You are right - this is by design. SMIGRATE or FP Migrate (which is GUI to
the same tool) is not designed to carry over any personalization or
security/permissions. They all get dropped out.

Use STSADM Backup/Restore for a full fidelity move of site  from Point A to
point B. Also note that STSADM only works at Top-Level Site (including all
sub-sites). You cannot use it for a sub-site.

There was a discussion about this deal few weeks ago on this group that you
may found useful.