in this report reflect those of the portfolio manager only through the end of the period covered and do not necessarily represent the views of Dreyfus or any other person in the Dreyfus organization. Any such views are subject to change at any time based upon market or other conditions and Dreyfus disclaims any responsibility to update such views.These views may not be relied on as investment advice and, because investment decisions for a Dreyfus fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Dreyfus fund.
Not FDIC-Insured • Not Bank-Guaranteed • May Lose Value
| Contents | ||
| THE FUND | ||
| 2 | Letter from the Chairman | |
| 3 | Discussion of Fund Performance | |
| 6 | Fund Performance | |
| 8 | Understanding Your Fund's Expenses | |
| 8 | Comparing Your Fund's Expenses | |
| With Those of Other Funds | ||
| 9 | Statement of Investments | |
| 24 | Statement of Assets and Liabilities | |
| 25 | Statement of Operations | |
| 26 | Statement of Changes in Net Assets | |
| 28 | Financial Highlights | |
| 32 | Notes to Financial Statements | |
| 40 | Report of Independent Registered | |
| Public Accounting Firm | ||
| 41 | Important Tax Information | |
| 42 | Board Members Information | |
| 44 | Officers of the Fund | |
| FOR MORE INFORMATION | ||
| Back Cover | ||
| Dreyfus Premier Municipal Bond Fund |
The Fund
LETTER FROM THE CHAIRMAN
Dear Shareholder:
We are pleased to present this annual report for Dreyfus Premier Municipal Bond Fund, covering the 12-month period from May 1, 2005, through April 30, 2006.
Since June 2004, the Federal Reserve Board (the "Fed") has attempted to manage U.S. economic growth and forestall potential inflation by gradually raising short-term interest rates. Recently, Fed Chairman Ben Bernanke suggested that the Fed may soon pause to assess current economic data and evaluate the impact of its credit tightening campaign. In our view, the Fed's efforts so far have largely been successful: the economy has grown at a moderate pace, the unemployment rate has dropped to multi-year lows, corporate profits have risen, and inflation has remained low despite volatile energy prices.
However, the municipal bond market is more likely to be influenced not by what the Fed already has accomplished, but by investors' expectations of what is to come, including the Fed's decision to increase interest rates further, maintain them at current levels or reduce them to stimulate future growth.We believe that this decision will depend largely on the outlook for core inflation in 2007. The Fed probably can stand pat as long as it expects inflation to remain subdued. But if inflationary pressures build in an expanding economy, the Fed may choose to resume tightening later this year.As always, we urge you to discuss with your financial advisor the potential implications of these possibilities on your investments.
For information about how the fund performed, as well as market perspectives, we have provided a Discussion of Fund Performance given by the fund's co-portfolio managers.
Thank you for your continued confidence and support.
Sincerely,
| Stephen E. Canter Chairman and Chief Executive Officer The Dreyfus Corporation May 15, 2006 |
2
DISCUSSION OF FUND PERFORMANCE
James Welch and W. Michael Petty, Portfolio Managers
How did Dreyfus Premier Municipal Bond Fund perform relative to its benchmark?
For the 12-month period ended April 30, 2006, the fund achieved total returns of 2.93% for Class A shares, 2.40% for Class B shares, 2.18% for Class C shares and 2.99% for Class Z shares.1 The Lehman Brothers Municipal Bond Index (the "Index"), the fund's benchmark, achieved a total return of 2.16% for the same period.2 In addition, the fund is reported in the Lipper General Municipal Debt Funds category, and the average total return for all funds reported in this category was 1.95% for the reporting period.3
Despite rising short-term interest rates throughout the reporting period, longer-term municipal bond prices continued to hold up relatively well.The fund produced higher returns than its benchmark and Lipper category average, primarily as a result of strong income contributions from its core holdings of seasoned bonds, strength among lower-rated credits and the success of our yield curve strategy.
What is the fund's investment approach?
The fund seeks to maximize current income exempt from federal income tax to the extent consistent with the preservation of capital.To pursue its goal, the fund normally invests substantially all of its assets in municipal bonds that provide income exempt from federal income tax. The fund invests at least 70% of its assets in investment-grade municipal bonds or the unrated equivalent as determined by Dreyfus. The fund may invest up to 30% of its assets in municipal bonds rated below investment grade or the unrated equivalent as determined by Dreyfus. Under normal market conditions, the dollar-weighted average maturity of the fund's portfolio is expected to exceed 10 years.
We may buy and sell bonds based on credit quality, market outlook and yield potential. In selecting municipal bonds for investment, we may assess the current interest-rate environment and a municipal bond's
The Fund 3
DISCUSSION OF FUND PERFORMANCE (continued)
potential volatility in different rate environments. We focus on bonds with the potential to offer attractive current income, typically looking for bonds that can provide consistently attractive current yields or that are trading at competitive market prices. A portion of the fund's assets may be allocated to "discount" bonds, which are bonds that sell at a price below their face value, or to "premium" bonds, which are bonds that sell at a price above their face value.The fund's allocation either to discount bonds or to premium bonds will change along with our changing views of the current interest-rate and market environments.We may also look to select bonds that are most likely to obtain attractive prices when sold.
What other factors influenced the fund's performance?
The Federal Reserve Board (the "Fed") implemented eight more increases in the overnight federal funds rate, driving it to 4.75% by the reporting period's end.While longer-term bond yields also rose, they climbed less steeply than short-term rates, contributing to a further narrowing of yield differences between the short and long ends of the market's maturity range. A more pronounced rise in long-term yields in March and April was not enough to erase the fund's positive absolute performance for the reporting period overall.
The fund's results also were influenced by supply-and-demand factors in the national municipal bond market. The growing U.S. economy benefited most states and municipalities, helping to reduce unemployment and boost corporate and personal income tax receipts. As a result, the national supply of newly issued bonds moderated. However, investor demand generally remained robust, putting downward pressure on bond yields and supporting their prices.
In this environment, the fund continued to receive strong income contributions from its core holdings of seasoned bonds, which were purchased with significantly higher yields than are available today. Some of those holdings were "advance refunded" by their issuers, a process in which new securities are issued at lower yields and part of the proceeds are set aside to redeem higher yielding bonds at the earliest available opportunity. Advance refunded securities are beneficial to shareholders as their prices tend to rise, reflecting the new, shorter effective maturity of the bonds.
4
The fund also received strong income contributions from its corporate-backed holdings, including bonds issued on behalf of airlines as well as securities backed by the states' settlement of litigation with U.S. tobacco companies.
Finally, the fund benefited from our focus on longer-maturity bonds and de-emphasis in the intermediate-term range. This yield curve strategy helped the fund participate more fully in strength at the longer end of the range for most of the reporting period.
What is the fund's current strategy?
Although we believe that the Fed may be nearing the end of its credit tightening campaign, we expect at least one more rate hike before it pauses to assess the impact of its previous moves on the economy and inflation. Therefore, we have begun to position the fund for stable short-term interest rates, higher levels of market volatility and wider yield differences between shorter- and longer-term municipal bonds. Of course, we are prepared to adjust our investment strategies should market expectations change.
May 15, 2006
| 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 charges imposed on redemptions in the case of Class B and Class C shares. Had these charges been reflected, returns would have been lower. Each share class is subject to a different sales charge and distribution expense structure and will achieve different returns. 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, and some income may be subject to the federal alternative minimum tax (AMT) for certain investors. Capital gains, if any, are taxable. Return figure provided for Class Z shares reflects the absorption of certain expenses by The Dreyfus Corporation pursuant to an agreement in effect until April 30, 2006, at which time it was terminated. Had these expenses not been absorbed, the return would have been lower. 2 SOURCE: LIPPER INC. — Reflects reinvestment of dividends and, where applicable, capital gain distributions.The Lehman Brothers Municipal Bond Index is a widely accepted, unmanaged total return performance benchmark for the long-term, investment-grade, tax-exempt bond market. Index returns do not reflect fees and expenses associated with operating a mutual fund. 3 Source: Lipper Inc. |
The Fund 5
FUND PERFORMANCE
Comparison of change in value of $10,000 investment in Dreyfus Premier Municipal Bond Fund Class A shares, Class B shares and Class C shares and the Lehman Brothers Municipal Bond Index
† Source: Lipper Inc.
Past performance is not predictive of future performance.
The above graph compares a $10,000 investment made in Class A, Class B and Class C shares of Dreyfus Premier Municipal Bond Fund on 4/30/96 to a $10,000 investment made in the Lehman Brothers Municipal Bond Index (the "Index") on that date.All dividends and capital gain distributions are reinvested. Performance for Class Z shares will vary from the performance of Class A, Class B and Class C shares shown above due to differences in charges and expenses. The fund invests primarily in municipal securities and its performance shown in the line graph takes into account the maximum initial sales charge on Class A shares and all other applicable fees and expenses for Class A, Class B and Class C shares.The Index, unlike the fund, is an unmanaged total return performance benchmark for the long-term, investment-grade, tax-exempt bond market, calculated by using municipal bonds selected to be representative of the municipal market overall.The Index does not take into account charges, fees and other expenses which can contribute to the Index potentially outperforming or underperforming the fund. Further information relating to fund performance, including expense reimbursements, if applicable, is contained in the Financial Highlights section of the prospectus and elsewhere in this report.
| 6 |
| Average Annual Total Returns as of 4/30/06 | ||||||||||
| Inception | From | |||||||||
| Date | 1 Year | 5 Years | 10 Years | Inception | ||||||
| Class Z shares | 10/13/04 | 2.99% | — | — | 3.69% | |||||
| Class A shares | ||||||||||
| with maximum sales charge (4.5%) | (1.72)% | 3.53% | 4.28% | |||||||
| without sales charge | 2.93% | 4.48% | 4.76% | |||||||
| Class B shares | ||||||||||
| with applicable redemption charge † | (1.54)% | 3.62% | 4.44% | |||||||
| without redemption | 2.40% | 3.95% | 4.44% | |||||||
| Class C shares | ||||||||||
| with applicable redemption charge †† | 1.19% | 3.72% | 3.98% | |||||||
| without redemption | 2.18% | 3.72% | 3.98% | |||||||
Past performance is not predictive of future performance.The fund's performance shown in the graph and table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance for Class B shares assumes the conversion of Class B shares to Class A shares at the end of the sixth year following the date of purchase.
| † The maximum contingent deferred sales charge for Class B shares is 4%. After six years Class B shares convert to Class A shares. The maximum contingent deferred sales charge for Class C shares is 1% for shares redeemed within one year of the date of purchase. |
The Fund 7
U N D E R S TA N D I N G YO U R F U N D ' S E X P E N S E S ( U n a u d i t e d )
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds.You also may pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial adviser.
Review your fund's expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Premier Municipal Bond Fund from November 1, 2005 to April 30, 2006. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
| Expenses and Value of a $1,000 Investment | ||||||||
| assuming actual returns for the six months ended April 30, 2006 | ||||||||
| Class A | Class B | Class C | Class Z | |||||
| Expenses paid per $1,000 † | $ 4.51 | $ 7.15 | $ 8.20 | $ 4.26 | ||||
| Ending value (after expenses) | $1,020.20 | $1,016.80 | $1,016.50 | $1,020.50 | ||||
COMPARING YOUR FUND'S EXPENSES WITH THOSE OF OTHER FUNDS (Unaudited)
Using the SEC's method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds.All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
| Expenses and Value of a $1,000 Investment | ||||||||
| assuming a hypothetical 5% annualized return for the six months ended April 30, 2006 | ||||||||
| Class A | Class B | Class C | Class Z | |||||
| Expenses paid per $1,000 † | $ 4.51 | $ 7.15 | $ 8.20 | $ 4.26 | ||||
| Ending value (after expenses) | $1,020.33 | $1,017.70 | $1,016.66 | $1,020.58 | ||||
† Expenses are equal to the fund's annualized expense ratio of .90% for Class A, 1.43% for Class B, 1.64% for Class C and .85% for Class Z; multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
8
| STATEMENT OF INVESTMENTS April 30, 2006 |
| Long-Term Municipal | Coupon | Maturity | Principal | |||||
| Investments—98.5% | Rate (%) | Date | Amount ($) | Value ($) | ||||
| Alabama—2.1% | ||||||||
| Jefferson County, | ||||||||
| Limited Obligation | ||||||||
| School Warrants | 5.25 | 1/1/20 | 5,000,000 | 5,247,400 | ||||
| Jefferson County, | ||||||||
| Sewer Revenue (Capital | ||||||||
| Improvement Warrants) | ||||||||
| (Insured; FGIC) | 5.13 | 2/1/09 | 4,000,000 a | 4,178,520 | ||||
| University of Alabama, | ||||||||
| HR (Insured; MBIA) | 5.75 | 9/1/20 | 3,000,000 | 3,230,190 | ||||
| Arizona—.4% | ||||||||
| Arizona School Facilities Board, | ||||||||
| Revenue (State School | ||||||||
| Improvement) | 5.25 | 7/1/12 | 2,500,000 a | 2,688,450 | ||||
| Arkansas—1.6% | ||||||||
| Independence County, | ||||||||
| PCR (Entergy Arkansas Inc. | ||||||||
| Project) | 5.00 | 1/1/21 | 5,000,000 | 5,054,050 | ||||
| Lake Hamilton, School District | ||||||||
| Number 005 (Capital | ||||||||
| Improvement) (Insured; AMBAC) | 5.50 | 4/1/29 | 4,600,000 | 4,729,030 | ||||
| California—11.4% | ||||||||
| Bay Area Toll Authority, | ||||||||
| San Francisco Bay Area Toll | ||||||||
| Bridge Revenue | 5.00 | 4/1/26 | 4,500,000 | 4,691,160 | ||||
| California, | ||||||||
| GO | 5.63 | 5/1/10 | 2,530,000 a | 2,725,063 | ||||
| California, | ||||||||
| GO | 5.63 | 5/1/18 | 3,020,000 | 3,209,354 | ||||
| California, | ||||||||
| GO (Various Purpose) | 5.25 | 11/1/27 | 5,000,000 | 5,235,050 | ||||
| California, | ||||||||
| GO (Various Purpose) | 5.00 | 2/1/33 | 5,000,000 | 5,071,850 | ||||
| California Department of Water | ||||||||
| Resources, Power Supply Revenue | 6.00 | 5/1/12 | 6,000,000 | 6,768,900 | ||||
| California Department of Water | ||||||||
| Resources, Power Supply | ||||||||
| Revenue (Insured; AMBAC) | 5.38 | 5/1/12 | 5,280,000 a | 5,783,554 | ||||
| California Educational Facilities | ||||||||
| Authority, Revenue (University | ||||||||
| of Southern California) | 5.00 | 10/1/33 | 5,000,000 | 5,133,700 |
The Fund 9
STATEMENT OF INVESTMENTS (continued)
| Long-Term Municipal | Coupon | Maturity | Principal | |||||
| Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
| California (continued) | ||||||||
| California Pollution Control | ||||||||
| Financing Authority, PCR | 7.76 | 6/1/14 | 6,355,000 b,c | 7,953,664 | ||||
| Foothill/Eastern Transportation | ||||||||
| Corridor Agency, Toll | ||||||||
| Road Revenue | 6.00 | 1/1/07 | 5,000,000 a | 5,077,850 | ||||
| Golden State Tobacco | ||||||||
| Securitization Corp., Tobacco | ||||||||
| Settlement Asset-Backed Bonds | 7.88 | 6/1/42 | 2,170,000 | 2,584,904 | ||||
| Golden State Tobacco | ||||||||
| Securitization Corp., Tobacco | ||||||||
| Settlement Asset-Backed Bonds | 7.90 | 6/1/42 | 1,920,000 | 2,289,984 | ||||
| Lincoln, | ||||||||
| Special Tax (Community Facilities | ||||||||
| District Number 2003-1) | 6.00 | 9/1/34 | 3,500,000 | 3,706,150 | ||||
| Los Angeles Unified School | ||||||||
| District (Insured; FSA) | 5.25 | 7/1/20 | 4,000,000 | 4,248,960 | ||||
| Port of Oakland, | ||||||||
| Revenue (Insured; FGIC) | 5.50 | 11/1/20 | 4,085,000 | 4,347,584 | ||||
| Colorado—4.4% | ||||||||
| Broomfield City and County, | ||||||||
| COP (Open Space Park and | ||||||||
| Recreation Facilities) | ||||||||
| (Insured; AMBAC) | 5.50 | 12/1/20 | 1,000,000 | 1,061,750 | ||||
| Colorado Educational and Cultural | ||||||||
| Facilities Authority, LR | ||||||||
| (Community Colleges of | ||||||||
| Colorado) (Insured; AMBAC) | 5.50 | 12/1/21 | 1,100,000 | 1,178,089 | ||||
| Colorado Housing Finance Authority | ||||||||
| (Collateralized; FHA) | 7.15 | 10/1/30 | 80,000 | 81,070 | ||||
| Colorado Housing Finance Authority | ||||||||
| (Collateralized; FHA) | 6.60 | 8/1/32 | 3,600,000 | 3,748,320 | ||||
| Denver City and County, | ||||||||
| Airport Revenue | ||||||||
| (Insured; AMBAC) | 6.00 | 11/15/17 | 5,000,000 | 5,361,650 | ||||
| E-470 Public Highway Authority, | ||||||||
| Revenue (Insured; MBIA) | 5.75 | 9/1/35 | 5,500,000 | 5,990,655 | ||||
| Northwest Parkway Public Highway | ||||||||
| Authority, Revenue | 7.13 | 6/15/41 | 8,250,000 | 7,748,895 | ||||
| Northwest Parkway Public Highway | ||||||||
| Authority, Revenue | ||||||||
| (Insured; AMBAC) | 0.00 | 6/15/27 | 6,125,000 | 1,831,375 | ||||
10
| Long-Term Municipal | Coupon | Maturity | Principal | |||||
| Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
| Connecticut—4.3% | ||||||||
| Connecticut | 7.51 | 6/15/11 | 4,000,000 b,c | 4,589,800 | ||||
| Connecticut | 7.01 | 12/15/15 | 3,700,000 b,c | 4,502,826 | ||||
| Connecticut Health and Educational | ||||||||
| Facilities Authority, Revenue | ||||||||
| (Saint Francis Hospital and | ||||||||
| Medical Center) (Insured; Radian) | 5.50 | 7/1/17 | 4,040,000 | 4,298,479 | ||||
| Connecticut Health and Educational | ||||||||
| Facilities Authority, Revenue | ||||||||
| (University of Hartford) | ||||||||
| (Insured; Radian) | 5.63 | 7/1/26 | 4,345,000 | 4,663,011 | ||||
| Mashantucket Western Pequot | ||||||||
| Tribe, Special Revenue | 5.75 | 9/1/27 | 8,000,000 c | 8,180,720 | ||||
| District of Columbia—1.1% | ||||||||
| Washington Convention Center | ||||||||
| Authority, Dedicated Tax | ||||||||
| Revenue (Senior Lien) | ||||||||
| (Insured; AMBAC) | 5.00 | 10/1/21 | 6,500,000 | 6,707,805 | ||||
| Florida—.5% | ||||||||
| Highlands County Health Facilities | ||||||||
| Authority, Revenue | ||||||||
| (Adventist/Sunbelt) | 6.00 | 11/15/11 | 2,500,000 a | 2,781,050 | ||||
| Georgia—2.0% | ||||||||
| Atlanta and Fulton County | ||||||||
| Recreation Authority, Revenue | ||||||||
| (Downtown Arena Public | ||||||||
| Improvement) (Insured; MBIA) | 5.38 | 6/1/07 | 2,180,000 a | 2,261,772 | ||||
| College Park Business and | ||||||||
| Industrial Development | ||||||||
| Authority, Revenue (Civic | ||||||||
| Center) (Insured; AMBAC) | 5.75 | 9/1/10 | 4,250,000 a | 4,660,635 | ||||
| Georgia | 5.25 | 7/1/10 | 5,000,000 a | 5,292,050 | ||||
| Illinois—4.6% | ||||||||
| Carol Stream, | ||||||||
| First Mortgage Revenue | ||||||||
| (Windsor Park Manor) | 6.50 | 12/1/07 | 770,000 | 789,396 | ||||
| Chicago, | ||||||||
| SFMR (Collateralized: FHLMC, | ||||||||
| FNMA and GNMA) | 6.45 | 9/1/29 | 2,445,000 | 2,522,042 | ||||
| Chicago O'Hare International Airport, | ||||||||
| Special Facilities Revenue | ||||||||
| (American Airlines Inc. Project) | 8.20 | 12/1/24 | 6,000,000 | 6,025,620 | ||||
The Fund 11
STATEMENT OF INVESTMENTS (continued)
| Long-Term Municipal | Coupon | Maturity | Principal | |||||
| Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
| Illinois (continued) | ||||||||
| Illinois Development Finance | ||||||||
| Authority, Revenue (Community | ||||||||
| Rehabilitation Providers | ||||||||
| Facilities Acquisition Program) | 8.75 | 3/1/10 | 102,000 | 102,766 | ||||
| Illinois Development Finance | ||||||||
| Authority, Revenue (Community | ||||||||
| Rehabilitation Providers | ||||||||
| Facilities Acquisition Program) | 8.25 | 8/1/12 | 216,484 | 192,179 | ||||
| Illinois Educational Facilities | ||||||||
| Authority, Revenue (Chicago | ||||||||
| University) (Insured; MBIA) | 5.13 | 7/1/38 | 5,000,000 | 5,137,000 | ||||
| Illinois Educational Facilities | ||||||||
| Authority, Revenue | ||||||||
| (Northwestern University) | 5.00 | 12/1/38 | 7,500,000 | 7,663,575 | ||||
| Metropolitan Pier and Exposition | ||||||||
| Authority, Dedicated State Tax | ||||||||
| Revenue (McCormick Place | ||||||||
| Expansion) (Insured; MBIA) | 5.50 | 6/15/23 | 5,000,000 | 5,362,500 | ||||
| Kansas—.9% | ||||||||
| Wichita, | ||||||||
| HR (Via Christi Health | ||||||||
| System, Inc.) | 6.25 | 11/15/19 | 2,000,000 | 2,180,060 | ||||
| Wichita, | ||||||||
| HR (Via Christi Health | ||||||||
| System, Inc.) | 6.25 | 11/15/20 | 3,000,000 | 3,270,090 | ||||
| Kentucky—2.2% | ||||||||
| Mount Sterling, | ||||||||
| LR (Kentucky League Cities | ||||||||
| Funding) | 6.10 | 3/1/18 | 5,500,000 | 6,288,095 | ||||
| Pendleton County, | ||||||||
| Multi-County LR (Kentucky | ||||||||
| Association of Counties | ||||||||
| Leasing Trust Program) | 6.40 | 3/1/19 | 6,000,000 | 7,019,580 | ||||
| Louisiana—.5% | ||||||||
| Louisiana Housing Finance Agency, | ||||||||
| SFMR (Home Ownership Program) | ||||||||
| (Collateralized: FNMA and GNMA) | 6.40 | 12/1/30 | 1,975,000 | 2,038,931 | ||||
| Saint James Parish, | ||||||||
| SWDR (Freeport-McMoran | ||||||||
| Partnership) | 7.70 | 10/1/22 | 1,000,000 | 1,001,040 | ||||
12
| Long-Term Municipal | Coupon | Maturity | Principal | |||||
| Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
| Maryland—.4% | ||||||||
| Maryland Energy Financing | ||||||||
| Administration, SWDR | ||||||||
| (Wheelabrator Water) | 6.45 | 12/1/16 | 2,100,000 | 2,162,811 | ||||
| Massachusetts—1.8% | ||||||||
| Massachusetts Industrial Finance | ||||||||
| Agency, RRR (Ogden | ||||||||
| Haverhill Project) | 5.35 | 12/1/10 | 5,000,000 | 5,218,050 | ||||
| Massachusetts Industrial Finance | ||||||||
| Agency, Water Treatment | ||||||||
| Revenue (Massachusetts- | ||||||||
| American Hingham Project) | 6.95 | 12/1/35 | 2,450,000 | 2,498,044 | ||||
| Route 3 North Transportation | ||||||||
| Improvement Association, LR | ||||||||
| (Insured; MBIA) | 5.75 | 6/15/17 | 3,000,000 | 3,205,680 | ||||
| Michigan—5.2% | ||||||||
| Dearborn Economic Development | ||||||||
| Corp., HR (Oakwood Obligation | ||||||||
| Group) (Insured; FGIC) | 5.88 | 11/15/25 | 4,950,000 | 5,056,970 | ||||
| Michigan Building Authority, | ||||||||
| Revenue (Residual Certificates) | 6.93 | 10/15/17 | 5,000,000 b,c | 5,696,600 | ||||
| Michigan Hospital Finance | ||||||||
| Authority, Revenue | 6.75 | 11/15/07 | 3,225,000 b,c | 3,365,191 | ||||
| Michigan Strategic Fund, | ||||||||
| SWDR (Genesee Power | ||||||||
| Station Project) | 7.50 | 1/1/21 | 7,925,000 | 7,899,402 | ||||
| Pontiac Tax Increment Finance | ||||||||
| Authority, Tax Increment | ||||||||
| Revenue (Development | ||||||||
| Area Number 3) | 6.25 | 6/1/22 | 3,250,000 | 3,482,310 | ||||
| Romulus Economic Development | ||||||||
| Corp., Limited Obligation EDR | ||||||||
| (Romulus HIR Limited Partnership | ||||||||
| Project) (Insured; ITT Lyndon | ||||||||
| Property Insurance Co.) | 7.00 | 11/1/15 | 5,000,000 | 5,965,600 | ||||
| Minnesota—1.8% | ||||||||
| Chaska, | ||||||||
| Electric Revenue | 6.00 | 10/1/10 | 2,000,000 a | 2,181,420 | ||||
| Minnesota Housing Finance Agency, | ||||||||
| Single Family Mortgage | 5.95 | 1/1/17 | 610,000 | 617,729 | ||||
The Fund 13
STATEMENT OF INVESTMENTS (continued)
| Long-Term Municipal | Coupon | Maturity | Principal | |||||
| Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
| Minnesota (continued) | ||||||||
| Minnesota Public Facilities | ||||||||
| Authority, Water PCR | 5.00 | 3/1/24 | 5,000,000 | 5,238,050 | ||||
| Saint Paul Housing and | ||||||||
| Redevelopment Authority, | ||||||||
| Hospital Facility Revenue | ||||||||
| (HealthEast Project) | 6.00 | 11/15/35 | 3,000,000 | 3,212,760 | ||||
| Mississippi—.4% | ||||||||
| Mississippi Home Corp., | ||||||||
| SFMR (Collateralized; GNMA) | 6.95 | 12/1/31 | 2,540,000 | 2,635,047 | ||||
| Missouri—1.6% | ||||||||
| Missouri Development Finance | ||||||||
| Board, Infrastructure | ||||||||
| Facilities Revenue (Branson | ||||||||
| Landing Project) | 5.38 | 12/1/27 | 2,470,000 | 2,527,625 | ||||
| Missouri Development Finance | ||||||||
| Board, Infrastructure | ||||||||
| Facilities Revenue (Branson | ||||||||
| Landing Project) | 5.00 | 6/1/35 | 2,500,000 | 2,490,375 | ||||
| Missouri Health and Educational | ||||||||
| Facilities Authority, Health | ||||||||
| Facilities Revenue (Saint | ||||||||
| Anthony's Medical Center) | 6.13 | 12/1/10 | 4,000,000 a | 4,412,720 | ||||
| Missouri Housing Development | ||||||||
| Commission, SFMR | ||||||||
| (Homeownership Loan Program) | ||||||||
| (Collateralized: FNMA and GNMA) | 6.30 | 9/1/25 | 135,000 | 135,973 | ||||
| New Jersey—4.7% | ||||||||
| New Jersey Economic Development | ||||||||
| Authority, Revenue | ||||||||
| (Insured; AMBAC) | 6.50 | 6/15/15 | 2,495,000 b,c | 2,847,169 | ||||
| New Jersey Economic Development | ||||||||
| Authority, Revenue | ||||||||
| (Insured; AMBAC) | 6.50 | 6/15/16 | 2,495,000 b,c | 2,847,169 | ||||
| New Jersey Economic Development | ||||||||
| Authority, Revenue (School | ||||||||
| Facilities-Construction 2001) | ||||||||
| (Insured; AMBAC) | 5.25 | 6/15/11 | 10,000 a | 10,706 | ||||
| New Jersey Economic Development | ||||||||
| Authority, Revenue (School | ||||||||
| Facilities-Construction 2001) | ||||||||
| (Insured; AMBAC) | 5.25 | 6/15/11 | 10,000 a | 10,706 |
14
| Long-Term Municipal | Coupon | Maturity | Principal | |||||
| Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
| New Jersey (continued) | ||||||||
| New Jersey Turnpike Authority, | ||||||||
| Turnpike Revenue | ||||||||
| (Insured; AMBAC) | 5.00 | 1/1/35 | 3,000,000 | 3,071,130 | ||||
| New Jersey Turnpike Authority, | ||||||||
| Turnpike Revenue | ||||||||
| (Insured; MBIA) | 5.50 | 1/1/10 | 6,000,000 a | 6,362,280 | ||||
| New Jersey Turnpike Authority, | ||||||||
| Turnpike Revenue | ||||||||
| (Insured; MBIA) | 8.00 | 1/1/11 | 6,350,000 b,c | 7,549,896 | ||||
| Tobacco Settlement Financing Corp. | ||||||||
| of New Jersey, Tobacco | ||||||||
| Settlement Asset-Backed Bonds | 7.00 | 6/1/41 | 5,135,000 | 5,815,182 | ||||
| New Mexico—1.1% | ||||||||
| Farmington, | ||||||||
| PCR (Public Service Co.-San Juan) | 6.38 | 4/1/22 | 1,430,000 | 1,490,904 | ||||
| Jicarilla Apache Nation, | ||||||||
| Revenue | 5.50 | 9/1/23 | 5,000,000 | 5,239,650 | ||||
| New York—6.0% | ||||||||
| New York City | 5.50 | 3/15/15 | 3,500,000 | 3,724,805 | ||||
| New York City Industrial | ||||||||
| Development Agency, Special | ||||||||
| Facility Revenue (American | ||||||||
| Airlines, Inc. John F. Kennedy | ||||||||
| International Airport Project) | 8.00 | 8/1/28 | 4,500,000 | 5,072,895 | ||||
| New York City Municipal Water | ||||||||
| Finance Authority, Water and | ||||||||
| Sewer Systems Revenue | 6.00 | 6/15/10 | 3,085,000 a | 3,380,450 | ||||
| New York Liberty Development | ||||||||
| Corp., Revenue (Goldman Sachs | ||||||||
| Headquarters Issue) (Liquidity | ||||||||
| Facility; Citibank N.A.) | 5.25 | 10/1/35 | 12,500,000 | 13,516,000 | ||||
| New York State Dormitory | ||||||||
| Authority, Revenue (New York | ||||||||
| University) (Insured; MBIA) | 6.00 | 7/1/17 | 3,500,000 | 4,046,910 | ||||
| New York State Dormitory | ||||||||
| Authority, Revenue (Rochester | ||||||||
| Institute of Technology) | ||||||||
| (Insured; AMBAC) | 5.25 | 7/1/24 | 3,345,000 | 3,545,299 | ||||
| New York State Dormitory | ||||||||
| Authority, Revenue (State | ||||||||
| University Educational Facilities) | 7.50 | 5/15/13 | 2,500,000 | 3,001,725 |
The Fund 15
STATEMENT OF INVESTMENTS (continued)
| Long-Term Municipal | Coupon | Maturity | Principal | |||||
| Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
| North Carolina—2.2% | ||||||||
| North Carolina Eastern Municipal | ||||||||
| Power Agency, Power | ||||||||
| System Revenue | 7.00 | 1/1/13 | 3,500,000 | 3,911,740 | ||||
| North Carolina Eastern Municipal | ||||||||
| Power Agency, Power System | ||||||||
| Revenue (Insured; ACA) | 6.75 | 1/1/26 | 5,000,000 | 5,455,600 | ||||
| North Carolina Medical Care | ||||||||
| Commission, Revenue (Housing | ||||||||
| Foundation Inc.) (Insured; ACA) | 6.45 | 8/15/20 | 1,000,000 | 1,085,220 | ||||
| North Carolina Medical Care | ||||||||
| Commission, Revenue (Housing | ||||||||
| Foundation Inc.) (Insured; ACA) | 6.63 | 8/15/30 | 2,565,000 | 2,769,148 | ||||
| Ohio—6.4% | ||||||||
| Cincinnati, | ||||||||
| Water Systems Revenue | 5.00 | 12/1/20 | 2,420,000 | 2,496,182 | ||||
| Cincinnati, | ||||||||
| Water Systems Revenue | 5.00 | 12/1/21 | 3,825,000 | 3,962,738 | ||||
| Cleveland-Cuyahoga County Port | ||||||||
| Authority, Revenue, Special | ||||||||
| Assessment/Tax Increment | 7.35 | 12/1/31 | 3,000,000 | 3,219,690 | ||||
| Columbus City School District | ||||||||
| (Insured; FSA) | 5.00 | 12/1/32 | 5,000,000 | 5,163,700 | ||||
| Cuyahoga County, | ||||||||
| Hospital Facilities Revenue | ||||||||
| (UHHS/CSAHS-Cuyahoga, Inc. | ||||||||
| and CSAHS/UHHS-Canton, Inc. | ||||||||
| Project) | 7.50 | 1/1/30 | 7,000,000 | 7,715,260 | ||||
| Cuyahoga County, | ||||||||
| Hospital Improvement | ||||||||
| Revenue (The Metrohealth | ||||||||
| Systems Project) | 6.15 | 2/15/09 | 3,115,000 a | 3,338,346 | ||||
| Hamilton County, | ||||||||
| Sales Tax (Insured; AMBAC) | 0.00 | 12/1/25 | 14,865,000 | 5,802,255 | ||||
| Ohio Water Development Authority, | ||||||||
| Pollution Control Facilities | ||||||||
| Revenue (Cleveland Electric | ||||||||
| Illuminating Co. Project) | ||||||||
| (Insured; ACA) | 6.10 | 8/1/20 | 7,300,000 | 7,553,821 | ||||
| 16 |
| Long-Term Municipal | Coupon | Maturity | Principal | |||||
| Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
| Oklahoma—2.2% | ||||||||
| Holdenville Industrial Authority, | ||||||||
| Correctional Facility Revenue | 6.60 | 7/1/06 | 2,045,000 a | 2,095,798 | ||||
| Holdenville Industrial Authority, | ||||||||
| Correctional Facility Revenue | 6.70 | 7/1/06 | 4,625,000 a | 4,740,671 | ||||
| McGee Creek Authority, | ||||||||
| Water Revenue (Insured; MBIA) | 6.00 | 1/1/13 | 6,025,000 | 6,506,458 | ||||
| Oregon—.6% | ||||||||
| Portland, | ||||||||
| Sewer Systems Revenue | ||||||||
| (Insured; FGIC) | 5.75 | 8/1/10 | 3,500,000 a | 3,773,630 | ||||
| Pennsylvania—2.4% | ||||||||
| Allegheny County Sanitation | ||||||||
| Authority, Sewer Revenue | ||||||||
| (Insured; MBIA) | 5.38 | 12/1/07 | 7,000,000 a | 7,300,860 | ||||
| Butler County Industrial | ||||||||
| Development Authority, Health | ||||||||
| Care Facilities Revenue (Saint | ||||||||
| John Care Center) | ||||||||
| (Collateralized; GNMA) | 5.85 | 4/20/36 | 4,210,000 | 4,461,505 | ||||
| Montgomery County Higher | ||||||||
| Education and Health Authority, | ||||||||
| Revenue (First Mortgage-AHF/ | ||||||||
| Montgomery, Inc.) | 10.50 | 9/1/20 | 3,075,000 | 3,082,319 | ||||
| Rhode Island—1.0% | ||||||||
| Providence, | ||||||||
| Special Tax Increment | ||||||||
| Obligation | 6.65 | 6/1/06 | 3,895,000 | 3,980,378 | ||||
| Rhode Island Health and | ||||||||
| Educational Building Corp., | ||||||||
| Revenue (Higher Education | ||||||||
| Facility) (Insured; AMBAC) | 5.50 | 9/15/24 | 2,000,000 | 2,175,360 | ||||
| South Carolina—1.8% | ||||||||
| Greenville County School District, | ||||||||
| Installment Purchase Revenue | ||||||||
| (Building Equity Sooner | ||||||||
| for Tomorrow) | 6.93 | 12/1/28 | 5,450,000 b,c | 6,511,224 | ||||
The Fund 17
STATEMENT OF INVESTMENTS (continued)
| Long-Term Municipal | Coupon | Maturity | Principal | |||||
| Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
| South Carolina (continued) | ||||||||
| Greenville Hospital System, | ||||||||
| Hospital Facilities Revenue | ||||||||
| (Insured; AMBAC) | 5.50 | 5/1/26 | 4,385,000 | 4,686,513 | ||||
| Tennessee—2.8% | ||||||||
| Johnson City Health and | ||||||||
| Educational Facilities Board, | ||||||||
| Hospital First Mortgage | ||||||||
| Revenue (Mountain States | ||||||||
| Health Alliance) | 5.50 | 7/1/31 | 8,355,000 | 8,627,122 | ||||
| Memphis Center Revenue Finance | ||||||||
| Corp., Sports Facility Revenue | ||||||||
| (Memphis Redbirds) | 6.50 | 9/1/28 | 8,000,000 | 7,799,680 | ||||
| Shelby County Health, Educational | ||||||||
| and Housing Facilities Board, | ||||||||
| MFHR (Cameron at Kirby Parkway | ||||||||
| and Stonegate Apartments) | 7.25 | 7/1/23 | 2,685,000 d | 725,057 | ||||
| Texas—7.9% | ||||||||
| Alliance Airport Authority Inc., | ||||||||
| Special Facilities Revenue | ||||||||
| (American Airlines, Inc. | ||||||||
| Project) | 7.50 | 12/1/29 | 6,100,000 | 5,916,085 | ||||
| Alliance Airport Authority Inc., | ||||||||
| Special Facilities Revenue | ||||||||
| (Federal Express Corp. Project) | 4.85 | 4/1/21 | 5,750,000 e | 5,703,368 | ||||
| Alliance Airport Authority Inc., | ||||||||
| Special Facilities Revenue | ||||||||
| (Federal Express Corp. Project) | 6.38 | 4/1/21 | 5,040,000 | 5,144,126 | ||||
| Austin Convention Enterprises | ||||||||
| Inc., Hotel Revenue | ||||||||
| (Convention Center) | 6.70 | 1/1/28 | 5,000,000 | 5,321,950 | ||||
| Dallas-Fort Worth International | ||||||||
| Airport, Facility Improvement | ||||||||
| Corp. Revenue (American | ||||||||
| Airlines Inc.) | 7.25 | 11/1/30 | 4,505,000 | 4,198,975 | ||||
| Dallas-Fort Worth International | ||||||||
| Airport, Facility Improvement | ||||||||
| Corp. Revenue (American | ||||||||
| Airlines Inc.) | 6.38 | 5/1/35 | 3,010,000 | 2,525,781 | ||||
| Dallas-Fort Worth International | ||||||||
| Airport, Joint Revenue | ||||||||
| (Insured; FSA) | 5.50 | 11/1/21 | 3,000,000 | 3,202,140 | ||||
18
| Long-Term Municipal | Coupon | Maturity | Principal | |||||
| Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
| Texas (continued) | ||||||||
| Houston, | ||||||||
| Combined Utility System First | ||||||||
| Lien Revenue (Insured; MBIA) | 5.25 | 5/15/25 | 5,000,000 e | 5,276,600 | ||||
| Sabine River Authority, | ||||||||
| PCR (TXU Energy Co. LLC | ||||||||
| Project) | 6.15 | 8/1/22 | 2,995,000 | 3,261,315 | ||||
| Texas Turnpike Authority, | ||||||||
| Central Texas Turnpike System | ||||||||
| Revenue (Insured; AMBAC) | 5.75 | 8/15/38 | 3,500,000 | 3,809,540 | ||||
| Wichita Falls, | ||||||||
| Water and Sewer Revenue | ||||||||
| (Insured; AMBAC) | 5.38 | 8/1/24 | 3,000,000 | 3,174,270 | ||||
| Utah—1.4% | ||||||||
| Carbon County, | ||||||||
| Solid Waste Disposal Facility | ||||||||
| Revenue (Sunnyside | ||||||||
| Cogeneration | ||||||||
| Associates Project) | 7.10 | 8/15/23 | 8,039,000 | 8,538,865 | ||||
| Virginia—.8% | ||||||||
| Tobacco Settlement Financing Corp. | ||||||||
| of Virginia, Tobacco | ||||||||
| Settlement Asset-Backed Bonds | 5.63 | 6/1/37 | 5,000,000 | 5,113,950 | ||||
| Washington—2.1% | ||||||||
| Washington Public Power Supply | ||||||||
| System, Revenue (Nuclear | ||||||||
| Project Number 3) | ||||||||
| (Insured; MBIA) | 7.13 | 7/1/16 | 10,425,000 | 12,753,320 | ||||
| West Virginia—.9% | ||||||||
| West Virginia, | ||||||||
| GO State Road (Insured; MBIA) | 5.75 | 6/1/10 | 2,500,000 a | 2,710,200 | ||||
| West Virginia Hospital Finance | ||||||||
| Authority, HR (Charleston Area | ||||||||
| Medical Center) | 6.00 | 9/1/10 | 2,440,000 a | 2,659,746 | ||||
| Wisconsin—3.4% | ||||||||
| Badger Tobacco Asset | ||||||||
| Securitization Corp., Tobacco | ||||||||
| Settlement Asset-Backed Bonds | 7.00 | 6/1/28 | 13,350,000 | 14,918,225 | ||||
| Wisconsin Health and Educational | ||||||||
| Facilities Authority, Revenue | ||||||||
| (Aurora Health Care) | 6.40 | 4/15/33 | 5,500,000 | 6,014,580 | ||||
The Fund 19
STATEMENT OF INVESTMENTS (continued)
| Long-Term Municipal | Coupon | Maturity | Principal | |||||
| Investments (continued) | Rate (%) | Date | Amount ($) | Value ($) | ||||
| Wyoming—.4% | ||||||||
| Wyoming Student Loan Corp., | ||||||||
| Student Loan Revenue | 6.25 | 6/1/29 | 2,500,000 | 2,640,875 | ||||
| U.S. Related—3.2% | ||||||||
| Children's Trust Fund of Puerto | ||||||||
| Rico, Tobacco Settlement | ||||||||
| Asset-Backed Bonds | 0.00 | 5/15/50 | 10,400,000 | 648,648 | ||||
| Children's Trust Fund of Puerto | ||||||||
| Rico, Tobacco Settlement | ||||||||
| Asset-Backed Bonds | 0.00 | 5/15/55 | 10,000,000 | 333,700 | ||||
| Puerto Rico Commonwealth | ||||||||
| (Insured; MBIA) | 5.65 | 7/1/15 | 4,000,000 | 4,455,000 | ||||
| Puerto Rico Commonwealth, | ||||||||
| Public Improvement | ||||||||
| (Insured; MBIA) | 5.25 | 7/1/13 | 6,000,000 | 6,488,700 | ||||
| Puerto Rico Convention Center | ||||||||
| District Authority, Hotel | ||||||||
| Occupancy Tax Revenue | ||||||||
| (Insured; CIFG) | 4.50 | 7/1/36 | 1,675,000 | 1,630,395 | ||||
| Puerto Rico Electric Power | ||||||||
| Authority, Power Revenue | ||||||||
| (Insured; MBIA) | 5.00 | 7/1/32 | 5,500,000 | 5,678,585 | ||||
| Total Long-Term Municipal Investments | ||||||||
| (cost $572,049,364) | 599,082,640 | |||||||
| Option—.0% | Contracts | Value ($) | ||||||
| Put Option | ||||||||
| June 2006 10 Year Future | ||||||||
| May 2006 @ 104 | ||||||||
| (cost $112,375) | 1,000 | 62,500 | ||||||
| 20 |
| Short-Term Municipal | Coupon | Maturity | Principal | |||||
| Investment—1.2% | Rate (%) | Date | Amount ($) | Value ($) | ||||
| Louisiana; | ||||||||
| New Orleans, | ||||||||
| Sewerage Service, BAN | ||||||||
| (cost $7,413,750) | 2.97 | 7/26/06 | 7,500,000 | 7,431,750 | ||||
| Total Investments (cost $579,575,489) | 99.7% | 606,576,890 | ||||||
| Cash and Receivables (Net) | .3% | 2,047,150 | ||||||
| Net Assets | 100.0% | 608,624,040 |
| a These securities are prerefunded; the date shown represents the prerefunded date. 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 exempt from registration under Rule 144A of the Securities Act of 1933.These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At April 30,2006, these securities amounted to $54,044,259 or 8.9% of net assets. d Non-income producing security; interest payments in default. e Purchased on a delayed delivery basis. |
The Fund 21
STATEMENT OF INVESTMENTS (continued)
| 22 |
| Summary of Combined Ratings (Unaudited) | ||||||||||
| Fitch | or | Moody's | or | Standard & Poor's | Value (%) † | |||||
| AAA | Aaa | AAA | 40.6 | |||||||
| AA | Aa | AA | 15.9 | |||||||
| A | A | A | 13.1 | |||||||
| BBB | Baa | BBB | 16.8 | |||||||
| BB | Ba | BB | .1 | |||||||
| B | B | B | 2.1 | |||||||
| CCC | Caa | CCC | 3.1 | |||||||
| F1 | MIG1/P1 | SP1/A1 | 1.2 | |||||||
| Not Rated f | Not Rated f | Not Rated f | 7.1 | |||||||
| 100.0 | ||||||||||
| † Based on total investments. f Securities which, while not rated by Fitch, Moody's and Standard & Poor's, have been determined by the Manager to be of comparable quality to those rated securities in which the fund may invest. See notes to financial statements. |
The Fund 23
| STATEMENT OF ASSETS AND LIABILITIES April 30, 2006 |
| Cost | Value | |||
| Assets ($): | ||||
| Investments in securities—See Statement of Investments | 579,575,489 | 606,576,890 | ||
| Interest receivable | 10,857,050 | |||
| Receivable for investment securities sold | 7,429,544 | |||
| Receivable for shares of Beneficial Interest subscribed | 41,257 | |||
| Prepaid expenses | 28,808 | |||
| 624,933,549 | ||||
| Liabilities ($): | ||||
| Due to The Dreyfus Corporation and affiliates—Note 3(c) | 401,570 | |||
| Cash overdraft due to custodian | 4,387,597 | |||
| Payable for investment securities purchased | 11,120,796 | |||
| Payable for shares of Beneficial Interest redeemed | 283,708 | |||
| Accrued expenses | 115,838 | |||
| 16,309,509 | ||||
| Net Assets ($) | 608,624,040 | |||
| Composition of Net Assets ($): | ||||
| Paid-in capital | 650,264,237 | |||
| Accumulated net realized gain (loss) on investments | (68,641,598) | |||
| Accumulated net unrealized appreciation | ||||
| (depreciation) on investments | 27,001,401 | |||
| Net Assets ($) | 608,624,040 |
| Net Asset Value Per Share | ||||||||
| Class A | Class B | Class C | Class Z | |||||
| Net Assets ($) | 258,503,994 | 16,461,823 | 9,121,273 | 324,536,950 | ||||
| Shares outstanding | 20,026,071 | 1,274,730 | 705,552 | 25,140,101 | ||||
| Net Asset Value Per Share ($) | 12.91 | 12.91 | 12.93 | 12.91 |
See notes to financial statements.
24
| STATEMENT OF OPERATIONS Year Ended April 30, 2006 |
| Investment Income ($): | ||
| Interest Income | 34,403,601 | |
| Expenses: | ||
| Management fee—Note 3(a) | 3,491,513 | |
| Shareholder servicing costs—Note 3(c) | 1,817,467 | |
| Distribution fees—Note 3(b) | 162,445 | |
| Registration fees | 73,932 | |
| Custodian fees | 60,784 | |
| Professional fees | 60,767 | |
| Trustees' fees and expenses—Note 3(d) | 7,616 | |
| Loan commitment fees—Note 2 | 5,038 | |
| Prospectus and shareholder's reports | 3,908 | |
| Miscellaneous | 45,567 | |
| Total Expenses | 5,729,037 | |
| Less—reduction in expenses | ||
| due to undertaking—Note 3(a) | (9,155) | |
| Net Expenses | 5,719,882 | |
| Investment Income—Net | 28,683,719 | |
| Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | ||
| Net realized gain (loss) on investments and options transactions | 2,849,022 | |
| Net realized gain (loss) on financial futures | (182,631) | |
| Net Realized Gain (Loss) | 2,666,391 | |
| Net unrealized appreciation (depreciation) on investments (including | ||
| $107,181 net unrealized appreciation on financial futures) | (12,743,303) | |
| Net Realized and Unrealized Gain (Loss) on Investments | (10,076,912) | |
| Net Increase in Net Assets Resulting from Operations | 18,606,807 | |
See notes to financial statements.
The Fund 25
STATEMENT OF CHANGES IN NET ASSETS
| Year Ended April 30, | ||||
| 2006 | 2005 | |||
| Operations ($): | ||||
| Investment income—net | 28,683,719 | 23,070,862 | ||
| Net realized gain (loss) on investments | 2,666,391 | 5,274,180 | ||
| Net unrealized appreciation | ||||
| (depreciation) on investments | (12,743,303) | 3,186,442 | ||
| Net Increase (Decrease) in Net Assets | ||||
| Resulting from Operations | 18,606,807 | 31,531,484 | ||
| Dividends to Shareholders from ($): | ||||
| Investment income—net: | ||||
| Class A shares | (12,089,440) | (13,068,198) | ||
| Class B shares | (734,708) | (992,193) | ||
| Class C shares | (353,775) | (379,857) | ||
| Class Z shares | (15,473,039) | (8,690,419) | ||
| Total Dividends | (28,650,962) | (23,130,667) | ||
| Beneficial Interest Transactions ($): | ||||
| Net proceeds from shares sold: | ||||
| Class A shares | 14,638,352 | 15,995,280 | ||
| Class B shares | 1,822,106 | 1,201,970 | ||
| Class C shares | 749,467 | 818,911 | ||
| Class Z shares | 10,500,961 | 8,745,394 | ||
| Net assets received in connection | ||||
| with reorganization—Note 1 | — | 360,805,920 | ||
| Dividends reinvested: | ||||
| Class A shares | 7,656,702 | 8,094,642 | ||
| Class B shares | 412,672 | 551,772 | ||
| Class C shares | 208,831 | 225,496 | ||
| Class Z shares | 10,364,641 | 5,759,846 | ||
| Cost of shares redeemed: | ||||
| Class A shares | (39,175,744) | (44,366,426) | ||
| Class B shares | (6,684,478) | (10,620,323) | ||
| Class C shares | (846,094) | (3,373,864) | ||
| Class Z shares | (41,143,018) | (25,890,773) | ||
| Increase (Decrease) in Net Assets from | ||||
| Beneficial Interest Transactions | (41,495,602) | 317,947,845 | ||
| Total Increase (Decrease) in Net Assets | (51,539,757) | 326,348,662 | ||
| Net Assets ($): | ||||
| Beginning of Period | 660,163,797 | 333,815,135 | ||
| End of Period | 608,624,040 | 660,163,797 |
26
| Year Ended April 30, | ||||
| 2006 | 2005 | |||
| Capital Share Transactions: | ||||
| Class A a | ||||
| Shares sold | 1,122,340 | 1,238,023 | ||
| Shares issued for dividends reinvested | 586,081 | 622,551 | ||
| Shares redeemed | (2,996,844) | (3,422,128) | ||
| Net Increase (Decrease) in Shares Outstanding | (1,288,423) | (1,561,554) | ||
| Class B a | ||||
| Shares sold | 139,569 | 92,084 | ||
| Shares issued for dividends reinvested | 31,562 | 42,468 | ||
| Shares redeemed | (511,145) | (819,430) | ||
| Net Increase (Decrease) in Shares Outstanding | (340,014) | (684,878) | ||
| Class C | ||||
| Shares sold | 57,163 | 63,516 | ||
| Shares issued for dividends reinvested | 15,964 | 17,324 | ||
| Shares redeemed | (64,601) | (261,444) | ||
| Net Increase (Decrease) in Shares Outstanding | 8,526 | (180,604) | ||
| Class Z | ||||
| Shares sold | 803,576 | 666,944 | ||
| Shares issued in connection with reorganization—Note 1 | — | 27,563,477 | ||
| Shares issued for dividends reinvested | 793,459 | 439,945 | ||
| Shares redeemed | (3,150,800) | (1,976,500) | ||
| Net Increase (Decrease) in Shares Outstanding | (1,553,765) | 26,693,866 |
| a During the period ended April 30, 2006, 197,377 Class B shares representing $2,582,554 were automatically converted to 197,435 Class A shares and during the period ended April 30, 2005, 352,639 Class B shares representing $4,574,649 were automatically converted to 352,748 Class A shares. See notes to financial statements. |
The Fund 27
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share.Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions.These figures have been derived from the fund's financial statements.
| Year Ended April 30, | ||||||||||
| Class A Shares | 2006 | 2005 | 2004 | 2003 | 2002 | |||||
| Per Share Data ($): | ||||||||||
| Net asset value, beginning of period | 13.12 | 12.81 | 13.04 | 12.99 | 13.14 | |||||
| Investment Operations: | ||||||||||
| Investment income—net a | .59 | .59 | .60 | .65 | .68 | |||||
| Net realized and unrealized | ||||||||||
| gain (loss) on investments | (.21) | .31 | (.24) | .04 | (.15) | |||||
| Total from Investment Operations | .38 | .90 | .36 | .69 | .53 | |||||
| Distributions: | ||||||||||
| Dividends from investment income—net | (.59) | (.59) | (.59) | (.64) | (.68) | |||||
| Net asset value, end of period | 12.91 | 13.12 | 12.81 | 13.04 | 12.99 | |||||
| Total Return (%) b | 2.93 | 7.18 | 2.80 | 5.45 | 4.13 | |||||
| Ratios/Supplemental Data (%): | ||||||||||
| Ratio of total expenses | ||||||||||
| to average net assets | .91 | .93 | .93 | .94 | .92 | |||||
| Ratio of net expenses | ||||||||||
| to average net assets | .91 | .92 | .93 | .94 | .92 | |||||
| Ratio of net investment income | ||||||||||
| to average net assets | 4.51 | 4.54 | 4.57 | 4.95 | 5.20 | |||||
| Portfolio Turnover Rate | 48.31 | 48.30 | 91.43 | 92.94 | 49.90 | |||||
| Net Assets, end of period ($ x 1,000) | 258,504 | 279,612 | 293,083 | 321,936 | 361,701 | |||||
| a Based on average shares outstanding at each month end. b Exclusive of sales charge. See notes to financial statements. |
28
| Year Ended April 30, | ||||||||||
| Class B Shares | 2006 | 2005 | 2004 | 2003 | 2002 | |||||
| Per Share Data ($): | ||||||||||
| Net asset value, beginning of period | 13.12 | 12.82 | 13.05 | 12.99 | 13.14 | |||||
| Investment Operations: | ||||||||||
| Investment income—net a | .52 | .52 | .53 | .58 | .61 | |||||
| Net realized and unrealized | ||||||||||
| gain (loss) on investments | (.21) | .31 | (.23) | .06 | (.15) | |||||
| Total from Investment Operations | .31 | .83 | .30 | .64 | .46 | |||||
| Distributions: | ||||||||||
| Dividends from investment income—net | (.52) | (.53) | (.53) | (.58) | (.61) | |||||
| Net asset value, end of period | 12.91 | 13.12 | 12.82 | 13.05 | 12.99 | |||||
| Total Return (%) b | 2.40 | 6.64 | 2.20 | 5.00 | 3.60 | |||||
| Ratios/Supplemental Data (%): | ||||||||||
| Ratio of total expenses | ||||||||||
| to average net assets | 1.43 | 1.44 | 1.44 | 1.44 | 1.43 | |||||
| Ratio of net expenses | ||||||||||
| to average net assets | 1.43 | 1.44 | 1.44 | 1.44 | 1.43 | |||||
| Ratio of net investment income | ||||||||||
| to average net assets | 3.99 | 4.02 | 4.06 | 4.44 | 4.69 | |||||
| Portfolio Turnover Rate | 48.31 | 48.30 | 91.43 | 92.94 | 49.90 | |||||
| Net Assets, end of period ($ x 1,000) | 16,462 | 21,192 | 29,471 | 43,022 | 43,092 | |||||
| a Based on average shares outstanding at each month end. b Exclusive of sales charge. See notes to financial statements. |
The Fund 29
FINANCIAL HIGHLIGHTS (continued)
| Year Ended April 30, | ||||||||||
| Class C Shares | 2006 | 2005 | 2004 | 2003 | 2002 | |||||
| Per Share Data ($): | ||||||||||
| Net asset value, beginning of period | 13.14 | 12.83 | 13.06 | 13.01 | 13.16 | |||||
| Investment Operations: | ||||||||||
| Investment income—net a | .49 | .49 | .50 | .55 | .57 | |||||
| Net realized and unrealized | ||||||||||
| gain (loss) on investments | (.21) | .32 | (.23) | .05 | (.14) | |||||
| Total from Investment Operations | .28 | .81 | .27 | .60 | .43 | |||||
| Distributions: | ||||||||||
| Dividends from investment income—net | (.49) | (.50) | (.50) | (.55) | (.58) | |||||
| Net asset value, end of period | 12.93 | 13.14 | 12.83 | 13.06 | 13.01 | |||||
| Total Return (%) b | 2.18 | 6.40 | 2.06 | 4.67 | 3.35 | |||||
| Ratios/Supplemental Data (%): | ||||||||||
| Ratio of total expenses | ||||||||||
| to average net assets | 1.64 | 1.66 | 1.66 | 1.67 | 1.66 | |||||
| Ratio of net expenses to | ||||||||||
| average net assets | 1.64 | 1.66 | 1.66 | 1.67 | 1.66 | |||||
| Ratio of net investment income | ||||||||||
| to average net assets | 3.78 | 3.81 | 3.84 | 4.18 | 4.45 | |||||
| Portfolio Turnover Rate | 48.31 | 48.30 | 91.43 | 92.94 | 49.90 | |||||
| Net Assets, end of period ($ x 1,000) | 9,121 | 9,158 | 11,261 | 13,330 | 9,544 | |||||
| a Based on average shares outstanding at each month end. b Exclusive of sales charge. See notes to financial statements. |
30
| Year Ended April 30, | ||||
| Class Z Shares | 2006 | 2005 a | ||
| Per Share Data ($): | ||||
| Net asset value, beginning of period | 13.12 | 13.09 | ||
| Investment Operations: | ||||
| Investment income—net b | .60 | .32 | ||
| Net realized and unrealized | ||||
| gain (loss) on investments | (.21) | .03 | ||
| Total from Investment Operations | .39 | .35 | ||
| Distributions: | ||||
| Dividends from investment income—net | (.60) | (.32) | ||
| Net asset value, end of period | 12.91 | 13.12 | ||
| Total Return (%) c | 2.99 | 2.71d | ||
| Ratios/Supplemental Data (%): | ||||
| Ratio of total expenses to average net assets | .85 | .88e | ||
| Ratio of net expenses to average net assets | .85 | .86e | ||
| Ratio of net investment income | ||||
| to average net assets | 4.57 | 4.49e | ||
| Portfolio Turnover Rate | 48.31 | 48.30 | ||
| Net Assets, end of period ($ x 1,000) | 324,537 | 350,202 | ||
| a From October 14, 2004 (commencement of initial offering) to April 30, 2005. b Based on average shares outstanding at each month end. c Exclusive of sales charge. d Not annualized. e Annualized. See notes to financial statements. |
The Fund 31
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Significant Accounting Policies:
Dreyfus Premier Municipal Bond Fund (the "fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified open-end management investment company. The fund's investment objective is to maximize current income exempt from federal income tax to the extent consistent with the preservation of capi-tal.The Dreyfus Corporation (the "Manager" or "Dreyfus") serves as the fund's investment adviser.The Manager is a wholly-owned subsidiary of Mellon Bank, N.A, which is a wholly-owned subsidiary of Mellon Financial Corporation ("Mellon Financial").
As of the close of business on October 13, 2004, pursuant to an Agreement and Plan of Reorganization previously approved by the fund's Board of Trustees, all of the assets, subject to the liabilities, of General Municipal Bond Fund, Inc. were transferred to the fund. Shareholders of General Municipal Bond Fund, Inc. received Class Z shares of the fund, in an amount equal to the aggregate net asset value of their investment in General Municipal Bond Fund, Inc. at the time of the exchange.The net asset value of the fund's Class Z shares at the close of business on October 13, 2004, after the reorganization, was $13.09 per share, and a total of 27,563,477 Class Z shares representing net assets of $360,805,920 (including $24,179,912 net unrealized appreciation on investments) were issued to General Municipal Bond Fund, Inc. shareholders in the exchange.The exchange was a tax-free event to shareholders.
Dreyfus Service Corporation (the "Distributor"), a wholly-owned subsidiary of the Manager, is the distributor of the fund's shares. The fund is authorized to issue an unlimited number of $.001 par value shares of Beneficial Interest in each of the following classes of shares: Class A, Class B, Class C and Class Z. 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 and automatically convert to Class A shares after six years. Class C shares are subject to a
32
CDSC imposed on Class C shares redeemed within one year of purchase. Class Z shares are sold at net asset value per share generally only to shareholders who received Class Z shares in exchange for their shares of General Municipal Bond Fund Inc. as a result of the reorganization of such fund. Class Z shares generally are not available for new accounts. Other differences between the classes include the services offered to and the expenses borne by each class and certain voting rights. Income, expenses (other than expenses attributable to a specific class) and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
Effective March 1, 2006, Class A shares of the fund may be purchased at net asset value ("NAV") without payment of a sales charge:
- By qualified investors who (i) purchase Class A shares directly through the Distributor, and (ii) have, or whose spouse or minor children have, beneficially owned shares and continuously maintained an open account directly through the Distributor in a Dreyfus-managed fund, including the fund, or a Founders Asset Management LLC
("Founders") managed fund since on or before February 28, 2006. Founders is a wholly-owned subsidiary of the Distributor. - With the cash proceeds from an investor's exercise of employment- related stock options, whether invested in the fund directly or indi- rectly through an exchange from a Dreyfus-managed money market fund, provided that the proceeds are processed through an entity that has entered into an agreement with the Distributor specifically relat- ing to processing stock options. Upon establishing the account in the fund or the Dreyfus-managed money market fund, the investor and the investor's spouse and minor children become eligible to purchase Class A shares of the fund at NAV, whether or not using the proceeds of the employment-related stock options.
- By members of qualified affinity groups who purchase Class A shares directly through the Distributor, provided that the qualified affinity group has entered into an affinity agreement with the Distributor.
The Fund 33
NOTES TO FINANCIAL STATEMENTS (continued)
The fund's financial statements are prepared in accordance with U.S. generally accepted accounting principles, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
The fund enters into contracts that contain a variety of indemnifications. The fund's maximum exposure under these arrangements is unknown.The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: Investments in securities are valued each business day by an independent pricing service (the "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.
(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 accretion of discount and amortization of premium 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 has an arrangement with the custodian bank whereby the fund receives earnings credits from the custodian when positive cash
34
balances are maintained, which are used to offset custody fees. For financial reporting purposes, the fund includes net earnings credits, if any, as an expense offset in the Statement of Operations.
(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, if any, 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. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles.
(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.
At April 30, 2006, the components of accumulated earnings on a tax basis were as follows: undistributed tax exempt income $244,813, accumulated capital losses $68,612,712 and unrealized appreciation $26,972,515.
The amount of this loss which can be utilized in subsequent years is subject to an annual limitation due to the fund's merger with General Municipal Bond Fund, Inc. If not applied, $6,548,088 of the carryover expires in fiscal 2007, $17,253,564 expires in fiscal 2008, $9,553,959 expires in fiscal 2009, $17,083,173 expires in fiscal 2010, $10,384,676 expires in fiscal 2011 and $7,789,252 expires in fiscal 2012.
The tax character of distributions paid to shareholders during the fiscal periods ended April 30, 2006 and April 30, 2005 were as follows: tax exempt income $28,650,962 and $23,130,667, respectively.
The Fund 35
NOTES TO FINANCIAL STATEMENTS (continued)
During the period ended April 30, 2006, as a result of permanent book to tax differences, primarily due to the tax treatment for amortization adjustments, the fund decreased accumulated undistributed investment income-net by $32,757, increased accumulated net realized gain (loss) on investments by $25,357 and increased paid-in capital by $7,400. Net assets were not affected by this reclassification.
NOTE 2—Bank Line of Credit:
The fund participates with other Dreyfus-managed funds in a $350 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 based on prevailing market rates in effect at the time of borrowing. During the period ended April 30, 2006, 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 the value of the fund's average daily net assets and is payable monthly.The Manager has contractually agreed to waive receipt of its fees and/or assume the expenses of the fund's Class Z shares, until at least April 30, 2006, so that, the total annual operating expenses of the fund's Class Z shares (exclusive of taxes, brokerage commissions, interest, commitment fees on borrowings and extraordinary expenses) do not exceed .87%.The reduction in expenses, pursuant to the undertaking, amounted to $9,155, during the period ended April 30, 2006.
During the period ended April 30, 2006, the Distributor retained $13,150 from commissions earned on sales of the fund's Class A shares, and $29,298 and $229 from CDSC on redemptions of the fund's Class B and Class C shares, respectively.
36
(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 the value of the average daily net assets of Class B shares and .75% of the value of the average daily net assets of Class C shares. During the period ended April 30, 2006, Class B and Class C shares were charged $92,079 and $70,366, respectively, pursuant to the Plan.
(c) Under the Shareholder Services Plan, Class A, Class B, Class C and Class Z shares pay the Distributor at an annual rate of .25% of the value of the average daily net assets of Class A, Class B and Class C shares and .20% of the value of the average daily net assets of Class Z shares, for the provision of certain services.The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the fund and providing reports and other information, and services related to the maintenance of shareholder accounts. The Distributor may make payments to Service Agents (a securities dealer, financial institution or other industry professional) in respect of these services. The Distributor determines the amounts to be paid to Service Agents. During the period ended April 30, 2006, Class A, Class B, Class C and Class Z shares were charged $670,344, $46,040, $23,455 and $677,770 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 April 30, 2006, the fund was charged $280,848 pursuant to the transfer agency agreement.
During the period ended April 30, 2006, the fund was charged $3,814 for services performed by the Chief Compliance Officer.
The components of Due to The Dreyfus Corporation and affiliates in the Statement of Assets and Liabilities consist of: management fees
The Fund 37
NOTES TO FINANCIAL STATEMENTS (continued)
$275,902, Rule 12b-1 distribution plan fees $12,395, shareholder services plan fees $111,989 and chief compliance officer fees $1,284.
(d) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
(e) A .10% redemption fee is charged and retained by the fund on certain Class Z shares redeemed within thirty days of their issuance.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities,financial futures and options transactions, during the period ended April 30, 2006, amounted to $302,438,311 and $337,152,472, respectively.
The fund may invest in financial futures contracts in order to gain exposure to or protect against changes in the market. The fund is exposed to market risk as a result of changes in the value of the underlying financial instruments. Investments in financial futures require the fund to "mark to market" on a daily basis, which reflects the change in market value of the contracts at the close of each day's trading. Accordingly, variation margin payments are received or made to reflect daily unrealized gains and losses. When the contracts are closed, the fund recognizes a realized gain or loss.These investments require initial margin deposits with a broker, which consist of cash or cash equiva-lents.The amount of these deposits is determined by the exchange or Board of Trade on which the contract is traded and is subject to change. At April 30, 2006, there were financial futures contracts outstanding.
38
At April 30, 2006, the cost of investments for federal income tax purposes was $579,654,251; accordingly, accumulated net unrealized appreciation on investments was $26,922,639, consisting of $30,463,083 gross unrealized appreciation and $3,540,444 gross unrealized depreciation.
NOTE 5—Subsequent Event:
Effective on or about June 1, 2006, the fund will no longer offer Class B shares, except in connection with dividend reinvestment and permitted exchanges of Class B shares.
The Fund 39
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
| Shareholders and Board of Trustees Dreyfus Premier Municipal Bond Fund |
We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Dreyfus Premier Municipal Bond Fund, as of April 30, 2006, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management.Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement.We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of April 30, 2006 by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dreyfus Premier Municipal Bond Fund at April 30, 2006, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the indicated periods, in conformity with U.S. generally accepted accounting principles.
| New York, New York June 8, 2006 |
40
IMPORTANT TAX INFORMATION (Unaudited)
In accordance with federal tax law, the fund hereby designates all the dividends paid from investment income-net during its fiscal year ended April 30, 2006 as "exempt-interest dividends" (not generally subject to regular federal income tax).
As required by federal tax law rules, shareholders will receive notification of their portion of the fund's taxable ordinary dividends (if any) and capital gain distributions (if any) paid for the 2006 calendar year on Form 1099-DIV which will be mailed by January 31, 2007.
The Fund 41
BOARD MEMBERS INFORMATION (Unaudited)
| Joseph S. DiMartino (62) |
| Chairman of the Board (1995) |
| Principal Occupation During Past 5 Years: |
| • Corporate Director and Trustee |
| Other Board Memberships and Affiliations: |
| • The Muscular Dystrophy Association, Director |
| • Levcor International, Inc., an apparel fabric processor, Director |
| • Century Business Services, Inc., a provider of outsourcing functions for small and medium size |
| companies, Director |
| • The Newark Group, a provider of a national market of paper recovery facilities, paperboard |
| mills and paperboard converting plants, Director |
| • Sunair Services Corporation, engages in the design, manufacture and sale of high frequency |
| systems for long-range voice and data communications, as well as provides certain outdoor- |
| related services to homes and businesses, Director |
| No. of Portfolios for which Board Member Serves: 185 |
| ——————— |
| Clifford L. Alexander, Jr. (72) |
| Board Member (1986) |
| Principal Occupation During Past 5 Years: |
| • President of Alexander & Associates, Inc., a management consulting firm (January 1981-present) |
| • Chairman of the Board of Moody's Corporation (October 2000-October 2003) |
| Other Board Memberships and Affiliations: |
| • Mutual of America Life Insurance Company, Director |
| No. of Portfolios for which Board Member Serves: 60 |
| ——————— |
| Peggy C. Davis (63) |
| Board Member (1990) |
| Principal Occupation During Past 5 Years: |
| • Shad Professor of Law, New York University School of Law (1983-present) |
| • Writer and teacher in the fields of evidence, constitutional theory, family law, social sciences |
| and the law, legal process and professional methodology and training |
| No. of Portfolios for which Board Member Serves: 23 |
42
| Ernest Kafka (73) |
| Board Member (1986) |
| Principal Occupation During Past 5 Years: |
| • Physician engaged in private practice specializing in the psychoanalysis of adults and |
| adolescents (1962-present) |
| • Instructor,The New York Psychoanalytic Institute (1981-present) |
| • Associate Clinical Professor of Psychiatry at Cornell Medical School (1987-2002) |
| No. of Portfolios for which Board Member Serves: 23 |
| ——————— |
| Nathan Leventhal (63) |
| Board Member (1989) |
| Principal Occupation During Past 5 Years: |
| • A management consultant for various non-profit organizations (May 2004-present) |
| • Chairman of the Avery-Fisher Artist Program (November 1997-present) |
| Other Board Memberships and Affiliations: |
| • Movado Group, Inc., Director |
| No. of Portfolios for which Board Member Serves: 23 |
Once elected all Board Members serve for an indefinite term.The address of the Board Members and Officers is in c/o The Dreyfus Corporation, 200 Park Avenue, New York, New York 10166. Additional information about the Board Members is available in the fund's Statement of Additional Information which can be obtained from Dreyfus free of charge by calling this toll free number: 1-800-554-4611.
Saul B. Klaman, Emeritus Board Member
The Fund 43
OFFICERS OF THE FUND (Unaudited)
STEPHEN E. CANTER, President since March 2000.
Chairman of the Board and Chief Executive Officer of the Manager, and an officer of 90 investment companies (comprised of 185 portfolios) managed by the Manager. Mr. Canter also is a Board member and, where applicable, an Executive Committee Member of the other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 60 years old and has been an employee of the Manager since May 1995.
STEPHEN R. BYERS, Executive Vice President since November 2002.
Chief Investment Officer,Vice Chairman and a director of the Manager, and an officer of 90 investment companies (comprised of 185 portfolios) managed by the Manager. Mr. Byers also is an officer, director or an Executive Committee Member of certain other investment management subsidiaries of Mellon Financial Corporation, each of which is an affiliate of the Manager. He is 52 years old and has been an employee of the Manager since January 2000.
MARK N. JACOBS, Vice President since March 2000.
Executive Vice President, Secretary and General Counsel of the Manager, and an officer of 91 investment companies (comprised of 201 portfolios) managed by the Manager. He is 60 years old and has been an employee of the Manager since June 1977.
MICHAEL A. ROSENBERG, Vice President and Secretary since August 2005.
Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 201 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since October 1991.
JAMES BITETTO, Vice President and Assistant Secretary since August 2005.
Assistant General Counsel and Assistant Secretary of the Manager, and an officer of 91 investment companies (comprised of 201 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since December 1996.
JONI LACKS CHARATAN, Vice President and Assistant Secretary since August 2005.
Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 201 portfolios) managed by the Manager. She is 50 years old and has been an employee of the Manager since October 1988.
JOSEPH M. CHIOFFI, Vice President and Assistant Secretary since August 2005.
Assistant General Counsel of the Manager, and an officer of 91 investment companies (comprised of 201 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since June 2000.
JANETTE E. FARRAGHER, Vice President and Assistant Secretary since August 2005.
Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 201 portfolios) managed by the Manager. She is 43 years old and has been an employee of the Manager since February 1984.
JOHN B. HAMMALIAN, Vice President and Assistant Secretary since August 2005.
Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 201 portfolios) managed by the Manager. He is 42 years old and has been an employee of the Manager since February 1991.
44
ROBERT R. MULLERY, Vice President and Assistant Secretary since August 2005. Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 201 portfolios) managed by the Manager. He is 54 years old and has been an employee of the Manager since May 1986.
JEFF PRUSNOFSKY, Vice President and Assistant Secretary since August 2005. Associate General Counsel of the Manager, and an officer of 91 investment companies (comprised of 201 portfolios) managed by the Manager. He is 40 years old and has been an employee of the Manager since October 1990.
JAMES WINDELS, Treasurer since November 2001. Director – Mutual Fund Accounting of the Manager, and an officer of 91 investment companies (comprised of 201 portfolios) managed by the Manager. He is 47 years old and has been an employee of the Manager since April 1985.
ERIK D. NAVILOFF, Assistant Treasurer since August 2005.Senior Accounting Manager – Taxable Fixed Income Funds of the Manager, and an officer of 91 investment companies (comprised of 201 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since November 1992.
ROBERT ROBOL, Assistant Treasurer since August 2005. Senior Accounting Manager – Money Market and Municipal Bond Funds of the Manager, and an officer of 91 investment companies (comprised of 201 portfolios) managed by the Manager. He is 42 years old and has been an employee of the Manager since October 1988.
ROBERT SVAGNA, Assistant Treasurer since August 2005. Senior Accounting Manager – Equity Funds of the Manager, and an officer of 91 investment companies (comprised of 201 portfolios) managed by the Manager. He is 39 years old and has been an employee of the Manager since November 1990.
GAVIN C. REILLY, Assistant Treasurer since December 2005. Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 91 investment companies (comprised of 201 portfolios) managed by the Manager. He is 37 years old and has been an employee of the Manager since April 1991.
JOSEPH W. CONNOLLY, Chief Compliance Officer since October 2004.Chief Compliance Officer of the Manager and The Dreyfus Family of Funds (91 investment companies, comprised of 201 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 48 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001.
WILLIAM GERMENIS, Anti-Money Laundering Compliance Officer since October 2002.Vice President and Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 87 investment companies (comprised of 197 portfolios) managed by the Manager. He is 35 years old and has been an employee of the Distributor since October 1998.
The Fund 45
For More Information
Telephone Call your financial representative or 1-800-554-4611
| Mail The Dreyfus Premier Family of Funds 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 |
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The fund's Forms N-Q are available on the SEC's website at http://www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Information regarding how the fund voted proxies relating to portfolio securities for the 12-month period ended June 30, 2005, is available on the SEC's website at http://www.sec.gov and without charge, upon request, by calling 1-800-645-6561.
© 2006 Dreyfus Service Corporation 0022AR0406
Item 2. Code of Ethics.
The Registrant has adopted a code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There have been no amendments to, or waivers in connection with, the Code of Ethics during the period covered by this Report.
Item 3. Audit Committee Financial Expert.
The Registrant's Board has determined that Joseph S. DiMartino, a member of the Audit Committee of the Board, is an audit committee financial expert as defined by the Securities and Exchange Commission (the "SEC"). Joseph S. DiMartino is "independent" as defined by the SEC for purposes of audit committee financial expert determinations.
Item 4. Principal Accountant Fees and Services
(a) Audit Fees. The aggregate fees billed for each of the last two fiscal years (the "Reporting Periods") for professional services rendered by the Registrant's principal accountant (the "Auditor") for the audit of the Registrant's annual financial statements, or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $35,626 in 2005 and $37,319 in 2006.
(b) Audit-Related Fees. The aggregate fees billed in the Reporting Periods for assurance and related services by the Auditor that are reasonably related to the performance of the audit of the Registrant's financial statements and are not reported under paragraph (a) of this Item 4 were $0 in 2005 and $0 in 2006.
The aggregate fees billed in the Reporting Periods for non-audit assurance and related services by the Auditor to the Registrant's investment adviser (not including any sub-investment adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Registrant ("Service Affiliates"), that were reasonably related to the performance of the annual audit of the Service Affiliate, which required pre-approval by the Audit Committee were $0 in 2005 and $0 in 2006.
Note: For the second paragraph in each of (b) through (d) of this Item 4, certain of such services were not pre-approved prior to May 6, 2003, when such services were required to be pre-approved. On and after May 6, 2003, 100% of all services provided by the Auditor were pre-approved as required. For comparative purposes, the fees shown assume that all such services were pre-approved, including services that were not pre-approved prior to the compliance date of the pre-approval requirement.
(c) Tax Fees. The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice and tax planning ("Tax Services") were $3,178 in 2005 and $3,382 in 2006. These services consisted of (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative developments, and (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held.
The aggregate fees billed in the Reporting Periods for Tax Services by the Auditor to Service Affiliates which required pre-approval by the Audit Committee were $0 in 2005 and $0 in 2006.
(d) All Other Fees. The aggregate fees billed in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) of this Item, were $624 in 2005 and $620 in 2006. These services consisted of a review of the Registrant's anti-money laundering program.
The aggregate fees billed in the Reporting Periods for Non-Audit Services by the Auditor to Service Affiliates, other than the services reported in paragraphs (b) through (c) of this Item, which required pre-approval by the Audit Committee were $0 in 2005 and $0 in 2006.
Audit Committee Pre-Approval Policies and Procedures. The Registrant's Audit Committee has established policies and procedures (the "Policy") for pre-approval (within specified fee limits) of the Auditor's engagements for non-audit services to the Registrant and Service Affiliates without specific case-by-case consideration. Pre-approval considerations include whether the proposed services are compatible with maintaining the Auditor's independence. Pre-approvals pursuant to the Policy are considered annually.
Non-Audit Fees. The aggregate non-audit fees billed by the Auditor for services rendered to the Registrant, and rendered to Service Affiliates, for the Reporting Periods were $686,197 in 2005 and $718,507 in 2006.
Auditor Independence. The Registrant's Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates which were not pre-approved (not requiring pre-approval) is compatible with maintaining the Auditor's independence.
| Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. Schedule of Investments. Not applicable. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers. Not applicable. Item 10. Submission of Matters to a Vote of Security Holders. |
The Registrant has a Nominating Committee (the "Committee"), which is responsible for selecting and nominating persons for election or appointment by the Registrant's Board as Board members. The Committee has adopted a Nominating Committee Charter (the "Charter"). Pursuant to the Charter, the
Committee will consider recommendations for nominees from shareholders submitted to the Secretary of the Registrant, c/o The Dreyfus Corporation Legal Department, 200 Park Avenue, 8th Floor East, New York, New York 10166. A nomination submission must include information regarding the recommended nominee as specified in the Charter. This information includes all information relating to a recommended nominee that is required to be disclosed in solicitations or proxy statements for the election of Board members, as well as information sufficient to evaluate the factors to be considered by the Committee, including character and integrity, business and professional experience, and whether the person has the ability to apply sound and independent business judgment and would act in the interests of the Registrant and its shareholders.
Nomination submissions are required to be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected by the shareholders, and such additional information must be provided regarding the recommended nominee as reasonably requested by the Committee.
Item 11. Controls and Procedures.
(a) The Registrant's principal executive and principal financial officers have concluded, based on their evaluation of the Registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the Registrant's disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the Registrant in the reports that it files or submits on Form N-CSR is accumulated and communicated to the Registrant's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes to the Registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
Item 12. Exhibits.
| (a)(1) Code of ethics referred to in Item 2. (a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940. (a)(3) Not applicable. (b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dreyfus Premier Municipal Bond Fund
| By: | /s/ Stephen E. Canter | |
| Stephen E. Canter | ||
| President | ||
| Date: | June 30, 2006 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| By: | /s/ Stephen E. Canter | |
| Stephen E. Canter | ||
| Chief Executive Officer | ||
| Date: | June 30, 2006 | |
| By: | /s/ James Windels | |
| Stephen E. Canter | ||
| Chief Financial Officer | ||
| Date: | June 30, 2006 | |
EXHIBIT INDEX
| (a)(1) Code of ethics referred to in Item 2. (a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a- 2(a) under the Investment Company Act of 1940. (EX-99.CERT) (b) Certification of principal executive and principal financial officers as required by Rule 30a- 2(b) under the Investment Company Act of 1940. (EX-99.906CERT) |